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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


              

                                    Form 10-K

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

                   For the fiscal year ended December 31, 1997

                                       OR



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

                         Commission File Number 2-54754



                   General American Transportation Corporation

Incorporated in the                          IRS Employer Identification Number
 State of New York                                      36-2827991

                             500 West Monroe Street
                          Chicago, Illinois 60661-3676
                                 (312) 621-6200

           Securities registered pursuant to Section 12(b) of the Act:

                                      None


           Securities registered pursuant to Section 12(g) of the Act:

                                      None

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

    Registrant had 1,000 shares of common stock  outstanding  (all owned by GATX
 Corporation) as of March 6, 1998.

    General American  Transportation  Corporation meets the conditions set forth
 in General  Instruction J(1) of Form 10-K and,  therefore,  is filing this form
 with the reduced disclosure format.





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<PAGE>



PART I

Item 1.  Business

General American Transportation  Corporation (GATC) is a wholly-owned subsidiary
of GATX  Corporation  (GATX) and is engaged in the  leasing  and  management  of
railroad  tank cars and  specialized  freight  cars and  through a  wholly-owned
subsidiary  owns and operates  tank  storage  terminals,  pipelines  and related
facilities.

Industry Segments

                         Railcar Leasing and Management
                         ------------------------------
The Railcar Leasing and Management  segment  (Transportation),  headquartered in
Chicago,  Illinois,  is  principally  engaged in leasing  specialized  railcars,
primarily  tank cars,  under full service  leases.  As of December 31, 1997, its
North American  fleet  consisted of  approximately  81,100  railcars,  including
62,900 tank cars and 18,200 specialized freight cars, including conventional and
Airslide(TM)  covered hopper cars. In addition to roughly 70,700 railcars in the
United States,  Transportation has approximately  9,200 railcars in its Canadian
fleet and 1,200 railcars in its Mexican fleet.  Transportation  has upgraded its
fleet over time by adding new larger  capacity  cars and retiring  older smaller
capacity cars.  Transportation's railcars have a useful life of approximately 30
to 33 years.  The  average  age of the  railcars  in  Transportation's  fleet is
approximately 16 years.

The following table sets forth the car types comprising  Transportation's  North
American fleet.

<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                         ---------------------------------------------------------
                                                          1997         1996         1995        1994        1993
                                                         ------       ------       ------      ------       ------

<S>                                                      <C>          <C>          <C>         <C>          <C>   
         Tank cars                                       62,900       60,400       53,900      50,700       48,000
         Freight, covered hopper,
           and plastic pellet cars                       18,200       17,100       11,000       9,100        7,800
                                                         ------       ------       ------     -------      -------

         North American fleet                            81,100       77,500       64,900      59,800       55,800
                                                         ======       ======       ======      ======       ======

</TABLE>

In  addition  to the  North  American  fleet,  Transportation's  investments  in
affiliates  result  in  ownership   interests  in  other  fleets.   During  1997
Transportation purchased a 40% interest in KVG Kesselwaggon  Vermietgesellschaft
mbH ("KVG"), a German and Austrian-based  tank car and specialty railcar leasing
company  that owns and  operates  approximately  9,400  railcars  in Europe,  to
complement its existing 12-1/2% interest in European-based AAE Cargo.

Transportation's   customers  use  its  railcars  to  ship  over  700  different
commodities,  primarily  chemicals,  petroleum,  and food  products.  For  1997,
approximately  51% of railcar leasing  revenue was  attributable to shipments of
chemical products, 20% to petroleum products, and 16% to food products.  Many of
these products require cars with special features;  Transportation offers a wide
variety of sizes and types of cars to meet these  needs.  Transportation  leases
railcars  to over  700  customers,  including  major  chemical,  oil,  food  and
agricultural  companies.  No single customer  accounts for more than 4% of total
railcar leasing revenue.

Transportation typically leases new railcars to its customers for a term of five
years or longer,  whereas  renewals or leases of existing cars are typically for
periods  ranging from less than a year to seven years with an average lease term
of about three years.  The utilization rate of  Transportation's  railcars as of
December 31, 1997 was approximately 96%.

Under  its full  service  leases,  Transportation  maintains  and  services  its
railcars,  pays ad valorem taxes, and provides many ancillary services.  Through
its GATX Conductor web site, for example, Transportation provides customers with
timely  analysis and performance  statistics  about their leased cars to enhance
and maximize the utilization of this equipment.  Transportation also maintains a

                                      -1-
<PAGE>


network of major service centers consisting of four domestic, three Canadian and
one  Mexican   facility.   To  supplement  the  eight  major  service   centers,
Transportation  utilizes a fleet of mobile trucks and also utilizes  independent
third-party repair shops.

Transportation purchases most of its new railcars from Trinity Industries,  Inc.
(Trinity), a Dallas-based metal products manufacturer,  under a contract entered
into in 1984 and extended from time to time  thereafter,  most recently in 1992.
Transportation  anticipates  that through this  contract it will  continue to be
able to satisfy  its  customers'  new car lease  requirements.  Transportation's
engineering   staff  provides   Trinity  with  design   criteria  and  equipment
specifications,  and works with  Trinity's  engineers to develop new  technology
where  needed in order to upgrade or improve car  performance  or in response to
regulatory requirements.

The full-service railcar leasing industry is comprised of Transportation,  Union
Tank Car Company,  General Electric Railcar Services  Corporation,  Shippers Car
Line division of ACF Industries,  Incorporated, Procor Limited, and many smaller
companies. Of the approximately 218,000 tank cars owned and leased in the United
States at December 31, 1997,  Transportation had approximately 57,000. Principal
competitive factors include price, service and availability.

                                       
                             Terminals and Pipelines
                             -----------------------
GATX Terminals Corporation  (Terminals) is engaged in the storage,  handling and
intermodal  transfer of petroleum and chemical  commodities at key points in the
bulk liquid  distribution  chain.  All of its  terminals  are located near major
distribution  and  transportation  points and most are capable of receiving  and
shipping bulk liquids by ship, rail, barge and truck. Many of the terminals also
are linked with major interstate pipelines. In addition to storing, handling and
transferring bulk liquids,  Terminals  provides blending and testing services at
most of its facilities. Terminals,  headquartered in Chicago, Illinois, owns and
operates 23 terminals in 10 states,  and seven  terminals in the United Kingdom.
Terminals  also has joint  venture  interests  in 14  international  facilities.
Additionally, Terminals owns or holds interests in four refined product pipeline
systems.

As of December 31, 1997,  Terminals had a total  storage  capacity of 68 million
barrels. This includes 48 million barrels of bulk liquid storage capacity in the
United States,  8 million barrels in the United Kingdom,  and an equity interest
in another 12 million barrels of storage capacity in Europe,  Mexico and the Far
East.  Terminals' smallest bulk liquid facility has a storage capacity of 95,000
barrels while its largest facility,  located in Pasadena,  Texas, has a capacity
of over 12 million  barrels.  Capacity  utilization  at Terminals'  wholly-owned
facilities averaged 91% during 1997; throughput, or deliveries to customers, for
the year was 639 million barrels.

In 1997,  a  strategic  decision  was made to sell or close  the  Staten  Island
terminal and the seven storage  facilities which make up GATX Terminals  Limited
in the United Kingdom.  The decision  included  analyses of the related customer
base, industry served, and profitability  outlook related to each facility.  The
Staten  Island  terminal  serves the petroleum  market while the United  Kingdom
facilities serve both the petroleum and chemical  markets in  approximately  the
same proportion.  Other smaller facilities are also being evaluated for possible
sale or closure.

For 1997, 54% of Terminals' revenue was derived from petroleum storage, 23% from
chemical  storage,  22% from pipelines,  and 1% from other products.  Demand for
Terminals'  facilities  depends in part upon demand for  petroleum  and chemical
products and is also affected by refinery output, foreign imports,  availability
of  other  storage  facilities,  and the  expansion  of its  customers  into new
geographical markets.

Terminals serves over 450 customers,  including major oil and chemical companies
as well as trading firms and larger  independent  refiners.  No single  customer
accounts for more than 6% of Terminals' revenue.  Customer service contracts are
both short term and long term.


                                       -2-

<PAGE>

Terminals along with two Dutch companies, Pakhoed N.V. and Van Ommeren N.V., are
the three major international public terminaling companies.  Pakhoed carries out
its  operations  under the name of  Paktank.  On March 2, 1998,  Pakhoed and Van
Ommeren announced a proposed merger (VOPAK), subject to approval by the European
Commission.)  The domestic public  terminaling  industry  consists of Terminals,
Paktank  Corporation,  International-Matex  Tank  Terminals (a joint  venture in
which  Van  Ommeren  participates),  and many  smaller  independent  terminaling
companies.  In  addition  to  public  terminaling  companies,  oil and  chemical
companies also have significant storage capacity and compete with Terminals in a
number of markets.  Terminals'  pipelines  compete  with rail,  trucks and other
pipelines  for  movement of liquid  petroleum  products.  Principal  competitive
factors  include  price,  location  relative  to  distribution  facilities,  and
service.

Customer Base

GATC and its  subsidiaries  are not  dependent  upon a single  customer or a few
customers. The loss of any one customer would not have a material adverse effect
on any segment or GATC as a whole.

Employees

GATC and its subsidiaries have approximately 1,800 active employees, of whom 35%
are hourly employees covered by union contracts.

Item 2.  Properties
-------------------
Information  regarding the location and general character of certain  properties
of GATC is included in Item 1, Business, of this document.  The major portion of
Terminals' land is owned; the balance, including some of its dock facilities, is
leased.

Item 3.  Legal Proceedings
--------------------------
A Final  Judgment has been entered by the U.S.  District  Court for the Northern
District  of Illinois in favor of General  American  Transportation  Corporation
("GATC") in the previously  reported matter of General  American  Transportation
Corporation v. Cryo-Trans,  Incorporated  (Case No. 91 C 1305), a case involving
an  alleged  patent  infringement  by  GATC in the  construction  and use of its
ArcticarTM cryogenically cooled railcar. A Petition for Writ of Certiorari filed
on behalf of  Cryo-Trans,  Incorporated  was denied by the United States Supreme
Court.

Various  lawsuits  have  been  filed  in the  Superior  Court  for the  State of
California, County of San Bernardino, and served upon GATX Terminals Corporation
("GTC"),  Calnev  Pipe Line  Company,  or  another  GATC  subsidiary  seeking an
unspecified  amount of  damages  arising  out of the May 1989  explosion  in San
Bernardino,  California.  All of those suits have all been resolved  except for:
Aguilar,  et al, v. Calnev Pipe Line Company,  et al filed  February 1990 in the
County of Los Angeles (No. 0751026); Pearson v. Calnev Pipe Line Company, et al,
filed May 1990 in the County of San Bernadino (No. 256206);  and Davis v. Calnev
Pipe  Line  Company,  et al,  filed May 1990 (No.  256207).  As GTC's  insurance
carriers have assumed the defense of these  lawsuits  without a  reservation  of
rights and have paid all of the settlements  entered into between the parties to
date,  GATC believes that the likelihood of a material  adverse effect on GATC's
consolidated financial position or results of operations is remote.

In September 1997, judgment was entered against General American  Transportation
Corporation  ("GATC"),  its wholly owned subsidiary,  GATX Terminals Corporation
("GTC") and seven other defendants not related to GATC for compensatory  damages
of  approximately  $1.9 million plus  interest  from the date of the incident to
twenty  individuals in a class action suit filed in the Civil District Court for
the Parish of New Orleans,  Louisiana,  In Re New Orleans Train Car Leakage Fire
Incident  (No.  87-16374).  The  judgment  allocated  responsibility  for twenty
percent of the compensatory damages to GATC and ten percent to GTC. The judgment

                                      -3-

<PAGE>

also provided for punitive damages of $3.4 billion in the aggregate against five
of the nine named defendants, including $190 million against GTC. The litigation
arose out of an incident which began on September 9, 1987, when butadiene leaked
from a tank car owned by GATC and  caught  fire.  The  incident  resulted  in no
deaths or significant  injuries and only minimal property damage, but caused the
overnight evacuation of a number of residents from the immediate area.

On October 31,  1997,  the  Louisiana  Supreme  Court ruled that the trial Court
erred in  rendering a judgment  awarding  damages  prior to rendering a judgment
adjudicating all liability issues in the case. Accordingly, it vacated the trial
Court's September 1997 judgment which had awarded both compensatory and punitive
damages,  and remanded the case back to the trial Court for further  proceedings
not inconsistent with its ruling. The plaintiffs have filed a motion asking that
the trial Court refrain from signing a judgment until all remaining 8,000 claims
are tried.  The  defendants  have filed motions  asking the Court (1) to enter a
judgment on  liability as to  compensatory  damages and as to the conduct of the
defendants  giving  rise to  punitive  damages,  and (2) to vacate  the  verdict
awarding  punitive  damages.  If a  judgment  is  entered  as  suggested  by the
defendants,  the  Company  will be in a position  to seek  appropriate  judicial
review of the liability determinations made to date and of the finding as to the
conduct on which  punitive  damages were based.  The Company  will  evaluate any
further  ruling of the trial Court,  and if  appropriate  ask the Court for post
judgment relief. If necessary, the Company will appeal any judgment against it.

Although more than 8,000 claims have been  made, the  Company  believes that the
damages, if  any, that may be awarded  to the remaining claimants should average
substantially  less  than those awarded to the initial  twenty  plaintiffs.  The
Company  also  believe  that  the  award  of compensatory  damages to the twenty
plaintiffs was excessive,  and that the  punitive damages judgment as to GTC was
unwarranted and excessive.

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

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
Not required.

PART II

Item 5.  Market  for the  Registrant's  Common  Stock  and  Related  Shareholder
         Matters
--------------------------------------------------------------------------------
GATX Corporation owns all of the outstanding common stock of GATC.

Item 6.  Selected Financial Data
--------------------------------
Not required.


                                       -4-

<PAGE>



Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations
--------------------------------------------------------------------------------
1997 RESULTS OF OPERATIONS COMPARED TO 1996

OVERVIEW GATC on a consolidated basis reported a net loss of $41 million,  after
restructuring  charges, for 1997 compared to net income of $80 million for 1996.
Before the restructuring charge, GATC's income for 1997 was $83 million:

                                                   1997            1996
                                                   ----            ----

      Income before restructuring               $   82.6           $80.3
      Restructuring                               (123.8)              -
                                                --------           -----
      Net (loss) income                         $  (41.2)          $80.3
                                                ========           =====

Terminals  recorded a $123.8 million  after-tax  charge in the fourth quarter of
1997. The changed market environment which Terminals serves required  aggressive
action to revitalize  operations  and includes the sale or closure of the Staten
Island terminal as well as seven terminals in the United Kingdom.  Additionally,
adjustments were made to the carrying costs of other smaller facilities.

Aside  from  the  restructuring  charge,  the  comparison  of  1997  to  1996 is
influenced  by  Transportation's  mid-1996  acquisition  of  the  remaining  55%
interest in CGTX,  whereupon this Canadian railcar company became a wholly-owned
subsidiary,  with  all  financial  results  fully  consolidated.  Prior  to  the
acquisition,  Transportation's  non-controlling  45% interest had been accounted
for as an investment in an affiliate.

GROSS INCOME   Consolidated  gross income for 1997 of $799 million exceeded 1996
revenue of $754 million by 6%.

Transportation's  gross  income of $477  million  increased  by $49 million from
1996.  The full year effect of the mid-1996 CGTX  acquisition  accounted for $28
million of the revenue  increase with the balance  attributable to a larger U.S.
fleet and improved  rental rates.  Railcar  additions  continued to be strong in
1997 with 4,800  cars  added to the North  American  fleet.  Of the total  North
American  fleet of 81,100  cars,  about  78,000 were on lease at year end, for a
utilization of 96%, up from 95% at the end of 1996.  Fleet additions in 1998 are
expected to remain strong. In addition to the North American fleet,  during 1997
Transportation purchased a 40% interest in KVG Kesselwaggon  Vermietgesellschaft
mbH ("KVG"), a German and Austrian-based  tank car and specialty railcar leasing
company that owns and manages approximately 9,400 railcars in Europe.

Terminals' gross income for 1997 of $293 million was 2% less than 1996 primarily
due to the continued  softness in both the domestic and international  petroleum
markets.  In general,  the petroleum  market was  characterized  by  competitive
pricing  pressures as refineries  continued to produce on a  just-in-time  basis
thereby  reducing  the demand for  storage.  Gross  income  related to  services
provided  to the  chemical  market  remained  steady  with 1996  while  pipeline
revenues improved slightly.
Terminals' pipelines serve the growing Nevada and Florida markets.

While Terminals' throughput of petroleum products remained strong, rates further
declined from the 1996 levels. Throughput for 1997, defined as barrels delivered
to customers,  of 639 million barrels at wholly-owned  locations remained steady
with 1996. Average storage utilization for the year was 91%, an improvement from
86% last year.

COSTS AND EXPENSES  Operating  expenses in 1997 increased $11 million or 3% over
1996.  Transportation's operating expenses of $192 million increased $15 million
over 1996 as a result of increased operating lease expense, as well as increased
fleet repair  costs due to the expanded  fleet size,  including  CGTX  railcars.
Transportation  continued  to utilize  sale-  leasebacks  to finance its railcar
additions,  though for the first time in 1997,  the financing was  structured as
nonrecourse to GATC; prior  sale-leasebacks were recourse to GATC. The leaseback

                                      -5-
<PAGE>

is recorded as an operating lease which removes the asset and related  liability
from the balance sheet;  the payments under the operating leases are recorded as
operating  lease  expense.  Fleet repair costs  increased 7% due to the expanded
fleet size and full year consolidation of CGTX, but decreased as a percentage of
revenue  from 1996  due,  in part,  to the mix of cars and the types of  repairs
completed.  Terminals'  1997 operating  expenses of $149 million were $5 million
lower than 1996, in part reflecting  certain  nonrecurring  expenses  related to
last year.

Interest  expense  increased $9 million in 1997 to $118 million as the result of
higher  average  debt  balances  to fund the  growth of the  business.  Interest
expense at  Transportation  increased due to the CGTX  acquisition and growth of
the U.S.  fleet.  Interest  expense  increased at Terminals as the result of the
full  year  impact of the  additional  debt  incurred  to  finance  maintenance,
regulatory,   business  development  and  environmental  expenditures  in  1996.
Business  development in 1996 included  completing the Central Florida  Pipeline
expansion.  Environmental and maintenance spending continue to be significant in
keeping with GATC's commitment to improve  terminaling assets and to operate its
facilities in an environmentally responsible manner.

The  company  continues  to  utilize  interest  rate  swaps to better  match the
duration of the debt portfolio to the terms of the railcar leases. The effect of
the swaps was to reduce interest expense in 1997 and 1996.

The provision for depreciation and amortization increased $14 million from 1996.
Depreciation expense increased as a result of the continued growth in assets and
the full year consolidation of CGTX.
                                       
Selling, general and administrative expenses of $77 million increased $8 million
from 1996 due to increased employee costs, information systems initiatives,  and
consulting expenses, as well as the consolidation of CGTX.

Income tax expense of $41 million before the  restructuring  charge was at about
the same level as for 1996. The effective tax rate before the charge was 38% for
1997 compared to 39% for 1996.  The effective tax rate for both years was higher
than the 35% federal statutory rate because of state taxes,  foreign income, and
nondeductible items.

EQUITY IN NET EARNINGS OF AFFILIATED  COMPANIES of $14 million in 1997 decreased
$1 million from the prior year  primarily  because CGTX was no longer  accounted
for as an affiliate  in 1997,  offset in part by  increased  equity  earnings at
Terminals. Transportation recorded $3 million of equity earnings for CGTX in the
first half of 1996,  prior to it becoming fully  consolidated.  Transportation's
European  railcar  joint  ventures,  AAE and the  newly-acquired  KVG,  added $1
million compared to 1996. Terminals' nine joint ventures produced $13 million of
equity  earnings in 1997, a $1 million  increase  from 1996.  European  chemical
market  partnerships  showed improved results.  Asian results  approximated last
year, with  improvement in the chemical  market offset by foreign  exchange rate
variances.

EARNINGS   Consolidated GATC earnings of about $83 million before restructuring
charges increased $3 million from 1996.

Transportation's  net  income  of  $74  million  increased  by  10%  over  1996,
reflecting higher revenues and the full year impact of CGTX, partially offset by
higher repair costs and other operating and asset ownership expenses.  Operating
margin improved by 14% as the growth in revenues exceeded the increase in repair
costs.

Terminals'  net loss for 1997 was $116 million,  including the effects of a $124
million after-tax  restructuring charge. On an operating basis,  Terminals' 1997
income of $8 million  declined  from last  year's  $13  million.  The  difficult
petroleum market  conditions  resulted in a 4% decrease in operating margin from
last year.  Overall operating costs and SG&A expenses decreased by 1% from 1996.
Fixed asset ownership costs, which include interest and depreciation,  increased
to 38% of revenue  from 35% last year  primarily  due to the full year impact of
significant facility and infrastructure investments made in 1996.

                                      -6-

<PAGE>


During the fourth quarter of 1997,  Terminals recorded an after-tax provision of
$124 million  reflecting the results of a strategic  review.  Initial steps were
taken to sell or close certain  locations  including the Staten Island  terminal
and seven storage  facilities which make up GATX Terminals Limited in the United
Kingdom.  Additionally,  adjustments  were made to the carrying  cost of certain
other locations where conditions indicated that asset values were impaired.

1996 RESULTS OF OPERATIONS COMPARED TO 1995

GATC on a  consolidated  basis  reported  net  income  of $80  million  for 1996
compared to $94 million in 1995.  The decrease was due to sharply lower earnings
at Terminals,  offset in part by record earnings at  Transportation.  Terminals'
results  were  down  primarily  as the  result  of  historically  low  petroleum
inventory levels and lower pricing due to increased competition.  Transportation
benefited from a record number of railcars on lease and the mid-1996 acquisition
of the remaining interest in CGTX, Transportation's Canadian railcar affiliate.

Consolidated gross income for 1996 of $754 million exceeded 1995 revenue of $703
million.  Transportation's  gross income of $428 million  increased  $67 million
from 1995.  The  acquisition of the remaining 55% interest in CGTX accounted for
$27 million of the increase. The remainder of the revenue increase is due to the
full year effect of a record number of railcar additions in 1995, another strong
year of fleet  additions in 1996,  and an increase in average  rental rates.  In
addition to the 8,700 cars at CGTX,  over 4,400 cars were added in 1996.  At the
end of 1996,  Transportation had 73,200 railcars on lease in North America. With
a total  fleet of 77,500  cars,  utilization  ended the year at 95%, up from 94%
utilization at the end of 1995. Terminals' gross income for 1996 of $298 million
was 5% less than 1995 resulting  from general  softness in both the domestic and
international  petroleum markets.  The petroleum business  environment since the
second half of 1995 has been characterized by backwardated markets, historically
low petroleum inventory levels, and lower pricing due to increased  competition.
Backwardation  indicates that the economics in the petroleum  futures market, as
characterized by the spread between spot and future prices, are not providing an
incentive to store  product.  While  throughput of petroleum  products  remained
strong,  rates  declined.   Throughput  for  1996  of  634  million  barrels  at
wholly-owned  locations increased 5% from 602 million barrels last year. Average
utilization  for the year was 86%, down from 1995's average of 88%,  though 1996
year-end   utilization  was  89%.  Balanced  against  the  difficult   petroleum
terminaling  markets  were  continued  steady  chemical  demand  as well as good
pipeline  results.  Terminals'  pipelines  serve the growing  Nevada and Florida
markets, and those pipelines continue to be enhanced and expanded.

Operating   expenses   in  1996   increased   $18   million  or  6%  over  1995.
Transportation's  operating  expenses of $177 million increased $29 million over
1995 as a result of  increased  operating  lease  expense,  as well as increased
fleet repair costs due to the expanded fleet size,  including the newly-acquired
CGTX railcars.  Fleet repair costs increased 10% due to the expanded fleet size,
but  decreased  as a  percentage  of  revenue  from  1995,  in  part  due to the
efficiencies  from the major service center upgrade program completed last year.
The percentage of cars repaired at Transportation's service centers increased to
71% from 65% last year,  indicating a decreased  dependence on outside  contract
repair shops. Throughput  days, the time it  takes  a  railcar  to  be  repaired
through  the  Transportation  service  center  network, declined from an average
of 38 days  in 1995 to 32  days in 1996.  Terminals' 1996 operating  expenses of
$153  million were $11 million  lower than 1995,  in part reflecting its reduced
gross income.

Interest expense  increased $16 million in 1996 to $109 million as the result of
higher  average  debt  balances  to fund the  growth of the  business.  Interest
expense  at  Transportation  increased  primarily  due to the CGTX  acquisition.
Interest  expense  grew at  Terminals  to finance  maintenance,  regulatory  and
environmental expenditures, as well as the expansion of CFPL and the acquisition
of a  65%  interest  in  an  existing  terminal  in  Mexico.  Environmental  and
maintenance  spending  were  significant  in keeping with GATC's  commitment  to
improve  terminaling  assets and to operate its facilities in an environmentally
responsible  manner.  The  company's  use of  interest  rate  swaps  resulted in
reduced  interest  expense in 1996 and 1995. The provision for depreciation  and
amortization  increased $17 million from 1995 also as a result of the  continued
growth in assets,  including the acquisition and consolidation of CGTX.

                                      -7-

<PAGE>

Selling,  general  and  administrative  expenses of $69  million  increased  $14
million  from  1995  due  to  increased  employee  costs,   information  systems
initiatives,  and consulting  expenses,  as well as the  consolidation of CGTX's
operations for the second half of 1996 and Terminals' rationalization costs.

Income tax expense of $41 million  decreased  $6 million from 1995 as the result
of lower pretax  income.  The effective tax rate for both 1996 and 1995 was 39%.
The  effective  tax rate for both  years  was  higher  than the  statutory  rate
primarily because of state taxes, foreign income, and nondeductible items.

Equity in net  earnings of  affiliated  companies  of $15 million  decreased  $5
million  from  1995.  Transportation's  equity  in net  earnings  of  affiliates
decreased due to CGTX being fully  consolidated  starting in July 1996; for 1995
and the first  half of 1996,  Transportation  accounted  for their 45%  interest
under the equity method.  Terminals' equity in earnings of affiliates  decreased
$3 million  from 1995  primarily  from the effects of lower  petroleum  storage,
particularly in Singapore,  partially  offset by higher earnings form a Japanese
affiliate which completed its rebuilding from the 1995 Kobe earthquake.

Consolidated  net income of $80 million in 1996 decreased $14 million from 1995.
Transportation's  net income of $68 million  increased 8% over 1995,  reflecting
the higher  revenues and the impact of CGTX  partially  offset by higher  repair
costs and other operating and ownership  expenses.  Operating  margins  improved
slightly as growth in revenues  exceeded  the increase in fleet repair costs and
SG&A expenses.

Terminals'  net income of $13 million in 1996 declined from the prior year's $31
million.  The  difficult  petroleum  terminaling  markets  resulted in decreased
operating  margins  at a number of key  locations,  including  New York  harbor,
United Kingdom, Houston, Los Angeles, and Singapore. Although Terminals has been
able  to  reduce  its  overall  cost  base,   results  have  been   impacted  by
rationalization costs and consulting charges.  Overall operating costs decreased
$5  million  or 3%  from  1995.  Fixed  asset  ownership  costs,  which  include
depreciation  and interest,  increased to 34% of revenue from 29% in 1995 due to
significant facility and infrastructure  investments.  Terminals' transformation
initiatives  to address cost  reduction  and  productivity  enhancements  led to
increased expense for consulting studies and rationalization costs.

ASSETS

Total  assets at year end of $2.8  billion  were $234  million  lower  than 1996
primarily due to asset revaluations at Terminals, depreciation and amortization,
sale-leaseback  of  railcars,  and asset sales and  retirements.  Transportation
utilizes railcars which are financed through  off-balance sheet operating leases
and, therefore, are not included on the balance sheet. Partially offsetting this
decrease is a continued strong level of capital spending.

Net  operating  lease  assets  and  facilities  decreased  $240  million to $2.0
billion.   Transportation's  capital  additions  for  1997  were  $337  million,
including  almost $300 million for expanding the North American railcar fleet as
well as an  investment  in a 40%  interest  in KVG,  a German  railcar  company.
Offsetting  these  additions  were  $167  million  of  railcar  sale-leasebacks.
Transportation's additions totaled $387 million in 1996 including $84 million to
acquire  the  remaining  interest  in CGTX.  Investments  in the fleet  remained
in-line  with last  year as 4,800  new and used cars were  added to the fleet in
1997  versus  over 4,400 in 1996.  Terminals'  asset  revaluations  represent  a
majority of the $186 million  pre-tax  restructuring  charge taken to write down
certain asset  carrying  values,  primarily  the Staten Island  terminal and the
seven  storage  facilities  which make up GATX  Terminals  Limited in the United
Kingdom.  The written-down  value of GATX Terminals  Limited was reclassified as
assets held for disposition and is included in other assets.  Terminals' capital
additions of $68 million decreased from $130 million in 1996 due to the changing
market conditions and last year's expenditures related to completing the Central
Florida Pipeline expansion.

                                      -8-
<PAGE>


Investment  in  affiliates  increased  $11 million  reflecting  Transportation's
investment in KVG partially  offset by the reclass of GATX  Terminals  Limited's
affiliates to other assets.


LIABILITIES AND EQUITY

Total debt decreased by $94 million as operating cash flow and the proceeds from
railcar  sale-leasebacks  were sufficient to fund capital  additions and certain
debt maturities.

Consolidated  equity decreased by $110 million  attributable to the 1997 loss of
$41 million, inclusive of the $124 after-tax restructuring charge, and dividends
paid  to  GATX  Corporation  of  $43  million.  The  balance  of the  change  is
attributable to foreign currency translation adjustments.

LIQUIDITY AND CAPITAL RESOURCES

GATC generates significant cash flows from its operating activities. Most of its
capital requirements are considered discretionary and represent additions to the
railcar fleet, terminal and pipeline facilities,  and joint ventures.  The level
of  discretionary  capital spending can be adjusted as conditions in the economy
or GATC's businesses warrant.  However, the nondiscretionary level of Terminals'
capital program  continues to be significant due to regulatory and environmental
requirements of the terminaling business.

Cash  provided by operating  activities  in 1997 of $245 million  increased  $14
million,  or 6%,  compared to 1996.  Net income,  adjusted  for  non-cash  items
(provision for restructuring,  depreciation,  and deferred taxes) generated $259
million, a $22 million increase from last year.

Cash  provided by operating  activities  in 1996 of $231 million  increased  $20
million,  or 9%,  compared to 1995.  Net income,  adjusted  for  non-cash  items
(depreciation and deferred taxes) generated $237 million,  a small increase from
1995.

Net cash used in investing  activities  for 1997  decreased by $151 million from
1996 as capital  additions  decreased by $111  million and  proceeds  from asset
dispositions,  which includes sale-leaseback proceeds, increased by $40 million.
Transportation's capital additions for 1997 were $337 million,  including almost
$300  million  for  expanding  the North  American  railcar  fleet as well as an
investment in a 40% interest in KVG, a German railcar company.  Offsetting these
additions were railcar  sale-leasebacks and asset  dispositions.  Sale-leaseback
proceeds  were $167  million in 1997  compared to $150  million in 1996.  1997's
asset  disposition  activity  included  Terminals' sale of its Norco,  Louisiana
facility  and  Transportation's  sale  and  scrapping  of over  1,000  railcars.
Transportation's additions totaled $387 million in 1996 including $84 million to
acquire  the  remaining  interest  in CGTX.  Investments  in the fleet  remained
in-line  with last  year as 4,800  new and used cars were  added to the fleet in
1997  versus over 4,400 in 1996.  Terminals'  capital  additions  of $68 million
decreased  from $130 million in 1996 due to the changing  market  conditions  as
well as last year's  expenditures  related to  completing  the  Central  Florida
Pipeline expansion. In total,  Transportation's and Terminal's capital additions
for 1998 are expected to approximate the level of additions in 1997, though both
investments  in the United  States and foreign  countries,  and  especially  the
latter,  are subject to  significant  change due to economic  and other  factors
beyond GATC's control.

Net cash used in investing  activities for 1996 increased $61 million from 1995.
Capital  additions  decreased  $25 million  from 1996.  Transportation  invested
approximately  $300  million  in its North  American  fleet and $84  million  to
acquire the remaining  interest in CGTX.  Terminals'  capital  additions of $130
million in 1996,  13% lower than in 1995,  included the expansion of the Central
Florida  Pipeline.  Proceeds  from asset  dispositions  of $185 million in 1996,
including $150 million of sale-leasebacks of certain railcars at Transportation,
declined $86 million from 1995.

                                      -9-

<PAGE>

Net cash used in financing  activities  was $72 million in 1997 compared to cash
provided of $108 million in 1996.  GATC finances its capital  additions  through
cash generated from operating activities,  debt financings, and sale-leasebacks.
In 1997, operating cash flow and sale-leaseback  proceeds provided a majority of
the funding for investing activities and long-term obligations.

Cash provided by financing  activities  was $108 million in 1996 compared to $58
million in 1995. During 1996, $280 million of long-term debt was issued and $101
million of long-term obligations was repaid.

GATC has a $300 million  revolving  credit  facility that expires in 2001.  GATC
also has a commercial paper program and uncommitted money market lines which are
used to fund  operating  needs.  Under the  covenants  of the  commercial  paper
programs and rating agency  guidelines,  GATC must keep unused revolver capacity
at least equal to the amount of commercial  paper  outstanding.  At December 31,
1997, GATC had $27 million of commercial paper outstanding,  resulting in unused
committed  lines of credit  of $273  million.  Also,  GATC had $125  million  of
borrowings  under  unsecured  money market lines at December 31, 1997.  CGTX had
other uncommitted short-term borrowings of $55 million Canadian dollars.

GATC has a $650 million shelf  registration for pass through trust  certificates
and debt  securities  of which $100  million  of notes and $236  million of pass
through  certificates  have been issued at year end. At year end,  GATC had $209
million of commitments to acquire assets,  all of which are scheduled to fund in
1998.

ENVIRONMENTAL MATTERS

Certain  operations  of GATC and its  subsidiaries  (collectively  GATC) present
potential  environmental risks principally through the transportation or storage
of  various  commodities.  Recognizing  that  some  risk to the  environment  is
intrinsic to its operations, GATC is committed to protecting the environment, as
well as complying with applicable environmental protection laws and regulations.
GATC,  as well as its  competitors,  is subject to  extensive  regulation  under
federal, state and local  environmental laws which have the effect of increasing
the costs and  liabilities  associated  with the conduct of its  operations.  In
addition,  GATC's  foreign operations  are subject to  environmental regulations
in effect in each respective jurisdiction.
                             
GATC's  policy is to monitor and actively  address  environmental  concerns in a
responsible  manner.  GATX has  received  notices  from  the U.S.  Environmental
Protection  Agency (EPA) that it is a  potentially  responsible  party (PRP) for
study and  clean-up  costs at 12 sites  under the  requirements  of the  Federal
Comprehensive  Environmental  Response,  Compensation  and Liability Act of 1980
(Superfund)  and the National  Resource Damage  Assessment.  Under Superfund and
comparable  state  laws,  GATC may be  required to share in the cost to clean-up
various  contaminated  sites  identified by the EPA and other  agencies.  In all
instances, GATC is one of a number of financially responsible PRP's and has been
identified as contributing  only a small percentage of the contamination at each
of the sites.  Due to various  factors such as the required level of remediation
and participation in clean-up efforts by others,  GATC's total clean-up costs at
these sites cannot be predicted with certainty;  however,  GATC's best estimates
for  remediation  and  restoration  of these sites have been  determined and are
included in its environmental reserves.

Future costs of environmental compliance are indeterminable due to unknowns such
as the  magnitude  of  possible  contamination,  the  timing  and  extent of the
corrective  actions that may be required,  the  determination  of the  company's
liability in proportion to other  responsible  parties,  and the extent to which
such costs are recoverable from third parties including insurers. Also, GATC may
incur  additional  costs relating to facilities and sites where past  operations
followed  practices and procedures that were  considered  acceptable at the time
but in the future  may  require  investigation  and/or  remedial  work to ensure
adequate  protection to the environment  under current or future  standards.  If
future laws and regulations  contain more stringent  requirements than presently
anticipated,  expenditures  may be higher  than the  estimates,  forecasts,  and
assessments of potential  environmental  costs provided  below.  However,  these
costs are expected to be at least equal to the current level of expenditures. In
addition,  GATC has provided  indemnities for environmental issues to the buyers
of two divested companies for which GATC believes it has adequate reserves.

                                      -10-

<PAGE>

GATC's  environmental  reserve at the end of 1997 was $60 million  and  reflects
GATC's best estimate of the cost to remediate  known  environmental  conditions.
Additions  to the  reserve  were $11  million  in 1997 and $12  million in 1996.
Expenditures  charged to the reserve  amounted to $14 million and $18 million in
1997 and 1996, respectively.

In 1997,  GATC made capital  expenditures of $13 million for  environmental  and
regulatory  compliance  compared to $17 million in 1996. These projects included
marine vapor recovery  systems,  discharge  prevention  compliance,  waste water
systems,  impervious dikes, tank modifications for emissions  control,  and tank
car cleaning  systems.  Environmental  projects  authorized  or currently  under
consideration would require capital expenditures of approximately $14 million in
1998. GATC anticipates it will make annual  expenditures at a similar level over
each of the next three years.

IMPACT OF YEAR 2000

GATC utilizes in-house developed  software as well as vendor-produced  software.
Certain  computer  software  GATC uses was written  using two digits rather than
four to define the applicable year. This software is time-sensitive, which could
cause a system  failure or  miscalculations  causing  disruptions of operations,
including,  among other things, a temporary  inability to process  transactions,
send invoices, or engage in similar normal business activities.

GATC has  completed an  assessment  and has begun  modifying  and  replacing its
in-house developed software as well as upgrading its  vendor-supported  software
so that its computer systems will function properly with respect to dates in the
year 2000 and  thereafter.  If these steps were not taken,  or are not completed
timely, the Year 2000 Issue could have a significant impact on the operations of
the Company.

The project is  estimated to be  completed  during  1999,  which is prior to any
anticipated  impact on its  operating  systems.  The Company  believes that with
modifications to existing software,  upgrading  vendor-supported  software,  and
conversions  to new  software,  the Year 2000 Issue should not pose  significant
operational  problems.  The total  Year 2000  project  cost is  estimated  to be
immaterial to GATC's results of operations.

FORWARD-LOOKING STATEMENTS

Certain  statements  in the  Management's  Discussion  and  Analysis  constitute
forward-looking  statements  made  pursuant to the safe harbor  provision of the
Private  Securities  Litigation Reform Act of 1995. This information may involve
risks and  uncertainties  that could cause actual  results to differ  materially
from the  forward-looking  statements.  Although the company  believes  that the
expectations   reflected  in  such  forward-looking   statements  are  based  on
reasonable  assumptions,  such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those projected. These
risks and uncertainties  include, but are not limited to, unanticipated  changes
in the  markets  served  by  GATC  such as the  petroleum,  chemical,  and  rail
industries.

Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------
The response to this item is submitted under Item 14 (a)(1) of this report.


                                       -11-

<PAGE>

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure
--------------------------------------------------------------------------------
None.

PART III

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------
Not required.

Item 11.  Executive Compensation
--------------------------------
Not required.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
Not required.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------
Not required.

PART IV

Item 14.  Financial Statement Schedules, Reports on Form 8-K and Exhibits   Page
--------------------------------------------------------------------------------
   (a) 1. Financial Statements

          The consolidated financial statements of General American
          Transportation Corporation and its subsidiaries which are
          required in Item 8 are listed below:

          Statements of Consolidated Operations and Reinvested Earnings--
          years ended December 31, 1997, 1996 and 1995...................    17
          Consolidated Balance Sheets--December 31, 1997 and 1996........    18
          Statements of Consolidated Cash Flows--
          years ended December 31, 1997, 1996 and 1995...................    20
          Notes to Consolidated Financial Statements.....................    21

       2. Financial Statement Schedules

          Schedule II     Valuation and Qualifying Accounts.............     38

          All  other  schedules  for  which  provision  is  made  in the
          applicable   accounting   regulation  of  the  Securities  and
          Exchange   Commission  are  not  required  under  the  related
          instructions  or are  inapplicable  and  therefore  have  been
          omitted.

(b)       Report  on Form  8-K - GATC  filed  a  report  on Form  8-K on
          December 8, 1997, under Item 5., Other Events.


                                      -12-

<PAGE>




(c)               Exhibit Index

Exhibit
Number       Exhibit Description                                            Page

   3A.       Certificate    of    Incorporation    of   General    American
             Transportation  Corporation,  incorporated by reference to the
             GATC  Annual  Report on Form 10-K for the  fiscal  year  ended
             December 31, 1991, file number 2-54754.

   3B.       By-Laws of General  American  Transportation  Corporation,  as
             amended and  restated  as of June 15,  1994,  incorporated  by
             reference  to the  GATC  Annual  Report  on Form  10-K for the
             fiscal year ended December 31, 1994, file number 2-54754.

   4A.       Indenture dated October 1, 1987, incorporated by reference to
             Exhibit 4.1 to the GATC Registration Statement on Form S-3 filed
             October 8, 1987, file number 33-17692; Indenture Supplement dated
             May 15, 1988, incorporated by reference to the GATC Quarterly
             Report on Form 10-Q for the quarter ended June 30, 1988, file
             number 2-54754.  Second Supplemental Indenture dated as of
             March 15, 1990, incorporated by reference to GATC Quarterly
             Report on Form 10-Q for the quarter ended March 30, 1990, file
             number 2-54754.  Third Supplemental Indenture dated as of
             June 15, 1990, incorporated by reference to GATC Quarterly Report
             on Form 10-Q for the quarter ended June 30, 1990, file
             number 2-54754. Fourth Supplemental Indenture dated as of
             January 15, 1996 filed with the SEC on Current Report on Form 8-K
             on January 26, 1996, file number 2-54754.

  4B.        General American  Transportation  Corporation  Notices 5 and 6
             dated March 28, 1988 and April 12, 1988 defining the rights of
             holders of GATC's  Medium-Term  Notes  Series A issued  during
             that period,  incorporated  by reference to the GATC Quarterly
             Report on Form 10-Q for the quarter ended June 30, 1988,  file
             number 2-54754.

   4C.       General  American  Transportation  Corporation  Notice 1 dated
             October 17,  1988 and Notices 4 through 6 dated from  November
             7, 1988 through March 3, 1989 defining the rights of holders  
             of GATC's Medium-Term Notes Series B issued  during  those
             periods,  Notices  1 through 3 incorporated by reference to
             the GATC Quarterly Report on Form 10-Q for the quarter ended
             September 30, 1988,  and Notices 4 through 6 incorporated
             by reference to the GATC Annual Report on Form 10-K for the
             fiscal year ended December 31, 1988, file number 2-54754.

   4D.       General American Transportation Corporation Notices 3 through 5
             dated from April 4, 1989 through May 16, 1989, Notice 7 dated
             June 19, 1989 and Notice 12 dated July 21, 1989 defining the
             rights of the holders of GATC's Medium-Term Notes Series C
             issued during those periods.  Notices 3 through 5 and Notice 7
             is incorporated by reference to the GATC Quarterly Reports on
             Form 10-Q for the quarter ended June 30, 1989 and Notice 12
             incorporated by reference to the GATC Quarterly Report on Form
             10-Q for the quarter ended September 30, 1989, file number
             2-54754.


  Exhibit
  Number     Exhibit Description                                            Page

      4E.    General  American  Transportation  Corporation  Notice 1 dated
             February 27, 1992, and Notices 7 and 10 dated May 18, 1993 and
             May 25,  1993  defining  the  rights of the  holders of GATC's
             Medium-Term Notes Series D issued during those periods. Notice
             1 is incorporated by reference to the GATC Quarterly Report on
             Form 10-Q for the quarter ended March 31, 1992,  Notices 7 and
             10 are  incorporated by reference to the GATC Quarterly Report
             on Form 10-Q for the quarter ending June 30, 1993, file number
             2-54754.


                                      -13-

<PAGE>



     4F.     General American  Transportation  Corporation  Notices 1 and 2
             dated  June 8, 1994 and  Notices 3 dated  June 17,  1994,  and
             Notices 7 through 11 dated July 18, 1994,  defining the rights
             of the  holders of GATC's  Medium-Term  Notes  Series E issued
             during those periods.  Notices 1 through 3 are incorporated by
             reference  to the GATC  Quarterly  Report on Form 10-Q for the
             quarter  ended  June 30,  1994,  and  Notices 7 through 11 are
             incorporated  herein by reference to the Form 424(b)(5)  dated
             July 18, 1994, file number 2-54754.

     4G.     General American Transportation Corporation Notices 12 through
             14 dated February 24, 1995, Notices 15 through 20 dated May 11,
             1995, amended May 24, 1995, and Notices 21 through 30 dated
             from November 8, 1995 through November 13, 1995 defining the
             rights of the holders of GATC's Medium-Term Notes Series E
             issued during those periods.  Notices 12 through 14 are
             incorporated by reference to the Form 424(b)(5) dated 
             February 24, 1995, Notices 15 through 20 are incorporated
             by reference to the Form 424(b)(5) dated May 11, 1995, and
             Notices 21 through 30 are incorporated by reference to the
             Form 424(b)(5) dated from November 8, 1995 through
             November 13, 1995, file number 2-54754.

    4H.      Form of 8-5/8% Note due December 1, 2004 filed with the SEC on
             Current  Report on Form 8-K on December  7, 1994,  file number
             2-54754.

    4I.      Form of 6-3/4%  Note due March 1, 2006  filed  with the SEC on
             Current  Report  on Form  8-K on March 4,  1996,  file  number
             2-54754.

   10A.      Revolving Credit Facility Agreement for GATC as borrower dated
             as of  May  9,  1996,  incorporated  by  reference  to  GATC's
             Quarterly  Report on Form 10-Q for the  period  ended June 30,
             1996, file number 2-54754.

   12.       Statement regarding computation of ratios of earnings to
             fixed charges                                                   39

   23.       Consent of Independent Auditors                                 40

   27.       Financial  Data  Schedule  for GATC for the fiscal  year ended
             December 31, 1997, file number  2-54754.  Submitted to the SEC
             along with the electronic submission of this report on Form 10-K.

             Any  instrument  defining the rights of security  holders with
             respect to nonregistered long-term debt not being filed on the
             basis that the amount of securities authorized does not exceed
             10 percent of the total assets of the company and subsidiaries
             on a  consolidated  basis will be furnished to the  Commission
             upon request.

                                      -14-

<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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.


                               GENERAL AMERICAN TRANSPORTATION CORPORATION
                                              (Registrant)



                                           /s/D. Ward Fuller
                                           ----------------- 
                                              D. Ward Fuller
                                     President, Chief Executive Officer
                                               and Director
                                              March 19, 1998


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the date indicated.



                                                        




          /s/D. Ward Fuller                              /s/David M. Edwards  
  -----------------------------------               ----------------------------
             D. Ward Fuller                                 David M. Edwards
   President, Chief Executive Officer                           Director
              and Director                                   March 19, 1998
             March 19, 1998


        /s/Donald J. Schaffer                            /s/David B. Anderson
   ---------------------------------                 ---------------------------
           Donald J. Schaffer                               David B. Anderson
   Vice President, Finance and Chief                             Director
           Financial Officer                                  March 19, 1998
            March 19, 1998



           /s/John Schorman
    --------------------------------
              John Schorman
                Controller
              March 19, 1998


                                      -15-

<PAGE>





REPORT OF INDEPENDENT AUDITORS



Board of Directors
General American Transportation Corporation




We have audited the  consolidated  financial  statements and related schedule of
General American  Transportation  Corporation (a wholly-owned subsidiary of GATX
Corporation)  and  subsidiaries  listed in Item  14(a)(1)  and (2) of the Annual
Report on Form 10-K of General American Transportation  Corporation for the year
ended December 31, 1997. These financial statements and related schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and related schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of General American
Transportation  Corporation and  subsidiaries at December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended  December 31, 1997, in conformity  with  generally  accepted
accounting principles.  Also, it is our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects,  the information set forth
therein.



                                                        ERNST & YOUNG LLP


Chicago, Illinois
January 27, 1998



                                      -16-

<PAGE>


<TABLE>
<CAPTION>



          GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

          STATEMENTS OF CONSOLIDATED OPERATIONS AND REINVESTED EARNINGS
                                  (In Millions)



                                                          Year Ended December 31

                                                         1997      1996      1995
                                                        ------    ------    ------

<S>                                                   <C>       <C>       <C>     
Gross income                                          $  798.6  $  753.8  $  703.0

Costs and expenses
     Operating expenses                                  340.6     330.0     312.2
     Interest                                            118.4     109.1      93.2
     Provision for depreciation and amortization         152.7     138.7     121.4
     Selling, general and administrative                  77.0      69.2      55.2
     Provision for restructuring                         185.8         -         -
                                                      --------  --------   -------
                                                         874.5     647.0     582.0
                                                      --------  --------   -------
(Loss) income before income taxes and equity in net
     earnings of affiliated companies                    (75.9)    106.8     121.0

Income taxes (benefit)                                   (20.7)     41.3      47.2
                                                      --------  --------  --------

(Loss) income before equity in net earnings of
     affiliated companies                                (55.2)     65.5      73.8

Equity in net earnings
     of affiliated companies                              14.0      14.8      20.1
                                                      --------  --------  --------

Net (loss) income                                        (41.2)     80.3      93.9

Reinvested earnings at beginning of year                 431.4     392.7     346.9

Dividends paid to GATX Corporation                       (43.0)    (41.6)    (48.1)
                                                      --------  --------  --------

Reinvested earnings at end of year                    $  347.2  $  431.4  $  392.7
                                                      ========  ========  ========

<FN>

See notes to consolidated financial statements.
</FN>
</TABLE>


                                      -17-

<PAGE>



<TABLE>
<CAPTION>


          GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS
                                  (In Millions)


                                                                December 31
                                                          -----------------------
                                                            1997           1996
                                                          --------       --------

ASSETS


<S>                                                     <C>            <C>       
Cash and cash equivalents                               $     14.0     $     20.7


Trade receivables--net                                        52.7           83.7


Operating Lease Assets and Facilities:
     Railcars and support facilities                       2,480.5        2,436.5
     Tank storage terminals and pipelines                  1,128.9        1,377.8
                                                        ----------     ----------
                                                           3,609.4        3,814.3

     Less - Allowance for depreciation                    (1,593.8)      (1,558.7)
                                                        ----------     ----------
                                                           2,015.6        2,255.6


Due from GATX Corporation                                    392.1          408.3


Investments in affiliated companies                          200.1          189.2

Other assets                                                 153.7          104.8


                                                        ----------     ----------




TOTAL ASSETS                                            $  2,828.2     $  3,062.3
                                                        ==========     ==========



<FN>

See notes to consolidated financial statements.

</FN>
</TABLE>

                                      -18-

<PAGE>




<TABLE>
<CAPTION>






                                                                   December 31
                                                              --------------------
                                                                1997        1996
                                                              --------    --------

LIABILITIES, DEFERRED ITEMS
     AND SHAREHOLDER'S EQUITY

<S>                                                         <C>         <C>       
Accounts payable                                            $    140.5  $    128.8

Accrued expenses                                                  44.7        40.8

Debt
     Short-term debt                                             190.5       166.9
     Long-term debt                                            1,120.5     1,230.0
     Capital lease obligations                                   100.2       108.1
                                                            ----------  ----------
                                                               1,411.2     1,505.0

Deferred income taxes                                            315.7       352.1

Other deferred items                                             251.4       261.3
                                                            ----------  ----------

     Total liabilities and deferred items                      2,163.5     2,288.0



Shareholder's equity
     Common Stock--par value $1 per share,
         1,000 shares authorized, issued and
         outstanding (owned by GATX Corporation)                     -           -
     Additional capital                                          335.0       335.0
     Reinvested earnings                                         347.2       431.4
     Cumulative foreign currency translation adjustment          (17.5)        7.9
                                                            ----------  ----------

     Total shareholder's equity                                  664.7       774.3
                                                            ----------  ----------


TOTAL LIABILITIES, DEFERRED ITEMS
     AND SHAREHOLDER'S EQUITY                               $  2,828.2  $  3,062.3
                                                            ==========  ==========


</TABLE>


                                      -19-

<PAGE>


<TABLE>
<CAPTION>



          GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                  (In Millions)

                                                             Year Ended December 31
                                                          ---------------------------
                                                            1997      1996      1995
                                                          -------   -------   -------


<S>                                                      <C>       <C>       <C>     
OPERATING ACTIVITIES
   Net (loss) income                                     $  (41.2) $   80.3  $   93.9
   Adjustments to reconcile net (loss) income to net
        cash provided by operating activities:
               Provision for depreciation
                 and amortization                           152.7     138.7     121.4
               Provision for restructuring, net of tax      123.8         -         -
               Deferred income taxes                         23.6      17.9      18.2
   Other (includes working capital)                         (13.5)     (6.2)    (22.3)
                                                         --------  --------  --------

   NET CASH PROVIDED BY OPERATING ACTIVITIES                245.4     230.7     211.2


INVESTING ACTIVITIES
   Additions to operating lease assets and facilities:
        Railcars and support facilities                    (293.4)   (299.6)   (382.0)
        Tank storage terminals and pipelines                (61.7)   (129.2)   (128.9)
   Investments in affiliated companies                      (49.8)     (4.4)    (30.3)
   Other investments                                            -     (83.1)        -
                                                         --------  --------  --------
        Capital additions                                  (404.9)   (516.3)   (541.2)
   Proceeds from asset dispositions                         224.6     184.7     270.7

   NET CASH USED IN INVESTING ACTIVITIES                   (180.3)   (331.6)   (270.5)


FINANCING ACTIVITIES
   Proceeds from issuance of long-term debt                  40.5     280.0     200.4
   Repayment of long-term debt                             (146.3)   (101.1)    (91.5)
   Net increase in short-term debt                           68.7      11.9      15.4
   Repayment of capital lease obligations                    (7.9)     (6.6)     (6.5)
   Cash dividends paid to GATX Corporation                  (43.0)    (41.6)    (48.1)
   Net decrease (increase) in amount due from
        GATX Corporation                                     16.2     (34.4)    (11.5)
                                                         --------  --------  --------


NET CASH (USED IN) PROVIDED BY
   FINANCING ACTIVITIES                                     (71.8)    108.2      58.2

                                                         --------  --------  --------

NET (DECREASE) INCREASE IN CASH
   AND CASH EQUIVALENTS                                  $   (6.7) $    7.3  $   (1.1)
                                                         ========  ========  ========


<FN>

See notes to consolidated financial statements.

</FN>
</TABLE>

                                      -20-

<PAGE>





GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies of General American  Transportation  Corporation
(GATC) and its consolidated subsidiaries are discussed below.

Consolidation:  The consolidated  financial  statements  include the accounts of
GATC and its majority-owned subsidiaries.  Investments in 20 to 50 percent-owned
companies  and joint  ventures are accounted for under the equity method and are
shown  as  investments  in  affiliated  companies.  Less  than 20  percent-owned
affiliated companies are recorded using the cost method.

Cash Equivalents:  GATC  considers all highly liquid investments with a maturity
of three months or less when purchased to
be cash equivalents.

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

      Railcars                                                       20-33 years
      Buildings, leasehold improvements,
         storage tanks, and pipelines                                 5-40 years
      Machinery and related equipment                                 3-25 years

Goodwill: GATC has classified the cost in excess of the fair value of net assets
acquired as  goodwill.  Goodwill,  which is included in other  assets,  is being
amortized on a straight-line basis over 40 years. GATC continually evaluates the
existence  of  goodwill  impairment  on the basis of  whether  the  goodwill  is
recoverable from projected  undiscounted net cash flows of the related business,
and in that regard adjusted  certain  carrying  amounts in 1997, as explained in
Note O.  Goodwill,  net of  accumulated  amortization  of $3.8  million and $3.4
million,  was $34.1  million and $41.9 million as of December 31, 1997 and 1996,
respectively. Amortization expense was $1.2 million, $.8 million and $.5 million
for 1997, 1996 and 1995, respectively.

Income  Taxes:  United  States  income  taxes  have  not  been  provided  on the
undistributed earnings of foreign subsidiaries and affiliates which GATC intends
to permanently  reinvest in these foreign  operations.  The cumulative amount of
such earnings was $148.8 million at December 31, 1997.

Other   Deferred   Items:   Other   deferred   items  include  the  accrual  for
postretirement  benefits other than pensions;  environmental,  general liability
and workers' compensation reserves; and other deferred credits.



                                      -21-

<PAGE>






GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE A--SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

Off-Balance-Sheet-Financial  Instruments:  GATC uses  interest rate and currency
swaps,  forwards and similar  contracts  to set  interest and exchange  rates on
existing  or  anticipated  transactions.  These  instruments  qualify  for hedge
accounting.  Fair  values  of  GATC's  off-balance-sheet  financial  instruments
(futures,  swaps,  forwards,  options  and  purchase  commitments)  are based on
current market prices, settlement values or fees currently charged to enter into
similar agreements. The fair values of the hedge contracts are not recognized in
the  financial  statements.  Net amounts paid or received on such  contracts are
recognized over the term of the contract as an adjustment to interest expense or
the basis of the hedged financial instrument.

Environmental  Liabilities:  Expenditures  that  relate  to  current  or  future
operations are expensed or capitalized as appropriate.  Expenditures that relate
to an existing condition caused by past operations,  and which do not contribute
to current or future revenue generation,  are charged to environmental reserves.
Reserves are recorded in accordance with accounting  guidelines to cover work at
identified  sites when  GATC's  liability  for  environmental  clean-up  is both
probable and reasonably estimable; adjustments to initial estimates are recorded
as further information develops or circumstances change.

Revenue Recognition:  The  majority of  GATC's  gross income is derived from the
rentals of railcars and terminals and other services.

Foreign  Currency  Translation:  The assets and  liabilities of GATC  operations
located  outside the United States are translated at exchange rates in effect at
year end, and income statements are translated at the average exchange rates for
the year.  Gains or losses  resulting from the  translation of foreign  currency
financial  statements  are  deferred  and  recorded as a separate  component  of
consolidated  shareholder's equity.  Incremental  unrealized  translation losses
recorded in the cumulative foreign currency translation  adjustment account were
$25.4  million,  $5.2 million and $8.4  million  during  1997,  1996,  and 1995,
respectively.

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

Reclassifications:  Certain amounts in  the 1996  and 1995  financial statements
have been reclassified to conform to the 1997 presentation.


                                      -22-

<PAGE>



GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE B--ACCOUNTING FOR LEASES

The following information pertains to GATC as a lessor:

Operating leases:  Railcar and tankage assets included in operating lease assets
and facilities are classified as operating leases.

Minimum  future  receipts:  Minimum  future rental  receipts from  noncancelable
operating leases by year at December 31, 1997 were (in millions):

           1998                                           $  507.9
           1999                                              373.1
           2000                                              267.8
           2001                                              176.4
           2002                                              101.5
           Years thereafter                                  232.7
                                                         ---------
                                                          $1,659.4

The following information pertains to GATC as a lessee:

Capital  leases:  Certain  railcars  are  leased  by GATC  under  capital  lease
agreements.  Operating  lease assets and  facilities  includes  cost and related
allowances for  depreciation of $152.0 million and $89.1 million,  respectively,
at December  31, 1997 and $152.2  million and $82.7  million,  respectively,  at
December 31, 1996 for these  railcars.  The cost of these assets is amortized on
the straight-line basis with the charge included in depreciation expense.

Operating   leases:   GATC  has  financed   railcars   through   sale-leasebacks
substantially  all of which are accounted for as operating  leases. In addition,
GATC leases certain other assets and office facilities. Total rental expense for
the years ended  December  31, 1997,  1996,  and 1995 was $90.0  million,  $81.3
million, and $65.1 million, respectively.

Minimum  future  rental  payments:  Future  minimum  rental  payments  due under
noncancelable leases at December 31, 1997 were (in millions):

                                                                     Nonrecourse
                                      Capital         Operating       Operating
                                       Leases           Leases          Leases

      1998                             $ 17.3         $   73.2         $   8.6
      1999                               17.3             69.2            10.5
      2000                               17.2             69.8            14.2
      2001                               16.8             69.8            14.2
      2002                               16.2             77.6            11.9
      Years thereafter                   65.1          1,105.8           207.3
                                       ------         --------         -------
                                        149.9         $1,465.4         $ 266.7
                                                      ========         =======

      Less - Amount representing
              interest                  (49.7)
                                     --------

      Present value of future
        minimum capital lease
        payments                      $ 100.2
                                      =======

The above  capital  lease  amounts do not include the cost of  licenses,  taxes,
insurance  and  maintenance  which GATC is  required to pay.  Subsequent  to the
initial lease term, the majority of railcar operating leases allow GATC to renew
the lease at a fixed rate or purchase the railcar at
                                      -23-

<PAGE>

GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE B--ACCOUNTING FOR LEASES (CONT'D)


fair market value.  Interest expense on the above capital lease  obligations was
$9.3 million in 1997, $10.2 million in 1996, and $10.6 million in 1995.

The amounts shown as nonrecourse  operating  leases reflect rental payments of a
bankruptcy  remote  special  purpose  corporation which is wholly owned by GATC.
These rentals are consolidated for accounting purposes but are not guaranteed by
nor are obligations of GATC.

NOTE C--ADVANCES TO PARENT

Interest  income on advances to GATX,  which is included in gross  income on the
income  statement,  was $28.9 million in 1997,  $28.3 million in 1996, and $28.7
million in 1995. These advances have no fixed maturity date.  Interest income on
advances  to GATX were based on an interest  rate which is adjusted  annually in
accordance with an estimate of short-term borrowing rates.

NOTE D--INVESTMENTS IN AFFILIATED COMPANIES

GATC has  investments  in 25 to 50  percent-owned  companies and joint  ventures
which are  accounted  for using the equity  method.  These  domestic and foreign
investments   are  in  businesses   similar  to  those  of  GATC's   operations.
Distributions received from such jointly-owned companies were $5.0 million, $5.2
million, and $7.3 million in 1997, 1996, and 1995, respectively.

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

                                                       For the Year
                                          -------------------------------------
                                           1997           1996            1995
                                          ------         ------          ------

              Revenues                    $229.9         $205.9          $233.8
              Net income                    35.4           30.7            44.0

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

                                                             December 31
                                                       -----------------------
                                                        1997             1996
                                                       ------           ------

              Total assets                             $880.1           $870.3
              Long-term liabilities                     506.8            442.6
              Other liabilities                         101.7            121.0
                                                       ------           ------

              Shareholders' equity                     $271.6           $306.7
                                                       ======           ======


                                      -24-

<PAGE>



GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE E--FOREIGN OPERATIONS

GATC has a number of investments in subsidiaries and affiliated  companies which
are  located  in or derive  income  from  foreign  countries.  Foreign  entities
contribute  significantly to equity in net earnings of affiliated companies. The
foreign  identifiable  assets represent  investments in affiliated  companies as
well as fully consolidated  assets for a Canadian railcar  subsidiary,  a United
Kingdom terminaling operation, and a Mexican railcar operation.

Gross Income (in Millions)            1997               1996              1995
--------------------------          -------            --------           ------

Canada                            $    58.7           $    36.6         $    4.7
Other Foreign                          35.0                29.6             30.8
United States                         704.9               687.6            667.5
                                  ---------           ---------         --------

                                  $   798.6           $   753.8         $  703.0
                                  =========           =========         ========

(Loss) Income Before Income Taxes
and Equity in Net Earnings of
Affiliated Companies (in Millions)   1997                 1996             1995
---------------------------------  -------              -------          -------

Canada                            $   16.9             $    8.9         $     .1
Other Foreign                        (75.9)                (9.0)              .6
United States                        (16.9)               106.9            120.3
                                  --------             --------         --------

                                  $  (75.9)            $  106.8         $  121.0
                                  ========             ========         ========

Equity in Net Earnings of
Affiliated Companies (in Millions)   1997                 1996             1995
---------------------------------  -------              -------          -------

Canada                            $      -             $    2.7         $    5.2
Other Foreign                         13.0                 11.3             14.4
United States                          1.0                   .8               .5
                                  --------             --------         --------

                                  $   14.0             $   14.8         $   20.1
                                  ========             ========         ========


Identifiable Assets (in Millions)    1997                 1996             1995
---------------------------------  -------             --------          -------

Canada                            $  289.4             $  319.8         $   43.1
Other Foreign                        241.0                324.7            275.1
United States                      2,297.8              2,417.8          2,312.8
                                  --------             --------         --------

                                  $2,828.2             $3,062.3         $2,631.0
                                  ========             ========         ========


Foreign  cash flows  generated  are used to meet local  operating  needs and for
reinvestment.  The translation of the foreign  balance sheets into U.S.  dollars
results  in  an  increase  or  decrease  to  the  unrealized   foreign  currency
translation adjustment.




                                      -25-

<PAGE>




GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE F--SHORT-TERM DEBT AND LINES OF CREDIT

Short-term debt and its weighted  average  interest rate as of year end were (in
millions):

                                               December 31
                               -------------------------------------------
                                     1997                       1996
                               -----------------          ----------------
                               Amount       Rate          Amount      Rate
                               ------       ----          ------      ----
Commercial paper               $ 26.6       6.53%         $ 10.0      5.58%
Other short-term borrowings     163.9       6.15           156.9      5.74
                               ------                     ------

                               $190.5                     $166.9
                               ======                     ======

Under a revolving credit agreement with a group of banks,  GATC may borrow up to
$300.0 million.  The revolving  credit agreement  contains  various  restrictive
covenants which include, among other things, minimum net worth,  restrictions on
additional  indebtedness,  and requirements to maintain certain financial ratios
for GATC. Under the agreement, GATC met these requirements at December 31, 1997.
While at year end no  borrowings  were  outstanding  under  the  agreement,  the
available  line of credit was  reduced  by $26.6  million  of  commercial  paper
outstanding.  GATC had borrowings of $125.3 million under unsecured money market
lines at December  31, 1997.  CGTX,  GATC's  Canadian  railcar  subsidiary,  had
bankers'  acceptances  and  other  uncommitted  short-term  borrowings  of $55.2
million Canadian dollars at December 31, 1997.

Interest expense on short-term debt was $14.7 million in 1997,  $11.9 million in
1996, and $8.5 million in 1995.

                                      -26-

<PAGE>




GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE G--LONG-TERM DEBT

Long-term  debt (in millions)  and the range of interest  rates as of the end of
1997 were:

                              Interest        Final             December 31
                               Rates        Maturity         1997         1996
                            ----------------------------------------------------
Fixed Rate:
  Term notes                6.15%-10.875%   1998-2011      $1,032.6     $1,142.1
  Industrial revenue bonds  6.625%-7.30%    2019-2024          87.9         87.9
                                                           --------     --------

                                                           $1,120.5     $1,230.0

Maturities  of GATC's  long-term  debt as of  December  31, 1997 for each of the
years 1998 through 2002 were (in millions):

                                        Year                  Amount
                                        ----                  ------
                                        1998                  $ 82.3
                                        1999                    89.0
                                        2000                   102.5
                                        2001                    95.8
                                        2002                   162.8

Interest cost incurred on long-term debt, net of capitalized interest, was $94.4
million in 1997, $87.0 million in 1996, and $74.1 million in 1995. Interest cost
capitalized as part of the cost of acquisition or  construction  of major assets
was $.9 million in 1997, $3.7 million in 1996, and $4.6 million in 1995.

                                      -27-

<PAGE>




GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE H--OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

In the ordinary course of business,  GATC utilizes  off-balance  sheet financial
instruments to manage financial market risk, including interest rate and foreign
exchange risk.

At  December  31,  1997  GATC  had the  following  off-balance  sheet  financial
instruments (in millions):
                                   Notional     Pay        Receive
Interest Rate Swaps                 Amount   Rate/Index   Rate/Index    Maturity
-------------------                -------- ------------ ------------  ---------
GATC pays fixed, receives floating  $725.7  5.097%-7.585%    LIBOR     1998-2001
GATC pays floating, receives fixed   500.0      LIBOR    6.230%-7.646% 2003-2006


Currency Swaps                  Receive           Deliver            Maturity
--------------                  -------           -------            --------
Canadian dollar swap             $115.0           C$156.1              2011
Deutschemark swap                $ 40.5           72.5 DM              2002

GATC had the following interest rate hedge activity (in millions):

                                                   Pay              Pay
Interest Rate Swaps                               Fixed           Floating

Balance at January 1, 1996                       $765.5            $850.0

Additions                                         315.5              62.0
Maturities                                       (200.0)                -
                                                 ------           ------

Balance at December 31, 1996                      881.0             912.0

Additions                                          44.7                 -
Maturities                                       (200.0)           (412.0)
                                                 ------            ------

Balance at December 31, 1997                     $725.7            $500.0
                                                 ======            ======

GATC uses interest rate swaps and forwards to manage its assets and liabilities,
to convert  floating  rate debt to fixed rate debt (or fixed to floating) and to
manage  interest rate risk  associated  with the  anticipated  issuance of debt.
Interest  rate swaps are utilized to better match the cash flow  characteristics
of its debt portfolio and its railcar  leases.  Railcar assets are financed with
long-term  fixed  rate debt or through  sale-leasebacks.  However,  the  railcar
assets are placed on lease  with  average  new lease  terms of five  years;  the
average  renewal  term is three  years.  Rents are fixed over these lease terms.
Interest rate swaps  effectively  convert  GATC's  long-term  fixed rate debt to
fixed rate debt with maturities of three months to three years. Through the swap
program,  changes in GATC's  interest  expense are  expected  to better  reflect
changes in railcar lease rates.

In its swaps,  GATC  agrees to exchange at  specific  intervals  the  difference
between fixed and floating rate  interest  amounts  calculated on an agreed upon
notional  principal amount. The swaps have in effect converted $725.7 million of
long-term fixed rate debt into 1-3 year fixed rate debt.

                                      -28-

<PAGE>



GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE H--OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS (CONT'D)

The net amount payable or receivable  from the interest rate swap  agreements is
accrued as an  adjustment  to interest  expense.  The fair value of its interest
rate swap  agreements  is an estimate of the amount the company would receive or
pay to  terminate  those  agreements.  At  December  31,  1997,  GATC would have
received $13.1 million if the swaps were terminated; GATC would have paid $10.4
million if the swaps were terminated at December 31, 1996.

GATC has entered into currency swaps to hedge $115.2 million in debt obligations
at its Canadian  subsidiary and $40.5 million in debt  obligations at its German
subsidiary. The fair market value of its currency swap agreements is an estimate
of the amount the company would receive or pay to terminate those agreements. At
December  31, 1997,  GATC would have  received  $11.1  million if the swaps were
terminated;  GATC would have paid $2.7 million if the swaps were  terminated  at
December 31, 1996.

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

                                      -29-

<PAGE>




GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE I--FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, defines the
fair value of a financial instrument as the amount at which the instrument could
be exchanged in a current  transaction  between willing  parties.  The following
table  presents  the  carrying  amounts  and  estimated  fair  values  of GATC's
financial  instruments  that were  recorded on the balance sheet at year end (in
millions):

                                                       December 31
                                       -----------------------------------------
                                                1997                 1996
                                       -----------------------------------------
                                       Carrying      Fair     Carrying     Fair
                                        Amount      Value      Amount      Value
Assets:
     Cash and cash equivalents         $   14.0   $   14.0   $   20.7   $   20.7
     Trade receivables-net                 52.7       52.7       83.7       83.7
     Due from GATX Corporation            392.1      392.1      408.3      408.3

Liabilities:
     Accounts payable                     140.5      140.5      128.8      128.8
     Short-term debt                      190.5      190.5      166.9      166.9
     Long-term debt - variable             47.5       47.5          -          -
     Long-term debt - fixed             1,073.0    1,145.8    1,230.0    1,300.4


The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments:

For  cash  and cash  equivalents,  trade  receivables,  accounts  payables,  and
short-term  debt,  the carrying  amount  approximates  fair value because of the
short maturity of those instruments.

The  carrying  amounts  reported  in the  balance  sheet  for the Due from  GATX
Corporation approximate fair value.

The carrying  amount of variable  rate  long-term  debt  reported in the balance
sheet  approximates  fair value. The fair value of fixed rate long-term debt was
estimated by performing a discounted cash flow  calculation  using the note term
and  market  interest  rate for each note  based on GATC's  current  incremental
borrowing rates for similar borrowing arrangements.

                                      -30-

<PAGE>




GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE J--PENSION BENEFITS

GATC and its subsidiaries contributed to several pension plans sponsored by GATX
which cover  substantially all employees.  Benefits under the plans are based on
years of service and/or final average  salary.  The funding policy for all plans
is based on an  actuarially  determined  cost method  allowable  under  Internal
Revenue Service  regulations.  Contributions to these plans were $3.5 million in
1997, $5.0 million in 1996, and $3.5 million in 1995.

Costs pertaining to the GATX plans are allocated to GATC on the basis of payroll
costs with respect to normal cost and on the basis of  actuarial  determinations
for prior service cost. Net periodic  pension cost for 1997,  1996, and 1995 was
$5.6 million,  $3.0 million,  and $3.1 million,  respectively.  The net periodic
pension cost for 1997 included a $2.5 million one-time  termination expense as a
result of a facility  sale.  Plan  benefit  obligations,  plan  assets,  and the
components of net periodic  cost for  individual  subsidiaries  of GATX have not
been determined.

NOTE K--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

GATC provides health care, life insurance and other benefits for certain retired
employees who meet established  criteria.  Most domestic  employees are eligible
for  health  care and life  insurance  benefits  if they  retire  from GATC with
immediate  pension  benefits  under the GATX pension plan.  The plans are either
contributory or non-contributory,  depending on various factors. A discount rate
of 7.75% was used to determine the expense (net periodic  postretirement benefit
cost) and liability  (accrued  postretirement  benefit  liability) for all years
presented below.

Net periodic  postretirement  benefit cost, which for 1997 reflected termination
expense for a facility sale, included the following components (in millions):

                                                 1997         1996         1995
                                                -----        -----        -----

  Current service cost                          $  .4        $  .4        $  .4
  Interest cost on accumulated
    postretirement benefit obligation             3.8          4.1          4.2
  Net termination expense                         1.1            -            -
                                                -----        -----        -----

  Net periodic postretirement benefit cost      $ 5.3        $ 4.5        $ 4.6
                                                =====        =====        =====

  Discount rate                                 7.75%        7.75%        7.75%
                                                =====        =====        =====


                                      -31-

<PAGE>




GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE K--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONT'D)


The accrued  postretirement  benefit liability,  part of Other Deferred Items on
GATC's balance sheet, included the following components (in millions):

                                                                December 31
                                                            1997           1996
                                                           -----          -----

 Accumulated postretirement benefit obligation
    Retirees                                               $45.6          $47.0
    Fully eligible active plan participants                  2.3            2.4
    Other active plan participants                           4.7            5.2
                                                           -----          -----

 Total accumulated postretirement benefit obligation        52.6           54.6

 Unrecognized gain                                          10.0           10.1
                                                           -----          -----

 Accrued postretirement benefit liability                  $62.6          $64.7
                                                           =====          =====


The health  care cost  trend rate  assumption  has a  significant  effect on the
amount of the periodic cost and  obligation  reported.  The trend rate currently
assumed  for  participants  under  age 65 is 6.0% in 1997  and  thereafter.  For
participants age 65 and older, the assumed trend rate is 5.0% in 1997 and after.
An increase in the assumed health care cost trend rates by 1% would increase the
net  periodic  postretirement  benefit  cost by $.3  million  per year,  and the
accumulated postretirement benefit obligation by $3.6 million.



                                      -32-

<PAGE>



GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE L--INCOME TAXES

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

Significant  components of GATC's  deferred tax  liabilities and assets were (in
millions):

                                                                December 31
                                                           ---------------------
                                                            1997           1996
                                                           ------         ------
Deferred tax liabilities:
   Book/tax basis differences due to depreciation          $347.8         $392.9
   Other                                                     45.4           45.8
                                                           ------         ------
        Total deferred tax liabilities                      393.2          438.7

Deferred tax assets:
   Accruals not currently deductible for tax purposes        31.1           35.9
   Postretirement benefits other than pensions               22.0           22.7
   Lease accounting                                          21.4           21.8
   Other                                                      3.0            6.2
                                                           ------         ------
        Total deferred tax assets                            77.5           86.6
                                                           ------         ------

Net deferred tax liabilities                               $315.7         $352.1
                                                           ======         ======

The  results  of  operations  of GATC and its  United  States  subsidiaries  are
included  in the  consolidated  federal  income  tax  return  of  GATX.  Current
provisions for federal income taxes represent  amounts payable to GATX resulting
from  inclusion of GATC's  operations  in the  consolidated  federal  income tax
return.  Amounts shown as currently  payable for federal income taxes  represent
taxes  payable due to the  alternative  minimum  tax.  Included in 1997's  total
deferred  tax credit is a $56.5  million  deferred  tax benefit  resulting  from
Terminals' $185.8 million pre-tax restructuring charge.

Income taxes consisted of (in millions):
                                                       For the Year
                                          -------------------------------------
                                            1997            1996           1995
                                          ------          ------         ------
     Current-
         Domestic:
              Federal                     $  8.4          $ 19.4         $ 26.7
              State and local                  -             1.8            2.2
                                          ------          ------         ------
                                             8.4            21.2           28.9
         Foreign                             3.8             2.2             .1
                                          ------          ------         ------
                                            12.2            23.4           29.0
     Deferred-
         Domestic:
              Federal                      (34.6)           16.9           16.7
              State and local               (3.3)            1.5            1.0
                                          ------          ------         ------
                                           (37.9)           18.4           17.7
         Foreign                             5.0             (.5)            .5
                                          ------          ------         ------
                                           (32.9)           17.9           18.2
                                          ------          ------        -------

     Income tax (benefit) expense         $(20.7)         $ 41.3         $ 47.2
                                          ======          ======         ======

     Income taxes paid                    $ 15.0          $ 23.9         $ 26.9
                                          ======          ======         ======

                                      -33-

<PAGE>


GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE L--INCOME TAXES (CONT'D)

The reasons for the  differences  between the effective  income tax rate and the
federal statutory income tax rate were:
                                                      For the Year
                                      -----------------------------------------
                                       1997       1997(A)      1996        1995
                                      ------      ------      -----       -----
                                   


Federal statutory income tax rate      35.0%       35.0%       35.0%       35.0%
Add (deduct) effect of:
         Foreign income                (2.4)        1.6         2.2         1.0
         State income taxes            (2.3)        1.6         2.0         1.7
         Restructuring charges         (3.9)          -           -           -
         Minority interest                -           -           -         2.0
         Other                           .8         (.5)        (.6)        (.7)
                                       ----        ----        ----        ----

                                       27.2%       37.7%       38.6%       39.0%
                                       ====        ====        ====        ====

(A) Before restructuring charges


NOTE M--COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS OF CREDIT RISK

GATC's  revenues  are derived  from a wide range of  industries  and  companies.
However,   approximately   39%  of  total   revenues  are  generated   from  the
transportation  or storage of products from the chemical  industry;  for similar
services, 39% of revenues are derived from the petroleum industry.

Under its customer lease  agreements,  GATC retains legal ownership of the asset
except when such assets have been  financed by  sale-leasebacks.  GATC  performs
credit  evaluations  prior to approval of a lease  contract.  Subsequently,  the
creditworthiness  of  the  customer  is  monitored  on an  ongoing  basis.  GATC
maintains  an  allowance  for possible  losses to provide for  potential  losses
should customers become unable to discharge their obligations to GATC.

At December  31,  1997,  GATC had firm  commitments  to acquire  railcars and to
upgrade facilities totaling $209 million.

GATC and its  subsidiaries are engaged in various matters of litigation and have
a number of unresolved claims pending,  including proceedings under governmental
laws  and  regulations   related  to  environmental   matters.   Two  of  GATC's
subsidiaries  are  involved in a litigation  arising out of a chemical  leak and
resulting tank car fire in New Orleans, Louisiana. While the amounts claimed are
substantial,  and the ultimate  liability  with respect to such  litigation  and
claims cannot be  determined at this time, it is the opinion of management  that
damages,  if  any,  required  to be paid by  GATC  and its  subsidiaries  in the
discharge of such liability are not likely to be material to GATC's consolidated
financial position or results of operations.

                                      -34-

<PAGE>


GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE N--FINANCIAL DATA OF BUSINESS SEGMENTS

GATC is engaged in the following businesses:

Railcar  Leasing  and  Management  represents  General  American  Transportation
Corporation and its foreign subsidiaries and affiliates (Transportation),  which
lease and manage tank cars and other specialized railcars.

Terminals and Pipelines  represents GATX Terminals  Corporation and its domestic
and foreign subsidiaries and affiliates (Terminals),  which own and operate tank
storage terminals, pipelines and related facilities.

Intersegment   sales  are  not   significant  in  amount  or  meaningful  to  an
understanding of GATC's business segments.

The following  presentation of segment  profitability  includes the direct costs
incurred at the segment's operating level plus expenses allocated by GATX. These
allocated  expenses  represent  costs for services  provided by GATX which these
operations  would have incurred  otherwise and are  determined on a usage basis;
management  believes that this method is  reasonable.  Such costs do not include
general corporate expense nor interest on debt of GATX.

Interest  costs  associated  with  segment  indebtedness  are  included  in  the
determination of profitability of each segment since

                                      



interest expense directly  influences any investment decision and the evaluation
of subsequent operational performance. Interest costs by segment have been shown
separately so the reader can ascertain  segment  profitability  before deducting
interest expense.

                                      -35-

<PAGE>


<TABLE>
<CAPTION>

GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE N--FINANCIAL DATA OF BUSINESS SEGMENTS (CONT'D)


                                                                                         (In millions)
                                                                     --------------------------------------------
                                                                       1997               1996              1995
                                                                     --------------------------------------------



<S>                                                                  <C>                <C>             <C>     
Gross Income:
     Railcar Leasing and Management                                  $  476.9           $ 427.9         $  360.9
     Terminals and Pipelines                                            292.8             297.6            313.4
                                                                     --------           -------         --------

              Subtotal                                                  769.7             725.5            674.3

     Intersegment amounts with other GATX segments                       28.9              28.3             28.7
                                                                     --------           -------         --------

CONSOLIDATED                                                         $  798.6           $ 753.8         $  703.0
                                                                     ========           =======         ========


(Loss) Income Before Income Taxes and Equity
     in Net Earnings of Affiliated Companies:
     Railcar Leasing and Management                                  $  116.8           $ 103.8         $   90.7
     Terminals and Pipelines                                           (192.7) (A)          3.0             30.3
                                                                     --------           -------         --------

CONSOLIDATED                                                         $  (75.9)          $ 106.8         $  121.0
                                                                     ========           =======         ========


Equity in Net Earnings
     of Affiliated Companies:
         Railcar Leasing and Management                              $     .9           $   2.9         $    5.4
         Terminals and Pipelines                                         13.1              11.9             14.7
                                                                     --------           -------         --------

CONSOLIDATED                                                         $   14.0           $  14.8         $   20.1
                                                                     ========           =======         ========
                                 

Net (Loss) Income:
         Railcar Leasing and Management                              $   74.4           $  67.7         $   62.9
         Terminals and Pipelines                                       (115.6) (B)         12.6             31.0
                                                                     --------           -------         --------

CONSOLIDATED                                                         $  (41.2)          $  80.3         $   93.9
                                                                     ========           =======         ========

<FN>


(A) Pre-tax income includes a $185.8 million provision for restructuring.

(B) Net loss includes a $123.8 million after-tax provision for restructuring.


</FN>
</TABLE>
                                      -36-

<PAGE>




<TABLE>
<CAPTION>


GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE N--FINANCIAL DATA OF BUSINESS SEGMENTS (CONT'D)





                                                                                      (In Millions)
                                                                  ---------------------------------------------
                                                                      1997               1996            1995
                                                                  ---------------------------------------------


<S>                                                                 <C>               <C>              <C>     
Identifiable Assets:
    Railcar Leasing and Management                                  $2,361.5          $2,387.1         $2,041.9
    Terminals and Pipelines                                            936.7           1,193.5          1,101.5
    Other                                                                1.1               1.0              1.0
                                                                    --------          --------         --------
                                                                     3,299.3           3,581.6          3,144.4
    Intersegment amounts                                              (471.1)           (519.3)          (513.4)
                                                                    --------          --------         --------

CONSOLIDATED                                                        $2,828.2          $3,062.3         $2,631.0
                                                                    ========          ========         ========

Capital Additions:
    Railcar Leasing and Management                                  $  336.9          $  386.8         $  392.6
    Terminals and Pipelines                                             68.0             129.5            148.6
                                                                    --------          --------         --------

CONSOLIDATED                                                        $  404.9          $  516.3         $  541.2
                                                                    ========          ========         ========

Provision for Depreciation and Amortization:
    Railcar Leasing and Management                                  $   98.0          $   86.8         $   76.1
    Terminals and Pipelines                                             54.7              51.9             45.3
                                                                    --------          --------         --------

CONSOLIDATED                                                        $  152.7          $  138.7         $  121.4
                                                                    ========          ========         ========

Interest Expense:
    Railcar Leasing and Management                                  $  103.7          $   99.4         $   86.1
    Terminals and Pipelines                                             57.2              53.5             46.4
                                                                    --------          --------         --------
                                                                       160.9             152.9            132.5
    Intersegment amounts                                               (42.5)            (43.8)           (39.3)
                                                                    --------          --------         --------

CONSOLIDATED                                                        $  118.4          $  109.1         $   93.2
                                                                    ========          ========         ========

</TABLE>
                               

NOTE O - RESTRUCTURING CHARGES

During  1997,  strategic  decisions  resulted in a $186  million  ($124  million
after-tax)  restructuring  charge related to GATX Terminals.  The  restructuring
charge was based on the decision to close,  sell or revalue certain domestic and
foreign terminal locations to reflect  permanent changes  in market  conditions.
The carrying values of certain assets, including goodwill, were  written down to
fair value as described in Note A.

                                      -37-

<PAGE>


<TABLE>
<CAPTION>


                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

          GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
                                  (In Millions)



-------------------------------------------------------------------------------------------------------------------


                     COL. A                           COL. B             COL. C          COL. D           COL. E          COL. F

-------------------------------------------------------------------------------------------------------------------


                                                                                  ADDITIONS
                                                                                  Charged to
                                                    Balance at     Charged to      Other                                 Balance
                                                    Beginning        Costs &      Accounts-         Deductions-          at End
                                                    of Period       Expenses       Describe          Describe           of Period
---------------------------------------------------------------------------------------------------------------------------------



<S>                                                   <C>             <C>         <C>              <C>                      <C>  
Year ended December 31, 1997:
        Allowance for possible losses
             in collection of trade
             receivables - Note A                     $ 5.5           $  .3         $  .6 (B)        $  .7 (C)             $  5.7

Year ended December 31, 1996:
        Allowance for possible losses
             in collection of trade
             receivables - Note A                     $ 5.4           $  .3         $ 1.7 (B)        $ 1.9 (C)             $  5.5

Year ended December 31, 1995:
        Allowance for possible losses
             in collection of trade
             receivables - Note A                     $ 5.4           $  .1         $ 1.2 (B)        $ 1.3 (C)             $  5.4
<FN>


Note A - Deducted from asset  accounts.
Note B - Transfer from other  accounts.
Note C - Uncollectible accounts charged off.

</FN>
</TABLE>



                                      -38-

<PAGE>


<TABLE>
<CAPTION>


                                                                                                                         EXHIBIT 12

          GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES

               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                         (In Millions Except For Ratios)



                                                                        1997          1996          1995          1994         1993
                                                                       ------        ------        ------        ------       -----


<S>                                                                  <C>           <C>           <C>           <C>          <C>    
Earnings available for fixed charges:
     Net (loss) income .......................................       $  (41.2)     $   80.3      $   93.9      $   87.0     $  74.1

Add (deduct):
     Income taxes (benefit) expense ..........................          (20.7)         41.3          47.2          42.7        45.1
     Equity in net earnings of affiliated
          companies, net of distributions received ...........           (9.0)         (9.6)        (12.8)        (14.2)      (11.5)
     Interest on indebtedness and amortization
          of debt discount and expense .......................          118.4         109.1          93.2          76.5        76.6
     Amortization of capitalized interest ....................            1.4           1.1           1.1           1.1         1.1
     Portion of rents representative of interest
          factor (deemed to be one-third) ....................           30.0          27.0          21.7          16.8        13.2
                                                                     --------      --------      --------      --------      ------

     Total earnings available for fixed charges ..............       $   78.9      $  249.2      $  244.3      $  209.9      $198.6
                                                                     ========      ========      ========      ========      ======

Fixed charges:
     Interest on indebtedness and amortization
          of debt discount and expense .......................       $  118.4      $  109.1      $   93.2      $   76.5      $ 76.6
     Capitalized interest ....................................             .9           3.7           4.6           2.7         2.4
     Portion of rents representative of interest
          factor (deemed to be one-third) ....................           30.0          27.0          21.7          16.8        13.2
                                                                     --------      --------      --------      --------      ------

     Total fixed charges .....................................       $  149.3      $  139.8      $  119.5      $   96.0      $ 92.2
                                                                     ========      ========      ========      ========      ======

Ratio of earnings to fixed charges (A).......................            .53x (B)     1.78x         2.04x         2.19x       2.15x

<FN>


(A)     The ratio of earnings to fixed  charges  represents  the number of times
        "fixed charges" are covered by "earnings."  "Fixed  charges"  consist of
        interest on outstanding  debt and capitalized  interest,  one-third (the
        proportion deemed representative of the interest factor) of rentals, and
        amortization  of  debt  discount  and  expense.  "Earnings"  consist  of
        consolidated  net income  before  income taxes and fixed  charges,  less
        equity in net earnings of  affiliated  companies,  net of  distributions
        received.

(B)     In 1997, net loss included restructuring charges of $123.8 million.  Excluding the charges, the "ratio of earnings to
        fixed charges" was 1.77x.  See Note O - Restructuring Charges.

</FN>
</TABLE>

                                      -39-

<PAGE>



                                                                     EXHIBIT 23




CONSENT OF INDEPENDENT AUDITORS




We consent to the  incorporation  by reference  in  Registration  Statement  No.
33-48475 on Form S-3 filed July 30, 1992, Registration Statement No. 33-52301 on
Form S-3 filed February 16, 1994,  and  Registration  Statement No.  33-64697 on
Form S-3 filed December 1, 1995 of General American  Transportation  Corporation
of our report dated January 27, 1998 with respect to the consolidated  financial
statements and schedule of General American Transportation  Corporation included
in this Annual Report on Form 10-K for the year ended December 31, 1997.



                                                         ERNST & YOUNG LLP


Chicago, Illinois
March 16, 1998





                                      -40-

<PAGE>

EXHIBITS FILED WITH DOCUMENT

   12.       Statement regarding computation of ratios of earnings to
             fixed charges                                                   

   23.       Consent of Independent Auditors                                 

   27.       Financial  Data  Schedule  for GATC for the fiscal  year ended
             December 31, 1997, file number  2-54754.  Submitted to the SEC
             along with the electronic submission of this report on Form 10-K.

             Any  instrument  defining the rights of security  holders with
             respect to nonregistered long-term debt not being filed on the
             basis that the amount of securities authorized does not exceed
             10 percent of the total assets of the company and subsidiaries
             on a  consolidated  basis will be furnished to the  Commission
             upon request.