Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

(Mark One)
þ
ANNUAL REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the fiscal year ended December 31, 20112012

OR

OR
¨
TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6903

Trinity Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware75-0225040
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)

2525 Stemmons Freeway,

Dallas, Texas

75207-2401
(Address of principal executive offices)(Zip Code)


Registrant’sRegistrant's telephone number, including area code:(214) 631-4420

Securities Registered Pursuant to Section 12(b) of the Act

Title of each class

Name of each exchange

on which registered

Common Stock ($1.00 par value)

New York Stock Exchange, Inc.

Securities registered Pursuant to Section 12(g) of the Act:None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as definedin Rule 405 of the Securities Act.  Yes þ   No ¨

Indicate by check mark if the Registrant is not required to file reports pursuant toSection 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the Registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.  Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and postedon its corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§(§ 232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post suchfiles).  Yes þ  No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to thebest of Registrant’sRegistrant's knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reportingcompany” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þAccelerated filer ¨Non-accelerated filer ¨Smaller reporting company ¨
(Do not check if a smaller reporting company)
Large accelerated filer þ
Accelerated filer ¨Non-accelerated filer ¨Smaller reporting company ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shellcompany (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No þ

The aggregate market value of voting and non-voting common equity held bynon-affiliates computed by reference to the price at which the common equity was lastsold as of the last business day of the Registrant’sRegistrant's most recently completed secondfiscal quarter (June 30, 2011)2012) was $2,732.2 million.

$1,938.9 million.

At January 31, 20122013 the number of shares of common stock outstanding was 80,202,358.

79,118,471.

The information required by Part III of this report, to the extent not set forthherein, is incorporated by reference from the Registrant’sRegistrant's definitive 20122013 ProxyStatement.


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TRINITY INDUSTRIES, INC.

FORM 10-K

TABLE OF CONTENTS

CaptionPage
PART I
Item 1. Business
3
Item 1A. Risk Factors
10
Item 1B. Unresolved Staff Comments
16
Item 2. Properties
16
Item 3. Legal Proceedings
16
Item 4. Mine Safety Disclosures
16
  

Caption

Page
PART II
 

PART I

3
Item 1.

Business

3
Item 1A.

Risk Factors

10
Item 1B.

Unresolved Staff Comments

16
Item 2.

Properties

17
Item 3.

Legal Proceedings

17
Item 4.

Mine Safety Disclosures

17

PART II

17
Item 5.

Market for Registrant’sRegistrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

17
Item 6.

Selected Financial Data

20
19
Item 7.

Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations

21
20
Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

41
Item 8.

Financial Statements and Supplementary Data

42
Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

85
Item 9A. Controls and Procedures
85
Item 9B. Other Information
83
87
 
Item 9A.

Controls and ProceduresPART III

83 
Item 9B.

Other Information

83

PART III

84
Item 10.

Directors, Executive Officers and Corporate Governance

84
87
Item 11.

Executive Compensation

84
87
Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

85
88
Item 13.

Certain Relationships and Related Transactions, and Director Independence

85
88
Item 14.

Principal Accountant Fees and Services

88
 85 

PART IV

86 
Item 15.

Exhibits and Financial Statement Schedules

86
89


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PART I

Item 1. Business.


General Development of Business.  Trinity Industries, Inc. and its consolidated subsidiaries, (“Trinity”, “Company”, “we”, or “our”) headquartered in Dallas, Texas, is a multi-industrydiversified industrial company that owns a variety of market-leading businesses which provide products and services to the industrial, energy, transportation, and construction sectors. Trinity was incorporated in 1933.


Trinity became a Delaware Corporationcorporation in 1987. Our principal executive offices are located at 2525 Stemmons Freeway, Dallas, Texas 75207-2401, our telephone number is 214-631-4420, and our Internet website address is www.trin.net.

www.trin.net.


Financial Information About Industry Segments. Financial information about our industry segments for the years ended December 31, 2012, 2011 2010, and 20092010 is presented in Part II, Item 7 “Management’s“Management's Discussion and Analysis of Financial Condition and Results of Operations.”


Narrative Description of Business. As a multi-industrydiversified industrial company, we manufacture and sell a variety of products through a number of product lines as follows:including:

Railcars

railcars and railcar parts in addition to leasing railcars to our customers through our integrated business model, which includes a captive leasing business, Trinity Industries Leasing Company (“TILC”).

;

Inland barges

inland barges;

Structuralstructural wind towers

towers;

Highway products

highway products;

Concreteaggregates;

containers; and aggregates

Tank containers

Steel parts and steel components.


We serve our customers through the following five business groups:


Rail Group. Through wholly-owned subsidiaries, our Rail Group is a leading manufacturer of freight railcars and tank cars in North America (“Trinity Rail Group” or “Rail Group”). Through our manufacturing facilities in the United StatesU.S. and Mexico, we provide a full complement of railcars used for transporting a wide variety of liquids, gases, and dry cargo.


Trinity Rail Group offers a complete array of railcar solutions to our customers. We manufacture a full line of railcars, including:

•

Auto Carrier Cars— Auto carrier cars transport automobiles and a variety of other vehicles.

•

Box Cars— Box cars transport products such as food products, auto parts, wood products, and paper.

•

Gondola Cars— Rotary gondola cars are primarily used for coal service. Top-loading gondola cars transport a variety of other heavy bulk commodities such as scrap metals and steel products.

•

Hopper Cars— Covered hopper cars carry cargo such as grain, distillers dried grain, dry fertilizer, plastic, cement, and sand. Open-top hoppers are most often used to haul coal and aggregates.

•

Intermodal Cars— Intermodal cars transport intermodal containers and trailers, which are generally interchangeable among railcars, trucks, and ships.

•

Specialty Cars— Specialty cars are designed to address the special needs of a particular industry or customer, such as waste-hauling gondolas, side dump cars, and pressure differential cars used to haul fine grain food products such as starch and flour.

•

Tank Cars— Tank cars transport products such as liquefied petroleum products, alcohol and renewable fuels, liquid fertilizer, and food and grain products such as vegetable oil and corn syrup.


Auto Carrier Cars - Auto carrier cars transport automobiles and a variety of other vehicles.

Box Cars - Box cars transport products such as food products, auto parts, wood products, and paper.

Gondola Cars - Rotary gondola cars are primarily used for coal service. Top-loading gondola cars transport a variety of other heavy bulk commodities such as scrap metals and steel products.

Hopper Cars - Covered hopper cars carry cargo such as grain, distillers dried grain, dry fertilizer, plastic, cement, and sand. Open-top hoppers are most often used to haul coal and aggregates.

Intermodal Cars - Intermodal cars transport intermodal containers and trailers, which are generally interchangeable among railcars, trucks, and ships.

Specialty Cars - Specialty cars are designed to address the special needs of a particular industry or customer, such as waste-hauling gondolas, side dump cars, flat cars, and pressure differential cars used to haul fine grain food products such as starch and flour.

Tank Cars - Tank cars transport products such as liquefied petroleum products, alcohol and renewable fuels, liquid fertilizer, and food and grain products such as vegetable oil and corn syrup.

Our Rail Group manufactures the mosta diversified railcar product line, available in North America, allowing us to capitalize on changing industry trends and developing market opportunities. We also manufacture and sell a variety of railcar components, from our plants in the United Statesparts and Mexico,components, used in manufacturing and repairing railcars such asincluding couplers, axles, and other devices,devices. We have plants in Mexico and the U.S. that manufacture parts and components, primarily for the North American market. We have two repair and coating facilities located in Texas.



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Our customers include railroads, leasing companies, and industrial shippers of products, such as utilities, petrochemical companies, grain shippers, agricultural product companies, and major construction and industrial companies. We compete against five major railcar manufacturers in the North American market.


For the year endedDecember 31, 2011,2012 we shipped approximately 14,06519,360 railcars, or approximately 30%33% of total North American railcar shipments. As of December 31, 2011,2012, our Rail Group backlog was approximately $2.6$3.7 billion, consisting of approximately 29,00031,990 railcars, including approximately $621.9$834.7 million in orders from our Railcar Leasing and Management Services Group (“Leasing Group”). The total amount of orders in our backlog from the Leasing Group was supported by lease commitments with external customers.


We hold patents of varying duration for use in our manufacture of railcars and components. We believe patents offer a marketing advantage in certain circumstances. No material revenues are received from the licensing of these patents.


Railcar Leasing and Management Services Group. Our Railcar Leasing and Management Services Group is a leading provider in North America of comprehensive rail industry services. Through wholly-owned subsidiaries, primarily TILC, and a majority-owned subsidiary, TRIP Rail Holdings LLC (“TRIP Holdings”), we offer operating leases for tank cars and freight cars. TILC also offers management and administrative services. By providing leasing and management services, our Leasing Group is an important strategic resource that links our Rail Group with our customers. Trinity’sTrinity's Rail Group and TILC coordinate sales and marketing activities under the registered trade nameTrinityRail®, thereby providing a single point of contact for railroads and shippers seeking rail equipment and services.


The railcars in our lease fleet are leased to industrial shippers and railroads. These companies operate in the petroleum, chemical, agricultural, and energy industries, among others. Substantially all of our railcars are manufactured by our Rail Group. The terms of our railcar leases generally vary from one to twenty years and provide for fixed monthly rentals. A small percentage of our fleet is leased on a per diem basis. As of December 31, 2011,2012, the lease fleet of our wholly-owned subsidiaries included approximately 54,59557,000 owned or leased railcars that were 99.3%98.4% utilized. Of this total, approximately 42,80044,540 railcars were owned by TILC and approximately 11,79512,460 railcars were financed in sale-leaseback transactions. In addition to our wholly-owned lease fleet, TRIP Holdings’Holdings' lease fleet included approximately 14,35014,455 owned railcars that were 99.9%99.2% utilized as of December 31, 2011.

2012.


In addition, we also manage railcar fleets on behalf of third parties. We believe our railcar fleet management services complement our leasing business by generating stable fee income, strengthening customer relationships, and enhancing the view of Trinity as a leading provider of railcar products and services.


Our railcar leasing businesses compete against a number of well-established entities that are also in the business of leasing railcars.


Construction Products Group. Through wholly-owned subsidiaries, our Construction Products Group produces concrete and aggregates and manufactures highway products as well as other steel products for infrastructure-related projects. Many of these lines of business are seasonal and revenues are impacted by weather conditions.


Our highway products businesses are leading U.S. manufacturers of guardrail, crash cushions, and other protective barriers. The Federal Highway Administration, which determines product eligibility for cost reimbursement using federal funds, has approved many of our products as eligible for cost reimbursement based on requirements set forth by the National Cooperative Highway Research Program. Our crash cushion, protective barrier, and guardrail products include multiple proprietary products manufactured under license from certain public and private research organizations and inventors and Company-held patents. We sell highway products in Canada, Mexico, and all 50 states in the U.S. We compete against several national and regional guardrail manufacturers. We also export our proprietary highway products to more than 60 countries worldwide.

We are a leading producer and distributor of construction aggregates, including crushed stone, sand and gravel, asphalt rock, and specialty sands and gravel in several regions of Texas with smaller operations in Arkansas and Louisiana. Our aggregates customers are primarily other concrete producers, commercial and highway contractors, and state and local municipalities. We

In addition, we provide hot-dip galvanizing services to manufacturers of fabricated steel materials from our production facilities in Texas and Louisiana, and manufacture a line of construction equipment for the mining industry and a line of trench shields and shoring products for the underground construction industry.

In December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations. The terms of the transaction are alsoexpected to be finalized and the transaction closed during 2013. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as a leadingdiscontinued operation and, accordingly, historical amounts previously reported have been adjusted, where appropriate, to remove the effect of discontinued operations. Further, assets and liabilities related to the discontinued operations have been classified as Assets/Liabilities Held for Sale and Discontinued Operations

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in the accompanying consolidated balance sheets. Through our discontinued ready-mix concrete operations, we are a supplier of ready mix concrete in certain areas of Texas and Southwest Arkansas. Our customers for concrete include contractors and subcontractors for residential, commercial, and highway construction projects. We compete with ready mix concrete producers and aggregate producers located in the regions where we operate.


Energy Equipment Group. Through wholly-owned subsidiaries, our Energy Equipment Group manufactures structural wind towers, containers and tank heads for pressure and non-pressure vessels, and utility, traffic, and lighting structures.

Our highway products businessesstructural wind towers business is a leading manufacturer in North America of structural wind towers used in the wind energy market. These towers are manufactured in the U.S. and Mexico to customer specifications and installed by our customers. Our customers are generally wind turbine producers. Our structural wind towers backlog as of December 31, 2012 was approximately $680.3 million. Approximately $412.5 million of this backlog is involved in litigation filed by the Company against one of our structural wind tower customers for breach of contract by failing to comply with the customer's multi-year, contractual purchase obligations.

We are a leading U.S. manufacturersmanufacturer in North America of highway products.containers and tank heads for pressure and non-pressure vessels. We manufacture guardrail, crash cushions,these products in the U.S. and other protective barriers. The Federal Highway Administration, which determines which products are eligible for federal funds for highway projects, has approved mostMexico. We market a portion of our products as acceptable permanentin Mexico under the brand name of TATSA®.

We manufacture containers that are used by the oil, gas, and construction zone highway hardware accordingchemical industry, industrial plants, utilities, residences, and small businesses in suburban and rural areas. We also manufacture fertilizer containers for bulk storage, farm storage, and the application and distribution of anhydrous ammonia. Our container products range from nine-gallon containers for motor fuel use to requirements1.8 million-gallon bulk storage spheres. We sell our containers to dealers and large industrial users. In the U.S. we generally deliver the containers to our customers who install and fill the containers. Our competitors include large and small manufacturers of containers.

We manufacture tank heads, which are pressed metal components used in the manufacturing of many of our finished products, both pressure rated and non-pressure rated, depending on their intended use. We use a significant portion of the National Cooperative Highway Research Program.

Our crash cushionstank heads we manufacture in the production of our tank cars and containers. We also sell our tank heads to a broad range of other protective barriers include multiple proprietary productsmanufacturers. There is strong competition in the tank heads business.


We manufacture utility, traffic, and lighting structures, which are used principally by municipalities, and various other local and state governmental entities. We also manufacture transmission and distribution structures to be used in the erection of private and public electric transmission lines. These structures are manufactured through various product license agreements with certain publicin the U.S. and private research organizationsMexico to customer specifications and inventors. We hold patents andinstalled by our customers.

There are a licensee for certainnumber of our guardrailwell-established entities that actively compete with us in the business of manufacturing energy equipment including several domestic and end-treatment products, which enhances our competitive position for these products.

We sell highway products in Canada, Mexico, and all 50 of the United States. We compete against several national and regional guardrail manufacturers. We also export our proprietary highway products to more than 60 countries worldwide.

In addition, we provide hot-dip galvanizing services toforeign manufacturers of fabricated steel materials from our production facilities in north Texas and manufacture a line of construction equipmentstructural wind towers for the mining industry.

North American market.


Inland Barge Group. Through wholly-owned subsidiaries, our Inland Barge Group is a leading U.S. manufacturer of inland barges and fiberglass barge covers. We manufacture a variety of dry cargo barges, such as deck barges, and open or covered hopper barges that transport various commodities, such as grain, coal, and aggregates. We also manufacture tank barges used to transport liquidliquids such as crude oil, chemicals and a variety of petroleum products. Our fiberglass reinforced lift covers are used primarily for grain barges. Our four barge manufacturing facilities are located along the United StatesU.S. inland river systems, allowing for rapid delivery to our customers. Our Inland Barge Group backlog as of December 31, 20112012 was approximately $494.6 million.$

564.1 million.


Our primary Inland Barge customers are commercial marine transportation companies. Many companies have the capability to enter into, and from time to time do enter into, the inland barge manufacturing business. We strive to compete through operational efficiency, timely delivery, and quality products.


Energy Equipment Group. Through wholly-owned subsidiaries, our Energy Equipment Group manufactures structural wind towers, tank containers and tank heads for pressure vessels, tank heads for non-pressure vessels, LPG tanks, and utility, traffic, and lighting structures.

We are a leading manufacturer in North America of structural wind towers used in the wind energy market. These towers are manufactured in the United States and Mexico to customer specifications and installed by our customers. Our customers are generally turbine producers. Our structural wind towers backlog as of December 31, 2011 was approximately $934.3 million. Approximately $412.5 million of this backlog is involved in litigation filed by the Company against one of our structural wind tower customers for breach of contract by failing to comply with the customer’s multi-year, contractual purchase obligations.

We are a leading manufacturer in North America of tank containers and tank heads for pressure and non-pressure vessels. We manufacture tanks in the United States and Mexico. We market a portion of our products in Mexico under the brand name of TATSA®. In 2011, we began manufacturing frac tanks to support industries requiring temporary liquid storage, primarily the oil and gas industry.

We manufacture tank heads, which are pressed metal components used in the manufacturing of many of our finished products, as well as pressure rated or non-pressure rated, depending on their intended use. We use a significant portion of the tank heads we manufacture in the production of our tank cars and containers. We also sell our tank heads to a broad range of other manufacturers. There is strong competition in the tank heads business.

We manufacture tanks that are used by industrial plants, utilities, residences, and small businesses in suburban and rural areas. We also manufacture fertilizer containers for bulk storage, farm storage, and the application and distribution of anhydrous ammonia. Our tank products range from nine-gallon tanks for motor fuel use to 1.8 million-gallon bulk storage spheres. We sell our tanks to dealers and large industrial users. In the United States we generally deliver the containers to our customers who install and fill the containers. Our competitors include large and small manufacturers of tanks.

We manufacture utility, traffic, and lighting structures, which are used principally by municipalities, and various other local and state governmental entities. We also manufacture transmission structures to be used in the erection of private and public electric transmission lines. These structures are manufactured in the United States and Mexico to customer specifications and installed by our customers.

There are a number of well-established entities that actively compete with us in the business of manufacturing energy equipment including several domestic and foreign manufacturers of structural wind towers for the North American market.

All Other. All Other includes our captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; other peripheral businesses; and the change in market valuation related to ineffective commodity hedges.


Foreign Operations. Trinity’s Trinity's foreign operations are primarily located in Mexico. Continuing operations included sales to foreign customers, primarily in Mexico, which represented 10.6%represented10.0%, 10.6%, and 7.3%10.6% of our consolidated revenues for the years ended December 31, 2012, 2011 2010,, and 2009,2010, respectively. As of December 31, 20112012 and 2010,2011, we had approximately3.1% and 3.3% and 3.5%, respectively, of our long-lived assets not held for sale located outside the United States.U.S.



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We manufacture railcars, tank containers, tank heads, structural wind towers, utility structures, parts and steel components, and other products at our Mexico facilities for local consumption as well as for export to the United StatesU.S. and other countries. Any material change in the quotas, regulations, or duties on imports imposed by the United StatesU.S. government and its agencies or on exports imposed by the government of Mexico or its agencies could adversely affect our operations in Mexico. Our foreign activities are also subject to various other risks of doing business in foreign countries, including currency fluctuations, political changes, changes in laws and regulations, social unrest, unrestrained criminal activities, and economic instability. Although our operations have not been materially affected by any of these factors to date, any substantial disruption of business as it is currently conducted could adversely affect our operations at least in the short term.


Backlog. As of December 31, 20112012 and 2010,2011, our backlog was approximately as follows:

   As of December 31, 
   2011   2010 
   (in millions) 

Rail Group

    

External Customers

  $        1,973.2    $346.6  

Leasing Group

   621.9     111.0  
  

 

 

   

 

 

 
  $2,595.1    $457.6  

Inland Barge

  $494.6    $508.0  

Structural wind towers

  $934.3    $        1,000.0  

  December 31,
2012		 December 31,
2011
  (in millions)
Rail Group    
External Customers $2,867.5
 $1,973.2
Leasing Group 834.7
 621.9
  $3,702.2
 $2,595.1
Inland Barge $564.1
 $494.6
Structural wind towers $680.3
 $934.3

For the twelve months endedDecember 31, 2011,2012, the Company received orders for approximately 37,100 railcars including a supply agreement with GATX Corporation to deliver 12,500 railcars over a five-year period, significantly increasing22,350 railcars. The increase in backlog as of December 31, 2012 reflects the Company’s Rail Group backlog.value of orders taken during the year as well as contractual pricing adjustments on long-term orders previously received. The total amount of orders in our backlog from the Leasing Group was supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery.


Approximately 55%60% of our railcar backlog is expected to be delivered in the 12twelve months ending December 31, 20122013 with the remainder to be delivered from 20132014 through 2016. The majorityApproximately 83% of our backlog for barges is expected to be delivered in the twelve months ending December 31, 2012.2013 with the remainder to be delivered in 2014. For multi-year barge orders, the deliveries for 20122013 and 2014 are included in the backlog at this time; deliveries beyond 2012 are not included in the backlog iftime where specific production quantities for future years have not been determined. Approximately 28%$412.5 million of ourthe backlog for structural wind towers is expected to be delivered in 2012 with the remainder of this backlog contracted for delivery in future years. Approximately $412.5 million of this backlog is involved in litigation filed by the Company against one of our structural wind tower customers for the customer's breach of a long-term supply contract by failingfor the manufacture of towers. Approximately 64% of our backlog for structural wind towers not currently subject to complycurrent litigation is expected to be delivered in 2013 with the customer’s multi-year, contractual purchase obligations.

remainder contracted for delivery in future years.


Marketing. We sell substantially all of our products and services through our own sales personnel operating from offices in multiple locations in the United StatesU.S. as well as Canada, Mexico, the United Kingdom, Singapore, and Sweden. We also use independent sales representatives toon a limited extent.basis.


Raw Materials and Suppliers.


Railcar Specialty Components and Steel. Products manufactured at our railcar manufacturing facilities require a significant supply of raw materials such as steel, as well as numerous specialty components such as brakes, wheels, axles, side frames, bolsters, and bearings. Specialty components and steel purchased from third parties comprise approximately 60%65% of the production cost of each railcar. Although the number of alternative suppliers of specialty components has declined in recent years, at least two suppliers continue to produce most components. However, any unanticipated interruption in the supply chain of specialty components would have an impact on both our margins and production schedules.


The principal material used in our Rail, Inland Barge, and Energy Equipment Groupsmanufacturing segments is steel. During 2011,2012, the supply of steel was sufficient to support our manufacturing requirements. Market steel prices continue to exhibit short periods of volatility and ended 2011 significantly higher2012 lower than 2010.2011. Steel prices may continue to be volatile in part as a result of scrap surcharges assessed by steel mills and other market factors. We often use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers, to mitigate the effect of this volatility on our operating profits for the year.


In general, we believe there is enough capacity in the supply industry to meet current production levels. We believe the existing contracts and other relationships we have in place will meet our current production forecasts. However, any unanticipated interruption in our supply chain could have an adverse impact on both our margins and production schedules.


Aggregates. Aggregates can be found throughout the United States,U.S., and many producers exist nationwide. However, as a general rule, shipments from an individual quarry are limited in geographic scope because the cost of transporting processed aggregates to

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customers is high in relation to the value of the product itself. We operate 1213 mining facilities strategically located in Texas, Arkansas, and Louisiana to fulfill some of our needs for aggregates.

Cement.

Cement. Cement required for theour ready-mix concrete and aggregates businessoperations is received primarily from Texas. In 2011,2012, the supply of cement was sufficient in our markets to meet demand. We have not experienced difficulties supplying concrete to our customers.


Employees. The following table presents the approximate headcount breakdown of employees by business group:

Business Group

December 31,
2011    		2012

Rail Group

6,2105,060

Construction Products Group

1,9501,800

Inland Barge Group

2,0102,040

Energy Equipment Group

4,5803,820

Railcar Leasing and Management Services Group

130

All Other

340
Corporate270
 15,490300

Corporate

240

13,390



As of December 31, 2011,2012, approximately 8,1509,590 employees were employed in the United StatesU.S. and approximately 5,2405,900 employees were employed in Mexico.


Acquisitions and Divestitures. See Note 2 of the Notes to Consolidated Financial Statements.


Environmental Matters. We are subject to comprehensive federal, state, local, and foreign environmental laws and regulations relating to the release or discharge of materials into the environment; the management, use, processing, handling, storage, transport, and disposal of hazardous and non-hazardous waste and materials; and other activities relating to the protection of human health and the environment. Such laws and regulations not only expose us to liability for our own acts, but also may expose us to liability for the acts of others or for our actions whichthat were in compliance with all applicable laws at the time such actions may have been taken. In addition, such laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations. Our operations that involve hazardous materials also raise potential risks of liability under common law.


Environmental operating permits are, or may be, required for our operations under these laws and regulations. These operating permits are subject to modification, renewal, and revocation. We regularly monitor and review our operations, procedures, and policies for compliance with our operating permits and related laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of our businesses, as it is with other companies engaged in similar businesses. We believe that our operations and facilities, whether owned, managed, or leased, are in substantial compliance with applicable environmental laws and regulations and that any non-compliance is not likely to have a material adverse effect on our operations or financial condition.


However, future events, such as changes in, or modified interpretations of, existing environmental laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards associated with our products, business

activities, or properties, may give rise to additional compliance and other costs that could have a material adverse effect on our financial condition and operations.


In addition to environmental laws, the transportation of commodities by railcar or barge raises potential risks in the event of a derailment, spill, or other accident. Generally, liability under existing law in the United StatesU.S. for a derailment, spill, or other accident depends on the negligence of the party, such as the railroad, the shipper, or the manufacturer of the barge, railcar, or its components. However, under certain circumstances strict liability concepts may apply.


Governmental Regulation.


Railcar Industry. The primary regulatory and industry authorities involved in the regulation of the railcar industry are the United StatesU.S. Environmental Protection Agency; the Research and Special Programs Administration and the Federal Railroad Administration, both divisions of the United StatesU.S. Department of Transportation; and the Association of American Railroads.


These organizations establish rules and regulations for the railcar industry and rail interchange, including construction specifications and standards for the design and manufacture of railcars and railcar parts; mechanical, maintenance, and related

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standards for railcars; safety of railroad equipment, tracks, and operations; and packaging and transportation of hazardous or toxic materials.


We believe that our operations are in substantial compliance with these regulations. We cannot predict whether any future changes in these rules and regulations could cause added compliance costs that could have a material adverse effect on our financial condition or operations.


Inland Barge Industry. The primary regulatory and industry authorities involved in the regulation of the inland barge industry are the United StatesU.S. Coast Guard; the United StatesU.S. National Transportation Safety Board; the United StatesU.S. Customs Service; the Maritime Administration of the United StatesU.S. Department of Transportation; and private industry organizations such as the American Bureau of Shipping. These organizations establish safety criteria, investigate vessel accidents, and recommend improved safety standards. Violations of these laws and related regulations can result in substantial civil and criminal penalties as well as injunctions curtailing operations.


We believe that our operations are in substantial compliance with applicable laws and regulations. We cannot predict whether future changes that affect compliance costs would have a material adverse effect on our financial condition and operations.


Highway Products. The primary regulatory and industry authorities involved in the regulation of highway products businessmanufacturers are the United StatesU.S. Department of Transportation, the Federal Highway Administration, and various state highway departments.


These organizations establish certain standards and specifications related to the manufacture of our highway products. If our products were found not to be in compliance with these standards and specifications, we would be required to re-qualify our products for installation on state and national highways.


We believe that our highway products are in substantial compliance with all applicable standards and specifications. We cannot predict whether future changes in these standards and specifications would have a material adverse effect on our financial condition and operations.


Occupational Safety and Health Administration and Similar Regulations. Our operations are subject to regulation of health and safety matters by the United StatesU.S. Occupational Safety and Health Administration and the United StatesU.S. Mine Safety and Health Administration. We believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities. However, claims that may be asserted against us for work-related illnesses or injury and the further adoption of occupational and mine safety and health regulations in the United StatesU.S. or in foreign jurisdictions in which we operate could increase our operating costs. While we do not anticipate having to make material expenditures in order to remain in substantial compliance with health and safety laws and regulations, we are unable to predict the ultimate cost of compliance. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings or if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us.


Other Matters. To date, we have not suffered any material shortages with respect to obtaining sufficient energy supplies to operate our various plant facilities or transportation vehicles. Future limitations on the availability or consumption of petroleum products,

particularly natural gas for plant operations and diesel fuel for vehicles, could have a material adverse effect upon our ability to conduct our business. The likelihood of such an occurrence or its duration, and its ultimate effect on our operations, cannot be reasonably predicted at this time.



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Executive Officers and Other Corporate Officers of the Company.


The following table sets forth the names and ages of all of our executive officers and other corporate officers, their positions and offices presently held by them, and the year each person first became an officer. All officer andterms expire in May 2013.
Name Age Office 
Officer
Since
Timothy R. Wallace*
 59 Chairman, Chief Executive Officer, and President 1985
James E. Perry*
 41 Senior Vice President and Chief Financial Officer 2005
William A. McWhirter II*
 48 Senior Vice President and Group President 2005
D. Stephen Menzies*
 57 Senior Vice President and Group President 2001
S. Theis Rice*
 62 Senior Vice President, Human Resources and Chief Legal Officer 2002
Donald G. Collum 64 Vice President and Chief Audit Executive 2005
Tammy D. Gilbert 52 Vice President, Information Technology 2012
Virginia C. Gray, Ph.D.  53 Vice President, Organizational Development 2007
Mary E. Henderson*
 54 Vice President, Chief Accounting Officer, and Controller 2009
John M. Lee 52 Vice President, Business Development 1994
Gail M. Peck 45 Vice President and Treasurer 2010
Heather Perttula Randall 39 Vice President, Legal Affairs and Government Relations 2011
Jared S. Richardson 40 Vice President, Associate General Counsel and Secretary 2010
Stephen W. Smith 63 Vice President 2012
C. Michael Williams 57 Vice President, Human Resources 2012
*Executive officer subject to reporting requirements under Section 16 of the termSecurities Exchange Act of each person’s office:

Name

  Age  

Office

  Officer
Since		  Term
Expires
Timothy R. Wallace*  58  

Chairman, Chief Executive Officer, and

President

  1985  May 2012
James E. Perry*  40  Senior Vice President and Chief Financial Officer  2005  May 2012
Antonio Carrillo*  45  Senior Vice President and Group President  2010  May 2012
William A. McWhirter II*  47  Senior Vice President and Group President  2005  May 2012
D. Stephen Menzies*  56  Senior Vice President and Group President  2001  May 2012
S. Theis Rice*  61  Senior Vice President, Human Resources and Chief Legal Officer  2002  May 2012
Madhuri A. Andrews  45  Vice President, Information Technology  2008  May 2012
Donald G. Collum  63  Vice President and Chief Audit Executive  2005  May 2012
Virginia C. Gray, Ph.D.  52  Vice President, Organizational Development  2007  May 2012
Mary E. Henderson*  53  Vice President, Chief Accounting Officer, and Controller  2009  May 2012
John M. Lee  51  Vice President, Business Development  1994  May 2012
Gail M. Peck  44  Vice President and Treasurer  2010  May 2012
Heather Perttula Randall  38  Vice President, Legal Affairs and Government Relations  2011  May 2012
Jared S. Richardson  39  Associate General Counsel and Secretary  2010  May 2012

*

Executive officer subject to reporting requirements under Section 16 of the Securities Exchange Act of 1934.

1934.


Ms. AndrewsGilbert joined Trinity in 20082012 as Vice President, Information Technology. Since January 2002,Prior to joining Trinity, she ledworked for Hewlett-Packard where she served as the information technology organization for Maxim Integrated Products, Inc., a major semiconductor design and manufacturing company.

Mr. Carrillo joined Trinity in 1996 asAmerica's Vice President, of Operations of Trinity Industries de MexicoTransition, Transformation, and in 1999 became the President of Trinity Industries de Mexico. In 2005, he was named President of Trinity’s Energy Equipment Group. In 2009, Mr. Carrillo was named Group President of the Energy Equipment GroupProject/Program Management. She has also held executive positions with Electronic Data Systems, Sabre Holdings, American Airlines, and in 2010 was named Vice President. He was elected Senior Vice President in 2011. Mr. Carrillo retains responsibility for Trinity’s operations in Mexico.

Dr. Gray joined Trinity in 2007 and was appointed Vice President, Organizational Development. Prior to that, she was President of Vehicles of Change, a consulting firm focused on improving organizational effectiveness.

Harris Methodist Hospital.

Ms. Henderson joined the Company in 2003 as Director of Financial Reporting. She was named Assistant Controller in 2005 and Controller in 2009. In 2010, Ms. Henderson was elected Vice President, Chief Accounting Officer, and Controller.

Mr. McWhirter joined the Company in 1985 and held various accounting positions until 1992, when he became a business group officer. In 1999, he was elected to a corporate position as Vice President for Mergers and Acquisitions. In 2001, he was named Executive Vice President of a business group. In March 2005, he became Vice President and Chief Financial Officer and in 2006, Senior Vice President and Chief Financial Officer. In 2010, Mr. McWhirter was named Senior Vice President and Group President of the Construction Products and Inland Barge Groups.

In 2012, Mr. Menzies joined Trinity in 2001 as President of Trinity Industries Leasing Company. In 2006, he becameMcWhirter was named Senior Vice President and Group President forTrinityRail®.

of the Construction Products, Energy Equipment, and Inland Barge Groups.

Ms. Peck joined Trinity in 2010 as Treasurer and was appointed Vice President and Treasurer in 2011. Prior to joining Trinity, she worked for Centex Corporation one of the nation’s largest publicly-traded homebuilders, from 2001 to 2009, most recently serving as Vice President and Treasurer since 2004.

Mr. Perry joined Trinity in 2004 and was appointed Treasurer in April 2005. Mr. Perry was named a Vice President of Trinity in 2006 and appointed its Vice President, Finance in 2007. In 2010, Mr. Perry was appointed Chief Financial Officer and in 2011 was elected Senior Vice President and Chief Financial Officer.

Ms. Randall joined the Company in 2005 as Chief Counsel ofTrinityRail. In 2006, she became Deputy General Counsel in charge of litigation for Trinity. In 2011, Ms. Randall was elected Vice President, Legal Affairs and Government Relations.

Mr. Rice joined the Company in 1991 and held various legal and business positions until 2005, when he was elected Vice President and Chief Legal Officer. He was named Senior Vice President, Human Resources and Chief Legal Officer in 2011.

Mr. Richardson joined the Company in 2010 as Associate General Counsel and Secretary. In 2012, Mr. Richardson was elected Vice President, Associate General Counsel, and Secretary. From 2004 to 2009, he handled corporate governance and secretary matters for Energy Future Holdings Corp. (formerly TXU Corp.), a company engaged in the generation, sale, transmission, and distribution of electricity.

Mr. Smith joined the Company in 1976 and held various engineering positions advancing to Senior Vice President Engineering for TrinityRail. In 2008, Mr. Smith was promoted to a corporate position and has served as an engineering and technical advisor to Trinity's Group Presidents and corporate officers. In 2012, Mr. Smith was elected Vice President.
Mr. Williams joined Trinity in 2012 as Vice President, Human Resources. Prior to joining Trinity, he was Vice President and Chief People Officer at Luminant, the power generation and mining subsidiary of Energy Future Holdings Corp. He has also held human resources leadership positions at Safety-Kleen Systems, Inc., Service Master, Inc., and Waste Management, Inc.

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Messrs. Wallace, Menzies, Collum, and Lee and Dr. Gray have been in full time employment of Trinity or its subsidiaries for more than five years and have performed essentially the same respective duties during such time.


Item 1A. Risk Factors.


There are risks and uncertainties that could cause our actual results to be materially different from those mentioned in forward-looking statements that we make from time to time in filings with the Securities and Exchange Commission (“SEC”), news releases, reports, proxy statements, registration statements, and other written communications, as well as oral forward-looking statements made from time to time by representatives of our Company. All known material risks and uncertainties are described below. The cautionary statements below discuss important factors that could cause our business, financial condition, operating results, and cash flows to be materially adversely affected. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements contained herein. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.


Volatility in the global financial markets may adversely affect our business and operating results.During periods of volatility in the global financial markets, certain of our customers could delay or otherwise reduce their purchases of railcars, barges, wind towers, and other products and services. If negativevolatile conditions in the global credit markets prevent our customers’customers' access to credit, product order volumes may decrease which could result in lower revenues.or customers may default on payments owed to us. Likewise, if our suppliers face challenges in obtaining credit, in selling their products, or otherwise in operating their businesses, they may become unable to continue to offer the supply of materials we purchase from them to manufacture our products. These actionsproducts may be interrupted. Any of these conditions or events could result in reductions in our revenues, increased price competition, or increased operating costs, which could adversely affect our business results of operations and financial condition.


Our backlog is not necessarily indicative of the level of our future revenues duerevenues. Our backlog represents future production and estimated potential revenue attributable to potential impactsfirm contracts with, or written orders from, negative global economic conditions that may lead to raw materials and supplies shortages or requestsour customers for deferred deliveries of ordersdelivery in our backlog. The lack of stabilityvarious periods. Instability in the global economy, prevailingnegative conditions in the global credit markets, volatility in the industries that our products serve, changes in legislative policy, adverse changes in the financial condition of our customers for manufactured or leased products, adverse changes in the availability of raw materials and supplies, or un-remedied contract breaches could possibly lead to contract termination or cancellations of orders in our backlog or increased requests for deferred deliveries of our backlog orders, each of which could adversely affect our cash flows and results of operations. Our manufacturing backlog represents future production for which we have written orders from our customers for delivery in various periods, and estimated potential revenue attributable to those orders.


The cyclical nature of our business results in lower revenues during economicdownturns. We operate in cyclical industries. Downturns in overall economic conditions usually have a significant adverse effect on cyclical industries due to decreased demand for new and replacement products. Decreased demand could result in lower sales volumes, lower prices, and/or a loss of profits. The railcar, barge, and wind energy industries have previously experienced deep down cyclessharp cyclical downturns and at such times operated with a minimal backlog.

Following a period of weak railcar demand that began in 2009, new orders for railcars improved significantly in 2011 due to increased demand for the shipment of commodities, replacement of older railcars, and federal tax benefits received from taking delivery of railcars in 2011 and 2012. Orders for structural wind towers have been slow since mid-2008 when energy development companies encountered tightened credit markets, lower demand for electricity and heightened competition arising from declining natural gas prices. The continued slowdown in the residential and commercial construction markets negatively impacted the results of our Construction Products Group as well. We continually assess our manufacturing capacity and take steps to align our production capacity with demand for our products. As a result of our assessment, we adapted to the rapid decline in market conditions that began in 2009 by reducing our production footprint and staffing levels and causing certain facilities to be on non-operating status. Due to improvements in demand, we increased production staff at certain facilities in late 2010 and during 2011. We expect that facilities on non-operating status will be available for future operations to the extent that demand further increases.


Litigation claims could increase our costs and weaken our financial condition. We are currently, and may from time to time be, involved in various claims or legal proceedings arising out of our operations. Adverse outcomes in some or all of these matters could result in judgments against us for significant monetary damages that could increase our costs and weaken our financial condition. We seek contractual recourse and indemnification in the ordinary course of business,Although we maintain reserves for our reasonably estimable liability, and purchase liability insurance at coverage levels based upon commercial norms in our industries in an effort to mitigate our liability exposures. Nevertheless, our reserves may be inadequate to cover the uninsured portion of claims or judgments. Any such claims or judgments could have a material adverse effect on our business, operations, or overall financial condition.


Increases in the price and demand for steel could lower ourmargins and profitability. The principal material used in our Rail, Inland Barge, and Energy Equipment Groupsmanufacturing segments is steel. During 2011, the supply of steel was sufficient to support our manufacturing requirements. Market steel prices continue to exhibit short periods of volatility and ended 2011 significantly higher than 2010. Generally, we are able to mitigate the majority of this volatility through contract-specific purchasing practices and existing supplier commitments.volatility. Steel prices may continue to be volatile in partexperience further volatility as a result of scrap surcharges assessed by steel mills and other market factors. We often use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to mitigate the effect of this volatility on our operating profits for the year.

To the extent that we do not have such arrangements in place, an increase in steel prices could materially lower our margins and profitability. In general, we believe there is enough capacity in the supply industryaddition, our ability to meet current production level demands. We believedemands is dependent on the existing contracts and commercial relationships we have in place will meet our current production forecasts. However, anyability to obtain a sufficient amount of steel. An unanticipated interruption in our supply chain could have an adverse impact on both our margins and production schedules.


We have potential exposure to environmental liabilities, which may increase costs andlower profitability. We are subject to comprehensive federal, state, local, and foreign environmental laws and regulations relating toto: (i) the release or discharge of materials into the environment; (ii) the management, use, processing, handling, storage, transport, and disposal of hazardous and non-hazardous waste and materials; and (iii) other activities relating to the protection of human health and the environment. Such laws and regulations not only expose us to liability for our own acts, but also may expose us to liability for the acts of others or for our actions which were in compliance with all applicable laws at the time these actions were taken. In addition, such laws may

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require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations. Our operations that involve hazardous materials also raise potential risks of liability under common law.


Environmental operating permits are, or may be, required for our operations under these laws and regulations. These operating permits are subject to modification, renewal, and revocation. WeAlthough we regularly monitor and review our operations, procedures, and policies for compliance with our operating permits and related laws and regulations. Despite these compliance efforts,regulations, the risk of environmental liability is inherent in the operation of our businesses, as it is with other companies engaged in similar businesses. We believe that our operations and facilities, whether owned, managed, or leased, are in substantial compliance with applicableoperating under environmental laws and regulations and that any non-compliance is not likely to have a material adverse effect on our operations or financial condition.

permits.


However, future events, such as changes in, or modified interpretations of, existing environmental laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards associated with our products, business activities, or properties, may give rise to additional compliance and other costs that could have a material adverse effect on our financial condition and operations.


In addition to environmental laws, the transportation of commodities by railcar or barge raises potential risks in the event of a derailment spill, or other accident.accident that results in the release of an environmentally sensitive substance. Generally, liability under existing law in the United StatesU.S. for a derailment spill, or other accident depends on the negligence, if any, of thea party, such as the railroad, the shipper, or the manufacturer of the barge, railcar, or its components. However, under certain circumstances strict liability concepts may apply.

apply and if we are found liable in any such incident, it could have a material adverse effect on our financial condition, business, and operations.


We operate in highly competitive industries. We may not be able to sustain our marketleadership positions which may impact our financial results. We face aggressive competition in all geographic markets and each industry sector in which we operate. In addition to price, we face competition in product performance and technological innovation, quality, reliability of delivery, customer service, and other factors. This competition is often intense, the effects of which could reduce our revenues and operating profits, limit our ability to grow, increase pricing pressure on our products, and otherwise affect our financial results.


The limited number of customers in certain of our businesses, the variable purchase patterns of our customers in all our segments, and the timing of completion, delivery, and customer acceptance of orders may cause our revenues and income from operations to vary substantially each quarter, which would result in significant fluctuations in our quarterly results.Some of the markets we serve are dominated by a limited number of customers. Customers in each of our business segments do not purchase a similar volume of products each year nor make purchases consistently from year to year.year-to-year. As a result, the order levels for our products have varied significantly from quarterly period to quarterly period in the past and may continue to vary significantly in the future. Therefore, our results of operations in any particular quarterly period may be significantly affected. As a result of these quarterly fluctuations, we believe that comparisons of our sales and operating results between quarterly periods may not be meaningful and should not be relied upon as indicators of future performance.


We may not have access to capital due to deterioration of conditions in the global capital markets, weakening of macroeconomic conditions, and negative changes in credit ratings. In general, the Company, and more specifically its leasing subsidiaries' operations, rely in large part, upon banks and capital markets to fund its operations and contractual commitments and refinance existing debt. These markets can experience high levels of volatility and access to capital can be constrained for an extended period of time. In addition to conditions in the capital markets, a number of other factors could cause the Company to incur increased borrowing costs and to have greater difficulty accessing public and private markets for both secured and unsecured debt. These factors include the Company's financial performance and its credit ratings and rating outlook as determined primarily by rating agencies such as Standard & Poor's and Moody's Investor Service. If we are unable to obtain refinancing for existing debt as it matures or if our railcar leasing subsidiarythe Company is unable to obtainsecure financing on acceptable long-term financingterms, the Company's other sources of funds, including available cash, bank facilities, and cash flow from operations may not be adequate to fund its railcar lease fleet, our lenders may foreclose on the portion of our lease fleet that secures our warehouse facility.In general, the ability tooperations and contractual commitments and refinance maturing debt is significant to our leasing group’s operations. TILC, our wholly-owned captive leasing subsidiary, uses borrowings under a non-recourse warehouse facility to initially finance the railcars it purchases from our rail manufacturing business. Trinity Rail Leasing Warehouse Trust (“TRLWT”), a qualified subsidiary of TILC, is the borrower under the warehouse facility. Borrowings under the warehouse facility are available through February 2013, and, any amounts outstanding at maturity, absent renewal, will be payable in three equal installments in August 2013, February 2014, and August 2014.existing debt.

As of December 31, 2011, there was $308.5 million of indebtedness outstanding and $166.5 million was available under the TILC warehouse loan facility. Borrowings under the warehouse facility are secured by the specific railcars financed by such borrowings and the underlying leases. A decline in the value of the railcars securing borrowings under the warehouse facility or in the creditworthiness of the lessees under the associated leases could reduce TRLWT’s ability to obtain long-term financing for such railcars. Additionally, fluctuations in interest rates from the time TRLWT purchases railcars with short-term borrowings under the warehouse facility and the time TRLWT obtains permanent financing for such railcars could decrease our profitability on the leasing of the railcars and could have an adverse impact on our financial results. If TRLWT is unable to obtain long-term financing to replace borrowings under the warehouse facility, the lenders under the warehouse facility may foreclose on the portion of TRLWT’s lease fleet pledged to secure its loan facility, which foreclosure, if a significant number of railcars is affected, could result in the loss of a significant amount of TRLWT’s assets.


We may be unable to re-market railcars from expiring leases on favorable terms, which could resultin lower lease utilization percentages and reduced revenues. The profitability of our railcar leasing business is dependent in part on our ability to re-lease or sell railcars we own upon the expiration of existing lease terms, or upon lease defaults or bankruptcy filings by third party lessees. Our ability to re-lease or sell leased railcars profitably is dependent upon several factors, including, among others:


the cost of and demand for leases or ownership of newer or specific use models;


the availability in the market generally of other used or new railcars;


the degree of obsolescence of leased railcars;


the prevailing market and economic conditions, including the availability of credit, interest rates, and inflation rates;


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the demand for refurbishment;


the cost of materials and labor;


the volume of railcar traffic; and


the volume and nature of railcar loadings.


A downturn in the industries in which our lessees operate and decreased demand for railcars could also increase our exposure to re-marketing risk because lessees may demand shorter lease terms or newer railcars, requiring us to re-market leased railcars more frequently. Furthermore, the resale market for previously leased railcars has a limited number of potential buyers. Our inability to re-lease or sell leased railcars on favorable terms could result in lower lease rates, lower lease utilization percentages, and reduced revenues.


Fluctuations in the price and supply of specialty and other component parts used in the production of our railcar-related and structural wind towers products could have a material adverseeffect on our ability to cost-effectively manufacture and sell our products. In some instances, we rely on a limited number of suppliers forcertain components needed in our production.A significant portion of our business depends on the adequate supply of numerous specialty and other parts and components at competitive prices such as brakes, wheels, side frames, bolsters, and bearings for the railcar business, as well as flanges for the wind towers business. Our manufacturing operations depend in part on our ability to obtain timely deliveries of materials, parts, and components in acceptable quantities and quality from our suppliers. Certain parts and components of our products are currently available from a limited number of suppliers (though generally a minimum of two suppliers continue to produce the parts and components we use in our products), and, as a result, we may have limited control over pricing, availability, and delivery schedules. While we endeavor to be diligent in contractual relationships with our suppliers, if we are unable to purchase a sufficient quantity of parts and components on a timely basis, we could face disruptions in our production and incur delays while we attempt to engage alternative suppliers. Any such disruption could harm our business and adversely impact our results of operations.


Reductions in the availability of energy supplies or an increase in energy costs mayincrease our operating costs. We use various gases, including natural gas, at our manufacturing facilities and use diesel fuel in vehicles to transport our products to customers and to operate our plant equipment. An outbreak or escalation of hostilities between the United StatesU.S. and any foreign power and, in particular, prolonged conflicts could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of natural gas or energy in general. Hurricanes or other natural disasters could result in a real or perceived shortage of petroleum and/or natural gas potentially resulting in an increase in natural gas prices or general energy costs. Speculative trading in energy futures in the world markets could also result in an increase in natural gas and general energy cost. Future limitations on the availability or consumption of petroleum products and/or an increase in energy costs, particularly natural gas for plant operations and diesel fuel for vehicles and plant equipment, could have an adverse effect upon our ability to conduct our business cost effectively.


Our manufacturer’smanufacturer's warranties expose us to product replacement and repair claims. Depending on the product, we warrant against manufacturing defects due to our workmanship and certain materials, parts, and components pursuant to express limited contractual warranties. Accordingly, we may be subject to significant warranty claims in the future such as multiple claims based on one defect repeated throughout our production process or claims for which the cost of repairing or replacing the defective part, component or material is highly disproportionate to the original cost. These types of warranty claims could result in costly product recalls, significant repair or replacement costs, and damage to our reputation.


Increasing insurance claims and expenses could lower profitability and increasebusiness risk. The nature of our business subjects us to product liability, property damage, and personal injury claims, especially in connection with the repair and manufacture of products that transport hazardous, toxic, or volatile materials. We maintain reserves for reasonably estimable liability claims and liability insurance coverage at levels based upon commercial norms in the industries in which we operate and our historical claims experience. Over the last several years, insurance carriers have raised premiums for many companies operating in our industries. Increased premiums may further increase our insurance expense as coverage expires or otherwise cause us to raise our self-insured retention. If the number or severity of claims within our self-insured retention increases, we could suffer costs in excess of the reserves we maintain for the reasonably estimable liability in such claims, and although we carry liability insurance coverage at levels based on commercial norms in our reserves. Anindustries, an unusually large liability claim or a string of claims based on a failure repeated throughout our production process may exceed our insurance coverage or expose us to the entireuninsured damages judgment if we were unable or elected not to insure against certain hazards because of high premiums or other reasons. In addition, the availability of, and our ability to collect on, insurance coverage is often subject to factors beyond our control. If any of our third-party insurers fail, cancel our coverage, or otherwise are unable to provide us with adequate insurance coverage, then our overall risk exposure and our operational expenses would increase and the management of our business operations would be disrupted. Moreover, any accident or incident involving us or our products, even if we are fully insured, contractually

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indemnified, or not held to be liable, could negatively affect our reputation among customers and the public, thereby making it more difficult for us to compete effectively, and could significantly affect the cost and availability of insurance in the future.


Risks related to our operations outside of the United States,U.S., particularly Mexico, could decrease ourprofitability. Our operations outside of the United StatesU.S. are subject to the risks associated with cross-border business transactions and activities. Political, legal, trade, economic change or instability, unrestrained criminal activities, or social unrest could limit or curtail our respective foreign business activities and operations, including the ability to hire and retain employees. There has been a significant increase in violence in Mexico associated with the Mexican government’sgovernment's attempts to stop illegal drug trafficking. We have not, to date, been materially affected by any of these risks, but we cannot predict the likelihood of future effects from such risks or any resulting adverse impact on our business, results of operations, or financial condition. Many items manufactured by us in Mexico are sold primarily in the U.S. and the transportation and import of such products may be disrupted. Some foreign countries where we operate have regulatory authorities that regulate railroad safety, railcar and railcar component part design, performance, and manufacture of equipment used on their railroad systems. If we fail to obtain and maintain certifications of our railcars and railcar parts and components within the various foreign countries where we operate, we may be unable to market and sell our railcars, parts, and components in those countries. In addition, unexpected changes in laws, rules, and regulatory requirements; tariffs and other trade barriers, including regulatory initiatives for buying

goods produced in America; more stringent or restrictive laws, rules, and regulations relating to labor or the environment; adverse tax consequences; and price exchange controls could limit operations affecting production throughput and makemaking the manufacture and distribution of our products less timely or more difficult. Furthermore, any material change in the quotas, regulations, or duties on imports imposed by the United StatesU.S. government and agencies, or on exports by the government of Mexico or its agencies, could affect our ability to export products that we manufacture in Mexico. Because we have operations outside the United States,U.S., we could be adversely affected by final judgments of non-compliance with the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws of other countries.


Equipment failures or extensive damage to our facilities, including as might occur as a result of natural disasters, could lead to production or service curtailments or shutdowns, loss of revenue or higher expenses.We operate a substantial amount of equipment at our production facilities, several of which are situated in tornado and hurricane zones and on navigable waterways in the nation’s navigable waterways.U.S. An interruption in production capabilities or maintenance and repair capabilities at our facilities, as a result of equipment failure or acts of nature could reduce or prevent our production, service, or repair of our products and increase our costs and expenses. A halt of production at any of our manufacturing facilities could severely affect delivery times to our customers. While we maintain business recovery plans that are intended to allow us to recover from natural disasters that could disrupt our business, we cannot provide assurances that our plans would fully protect us from the effects of all such disasters. In addition, insurance may not adequately compensate us for any losses incurred as a result of natural or other disasters.disasters, which may adversely affect our financial condition. Any significant delay in deliveries could result in cancellation of all or a portion of our orders, cause us to lose future sales, and negatively affect our reputation and our results of operations.


Because we do not have employment contracts with our key management employees, we maynot be able to retain their services in the future. Our success depends on the continued services of our key management employees, none of whom currently have an employment agreement with us. Although we have historically been largely successful in retaining the services of our key management, we may not be able to do so in the future. The loss of the services of one or more key members of our management team could result in increased costs associated with attracting and retaining a replacement and could disrupt our operations and result in a loss of revenues.


Repercussions from terrorist activities or armed conflict could harm ourbusiness. Terrorist activities, anti-terrorist efforts, and other armed conflict involving the United StatesU.S. or its interests abroad may adversely affect the United StatesU.S. and global economies, potentially preventing us from meeting our financial and other obligations. In particular, the negative impacts of these events may affect the industries in which we operate. This could result in delays in or cancellations of the purchase of our products or shortages in raw materials, parts, or components. Any of these occurrences could have a material adverse impact on our operating results, revenues, and costs.


Violations of or changes in the regulatory requirements applicable to the industriesin which we operate may increase our operating costs. We are subject to extensive regulation by governmental regulatory and industry authorities. Our railcar operations are subject to regulation by the United StatesU.S. Environmental Protection Agency; the Research and Special Programs Administration and the Federal Railroad Administration, both divisions of the United StatesU.S. Department of Transportation; and the Association of American Railroads. These organizations establish rules and regulations for the railcar industry and rail interchange, including construction specifications and standards for the design and manufacture of railcars; mechanical, maintenance, and related standards for railcars; safety of railroad equipment, tracks, and operations; and packaging and transportation of hazardous or toxic materials. Future changes that affect compliance costs may have a material adverse effect on our financial condition and operations.


Our Inland Barge operations are subject to regulation by the United StatesU.S. Coast Guard; the United StatesU.S. National Transportation Safety Board; the United StatesU.S. Customs Service; the Maritime Administration of the United StatesU.S. Department of Transportation; and private industry organizations

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such as the American Bureau of Shipping. These organizations establish safety criteria, investigate vessel accidents and recommend improved safety standards. Violations of these laws and related regulations can result in substantial civil and criminal penalties as well as injunctions curtailing operations.


Our Construction Products Group business is subject to regulation by the United StatesU.S. Department of Transportation,Transportation; the Federal Highway Administration,Administration; and various state highway departments. These organizations establish certain standards and specifications related to the manufacture of our highway products. If our products were found to be not in compliance with these standards and specifications, we would be required to re-qualify our products for installation on state and national highways.


Our operations are also subject to regulation of health and safety matters by the United StatesU.S. Occupational Safety and Health Administration and the United StatesU.S. Mine Safety and Health Administration. WeAlthough we believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities. However,facilities, claims that may be asserted against us for work-related illnesses or injury, and the further adoption of occupational and

mine safety and health regulations in the United StatesU.S. or in foreign jurisdictions in which we operate could increase our operating costs. We are unable to predict the ultimate cost of compliance with these health and safety laws and regulations. Accordingly, there can be no assurance that we will not become involved in future litigation, investigations, or other proceedings or if we were found to be responsible or liable in any litigation, investigations, or proceedings, that such costs would not be material to us.


Some of our customers place orders for our products in reliance on their ability to access government subsidies in the form of early tax benefits or tax credits such as accelerated depreciation or the production tax credit for renewable energy. There is no assurance that the United StatesU.S. government will reauthorize, modify, or otherwise not allow the expiration of such early tax benefits or tax credits, and in cases where such subsidies are materially modified to reduce the available early benefit or credit, or otherwise allowed to expire, the demand for our products could decrease, thereby creating the potential for a material adverse effect on our financial condition or results of operations.


We may be required to reduce the value of our long-lived assets and/orgoodwill, which would weaken our financial results. We periodically evaluate for potential impairment the carrying values of our long-lived assets to be held and used. The carrying value of a long-lived asset to be held and used is considered impaired when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the asset is less than the carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced commensurate with the estimated cost to dispose of the assets. In addition, goodwill is required to be tested for impairment annually, or on an interim basis whenever events or circumstances change, indicating that the carrying amount of the goodwill might be impaired. Due to an overall market decline for products in the Rail Group during the second quarter of 2009, we recorded a goodwill impairment charge of $325.0 million. Impairment losses related to reductions in the value of our long-lived assets or our goodwill could weaken our financial condition and results of operations.


We may incur increased costs due to fluctuations in interest rates and foreigncurrency exchange rates. We are exposed to risks associated with fluctuations in interest rates and changes in foreign currency exchange rates. WeUnder varying circumstances, we seek to minimize these risks when considered appropriate, through the use of interest rate hedges and similar financial instruments and other activities, although these measures, if and when implemented, may not be implemented or effective. Any material and untimely changes in interest rates or exchange rates could result in significant losses to us.


Railcars as a significant mode of transporting freight could decline, become moreefficient over time, experience a shift in types of modal transportation, and/orcertain railcar types could become obsolete.As the freight transportation markets we serve continue to evolve and become more efficient, the use of railcars may decline in favor of other more economic transportation modalities. Features and functionality specific to certain railcar types could result in those railcars becoming obsolete as customer requirements for freight delivery change.


Business, regulatory, and legal developments regarding climate change may affect thedemand for our products or the ability of our critical suppliers to meet ourneeds. The Company has We have followed the current debate over climate change in general, and the related science, policy discussion, and prospective legislation. Additionally, the potential challenges and opportunities for the Company that climate change policy and legislation may pose have been reviewed. However, any such challenges or opportunities are heavily dependent on the nature and degree of climate change legislation and the extent to which it applies to our industries. At this time, the Company cannot predict the ultimate impact of climate change and climate change legislation on the Company’sCompany's operations or opportunities. Potential opportunities could include greater demand for wind towers and certain types of rail cars,railcars, while potential challenges could include decreased demand for certain types of rail carsrailcars and higher energy costs. Further, when or if these impacts may occur cannot be assessed until scientific analysis and legislative policy are more developed and specific legislative proposals begin to take shape.


Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial results. Our accounting policies and methods are fundamental to how we record and report our

14
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financial condition and results of operations. Some of these policies require use of estimates and assumptions that may affect the reported value of our assets or liabilities and financial results and are critical because they require management to make difficult, subjective, and complex judgments about matters that are inherently uncertain. Accounting standard setters and those who interpret the accounting standards (such as the Financial Accounting Standards Board, the Securities and Exchange Commission,SEC, and our independent registered public accounting firm) may amend or even reverse their previous interpretations or positions on how these standards should be applied. These changes can be harddifficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior

period financial statements. For a further discussion of some of our critical accounting policies and standards and recent accounting changes, see Critical Accounting Policies and Estimates in Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations and Note 1 Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.


Shortages of skilled labor could adversely impact our operations. We depend on skilled labor in the manufacture and repair of our products. Some of our facilities are located in areas where demand for skilled laborers may exceed supply. Shortages of some types of skilled laborers, such as welders, could restrict our ability to maintain or increase production rates and could increase our labor costs.


Some of our employees belong to labor unions, and strikes or work stoppages could adversely affect our operations.We are a party to collective bargaining agreements with various labor unions at some of our operations in the U.S. and all of our operations in Mexico. Disputes with regard to the terms of these agreements or our potential inability to negotiate acceptable contracts with these unions in the future could result in, among other things, strikes, work stoppages or other slowdowns by the affected workers. We cannot be assured that our relations with our workforce will remain positive or that union organizers will not be successful in future attempts to organize at some of our facilities. If our workers were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized, or the terms and conditions in future labor agreements were renegotiated, we could experience a significant disruption of our operations and higher ongoing labor costs. In addition, we could face higher labor costs in the future as a result of severance or other charges associated with lay-offs, shutdowns or reductions in the size and scope of our operations or difficulties of restarting our operations that have been temporarily shuttered.


From time to time we may take tax positions that the Internal Revenue Service or other taxing jurisdictions may contest.We have in the past and may in the future take tax positions that the Internal Revenue Service (“IRS”) or other taxing jurisdictions may contest. Effectivechallenge. Beginning with the 2011 tax return, we are required by a new IRS regulation to disclose particular tax positions, taken after the effective date, to the IRS as part of our tax returns for that year and future years.years particular tax positions in which we have a reasonable basis for the position but not a "more likely than not" chance of prevailing. If the IRS successfully contests a tax position that we take, we may be required to pay additional taxes or fines which may not have been previously accrued that may adversely affect our results of operations and financial position.


Our inability to produce and disseminate relevant and/or reliable data and information pertaining to our business in an efficient, cost-effective, secure, and well-controlled fashion may have significant negative impacts on confidentiality requirements and obligations and proprietary needs and expectations and, therefore, our future operations, profitability, and competitive position. Management relies on IT infrastructure, including hardware, network, software, people, and processes to provide useful and confidential information to conduct our business in the ordinary course, including correspondence and commercial data and information interchange with customers, suppliers, legal counsel, governmental agencies, and financial institutions consultants, and to support assessments and conclusions about future plans and initiatives pertaining to market demands, operating performance, and competitive positioning. In addition, any material failure, interruption of service, or compromised data security could adversely affect our relations with suppliers and customers, place us in violation of confidentiality and data protection laws, rules, and regulations, and result in negative impacts to our market share, operations, and profitability. Security breaches in our information technology could result in theft, destruction, loss, misappropriation, or release of confidential data or intellectual property which could adversely impact our future results.

Discord, conflict, and lack of compromise within and amongst the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, and U.S. borrowing/debt ceiling limits could adversely affect our business and operating results. The inability of the legislative and executive branches of the U.S. government to pass a federal government budget, address tax revenue requirements, control deficit spending, and effectively manage short and long term U.S. government borrowing, debt ratings, and debt ceiling adjustments, could negatively impact U.S. domestic and global financial markets thereby reducing demand by our customers for our products and services thereby reducing revenues. Similarly, if our suppliers face challenges in obtaining credit, in selling their products, or otherwise in operating their businesses, they may become unable to continue to offer the materials we purchase from them to manufacture our products. These actions could result in reductions in our revenues, increased price competition, or increased operating costs, which could adversely affect our business results of operations and financial condition.


15
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The Company could potentially fail to successfully integrate new businesses or products into its current business. The Company routinely engages in the search for growth opportunities, including assessment of merger and acquisition prospects in new markets and/or products. Any merger or acquisition in which the Company becomes involved and ultimately concludes is subject to integration into the Company's businesses and culture. If such integration is unsuccessful to any material degree, such lack of success could have a material adverse effect on our business, operations, or overall financial condition.

Additional Information. Our Internet website address is www.trin.net.www.trin.net. Information on the website is available free of charge. We make available on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto, as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. The contents of our website are not intended to be incorporated by reference into this report or in any other report or document we file and any reference to our website is intended to be an inactive textual reference only.


Item 1B. Unresolved Staff Comments.


None.


Item 2. Properties.


We principally operate in various locations throughout the United StatesU.S. and in Mexico. Our facilities are considered to be in good condition, well maintained, and adequate for our purposes.

   Approximate Square
Feet		   Approximate Square Feet
Located In		 
   Owned   Leased   US   Mexico 

Rail Group

   5,278,900     32,000     3,573,100     1,737,800  

Construction Products Group

   1,494,400     63,400     1,557,800     —  

Inland Barge Group

   919,000     97,100     1,016,100     —  

Energy Equipment Group

   1,505,500     261,100     923,600     843,000  

Executive Offices

   173,000     —     173,000     —  
  

 

 

   

 

 

   

 

 

   

 

 

 
   9,370,800     453,600     7,243,600     2,580,800  
  

 

 

   

 

 

   

 

 

   

 

 

 

  Approximate Square Feet Approximate Square Feet Located In
  Owned Leased US Mexico
Rail Group 6,185,400
 92,700
 4,280,600
 1,997,500
Construction Products Group 1,833,900
 98,100
 1,932,000
 —
Inland Barge Group 948,500
 97,100
 1,045,600
 —
Energy Equipment Group 1,799,500
 250,300
 1,206,800
 843,000
Executive Offices 186,000
 —
 186,000
 —
  10,953,300
 538,200
 8,651,000
 2,840,500

Our estimated weighted average production capacity utilization for 2011 was utilized asthe twelve month period ended December 31, 2012 is reflected by the following approximate percentages:

 Production
Capacity
Utilized

Rail Group

50% 

Construction Products Group

70%

Construction Products Group

75%
Inland Barge Group

8595%

Energy Equipment Group

5060%


Item 3. Legal Proceedings.


See Note 18 of the Notes to Consolidated Financial Statements.


Item 4.Mine Safety Disclosures


The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K.



16

PART II

Item 5.

 Market for Registrant's Common Equity, Related Stockholder Mattersand Issuer Purchases of Equity Securities.

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the New York Stock Exchange under the ticker symbol “TRN”. The following table shows the closing price range of our common stock by quarter for the years ended December 31, 20112012 and 2010.

   Prices 

Year Ended December 31, 2011

  High   Low 

Quarter ended March 31, 2011

  $  36.67    $  26.31  

Quarter ended June 30, 2011

   37.76     30.54  

Quarter ended September 30, 2011

   37.25     21.05  

Quarter ended December 31, 2011

   30.62     19.94  

Year Ended December 31, 2010

  High   Low 

Quarter ended March 31, 2010

  $  20.58    $  15.22  

Quarter ended June 30, 2010

   26.46     17.72  

Quarter ended September 30, 2010

   22.27     16.45  

Quarter ended December 31, 2010

   26.68     22.01  

2011.

 Prices
Year Ended December 31, 2012High Low
Quarter ended March 31, 2012$35.93
 $29.69
Quarter ended June 30, 201233.48
 22.80
Quarter ended September 30, 201233.55
 21.85
Quarter ended December 31, 201236.05
 29.01

Year Ended December 31, 2011High Low
Quarter ended March 31, 2011$36.67
 $26.31
Quarter ended June 30, 201137.76
 30.54
Quarter ended September 30, 201137.25
 21.05
Quarter ended December 31, 201130.62
 19.94

Our transfer agent and registrar as of December 31, 20112012 was American Stock Transfer & Trust Company.


Holders

Holders

At December 31, 2011,2012, we had approximately 1,8581,867 record holders of common stock. The par value of the common stock is $1.00 per share.


Dividends

Dividends

Trinity has paid 191195 consecutive quarterly dividends. Quarterly dividends declared by Trinity for the years ended December 31, 20112012 and 20102011 are as follows:

   

Year Ended December 31,

 
       2011           2010     

Quarter ended March 31,

  $0.08    $0.08  

Quarter ended June 30,

   0.09     0.08  

Quarter ended September 30,

   0.09     0.08  

Quarter ended December 31,

   0.09     0.08  
  

 

 

   

 

 

 

Total

  $    0.35    $    0.32  
  

 

 

   

 

 

 

 Year Ended December 31,
 2012 2011
Quarter ended March 31,$0.09
 $0.08
Quarter ended June 30,0.11
 0.09
Quarter ended September 30,0.11
 0.09
Quarter ended December 31,0.11
 0.09
Total$0.42
 $0.35

Recent Sales of Unregistered Securities


None.


Performance Graph

-


The following Performance Graph and related information shall not be deemed “soliciting“soliciting material” or to be “filed” with the SEC, nor shall such information beincorporated by reference into any future filing under the Securities Act of 1933 orSecurities Exchange Act of 1934, each as amended, except to the extent that theCompany specifically incorporates it by reference into such filing.


The following graph compares the Company’sCompany's cumulative total stockholder return (assuming reinvestment of dividends) during the five-year period ended December 31, 20112012 with an overall stock market index (New York Stock Exchange Composite Index) and the Company’sCompany's peer group index (Dow Jones US Commercial Vehicles & Trucks Index). The data in the graph assumes $100 was invested on December 31, 2006.

    2006   2007   2008   2009   2010   2011 

Trinity Industries, Inc.

   100     79     46     52     80     91  

Dow Jones US Commercial Vehicles & Trucks Index

   100     145     69     101     167     147  

New York Stock Exchange Composite Index

   100     109     66     85     97     93  

2007.





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 2007
 2008
 2009
 2010
 2011
 2012
Trinity Industries, Inc. 100
 57
 65
 101
 115
 139
Dow Jones US Commercial Vehicles & Trucks Index100
 48
 70
 115
 101
 113
New York Stock Exchange Composite Index100
 61
 78
 89
 86
 99

Issuer Purchases of Equity Securities


This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended December 31, 2011:

Period

  Number of
Shares
Purchased (1)		   Average Price
Paid per
Share (1)		   Total Number of
Shares  (or Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs (2)		   Maximum
Number (or
Approximate
Dollar Value) of
Shares (or  Units)
that May Yet Be
Purchased
Under the Plans
or Programs (2)		 

October 1, 2011 through October 31, 2011

   12,327    $21.53     —    $200,000,000  

November 1, 2011 through November 30, 2011

   161    $28.09     —    $200,000,000  

December 1, 2011 through December 31, 2011

   122    $29.77     —    $200,000,000  
  

 

 

     

 

 

   

Total

           12,610    $21.70                     —    $200,000,000  
  

 

 

     

 

 

   

(1)Amounts represent the surrender to the Company of 12,610 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.

(2)On December 9, 2010, the Company’s Board of Directors authorized a $200 million share repurchase program, effective January 1, 2011. This program replaced the Company’s previous share repurchase program and expires December 31, 2012. No shares were repurchased under this program for the three months ended December 31, 2011.

2012:

Period 
Number of Shares Purchased (1)
 
Average Price Paid per Share (1)
 
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)
 Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)
October 1, 2012 through October 31, 2012 3,659
 $31.23
 —
 $200,000,000
November 1, 2012 through November 30, 2012 61,383
 $31.84
 —
 $200,000,000
December 1, 2012 through December 31, 2012 361
 $35.22
 —
 $200,000,000
Total 65,403
 $31.82
 —
 $200,000,000

(1) These columns include the following transactions during the three months ended December 31, 2012: (i) the deemed surrender to the Company of 60,661 shares of common stock to pay the exercise price and satisfy tax withholding in connection with the exercise of employee stock options, (ii) the surrender to the Company of 300 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees, and (iii) the purchase of 4,442 shares of common stock by the Trustee for assets held in a non-qualified employee profit-sharing plan trust.

(2) In September 2012, the Company's Board of Directors authorized a new $200 million share repurchase program effective October 1, 2012, which expires on December 31, 2014. The new program replaces the Company's prior program which expired on September 30, 2012. During the three months ended December 31, 2012, the Company did not repurchase any shares under the program. The approximate dollar value of shares that were eligible to be repurchased under such share repurchase program is shown as of the end of such month or quarter. Since the prior program was terminated on September 30, 2012, beginning October 1, 2012, $200 million of shares are eligible for repurchase under the new program.

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Item  6. Selected Financial Data.


The following financial information for the five years ended December 31, 20112012 has been derived from our audited consolidated financial statements. This information should be read in conjunction with Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included elsewhere herein.

(in millions, except percent and per share data) Year Ended December 31, 
 2011  2010  2009  2008  2007 

Statement of Operations Data:

     

Revenues

 $3,075.1   $2,155.5   $2,420.9   $3,803.4   $3,723.3  

Operating profit (loss)

  425.3    303.8    (30.9)   559.5    529.8  

Income (loss) from continuing operations

  145.7    75.4    (137.7)   282.4    289.8  

Discontinued operations:

     

Loss from discontinued operations, net of benefit for income taxes of $—, $—, $—, $(0.0), and $(0.2)

  —    —    —    (1.5)   (0.7) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

 $145.7   $75.4   $(137.7)  $280.9   $289.1  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to Trinity
Industries, Inc.

 $142.2   $67.4   $(137.7)  $280.9   $289.1  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to Trinity Industries, Inc. per common share:

     

Basic:

     

Continuing operations

 $1.77   $0.85   $(1.81)  $3.49   $3.58  

Discontinued operations

  —    —    —    (0.02)   (0.01) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
 $1.77   $0.85   $(1.81)  $3.47   $3.57  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Diluted:

     

Continuing operations

 $1.77   $0.85   $(1.81)  $3.47   $3.55  

Discontinued operations

  —    —    —    (0.02)   (0.01) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
 $1.77   $0.85   $(1.81)  $3.45   $3.54  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Weighted average number of shares outstanding:

     

Basic

  77.5    76.8    76.4    78.4    78.7  

Diluted

  77.8    77.0    76.4    78.8    79.4  

Dividends declared per common share

 $0.35   $0.32   $0.32   $0.31   $0.26  

Balance Sheet Data:

     

Total assets

 $6,121.0   $5,760.0   $4,656.4   $4,911.6   $4,039.7  

Debt — recourse

  457.7    450.3    646.0    584.4    590.3  

Debt — non-recourse

  2,517.2    2,457.4    1,199.1    1,190.3    643.9  

Stockholders’ equity

 

$

  1,948.3

  

 $  1,845.7   $  1,806.3   $  1,912.3   $  1,812.7  

Ratio of total debt to total capital

  60.4%   61.2%   50.5%   48.1%   40.5% 

Book value per share

 $24.29   $23.13   $22.81   $24.08   $22.27  

Effective

 Year Ended December 31,

2012 2011 2010 2009 2008
 (in millions, except percent and per share data)
Statement of Operations Data:         
Revenues$3,811.9
 $2,938.3
 $1,930.7
 $2,162.9
 $3,423.6
Operating profit (loss)574.8
 426.8
 294.2
 (36.1) 536.7
Income (loss) from continuing operations251.9
 146.8
 69.4
 (140.8) 266.8
Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $1.1, $(0.4), $3.6, $2.0, and $7.81.8
 (1.1) 6.0
 3.1
 14.1
Net income (loss)$253.7
 $145.7
 $75.4
 $(137.7) $280.9
Net income (loss) attributable to Trinity Industries, Inc.$255.2
 $142.2
 $67.4
 $(137.7) $280.9
Net income (loss) attributable to Trinity Industries, Inc. per common share:         
Basic:         
Continuing operations$3.18
 $1.78
 $0.77
 $(1.85) $3.30
Discontinued operations0.02
 (0.01) 0.08
 0.04
 0.17
 $3.20
 $1.77
 $0.85
 $(1.81) $3.47
Diluted:         
Continuing operations$3.17
 $1.78
 $0.77
 $(1.85) $3.28
Discontinued operations0.02
 (0.01) 0.08
 0.04
 0.17
 $3.19
 $1.77
 $0.85
 $(1.81) $3.45
Weighted average number of shares outstanding:         
Basic77.3
 77.5
 76.8
 76.4
 78.4
Diluted77.5
 77.8
 77.0
 76.4
 78.8
Dividends declared per common share$0.42
 $0.35
 $0.32
 $0.32
 $0.31
          
Balance Sheet Data:         
Total assets$6,669.9
 $6,121.0
 $5,760.0
 $4,656.4
 $4,911.6
Debt - recourse$458.1
 $455.0
 $449.4
 $645.5
 $583.9
Debt - non-recourse$2,596.9
 $2,517.2
 $2,457.4
 $1,199.1
 $1,190.3
Stockholders' equity$2,137.6
 $1,948.3
 $1,845.7
 $1,806.3
 $1,912.3
Ratio of total debt to total capital58.8% 60.4% 61.2% 50.5% 48.1%
Book value per share$27.02
 $24.29
 $23.13
 $22.81
 $24.08

In December 31, 2011,2012, the Company adoptedentered into an agreement to sell its remaining ready-mix concrete operations. The terms of the emerging industry policytransaction are expected to be finalized and the transaction closed during 2013. The expected divestiture of recognizing revenue from the sales of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcarour remaining ready-mix concrete operations has been owned by the lease fleetaccounted for one year or less at the time of sale. Sales of railcars from the lease fleet whichand reported as a discontinued operation and, accordingly, historical amounts previously reported have been owned byadjusted, where appropriate, to reflect this change. Further, assets and liabilities related to the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balancesdiscontinued operations have been reclassified to conform to this policy. See Note 1 ofclassified as Assets/Liabilities Held for Sale and Discontinued Operations in the Notes to Consolidated Financial Statements.

accompanying consolidated balance sheets.


Due to the adoption of Accounting Standards Codification (“ASC”) 810-10, effective January 1, 2010, the Consolidated Balance Sheets as of December 31, 2012, 2011, and 2010, and the Consolidated Statements of Operations, Comprehensive Income, Cash Flows, and Stockholder’sStockholder's Equity for the years ended December 31, 2012, 2011, and 2010, include the financial position and results of operations of TRIP Holdings and its subsidiaries. Prior periods were not restated. See Notes 1 and 6 of the Notes to Consolidated Financial Statements for an explanation of the effect of this pronouncement.


A goodwill impairment charge of $325.0 million was recorded in 2009 related to the Rail Group segment. See Note 1

19
Table of the Notes to Consolidated Financial Statements for further discussion.

Contents


Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations


Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

•Company Overview

•Executive Summary

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Commercial Commitments

•Critical Accounting Policies and Estimates

•Recent Accounting Pronouncements

Forward Looking•Forward-Looking Statements

Our MD&A should be read in conjunction with our Consolidated Financial Statements and related Notes in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.


Company Overview


Trinity Industries, Inc., headquartered in Dallas, Texas, is a multi-industrydiversified industrial company that owns a variety of market-leading businesses which provide products and services to the industrial, energy, transportation, and construction sectors. We operate in five distinct business groups which we report on a segment basis: the Rail Group, Construction Products Group, Inland Barge Group, Energy Equipment Group, and Railcar Leasing and Management Services Group. We also report the All Other segment which includes the Company’sCompany's captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; other peripheral businesses; and the change in market valuation related to ineffective commodity hedges.


Our Rail and Inland Barge Groups and our structural wind towers and containers businesses operate in cyclical industries.  Results in our Construction Products and Energy Equipment Groups are subject to seasonal fluctuations with the first quarter historically being the weakest quarter. Railcar sales from the lease fleet are the primary driver of fluctuations in results in the Railcar Leasing and Management Services Group.

Following aan extended period of weak railcar demand that began in 2009,for new ordersrailcars through 2010, demand for new railcars improved significantly in 2011recovered sharply, primarily due to increased demand foran increase in the shipment of commodities, replacement of older railcars, and federal tax benefits received from taking delivery of railcars in 2011 and 2012. While moderating from the accelerated pace in the first half of 2011, demand conditions and corresponding order levels for new railcars in 2012 continued to be favorable, particularly from the oil, gas, and chemicals industries. Orders for structural wind towers have been slow since mid-2008 when energy development companies encountered tightened credit markets, lower demand for electricity, and heightened competition arising from declining natural gas prices.prices and imports from foreign manufacturers. The continued slowdown in the residential and commercial construction markets and budgetary constraints at the state level have negatively impacted the results of our Construction Products Group as well. Group.

We continually assess our manufacturing capacity and take steps to align our production capacity with demand for our products. AsRail Group operating results include certain costs associated with the repositioning of a resultportion of our assessment, we adaptedthe Company's production capacity to the rapid decline in market conditions that began in 2009 by reducing our production footprint and staffing levels and causing certain facilities to be on non-operating status.meet railcar demand.  Due to improvements in demand for certain products, we have increased production staff at certain facilities insince late 2010 and during 2011.2010. We expect that facilities on non-operating status will be available for future operations to the extent that demand further increases.


Executive Summary


The Company’s revenues for 20112012 were approximately $3.1$3.8 billion, representing an increase of $919.6$873.6 million or 42.7%30% over last year. Operating profit increased to $425.3$574.8 million compared to $303.8$426.8 million last year. ForWhile all of our business segments reported increases in revenues for the year endedDecember 31, 2011,2012 when compared to the prior year, the largest contributors to the increase were our Rail, Inland Barge, and Leasing Groups. The increase in revenues in our Rail and Inland Barge Groups was primarily due to higher shipment volumes in our Rail and Inland Barge Groups while the increase in revenues in our Leasing Group was primarily due to higher railcar sales from the lease fleet, higher rentalincreased revenues from lease fleet additions, and an increase in rental rates. ForOperating profit and margin grew for the year endedDecember 31, 2011,2012 when compared with the increase in operating profit wasprior year, primarily due to the higher shipment levels in our Rail and Inland Barge Groups and from revenue growth and an increase in the net gain on the sales of railcars from our lease fleet in our Leasing Group. Our Construction Products Group experienced a decline in operating margin primarily as a result of competitive pricing pressures and higher operating costs in our Highway Products business. Net income attributable to Trinity Industries, Inc. common stockholders for 20112012 increased $74.8$113.0 million compared to last year.

As



20
Table of Contents

Our backlog at December 31, 2011 and 2010, our backlog2012 compared with the prior year was approximately as follows:

   As of December 31, 
   2011   2010 
   (in millions) 

Rail Group

    

External Customers

  $1,973.2    $346.6  

Leasing Group

   621.9     111.0  
  

 

 

   

 

 

 
  $    2,595.1    $457.6  

Inland Barge

  $494.6    $508.0  

Structural wind towers

  $934.3    $    1,000.0  

 December 31,
2012		 December 31,
2011
 (in millions)
Rail Group   
External Customers$2,867.5
 $1,973.2
Leasing Group834.7
 621.9
 $3,702.2
 $2,595.1
Inland Barge$564.1
 $494.6
Structural wind towers$680.3
 $934.3

For the twelve months endedDecember 31, 2011,2012, our rail manufacturing businesses received orders for approximately 37,100 railcars which included a supply agreement22,350 railcars. The increase in backlog as of December 31, 2012 reflects the value of orders taken during the year as well as contractual pricing adjustments on long-term orders previously received. Approximately 60% of the railcar backlog is expected to be delivered in the twelve months ending December 31, 2013 with GATX Corporationthe remainder to deliver 12,500 railcars over a five-year period, significantly increasing the Rail Group backlog.be delivered from 2014 through 2016. The total amount of orders in our backlog from the Leasing Group wasare supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery. Approximately 83% of our backlog for barges is expected to be delivered in the twelve months ending December 31, 2013 with the remainder to be delivered in 2014. For multi-year barge orders, theagreements, deliveries scheduled for 20122013 and 2014 are included in the backlog at this time; deliveries beyond 2012 are not included in the backlog iftime where specific production quantities for future years have not been determined. Approximately $412.5$412.5 million of the structural wind towers backlog is involved insubject to litigation filed bywith a structural wind towers customer for the Company against onecustomer’s breach of a long-term supply contract for the manufacture of towers. Approximately 64% of our backlog for structural wind tower customers for breach of contract by failingtowers not currently subject to complylitigation is expected to be delivered in 2013 with the customer’s multi-year, contractual purchase obligations.

remainder contracted for delivery in future years.


Capital expenditures for 20112012 were $340.0$469.2 million with $258.6$352.6 million utilized for lease fleet additions, net of deferred profit of $28.3 million.$50.8 million. Capital expenditures for 20122013 are projected to be approximately $400.0$510.0 million to $475.0$595.0 million, including $300.0$350.0 million to $350.0$400.0 million in net lease fleet additions.


In April 2012, Trinity increased its quarterly dividend by 22% to $0.11 per share and in September 2012, the Company's Board of Directors approved a new $200 million share repurchase program which became effective October 1, 2012 and will expire on December 31, 2014. The new program replaced the Company's previous share repurchase program.

In December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations. The terms of the transaction are expected to be finalized and the transaction closed during 2013. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as a discontinued operation and, accordingly, historical amounts previously reported have been adjusted, where appropriate, to remove the effect of discontinued operations. Further, assets and liabilities related to the discontinued operations have been classified as Assets/Liabilities Held for Sale and Discontinued Operations in the accompanying consolidated balance sheets.

In December 2012, Trinity Rail Leasing 2012 LLC, a Delaware limited liability company ("TRL 2012"), a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $333.8 million in aggregate principal amount of Secured Railcar Equipment Notes which are non-recourse to Trinity.

In February 2011,2013, the $475 million TILC warehouse loan facility was renewedextended for an additional two yearssix months and now matures in February 2013.August 2013. Amounts outstanding at maturity, absent renewal will be payable in three installments in August 2013, February 2014 and , August 2014.

In May 2011, the Company’s inland barge manufacturing facility in Missouri experienced a flood resulting in significant damages to Trinity’s property and a temporary disruption of its production activities. The Company is insured against losses due to property damage and business interruption subject to certain deductibles. Trinity received $35.0 million in payments from its insurance carriers of which $22.7 million pertained to the replacement of or repairs to damaged property, plant, and equipment with a net book value of $5.7 million, with the remainder pertaining primarily to the reimbursement of flood-related expenses and lost production. Accordingly, the Company recognized a gain of $17.0 million in the fourth quarter of 2011 from the disposition of flood-damaged property, plant, and equipment. Additionally, our barge manufacturing operations incurred approximately $8.6 million in costs, net of insurance reimbursements, related to damages and lost productivity resulting from the flood. During the fourth quarter of 2011, the Company’s inland barge production capacity at its Missouri operations was restored to its pre-flood levels. With respect to the flood at our Tennessee manufacturing facility in May 2010, operating profit in 2011 includes insurance proceeds of $6.5 million and a $0.6 million gain from the disposition of damaged property, plant, and equipment related to the flood.

In July 2011, TRIP Rail Holdings LLC (“TRIP Holdings”) issued $175.0 million in Senior Secured Notes (the “TRIP Holdings Senior Secured Notes”) and TRIP Rail Master Funding LLC (“TRIP Master Funding”), a Delaware limited liability company and limited purpose, wholly-owned subsidiary of TRIP Holdings, issued $857.0 million in Secured Railcar Equipment Notes (the “TRIP Master Funding Secured Railcar Equipment Notes”). The proceeds from the TRIP Holdings Senior Secured Notes and the TRIP Master Funding Secured Railcar Equipment Notes were primarily used by TRIP Master Funding to purchase all of the railcar equipment owned by TRIP Rail Leasing LLC (“TRIP Leasing”) which, in turn, repaid the borrowings under its Warehouse Loan Agreement in full.

The TRIP Holdings Senior Secured Notes have a stated final maturity date of July 6, 2014 and bear interest at 8.00% payable quarterly with a yield to call interest rate of 12.00% for redemptions or other prepayments on or prior to January 15, 2013 and 15.00% for redemptions or other prepayments after such date. The TRIP Holdings Senior Secured Notes are secured, among other things, by a pledge of each equity investor’s ownership interest in TRIP Holdings and certain distributions made to TRIP Holdings from TRIP Master Funding and are non-recourse to Trinity, TILC, TRIP Master Funding, and the other equity investors in TRIP Holdings. Trinity purchased $112.0 million of the TRIP Holdings Senior Secured Notes in July 2011.

The TRIP Master Funding Secured Railcar Equipment Notes were issued pursuant to an Indenture, dated as of July 6, 2011 between TRIP Master Funding and Wilmington Trust Company, as indenture trustee, with a final maturity date in July 2041. The TRIP Master Funding Secured Railcar Equipment Notes consist of three classes of notes with the Class A-1a notes bearing interest at 4.37%, the Class A-1b notes bearing interest at Libor plus 2.50%, and the Class A-2 notes bearing interest at 6.02%, all payable monthly. The TRIP Master Funding Secured Railcar Equipment Notes are non-recourse to Trinity, TILC, and the other equity investors in TRIP Holdings and are secured by TRIP Master Funding’s portfolioFebruary 2015.



21
Table of railcars and operating leases thereon, its cash reserves and all other assets owned by TRIP Master Funding.

On October 20, 2011, we extended our $425.0 million unsecured revolving credit facility for an additional four years. It now matures on October 20, 2016. Borrowings under the amended credit facility bear interest at Libor plus 150.0 basis points or prime plus 50.0 basis points. Financial covenants are similar to existing covenants but no longer include a minimum net worth requirement.

Contents


Results of Operations


Years Ended December 31, 2012, 2011 2010,, and 2009

2010


Overall Summary for Continuing Operations


Revenues
 Year Ended December 31, 2012   
 Revenues Percent Change 2012 versus 2011
 External Intersegment Total 
 ($ in millions)  
Rail Group$1,512.1
 $500.9
 $2,013.0
 57.9% 
Construction Products Group461.2
 22.5
 483.7
 6.7
 
Inland Barge Group675.2
 —
 675.2
 23.1
 
Energy Equipment Group506.0
 52.6
 558.6
 18.1
 
Railcar Leasing and Management Services Group644.4
 2.7
 647.1
 17.2
 
All Other13.0
 68.4
 81.4
 31.7
 
Eliminations – Lease subsidiary—
 (485.9) (485.9) 

 
Eliminations – Other—
 (161.2) (161.2)   
Consolidated Total$3,811.9
 $—
 $3,811.9
 29.7
 
         
 Year Ended December 31, 2011   
 Revenues Percent Change 2011 versus 2010
 External Intersegment Total 
 ($ in millions)   
Rail Group$931.7
 $343.0
 $1,274.7
 144.1% 
Construction Products Group440.4
 12.9
 453.3
 28.1
 
Inland Barge Group548.5
 —
 548.5
 29.9
 
Energy Equipment Group454.8
 18.0
 472.8
 12.7
 
Railcar Leasing and Management Services Group551.4
 0.6
 552.0
 18.8
 
All Other11.5
 50.3
 61.8
 27.4
 
Eliminations – Lease subsidiary—
 (325.5) (325.5)   
Eliminations – Other—
 (99.3) (99.3)   
Consolidated Total$2,938.3
 $—
 $2,938.3
 52.2
 
         
 Year Ended December 31, 2010   
 Revenues   
 External Intersegment Total   
 ($ in millions)   
Rail Group$289.7
 $232.4
 $522.1
   
Construction Products Group333.5
 20.5
 354.0
   
Inland Barge Group422.3
 —
 422.3
   
Energy Equipment Group408.5
 11.1
 419.6
   
Railcar Leasing and Management Services Group464.5
 —
 464.5
   
All Other12.2
 36.3
 48.5
   
Eliminations – Lease subsidiary—
 (216.8) (216.8)   
Eliminations – Other—
 (83.5) (83.5)   
Consolidated Total$1,930.7
 $—
 $1,930.7
   

Revenues

   Year Ended December 31, 2011    
   Revenues  Percent Change 
   External   Intersegment  Total  2011 versus 2010 
   (in millions, except percents)    

Rail Group

  $931.7    $    343.0   $1,274.7    144.1% 

Construction Products Group

   577.2     12.9    590.1    2.0% 

Inland Barge Group

   548.5     —    548.5    29.9% 

Energy Equipment Group

   454.8     18.0    472.8    12.7% 

Railcar Leasing and Management Services Group

   551.4.     0.6    552.0    18.8% 

All Other

   11.5     50.3    61.8    27.4% 

Eliminations – lease subsidiary

   —     (325.5)   (325.5)  

Eliminations – other

   —     (99.3)   (99.3)  
  

 

 

   

 

 

  

 

 

  

Consolidated Total

  $    3,075.1    $—   $    3,075.1    42.7% 
  

 

 

   

 

 

  

 

 

  
   Year Ended December 31, 2010    
   Revenues  Percent Change 
   External   Intersegment  Total  2010 versus 2009 
   (in millions, except percents)    

Rail Group

  $289.7    $    232.4   $522.1    (41.7)% 

Construction Products Group

   558.3     20.5    578.8    7.5% 

Inland Barge Group

   422.3     —    422.3    (19.9)% 

Energy Equipment Group

   408.5     11.1    419.6    (17.7)% 

Railcar Leasing and Management Services Group

   464.5     —    464.5    25.5% 

All Other

   12.2     36.3    48.5    0.2% 

Eliminations – lease subsidiary

   —     (216.8)   (216.8)  

Eliminations – other

   —     (83.5)   (83.5)  
  

 

 

   

 

 

  

 

 

  

Consolidated Total

  $    2,155.5    $—   $    2,155.5    (11.0)% 
  

 

 

   

 

 

  

 

 

  
   Year Ended December 31, 2009    
   Revenues    
   External   Intersegment  Total    
   (in millions)    

Rail Group

  $485.2    $    410.1   $895.3   

Construction Products Group

   524.0     14.5    538.5   

Inland Barge Group

   527.3     —    527.3   

Energy Equipment Group

   502.2     7.8    510.0   

Railcar Leasing and Management Services Group

   370.2     —    370.2   

All Other

   12.0     36.4    48.4   

Eliminations – lease subsidiary

   —     (391.6)   (391.6)  

Eliminations – other

   —     (77.2)   (77.2)  
  

 

 

   

 

 

  

 

 

  

Consolidated Total

  $    2,420.9    $—   $    2,420.9   
  

 

 

   

 

 

  

 

 

  

Our revenues for the yearyears ended December 31, 2012 and 2011 increased from the previous year primarily due to higher shipment volumes in our Rail and Inland Barge Groups while our Leasing Group experienced increased revenue primarily due to higher railcar sales from the lease fleet, higher rentalincreased revenues from lease fleet additions, and higher rental rates. Our revenues for the year ended December 31, 2010 decreased from 2009 primarily due to the impact


22
Table of the economic downturn on the markets we serve, especially the new railcar market. This decrease was partially offset in 2010 by the inclusion of the operating results of TRIP Holdings in the consolidated statements of operations for the year ended December 31, 2010.

Contents



Operating Profit (Loss)

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Rail Group

  $77.3   $1.5   $    (355.9) 

Construction Products Group

   53.4    47.4    32.6  

Inland Barge Group

   106.4    69.0    125.2  

Energy Equipment Group

   8.9    35.1    73.8  

Railcar Leasing and Management Services Group

   254.5    207.0    149.0  

All Other

   (3.8)   (11.4)   0.8  

Corporate

   (43.6)   (33.8)   (30.8) 

Eliminations – lease subsidiary

   (28.3)   (8.4)   (22.6) 

Eliminations – other

   0.5    (2.6)   (3.0) 
  

 

 

  

 

 

  

 

 

 

Consolidated Total

  $    425.3   $    303.8   $(30.9) 
  

 

 

  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Rail Group$199.0
 $77.3
 $1.5
Construction Products Group44.8
 54.9
 37.8
Inland Barge Group124.7
 106.4
 69.0
Energy Equipment Group18.2
 8.9
 35.1
Railcar Leasing and Management Services Group300.9
 254.5
 207.0
All Other(10.2) (3.8) (11.4)
Corporate(51.5) (43.6) (33.8)
Eliminations – lease subsidiary(50.8) (28.3) (8.4)
Eliminations – other(0.3) 0.5
 (2.6)
Consolidated Total$574.8
 $426.8
 $294.2

Our operating profit for the yearyears ended December 31, 2012 and 2011 increased primarily as a result of consistently higher shipment levels in our Rail and Inland Barge groups and from revenue growth and an increase in the net gain on the sales of railcars from our lease fleet in our Leasing Group. The increaseFor 2012 and 2011, the increased cost of revenues was primarily volume-related and included certain repositioning costs from these groups is partially offset by lower profitabilityour Rail Group in 2012. Operating profit in 2011 and 2010 also included flood-related gains of $15.5 million and $5.1 million, respectively, in our Energy Equipment group due to competitive pricing pressures and product changes.Inland Barge Group. Selling, engineering, and administrative expenses as a percentage of revenue decreased to 6.8%5.9% for 20112012 as compared to 6.6% for 2011 and 8.6% for 2010.

Our operating profit for the year ended December 31, 2010 increased primarily as a result of the $325.0 million goodwill impairment charge in 2009 and the inclusion of the results of operations of TRIP Holdings in 2010 partially offset by lower product shipments. Selling, engineering, and administrative expenses as a percentage of revenues increased to 8.6% for 2010 as compared to 7.7% for 2009. Overall, selling, engineering, and administrative expenses were substantially unchanged for 2010 when compared to the previous year.

.


Other Income and Expense.Expense. Other income and expense is summarized in the following table:

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Interest income

  $(1.5)  $(1.4)  $(1.7) 

Interest expense

   185.3    182.1    123.2  

Other, net

   4.0    6.8    (5.3) 
  

 

 

  

 

 

  

 

 

 

Total

  $    187.8   $    187.5   $    116.2  
  

 

 

  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Interest income$(1.5) $(1.5) $(1.4)
Interest expense194.7
 185.3
 182.1
Other, net(4.3) 4.0
 6.8
Consolidated Total$188.9
 $187.8
 $187.5

Interest expense in 20102012 increased $58.9$9.4 million over the prior year due to the inclusion of TRIP Holdings debt refinancing completed in 2011 while interest expense of $46.9 million and an increase in debt levels, including $238.3 million of secured railcar equipment notes entered into in November 2009 and $369.2 million of secured railcar equipment notes entered into in October 2010 forincome was substantially unchanged from the Leasing Group.prior year. The decrease in Other, net expense for the year endedDecember 31, 2012 was primarily due to higher foreign currency translation gains over the prior year. The decrease in Other, net expense for the year endedDecember 31, 2011 of $2.8 million was primarily due to certain expenses in 2010 related to the retirement of the Company’sCompany's senior notes partially offset by higher foreign currency translation losses in 2011. The increase in Other, net expense for the year ended December 31, 2010 of $12.1 million was primarily due to lower gains in 2010 on equity investments, certain expenses related to the retirement of the Company’s senior notes in November 2010, and the recorded decline in the fair value of the Company's pre-acquisition investment in Quixote Corporation partially offset by lower foreign currency translation losses.

2011.


Income Taxes. The provision for income taxes results in effective tax rates differentthat differ from the statutory rates. The following is a reconciliation between the statutory United StatesU.S. Federal income tax rate and the Company’s effective income tax rate:rate on income from continuing operations:

   Year Ended December 31, 
   

2011

  2010  2009 

Statutory rate

   35.0%   35.0%   35.0% 

State taxes

   2.1    3.3    1.9  

Impairment of goodwill

   —    —    (23.7) 

Changes in valuation allowances

   —    —    (6.5) 

Tax settlements

   —    4.4    —  

Changes in tax reserves

   —    (9.6)   —  

Other, net

   1.6    2.0    (0.3) 
  

 

 

  

 

 

  

 

 

 

Effective rate

   38.7%   35.1%   6.4% 
  

 

 

  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011 2010
Statutory rate35.0 % 35.0% 35.0 %
State taxes2.0
 2.1
 3.4
Tax settlements(0.6) —
 4.8
Changes in tax reserves(1.4) 0.4
 (10.7)
Other, net(0.3) 1.1
 2.5
Effective rate34.7 % 38.6% 35.0 %

At December 31, 2011,2012, the Company, excluding TRIP Holdings, had $124.2$103.3 million of Federal consolidated net operating loss carryforwards after the estimated current year utilization of $42.9 million, and tax-effected $5.6$5.4 million of state loss carryforwards. The Company has $42.2 million of foreign tax credit carryforwards which will expire between 2014 and 2022. The Federal net operating loss carryforwards are due to expire between 2028 and 2031. We have established a valuation allowance for Federal, state, and foreign tax operating losses and credits which may not be realizable. We believe that it is more likely than not that we will be able to generate sufficient future taxable income to utilize the remaining deferred tax assets.


23
Table of Contents

TRIP Holdings had $383.3$439.7 million in Federal tax loss carryforwards at December 31, 2011.2012 which are due to expire between 2027 and 2032. We expect TRIP Holdings to begin utilizing their tax loss carryforwards beginning in 2020. Because TRIP Holdings files a separate tax return from the Company, its tax loss carryforwards can only be used by TRIP Holdings and cannot be used to offset future taxable income of the Company. The Federal tax loss carryforwards are due to expire between 2024 and 2031. We expect TRIP Holdings to begin utilizing their tax loss carryforwards beginning in 2020. Our ability to utilize

For the tax loss carryforwards thatyear ended December 31, 2012, cash taxes were acquired as part ofnot substantially different from the Quixote acquisition against future taxablecurrent provision for income is subject to restrictions undertaxes. In 2011, the Internal Revenue Code. We have established a valuation allowance for Federal, state, and foreign tax operating losses which may not be realizable.

The current provision for income taxes of $30.9$31.7 million exceedsexceeded expected cash taxes of $12.1 million related to 2011 income due to additional accruals for uncertain tax positions, refunds of excess payments from prior years, and prior year true ups.


During the year endedDecember 31, 2012, we settled our audit with the Internal Revenue Service (“IRS”) for the 2004-2005 tax years. As a result of closing this audit, we recognized a $3.5 million tax benefit in the first quarter, primarily related to favorable claims filed and approved by the IRS in the final audit settlement.

The IRS field work for our 2006-2008 audit cycle has concluded and all issues, except for transfer pricing, have been agreed to and tentatively settled. The transfer pricing issue has been appealed and we are working with both the U.S. and Mexican taxing authorities to coordinate taxation. As we do not control the timing of when our issues will be settled, we cannot determine when the 2006-2008 cycle will close and all issues formally settled and thus when the statute of limitations for years after 2005 will close. In addition, we are currently under IRS audit for the 2009-2011 tax years.



24
Table of Contents

Segment Discussion


Rail Group

   Year Ended December 31,  Percent Change 
   2011  2010  2009  2011 versus 2010  2010 versus 2009 
   ($ in millions)       

Revenues:

      

Rail

  $    1,105.5   $    391.9   $    776.8    182.1%   (49.5)% 

Components

   169.2    130.2    118.5    30.0%   9.9% 
  

 

 

  

 

 

  

 

 

   

Total revenues

  $1,274.7   $522.1   $895.3    144.1%   (41.7)% 

Operating profit (loss)

  $77.3   $1.5   $(355.9)   

Operating profit (loss) margin

   6.1%   0.3%   (39.8)%   

Railcar shipments in 2011 increased by 9,315 railcars to approximately 14,065 railcars when compared with 2010. Railcars shipped in 2010 and 2009 were approximately 4,750 and 9,100 railcars, respectively.

 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues:         
Rail$1,850.5
 $1,105.5
 $391.9
 67.4 % 182.1%
Components162.5
 169.2
 130.2
 (4.0) 30.0
Total revenues2,013.0
 1,274.7
 522.1
 57.9
 144.1
          
Operating costs:         
Cost of revenues1,773.9
 1,167.3
 489.3
 52.0
 138.6
Selling, engineering, and administrative costs40.1
 34.0
 31.3
 17.9
 8.6
Property disposition (gains)/losses—
 (3.9) —
    
Operating profit$199.0
 $77.3
 $1.5
    
Operating profit margin9.9% 6.1% 0.3%    

As of December 31, 2012, 2011, and 2010 our Rail Group backlog of railcars was as follows:

   Year Ended December 31, 
   2011   2010   2009 
   (in millions, except railcars) 

External Customers

  $1,973.2    $346.6    $75.6  

Leasing Group

   621.9     111.0     119.8  
  

 

 

   

 

 

   

 

 

 

Total

  $  2,595.1    $  457.6    $  195.4  
  

 

 

   

 

 

   

 

 

 

Number of railcars

   29,000     5,960     2,320  

For

 Year Ended December 31,
 2012 2011 2010
 (in millions)
External Customers$2,867.5
 $1,973.2
 $346.6
Leasing Group834.7
 621.9
 111.0
Total$3,702.2
 $2,595.1
 $457.6

The changes in the twelve monthsnumber of railcars in the Rail Group backlog are as follows:
 Year Ended December 31,
 2012 2011 2010
Beginning balance29,000
 5,960
 2,320
Orders received22,350
 37,105
 8,390
Shipments(19,360) (14,065) (4,750)
Ending balance31,990
 29,000
 5,960

Total revenues increased $738.3 million for the year ended December 31, 2012 compared to the prior year as a result of an increase in railcar deliveries and an increase in average sales price, resulting from higher overall demand and product mix changes. Total revenues increased $752.6 million for the year ended December 31, 2011 our rail manufacturing businesses receivedwhen compared to 2010 as a result of increased railcar deliveries and related components.

Cost of revenues increased $606.6 million for the year ended December 31, 2012 compared to the prior year as a result of increased unit deliveries as well as a larger mix of higher-cost railcars. Production efficiencies and costs were impacted by costs of $10.6 million incurred in 2012 to reposition a portion of the Company's production capacity to meet railcar demand. Additionally, the Company incurred capital expenditures of $10.0 million for the year ended December 31, 2012 related to these repositioning efforts. Cost of revenues increased $678.0 million when comparing 2011 with 2010 as a result of increased railcar deliveries.

Unit and price increases as well as product mix change increased total backlog dollars when comparing December 31, 2012 year end to the previous year end. The increase in backlog as of December 31, 2012 also reflects contractual pricing adjustments on long-term orders for approximately 37,100 railcars including a supply agreement with GATX Corporationpreviously received. The average selling price in the backlog at December 31, 2012 increased as compared to deliver 12,500 railcars over a five-year period, significantly increasing the Rail Group backlog.previous year end due to higher demand and product mix. Backlog increased when comparing 2011 versus 2010 due to favorable demand. The total amount of the backlog dedicated to the Leasing Group wasis supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery.

Operating profit for the Rail Group increased $75.8 million for the year ended December 31, 2011 compared to the same period last year. This increase was primarily due to significantly higher volume of railcars delivered during the year. Operating loss for the Rail Group decreased $357.4 million for the year ended December 31, 2010 compared to the prior year. This decrease was primarily due to a $325.0 million goodwill impairment charge during the quarter ended June 30, 2009. The effect of significantly reduced railcar shipments on operating profit during 2010 was partially offset by a reduction in operating expenses.


In the year ended December 31, 2011,2012, railcar shipments included sales to the Leasing Group of $325.5$485.9 million compared to $216.8$325.5 million in 2010the comparable period in 2011, with a deferred profit of $28.3$50.8 million compared to $8.4$28.3 million for the same period in 2011. Results for the year ended December 31, 2010. 2010, included $216.8 million in sales to the Leasing Group with a deferred profit of $8.4 million.Sales to the Leasing Group and related profits are included in the operating results of the Rail Group but are eliminated in consolidation. Railcar sales to the Leasing Group for 2009 were $391.6 million with a deferred profit

25
Table of $22.6 million. Results for the year ended December 31, 2009 included $113.0 million in railcars sold to TRIP Leasing that resulted in a gain of $11.2 million, of which $2.8 million in profit was deferred based on our equity interest. There were no railcar sales to TRIP Leasing during the years ended December 31, 2011 and December 31, 2010.

Contents



Global Insight, Inc., an independent industry research firm, has estimated in its firstfourth quarter 2012 report that the average age of the North American freight car fleet is approximately 20.819.8 years, with approximately 35%36% older than 25 years and has estimated that North American carload traffic will grow by 1.9%1.8% in 2012,2013, with an increase of 1.5%3.3% for 20132014 and 2.6%1.6% for 20142015 before slowing to 1.7%0.8% in 2015,2016, and 1.2%0.7% in 2016.

2017.


The table below is an average of the most recent estimates of approximate industry railcar deliveries for the next five years from two independent third party research firms, Global Insight, Inc. and Economic Planning Associates, Inc.

2012

   55,200  

2013

   59,600  

2014

   62,100  

2015

   61,600  

2016

   60,000  

TILC

201353,000
201462,200
201563,100
201657,700
201755,300

The Leasing Group purchases a portion of our railcar production, financing a portion of the purchase price through a non-recourse warehouse loan facility, and periodically refinances those borrowings through equipment financing transactions. In 2011, TILC2012, the Leasing Group purchased 26.7%28.0% of our railcar production as compared to 51.1%26.7% in 2010.2011. On a segment basis, sales to TILCthe Leasing Group and related profits are included in the operating results of our Rail Group but are eliminated in consolidation.


Construction Products Group
 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues:         
Highway Products$376.1
 $377.0
 $312.9
 (0.2)% 20.5%
Aggregates65.1
 45.5
 32.1
 43.1
 41.7
Other42.5
 30.8
 9.0
 *
 *
Total revenues483.7
 453.3
 354.0
 6.7
 28.1
          
Operating costs:         
Cost of revenues387.0
 357.9
 280.8
 8.1
 27.5
Selling, engineering, and administrative costs52.0
 40.8
 36.1
 27.5
 13.0
Property disposition (gains)/losses(0.1) (0.3) (0.7)    
Operating profit$44.8
 $54.9
 $37.8
    
Operating profit margin9.3% 12.1% 10.7%    
 *

   Year Ended December 31,  Percent Change 
   2011  2010  2009  2011 versus 2010  2010 versus 2009 
   ($ in millions)       

Revenues:

      

Concrete and Aggregates

  $182.3   $256.9   $291.4    (29.0)%   (11.8)% 

Highway Products

   377.0    312.9    238.0    20.5%   31.5% 

Other

   30.8    9.0    9.1    *    (1.1)% 
  

 

 

  

 

 

  

 

 

   

Total revenues

  $    590.1   $    578.8   $    538.5    2.0%   7.5% 

Operating profit

  $53.4   $47.4   $32.6    

Operating profit margin

   9.0%   8.2%   6.1%   

*not meaningful


Revenues increased slightly for the year ended December 31, 2012 compared to the same period last year due primarily to higher Aggregate volumes and increased sales in other product lines. Revenues increased for the year ended December 31, 2011 compared to the same period in 2010 primarily due to higher volumes in all product lines.

For the year ended December 31, 2012, operating profit and operating profit margin decreased compared to the same period last year primarily due to lower operating profit from our Highway Products business related to competitive pricing pressures and other product lineshigher operating costs offset partially offset by lower revenuesimproved operating efficiencies in our ConcreteAggregates business. Selling, engineering, and Aggregates business resulting from the divestiture of our asphalt operations in August 2010administrative costs increased for 2012 when compared to 2011 due to higher legal and our Central Texas Region ready mix concrete facilities in April 2011. The increase in revenuescompensation costs. Operating profit and operating profit margin increased for the year ended December 31, 20102011 compared to the same period in 2009 was attributable2010 due to lower operating costs relative to revenues as a result of higher Highway Products and Aggregates sales volumes.

In December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations. The terms of the transaction are expected to be finalized and the transaction closed during 2013. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as a discontinued operation and, accordingly, historical amounts previously reported have been adjusted, where appropriate, to remove the effect of these discontinued operations.


26
Table of Contents

Inland Barge Group
 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues$675.2
 $548.5
 $422.3
 23.1% 29.9%
          
Operating costs:         
Cost of revenues538.9
 445.0
 350.3
 21.1
 27.0
Selling, engineering, and administrative costs15.4
 14.7
 12.7
 4.8
 15.7
Property disposition (gains)/losses(3.8) (17.6) (9.7)    
Operating profit$124.7
 $106.4
 $69.0
    
Operating profit margin18.5% 19.4% 16.3%    

Revenues and operating costs increased for the year endedDecember 31, 2012 compared to the same period in the prior year due to higher volumes of hopper and tank barges, and a change in the mix of barge types. Hopper barge volume primarily increased, when compared to the prior year due to the recovery from the acquisition2011 flood at our Missouri manufacturing facility. Higher cost of Quixote Corporationrevenues due to increased shipping volumes was partially offset by a decline in the economic conditionsimproved efficiencies related to higher tank barge production when comparing 2012 to 2011. Operating costs for the markets served by our Concreteyear endedDecember 31, 2012 included a $3.4 million net gain from sales of barges previously included in property, plant, and Aggregates operations and the divestiture of our asphalt operations in August 2010.

Operating profitequipment that were under lease to third-party customers.


Revenues and operating margincosts increased for the year ended December 31, 2011 compared to the same period in 2010 as a result of higher Highway Products sales volumes partially offset by reduced Concrete and Aggregates sales volumes. Operating profit and operating margin increased for the year ended December 31, 2010 compared to the same period in 2009 as a result of the Quixote acquisition, higher Highway Products volume, lower operating costs, and $3.8 million in gains recognized from divestitures in our Concrete and Aggregates business.

Inland Barge Group

   Year Ended December 31,  Percent Change 
   2011  2010  2009  2011 versus 2010  2010 versus 2009 
   ($ in millions)       

Revenues

  $    548.5   $    422.3   $    527.3    29.9%   (19.9)% 

Operating profit

  $106.4   $69.0   $125.2    

Operating profit margin

   19.4%   16.3%   23.7%   

Revenues and operating profit increased for the year ended December 31, 2011 compared to the prior year2010 due to higher volumes of tank barges and a change in the mix of tank barge types. In addition,As with 2012, we experienced improved efficiencies related to higher tank barge production in 2011 as compared with 2010.


A summary of the increase inimpact on operating profit was affected by the impact, as described in the following table, of floods at two separate flood events in May 2010 and May 2011 atof our manufacturing facilities in Tennessee and Missouri, respectively.

   Impact to operating  profit
as a result of the
floods Benefit (Cost)		 
   Year Ended December 31, 
   2011   2010 
   

(in millions)

 

Tennessee flood – May 2010

    

Costs, net of insurance advances related to damages and lost productivity

  $—    $(4.6) 

Insurance proceeds related to business interruption

   6.5     —  

Gain on disposition of damaged property, plant, and equipment

   0.6     9.7  
  

 

 

   

 

 

 
  $7.1    $5.1  

Missouri flood – May 2011

    

Costs, net of insurance advances related to damages and lost productivity

  $(8.6)   $—  

Gain on disposition of damaged property, plant, and equipment

   17.0     —  
  

 

 

   

 

 

 
   8.4     —  
  

 

 

   

 

 

 

Combined net effect of both floods

  $  15.5    $  5.1  

Excluding the net $5.1 million increase in operating profit in 2010 resulting from the effectsfollows:

 
Impact to Operating Profit as a Result of Floods
Benefit (Cost)
 Year Ended December 31,
 2012 2011 2010
 (in millions)
Tennessee flood - May 2010     
Costs, net of insurance advances related to damages and lost productivity$—
 $—
 $(4.6)
Insurance proceeds related to business interruption—
 6.5
 —
Gain on disposition of damaged property, plant, and equipment—
 0.6
 9.7
 —
 7.1
 5.1
Missouri flood - May 2011     
Costs, net of insurance advances related to damages and lost productivity—
 (8.6) —
Gain on disposition of damaged property, plant, and equipment0.4
 17.0
 —
 0.4
 8.4
 —
Combined net effect of both floods$0.4
 $15.5
 $5.1

As of the flood, revenues and operating profit decreased for the year ended December 31, 2010 compared to the same period in 2009 due to a change in the mix of tank barge types and a more competitive hopper barge pricing environment. As of December 31, 2011,2012, the backlog for the Inland Barge Group was approximately $494.6$564.1 million compared to approximately $508.0$494.6 million and approximately $318.8 million as of December 31, 2010 and December 31, 2009, respectively.2011. For multi-year barge orders, theagreements, deliveries scheduled for 20122013 and 2014 are included in the backlog at this time; deliveries beyond 2012 are not included in the backlog iftime where specific production quantities for future years have not been determined.



27
Table of Contents

Energy Equipment Group

   Year Ended December 31,  Percent Change 
   2011  2010  2009  2011 versus 2010  2010 versus 2009 
   ($ in millions)       

Revenues:

      

Structural wind towers

  $    245.2   $    252.1   $    358.3    (2.7)%   (29.6)% 

Other

   227.6    167.5    151.7    35.9%   10.4% 
  

 

 

  

 

 

  

 

 

   

Total revenues

  $472.8   $419.6   $510.0    12.7%   (17.7)% 

Operating profit

  $8.9   $35.1   $73.8    

Operating profit margin

   1.9%   8.4%   14.5%   

 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues:         
Structural wind towers$262.4
 $245.2
 $252.1
 7.0 % (2.7)%
Other296.2
 227.6
 167.5
 30.1
 35.9
Total revenues558.6
 472.8
 419.6
 18.1
 12.7
          
Operating costs:         
Cost of revenues510.3
 432.1
 360.7
 18.1
 19.8
Selling, engineering, and administrative costs30.8
 31.8
 25.9
 (3.1) 22.8
Property disposition (gains)/losses(0.7) —
 (2.1)    
Operating profit$18.2
 $8.9
 $35.1
    
Operating profit margin3.3% 1.9% 8.4%    

Revenues for the year ended December 31, 20112012 increased compared to the same period in 2011 as a result of higher structural wind towers shipments and increased demand for containers, tank heads, and utility structures. Cost of revenues for the year ended December 31, 2012 increased at a lesser rate than revenues compared to 2011 as the manufacturing challenges which negatively impacted 2011 results improved. Revenues for the year ended December 31, 2011 increased compared to the same period in 2010 as a result of higher shipments of tank containers and tank heads offsetting lower structural wind tower shipments. Operating profitCost of revenues for the year ended December 31, 2011 decreased increased at a greater rate than revenues compared to the same period in 2010 primarily due to transition issues arising from changes in product mix in the structural wind towers business as well as competitive pricing pressures on structural wind towers, partially offset by increased operating profit in other product lines.

Revenues and operating profit decreased for the year ended towers.

As of December 31, 2010 compared to the same period in 2009 primarily due to lower structural wind tower shipments, reduced operating efficiency from lower production volume, and lower margins on certain

wind towers shipped. As of December 31, 2011,2012, the backlog for structural wind towers was approximately $934.3$680.3 million compared to approximately $1.0 billion and approximately $1.1 billion$934.3 million as of December 31, 2010 and December 31, 2009, respectively. Approximately 28% of our backlog for structural wind towers, as of December 31, 2011 is expected to be delivered in 2012 with the remainder contracted for delivery in future years.. Approximately $412.5$412.5 million of this backlog is involved insubject to litigation filed bywith a customer for the Company against one of our structural wind tower customers forcustomer’s breach of a long-term supply contract by failing to comply withfor the customer’s multi-year, contractual purchase obligations.

manufacture of towers.



28
Table of Contents

Railcar Leasing and Management Services Group
 Year Ended December 31,Percentage Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues:         
Wholly owned subsidiaries:         
Leasing and management$409.8
 $375.1
 $345.4
 9.3% 8.6%
Railcar sales118.6
 59.4
 3.1
 *
 *
 528.4
 434.5
 348.5
 21.6
 24.7
TRIP Holdings:         
Leasing and management118.7
 117.5
 116.0
 1.0
 1.3
Railcar sales—
 —
 —
 —
 —
 118.7
 117.5
 116.0
 1.0
 1.3
Total revenues$647.1
 $552.0
 $464.5
 17.2
 18.8
Operating Profit:         
Wholly-owned subsidiaries:         
Leasing and management$175.2
 $156.3
 $131.7
    
Railcar sales:         
Railcars owned one year or less at the time of sale24.8
 13.2
 0.2
    
Railcars owned more than one year at the time of sale32.8
 11.8
 6.6
    
 232.8
 181.3
 138.5
    
TRIP Holdings:         
Leasing and management67.4
 68.8
 68.5
    
Railcar sales:         
Railcars owned one year or less at the time of sale—
 —
 —
    
Railcars owned more than one year at the time of sale0.7
 4.4
 —
    
 68.1
 73.2
 68.5
    
Total operating profit$300.9
 $254.5
 $207.0
    
Operating profit margin:         
Leasing and management45.9% 45.7% 43.4%    
Railcar sales* * *    
Total operating profit margin46.5
 46.1
 44.6
    
          
Depreciation, interest, and rent expense(1):
         
Depreciation expense$120.5
 $115.7
 $112.6
    
Rent expense$50.9
 $48.6
 $48.6
    
Interest expense:         
Wholly-owned subsidiaries$101.2
 $101.3
 $91.7
    
TRIP Holdings:         
External60.0
 53.1
 46.9
    
Intercompany13.1
 6.4
 —
    
 73.1
 59.5
 46.9
    
Total interest expense$174.3
 $160.8
 $138.6
    
          
Fleet utilization:         
Wholly-owned subsidiaries98.4% 99.3% 99.3%    
TRIP Holdings99.2% 99.9% 99.9%    
Total fleet98.6% 99.5% 99.4%    
* Not meaningful

  Year Ended December 31,  Percent Change 
  2011  2010  2009  2011 versus 2010  2010 versus 2009 
  ($ in millions)       

Revenues:

     

Wholly-owned subsidiaries:

     

Leasing and management

 $    375.1   $345.4   $    329.3    8.6%   4.9% 

Railcar sales(1)

  59.4    3.1    40.9    *    *  
 

 

 

  

 

 

  

 

 

   
  434.5    348.5    370.2    24.7%   (5.9)% 

TRIP Holdings:

     

Leasing and management

  117.5    116.0    —    1.3%   —  

Railcar sales(1)

  —    —    —    —    —  
 

 

 

  

 

 

  

 

 

   
  117.5    116.0    —    1.3%   —  
 

 

 

  

 

 

  

 

 

   

Total revenues

 $552.0   $    464.5   $370.2    18.8%   25.5% 

Operating profit:

     

Wholly-owned subsidiaries:

     

Leasing and management

 $156.3   $131.7   $128.5    

Railcar sales(1):

     

Railcars owned one year or less at the time of sale

  13.2    0.2    2.1    

Railcars owned more than one year at the time of sale

  11.8    6.6    18.4    
 

 

 

  

 

 

  

 

 

   
  181.3    138.5    149.0    

TRIP Holdings:

     

Leasing and management

  68.8    68.5    —    

Railcar sales(1):

     

Railcars owned one year or less at the time of sale

  —    —    —    

Railcars owned more than one year at the time of sale

  4.4    —    —    
 

 

 

  

 

 

  

 

 

   
  73.2    68.5    —    
 

 

 

  

 

 

  

 

 

   

Total operating profit

 $254.5   $207.0   $149.0    

Operating profit margin:

     

Leasing and management

  45.7%   43.4%   39.0%   

Railcar sales

  *    *    *    

Total operating profit margin

  46.1%   44.6%   40.2%   

Fleet utilization:

     

Wholly-owned subsidiaries

  99.3%   99.3%   97.8%   

TRIP Holdings

  99.9%   99.9%   —    

Total fleet

  99.5%   99.4%   97.8%   

*Not meaningful

(1) Depreciation and rent expense are components of operating profit. Interest expense is not a component of operating profit and includes the effect of hedges. Intercompany interest expense arises from Trinity’s ownership of a portion of TRIP Holdings’ Senior Secured Notes and is eliminated in consolidation. See Note 11 of the Notes to Consolidated Financial Statements.


29

(1)

Effective December 31, 2011, the Company adopted the emerging industry policy of recognizing revenue from the sales of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balances have been reclassified to conform to this policy. See Note 1 of the Notes to Consolidated Financial Statements.

Total revenues increased for the year ended December 31, 20112012 compared to the prior year primarily due to increased railcar sales from the lease fleet, increased revenues related to additions to the lease fleet and higher rental rates. Total revenues increased for the year ended December 31, 2011 compared to 2010 primarily due to increased railcar sales from the lease fleet, as well as rental revenues related to additions to the lease fleet and higher rental rates. Total revenues decreased


Operating profit increased $46.4 million for the year ended December 31, 20102012 compared to the prior year due to decreased railcar salesprofit from the lease fleet including $39.4 million in railcar sales to TRIP Leasingsales. In addition, lease fleet additions and higher rental rates more than offset increased depreciation and rent expense for the year ended December 31, 2009, partially offset by increased utilization and rental

revenues related to additions2012 when compared to the lease fleet of our wholly-owned subsidiaries. Additionally,prior year. Interest expense increased during 2012 compared with 2011 due to the adoption of an accounting pronouncement, the Leasing Group's results of operations for the years ended December 31, 2011 and December 31, 2010 include TRIP Holdings and its subsidiaries. See Notes 1 and 6refinancing of the Notes to Consolidated Financial Statements.

TRIP warehouse loan in 2011. Operating profit increased for the year ended December 31, 2011 compared to the prior year2010 due to profit from railcar sales, rental revenues related to additions to the lease fleet, and higher rental rates. Operating profitInterest expense increased for the year ended December 31,2011 compared with 2010 compared to 2009 due to the inclusionissuance of TRIP Holdings in the Leasing Group's results of operationsadditional debt in 2010 and increased utilization and rental revenues related to lease fleet additions, partially offset by lower profit from railcar sales. Results for the year ended December 31, 2009 included $183.8 millionrefinancing of the TRIP warehouse loan in railcar sales to TRIP Leasing that resulted in the recognition of previously deferred gains of $30.3 million of which $7.6 million were deferred based on our equity interest. There were no railcar sales to TRIP Leasing or TRIP Master Funding during the years ended December 31, 2011 and December 31, 2010.

2011.


To fund the continued expansion of its lease fleet to meet market demand, the Leasing Group generally uses its non-recourse $475 million warehouse facility or excess cash to provide initial financing for a portion of the purchase price of the railcars. After initial financing, the Leasing Group generally obtains long-term financing for the railcars in the lease fleet through non-recourse asset-backed securities, long-term non-recourse operating leases pursuant to sales/leaseback transactions, or long-term recourse debt such as equipment trust certificates. SeeFinancing Activities.


Information regarding the Leasing Group’s lease fleet as of December 31, 20112012 follows:

   No. of cars   Average age   Average remaining
lease term		 

Wholly-owned subsidiaries

   54,595     6.6     3.5  

TRIP Holdings

   14,350     4.3     3.1  
  

 

 

     

Total fleet

   68,945     6.1     3.4  

 No. of cars Average age Average remaining lease term
Wholly-owned subsidiaries57,000
 7.1
 3.3
TRIP Holdings14,455
 5.3
 3.1
Total fleet71,455
 6.7
 3.3

All Other

   Year Ended December 31,   Percent Change 
   2011  2010  2009   2011 versus 2010  2010 versus 2009 
   ($ in millions)        

Revenues

  $61.8   $48.5   $48.4     27.4%   0.2% 

Operating profit (loss)

  $(3.8)  $(11.4)  $0.8     

 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues$81.4
 $61.8
 $48.5
 31.7 % 27.4%
          
Operating costs:         
Cost of revenues86.8
 61.8
 55.6
 40.5
 11.2
Selling, engineering, and administrative costs5.2
 5.8
 5.3
 (10.3) 9.4
Property disposition (gains)/losses(0.4) (2.0) (1.0)    
Operating loss$(10.2) $(3.8) $(11.4)    

The increaseincreases in revenues for the yearyears ended December 31, 2012 and 2011 compared to the prior year wasyears were primarily due to an increaseincreases in intersegment sales by our transportation company. RevenuesThe increase in operating loss for the year ended December 31, 2010 remained relatively constant when compared2012 was primarily due to the same periodhigher claim costs related to our captive insurance company, higher environmental and legal reserves, and higher gains in 2009.2011 from property dispositions. Operating losses decreased for the year ended December 31, 2011 compared to the same period in 2010 due to higher intersegment transportation sales. Operating profit decreased for the year ended December 31, 2010 compared to the same period in 2009 primarily due to gains on property dispositions in 2009.

sales volume.


Corporate
 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Operating costs$(51.5) $(43.6) $(33.8) 18.1% 29.0%

Corporate

   Year Ended December 31,   Percent Change 
   2011   2010   2009   2011 versus 2010  2010 versus 2009 
   ($ in millions)        

Operating costs

  $43.6    $33.8    $30.8     29.0%   9.7% 

The increase in operating costs for the yearyears ended December 31, 2012 and 2011 compared to 2010with the prior year is due to higher incentive and deferred compensation costs. Thecosts and an increase in operating costs for the year ended December 31, 2010 compared to 2009 is due to additional costs from the acquisitioncertain legal reserves.


30
Table of Quixote Corporation.

Contents


Liquidity and Capital Resources


Cash Flows


The following table summarizes our cash flows from operating, investing, and financing activities for each of the last three years:

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Total cash provided by (required by)

    

Operating activities

  $104.3   $170.5   $707.3  

Investing activities

   (85.0)   (308.2)   (187.4) 

Financing activities

   (22.2)   (120.1)   (69.9) 
  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash and cash equivalents

  $(2.9)  $(257.8)  $450.0  
  

 

 

  

 

 

  

 

 

 

2011

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Total cash provided by (required by):     
Operating activities$527.4
 $110.9
 $170.5
Investing activities(311.4) (85.0) (308.2)
Financing activities5.9
 (28.8) (120.1)
Net increase (decrease) in cash and cash equivalents$221.9
 $(2.9) $(257.8)

2012 compared with 2010

2011


Operating Activities.Activities. Net cash provided by operating activities for the year endedDecember 31, 2012 was $527.4 million compared to net cash provided by operating activities of $110.9 million for the year endedDecember 31, 2011. Cash flow provided by operating activities increased due to higher operating profits in 2012, a lower increase in inventories in 2012 compared with 2011, and an increase in accrued liabilities for the year endedDecember 31, 2012.

Receivables at December 31, 2012 increased by $2.7 million or 0.7% since December 31, 2011, primarily due to higher receivables from the Rail Group partially offset by lower receivables from our Inland Barge and Energy Equipment Groups. At December 31, 2012, one customer’s net receivable balance in our Energy Equipment Group, all within terms, accounted for 21% of the consolidated net receivables balance outstanding. Raw materials inventory at December 31, 2012 increased by $85.8 million or 26.9% since December 31, 2011 primarily attributable to higher levels in our Rail Group required to meet production demands. Finished goods inventory at December 31, 2012 increased by $22.0 million or 22.1% since December 31, 2011 primarily attributable to higher levels of production in our Energy Equipment Group. Accounts payable decreased slightly while accrued liabilities increased by $125.5 million or 29.8% from December 31, 2011 due primarily to customer advance payments received by our Rail Group. We continually review reserves related to bad debt as well as the adequacy of lower of cost or market valuations related to accounts receivable and inventory.

Investing Activities. Net cash required by investing activities for the year endedDecember 31, 2012 was $311.4 million compared to $85.0 million for the year endedDecember 31, 2011. Capital expenditures for the year endedDecember 31, 2012 were $469.2 million, of which $352.6 million were for additions to the lease fleet. This compares to $335.6 million of capital expenditures for the same period last year, of which $258.6 million were for additions to the lease fleet. Full-year manufacturing capital expenditures for 2013 are projected to range between $160.0 million and $195.0 million. We expect our net investment in the lease fleet to range between $350.0 million and $400.0 million for 2013 after taking into account the proceeds from railcar sales from the lease fleet. Proceeds from the sale of property, plant, and equipment and other assets totaled $201.4 million for the year endedDecember 31, 2012, including railcar sales from the lease fleet owned more than one year at the time of sale totaling $126.3 million. This compares to $136.8 million for the same period in 2011, including railcar sales from the lease fleet owned more than one year at the time of sale totaling $60.6 million. Net cash required related to acquisitions amounted to $46.2 million and $42.5 million for the years ended December 31, 2012 and 2011, respectively.

Financing Activities. Net cash provided by financing activities during the year endedDecember 31, 2012was $104.3$5.9 million compared to $170.5$28.8 million of cash required by financing activities for the same period in 2011. During the year endedDecember 31, 2012, we retired $378.4 million in debt principally consisting of repayments of the TILC warehouse loan facility. During the year endedDecember 31, 2011, we retired $1,112.3 million in debt principally consisting of repayment of the TRIP Warehouse Loan. We borrowed $443.8 million during the year endedDecember 31, 2012, net of $5.2 million of deferred loan costs, primarily from the issuance by TRL 2012 of $333.8 million in Secured Railcar Equipment Notes, as further described below, and from advances under our TILC warehouse loan facility. During the year endedDecember 31, 2011, we borrowed $1,143.3 million, primarily consisting of $920.0 million raised to refinance the TRIP Warehouse Loan, with the remainder primarily from our TILC warehouse loan facility. Additionally, we repurchased shares of the Company’s stock under a share repurchase program as described further below. We intend to use our cash and committed credit facilities to fund the operations, expansions, and growth initiatives of the Company.


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Table of Contents

2011 compared with 2010

Operating Activities. Net cash provided by operating activities for the year endedDecember 31, 2011 was $110.9 million compared to $170.5 million of net cash provided by operating activities for the same period in 2010.2010. Cash flow provided by operating activities decreased primarily due to an overall increase in accounts receivable and inventories in 2011 compared with 2010 partially offset by higher operating profits in 2011.

2011.


Accounts receivables at December 31, 2011 increased by $146.3$150.3 million or 63%65% since December 31, 2010 primarily due to higher receivables from the Rail and Energy Equipment Groups. Raw materials inventory at December 31, 2011 increased by $155.4$150.1 million or 92%89% since December 31, 2010 primarily attributable to higher levels in our Rail and Inland Barge Groups required to meet production demands. Finished goods inventory at December 31, 2011 increased by $20.9$20.9 million or 27% since December 31, 2010 primarily attributable to our Rail and Construction Products Groups reflecting higher levels of production arising from increased shipping volumes in our Highway Products business.Groups. Accounts payable increased by $73.1$74.9 million or 55%56% since December 31, 2010 primarily due to higher production levels in the business groups mentioned. Accrued liabilities decreased by $14.2$11.5 million or 4%3% from December 31, 2010.2010. We continually review reserves related to bad debt as well as the adequacy of lower of cost or market valuations related to accounts receivables and inventory.


Investing Activities. Net cash required by investing activities for the year endedDecember 31, 2011 was $85.0$85.0 million compared to $308.2$308.2 million for the year endedDecember 31, 2010.2010. Investments in short-term marketable securities decreased by $158.0$158.0 million during the year endedDecember 31, 2011 compared to an increase of $88.0$88.0 million during the year endedDecember 31, 2010.2010. Capital expenditures for the year endedDecember 31, 2011 were $340.0$335.6 million, of which $258.6$258.6 million were for net additions to the lease fleet and $29.4$29.4 million were for replacement of flood-damaged property. This compares to $254.8$252.8 million of capital expenditures for the same period last year,in 2010, of which $213.8$213.8 million were for net additions to the lease fleet and $12.0$12.0 million were for replacement of flood-damaged property. Capital expenditures for 2012 are projected to be approximately $400.0 to $475.0 million, including $300.0 to $350.0 million in net lease fleet additions. Proceeds from the sale of property, plant, and equipment and other assets were $139.5$136.8 million for the year endedDecember 31, 2011, comprised primarily of railcar sales from the lease fleet totaling $60.6$60.6 million, and proceeds from the disposition of flood-damaged property, plant and equipment of $23.3 million.$23.3 million. Proceeds from the sale of property, plant, and equipment and other assets were $84.5$52.6 million for the year endedDecember 31, 2010, comprised primarily of the sale of assets in our Construction Products Group for $30.8 million, railcar sales from the lease fleet totaling $33.6$33.6 million and proceeds from the disposition of flood-damaged property, plant and equipment of $12.0 million.$12.0 million. Net cash required related to acquisitions amounted to $42.5$42.5 million and $49.9$47.9 million for the yearyears endedDecember 31, 2011 and 2010, respectively.


Financing Activities. Net cash required by financing activities for the years endedDecember 31, 2011 and 2010 was $22.2$28.8 million and $120.1$120.1 million, respectively. During the year endedDecember 31, 2011 we borrowed $1,145.9$1,143.3 million, primarily consisting of $920.0 million to refinance the TRIP Warehouse Loan, as described further below, with the remainder primarily from borrowings under our TILC warehouse loan facility. During the year endedDecember 31, 2011, we retired $1,113.0$1,112.3 million in debt principally consisting of the repayment of the TRIP Warehouse Loan. During the comparable prior year period, Trinity Rail Leasing 2010 LLC (“TRL 2010”) issued $369.2$369.2 million in aggregate principal amount of Secured Railcar Equipment Notes which are non-recourse to Trinity. A portion of the proceeds from the TRL 2010 financing was used to retire, in full, our 6.5% Senior Notes due March 2014 and repay a portion of our borrowings under our

TILC warehouse loan facility. Debt retirements during 2010 totaled $363.9 million including $40.0 million in debt assumed as a result of the Quixote acquisition. We also purchased an additional equity interest in TRIP Holdings from one of its other investors for $28.6 million in the comparable prior year period. Restricted cash increased by $33.2 million during 2011. We intend to use our cash and committed credit facilities to fund the operations, expansions, and growth initiatives of the Company.

2010 compared with 2009

Operating Activities. Net cash provided by the operating activities of continuing operations for the year ended December 31, 2010 was $170.5 million compared to $707.3 million of net cash provided by the operating activities of continuing operations for the same period in 2009.

Accounts receivables at December 31, 2010 increased by $62.2 million or 39% since December 31, 2009 due to higher shipping volumes at year end primarily in our Rail and Energy Equipment Groups. Raw materials inventory at December 31, 2010 increased by $72.3 million or 75% since December 31, 2009 primarily attributable to higher levels in our Rail and Energy Equipment Groups required to meet production demands. Finished goods inventory decreased slightly by $9.3 million since December 31, 2009 primarily due to lower finished goods inventory in our Rail Group. Accounts payable increased by $53.4 million or 70% since December 31, 2009 primarily due to higher production activity while accrued liabilities decreased by $59.5 million due to the normal settlement of certain items during the year.

Investing Activities. Net cash required by investing activities of continuing operations for the year ended December 31, 2010 was $308.2 million compared to $187.4 million for the same period in 2009. Capital expenditures for the year ended December 31, 2010 were $254.8 million, of which $213.8 million were for net additions to the lease fleet and $12.0 million were for replacement of flood-damaged property. This compares to $390.4 million of capital expenditures for the same period in 2009, of which $343.0 million were for net additions to the lease fleet. Proceeds from the sale of property, plant, and equipment and other assets were $84.5 million for the year ended December 31, 2010, comprised primarily of the sale of assets in our Construction Products Group for $30.8 million, railcar sales from the lease fleet totaling $33.6 million, and proceeds from the disposition of flood-damaged property, plant and equipment of $12.0 million. This compares to $273.0 million for the same period in 2009 comprised primarily of railcar sales from the lease fleet, which included $144.4 million to TRIP Leasing, and the sale of non-operating assets. Cash required related to acquisitions amounted to $49.9 million, excluding $17.1 million in cash balances acquired from Quixote.

Financing Activities. Net cash required by financing activities during the years ended December 31, 2010 and 2009 was $120.1 million and $69.9 million, respectively. As stated previously, in 2010, TRL 2010 issued $369.2 million in aggregate principal amount of Secured Railcar Equipment Notes which are non-recourse to Trinity. A portion of the proceeds from the TRL 2010 financing was used to retire, in full, our 6.5% Senior Notes due March 2014 and repay a portion of our borrowings under our TILC warehouse loan facility. In addition,Debt retirements during the year ended December 31, 2010 we retired $40.0 totaled $363.5 million including $40.0 million in debt assumed as a result of the Quixote acquisition. We also purchased an additional equity interest in TRIP Holdings from one of its other investors for $28.6 million.$

28.6 million in the comparable prior year period. Restricted cash increased by $33.2 million during 2011.


Other Financing Activities


At December 31, 20112012 and for the two year period then ended, there were no borrowings under our $425.0$425.0 million revolving credit facility. This facility was amended and extended in October 2011 for an additional four years and nowthat matures on October 20, 2016.2016. Interest on the revolving credit facility is calculated at Libor plus 150.01.50% basis points or prime plus 50.00.50% basis points. After subtracting $74.1$68.6 million and $79.9 million for letters of credit outstanding, there$356.4 million was $350.9 million and $345.1 million available under the revolving credit facility as of December 31, 2011 and 2010, respectively.

As of December 31, 2011, peak borrowings for the year of $308.52012.


The $475.0 million were outstanding and $166.5 million was available under TILC’s $475 million TILC warehouse loan facility, established to finance railcars owned by TILC. AsTILC, had $173.6 million outstanding and $301.4 million available as of December 31, 2010, the facility had $80.2 million outstanding and $394.8 million available.2012. The warehouse loan is a non-recourse obligation secured by a portfolio of railcars and operating leases, certain cash reserves, and other assets acquired and owned by the warehouse loan facility. The principal and interest of this indebtedness are paid from the cash flows of the underlying leases. Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 2.30%2.25% at December 31, 2011.2012. In February 2011,2013, the warehouse loan facility was renewedextended for an additional two yearssix months and now matures in February 2013.August 2013. Amounts outstanding at maturity, absent renewal, will be payable in three installments in August 2013, February 2014, August 2014, and August 2014.

On July 6, 2011, TRIP HoldingsFebruary 2015.


In December 2012, TRL 2012 issued $175.0$145.4 million in TRIP Holdings Senior Secured Notes and TRIP Master Funding issued $857.0 million in TRIP Master Funding Secured Railcar Equipment Notes. A portionaggregate principal amount of the proceeds from the TRIP Holdings Senior Secured Notes and the TRIP Master FundingSeries 2012-1 Class A-1 Secured Railcar Equipment Notes (the "2012 Class A-1 Notes") and $188.4 million in aggregate principal amount of Series 2012-1 Class A-2

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Table of Contents

Secured Railcar Equipment Notes (the "2012 Class A-2 Notes"), of which $145.4 million and $188.4 million, respectively, were used by TRIP Master Fundingoutstanding as of December 31, 2012. The 2012 Class A-1 Notes and the 2012 Class A-2 notes were issued pursuant to purchase allan Indenture, dated as of the railcar equipment owned by TRIP Leasing which, in turn, repaid the TRIP Warehouse Loan in full.

December 19, 2012 between TRL 2012 and Wilmington Trust Company, as indenture trustee. The TRIP Holdings Senior Secured2012 Class A-1 Notes bear interest at a fixed rate of 2.27%, are payable monthly, and have a stated final maturity date of July 6, 2014 andJanuary 15, 2043. The 2012 Class A-2 Notes bear interest at 8.00%a fixed rate of 3.53%, are payable quarterly with yield to call interest rates of 12.00% for redemptions or other prepayments on or prior to January 15, 2013monthly, and 15.00% for redemptions or other prepayments after such date. The TRIP Holdings Senior Secured Notes are secured, among other things, byhave a pledge of each equity investor’s ownership interest in TRIP Holdings and certain distributions made to TRIP Holdings from TRIP Master Funding and are non-recourse to Trinity, TILC, TRIP Master Funding, and the other equity investors in TRIP Holdings. Trinity purchased $112.0 million of the TRIP Holdings Senior Secured Notes in July 2011.

The TRIP Master Funding Secured Railcar Equipment Notes were issued pursuant to an Indenture, dated July 6, 2011 between TRIP Master Funding and Wilmington Trust Company, as indenture trustee, with astated final maturity date in July 2041.of January 15, 2043. The TRIP Master Funding Secured Railcar Equipment Notes consist of three classes of notes with the Class A-1a notes bearing interest at 4.37%, the Class A-1b notes bearing interest at Libor plus 2.50%, and the Class A-2 notes bearing interest at 6.02%, all payable monthly. The TRIP Master Funding2012 Secured Railcar Equipment Notes are obligations of TRL 2012 and are non-recourse to Trinity, TILC, and the other equity investors in TRIP Holdings andTrinity. The obligations are secured by TRIP Master Funding’sa portfolio of railcars and operating leases thereon, itscertain cash reserves, and all other assets acquired and owned by TRIP Master Funding.

On December 9, 2010,TRL 2012.


In September 2012, the Company’s Board of Directors authorized a $200new $200.0 million share repurchase program, effective JanuaryOctober 1, 2011. This program replaced the Company’s previous share repurchase program and2012, which expires on December 31, 2012. 2014. The new program replaces the Company's prior program which expired on September 30, 2012. During the year ended December 31, 2012, the Company repurchased 1,834,221 shares under the prior program at a cost of $45.2 million. No shares were repurchased under thisthe prior program during the year ended December 31, 2011.


Following aan extended period of weak railcar demand that began in 2009,for new ordersrailcars through 2010, demand for new railcars improved significantly in 2011recovered sharply, primarily due to increased demand foran increase in the shipment of commodities, replacement of older railcars, and federal tax benefits received from taking delivery of railcars in 2011 and 2012. While moderating from the accelerated pace in the first half of 2011, demand conditions and corresponding order levels for new railcars in 2012 continued to be favorable, particularly from the oil, gas, and chemicals industries. Orders for structural wind towers have been slow since mid-2008 when energy development companies encountered tightened credit markets, lower demand for electricity, and heightened competition arising from lowerdeclining natural gas prices.prices and imports from foreign manufacturers. The continued slowdown in the residential and commercial construction markets and budgetary constraints at the state level have negatively impacted the results of our Construction Products Group as well. Group.

We continually assess our manufacturing capacity and take steps to align our production capacity with demand for our products. AsRail Group operating results include certain costs associated with the repositioning of a resultportion of our assessment, we adaptedthe Company's production capacity to the rapid decline in market conditions that began in 2009 by reducing our production footprint and staffing levels and causing certain facilities to be on non-operating status.meet railcar demand.  Due to improvements in demand for certain products, we have increased production staff at certain facilities insince late 2010 and during 2011.2010. We expect that facilities on non-operating status will be available for future operations to the extent that demand increases further.

further increases.


Equity Investment


See Note 6 of the Notes to Consolidated Financial Statements.

Statements for information about the investment in TRIP Holdings.


Future Operating Requirements


We expect to finance future operating requirements with cash on hand, cash flows from operations, and, depending on market conditions, short-term and long-term debt, and equity. Debt instruments that the Company has utilized include its revolving credit facility, the TILC warehouse facility, senior notes, convertible subordinated notes, asset-backed securities, and sale/leasebacksale-leaseback transactions. The Company has also issued equity at various times. As of December 31, 2011,2012, the Company had unrestricted cash balances of $351.1$573.0 million $350.9, $356.4 million available under its revolving credit facility, and $166.5$301.4 million available under its TILC warehouse facility. Despite the volatile conditions in the financial markets, theThe Company believes it has access to adequate capital resources to fund operating requirements and is an active participant in the credit markets.


Off Balance Sheet Arrangements


See Note 5 of the Notes to Consolidated Financial Statements.

Statements for information about off balance sheet arrangements.



33
Table of Contents

Derivative Instruments


We use derivative instruments to mitigate the impact of changes in interest rates, both in anticipation of future debt issuances and pricing for zinc, natural gas, and diesel fuel prices, as well as to convert a portionoffset interest rate variability of our variable-ratecertain floating rate debt to fixed-rate debt. Additionally, weissuances outstanding. We also use derivative instruments to mitigate the impact of unfavorable fluctuationschanges in natural gas and diesel fuel prices and changes in foreign currency exchange rates. We also use derivatives to lock in fixed interest rates in anticipation of future debt issuances. For derivative instruments designated as hedges, the Company formally documents the relationship between the derivative instrument and the hedged item, as well as the risk management objective and strategy for the use of the derivative instrument. This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the balance sheet, commitments, or forecasted transactions. At the time a derivative instrument is entered into, and at least quarterly thereafter, the Company assesses whether the derivative instrument is effective in offsetting the changes in fair value or cash flows of the hedged item. Any change in fair value resulting in ineffectiveness, as defined by accounting standards issued by the FASB, is recognized in current period earnings. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is recorded in AOCLaccumulated other comprehensive loss ("AOCL") as a separate component of stockholders’stockholders' equity and reclassified into earnings in the period during which the hedge transaction affects earnings. Trinity monitors its derivative positions and the credit ratings of its counterparties and does not anticipate losses due to counterparties’counterparties' non-performance. See Note 3 Fair Value Accountingof the Notes to Consolidated Financial Statements for discussion of how the Company valued its commodity hedges and interest rate swaps at December 31, 2011.

2012. See Note 11 of the Notes to Consolidated Financial Statements for a description of the Company's debt instruments.


Interest rate hedges

          Included in accompanying balance sheet
at December 31, 2011		 
   Notional
Amount		   Interest
Rate(1)		  Liability   AOCL  —loss/
(income)		  Noncontrolling
Interest		 
   (in millions, except %) 

Interest rate locks:

        

2005-2006

  $    200.0     4.87%   —    $(2.3)   —  

2006-2007

  $370.0     5.34%   —    $    10.6    —  

TRIP Holdings(2)

  $788.5     3.60%   —    $23.4   $    17.5  

Interest rate swaps:

        

TRIP Rail Master Funding secured railcar equipment notes

  $    89.5     2.62%  $    4.8    $2.7   $2.0  

2008 debt issuance

  $    474.7     4.13%  $    48.9    $46.7    —  

     Included in accompanying balance sheet
at December 31, 2012
 
Notional
Amount
 
Interest
Rate(1)
 Liability 
AOCL –
loss/
(income)
 
Noncontrolling
Interest
 (in millions, except %)
Expired hedges:         
2006 secured railcar equipment notes$200.0
 4.87% $—
 $(1.9) $—
Promissory notes$370.0
 5.34% $—
 $7.2
 $—
TRIP Holdings$788.5
 3.60% $—
 $19.9
 $14.9
Open hedges:         
TRIP Master Funding secured railcar equipment notes$78.4
 2.62% $5.2
 $2.9
 $2.2
Promissory notes$443.8
 4.13% $37.6
 $34.9
 $—
(1) 

Weighted average fixed interest rate

 Effect on interest expense-increase/(decrease)
 Year Ended December 31, 
Expected effect during next twelve months(1)
 2012 2011 2010 
 (in millions)
Expired hedges:       
2006 secured railcar equipment notes$(0.3) $(0.4) $(0.4) $(0.3)
Promissory notes$3.3
 $3.5
 $3.8
 $3.1
TRIP Holdings$6.0
 $17.4
 $29.3
 $5.6
Open hedges(2):
       
TILC Warehouse$—
 $—
 $0.5
 $—
TRIP Master Funding secured railcar equipment notes$2.0
 $1.1
 $—
 $1.8
Promissory notes$18.4
 $19.6
 $19.7
 $16.7
(2)

Previously classified with interest rate swaps

   Effect on interest expense — increase/(decrease) 
      Expected  effect
during next
twelve months(1)		 
   Year Ended December 31,  
   2011  2010  2009  
   (in millions) 

Interest rate locks:

     

2005-2006

  $(0.4)  $(0.4)  $(0.4)  $(0.3) 

2006-2007

  $3.5   $3.8   $4.0   $3.4  

TRIP Holdings(2)

  $17.4   $29.3    —   $6.0  

Interest rate swaps:

     

TILC warehouse

   —   $0.5   $2.9    —  

TRIP Rail Master Funding secured railcar equipment notes

  $1.1    —    —   $1.7  

2008 debt issuance

  $19.6   $19.7   $21.6   $17.0  

(1) 

Based on fair value as of December 31, 2011

2012

(2) 

Previously classified with interest rate swaps

Cash flows related to open hedges are included as change in accrued liabilities in the Consolidated Statements of Cash Flows


During 2005 and 2006, we entered into interest rate swap transactionsderivatives in anticipation of a future debt issuance.issuing our 2006 Secured Railcar Equipment Notes. These derivative instruments, with a notional amount of $200$200.0 million, were settled in 2006 and fixed the interest rate on a portion of a futurethe related debt issuance associated with a railcar leasing transaction in 2006 and settled at maturity in the first quarter of 2006.issuance. These interest rate swaps werederivative instrument transactions are being accounted for as cash flow

hedges with changes in the fair value of the instruments of $4.5$4.5 million in income recorded in AOCL through the date the


34
Table of Contents

related debt issuance closed in May 2006.2006. The balance is being amortized over the term of the related debt. The effect on interest expense is due to amortization of the AOCL balance.

In anticipation of a future debt issuance,


During 2006 and 2007, we entered into interest rate swap transactions during the fourth quarterderivatives in anticipation of 2006 and during 2007.issuing our Promissory Notes. These derivative instruments, with a notional amount of $370$370.0 million hedged, were settled in 2008 and fixed the interest rate on a portion of a futurethe related debt issuance associated with an anticipated railcar leasing transaction, which closed in May 2008.issuance. These instruments settled during the second quarter of 2008 and werederivative instrument transactions are being accounted for as cash flow hedges with changes in the fair value of the instruments of $24.5$24.5 million recorded as a loss in AOCL through the date the related debt issuance closed in May 2008.2008. The balance is being amortized over the term of the related debt. The effect on interest expense is due to amortization of the AOCL balance.


During 2008, we entered into interest rate swap transactions, with a notional amount of $200$200.0 million, which were being used to hedge our exposure to changes in the variable interest rate associated with our TILC warehouse facility. The effect on interest expense included the mark to marketmark-to-market valuation on the interest rate swap transactions and monthly interest settlements. These interest rate hedges expired during the fourth quarter of 2010.

2010.


In May 2008, we entered into an interest rate swap transaction that is being usedderivative instrument, expiring in 2015, to fix the LIBORvariable Libor component of the debt issuance which closed in May 2008.Promissory Notes. This derivative instrument transaction is being accounted for as a cash flow hedge. The effect on interest expense results primarily from monthly interest settlements. In 2009, $1.0 million in unrealized derivative losses were reclassified from AOCL to interest expense that was related to a partial retirement of the debt issuance in the fourth quarter of 2009.


Between 2007 and 2009, TRIP Holdings, as required by its warehouse loan agreement,the TRIP Warehouse Loan, entered into interest rate swap transactions,derivatives, all of which qualified as cash flow hedges, to reduce the effect of changes in variable interest rates.rates in the TRIP Warehouse Loan. In July 2011, these interest rate hedges were terminated in connection with the refinancing of the TRIP Warehouse Loan. Balances included in AOCL at the date the hedges were terminated are being amortized over the expected life of the new debt with $6.0$5.6 million of additional interest expense expected to be recognized during the next twelve months following December 31, 2011.2012. Also in July 2011, TRIP Holdings’ wholly-owned subsidiary, TRIP Rail Master Funding, entered into an interest rate swap transactionderivative instrument, expiring in 2021, with a notional amount of $94.1$94.1 million to reduce the effect of changes in variable interest rates associated with the Class A-1b notes of the TRIP Master Funding secured railcar equipment notes.

The effect on interest expense results primarily from monthly interest settlements.


See Note 11 Debt for a discussion of the Notes to Consolidated Financial Statements regarding the related debt instruments.


Other Derivatives

   Effect on operating income —
increase/(decrease)		 
   Year Ended December 31, 
   2011   2010  2009 
   (in millions) 

Fuel hedges(1)

     

Effect of mark to market valuation

  $0.0    $0.0   $(0.3) 

Settlements

   0.4     (0.1)   (1.2) 
  

 

 

   

 

 

  

 

 

 
  $0.4    $(0.1)  $(1.5) 

Foreign exchange hedges(2)

  $0.1    $(0.9)  $(1.9) 

 Effect on operating income - increase/(decrease)
 Year Ended December 31,
 2012 2011 2010
 (in millions)
Fuel hedges(1)
     
Effect of mark-to-market valuation$0.4
 $0.0
 $0.0
Settlements0.0
 0.4
 (0.1)
 $0.4
 $0.4
 $(0.1)
Foreign exchange hedges(2)
$(0.4) $0.1
 $(0.9)
(1) 

Included in cost of revenues in the accompanying consolidated statement of operations

(2) 

Included in other, net in the accompanying consolidated statement of operations


Natural gas and diesel fuel


We maintain a program to mitigate the impact of fluctuations in the price of natural gas and diesel fuel purchases. The intent of the program is to protect our operating profit from adverse price changes by entering into derivative instruments. For those instruments that do not qualify for hedge accounting treatment, any changes in their valuation are recorded directly to the consolidated statement of operations. The amount recorded in the consolidated balance sheetssheet as of December 31, 2011 and 20102012 for these instruments was not significant.


Foreign exchange hedge


We enter into foreign exchange hedges to mitigate the impact on operating profit of unfavorable fluctuations in foreign currency exchange rates. These instruments are short term with quarterly maturities and no remaining balance in AOCL as of December 31, 2011 and 2010.

2012Zinc.

We maintain a program to mitigate the impact



35
Table of fluctuations in the price of zinc purchases. The intent of this program is to protect our operating profit from adverse price changes by entering into derivative instruments. The effect of these derivative instruments on the consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 was not significant.

Contents


Stock-Based Compensation


We have a stock-based compensation plan covering our employees and our Board of Directors. See Note 16 of the Notes to Consolidated Financial Statements.


Employee Retirement Plans


As disclosed in Note 14 of the Notes to Consolidated Financial Statements, the projected benefit obligation for the employee retirement plans exceeds the plans’plans' assets by $74.2$102.4 million as of December 31, 20112012 as compared to $44.7$74.2 million as of December 31, 2010.2011. The change was primarily due to actual investment returns falling short of previous actuarial estimates and a fifty115 basis point reduction in the obligation discount rate assumption. We continue to sponsor an employee savings plan under the existing 401(k) plan that covers substantially all employees and includes both a company matching contribution and an annual retirement contribution of up to 3% each of eligible compensation based on our performance, as well as a Supplemental Profit Sharing Plan. Both the annual retirement contribution and the company matching contribution are discretionary, requiring board approval, and made annually with the investment of the funds directed by the participants.


Employer contributions for the year ending December 31, 20122013 are expected to be $17.3$18.9 million for the defined benefit plans compared to $15.4$17.3 million contributed during 2011.2012. Employer contributions to the 401(k) plans and the Supplemental Profit Sharing Plan for the year ending December 31, 20122013 are expected to be $9.3$11.9 million compared to $8.2$9.3 million during 2011.

During the first quarter of 2009, the Company amended its Supplemental Retirement Plan (the “Supplemental Plan”) to reduce future retirement plan costs. This amendment provided that all benefit accruals under the Supplemental Plan cease effective March 31, 2009, and the Supplemental Plan was frozen as of that date. In addition, the Company amended the Trinity Industries, Inc. Standard Pension Plan (the “Pension Plan”). This amendment was designed to reduce future pension costs and provided that, effective March 31, 2009, all future benefit accruals under the Pension Plan automatically cease for all participants, and the accrued benefits under the Pension Plan were determined and frozen as of that date. Accordingly, as a result of these amendments, accrued pension liability was reduced by $44.1 million with an offsetting reduction in funded status of pension liability included in AOCL.

2012.


Contractual ObligationsObligation and Commercial Commitments


As of December 31, 2011,2012, we had the following contractual obligations and commercial commitments:

       Payments Due by Period 

Contractual Obligations and Commercial Commitments

  Total   1 Year
or Less		   2-3
Years		   4-5
Years		   After
5 Years		 
   (in millions) 

Debt and capital lease obligations:

          

Debt:

          

Parent and wholly-owned subsidiaries, excluding unamortized debt discount

  $    2,124.9    $    80.0    $    452.5    $    503.2    $    1,089.2  

TRIP Holdings

   901.2     41.0     142.5     65.3     652.4  

Capital lease obligations

   48.6     2.8     6.0     6.8     33.0  

Interest

   1,055.2     153.1     281.1     229.4     391.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   4,129.9     276.9     882.1     804.7     2,166.2  

Operating leases

   12.6     4.3     4.1     2.3     1.9  

Obligations for purchase of goods and services1

   399.6     388.8     10.3     0.5     —  

Letters of credit

   74.1     69.2     4.9     —     —  

Leasing Group — operating leases related to sale/leaseback transactions

   633.5     52.8     106.5     99.0     375.2  

Other

   10.9     5.6     3.0     2.3     —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $5,260.6    $797.6    $1,010.9    $908.8    $2,543.3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

   Payments Due by Period
Contractual Obligations and Commercial CommitmentsTotal 
1 Year
or Less
 
2-3
Years
 
4-5
Years
 
After
5 Years
 (in millions)
Debt and capital lease obligations:         
Debt:         
Parent and wholly-owned subsidiaries, excluding unamortized debt discount$2,237.8
 $95.0
 $338.7
 $502.8
 $1,301.3
TRIP Holdings858.9
 41.0
 137.0
 49.7
 631.2
Capital lease obligations45.8
 2.9
 6.4
 7.2
 29.3
Interest1,035.8
 166.6
 285.8
 215.1
 368.3
 4,178.3
 305.5
 767.9
 774.8
 2,330.1
          
Operating leases11.8
 3.9
 4.7
 2.0
 1.2
Obligations for purchase of goods and services1
649.6
 630.1
 14.8
 4.7
 —
Letters of credit69.5
 66.7
 2.8
 —
 —
Leasing Group - operating leases related to sale/leaseback transactions627.8
 58.5
 113.3
 106.8
 349.2
Other17.5
 14.9
 1.8
 0.8
 —
Total$5,554.5
 $1,079.6
 $905.3
 $889.1
 $2,680.5

1 Includes $567.1 million in purchase obligations for raw materials and components principally by the Rail, Inland Barge, and Energy Equipment Groups.

1

Includes $347.5 million in purchase obligations for raw materials and components principally by the Rail, Inland Barge, and Energy Equipment Groups.

As of December 31, 20112012 and 2010,2011, we had approximately $65.8$59.0 million and $48.0$65.8 million, respectively, of tax liabilities, including interest and penalties, related to uncertain tax positions. Because of the high degree of uncertainty regarding the timing of future cash outflows associated with these liabilities, we are unable to estimate the years in which settlement will occur with the respective taxing authorities. See Note 13 of the Notes to Consolidated Financial Statements.



36
Table of Contents

Critical Accounting Policies and Estimates

Management’s


Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.U.S. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to bad debts, inventories, property, plant, and equipment, goodwill, income taxes, warranty obligations, insurance, restructuring costs, contingencies, and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.


We believe the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.


Inventory


We state all our inventories at the lower of cost or market. Our policy related to excess and obsolete inventory requires thean analysis of inventory to be analyzed at the business unit level on a quarterly basis and to recordthe recording of any required adjustments. In assessing the ultimate realization of inventories, we are required to make judgments as to future demand requirements and compare that with the current or committed inventory levels. It is possible that changes in required inventory reserves may occur in the future due to then current market conditions.


Long-lived Assets


We periodically evaluate the carrying value of long-lived assets to be held and used for potential impairment. The carrying value of long-lived assets to be held and used is considered impaired only when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the assets is less than its carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced by the estimated cost to dispose of the assets.


Goodwill

Goodwill

Goodwill is required to be tested for impairment annually, or on an interim basis, whenever events or circumstances change, indicating that the carrying amount of the goodwill might be impaired. The goodwill impairment test is a two-step process requiring the comparison of the reporting unit’sunit's estimated fair value with the carrying amount of its net assets. Step two of the impairment test is necessary to determine the amount of goodwill impairment to be recorded when the reporting unit’sunit's recorded net assets exceed its fair value. Impairment is assessed at the “reporting unit” level by applying a fair value-based test for each unit with recorded goodwill. The estimates and judgments that most significantly affect the fair value calculations are assumptions related to revenue and operating profit growth, discount rates and exit multiples. Due to an overall market decline for products in the Rail Group during the second quarter of 2009, we concluded that indications of impairment existed that required an interim goodwill impairment analysis. Accordingly, we tested the Rail Group’s goodwill for impairment as of June 30, 2009 and recorded a charge of $325.0 million during the second quarter of 2009. As of December 31, 2011,2012, the Company’sCompany's annual impairment test of goodwill was completed at the reporting unit level and no additional impairment charges were determined to be necessary. See Note 1 of the Notes to Consolidated Financial Statements for further explanation.


Given the uncertainties of the economy and its potential impact on our businesses, there can be no assurance that our estimates and assumptions regarding the fair value of our reporting units, made for the purposes of the long-lived asset and goodwill impairment tests, will prove to be accurate predictions of the future. If our assumptions regarding forecasted cash flows are not achieved, it is possible that additional impairments of remaining goodwill and long-lived assets may be required.


Warranties


The Company provides warranties against workmanship and materials defects generally ranging from one to five years depending on the product. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been filed by a customer. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. The Company provides for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assesses the adequacy of the resulting reserves on a quarterly basis.



37
Table of Contents

Insurance


We are effectively self-insured for workers’workers' compensation claims. A third-party administrator processes all such claims. We accrue our workers’workers' compensation liability based upon independent actuarial studies. To the extent actuarial assumptions change and claims experience rates differ from historical rates, our liability may change.


Contingencies and Litigation


The Company is involved in claims and lawsuits incidental to our business. Based on information currently available with respect to such claims and lawsuits, including information on claims and lawsuits as to which the Company is aware but for which the Company has not been served with legal process,  it is management’smanagement's opinion that the ultimate outcome of all currentsuch claims and litigation, and other claims, including settlements, in the aggregate will not have a material adverse effect on the Company’sCompany's overall financial condition for purposes of financial reporting. However, resolution of certain claims or lawsuits by settlement or otherwise, could impact the operating results of the reporting period in which such resolution occurs.


Environmental


We are involved in various proceedings related to environmental matters. We have provided reserves to cover probable and estimable liabilities with respect to such proceedings, taking into account currently available information and our contractual rights of

indemnification. However, estimates of future response costs are necessarily imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to us.


Income Taxes


The Company accounts for income taxes under the asset and liability method prescribed by ASC 740. See Note 13 in the Notes to Consolidated Financial Statements. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and other tax attributes using currently enacted tax rates. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Management is required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities. Changes in the calculated deferred tax assets and liabilities may occur in certain circumstances, including statutory income tax rate changes, statutory tax law changes, changes in the anticipated timing of recognition of deferred tax assets and liabilities or changes in the structure or tax status of the Company. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses; a forecast of future profitability; the duration of statutory carryback and carryforward periods; the Company’sCompany's experience with tax attributes expiring unused; and tax planning alternatives.


At December 31, 2011,2012, the Company, excluding TRIP Holdings, had $124.2$103.3 million of Federal consolidated net operating loss carryforwards after the estimated current year utilization of $42.9 million, and tax-effected $5.6$5.4 million of state loss carryforwards. The Company has $42.2 million of foreign tax credit carryforwards which will expire between 2014 and 2022. The Federal net operating loss carryforwards are due to expire between 2028 and 2031. We have established a valuation allowance for Federal, state, and foreign tax operating losses and credits which may not be realizable. We believe that it is more likely than not that we will be able to generate sufficient future taxable income to utilize the remaining deferred tax assets.

TRIP Holdings had $383.3$439.7 million in Federal tax loss carryforwards at December 31, 2011.2012 which are due to expire between 2027 and 2032. We expect TRIP Holdings to begin utilizing their tax loss carryforwards beginning in 2020. Because TRIP Holdings files a separate tax return from the Company, its tax loss carryforwards can only be used by TRIP Holdings and cannot be used to offset future taxable income of the Company. The Federal tax loss carryforwards are due to expire between 2024 and 2031. Our ability to utilize the tax loss carryforwards that were acquired as part of the Quixote acquisition against future taxable income is subject to restrictions under the Internal Revenue Code. We have established a valuation allowance for Federal, state, and foreign tax operating losses which may not be realizable.


At times, we may claim tax benefits that may be challenged by a tax authority. We recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.



38
Table of Contents

Pensions


The Company sponsors defined benefit plans which provide retirement income and death benefits for certain eligible employees. The Company’sCompany's pension costs and liabilities are primarily determined using actuarial assumptions regarding the long-term rate of return on plan assets and the discount rate used to determine the present value of future benefit obligations. The compensation increase rate assumption pertains solely to the pension plan of the Company’sCompany's Inland Barge segment as the accrued benefits of the Company’sCompany's remaining pension plans were frozen in 2009. Pension assumptions are reviewed annually by outside actuaries and the Company’sCompany's management. These actuarial assumptions are summarized in the following table:

   Year Ended December 31, 
 �� 2011  2010  2009 

Assumptions used to determine benefit obligations at the annual measurement date were:

    

Obligation discount rate

   5.40%   5.90%   6.10% 

Compensation increase rate

   3.00%   3.00%   3.00% 

Assumptions used to determine net periodic benefit costs were:

    

Obligation discount rate

   5.90%   6.10%   6.50% 

Long-term rate of return on plan assets

   7.75%   7.75%   7.75% 

Compensation increase rate

   3.00%   3.00%   4.00% 

 Year Ended December 31,
 2012 2011 2010
Assumptions used to determine benefit obligations at the annual measurement date were:     
Obligation discount rate4.25% 5.40% 5.90%
Compensation increase rate4.00% 3.00% 3.00%
Assumptions used to determine net periodic benefit costs were:     
Obligation discount rate5.40% 5.90% 6.10%
Long-term rate of return on plan assets7.75% 7.75% 7.75%
Compensation increase rate3.00% 3.00% 3.00%

The obligation discount rate assumption is determined by deriving a single discount rate from a theoretical settlement portfolio of high quality corporate bonds sufficient to provide for the plans’plans' projected benefit payments. The expected long-term rate of return on plan assets is an assumption reflecting the anticipated weighted average rate of earnings on the portfolio over the long-term. To arrive at this rate, we developed estimates based upon the anticipated performance of the assets in its portfolio. The effect of a change in

either of these assumptions on the net retirement cost for the year ended December 31, 20112012 and on the projected benefit obligations at December 31, 20112012 is summarized as follows:

   Effect on Net
Retirement Cost for
the Year Ended
December 31, 2011		  Effect on
Projected Benefit
Obligations at
December 31,
2011		 
    Increase/(decrease)
(in millions)		 

Assumptions:

   

Obligation discount rate:

   

Increase of 50 basis points

  $(0.2)  $(22.1) 

Decrease of 50 basis points

  $                0.4   $        23.5  

Long-term rate of return on plan assets:

   

Increase of 50 basis points

  $(1.5)  $        —  

Decrease of 50 basis points

  $        1.5   $        —  

 Effect on Net Retirement Cost for the Year Ended December 31, 2012 Effect on Projected Benefit Obligations at December 31, 2012
Assumptions:
Increase/(decrease)
(in millions)
Obligation discount rate:   
Increase of 50 basis points$(0.5) $(29.0)
Decrease of 50 basis points$0.5
 $32.3
Long-term rate of return on plan assets:   
Increase of 50 basis points$(1.5) $—
Decrease of 50 basis points$1.5
 $—

Recent Accounting Pronouncements


See Note 1 of the Notes to Consolidated Financial Statements.

Statements for information about recent accounting pronouncements.



39
Table of Contents

Forward-Looking Statements


This annual report on Form 10-K (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the SEC,Securities and Exchange Commission (“SEC”), news releases, conferences, World Wide Web postings or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Trinity uses the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements include, among others:


market conditions and demand for our business products and services;

the cyclical nature of industries in which we compete;

variations in weather in areas where our construction products are sold, used, or installed;

naturally-occurring events and disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses;

the timing of introduction of new products;

the timing and delivery of customer orders or a breach of customer contracts;

the credit worthiness of customers and their access to capital;

product price changes;

changes in mix of products sold;

the extent of utilization of manufacturing capacity;

availability and costs of steel, component parts, supplies, and other raw materials;

competition and other competitive factors;

changing technologies;

surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies and other raw materials;

interest rates and capital costs;

counter-party risks for financial instruments;

long-term funding of our operations;

taxes;

the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico;

changes in import and export quotas and regulations;

business conditions in emerging economies;

costs and results of litigation; and

legal, regulatory, and environmental issues.


Any forward-looking statement speaks only as of the date on which such statement is made. Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.



40
Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.


Our earnings could be affected by changes in interest rates due to the impact those changes have on our variable rate debt obligations, which represented approximately 30.8%23.8% of our total debt as of December 31, 2011.2012. If interest rates average one percentage point more in fiscal year 20122013 than they did during 2011,2012, our interest expense would increase by $3.9$2.5 million, after considering the effects of interest rate hedges. In comparison, at December 31, 2010,2011, we estimated that if interest rates averaged one percentage point more in fiscal year 20112012 than they did during the year ended December 31, 2010,2011, our interest expense would increase by $3.0$3.9 million. The impact of an increase in interest rates was determined based on the impact of the hypothetical change in interest rates and scheduled principal payments on our variable-rate debt obligations as of December 31, 20112012 and 2010.2011. A one percentage point increase in the interest rate yield would decrease the fair value of the fixed rate debt by approximately $166.8$227.7 million. A one percentage point decrease in the interest rate yield would increase the fair value of the fixed rate debt by approximately $193.1$263.5 million.


Trinity uses derivative instruments to mitigate the impact of increases in natural gas and diesel fuel prices, and zinc.prices. Existing hedge transactions as of December 31, 20112012 are based on the New York Mercantile Exchange for natural gas and heating oil. Hedge transactions are settled with the counterparty in cash. At December 31, 2012 and December 31, 2011 and December 31, 2010 the effect on the consolidated balance sheets was insignificant. The effect on the consolidated statement of operations for the year ended December 31, 20112012 was operating income of $0.2$0.4 million, and for the year ended December 31, 20102011 was operating expenseincome of $0.1$0.2 million. We estimate that the impact to earnings and the balance sheet that could result from hypothetical price changes of up to 10% is not significant based on hedge positions at December 31, 2011.

2012.


In addition, we are subject to market risk related to our net investments in our foreign subsidiaries. The net investment in foreign subsidiaries as of December 31, 20112012 was $188.4$222.7 million. The impact of such market risk exposures as a result of foreign exchange rate fluctuations has not been material to us. See Note 12 of the Notes to Consolidated Financial Statements.


41

Item 8.Financial Statements and Supplementary Data.


Trinity Industries, Inc.


Index to Financial Statements


 Page

Report of Independent Registered Public Accounting Firm

43

Report of Independent Registered Public Accounting Firm

44

Consolidated Statements of Operations for the years ended December 31, 2012, 2011, 2010, and 20092010

45
44
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011, and 2010
45

Consolidated Balance Sheets as of December 31, 20112012 and 20102011

46

Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011, 2010, and 20092010

47

Consolidated Statements of Stockholders’Stockholders' Equity for the years ended December 31, 2012, 2011, 2010, and 20092010

48

Notes to Consolidated Financial Statements

49

Due to the adoption



42
Table of an accounting pronouncement, Accounting Standards Codification (“ASC”) 810-10, which became effective January 1, 2010, the Consolidated Balance Sheets as of December 31, 2011 and 2010, and the Consolidated Statements of Operations, Cash Flows, and Stockholder’s Equity for the years ended December 31, 2011 and 2010, include the financial position and results of operations of TRIP Rail Holdings LLC (“TRIP Holdings”) and its subsidiary. See Notes 1 and 6 of the Notes to Consolidated Financial Statements for an explanation of the effect of this pronouncement.

Contents



Report of Independent Registered Public Accounting Firm


The Board of Directors and Stockholders

  Trinity Industries, Inc.

We have audited Trinity Industries, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Trinity Industries, Inc. and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Trinity Industries, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Trinity Industries, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, cash flows, and stockholders’ equity for each of the three years in the period ended December 31, 2011 of Trinity Industries, Inc. and Subsidiaries and our report dated February 16, 2012 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Dallas, Texas

February 16, 2012

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

    Trinity Industries, Inc.


We have audited the accompanying consolidated balance sheets of Trinity Industries, Inc. and Subsidiaries as of December 31, 20112012 and 20102011, and the related consolidated statements of operations, comprehensive income, cash flows and stockholders’stockholders' equity for each of the three years in the period ended December 31, 2011.2012. These financial statements are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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. 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 Trinity Industries, Inc. and Subsidiaries at December 31, 20112012 and 2010,2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011,2012, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, during the year ended December 31, 2010, the Company adopted a new accounting standard relating to consolidation of variable interest entities.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Trinity Industries, Inc. and Subsidiaries’Subsidiaries' internal control over financial reporting as of December 31, 2011,2012, based on criteria established in Internal Control —- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 201221, 2013 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP


/s/ ERNST & YOUNG LLP


Dallas, Texas

February 16, 2012

21, 2013


43
Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Operations

   Year Ended December 31, 
   2011  2010  2009 
   (in millions, except per share data) 

Revenues:

    

Manufacturing

  $2,523.7   $1,691.0   $2,050.7  

Leasing

   551.4    464.5    370.2  
  

 

 

  

 

 

  

 

 

 
   3,075.1    2,155.5    2,420.9  

Operating costs:

    

Cost of revenues:

    

Manufacturing

   2,164.7    1,434.7    1,712.5  

Leasing

   290.3    244.0    226.7  

Other

   27.9    10.9    25.7  
  

 

 

  

 

 

  

 

 

 
   2,482.9    1,689.6    1,964.9  

Selling, engineering, and administrative expenses:

    

Manufacturing

   142.2    132.3    142.5  

Leasing

   23.4    20.1    12.9  

Other

   43.5    33.9    30.7  
  

 

 

  

 

 

  

 

 

 
   209.1    186.3    186.1  

Goodwill impairment

   —    —    325.0  

Gain on disposition of property, plant, and equipment:

    

Net gains on lease fleet sales

   16.2    6.6    18.4  

Disposition of flood-damaged property, plant, and equipment

   17.6    9.7    —  

Other

   8.4    7.9    5.8  
  

 

 

  

 

 

  

 

 

 
   42.2    24.2    24.2  
  

 

 

  

 

 

  

 

 

 

Total operating profit (loss)

   425.3    303.8    (30.9) 

Other (income) expense:

    

Interest income

   (1.5)   (1.4)   (1.7) 

Interest expense

   185.3    182.1    123.2  

Other, net

   4.0    6.8    (5.3) 
  

 

 

  

 

 

  

 

 

 
   187.8    187.5    116.2  
  

 

 

  

 

 

  

 

 

 

Income (loss) before income taxes

   237.5    116.3    (147.1) 

Provision (benefit) for income taxes:

    

Current

   30.9    (19.2)   14.4  

Deferred

   60.9    60.1    (23.8) 
  

 

 

  

 

 

  

 

 

 
   91.8    40.9    (9.4) 
  

 

 

  

 

 

  

 

 

 

Net income (loss)

   145.7    75.4    (137.7) 

Net income attributable to noncontrolling interest

   3.5    8.0    —  
  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to Trinity Industries, Inc.

  $142.2   $67.4   $(137.7) 
  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to Trinity Industries, Inc. per common share:

    

Basic

  $1.77   $0.85   $(1.81) 

Diluted

  $1.77   $0.85   $(1.81) 

Weighted average number of shares outstanding:

    

Basic

   77.5    76.8    76.4  

Diluted

   77.8    77.0    76.4  

Dividends declared per common share

  $0.35   $0.32   $0.32  

 Year Ended December 31,
 2012 2011 2010
 (in millions, except per share amounts)
Revenues:     
Manufacturing$3,167.5
 $2,386.9
 $1,466.2
Leasing644.4
 551.4
 464.5
 3,811.9
 2,938.3
 1,930.7
Operating costs:     
Cost of revenues:     
Manufacturing2,649.9
 2,039.3
 1,236.3
Leasing350.3
 290.3
 244.0
Other51.3
 27.9
 10.9
 3,051.5
 2,357.5
 1,491.2
Selling, engineering, and administrative expenses:     
Manufacturing143.4
 127.1
 111.4
Leasing29.4
 23.4
 20.1
Other51.3
 43.5
 33.9
 224.1
 194.0
 165.4
Gains on disposition of property, plant, and equipment:     
Net gains on railcar lease fleet sales33.5
 16.2
 6.6
Disposition of flood-damaged property, plant, and equipment0.4
 17.6
 9.7
Other4.6
 6.2
 3.8
 38.5
 40.0
 20.1
      
Total operating profit574.8
 426.8
 294.2
Other (income) expense:     
Interest income(1.5) (1.5) (1.4)
Interest expense194.7
 185.3
 182.1
Other, net(4.3) 4.0
 6.8
 188.9
 187.8
 187.5
Income from continuing operations before income taxes385.9
 239.0
 106.7
Provision (benefit) for income taxes:     
Current7.7
 31.7
 (31.2)
Deferred126.3
 60.5
 68.5
 134.0
 92.2
 37.3
Net income from continuing operations251.9
 146.8
 69.4
Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $1.1, $(0.4), and $3.61.8
 (1.1) 6.0
Net income253.7
 145.7
 75.4
Net income (loss) attributable to noncontrolling interest(1.5) 3.5
 8.0
Net income attributable to Trinity Industries, Inc.$255.2
 $142.2
 $67.4
Net income (loss) attributable to Trinity Industries, Inc. per common share:     
Basic:     
Continuing operations$3.18
 $1.78
 $0.77
Discontinued operations0.02
 (0.01) 0.08
 $3.20
 $1.77
 $0.85
Diluted:     
Continuing operations$3.17
 $1.78
 $0.77
Discontinued operations0.02
 (0.01) 0.08
 $3.19
 $1.77
 $0.85
Weighted average number of shares outstanding:     
Basic77.3
 77.5
 76.8
Diluted77.5
 77.8
 77.0
Dividends declared per common share$0.42
 $0.35
 $0.32
See accompanying notes to consolidated financial statements.


44
Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Balance Sheets

   December 31,
2011		  December 31,
2010		 
   (in millions) 

ASSETS

  

Cash and cash equivalents

  $351.1   $354.0  

Short-term marketable securities

   —    158.0  

Receivables, net of allowance for doubtful accounts of $8.3 and $5.5

   384.3    232.0  

Income tax receivable

   1.6    7.4  

Inventories:

   

Raw materials and supplies

   324.8    169.4  

Work in process

   125.6    83.3  

Finished goods

   99.5    78.6  
  

 

 

  

 

 

 
   549.9    331.3  

Restricted cash, including TRIP Holdings of $74.6 and $46.0

   240.3    207.1  

Property, plant, and equipment, at cost, including TRIP Holdings of $1,257.7 and $1,282.1

   5,407.9    5,202.2  

Less accumulated depreciation, including TRIP Holdings of $122.7 and $90.3

   (1,228.4)   (1,090.2) 
  

 

 

  

 

 

 
   4,179.5    4,112.0  

Goodwill

   225.9    197.6  

Other assets

   188.4    160.6  
  

 

 

  

 

 

 
  $6,121.0   $5,760.0  
  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

  

Accounts payable

  $207.4   $132.8  

Accrued liabilities

   421.3    375.6  

Debt:

   

Recourse, net of unamortized discount of $99.8 and $111.1

   457.7    450.3  

Non-recourse:

   

Parent and wholly-owned subsidiaries

   1,616.0    1,453.5  

TRIP Holdings

   901.2    1,003.9  
  

 

 

  

 

 

 
   2,974.9    2,907.7  

Deferred income

   38.7    33.6  

Deferred income taxes

   434.7    391.0  

Other liabilities

   95.7    73.6  
  

 

 

  

 

 

 
   4,172.7    3,914.3  

Stockholders’ equity:

   

Preferred stock — 1.5 shares authorized and un-issued

   —    —  

Common stock — shares authorized — 200.0; shares issued and outstanding at December 31, 2011 — 81.7; at December 31, 2010 — 81.7

   81.7    81.7  

Capital in excess of par value

   626.5    606.1  

Retained earnings

   1,314.7    1,200.5  

Accumulated other comprehensive loss

   (134.0)   (95.5) 

Treasury stock — at December 31, 2011 — 1.5 shares; at December 31, 2010 — 1.9 shares

   (25.1)   (28.0) 
  

 

 

  

 

 

 
   1,863.8    1,764.8  

Noncontrolling interest

   84.5    80.9  
  

 

 

  

 

 

 
   1,948.3    1,845.7  
  

 

 

  

 

 

 
  $6,121.0   $5,760.0  
  

 

 

  

 

 

 

Statements of Comprehensive Income

  Year Ended December 31,
  2012 2011 2010
  (in millions)
Net income $253.7
 $145.7
 $75.4
Other comprehensive income (loss):      
Unrealized loss on derivative financial instruments:      
Unrealized gain (loss) arising during the period, net of tax expense (benefit) of $4.2, $(1.9), and $(10.4) 7.2
 (3.9) (18.5)
Reclassification adjustments for losses included in net income, net of tax expense of $3.2, $2.3, and $1.3 5.8
 4.1
 2.1
Currency translation adjustment – reclassification adjustment for loss included in net income, net of tax expense of $0.4, $0.0, and $0.0 0.6
 0.0
 0.0
Net actuarial gains (losses) of defined benefit plans:      
Unrealized gain (loss) arising during the period, net of tax expense (benefit) of $(17.8), $(17.5), and $4.4 (30.3) (29.8) 7.5
Amortization of net actuarial loss, net of tax expense of $1.1, $0.6, and $0.8 2.2
 1.2
 1.2
Other, net of tax benefit of $-, $-, and $0.7 —
 —
 1.1
  (14.5) (28.4) (6.6)
Comprehensive income 239.2
 117.3
 68.8
Less: comprehensive income (loss) attributable to noncontrolling interest 0.1
 3.6
 (1.1)
Comprehensive income attributable to Trinity Industries, Inc. $239.1
 $113.7
 $69.9

See accompanying notes to consolidated financial statements.



45
Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Operating activities:

    

Net income (loss)

  $145.7   $75.4   $(137.7) 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Goodwill impairment

   —    —    325.0  

Depreciation and amortization

   192.9    189.6    160.8  

Stock-based compensation expense

   23.5    15.7    13.5  

Excess tax benefits from stock-based compensation

   (3.2)   (0.6)   —  

Provision (benefit) for deferred income taxes

   60.9    60.1    (23.8) 

Net gains on sales of railcars owned more than one year at the time of sale

   (16.2)   (6.6)   (18.4) 

Gain on disposition of property, plant, equipment, and other assets

   (8.4)   (7.9)   (5.8) 

Gain on disposition of flood-damaged property, plant, and equipment

   (17.6)   (9.7)   —  

Other

   19.3    5.0    8.8  

Changes in assets and liabilities:

    

(Increase) decrease in receivables

   (146.3)   (62.2)   91.5  

(Increase) decrease in income tax receivable

   5.8    3.8    87.5  

(Increase) decrease in inventories

   (212.2)   (88.7)   380.1  

(Increase) decrease in other assets

   (13.5)   27.8    (24.1) 

Increase (decrease) in accounts payable

   73.1    53.4    (140.8) 

Increase (decrease) in accrued liabilities

   (14.2)   (59.5)   (20.5) 

Increase (decrease) in other liabilities

   14.7    (25.1)   11.2  
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   104.3    170.5    707.3  
  

 

 

  

 

 

  

 

 

 

Investing activities:

    

(Increase) decrease in short-term marketable securities

   158.0    (88.0)   (70.0) 

Proceeds from sales of railcars owned more than one year at the time of sale

   60.6    33.6    154.3  

Proceeds from lease fleet sales — sale and leaseback

   44.4    —    103.6  

Proceeds from disposition of property, plant, equipment, and other assets

   11.2    38.9    15.1  

Proceeds from disposition of flood-damaged property, plant, and equipment

   23.3    12.0    —  

Capital expenditures — leasing, net of railcars owned one year or less at the time of sale

   (258.6)   (213.8)   (343.0) 

Capital expenditures — manufacturing and other

   (52.0)   (29.0)   (47.4) 

Capital expenditures — replacement of flood-damaged property, plant, and equipment

   (29.4)   (12.0)   —  

Acquisitions, net of cash acquired

   (42.5)   (49.9)   —  
  

 

 

  

 

 

  

 

 

 

Net cash required by investing activities

   (85.0)   (308.2)   (187.4) 
  

 

 

  

 

 

  

 

 

 

Financing activities:

    

Proceeds from issuance of common stock, net

   2.1    1.7    1.1  

Excess tax benefits from stock-based compensation

   3.2    0.6    —  

Payments to retire debt — assumed debt of Quixote

   —    (40.0)   —  

Payments to retire debt — other

   (1,113.0)   (363.9)   (294.0) 

Proceeds from issuance of debt

   1,145.9    363.5    281.1  

Stock repurchases

   —    —    (6.3) 

(Increase) decrease in restricted cash

   (33.2)   (25.4)   (26.5) 

Purchase of additional interest in TRIP Holdings

   —    (28.6)   —  

Dividends paid to common shareholders

   (27.2)   (25.4)   (25.3) 

Distribution to noncontrolling interest

   —    (2.6)   —  
  

 

 

  

 

 

  

 

 

 

Net cash (required) provided by financing activities

   (22.2)   (120.1)   (69.9) 

Net (decrease) increase in cash and cash equivalents

   (2.9)   (257.8)   450.0  

Cash and cash equivalents at beginning of period

   354.0    611.8    161.8  
  

 

 

  

 

 

  

 

 

 

Cash and cash equivalents at end of period

  $351.1   $354.0   $611.8  
  

 

 

  

 

 

  

 

 

 

Interest paid for the years ended December 31, 2011, 2010, and 2009, was $154.9 million, $160.5 million, and $101.4 million, respectively. There was no capitalized interest in the years ended December 31, 2011, 2010, and 2009. Tax payments made, net of refunds received, for the year ended December 31, 2011 were $2.5 million. Tax refunds received, net of payments made, for the years ended December 31, 2010 and 2009 were $16.0 million and $85.6 million, respectively.

Non-cash investing and financing activity: During the year ended December 31, 2009, the Company acquired $56.6 million of equipment on lease through the assumption of capital lease obligations.

Balance Sheets

  December 31,
2012		 December 31,
2011
  (in millions)
ASSETS    
Cash and cash equivalents $573.0
 $351.1
Receivables, net of allowance for doubtful accounts of $4.6 and $8.3 390.0
 385.9
Inventories:    
Raw materials and supplies 405.3
 319.5
Work in process 140.9
 125.6
Finished goods 121.5
 99.5
  667.7
 544.6
Restricted cash, including TRIP Holdings of $50.3 and $74.6 223.2
 240.3
Property, plant, and equipment, at cost, including TRIP Holdings of $1,272.4 and $1,257.7 5,642.0
 5,336.8
Less accumulated depreciation, including TRIP Holdings of $153.8 and $122.7 (1,343.0) (1,177.7)
  4,299.0
 4,159.1
Goodwill 240.4
 219.5
Assets held for sale and discontinued operations 27.9
 32.5
Other assets 248.7
 188.0
  $6,669.9
 $6,121.0
LIABILITIES AND STOCKHOLDERS' EQUITY    
Accounts payable $188.2
 $207.4
Accrued liabilities 583.1
 421.3
Debt:    
Recourse, net of unamortized discount of $87.5 and $99.8 458.1
 455.0
Non-recourse:    
Parent and wholly-owned subsidiaries 1,738.0
 1,616.0
TRIP Holdings 858.9
 901.2
  3,055.0
 2,972.2
Deferred income 44.5
 38.7
Deferred income taxes 572.4
 434.7
Liabilities held for sale and discontinued operations 3.7
 2.7
Other liabilities 85.4
 95.7
  4,532.3
 4,172.7
Stockholders’ equity:    
Preferred stock – 1.5 shares authorized and unissued —
 —
Common stock – 200.0 shares authorized; shares issued and outstanding at December 31, 2012 and 2011 – 81.7 81.7
 81.7
Capital in excess of par value 652.6
 626.5
Retained earnings 1,536.7
 1,314.7
Accumulated other comprehensive loss (150.1) (134.0)
Treasury stock – shares at December 31, 2012 – 2.6; at December 31, 2011 – 1.5 (67.9) (25.1)
  2,053.0
 1,863.8
Noncontrolling interest 84.6
 84.5
  2,137.6
 1,948.3
  $6,669.9
 $6,121.0
See accompanying notes to consolidated financial statements.


46
Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ EquityCash Flows

  Common Stock        Accumulated

Other
Comprehensive
Loss

  Treasury Stock          
  Shares  $1 Par
Value		  Capital in
Excess of Par
Value		  Retained
Earnings		   Shares  Cost  Trinity
Stockholders’
Equity		  Noncontrolling
Interest		  Total
Stockholders’
Equity		 
  (in millions, except par value) 

Balances at December 31, 2008

  81.7   $81.7   $612.7   $1,427.0   $(161.3)   (2.3)  $(47.8)  $1,912.3   $—   $1,912.3  

Net loss

  —    —    —    (137.7)   —    —    —    (137.7)   —    (137.7) 

Other comprehensive loss, net of tax:

          

Change in funded status of pension liability

  —    —    —    —    35.6    —    —    35.6    —    35.6  

Unrealized gain on derivative financial instruments

  —    —    —    —    27.8    —    —    27.8    —    27.8  

Other changes

  —    —    —    —    (0.1)   —    —    (0.1)   —    (0.1) 
        

 

 

  

 

 

  

 

 

 

Comprehensive net loss

         (74.4)   —    (74.4) 

Cash dividends on common stock

  —    —    —    (25.3)   —    —    —    (25.3)   —    (25.3) 

Restricted shares issued, net

  —    —    (12.6)   —    —    0.5    12.6    —    —    —  

Shares repurchased

  —    —    —    —    —    (0.8)   (6.3)   (6.3)   —    (6.3) 

Stock options exercised

  —    —    (0.6)   —    —    0.1    1.7    1.1    —    1.1  

Income tax expense from stock options exercised

  —    —    (2.1)   —    —    —    —    (2.1)   —    (2.1) 

Stock-based compensation expense

  —    —    1.0    —    —    —    —    1.0    —    1.0  

Other

  —    —    —    (0.1)   —    —    0.1    —    —    —  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances at December 31, 2009

  81.7   $81.7   $598.4   $1,263.9   $(98.0)   (2.5)  $(39.7)  $1,806.3   $—   $1,806.3  

Cumulative effect of consolidating TRIP Holdings (see Notes 1 and 6)

  —    —    —    (105.4)   —    —    —    (105.4)   129.9    24.5  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances at December 31, 2009 as adjusted

  81.7    81.7    598.4    1,158.5    (98.0)   (2.5)   (39.7)   1,700.9    129.9    1,830.8  

Net income

  —    —    —    67.4    —    —    —    67.4    8.0    75.4  

Other comprehensive income (loss), net of tax:

          

Change in funded status of pension liability

  —    —    —    —    8.7    —    —    8.7    —    8.7  

Unrealized loss on derivative financial instruments

  —    —    —    —    (7.3)   —    —    (7.3)   (9.1)   (16.4) 

Other changes

  —    —    —    —    1.1    —    —    1.1    —    1.1  
        

 

 

  

 

 

  

 

 

 

Comprehensive net income (loss)

         69.9    (1.1)   68.8  

Purchase of additional interest in TRIP Holdings

  —    —    10.3    —    —    —    —    10.3    (47.9)   (37.6) 

Cash dividends on common stock

  —    —    —    (25.4)   —    —    —    (25.4)   —    (25.4) 

Restricted shares issued, net

  —    —    (2.3)   —    —    0.4    9.2    6.9    —    6.9  

Stock options exercised

  —    —    (0.8)   —    —    0.1    2.5    1.7    —    1.7  

Income tax expense from stock options exercised

  —    —    (0.2)   —    —    —    —    (0.2)   —    (0.2) 

Stock-based compensation expense

  —    —    0.6    —    —    —    —    0.6    —    0.6  

Other

  —    —    0.1    —    —    0.1    —    0.1    —    0.1  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances at December 31, 2010

  81.7   $81.7   $606.1   $1,200.5   $(95.5)   (1.9)  $(28.0)  $1,764.8   $80.9   $1,845.7  

Net income

  —    —    —    142.2    —    —    —    142.2    3.5    145.7  

Other comprehensive income, net of tax:

          

Change in funded status of pension liability

  —    —    —    —    (28.6)   —    —    (28.6)   —    (28.6) 

Unrealized loss on derivative financial instruments

  —    —    —    —    0.1    —    —    0.1    0.1    0.2  
        

 

 

  

 

 

  

 

 

 

Comprehensive net income

         113.7    3.6    117.3  

Cash dividends on common stock

  —    —    —    (28.0)   —    —    —    (28.0)   —    (28.0) 

Restricted shares issued, net

  —    —    6.7    —    —    0.2    0.3    7.0    —    7.0  

Stock options exercised

  —    —    (0.5)   —    —    0.2    2.6    2.1    —    2.1  

Income tax benefit from stock options exercised

  —    —    3.5    —    —    —    —    3.5    —    3.5  

Stock-based compensation expense

  —    —    0.6    —    —    —    —    0.6    —    0.6  

Reclassification of purchase of additional interest in TRIP Holdings

  —    —    15.5    —    (15.5)   —    —    —    —    —  

Tax expense allocation related to TRIP Holdings unrealized loss on derivative financial instruments

  —    —    (5.5)   —    5.5    —    —    —    —    —  

Other

  —    —    0.1    —    —    —    —    0.1    —    0.1  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances at December 31, 2011

  81.7   $81.7   $626.5   $1,314.7   $(134.0)   (1.5)  $(25.1)  $1,863.8   $84.5   $1,948.3  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

  Year Ended December 31,
  2012 2011 2010
  (in millions)
Operating activities:      
Net income $253.7
 $145.7
 $75.4
Adjustments to reconcile net income to net cash provided by operating activities:      
(Income) loss from discontinued operations (1.8) 1.1
 (6.0)
Depreciation and amortization 193.7
 187.7
 180.9
Stock-based compensation expense 27.7
 22.8
 14.4
Excess tax benefits from stock-based compensation (0.6) (3.2) (0.6)
Provision for deferred income taxes 126.3
 60.5
 68.5
Net gains on sales of railcars owned more than one year at the time of sale (33.5) (16.2) (6.6)
Gain on disposition of property, plant, equipment, and other assets (4.6) (6.2) (3.8)
Gain on disposition of flood-damaged property, plant, equipment, and other assets (0.4) (17.6) (9.7)
Non-cash interest expense 22.0
 18.6
 13.6
Other (3.2) 1.4
 (6.0)
Changes in assets and liabilities:      
(Increase) decrease in receivables 2.7
 (150.3) (56.0)
(Increase) decrease in inventories (117.2) (212.5) (88.3)
(Increase) decrease in other assets (43.1) (7.7) 27.5
Increase (decrease) in accounts payable (16.7) 74.9
 50.9
Increase (decrease) in accrued liabilities 125.5
 (11.5) (62.0)
Increase (decrease) in other liabilities (3.9) 14.0
 (25.4)
Net cash provided by operating activities - continuing operations 526.6
 101.5
 166.8
Net cash provided by operating activities - discontinued operations 0.8
 9.4
 3.7
Net cash provided by operating activities 527.4
 110.9
 170.5
Investing activities:      
(Increase) decrease in short-term marketable securities —
 158.0
 (88.0)
Proceeds from sales of railcars owned more than one year at the time of sale 126.3
 60.6
 33.6
Proceeds from lease fleet sales – sale and leaseback 58.3
 44.4
 —
Proceeds from disposition of property, plant, equipment, and other assets 16.8
 8.5
 7.0
Proceeds from disposition of flood-damaged property, plant, and equipment —
 23.3
 12.0
Capital expenditures – leasing, net of sold railcars owned one year or less (352.6) (258.6) (213.8)
Capital expenditures – manufacturing and other (116.6) (47.6) (27.0)
Capital expenditures – replacement of flood-damaged property, plant, and equipment —
 (29.4) (12.0)
Acquisitions, net of cash acquired (46.2) (42.5) (47.9)
Other 1.7
 —
 —
Net cash required by investing activities - continuing operations (312.3) (83.3) (336.1)
Net cash provided (required) by investing activities - discontinued operations 0.9
 (1.7) 27.9
Net cash required by investing activities (311.4) (85.0) (308.2)
Financing activities:      
Proceeds from issuance of common stock, net 4.1
 2.1
 1.7
Excess tax benefits from stock-based compensation 0.6
 3.2
 0.6
Payments to retire debt (378.4) (1,112.3) (363.5)
Payments to retire debt - assumed debt of Quixote —
 —
 (40.0)
Proceeds from issuance of debt 443.8
 1,143.3
 362.7
(Increase) decrease in restricted cash 17.1
 (33.2) (25.4)
Shares repurchased (45.2) —
 —
Purchase of additional interest in TRIP Holdings —
 —
 (28.6)
Dividends paid to common shareholders (31.7) (27.2) (25.4)
Distribution to noncontrolling interest —
 —
 (2.6)
Other (5.3) (6.6) —
Net cash provided (required) by financing activities - continuing operations 5.0
 (30.7) (120.5)
Net cash provided by financing activities - discontinued operations 0.9
 1.9
 0.4
Net cash provided (required) by financing activities 5.9
 (28.8) (120.1)
Net increase (decrease) in cash and cash equivalents 221.9
 (2.9) (257.8)
Cash and cash equivalents at beginning of period 351.1
 354.0
 611.8
Cash and cash equivalents at end of period $573.0
 $351.1
 $354.0

Interest paid for the years ended December 31, 2012, 2011, and 2010 was $174.8 million, $154.9 million, and $160.5 million, respectively. Net tax payments received (made) for the years ended December 31, 2012, 2011, and 2010 were $(18.4) million, $(2.5) million, and $16.0 million, respectively.

See accompanying notes to consolidated financial statements.


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Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity

  
Common
Stock
       
Treasury
Stock
      
  Shares $1 Par Value 
Capital in
Excess of
Par Value
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 Shares Amount 
Trinity
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total
Stockholders’
Equity
  (in millions, except par value)
Balances at
December 31, 2009		 81.7
 $81.7
 $598.4
 $1,158.5
 $(98.0) (2.5) $(39.7) $1,700.9
 $129.9
 $1,830.8
Net income —
 —
 —
 67.4
 —
 —
 —
 67.4
 8.0
 75.4
Other comprehensive income (loss) —
 —
 —
 —
 2.5
 —
 —
 2.5
 (9.1) (6.6)
Cash dividends on common stock —
 —
 —
 (25.4) —
 —
 —
 (25.4) —
 (25.4)
Restricted shares issued, net —
 —
 (2.3) —
 —
 0.4
 9.2
 6.9
 —
 6.9
Stock options exercised —
 —
 (0.8) —
 —
 0.1
 2.5
 1.7
 —
 1.7
Income tax expense from stock options exercised —
 —
 (0.2) —
 —
 —
 —
 (0.2) —
 (0.2)
Stock-based compensation expense —
 —
 0.6
 —
 —
 —
 —
 0.6
 —
 0.6
Purchase of additional interest in TRIP Holdings —
 —
 10.3
 —
 —
 —
 —
 10.3
 (47.9) (37.6)
Other —
 —
 0.1
 —
 —
 0.1
 —
 0.1
 —
 0.1
Balances at
December 31, 2010		 81.7
 $81.7
 $606.1
 $1,200.5
 $(95.5) (1.9) $(28.0) $1,764.8
 $80.9
 $1,845.7
Net income —
 —
 —
 142.2
 —
 —
 —
 142.2
 3.5
 145.7
Other comprehensive income (loss) —
 —
 —
 —
 (28.5) —
 —
 (28.5) 0.1
 (28.4)
Cash dividends on common stock —
 —
 —
 (28.0) —
 —
 —
 (28.0) —
 (28.0)
Restricted shares issued, net —
 —
 6.7
 —
 —
 0.2
 0.3
 7.0
 —
 7.0
Stock options exercised —
 —
 (0.5) —
 —
 0.2
 2.6
 2.1
 —
 2.1
Income tax benefit from stock options exercised —
 —
 3.5
 —
 —
 —
 —
 3.5
 —
 3.5
Stock-based compensation expense —
 —
 0.6
 —
 —
 —
 —
 0.6
 —
 0.6
Reclassification of purchase of additional interest in TRIP Holdings —
 —
 15.5
 —
 (15.5) —
 —
 —
 —
 —
Tax expense allocation related to TRIP Holdings unrealized loss on derivative financial instruments —
 —
 (5.5) —
 5.5
 —
 —
 —
 —
 —
Other —
 —
 0.1
 —
 —
 —
 —
 0.1
 —
 0.1
Balances at
December 31, 2011		 81.7
 $81.7
 $626.5
 $1,314.7
 $(134.0) (1.5) $(25.1) $1,863.8
 $84.5
 $1,948.3
Net income (loss) —
 —
 —
 255.2
 —
 —
 —
 255.2
 (1.5) 253.7
Other comprehensive income (loss) —
 —
 —
 —
 (16.1) —
 —
 (16.1) 1.6
 (14.5)
Cash dividends on common stock —
 —
 —
 (33.2) —
 —
 —
 (33.2) —
 (33.2)
Restricted shares issued, net —
 —
 26.4
 —
 —
 0.4
 (1.7) 24.7
 —
 24.7
Stock options exercised —
 —
 (0.7) —
 —
 0.3
 4.8
 4.1
 —
 4.1
Income tax benefit from stock options exercised —
 —
 0.2
 —
 —
 —
 —
 0.2
 —
 0.2
Stock-based compensation expense —
 —
 0.2
 —
 —
 —
 —
 0.2
 —
 0.2
Shares repurchased —
 —
 —
 —
 —
 (1.8) (45.2) (45.2) —
 (45.2)
Other —
 —
 —
 —
 —
 0.0
 (0.7) (0.7) —
 (0.7)
Balances at
December 31, 2012		 81.7
 $81.7
 $652.6
 $1,536.7
 $(150.1) (2.6) $(67.9) $2,053.0
 $84.6
 $2,137.6
See accompanying notes to consolidated financial statements.

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Trinity Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies


Principles of Consolidation


The financial statements of Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity”, “Company”, “we” or “our”) include the accounts of all majority owned subsidiaries. The equity method of accounting is used for companies in which the Company has significant influenceits wholly-owned subsidiaries and 50% or less ownership.its majority-owned subsidiary, TRIP Rail Holdings LLC ("TRIP Holdings"). All significant intercompany accounts and transactions have been eliminated.

On January 1, 2010, Certain amounts previously reported have been adjusted in the Company adopted the provisions of a new accounting standard, Accounting Standards Codification (“ASC”) 810-10, requiring the inclusion of theaccompanying consolidated financial statements of TRIP Holdings and subsidiary in the consolidated financial statements of the Company as of January 1, 2010. Prior to January 1, 2010, the Company’s investment in TRIP Holdings was accounted for using the equity method. Accordingly, the consolidated balance sheets of the Company as of December 31, 2011 and 2010 and the consolidated statements of operations, cash flows, and stockholders’ equity for the years ended December 31, 2011 and 2010 include the accounts of all subsidiaries including TRIP Holdings. As a result of adopting this pronouncement, we determinedremove the effects on Trinity’s consolidated financial statements as if TRIP Holdings had been included in the Company’s consolidated financial statements from TRIP Holdings’ inception and recorded a charge to retained earnings of $105.4 million, net of $57.7 million of tax benefit, and a noncontrolling interest of $129.9 million as of January 1, 2010. Prior periods were not restated. All significant intercompany accounts and transactions have been eliminated. Profits have been deferred on sales of railcars from the Rail or Leasing Group to TRIP Holdings and will be amortized over the life of the related equipment. Additionally, any future profits on the sale of railcars to TRIP Holdings will be deferred and amortized over the life of the related equipment. The noncontrolling interest represents the non-Trinity equity interest in TRIP Holdings. In September 2010, Trinity increased its ownership interest in TRIP Holdings to 57%. The effect of adopting this accounting standard was an increase to income from continuing operations and net income attributable to Trinity Industries, Inc. of $5.3 million or $0.07 per share in 2010.discontinued operations. See Note 6 Investment in TRIP Holdings for further discussion.

2 Acquisitions and Divestitures.


Stockholders' Equity

Stockholders’ EquityIn

On December 9, 2010,September 2012, the Company’s Board of Directors authorized a $200new $200 million share repurchase program, effective JanuaryOctober 1, 2011. This2012, which expires on December 31, 2014. The new program replaced the Company’s previous share repurchaseprior program and expires December 31, 2012. No shares were repurchased under this program forwhich expired on September 30, 2012. During the year ended December 31, 2011.

For2012, the quarter ended June 30,Company repurchased 1,834,221 shares under the prior program at a cost of $45.2 million.


In 2011, an amount of $15.5$15.5 million was reclassified between capital in excess of par value and accumulated other comprehensive loss to properly reflect the additional amount of accumulated unrealized loss on derivative financial instruments attributable to the Company after the purchase of additional interests in TRIP Holdings.


Revenue Recognition


Revenues for contracts providing for a large number of units and few deliveries are recorded as the individual units are produced, inspected, and accepted by the customer as the risk of loss passes to the customer upon pre-delivery acceptance on these contracts. This occurs primarily in the Rail and Inland Barge Groups. Revenue from rentals and operating leases, including contracts which contain non-level fixed rental payments, is recognized monthly on a straight-line basis. Fees for shipping and handling are recorded as revenue. For all other products, we recognize revenue when products are shipped or services are provided.

Effective December 31, 2011, the Company adopted the emerging industry policy of recognizing revenueRevenue is recognized from the sales of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet that have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balances have been reclassified to conform to this policy resulting in a decrease inFees for shipping and handling are recorded as revenue. For all other products, we recognize revenue of $33.6 million and $154.3 million for the years ended December 31, 2010 and 2009, respectively. Additionally, this change resulted in additional cash flow provided by operating activities with an offsetting decrease in cash flow from investing activities of $0.3 million and $2.1 million for the years ended December 31, 2010 and 2009, respectively.

when products are shipped or services are provided.


Income Taxes


The liability method is used to account for income taxes. Deferred income taxes represent the 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. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized.


The Company regularly evaluates the likelihood of realization of tax benefits derived from positions it has taken in various federal and state filings after consideration of all relevant facts, circumstances, and available information. For those tax benefitspositions that are deemed more likely than not that willto be sustained, the Company recognizes the benefit it believes is cumulatively greater than 50% likely to be realized. To the extent the Company were to prevail in matters for which accruals have been established or be required to pay amounts in excess of recorded reserves, the effective tax rate in a given financial statement period could be materially impacted.


Financial Instruments


The Company considers all highly liquid debt instruments to be either cash and cash equivalents if purchased with a maturity of three months or less, or short-term marketable securities if purchased with a maturity of more than three months and less than one year.

year.


Financial instruments that potentially subject the Company to a concentration of credit risk are primarily cash investments, short-term marketable securities, and receivables. The Company places its cash investments and short-term marketable securities in bank deposits and investment grade, short-term debt instruments and limits the amount of credit exposure to any one commercial issuer. Concentrations of credit risk with respect to receivables are limited due to control procedures tothat monitor the credit worthiness of customers, the large number of customers in the Company’sCompany's customer base, and their dispersion across different industries and geographic areas. As receivables are generally unsecured, the Company maintains an allowance for doubtful accounts

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Table of Contents

based upon the expected collectability of all receivables. Receivable balances determined to be uncollectible are charged against the allowance. The carrying values of cash, receivables and accounts payable are considered to be representative of their respective fair values. One customerAt December 31, 2012, one customer’s net receivable balance in our Energy Equipment Group, all within terms, accounted for approximately 21% of the totalconsolidated net receivables balance outstanding at December 31, 2011 and paid approximately 69% of their balance to date in 2012.

outstanding.


Inventories


Inventories are valued at the lower of cost or market, with cost determined principally on the first in first out method. Market is replacement cost or net realizable value. Work in process and finished goods include material, labor, and overhead.


Property, Plant, and Equipment


Property, plant, and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives are: buildings and improvements — - 3 to 30 years;years; leasehold improvements —- the lesser of the term of the lease or 7 years;years; machinery and equipment — - 2 to 10 years;years; information systems hardware and software — - 2 to 5 years;years; and railcars in our lease fleet —- generally 35 years.years. The costs of ordinary maintenance and repair are charged to operating costs while renewals and major replacements are capitalized.


Long-lived Assets


The Company periodically evaluates the carrying value of long-lived assets to be held and used for potential impairment. The carrying value of long-lived assets to be held and used is considered impaired only when their carrying value is not recoverable through undiscounted future cash flows and the fair value of the assets is less than their carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced for the estimated cost to dispose of the assets. Impairment losses were not material for the years ended December 31, 2012, 2011 2010,, and 2009.

2010.


Goodwill and Intangible Assets


Goodwill is required to be tested for impairment annually, or on an interim basis whenever events or circumstances change, indicating that the carrying amount of the goodwill might be impaired. The goodwill impairment test is a two-step process with step one requiring the comparison of the reporting unit’sunit's estimated fair value with the carrying amount of its net assets. Step two of the impairment test is necessary to determine the amount of goodwill impairment to be recorded when the reporting unit’sunit's recorded net

assets exceed its fair value. Impairment is assessed at the “reporting unit” level by applying a fair value-based test for each unit with recorded goodwill. The estimates and judgments that most significantly affect the fair value calculations are assumptions related to revenue and operating profit growth, discount rates and exit multiples. Due to an overall market decline for products in the Rail Group during the second quarter of 2009, we concluded that indications of impairment existed that required an interim goodwill impairment analysis. Accordingly, we tested the Rail Group’s goodwill for impairment as of June 30, 2009 and recorded a charge of $325.0 million during the second quarter of 2009. See Note 9 Goodwill for further explanation and results of this test. As of December 31, 20112012 and 2010,2011, the Company’sCompany's annual impairment test of goodwill was completed at the reporting unit level and no additional impairment charges were determined to be necessary.


Intangible assets with defined useful lives, which as of December 31, 20112012 had net book values of $24.7$21.7 million, are amortized over their estimated useful lives, and arewere also evaluated for potential impairment at least annually. Impairment losses were not material for the years ended as of December 31, 2011, 2010, and 2009.

2012.


Restricted Cash


Restricted cash consists of cash and cash equivalents that are held as collateral for the Company’sCompany's non-recourse debt and lease obligations and as such are restricted in use.


Insurance


The Company is effectively self-insured for workers’workers' compensation. A third party administrator is used to process claims. We accrue our workers’workers' compensation liability based upon independent actuarial studies.


Warranties

Warranties

Depending on the product, the Company provides warranties against materials and manufacturing defects generally ranging from one to five years. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. The Company provides for the estimated cost of product


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warranties at the time revenue is recognized related to products covered by warranties, and assesses the adequacy of the resulting reserves on a quarterly basis.


Foreign Currency Translation


Operations outside the United States prepare financial statements in currencies other than the United States dollar. The income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’stockholders' equity and other comprehensive loss. The functional currency of our Mexico operations is considered to be the United States dollar.


Other Comprehensive Income (Loss)


Other comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive net income (loss) consists of net income (loss), foreign currency translation adjustments, the effective unrealized portions of changes in fair value ofgains and losses on the Company’sCompany's derivative financial instruments, and the change innet actuarial gains and losses of the funded status of pension liabilities.Company's defined benefit plans. See Note 15 Accumulated Other Comprehensive Loss (“AOCL”). All components are shown net of tax.


Recent Accounting Pronouncements


In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”) which amends currentamended prior comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will bebecame effective for public companies during the interim and annual periods beginning after Dec.December 15, 2011 with early adoption permitted. Accordingly, the Company adopted this new standard on January 1,

2012. 2012 by including the consolidated statement of comprehensive income with its consolidated financial statements and revising Note 15 Accumulated Other Comprehensive Loss. The adoption of ASU 2011-05 did not have an impact on the Company’s consolidated financial position, results of operations or cash flows as it only requires a change in reporting format with regard to components of other comprehensive income.


In February 2013, the formatFinancial Accounting Standards Board issued Accounting Standards Update No. 2013-02, "Reporting of the current presentation.

In June 2009, the FASB issued a new accounting standard, ASC 810-10,Amounts Reclassified out of Accumulated Other Comprehensive Income," ("ASU 2013-02") which amended prior reporting requirements with respect to comprehensive income by requiring additional disclosures about the previous accounting rules for consolidationamounts reclassified out of variable interest entities. The new standard replaced the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly affect its economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, the new standard provided more timely and useful information about an enterprise’s involvement with a variable interest entity. This standard wasaccumulated other comprehensive loss by component. ASU 2013-02 became effective for public companies during interim and annual reporting periods beginning after NovemberDecember 15, 2009.2012 with early adoption permitted. Accordingly, the Company adopted this new standard on January 1, 2010. See Note 6 Investment in TRIP Holdings for additional explanation2013. The adoption of ASU 2013-02 did not have an impact on the effectsCompany's consolidated financial position, results of implementing this pronouncement as it applies to our investment in TRIP Holdings.

Management’soperations, or cash flows.


Management's Estimates


The preparation of financial statements in conformity with generally accepted accounting principles 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Reclassifications

Reclassifications and Revisions

Certain prior year balances have been reclassified in the Consolidated Balance Sheets and Consolidated Statements of Operations and Cash Flows to conform to the 2011 presentations related to the presentation of lease fleet railcar sales. The effect of properly classifying deferred loan issuance costs incurred in the Consolidated Statements of Cash Flows from an operating activity within the change in other assets to a financing activity to properly state such costs as financing activities, amounted to $6.6 million2012 presentation.


Note 2. Acquisitions and $19.0 million forDivestitures

For the years ended December 31, 20102012 and 2009, respectively. See Note 19Selected Quarterly Financial Data for further discussion.

Note 2. Acquisitions and Divestitures

For the year ended December 31, 2011, all of our acquisition and divestiture activity occurred in the Construction Products Group. This activity consisted of fourthree acquisitions and one divestiture. divestiture during 2012, and four acquisitions and one divestiture in 2011. For the year ended December 31, 2010, we completed three acquisitions consisting of two by the Construction Products Group and one by the Energy Equipment Group. For the year ended December 31, 2010, there were two divestitures which occurred in the Construction Products Group. One of the 2012 acquisitions, completed in December 2012, was recorded based on a preliminary valuation of the net assets acquired. As a result of our acquisition activity, we recorded certain assets and liabilities at their acquisition date fair value based on level 3 inputs. Such assets and liabilities were not significant in relation to consolidated assets and liabilities. See Note 3 Fair Value Accounting for a discussion of inputs in determining fair value.



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In February 2010, the CompanyCompany's Construction Products Group acquired Quixote Corporation (“Quixote”), a leading manufacturer of energy-absorbing highway crash cushions, truck-mounted attenuators, and other transportation products, for a total cost of $58.1 million.$58.1 million. In addition, the Company assumed $40.0$40.0 million in debt that was subsequently retired in the first quarter of 2010. Based on its valuation of the net assets acquired, Trinity recorded goodwill of $22.7$22.7 million and $24.2$24.2 million in intangible assets primarily consisting of the acquisition-date fair value allocated to patents, trade names and customer relationships that are being amortized over their estimated economic life which generally ranges from four to twenty years and. years. As a result of the acquisition, the Company recorded transaction-related expenses of $4.6$4.6 million including a $1.5$1.5 million write-down of its pre-acquisition investment in Quixote classified as other selling, engineering, and administrative costs. In addition to the transaction-related expenses listed above, there was a $1.8$1.8 million reclassification of previously-recognized charges from AOCL to earnings representing the decline in fair value of the Company’sCompany's pre-acquisition investment in Quixote, included in other,Other, net in the consolidated statement of operations. See Note 12 Other, Net and Note 15 Accumulated Other Comprehensive Loss.


Acquisition and divestiture activity for 2012, 2011 and 2010 is summarized below:
 Year Ended December 31,
 2012 2011 2010
 (in millions)
Acquisitions:     
Total cost$48.8
 $56.4
 $70.5
Net cash paid$46.2
 $42.5
 $49.9
Goodwill recorded$20.9
 $29.3
 $33.3
      
Divestitures:     
Proceeds$2.1
 $8.3
 $30.8
Gain recognized$1.5
 $0.7
 $3.8
Goodwill charged off$0.1
 $1.0
 $16.5

Discontinued operation - Ready Mix Concrete Operations

In December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations. The terms of the transaction are expected to be finalized and the transaction closed during 2013. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as follows. There was no acquisitiona discontinued operation and, divestiture activityaccordingly, historical amounts previously reported have been adjusted, where appropriate, to remove the effect of discontinued operations. Further, assets and liabilities related to the discontinued operations have been classified as Assets/Liabilities Held for Sale and Discontinued Operations in 2009:

   Acquisitions   Divestitures 
   Total cost   Net cash
paid during
the year		   Goodwill
recorded		   Proceeds   Gain
recognized		   Goodwill
charged off		 
   (in millions) 

2011:

            

Construction Products Group

  $56.4    $42.5    $29.3    $8.3    $0.7    $1.0  

2010:

            

Construction Products Group

            

Quixote

  $58.1    $39.9    $22.7    $—    $—    $—  

Other

   5.0     5.0     4.0     30.8     3.8     16.5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   63.1     44.9     26.7     30.8     3.8     16.5  

Energy Equipment Group

   7.4     5.0     6.6     —     —     —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $    70.5    $    49.9    $    33.3    $    30.8    $    3.8    $    16.5  

the accompanying consolidated balance sheets as follows:

 
December 31,
2012
 
December 31,
2011

 (in millions)
Assets of Ready-Mix Concrete Operations:   
Inventories$4.5
 $5.3
Property, plant, and equipment, net16.9
 20.4
Goodwill6.3
 6.4
Other0.2
 0.4
 $27.9
 $32.5
Liabilities of Ready-Mix Concrete Operations:   
Debt$3.7
 $2.7
 $3.7
 $2.7

Condensed results of operations for the Ready-Mix Concrete Operations for the years ended December 31, 2012, 2011, and 2010 are as follows:
 Year Ended December 31,
 2012 2011 2010
Revenues$121.4
 $136.8
 $224.8
      
Income (loss) from discontinued operations before income taxes$2.9
 $(1.5) $9.6
Provision (benefit) for income taxes1.1
 (0.4) 3.6
Net income (loss) from discontinued operations$1.8
 $(1.1) $6.0


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Note 3. Fair Value Accounting


Assets and liabilities measured at fair value on a recurring basis are summarized below:

   Fair Value Measurement as of December 31, 2011 
   (in millions) 
   Level 1   Level 2   Level 3   Total 

Assets:

        

Cash equivalents

  $246.6    $—    $—    $246.6  

Restricted cash

   240.3     —     —     240.3  

Equity call agreement with TRIP Holdings equity investor(1)

   —     —     0.7     0.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $486.9    $—    $0.7    $487.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

        

Interest rate hedges(2)

        

Wholly-owned subsidiary

  $—    $48.9    $—    $48.9  

TRIP Holdings

   —     4.8     —     4.8  

Equity put agreement with TRIP Holdings equity investor(3)

   —     —     3.1     3.1  

Fuel derivative instruments(1)

   —     0.1     —     0.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  $          —    $          53.8    $          3.1    $          56.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

   Fair Value Measurement as of December 31, 2010 
   (in millions) 
   Level 1   Level 2   Level 3   Total 

Assets:

        

Cash equivalents

  $286.0    $—    $—    $286.0  

Short-term marketable securities

   158.0     —     —     158.0  

Restricted cash

   207.1     —     —     207.1  

Fuel derivative instruments(1)

   —     0.1     —     0.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $651.1    $0.1    $—    $651.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

        

Interest rate hedges(2)

        

Wholly-owned subsidiary

  $—    $45.7    $—    $45.7  

TRIP Holdings

   —     48.3     —     48.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  $          —    $          94.0    $          —    $          94.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Fair Value Measurement as of December 31, 2012
 (in millions)
 Level 1 Level 2 Level 3 Total
Assets:       
Cash equivalents$246.6
 $155.0
 $—
 $401.6
Restricted cash223.2
 —
 —
 223.2
Equity call agreement with TRIP Holdings equity investor1
—
 —
 0.8
 0.8
Fuel derivative instruments1
—
 0.1
 —
 0.1
Total assets$469.8
 $155.1
 $0.8
 $625.7
Liabilities:       
Interest rate hedges:2
       
Wholly-owned subsidiary$—
 $37.6
 $—
 $37.6
TRIP Holdings—
 5.2
 —
 5.2
Equity put agreement with TRIP Holdings equity investor3
—
 —
 2.9
 2.9
Fuel derivative instruments2
—
 0.0
 —
 0.0
Total liabilities$—
 $42.8
 $2.9
 $45.7
        
 Fair Value Measurement as of December 31, 2011
 (in millions)
 Level 1 Level 2 Level 3 Total
Assets:       
Cash equivalents$246.6
 $—
 $—
 $246.6
Restricted cash240.3
 —
 —
 240.3
Equity call agreement with TRIP Holdings equity investor1
—
 —
 0.7
 0.7
Total assets$486.9
 $—
 $0.7
 $487.6
Liabilities:       
Interest rate hedges:2
       
Wholly-owned subsidiary$—
 $48.9
 $—
 $48.9
TRIP Holdings—
 4.8
 —
 4.8
Equity put agreement with TRIP Holdings equity investor3
—
 —
 3.1
 3.1
Fuel derivative instruments2
—
 0.1
 —
 0.1
Total liabilities$—
 $53.8
 $3.1
 $56.9
1 Included in other assets on the consolidated balance sheet.
2 Included in accrued liabilities on the consolidated balance sheet.
3 Included in other liabilities on the consolidated balance sheet.

(1)

Included in other assets on the consolidated balance sheet.

(2)

Included in accrued liabilities on the consolidated balance sheet.

(3)

Included in other liabilities on the consolidated balance sheet.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market tofor that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair values are listed below:


Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. The Company’s cash equivalents, short-term marketable securities,excluding commercial paper, and restricted cash are instruments of the United StatesU.S. Treasury fully-insured certificates of deposit or highly-rated money market mutual funds.


Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Cash equivalents include commercial paper valued using quoted prices in secondary markets. The Company’s fuel derivative instruments, which are commodity options, are

valued using energy and commodity market data. Interest rate hedges are valued at exit prices obtained from each counterparty. See Note 7 Derivative Instruments and Note 11 Debt.



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Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The equity put and call agreements with the TRIP equity investor are valued based on cash flow projections and certain assumptions regarding the likelihood of exercising the option under the related agreement. See Note 6 Investment in TRIP Holdings.


The carrying amounts and estimated fair values of our long-term debt wereare as follows:

   December 31, 2011   December 31, 2010 
   Carrying
Value		  Estimated
Fair Value		   Carrying
Value		  Estimated
Fair Value		 
   (in millions) 

Recourse:

      

Convertible subordinated notes

  $450.0   $439.4    $450.0   $448.3  

Less: unamortized discount

   (99.8)     (111.1)  
  

 

 

    

 

 

  
   350.2      338.9   

Capital lease obligations

   48.6    48.6     51.2    51.2  

Term loan

   54.7    55.7     57.4    54.2  

Other

   4.2    4.2     2.8    2.8  
  

 

 

  

 

 

   

 

 

  

 

 

 
   457.7    547.9     450.3    556.5  

Non-recourse:

      

2006 secured railcar equipment notes

   269.3    278.5     283.2    302.8  

Promissory notes

   465.5    448.6     493.8    482.2  

2009 secured railcar equipment notes

   218.4    228.6     229.2    256.1  

2010 secured railcar equipment notes

   354.3    333.1     367.1    345.5  

TILC warehouse facility

   308.5    308.5     80.2    80.2  

TRIP Holdings senior secured notes

   61.2    61.6     —    —  

TRIP Master Funding secured railcar equipment notes

   840.0    834.9     —    —  

TRIP Holdings warehouse loan

   —    —     1,003.9    994.0  
  

 

 

  

 

 

   

 

 

  

 

 

 
   2,517.2    2,493.8     2,457.4    2,460.8  
  

 

 

  

 

 

   

 

 

  

 

 

 

Total

  $    2,974.9   $    3,041.7    $    2,907.7   $    3,017.3  
  

 

 

  

 

 

   

 

 

  

 

 

 

  December 31, 2012 December 31, 2011
  
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
  (in millions)
Recourse:        
Convertible subordinated notes $450.0
 $506.6
 $450.0
 $439.4
Less: unamortized discount (87.5)   (99.8)  
  362.5
   350.2
  
Capital lease obligations 45.8
 45.8
 48.6
 48.6
Term loan 48.6
 53.3
 54.7
 55.7
Other 1.2
 1.2
 1.5
 1.5
  458.1
 606.9
 455.0
 545.2
Non-recourse:        
2006 secured railcar equipment notes 255.8
 292.0
 269.3
 278.5
Promissory notes 424.1
 414.6
 465.5
 448.6
2009 secured railcar equipment notes 209.2
 260.4
 218.4
 228.6
2010 secured railcar equipment notes 341.5
 387.2
 354.3
 333.1
2012 secured railcar equipment notes 333.8
 321.7
 —
 —
TILC warehouse facility 173.6
 173.6
 308.5
 308.5
TRIP Holdings senior secured notes 61.2
 62.5
 61.2
 61.6
TRIP Master Funding secured railcar equipment notes 797.7
 952.0
 840.0
 834.9
  2,596.9
 2,864.0
 2,517.2
 2,493.8
Total $3,055.0
 $3,470.9
 $2,972.2
 $3,039.0

The estimated fair value of our convertible subordinated notes was based on a quoted market price as of December 31, 20112012 and 2010, respectively.2011, respectively (Level 1 input). The estimated fair values of our 2006, 2009, 2010, and 20102012 secured railcar equipment notes, promissory notes, TRIP Holdings senior secured notes, TRIP Rail Master Funding LLC (“TRIP Master Funding”) secured railcar equipment notes, TRIP Holdings warehouse loan, and term loan are based on our estimate of their fair value as of December 31, 20112012 and 2010,2011, respectively. These values were determined by discounting their future cash flows at the current market interest rate.rate (Level 3 inputs). The carrying value of our Trinity Industries Leasing Company (“TILC”) warehouse facility approximates fair value because the interest rate adjusts to the market interest rate and the Company’s credit rating has not changed since the loan agreement was renewed in February 2011.2011 and extended in February 2013 (Level 3 input). The fair values of all other financial instruments are estimated to approximate carrying value.

See Note 11 Debt for a description of the Company's long-term debt.



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Table of Contents

Note 4. Segment Information


The Company reports operating results in five principal business segments: (1) the Rail Group, which manufactures and sells railcars and related parts and components; (2) the Construction Products Group, which manufactures and sells highway products and concreteother steel products for infrastructure-related projects and produces aggregates; (3) the Inland Barge Group, which manufactures and sells barges and related products for inland waterway services; (4) the Energy Equipment Group, which manufactures and sells products for energy related businesses, including structural wind towers, tank containers and tank heads for pressure and non-pressure vessels, frac tanks, and utility, traffic, and lighting structures; and (5) the Railcar Leasing and Management Services Group (“Leasing Group”), which owns and operates a fleet of railcars as well as provides third-party fleet management, maintenance, and leasing services. The segment All Other includes our captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; other peripheral businesses; and the change in market valuation related to ineffective commodity hedges. Gains and losses from the sale of property, plant, and equipment whichthat are related to manufacturing and dedicated to the specific manufacturing operations of a particular segment are included in operating profit of that

respective segment. Gains and losses from the sale of property, plant, and equipment whichthat can be utilized by multiple segments are included in operating profit of the All Other segment.


As discussed in Note 2, Acquisitions and Divestitures, in December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations that have historically been a component of the Construction Products Group. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as a discontinued operation and, accordingly, historical segment information previously reported has been adjusted to exclude the discontinued operations from the Construction Products Group.

Sales and related net profits from the Rail Group to the Leasing Group are recorded in the Rail Group and eliminated in consolidation. Sales between these groups are recorded at prices comparable to those charged to external customers, taking into consideration quantity, features, and production demand. Amortization of deferred profit on railcars sold to the Leasing Group is included in the operating profits of the Leasing Group. Sales of railcars from the lease fleet are included in the Leasing Group. Revenue and operating profit


55
Table of the Leasing Group for the years ended December 31, 2011 and 2010 include the operating results of TRIP Holdings. Total assets of the Leasing Group include the assets of TRIP Holdings as of December 31, 2011 and 2010. See Note 1 Summary of Significant Accounting Policies – Principles of Consolidation for further discussion.

Contents


The financial information from continuing operations for these segments is shown in the tables below. We operate principally in North America.


Year EndedDecember 31, 2012
 Revenues Operating Profit (Loss) Assets Depreciation & Amortization Capital Expenditures
 External Intersegment Total    
 (in millions)
Rail Group$1,512.1
 $500.9
 $2,013.0
 $199.0
 $916.2
 $21.8
 $47.8
Construction Products Group461.2
 22.5
 483.7
 44.8
 415.2
 16.6
 15.7
Inland Barge Group675.2
 —
 675.2
 124.7
 154.4
 7.6
 15.0
Energy Equipment Group506.0
 52.6
 558.6
 18.2
 400.1
 19.0
 25.2
Railcar Leasing and Management Services Group644.4
 2.7
 647.1
 300.9
 4,538.8
 120.5
 352.6
All Other13.0
 68.4
 81.4
 (10.2) 30.9
 4.4
 6.6
Corporate—
 —
 —
 (51.5) 744.9
 3.9
 6.3
Eliminations – Lease subsidiary—
 (485.9) (485.9) (50.8) (446.2) —
 —
Eliminations – Other—
 (161.2) (161.2) (0.3) (112.3) (0.1) —
Consolidated Total$3,811.9
 $—
 $3,811.9
 $574.8
 $6,642.0
 $193.7
 $469.2

Year EndedDecember 31, 2011

                 
   Revenues  Operating
Profit
(Loss)		     Depreciation  &
Amortization		  Capital
Expenditures		 
   External   Intersegment  Total   Assets   
   (in millions) 

Rail Group

  $931.7    $343.0   $1,274.7   $77.3   $684.6   $23.9   $11.4  

Construction Products Group

   577.2     12.9    590.1    53.4    403.2    20.7    12.1  

Inland Barge Group

   548.5     —    548.5    106.4    189.2    6.4    38.0(1) 

Energy Equipment Group

   454.8     18.0    472.8    8.9    392.9    18.4    10.4  

Railcar Leasing and Management Services Group

   551.4     0.6    552.0    254.5    4,462.1    115.7    258.6  

All Other

   11.5     50.3    61.8    (3.8)   30.5    4.4    4.0  

Corporate

   —     —    —    (43.6)   512.9    3.6    5.5  

Eliminations-Lease subsidiary

   —     (325.5)   (325.5)   (28.3)   (440.3)   —    —  

Eliminations – Other

   —     (99.3)   (99.3)   0.5    (114.1)   (0.2)   —  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Consolidated Total

  $    3,075.1    $    —   $    3,075.1   $    425.3   $    6,121.0   $    192.9   $    340.0  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 Revenues Operating Profit (Loss) Assets Depreciation & Amortization Capital Expenditures
 External Intersegment Total    
 (in millions)
Rail Group$931.7
 $343.0
 $1,274.7
 $77.3
 $684.6
 $23.9
 $11.4
Construction Products Group440.4
 12.9
 453.3
 54.9
 370.7
 15.5
 7.7
Inland Barge Group548.5
 —
 548.5
 106.4
 189.2
 6.4
 38.0
Energy Equipment Group454.8
 18.0
 472.8
 8.9
 392.9
 18.4
 10.4
Railcar Leasing and Management Services Group551.4
 0.6
 552.0
 254.5
 4,462.1
 115.7
 258.6
All Other11.5
 50.3
 61.8
 (3.8) 30.5
 4.4
 4.0
Corporate—
 —
 —
 (43.6) 512.9
 3.6
 5.5
Eliminations – Lease subsidiary—
 (325.5) (325.5) (28.3) (440.3) —
 —
Eliminations – Other—
 (99.3) (99.3) 0.5
 (114.1) (0.2) —
Consolidated Total$2,938.3
 $—
 $2,938.3
 $426.8
 $6,088.5
 $187.7
 $335.6

Year EndedDecember 31, 2010

      Operating          
   Revenues  Profit     Depreciation &  Capital 
   External   Intersegment  Total  (Loss)  Assets  Amortization  Expenditures 
   (in millions) 

Rail Group

  $289.7    $232.4   $522.1   $1.5   $482.9   $24.0   $4.0  

Construction Products Group

   558.3     20.5    578.8    47.4    335.2    23.7    5.5  

Inland Barge Group

   422.3     —    422.3    69.0    94.5    5.5    14.6(1) 

Energy Equipment Group

   408.5     11.1    419.6    35.1    352.4    17.1    8.1  

Railcar Leasing and Management Services Group

   464.5     —    464.5    207.0    4,452.6    112.6    213.8  

All Other

   12.2     36.3    48.5    (11.4)   27.5    3.6    4.2  

Corporate

   —     —    —    (33.8)   538.5    3.4    4.6  

Eliminations-Lease subsidiary

   —     (216.8)   (216.8)   (8.4)   (522.1)   —    —  

Eliminations – Other

   —     (83.5)   (83.5)   (2.6)   (1.5)   (0.3)   —  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Consolidated Total

  $    2,155.5    $    —   $    2,155.5   $    303.8   $    5,760.0   $    189.6   $    254.8  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(1)Primarily related to repair and replacement of property, plant and equipment at the Company’s inland barge manufacturing facilities in Missouri and Tennessee. See Note 8 – Property, Plant, and Equipment.

Year Ended December 31, 2009

                 
   Revenues  Operating
Profit
(Loss)		     Depreciation  &
Amortization		  Capital
Expenditures		 
   External   Intersegment  Total   Assets   
   (in millions) 

Rail Group

  $485.2    $410.1   $895.3   $(355.9)  $450.7   $25.0   $19.6  

Construction Products Group

   524.0     14.5    538.5    32.6    277.3    23.5    11.6  

Inland Barge Group

   527.3     —    527.3    125.2    69.4    6.1    1.3  

Energy Equipment Group

   502.2     7.8    510.0    73.8    242.0    16.9    9.1  

Railcar Leasing and Management Services Group

   370.2     —    370.2    149.0    3,167.3    82.4    343.0  

All Other

   12.0     36.4    48.4    0.8    27.6    3.1    2.0  

Corporate

   —     —    —    (30.8)   753.1    4.2    3.8  

Eliminations-Lease subsidiary

   —     (391.6)   (391.6)   (22.6)   (329.0)   —    —  

Eliminations – Other

   —     (77.2)   (77.2)   (3.0)   (2.0)   (0.4)   —  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Consolidated Total

  $    2,420.9    $    —   $    2,420.9   $(30.9)  $    4,656.4   $    160.8   $    390.4  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Effective December 31, 2011, the Company adopted the emerging industry policy of recognizing revenue from the sales of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balances have been reclassified to conform to this policy. See Note 1 of the Notes to Consolidated Financial Statements.

 Revenues Operating Profit (Loss) Assets Depreciation & Amortization Capital Expenditures
 External Intersegment Total    
 (in millions)
Rail Group$289.7
 $232.4
 $522.1
 $1.5
 $482.9
 $24.0
 $4.0
Construction Products Group333.5
 20.5
 354.0
 37.8
 294.0
 15.0
 3.5
Inland Barge Group422.3
 —
 422.3
 69.0
 94.5
 5.5
 14.6
Energy Equipment Group408.5
 11.1
 419.6
 35.1
 352.4
 17.1
 8.1
Railcar Leasing and Management Services Group464.5
 —
 464.5
 207.0
 4,452.6
 112.6
 213.8
All Other12.2
 36.3
 48.5
 (11.4) 27.5
 3.6
 4.2
Corporate—
 —
 —
 (33.8) 538.5
 3.4
 4.6
Eliminations – Lease subsidiary—
 (216.8) (216.8) (8.4) (522.1) —
 —
Eliminations – Other—
 (83.5) (83.5) (2.6) (1.5) (0.3) —
Consolidated Total$1,930.7
 $—
 $1,930.7
 $294.2
 $5,718.8
 $180.9
 $252.8

Corporate assets are composed of cash and cash equivalents, short-term marketable securities, notes receivable, certain property, plant, and equipment, and other assets. Capital expenditures do not include business acquisitions.

Capital expenditures for the Inland Barge Group in 2011 and 2010 primarily relate to the repair and replacement of flood-damaged property, plant, and equipment at the Company's manufacturing facilities in Missouri and Tennessee. See Note 8 Property, Plant, and Equipment.



56
Table of Contents

Externally reported revenues and operating profit for our Mexico operations for the years ended December 31, 2012, 2011 2010,, and 20092010 are presented below:

   External Revenues   Operating Profit 
   Year Ended
December 31,		   Year Ended
December 31,		 
   2011   2010   2009   2011  2010  2009 
   (in millions) 

Mexico

  $123.0    $98.3    $86.8    $18.4    $3.4  $15.2  

 External Revenues Operating Profit
 Year Ended December 31, Year Ended December 31,
 2012 2011 2010 2012 2011 2010
 (in millions)
Mexico$96.4
 $123.0
 $98.3
 $0.2
 $18.4
 $3.4

Total assets and long-lived assets for our Mexico operations as of December 31, 20112012 and 20102011 are presented below:

   Total Assets   Long-Lived Assets 
   December 31, 
   2011   2010   2011   2010 
   (in millions) 

Mexico

  $240.4    $288.8    $143.2    $151.7  

 Total Assets Long-Lived Assets
 December 31,
 2012 2011 2012 2011
 (in millions)
Mexico$285.8 $240.4 $141.2 $143.2

57
Table of Contents

Note 5. Railcar Leasing and Management Services Group


The Railcar Leasing and Management Services Group owns and operates a fleet of railcars as well as provides third-party fleet management, maintenance, and leasing services. Selected consolidating financial information for the Leasing Group is as follows:

   December 31, 2011 
   Leasing Group       
   Wholly
Owned
Subsidiaries		  TRIP
Holdings		  Manufacturing/
Corporate		  Total 
   (in millions) 

Cash, cash equivalents, and short-term marketable securities

  $3.2   $—   $347.9   $351.1  

Property, plant, and equipment, net

  $ 3,066.0   $ 1,135.0   $ 510.0   $ 4,711.0  

Net deferred profit on railcars sold to the Leasing Group

   (344.5)   (187.0)   —    (531.5) 
  

 

 

  

 

 

  

 

 

  

 

 

 
  $2,721.5   $948.0   $510.0   $4,179.5  

Restricted cash

  $165.7   $74.6   $—   $240.3  

Debt:

     

Recourse

  $103.3   $—   $454.2   $557.5  

Less: unamortized discount

   —    —    (99.8)   (99.8) 
  

 

 

  

 

 

  

 

 

  

 

 

 
   103.3    —    354.4    457.7  

Non-recourse

   1,616.0    1,010.0    —    2,626.0  

Less: non-recourse debt owned by Trinity

   —    (108.8)   —    (108.8) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total debt

  $1,719.3   $901.2   $354.4   $2,974.9  

Net deferred tax liabilities

  $582.4   $4.7   $(152.4)  $434.7  

   December 31, 2010 
   Leasing Group       
   Wholly
Owned
Subsidiaries		  TRIP
Holdings		  Manufacturing/
Corporate		  Total 
   (in millions) 

Cash, cash equivalents, and short-term marketable securities

  $3.8   $—   $508.2   $512.0  

Property, plant, and equipment, net

  $2,965.4   $1,191.8   $491.4   $4,648.6  

Net deferred profit on railcars sold to the Leasing Group

   (340.4)   (196.2)   —    (536.6) 
  

 

 

  

 

 

  

 

 

  

 

 

 
  $2,625.0   $995.6   $491.4   $4,112.0  

Restricted cash

  $161.1   $46.0   $—   $207.1  

Debt:

     

Recourse

  $108.6   $—   $452.8   $561.4  

Less: unamortized discount

   —    —    (111.1)   (111.1) 
  

 

 

  

 

 

  

 

 

  

 

 

 
   108.6    —    341.7    450.3  

Non-recourse

   1,453.5    1,003.9    —    2,457.4  
  

 

 

  

 

 

  

 

 

  

 

 

 

Total debt

  $1,562.1   $1,003.9   $341.7   $2,907.7  

Net deferred tax liabilities

  $515.7   $(0.3)  $(124.4)  $391.0  

 December 31, 2012
 Leasing Group    
 
Wholly-
Owned
Subsidiaries
 
TRIP
Holdings
 
Manufacturing/
Corporate
 Total
 (in millions)
Cash and cash equivalents$5.7
 $—
 $567.3
 $573.0
Property, plant, and equipment, net$3,203.8
 $1,118.6
 $539.3
 $4,861.7
Net deferred profit on railcars sold to the Leasing Group(381.8) (180.9) —
 (562.7)
 $2,822.0
 $937.7
 $539.3
 $4,299.0
Restricted cash$172.9
 $50.3
 $—
 $223.2
Debt:       
Recourse$94.4
 $—
 $451.2
 $545.6
Less: unamortized discount—
 —
 (87.5) (87.5)
 94.4
 —
 363.7
 458.1
Non-recourse1,738.0
 967.7
 —
 2,705.7
Less: non-recourse debt owned by Trinity—
 (108.8) —
 (108.8)
Total debt$1,832.4
 $858.9
 $363.7
 $3,055.0
Net deferred tax liabilities$671.1
 $5.4
 $(120.7) $555.8
 December 31, 2011
 Leasing Group    
 
Wholly-
Owned
Subsidiaries
 
TRIP
Holdings
 
Manufacturing/
Corporate
 Total
 (in millions)
Cash and cash equivalents$3.2
 $—
 $347.9
 $351.1
Property, plant, and equipment, net$3,066.0
 $1,135.0
 $489.6
 $4,690.6
Net deferred profit on railcars sold to the Leasing Group(344.5) (187.0) —
 (531.5)
 $2,721.5
 $948.0
 $489.6
 $4,159.1
Restricted cash$165.7
 $74.6
 $—
 $240.3
Debt:       
Recourse$103.3
 $—
 $451.5
 $554.8
Less: unamortized discount—
 —
 (99.8) (99.8)
 103.3
 —
 351.7
 455.0
Non-recourse1,616.0
 1,010.0
 —
 2,626.0
Less: non-recourse debt owned by Trinity—
 (108.8) —
 (108.8)
Total debt$1,719.3
 $901.2
 $351.7
 $2,972.2
Net deferred tax liabilities$582.4
 $4.7
 $(152.4) $434.7

See Note 1 Summary of Significant Accounting Policies, Note 6 Investment in TRIP Holdings and Note 11 Debt for a further discussion regarding the accounting for the Company’s investment in TRIP Holdings and TRIP Holdings’ debt.

  Year Ended
December 31,		  Percent Change 
  2011  2010  2009  2011
versus 2010		  2010
versus 2009		 
  ($ in millions)       

Revenues:

     

Wholly-owned subsidiaries:

     

Leasing and management

 $375.1   $345.4   $329.3    8.6%   4.9% 

Railcar sales(1)

  59.4    3.1    40.9    *    *  
 

 

 

  

 

 

  

 

 

   
  434.5    348.5    370.2    24.7%   (5.9)% 

TRIP Holdings:

     

Leasing and management

  117.5    116.0    —    1.3%   —  

Railcar sales(1)

  —    —    —    —    —  
 

 

 

  

 

 

  

 

 

   
  117.5    116.0    —    1.3%   —  
 

 

 

  

 

 

  

 

 

   

Total revenues

 $552.0   $464.5   $370.2    18.8%   25.5% 

Operating profit:

     

Wholly-owned subsidiaries:

     

Leasing and management

 $156.3   $131.7   $128.5    

Railcar sales(1):

     

Railcars owned one year or less at the time of sale

  13.2    0.2    2.1    

Railcars owned more than one year at the time of sale

  11.8    6.6    18.4    
 

 

 

  

 

 

  

 

 

   
  181.3    138.5    149.0    

TRIP Holdings:

     

Leasing and management

  68.8    68.5    —    

Railcar sales(1):

     

Railcars owned one year or less at the time of sale

  —    —    —    

Railcars owned more than one year at the time of sale

  4.4    —    —    
 

 

 

  

 

 

  

 

 

   
  73.2    68.5    —    
 

 

 

  

 

 

  

 

 

   

Total operating profit

 $254.5   $207.0   $149.0    

Operating profit margin:

     

Leasing and management

  45.7%   43.4%   39.0%   

Railcar sales

  *    *    *    

Total operating profit margin

  46.1%   44.6%   40.2%   

Interest and rent expense(2):

     

Rent expense

 $48.6   $48.6   $46.7    

Interest expense:

     

Wholly-owned subsidiaries

 $101.3   $91.7   $80.1    

TRIP Holdings:

     

External

 $53.1   $46.9   $—    

Intercompany

  6.4    —    —    
 

 

 

  

 

 

  

 

 

   
  59.5    46.9    —    
 

 

 

  

 

 

  

 

 

   

Total interest expense

 $    160.8   $    138.6   $    80.1    


58
Table of Contents

 Year Ended December 31, Percent Change
 2012 2011 2010 2012 versus 2011 2011 versus 2010
 ($ in millions)    
Revenues:         
Wholly owned subsidiaries:         
Leasing and management$409.8
 $375.1
 $345.4
 9.3% 8.6%
Railcar sales118.6
 59.4
 3.1
 *
 *
 528.4
 434.5
 348.5
 21.6
 24.7
TRIP Holdings:         
Leasing and management118.7
 117.5
 116.0
 1.0
 1.3
Railcar sales—
 —
 —
 —
 —
 118.7
 117.5
 116.0
 1.0
 1.3
Total revenues$647.1
 $552.0
 $464.5
 17.2
 18.8
Operating Profit:         
Wholly owned subsidiaries:         
Leasing and management$175.2
 $156.3
 $131.7
    
Railcar sales:         
Railcars owned one year or less at the time of sale24.8
 13.2
 0.2
    
Railcars owned more than one year at the time of sale32.8
 11.8
 6.6
    
 232.8
 181.3
 138.5
    
TRIP Holdings:         
Leasing and management67.4
 68.8
 68.5
    
Railcar sales:         
Railcars owned one year or less at the time of sale—
 —
 —
    
Railcars owned more than one year at the time of sale0.7
 4.4
 —
    
 68.1
 73.2
 68.5
    
Total operating profit$300.9
 $254.5
 $207.0
    
Operating profit margin:         
Leasing and management45.9% 45.7% 43.4%    
Railcar sales* * *
    
Total operating profit margin46.5
 46.1
 44.6
    
          
Depreciation, interest, and rent expense(1):
         
Depreciation expense$120.5
 $115.7
 $112.6
    
Rent expense$50.9
 $48.6
 $48.6
    
Interest expense:         
Wholly-owned subsidiaries$101.2
 $101.3
 $91.7
    
TRIP Holdings:         
External60.0
 53.1
 46.9
    
Intercompany13.1
 6.4
 —
    
 73.1
 59.5
 46.9
    
Total interest expense$174.3
 $160.8
 $138.6
    
*Not meaningful


(1)

Effective December 31, 2011, the Company adopted the emerging industry policy of recognizing revenue from the sales of railcars from the lease fleet on a gross basis in leasing revenues

(1)Depreciation and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet which have been owned by the lease fleet for more than one yearrent expense are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balances have been reclassified to conform to this policy. See Note 1 of the Notes to Consolidated Financial Statements.

(2)

Rent expense is a componentcomponents of operating profit. Interest expense is not a component of operating profit and includes the effect of hedges. Intercompany interest expense arises from Trinity’s ownership of a portion of TRIP Holdings’ Senior Secured Notes and is eliminated in consolidation. See Note 11 Debt.

For the year ended December 31, 2009, revenues



59
Table of $39.4 million and operating profit of $2.0 million were related to sales of railcars from the lease fleet to TRIP Holdings. There were no sales to TRIP Holdings during the years ended December 31, 2011 and 2010. See Note 6 Investment in TRIP Holdings.

Contents


Equipment consists primarily of railcars leased by third parties. The Leasing Group purchases equipment manufactured predominantly by the Rail Group and enters into lease contracts with third parties with terms generally ranging between one and twenty years. The Leasing Group primarily enters into operating leases. Future contractual minimum rental revenues on leases are as follows:

   2012   2013   2014 �� 2015   2016   Thereafter   Total 
   (in millions) 

Wholly-owned subsidiaries

  $    255.9    $    205.7    $    153.5    $    116.3    $    81.6    $    181.8    $    994.8  

TRIP Holdings

   93.6     62.6     41.9     33.7     28.9     55.7     316.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $    349.5    $    268.3    $    195.4    $    150.0    $    110.5    $    237.5    $    1,311.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

  2013 2014 2015 2016 2017 Thereafter Total
  (in millions)
Wholly-owned subsidiaries $274.9
 $222.9
 $177.7
 $136.8
 $95.0
 $205.7
 $1,113.0
TRIP Holdings 94.3
 71.8
 59.1
 48.9
 34.9
 44.0
 353.0
  $369.2
 $294.7
 $236.8
 $185.7
 $129.9
 $249.7
 $1,466.0

Debt.The Leasing Group’s debt at December 31, 2011 consists2012 consisted of both recourse and non-recourse debt. In 2009, the Company entered into a seven-year $61.0seven-year $61.0 million term loan agreement and capital lease obligations totaling $56.6 million.$56.6 million. These debt obligations are guaranteed by Trinity Industries, Inc. and certain subsidiaries, and secured by railcar equipment and related leases. As of December 31, 2011,2012, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of approximately $2,489.1$2,660.5 million that is pledged as collateral for Leasing Group debt held by those subsidiaries, including equipment with a net book value of $51.0$49.6 million securing capital lease obligations. The net book value of unpledged equipment at December 31, 2012 was $450.2 million. See Note 11 Debt for the form, maturities, and descriptions of Leasing Group debt.


TRIP Holdings. Debt owed by TRIP Holdings and its subsidiaries is nonrecourse to Trinity and TILC and is secured solely by the consolidated assets of TRIP Holdings and the equity interests of TRIP Holdings. In July 2011, TRIP Holdings and its newly-formed subsidiary, TRIP Rail Master Funding, LLC (“TRIP Master Funding”), issued $1,032.0$1,032.0 million in new debt and repaid all of the outstanding borrowings of the previously-existingexisting TRIP Warehouse Loan. TRIP HoldingsMaster Funding equipment with a net book value of $1,135.0$1,118.6 million, excluding deferred profit onresulting from the sale of railcars sold to TRIP Holdings,Master Funding, is pledged as collateral for the TRIP Holdings'Master Funding debt. See Note 6 Investment in TRIP Holdings for a description of TRIP Holdings.


Off Balance Sheet Arrangements.In prior years, the Leasing Group completed a series of financing transactions whereby railcars were sold to one or more separate independent owner trusts (“Trusts”). Each of the Trusts financed the purchase of the railcars with a combination of debt and equity. In each transaction, the equity participant in the Trust is considered to be the primary beneficiary of the Trust and therefore, the debt related to the Trust is not included as part of the consolidated financial statements. The Leasing Group, through newly formed, wholly-owned, qualified subsidiaries, leased railcars from the Trusts under operating leases with terms of 22 years, and subleased the railcars to independent third partythird-party customers under shorter term operating rental agreements. Under the terms of the operating lease agreements between the subsidiaries and the Trusts, the Leasing Group has the option to purchase at a predetermined fixed price, certain of the railcars from the Trusts in 2016 and other railcars in 2019.2019. The Leasing Group also has options to purchase the railcars at the end of the respective lease agreements in 2023, 2026, and 2027 at the then fair market value of the railcars as determined by a third party, independent appraisal. At the expiration of the operating lease agreements, the Company has no further obligations with respect to the leased railcars.


These Leasing Group subsidiaries had total assets as of December 31, 20112012 of $219.1$208.7 million, including cash of $88.6$83.2 million and railcars of $97.6 million.$93.0 million. The right, title, and interest in each sublease, cash, and railcars are pledged to collateralize the lease obligations to the Trusts and are included in the consolidated financial statements of the Company. Trinity does not guarantee the performance of the subsidiaries’ lease obligations. Certain ratios and cash deposits must be maintained by the Leasing Group’s subsidiaries in order for excess cash flow, as defined in the agreements, from the lease to third parties to be available to Trinity. Future operating lease obligations of the Leasing Group’s subsidiaries as well as future contractual minimum rental revenues related to these leases due to the Leasing Group are as follows:

   2012   2013   2014   2015   2016   Thereafter   Total 
   (in millions) 

Future operating lease obligations of Trusts’ railcars

  $    44.5    $    45.7    $    44.9    $    43.2    $    40.2    $    341.8    $    560.3  

Future contractual minimum rental revenues of Trusts’ railcars

  $    57.5    $    40.7    $    26.3    $    19.8    $    12.5    $    24.0    $    180.8  

  2013 2014 2015 2016 2017 Thereafter Total
�� (in millions)
Future operating lease obligations of Trusts’ railcars $45.6
 $44.7
 $43.0
 $40.1
 $41.9
 $298.9
 $514.2
Future contractual minimum rental revenues of Trusts’ railcars $55.0
 $39.8
 $30.5
 $21.9
 $13.1
 $30.0
 $190.3

In each transaction, the Leasing Group has entered into a servicing and re-marketing agreement with the Trusts that requires the Leasing Group to endeavor, consistent with customary commercial practice as would be used by a prudent person, to maintain railcars under lease for the benefit of the Trusts. The Leasing Group also receives management fees under the terms of the agreements. In each transaction, an independent trustee for the Trusts has authority for appointment of the railcar fleet manager.


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Operating Lease Obligations.Obligations. Future amounts due as well as future contractual minimum rental revenues related to operating leases other than leases with the Trusts are as follows:

   2012   2013   2014   2015   2016   Thereafter   Total 
   (in millions) 

Future operating lease obligations

  $8.3    $8.0    $7.9    $7.9    $7.7    $    33.4    $73.2  

Future contractual minimum rental revenues

  $    9.4    $    8.5    $  7.9    $    5.0    $    4.3    $7.5    $    42.6  

  2013 2014 2015 2016 2017 Thereafter Total
  (in millions)
Future operating lease obligations $12.9
 $12.8
 $12.8
 $12.7
 $12.1
 $50.3
 $113.6
Future contractual minimum rental revenues $16.6
 $16.0
 $12.4
 $11.4
 $8.9
 $14.0
 $79.3

Operating lease obligations totaling $30.3$26.1 million are guaranteed by Trinity Industries, Inc. and certain subsidiaries.



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Note 6. Investment in TRIP Holdings


In 2007, the Company and other third-party equity investors formed TRIP Holdings for the purpose of providing railcar leasing and management services in North America. TRIP Holdings, through its wholly-owned subsidiary, TRIP Rail Leasing LLC (“TRIP Leasing”), purchased railcars from the Company’s Rail and Leasing Groups funded by capital contributions from TRIP Holdings’ equity investors and borrowings under the TRIP Warehouse Loan, defined as such in Note 11 Debt.Loan. As of December 31, 2011,2012, TRIP LeasingHoldings’ subsidiaries had purchased $1,284.7$1,331.4 million of railcars from the Company. Railcars purchased from the Company by TRIP LeasingHoldings’ subsidiaries were required to be purchased at prices comparable with the prices of all similar, new railcars sold contemporaneously by the Company and at prices based on third-party appraised values for used railcars.


In 2010, Trinity purchased2011, as a 29% interest inresult of refinancing TRIP Holdings for $28.6 million from another equity investor. The carrying amount of the noncontrolling interest was reduced by $45.3 million to reflect the change in its ownership interest, resulting in an increase to stockholders’ equity attributable to Trinity Industries’ controlling interest of $10.3 million, net of tax.

In July 2011,Holdings’ previous credit facility, TRIP Holdings and its newly-formed subsidiary, TRIP Master Funding, issued $1,032.0$1,032.0 million in new debt. The debt which was used by TRIP Master Funding to purchase all of the railcar equipment owned by TRIP Leasing which, in turn, repaid all outstanding borrowings under the previously-existingthen existing TRIP Warehouse Loancredit facility and settled all outstanding related interest rate hedges. See Note 11 Debt for a description ofregarding TRIP Holdings and its related debt.

The assets of TRIP Holdings may only be used to satisfy the liabilities of TRIP Holdings, and the liabilities and indebtedness of TRIP Holdings have recourse only to TRIP Holdings' assets.


Additionally, Trinity entered into agreements with an equity investor of TRIP Holdings potentially requiring Trinity, under certain limited circumstances, to acquire from the equity investor an additional 16.3% equity ownership in TRIP Holdings if the option is exercised to its fullest extent. Under the agreement, if exercised, Trinity would be required to pay the equity investor an amount equal to 90% of the equity investor’s net investment in TRIP Holdings. Similarly, at its option, Trinity, under certain limited circumstances, may acquire all of the equity investor’s equity ownership in TRIP Holdings at an amount equal to 100% of the equity investor’s net investment in TRIP Holdings. The agreements expire in July 2014. See Note 3 Fair Value Accounting and Note 12 Other, net.

At December 31, 2011,2012, the Company owned 57% of TRIP Holdings with the remainder owned by three other third-party equity investors. The Company's noncontrolling interest represents the non-Trinity equity interest in TRIP Holdings. The Company receives distributions from TRIP Holdings as an equity investor, when allowed, in proportion to its 57% equity interest, and has an interest in the net assets of TRIP Holdings upon a liquidation event in the same proportion. The terms of the Company’s equity investment are identical to the terms of each of the other equity investors. The manager of TRIP Holdings, TILC, may be removed without cause as a result of a majority vote of the third-party equity investors. Other than as described further below,above, Trinity has had no remaining equity commitment to TRIP Holdings as of December 31, 20112012 and has had no obligation to guarantee performance under any TRIP-related debt agreements, guarantee any railcar residual values, shield any parties from losses, or guarantee minimum yields.

The manager of TRIP Holdings, Trinity Industries Leasing Company (“TILC”), may be removed without cause as a result of a majority vote of the third-party equity investors.


The Company’s carrying value of its investment in TRIP Holdings is as follows:

  December 31,
2011		  December 31,
2010		 
  (in millions) 

Capital contributions

 $    47.3   $    47.3  

Equity purchased from investors

  44.8    44.8  
 

 

 

  

 

 

 
  92.1    92.1  

Equity in earnings

  12.0    7.5  

Equity in unrealized losses on derivative financial instruments

  (1.3)   (1.4) 

Distributions

  (7.0)   (7.0) 

Deferred broker fees

  (0.6)   (0.8) 
 

 

 

  

 

 

 
 $95.2   $90.4  
 

 

 

  

 

 

 

On January 1, 2010, the Company adopted the provisions of a new accounting pronouncement, ASC 810-10, which amended the rules regarding the consolidation of variable interest entities. Under this new standard, which changed the criteria for determining which enterprise has a controlling financial interest, the Company was determined to be the primary beneficiary of TRIP Holdings because of its combined role as both equity member and manager/servicer of TRIP Holdings. As a result of adopting this

pronouncement, the consolidated financial statements of TRIP Holdings and subsidiary are required to be included with the consolidated financial statements of the Company. We determined the effects on Trinity’s consolidated financial statements as if TRIP Holdings had been included in the Company’s consolidated financial statements from TRIP Holdings’ inception, and recorded a charge to retained earnings of $105.4 million, net of $57.7 million in tax benefit, and a noncontrolling interest of $129.9 million as of January 1, 2010. With the acquisition by Trinity of the additional ownership interest in TRIP Holdings in September 2010, the Company’s controlling financial interest in TRIP Holdings derives from its majority ownership. Accordingly, the consolidated balance sheets of the Company as of December 31, 2011 and 2010 and the consolidated statements of operations, cash flows, and stockholders’ equity for the twelve months ended December 31, 2011 and 2010 include the accounts of TRIP Holdings. Prior periods were not restated. All significant intercompany accounts and transactions have been eliminated. Profits have been deferred on sales of railcars from the Rail or Leasing Group to TRIP Holdings and will be amortized over the life of the related equipment. Additionally, any future profits on the sale of railcars to TRIP Holdings will be deferred and amortized over the life of the related equipment. The noncontrolling interest represents the non-Trinity equity interest in TRIP Holdings. The assets of TRIP Holdings may only be used to satisfy liabilities of TRIP Holdings, and the liabilities of TRIP Holdings have recourse only to TRIP Holdings’ assets.

Prior to January 1, 2010, profit on equipment sales to TRIP Leasing was recognized at the time of sale to the extent of the non-Trinity interests in TRIP Holdings. The deferred profit on the sale of equipment to TRIP Leasing pertaining to TILC’s interest in TRIP Holdings was being amortized over the depreciable life of the related equipment. All other fee income to TILC earned from services provided to TRIP Holdings was recognized by TILC to the extent of the non-Trinity interests in TRIP Holdings. Effective January 1, 2010, amortization of the deferred profit on the sale of equipment is recorded as if the entire profit on equipment sales to TRIP Leasing was deferred at the time of the sale and amortized over the depreciable life of the related equipment. All fee income to TILC earned from services provided to TRIP Holdings has been eliminated for the twelve months ended December 31, 2011 and 2010.

Sales of railcars to TRIP Leasing and related gains for the years ended December 31, 2011, 2010, and 2009 are as follows:

   Year Ended December 31, 
   2011   2010   2009 
   (in millions) 

Rail Group:

      

Sales of railcars to TRIP Leasing

  $—    $—    $113.0  

Gain on sales of railcars to TRIP Leasing

  $—    $—    $11.2  

Deferral of gain on sales of railcars to TRIP Leasing based on Trinity’s equity interest

  $—    $—    $2.8  

TILC:

      

Sales of railcars to TRIP Leasing:

      

Railcars owned one year or less at the time of sale

  $—    $—    $39.4  

Railcars owned for more than one year at the time of sale

   —     —     144.4  
  

 

 

   

 

 

   

 

 

 
  $—    $—    $  183.8  
  

 

 

   

 

 

   

 

 

 

Recognition of previously deferred gain on sales of railcars to TRIP Leasing

  $—    $—    $30.3  

Deferral of gain on sales of railcars to TRIP Leasing based on Trinity’s equity interest

  $        —    $        —    $7.6  

In July 2011, Trinity entered into agreements with an equity investor of TRIP Holdings potentially requiring Trinity, under certain limited circumstances, to acquire from the equity investor an additional 16.3% equity ownership in TRIP Holdings if the option is exercised to its fullest extent. Under the agreement, if exercised, Trinity would be required to pay the equity investor an amount equal to 90% of the equity investor’s net investment in TRIP Holdings. Similarly, at its option, Trinity, under certain limited circumstances, may acquire all of the equity investor’s equity ownership in TRIP Holdings at an amount equal to 100% of the equity investor’s net investment in TRIP Holdings. The agreements expire in July 2014. The fair value of these agreements was recorded in the accompanying consolidated statement of operations as an expense of $2.4 million for the year ended December 31, 2011. See Note 3 Fair Value Accounting and Note 12 Other, Net.

 December 31,
2012		 December 31,
2011
 (in millions)
Capital contributions$47.3
 $47.3
Equity purchased from investors44.8
 44.8
 92.1
 92.1
Equity in earnings10.1
 12.0
Equity in unrealized losses on derivative financial instruments0.8
 (1.3)
Distributions(7.0) (7.0)
Deferred broker fees(0.4) (0.6)
 $95.6
 $95.2

Administrative fees paid to TILC by TRIP Holdings and subsidiaries for the years ended December 31, 2012, 2011 2010,, and 20092010 were $4.3$4.8 million $3.7, $4.3 million, and $4.5$3.7 million, respectively.



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Note 7. Derivative Instruments


We use derivative instruments to mitigate the impact of changes in interest rates, both in anticipation of future debt issuances and pricing for zinc, natural gas, and diesel fuel prices, as well as to convert a portionoffset interest rate variability of our variable-ratecertain floating rate debt to fixed-rate debt. Additionally, weissuances outstanding. We also use derivative instruments to mitigate the impact of unfavorable fluctuationschanges in natural gas and diesel fuel prices and changes in foreign currency exchange rates. We also use derivatives to lock in fixed interest rates in anticipation of future debt issuances. For derivative instruments designated as hedges, the Company formally documents the relationship between the derivative instrument and the hedged item, as well as the risk management objective and strategy for the use of the derivative instrument. This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the balance sheet, commitments, or forecasted transactions. At the time a derivative instrument is entered into, and at least quarterly thereafter, the Company assesses whether the derivative instrument is effective in offsetting the changes in fair value or cash flows of the hedged item. Any change in fair value resulting in ineffectiveness, as defined by accounting standards issued by the FASB, is recognized in current period earnings. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is recorded in AOCL as a separate component of stockholders’stockholders' equity and reclassified into earnings in the period during which the hedge transaction affects earnings. Trinity monitors its derivative positions and the credit ratings of its counterparties and does not anticipate losses due to counterparties’counterparties' non-performance. See Note 3 Fair Value Accounting for discussion of how the Company valued its commodity hedges and interest rate swaps at December 31, 2011.

2012. See Note 11 Debt for a description of the Company's debt instruments.


Interest rate hedges

        Included in accompanying balance
sheet at December 31, 2011		 
  Notional
Amount		  Interest
Rate(1)		  Liability  AOCL  —
loss/
(income)		  Noncontrolling
Interest		 
  (in millions, except %) 

Interest rate locks:

     

2005-2006

 $200.0    4.87%   —   $(2.3)   —  

2006-2007

 $370.0    5.34%   —   $10.6    —  

TRIP Holdings(2)

 $788.5    3.60%   —   $23.4   $  17.5  

Interest rate swaps:

     

TRIP Rail Master Funding secured railcar equipment notes

 $89.5    2.62%  $4.8   $2.7   $2.0  

2008 debt issuance

 $  474.7    4.13%  $  48.9   $  46.7    —  

     Included in accompanying balance sheet
at December 31, 2012
 
Notional
Amount
 
Interest
Rate(1)
 Liability 
AOCL –
loss/
(income)
 
Noncontrolling
Interest
 (in millions, except %)
Expired hedges:         
2006 secured railcar equipment notes$200.0
 4.87% $—
 $(1.9) $—
Promissory notes$370.0
 5.34% $—
 $7.2
 $—
TRIP Holdings$788.5
 3.60% $—
 $19.9
 $14.9
Open hedges:         
TRIP Master Funding secured railcar equipment notes$78.4
 2.62% $5.2
 $2.9
 $2.2
Promissory notes$443.8
 4.13% $37.6
 $34.9
 $—
(1)
Weighted average fixed interest rate
 Effect on interest expense-increase/(decrease)
 Year Ended December 31, 
Expected effect during next twelve months(1)
 2012 2011 2010 
 (in millions)
Expired hedges:       
2006 secured railcar equipment notes$(0.3) $(0.4) $(0.4) $(0.3)
Promissory notes$3.3
 $3.5
 $3.8
 $3.1
TRIP Holdings$6.0
 $17.4
 $29.3
 $5.6
Open hedges(2):
       
TILC Warehouse$—
 $—
 $0.5
 $—
TRIP Master Funding secured railcar equipment notes$2.0
 $1.1
 $—
 $1.8
Promissory notes$18.4
 $19.6
 $19.7
 $16.7
(1) Weighted average fixed interest rate

(2) Previously classified with interest rate swaps

  Effect on interest
expense –increase/(decrease)		 
  Year Ended December 31,  Expected  effect
during next
twelve months(1)		 
  2011  2010  2009  
  (in millions) 

Interest rate locks:

    

2005-2006

 $(0.4)  $(0.4)  $(0.4)  $(0.3) 

2006-2007

 $3.5   $3.8   $4.0   $3.4  

TRIP Holdings(2)

 $17.4   $29.3    —   $6.0  

Interest rate swaps:

    

TILC warehouse

  —   $0.5   $2.9    —  

TRIP Rail Master Funding secured

railcar equipment notes

 $1.1    —    —   $1.7  

2008 debt issuance

 $  19.6   $  19.7   $  21.6   $  17.0  

(1)Based on fair value as of December 31, 20112012

(2) Previously classified with interest rate swapsCash flows related to open hedges are included as a change in accrued liabilities in the Consolidated Statements of Cash Flows.


During 2005 and 2006, we entered into interest rate swap transactionsderivatives in anticipation of a future debt issuance.issuing our 2006 Secured Railcar Equipment Notes. These derivative instruments, with a notional amount of $200$200.0 million, were settled in 2006 and fixed the interest rate on a portion of a futurethe related debt issuance associated with a railcar leasing

transaction in 2006 and settled at maturity in the first quarter of 2006.issuance. These interest rate swaps werederivative instrument transactions are being accounted for as cash flow hedges with changes in the fair value of the instruments of $4.5$4.5 million in income recorded in AOCL through the date the


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Table of Contents

related debt issuance closed in May 2006.2006. The balance is being amortized over the term of the related debt. The effect on interest expense is due to amortization of the AOCL balance.

In anticipation of a future debt issuance,


During 2006 and 2007, we entered into interest rate swap transactions during the fourth quarterderivatives in anticipation of 2006 and during 2007.issuing our Promissory Notes. These derivative instruments, with a notional amount of $370$370.0 million hedged, were settled in 2008 and fixed the interest rate on a portion of a futurethe related debt issuance associated with an anticipated railcar leasing transaction, which closed in May 2008.issuance. These instruments settled during the second quarter of 2008 and werederivative instrument transactions are being accounted for as cash flow hedges with changes in the fair value of the instruments of $24.5$24.5 million recorded as a loss in AOCL through the date the related debt issuance closed in May 2008.2008. The balance is being amortized over the term of the related debt. The effect on interest expense is due to amortization of the AOCL balance.


During 2008, we entered into interest rate swap transactions, with a notional amount of $200$200.0 million, which were being used to hedge our exposure to changes in the variable interest rate associated with our TILC warehouse facility. The effect on interest expense included the mark to marketmark-to-market valuation on the interest rate swap transactions and monthly interest settlements. These interest rate hedges expired during the fourth quarter of 2010.

2010.


In May 2008, we entered into an interest rate swap transaction that is being usedderivative instrument, expiring in 2015, to fix the LIBORvariable Libor component of the debt issuance which closed in May 2008.Promissory Notes. This derivative instrument transaction is being accounted for as a cash flow hedge. The effect on interest expense results primarily from monthly interest settlements. In 2009, $1.0 million in unrealized derivative losses were reclassified from AOCL to interest expense that was related to a partial retirement of the debt issuance in the fourth quarter of 2009.


Between 2007 and 2009, TRIP Holdings, as required by its warehouse loan agreement,the TRIP Warehouse Loan, entered into interest rate swap transactions,derivatives, all of which qualified as cash flow hedges, to reduce the effect of changes in variable interest rates.rates in the TRIP Warehouse Loan. In July 2011, these interest rate hedges were terminated in connection with the refinancing of the TRIP Warehouse Loan. Balances included in AOCL at the date the hedges were terminated are being amortized over the expected life of the new debt with $6.0$5.6 million of additional interest expense expected to be recognized during the next twelve months following December 31, 2011.2012. Also in July 2011, TRIP Holdings’ wholly-owned subsidiary, TRIP Rail Master Funding, entered into an interest rate swap transactionderivative instrument, expiring in 2021, with a notional amount of $94.1$94.1 million to reduce the effect of changes in variable interest rates associated with the Class A-1b notes of the TRIP Master Funding secured railcar equipment notes.

The effect on interest expense results primarily from monthly interest settlements.


See Note 11 Debt for a discussion ofregarding the related debt instruments.


Other Derivatives

  Effect on operating income —
increase/(decrease)		 
  Year Ended December 31, 
  2011  2010  2009 
  (in millions) 

Fuel hedges(1)

   

Effect of mark to market valuation

 $  0.0   $0.0   $(0.3) 

Settlements

  0.4    (0.1)   (1.2) 
 

 

 

  

 

 

  

 

 

 
 $0.4   $(0.1)  $(1.5) 

Foreign exchange hedges(2)

 $0.1   $  (0.9)  $  (1.9) 

(1) Included in cost of revenues in the accompanying consolidated statement of operations

(2) Included in other, net in the accompanying consolidated statement of operations

 Effect on operating income - increase/(decrease)
 Year Ended December 31,
 2012 2011 2010
 (in millions)
Fuel hedges(1)
     
Effect of mark-to-market valuation$0.4
 $0.0
 $0.0
Settlements0.0
 0.4
 (0.1)
 $0.4
 $0.4
 $(0.1)
Foreign exchange hedges(2)
$(0.4) $0.1
 $(0.9)
(1)
Included in cost of revenues in the accompanying consolidated statement of operations
(2)
Included in other, net in the accompanying consolidated statement of operations

Natural gas and diesel fuel


We maintain a program to mitigate the impact of fluctuations in the price of natural gas and diesel fuel purchases. The intent of the program is to protect our operating profit from adverse price changes by entering into derivative instruments. For those instruments that do not qualify for hedge accounting treatment, any changes in their valuation are recorded directly to the consolidated statement of operations. The amount recorded in the consolidated balance sheetssheet as of December 31, 2011 and 20102012 for these instruments was not significant.


Foreign exchange hedge


We enter into foreign exchange hedges to mitigate the impact on operating profit of unfavorable fluctuations in foreign currency exchange rates. These instruments are short term with quarterly maturities and no remaining balance in AOCL as of December 31, 2011 and 2010.

2012Zinc.

We maintain a program to mitigate the impact



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Table of fluctuations in the price of zinc purchases. The intent of this program is to protect our operating profit from adverse price changes by entering into derivative instruments. The effect of these derivative instruments on the consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 was not significant.

Contents


Note 8. Property, Plant, and Equipment


The following table summarizes the components of property, plant, and equipment as of December 31, 20112012 and 2010.

   December 31,
2011		  December 31,
2010		 
   (in millions) 

Manufacturing/Corporate:

   

Land

  $41.6   $40.9  

Buildings and improvements

   429.7    418.4  

Machinery and other

   758.7    699.7  

Construction in progress

   12.8    9.7  
  

 

 

  

 

 

 
   1,242.8    1,168.7  

Less accumulated depreciation

   (732.8)   (677.3) 
  

 

 

  

 

 

 
   510.0    491.4  

Leasing:

   

Wholly-owned subsidiaries:

   

Machinery and other

   9.6    38.2  

Equipment on lease

   3,429.3    3,249.8  
  

 

 

  

 

 

 
   3,438.9    3,288.0  

Less accumulated depreciation

   (372.9)   (322.6) 
  

 

 

  

 

 

 
   3,066.0    2,965.4  

TRIP Holdings:

   

Equipment on lease

   1,257.7    1,282.1  

Less accumulated depreciation

   (122.7)   (90.3) 
  

 

 

  

 

 

 
   1,135.0    1,191.8  

Net deferred profit on railcars sold to the Leasing Group

   

Sold to wholly-owned subsidiaries

   (344.5)   (340.4) 

Sold to TRIP Holdings

   (187.0)   (196.2) 
  

 

 

  

 

 

 
  $4,179.5   $4,112.0  
  

 

 

  

 

 

 

2011.

 December 31,
2012		 December 31,
2011
 (in millions)
Manufacturing/Corporate:   
Land$37.7
 $34.7
Buildings and improvements431.0
 407.9
Machinery and other745.3
 716.4
Construction in progress46.1
 12.7
 1,260.1
 1,171.7
Less accumulated depreciation(720.8) (682.1)
 539.3
 489.6
Leasing:   
Wholly-owned subsidiaries:   
Machinery and other9.6
 9.6
Equipment on lease3,662.6
 3,429.3
 3,672.2
 3,438.9
Less accumulated depreciation(468.4) (372.9)
 3,203.8
 3,066.0
TRIP Holdings:   
Equipment on lease1,272.4
 1,257.7
Less accumulated depreciation(153.8) (122.7)
 1,118.6
 1,135.0
Net deferred profit on railcars sold to the Leasing Group   
Sold to wholly-owned subsidiaries(381.8) (344.5)
Sold to TRIP Holdings(180.9) (187.0)
 $4,299.0
 $4,159.1

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the expected sale of the Company's remaining ready-mix concrete operations. See Note 2 Acquisitions and Divestitures.

We lease certain equipment and facilities under operating leases. Future minimum rent expense on non-Leasing Group leases in each year is (in millions): 2012 — $4.3; 2013 — $2.4;  - $3.9; 2014 — $1.7;  - $2.7; 2015 — $1.3;  - $2.0; 2016 — $1.0; - $1.3; 2017 - $0.7; and $1.9$1.2 thereafter. See Note 5 Railcar Leasing and Management Services Group for information related to the lease agreements, future operating lease obligations, and future minimum rent expense associated with the Leasing Group.


We did not capitalize any interest expense as part of the construction of facilities and equipment during 20112012 or 2010.

2011.


In May 2011 and May 2010, the Company’sCompany's inland barge manufacturing facilities in Missouri and Tennessee, respectively, experienced floods resulting in significant damages to Trinity’sTrinity's property and temporary disruptionsdisruption of its production activities. The Company is insured against losses due to property damage and business interruption subject to certain deductibles. With respect to the Missouri flood, Trinity received $35$35.0 million in payments from its insurance carriers of which $22.7$22.7 million pertained to the replacement of or repairs to damaged property, plant, and equipment with a net book value of $5.7$5.7 million, with the remainder pertaining primarily to the reimbursement of flood-related expenses and lost production. Accordingly, the Company recognized a gain

of $17.0$0.4 million in the fourth quarter of 2012 and $17.0 million in 2011 from the disposition of the Missouri flood-damaged property, plant, and equipment. With respect to the Tennessee flood, Trinity received $27.5$27.5 million in payments from its insurance carrier of which $12.6$12.6 million pertained to the replacement of or repairs to damaged property, plant, and equipment with a net book value of $2.3$2.3 million, with the remainder pertaining primarily to the reimbursement of flood-related expenses. Accordingly, the Company recognized a gain of $9.7$9.7 million in 2010 and $0.6$0.6 million in 2011 from the disposition of the Tennessee flood-damaged property, plant, and equipment.


We estimate the fair market value of properties no longer in use or held for sale based on the location and condition of the properties, the fair market value of similar properties in the area, and the Company’sCompany's experience selling similar properties in the past. As of December 31, 2011,2012, the Company had non-operating plants with a net book value of $4.3 million.$7.4 million. Our estimated fair value of these assets exceeds their book value.




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Note 9. Goodwill


Goodwill by segment is as follows:

   December 31,
2011		   December 31,
2010		 
   (in millions) 

Rail Group

  $122.5    $122.5  

Construction Products Group

   90.7     62.4  

Energy Equipment Group

   10.9     10.9  

Railcar Leasing and Management Services Group

   1.8     1.8  
  

 

 

   

 

 

 
  $  225.9    $  197.6  
  

 

 

   

 

 

 

 December 31,
2012		 December 31,
2011
 (in millions)
Rail Group$122.5
 $122.5
Construction Products Group105.2
 84.3
Energy Equipment Group10.9
 10.9
Railcar Leasing and Management Services Group1.8
 1.8
 $240.4
 $219.5

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the expected sale of the Company's ready-mix concrete operations. See Note 2 Acquisitions and Divestitures.

As of December 31, 20112012 and 2010,2011, the Company’sCompany's annual impairment test of goodwill was completed at the reporting unit level and no additional impairment charges were determined to be necessary.

Accumulated goodwill impairment losses as of December 31, 2012 and 2011 totaled $325.0 million resulting from the 2009 impairment charge recorded by the Rail Group.


The net increase in the Construction Products Group goodwill as of December 31, 2011 over the same period last year2012 is due to 20112012 acquisitions and divestitures. See Note 2 Acquisitions and Divestitures.

offset partially by a divestiture.


Note 10. Warranties


The changes in the accruals for warranties for the years ended December 31, 2012, 2011, 2010, and 20092010 are as follows:

   December 31,
2011		  December 31,
2010		  December 31,
2009		 
   (in millions) 

Beginning balance

  $13.2   $19.6   $25.7  

Warranty costs incurred

   (6.3)   (5.7)   (8.6) 

Warranty originations and revisions

   9.1    1.9    9.8  

Warranty expirations

   (2.5)   (2.6)   (7.3) 
  

 

 

  

 

 

  

 

 

 

Ending balance

  $  13.5   $  13.2   $  19.6  
  

 

 

  

 

 

  

 

 

 


 December 31, 2012 December 31, 2011 December 31, 2010
 (in millions)
Beginning balance$13.5
 $13.2
 $19.6
Warranty costs incurred(5.9) (6.3) (5.7)
Warranty originations and revisions7.7
 9.1
 1.9
Warranty expirations(2.8) (2.5) (2.6)
Ending balance$12.5
 $13.5
 $13.2


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Note 11. Debt


The following table summarizes the components of debt as of December 31, 20112012 and 2010.

   December 31,
2011		  December 31,
2010		 
   (in millions) 

Manufacturing/Corporate — Recourse:

   

Revolving credit facility

  $—   $—  

Convertible subordinated notes

   450.0    450.0  

Less: unamortized discount

   (99.8)   (111.1) 
  

 

 

  

 

 

 
   350.2    338.9  

Other

   4.2    2.8  
  

 

 

  

 

 

 
   354.4    341.7  
  

 

 

  

 

 

 

Leasing — Recourse:

   

Capital lease obligations

   48.6    51.2  

Term loan

   54.7    57.4  
  

 

 

  

 

 

 
   457.7    450.3  
  

 

 

  

 

 

 

Leasing — Non-recourse:

   

2006 secured railcar equipment notes

   269.3    283.2  

Promissory notes

   465.5    493.8  

2009 secured railcar equipment notes

   218.4    229.2  

2010 secured railcar equipment notes

   354.3    367.1  

TILC warehouse facility

   308.5    80.2  

TRIP Holdings senior secured notes:

   

Total outstanding

   170.0    —  

Less: owned by Trinity

   (108.8)   —  
  

 

 

  

 

 

 
   61.2    —  

TRIP Master Funding secured railcar equipment notes

   840.0    —  

TRIP warehouse loan

   —    1,003.9  
  

 

 

  

 

 

 
   2,517.2    2,457.4  
  

 

 

  

 

 

 

Total debt

  $    2,974.9   $    2,907.7  
  

 

 

  

 

 

 

On October 20, 2011 we amended:

 December 31,
2012		 December 31,
2011
 (in millions)
Manufacturing/Corporate – Recourse:   
Revolving credit facility$—
 $—
Convertible subordinated notes450.0
 450.0
Less: unamortized discount(87.5) (99.8)
 362.5
 350.2
Other1.2
 1.5
 363.7
 351.7
Leasing – Recourse:   
Capital lease obligations45.8
 48.6
Term loan48.6
 54.7
 94.4
 103.3
Total recourse debt458.1
 455.0
    
Leasing – Non-recourse:   
2006 secured railcar equipment notes255.8
 269.3
Promissory notes424.1
 465.5
2009 secured railcar equipment notes209.2
 218.4
2010 secured railcar equipment notes341.5
 354.3
2012 secured railcar equipment notes333.8
 —
TILC warehouse facility173.6
 308.5
TRIP Holdings senior secured notes:   
Total outstanding170.0
 170.0
Less: owned by Trinity(108.8) (108.8)
 61.2
 61.2
TRIP Master Funding secured railcar equipment notes797.7
 840.0
Total non–recourse debt2,596.9
 2,517.2
Total debt$3,055.0
 $2,972.2

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the expected sale of the Company's ready-mix concrete operations. See Note 2 Acquisitions and extended our $425.0Divestitures.

We have a $425.0 million unsecured revolving credit facility for an additional four years and it nowthat matures on October 20, 2016.2016. As of December 31, 2011,2012, we had letters of credit issued under our revolving credit facility in an aggregate principal amount of $74.1$68.6 million, leaving $350.9$356.4 million available for borrowing. Other than with respect to suchthese letters of credit, there were no borrowings under our revolving credit facility as of December 31, 2011,2012, or for the twelve month period then ended. Of the outstanding letters of credit as of December 31, 2011,2012, a total of $69.2$66.7 million is expected to expire in 20122013 and the remainder in 2013.2014. The majority of our letters of credit obligations supportssupport the Company'sCompany’s various insurance programs and generally renewsrenew each year. Trinity’s revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. Borrowings under the amended credit facility bear interest at Libor plus 150.0 basis points1.50% or prime plus 50.0 basis points.0.50%. As of December 31, 2011,2012, we were in compliance with all such financial covenants.


The Company’s $450.0Company's $450.0 million of Convertible Subordinated Notes due 2036 (“Convertible Subordinated Notes”) bear an interest rate of 3 7/8% per annum on the principal amount payable semi-annually in arrears on June 1 and December 1 of each year. In addition, commencing with the six-monthsix-month period beginning June 1, 2018 and for each six-monthsix-month period thereafter, we will pay contingent interest to the holders of the Convertible Subordinated Notes under certain circumstances. The Convertible Subordinated Notes mature on June 1, 2036, unless redeemed, repurchased, or converted earlier. We may not redeem the Convertible Subordinated Notes before June 1, 2018.2018. On or after that date, we may redeem all or part of the Convertible Subordinated Notes for cash at 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest (including any contingent interest) up to, but excluding, the redemption date. Holders of the Convertible Subordinated Notes may require us to purchase all or a portion of their notes on June 1, 2018 or upon a fundamental change. In each case, the Convertible Subordinated Notes would be purchased for cash at a price equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest (including any contingent interest) to, but excluding, the purchase date.


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The convertible subordinated notes are recorded net of unamortized discount to reflect their underlying economics by capturing the value of the conversion option as borrowing costs. As of December 31, 20112012 and 2010,2011, capital in excess of par value included

$92.8 million related to the estimated value of the Convertible Subordinated Notes’ conversion options, in accordance with ASC 470-20. Debt discount recorded in the consolidated balance sheet is being amortized through June 1, 2018 to yield an effective annual interest rate of 8.42% based upon the estimated market interest rate for comparable non-convertible debt as of the issuance date of the Convertible Subordinated Notes. Total interest expense recognized on the Convertible Subordinated Notes for the years ended December 31, 2012, 2011 2010,, and 2009,2010, is as follows:

   Year Ended December 31, 
   2011   2010   2009 
   (in millions) 

Coupon rate interest

  $17.4    $17.4    $17.4  

Amortized debt discount

   11.3     10.5     9.6  
  

 

 

   

 

 

   

 

 

 
  $28.7    $27.9    $27.0  
  

 

 

   

 

 

   

 

 

 

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Coupon rate interest$17.4
 $17.4
 $17.4
Amortized debt discount12.3
 11.3
 10.5
 $29.7
 $28.7
 $27.9

At December 31, 2011,2012, the Convertible Subordinated Notes were convertible at a price of $51.41$51.11 per share resulting in 8,753,1618,804,539 issuable shares. As of December 31, 2011,2012, if the Convertible Subordinated Notes had been converted, no shares would have been issued since the trading price of the Company’s common stock was below the conversion price of the Convertible Subordinated Notes. The Company has not entered into any derivatives transactions associated with these notes.


In May 2006, Trinity Rail Leasing V, L.P., a limited partnership (“TRL V”) and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC issued $355.0$355.0 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2006-1A2006-1A (the “2006“2006 Secured Railcar Equipment Notes”), of which $269.3$255.8 million was outstanding as of December 31, 2011.2012. The 2006 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture, dated May 24, 2006, between TRL V and Wilmington Trust Company, as indenture trustee. The 2006 Secured Railcar Equipment Notes bear interest at a fixed rate of 5.9%5.90% per annum, are payable monthly, and have a final maturity of May 14, 2036.2036. The 2006 Secured Railcar Equipment Notes are obligations of TRL V and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL V.


In May 2008, Trinity Rail Leasing VI LLC, a Delaware limited liability company (“TRL VI”), a limited purpose, indirect wholly-owned subsidiary of Trinity, issued $572.2$572.2 million of 30-year30-year promissory notes (the “Promissory Notes”) to financial institutions, of which $465.5$424.1 million was outstanding as of December 31, 2011.2012. The Promissory Notes are secured by a portfolio of railcars and operating leases thereon, certain cash reserves and other assets acquired and owned by TRL VI. The Promissory Notes are obligations of TRL VI and are non-recourse to Trinity. TRL VI acquired the railcars securing the Promissory Notes by purchase from TILC and a subsidiary. The Promissory Notes bear interest at a floating rate of one-month LIBORone-month Libor plus a margin of 1.50%. The LIBORLibor portion of the interest rate on the Promissory Notes is fixed at approximately 4.13% for the first seven years from the date of issuance of the Promissory Notes through interest rate swaps. The interest rate margin on the Promissory Notes will increase by 0.50% on each of the seventh and eighth anniversary dates of the issuance of the Promissory Notes, and by an additional 2.00% on the tenth anniversary date of the issuance of the Promissory Notes. The Promissory Notes may be prepaid at any time.


In November 2009, Trinity Rail Leasing VII LLC, a Delaware limited liability company (“TRL VII”), a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $238.3$238.3 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2009-12009-1 (“the 2009 Secured Railcar Equipment Notes”), of which $218.4$209.2 million was outstanding as of December 31, 2011.2012. The 2009 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture, dated November 5, 2009 between TRL VII and Wilmington Trust Company, as indenture trustee. The 2009 Secured Railcar Equipment Notes bear interest at a fixed rate of 6.66% per annum, are payable monthly, and have a final maturity date of November 16, 2039.2039. The 2009 Secured Railcar Equipment Notes are obligations of TRL VII and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL VII.


In October 2010, Trinity Rail Leasing 2010 LLC, a Delaware limited liability company ("TRL 2010"2010"), a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $369.2$369.2 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2010-12010-1 (“2010 Secured Railcar Equipment Notes"), of which $354.3$341.5 million was outstanding as of December 31, 2011.2012. The 2010 Secured Railcar Equipment Notes were issued pursuant to an Indenture, dated as of October 25, 2010 between TRL 2010 and Wilmington Trust Company, as indenture trustee. The 2010 Secured Railcar Equipment Notes bear interest at a fixed rate of 5.19%, are payable monthly, and have a stated final maturity date of October 16, 2040.2040. The 2010 Secured Railcar Equipment Notes are obligations of TRL 2010 and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL 2010.

2010.


In December 2012, Trinity Rail Leasing 2012 LLC, a Delaware limited liability company ("TRL 2012"), a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $145.4 million in aggregate principal amount of

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Series 2012-1 Class A-1 Secured Railcar Equipment Notes (the "2012 Class A-1 Notes") and $188.4 million in aggregate principal amount of Series 2012-1 Class A-2 Secured Railcar Equipment Notes (the "2012 Class A-2 Notes") and collectively with the 2012 Class A-1 Notes, the "2012 Secured Railcar Equipment Notes", of which $145.4 million and $188.4 million, respectively, were outstanding as of December 31, 2012. The $475.02012 Class A-1 Notes and the 2012 Class A-2 notes were issued pursuant to an Indenture, dated as of December 19, 2012 between TRL 2012 and Wilmington Trust Company, as indenture trustee. The 2012 Class A-1 Notes bear interest at a fixed rate of 2.27%, are payable monthly, and have a stated final maturity date of January 15, 2043. The 2012 Class A-2 Notes bear interest at a fixed rate of 3.53%, are payable monthly, and have a stated final maturity date of January 15, 2043. The 2012 Secured Railcar Equipment Notes are obligations of TRL 2012 and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL 2012.

The $475.0 million TILC warehouse loan facility, established to finance railcars owned by TILC, had $308.5$173.6 million outstanding and $166.5$301.4 million available as of December 31, 2011.2012. The warehouse loan is a non-recourse obligation secured by a portfolio of railcars and operating leases, certain cash reserves, and other assets acquired and owned by the warehouse loan facility. The principal and interest of this indebtedness are paid from the cash flows of the underlying leases. Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 2.30%2.25% at December 31, 2011.2012. In February 2011,2013, the warehouse loan facility was renewedextended for an additional two yearssix months and now matures in February 2013.August 2013. Amounts outstanding at maturity, absent renewal, will be payable in three installments in August 2013, February 2014, August 2014, and August 2014.

February 2015.


In June 2007, TRIP Leasing entered into a $1.19$1.19 billion Warehouse Loan Agreement which contained a floating rate revolving facility (the “TRIP Warehouse Loan”). In July 2011, TRIP Holdings issued $175.0$175.0 million in Senior Secured Notes (the “TRIP Holdings Senior Secured Notes”) and TRIP Master Funding, a Delaware limited liability company and limited purpose, wholly-owned subsidiary of TRIP Holdings, issued $857.0$857.0 million in Secured Railcar Equipment Notes (the “TRIP Master Funding Secured Railcar Equipment Notes”). The proceeds from the TRIP Holdings Senior Secured Notes and the TRIP Master Funding Secured Railcar Equipment Notes were primarily used by TRIP Master Funding to purchase all of the railcar equipment owned by TRIP Leasing which, in turn, repaid the TRIP Warehouse Loan in full.


The TRIP Holdings Senior Secured Notes, as amended, have a stated final maturity date of July 6, 2014 and bear interest at 8.00%10.00% payable quarterly with yield to call interest rates of 12.00% for redemptions or other prepayments on or prior to January 15, 2013 and 15.00% for redemptions or other prepayments after such date.quarterly. The TRIP Holdings Senior Secured Notes are secured, among other things, by a pledge of each equity investor’sinvestor's ownership interest in TRIP Holdings and certain distributions made to TRIP Holdings from TRIP Master Funding and are non-recourse to Trinity, TILC, TRIP Master Funding, and the other equity investors in TRIP Holdings. Trinity purchased $112.0 million of the TRIP Holdings Senior Secured Notes in July 2011.


The TRIP Master Funding Secured Railcar Equipment Notes were issued pursuant to an Indenture, dated July 6, 2011 between TRIP Master Funding and Wilmington Trust Company, as indenture trustee, with a final maturity date in July 2041.2041. The TRIP Master Funding Secured Railcar Equipment Notes consist of three classes with the Class A-1a notes bearing interest at 4.37%, the Class A-1b notes bearing interest at Libor plus 2.50%, and the Class A-2 notes bearing interest at 6.02%, all payable monthly. The TRIP Master Funding Secured Railcar Equipment Notes are non-recourse to Trinity, TILC, and the other equity investors in TRIP Holdings and are secured by TRIP Master Funding’sFunding's portfolio of railcars and operating leases thereon, its cash reserves and all other assets owned by TRIP Master Funding. As of December 31, 2011,2012, there were $211.1$184.1 million $119.3, $104.0 million, and $509.6$509.6 million of Class A-1a, Class A-1b, and of Class A-2 notes outstanding, respectively.


In 2009, the Company entered into a seven-year $61.0seven-year $61.0 million term loan agreement and capital lease obligations totaling $56.6 million.$56.6 million. These new debt obligations are guaranteed by the Company and secured by railcar equipment and related leases.


In November 2010, the Company redeemed all of its $201.5$201.5 million unsecured 6 1/6.5%2% Senior Notes whichthat were scheduled to mature in 2014 at a redemption price 102.167% of the principal amount, pursuant to the terms of the indenture. The Company incurred approximately $5.9$5.9 million in expenses related to the redemption which are included in Other Income and Expense in 2010.2010

.




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The remaining principal payments under existing debt agreements as of December 31, 20112012, after considering the extension of the TILC warehouse facility in February 2013, are as follows:

   2012   2013   2014  2015   2016   Thereafter 
   (in millions) 

Recourse:

           

Manufacturing/Corporate

  $1.1    $1.2    $1.2   $0.2    $0.2    $450.3  

Leasing – capital lease obligations (Note 5)

   2.8     2.9     3.1    3.3     3.5     33.0  

Leasing – term loan (Note 5)

   2.8     3.0     3.3    3.5     42.1     —  

Non-recourse – leasing (Note 5):

           

2006 secured railcar equipment notes

   13.5     15.1     16.9    18.6     21.9     183.3  

Promissory notes

   31.2     33.6     30.4    28.1     342.2     —  

2009 secured railcar equipment notes

   9.2     10.2     9.9    9.6     6.5     173.0  

2010 secured railcar equipment notes

   12.8     14.6     14.0    15.3     15.0     282.6  

TILC warehouse facility

   9.4     8.5     4.6    —     —     —  

TRIP Holdings senior secured notes

           

Total outstanding

   —     —     170.0    —     —     —  

Less: owned by Trinity

   —     —     (108.8)   —     —     —  
      

 

 

      
       61.2       

TRIP Master Funding secured railcar equipment notes

   41.0     41.1     40.2    35.9     29.4     652.4  

Facility termination payments:

           
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

TILC warehouse facility

   —     94.8     191.2    —     —     —  
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

Total principal payments

  $123.8    $225.0    $376.0   $114.5    $460.8    $1,774.6  
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

 2013 2014 2015 2016 2017 Thereafter
 (in millions)
Recourse: 
Manufacturing/Corporate$0.2
 $0.2
 $0.2
 $0.2
 $0.4
 $450.0
Leasing – capital lease obligations (Note 5)2.9
 3.1
 3.3
 3.5
 3.7
 29.3
Leasing – term loan (Note 5)3.0
 3.3
 3.5
 38.8
 —
 —
Non-recourse – leasing (Note 5):           
2006 secured railcar equipment notes15.1
 16.9
 18.6
 21.9
 24.1
 159.2
Promissory notes28.9
 25.8
 23.2
 346.2
 —
 —
2009 secured railcar equipment notes10.2
 9.9
 9.6
 6.5
 6.3
 166.7
2010 secured railcar equipment notes14.6
 14.0
 15.3
 15.0
 13.7
 268.9
2012 secured railcar equipment notes15.3
 16.6
 15.7
 15.9
 13.8
 256.5
TILC warehouse facility7.7
 4.7
 0.5
 —
 —
 —
TRIP Holdings senior secured notes:           
Total outstanding—
 170.0
 —
 —
 —
 —
Less: owned by Trinity—
 (108.8) —
 —
 —
 —
   61.2
 

      
TRIP Master Funding secured railcar equipment notes41.0
 40.1
 35.7
 29.3
 20.4
 631.2
Facility termination payments - TILC warehouse facility—
 107.1
 53.6
 —
 —
 —
Total principal payments$138.9
 $302.9
 $179.2
 $477.3
 $82.4
 $1,961.8

Note 12. Other, Net


Other, net (income) expense consists of the following items:

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Foreign currency exchange transactions

  $3.1   $—   $2.2  

Loss (gain) on equity investments

   (0.6)   1.7    (6.5) 

Costs related to redemption of Senior Notes

   —    5.9    —  

Other

   1.5    (0.8)   (1.0) 
  

 

 

  

 

 

  

 

 

 

Other, net

  $4.0   $6.8   $(5.3) 
  

 

 

  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Foreign currency exchange transactions$(2.3) $3.1
 $—
(Gain) loss on equity investments(0.4) (0.6) 1.7
Costs related to redemption of Senior Notes—
 —
 5.9
Other(1.6) 1.5
 (0.8)
Other, net$(4.3) $4.0
 $6.8

Other for the year ended December 31, 2012 and 2011 includes $2.4$0.3 million in income and $2.4 million in expense, respectively, from the recognition of certain equity repurchase agreements with an investor in TRIP Holdings at fair value. See Note 3 Fair Value Accounting and Note 6 Investment in TRIP Holdings. Loss on equity investments for the year ended December 31, 2010 includes a $1.8$1.8 million loss on the write-down of the Company’sCompany's pre-acquisition investment in Quixote Corporation. See Note 2 Acquisitions and Divestitures. See Note 11 Debt for further explanation of the Senior Notes redemption. Gain on equity investments for 2009 includes a $3.7 million gain from the sale


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Table of an investment during the year ended December 31, 2009.

Contents


Note 13. Income Taxes


The components of the provision for income taxes from continuing operations are as follows:

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Current:

    

Federal

  $20.0   $(22.2)  $5.8  

State

   5.5    (2.0)   0.7  

Foreign

   5.4    5.0    7.9  
  

 

 

  

 

 

  

 

 

 

Total current

   30.9    (19.2)   14.4  
  

 

 

  

 

 

  

 

 

 

Deferred:

    

Federal

   62.7    57.0    (27.1) 

State

   1.2    3.4    (3.5) 

Foreign

   (3.0)   (0.3)   6.8  
  

 

 

  

 

 

  

 

 

 

Total deferred

   60.9    60.1        (23.8) 
  

 

 

  

 

 

  

 

 

 

Provision

  $    91.8   $40.9   $    (9.4) 
  

 

 

  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Current:     
Federal$(5.7) $20.8
 $(33.8)
State7.0
 5.5
 (2.4)
Foreign6.4
 5.4
 5.0
Total current7.7
 31.7
 (31.2)
Deferred:     
Federal126.6
 62.2
 65.4
State3.2
 1.3
 3.5
Foreign(3.5) (3.0) (0.4)
Total deferred126.3
 60.5
 68.5
Provision$134.0
 $92.2
 $37.3

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the expected sale of the Company's ready-mix concrete operations. See Note 2 Acquisitions and Divestitures.

Deferred income taxes represent the 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. The components of deferred tax liabilities and assets are as follows:

   December 31, 
   2011  2010 
   (in millions) 

Deferred tax liabilities:

   

Depreciation, depletion, and amortization

  $740.8   $667.3  

Derivatives

   14.5    —  

Convertible debt

   88.4    80.9  
  

 

 

  

 

 

 

Total deferred tax liabilities

   843.7    748.2  
  

 

 

  

 

 

 

Deferred tax assets:

   

Workers compensation, pensions, and other benefits

   47.8    44.7  

Warranties and reserves

   14.4    17.5  

Equity items

   72.8    56.4  

Tax loss carryforwards and credits

   234.9    224.3  

Inventory

   11.1    7.6  

Accrued liabilities and other

   4.7    1.6  
  

 

 

  

 

 

 

Total deferred tax assets

   385.7    352.1  
  

 

 

  

 

 

 

Net deferred tax liabilities before valuation allowance

   458.0    396.1  

Valuation allowance

   19.3    19.9  
  

 

 

  

 

 

 

Net deferred tax liabilities before reserve for uncertain tax positions

   477.3    416.0  

Deferred tax assets included in reserve for uncertain tax positions

   (42.6)   (25.0) 
  

 

 

  

 

 

 

Adjusted net deferred tax liabilities

  $  434.7   $  391.0  
  

 

 

  

 

 

 

 December 31,
 2012 2011
 (in millions)
Deferred tax liabilities:   
Depreciation, depletion, and amortization$887.6
 $740.8
Derivatives12.4
 14.5
Convertible debt96.5
 88.4
Total deferred tax liabilities996.5
 843.7
Deferred tax assets:   
Workers compensation, pensions, and other benefits52.4
 47.8
Warranties and reserves15.6
 14.4
Equity items81.5
 72.8
Tax loss carryforwards and credits249.7
 234.9
Inventory17.9
 11.1
Accrued liabilities and other3.9
 4.7
Total deferred tax assets421.0
 385.7
Net deferred tax liabilities before valuation allowance575.5
 458.0
Valuation allowance19.7
 19.3
Net deferred tax liabilities before reserve for uncertain tax positions595.2
 477.3
Deferred tax assets included in reserve for uncertain tax positions(39.4) (42.6)
Adjusted net deferred tax liabilities$555.8
 $434.7

At December 31, 2011,2012, the Company, excluding TRIP Holdings, had $124.2$103.3 million of Federal consolidated net operating loss carryforwards after the estimated current year utilization of $42.9 million, and tax-effected $5.6$5.4 million of state loss carryforwards. The Company has $42.2 million of foreign tax credit carryforwards which will expire between 2014 and 2022. The Federal net operating loss carryforwards are due to expire between 2028 and 2031. We have established a valuation allowance for Federal, state, and foreign tax operating losses and credits which may not be realizable. We believe that it is more likely than not that we will be able to generate sufficient future taxable income to utilize the remaining deferred tax assets.

TRIP Holdings had $383.3$439.7 million in Federal tax loss carryforwards at December 31, 2011.2012 which are due to expire between 2027 and 2032. We expect TRIP Holdings to begin utilizing their tax loss carryforwards beginning in 2020. Because TRIP Holdings files a separate tax return from the Company, its tax loss carryforwards can only be used by TRIP Holdings and cannot be used to offset future taxable income of the Company.


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The provision for income taxes results in effective tax rates that differ from the statutory rates. The following is a reconciliation between the statutory U.S. Federal income tax loss carryforwards are due to expire between 2024rate and 2031.the Company’s effective income tax rate on income from continuing operations:
 Year Ended December 31,
 2012 2011 2010
Statutory rate35.0 % 35.0% 35.0 %
State taxes2.0
 2.1
 3.4
Tax settlements(0.6) —
 4.8
Changes in tax reserves(1.4) 0.4
 (10.7)
Other, net(0.3) 1.1
 2.5
Effective rate34.7 % 38.6% 35.0 %

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. We expect TRIP Holdings to begin utilizing their tax loss carryforwards beginning in 2020. Our ability to utilizebelieve the tax loss carryforwards that were acquired as partimpact of the Quixote acquisition against future taxable income is subject to restrictions under the Internal Revenue Code. We have established a valuation allowance for Federal, state, and foreign tax operating losses which maythis law will not be realizable.

Realizationmaterial to Trinity.


Income from continuing operations before income taxes for the years endedDecember 31, 2012, 2011, and 2010 was $376.3 million, $225.9 million, and $103.4 million, respectively, for U.S. operations, and $9.6 million, $13.1 million, and $3.3 million, respectively, for foreign operations. The Company has provided U.S. deferred income taxes on the un-repatriated earnings of deferred tax assets is dependent on generating sufficient taxable income in future periods. We have established valuation allowances against tax losses and credits thatits foreign operations.

During the year ended December 31, 2012, we will most likely be unable to utilize. We believe that it is more likely than not that we will be able to generate sufficient future taxable income to utilizesettled our audit with the remaining deferred tax assets.

We are currently under two separate Internal Revenue Service (“IRS”) examination cycles for the years2004-2005 tax years. As a result of closing this audit, we recognized a $3.5 million tax benefit, primarily related to favorable claims filed and approved by the IRS in the final audit settlement.


During the year ended 2004 through 2005 and 2006 through 2008. OurDecember 31, 2012, we recognized a tax benefit of $4.4 million due to the release of net tax reserves primarily as a result of certain state tax issues where the statute of limitations therefore remains open fromhad lapsed.

The IRS field work for our 2006-2008 audit cycle has concluded and all issues, except for transfer pricing, have been agreed to and tentatively settled. The transfer pricing issue has been appealed and we are working with both the year ended December 31, 2004U.S. and forward. Our 2004-2005 examMexican taxing authorities to coordinate taxation. As we do not control the timing of when our issues will be settled, we cannot determine when the 2006-2008 cycle iswill close and all issues formally settled and thus when the statute of limitations for years after 2005 will close. In addition, we are currently under administrative appealIRS audit for certain unresolved issues. the 2009- 2011 tax years.

We expect this cycle to be effectively settled during the first or second quarter of 2012. Additionally, the 2006-2008 cycle is stillhave various subsidiaries in the examination levelMexico that file separate tax returns and thus we are unablesubject to determine how long these periods will remain open.

examination by taxing authorities at different times. The 2003 tax year of one of our Mexican subsidiaries is still under review and thus its statute of limitations remains open. In addition, anotheropen through June 2014. Another Mexican subsidiary filed an amended return and thus, its subsidiary’s statute of limitations for the 2005 statute tax year remains open through July 2013. Statute2013. The remaining entities are open for their 2006 tax years and forward.


Our two Swiss subsidiaries, one of which is a holding company and the other of which is dormant, have been audited by the taxing authorities through 2008 and 2009. The statute of limitations of all of Mexican subsidiaries for 2006 and forwardin Switzerland is generally five years remain open.

Duringfrom the third quarter ended September 30, 2011, we effectively settled an audit of one of our Swiss subsidiaries which covered the years 2006 through 2009. There was no impact to the income statement as a resultend of the settlement.

Our various other European subsidiaries, including subsidiariestax year, but can be extended up to 15 years in certain cases if the audit has commenced during the original five year period. We also currently have sales offices in Europe and Canada that were sold in 2006, are impacted bysubject to various statutes of limitations which are generally open from 2003 forward. An exceptionwith regard to this is our discontinued operations in Romania, which have been audited through 2004.

their tax status. Generally, states’ statutes of limitations in the United StatesU.S. are open from 20022003 forward due to the use of tax loss carryforwards in certain jurisdictions.

The provision for income taxes results in effective tax rates different from the statutory rates. The following is a reconciliation between the statutory United States Federal income tax rate and the Company’s effective income tax rate:

   

Year Ended December 31,

 
   2011  2010  2009 

Statutory rate

   35.0%   35.0%   35.0% 

State taxes

   2.1    3.3    1.9  

Impairment of goodwill

   —    —    (23.7) 

Changes in valuation allowances

   —    —    (6.5) 

Tax settlements

   —    4.4    —  

Changes in tax reserves

   —    (9.6)   —  

Other, net

   1.6    2.0    (0.3) 
  

 

 

  

 

 

  

 

 

 

Effective rate

       38.7%       35.1%       6.4% 
  

 

 

  

 

 

  

 

 

 

Income (loss) from continuing operations before income taxes for the year ended December 31, 2011, 2010, and 2009 was $224.4 million, $113.7 million, and $(158.4) million, respectively, for United States operations, and $13.1 million, $2.9 million, and $11.5 million, respectively, for foreign operations. The Company has provided United States deferred income taxes on the un-repatriated earnings of its foreign operations. The Company has $37.8 million of foreign tax credit carryforwards which will expire between 2014 and 2021.


The change in unrecognized tax benefits for the years ended December 31, 2012, 2011, and 2010 were was as follows:

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Beginning balance

  $    36.8   $    40.1   $    32.9  

Additions for tax positions related to the current year

   3.8    3.3    5.8  

Additions for tax positions of prior years

   16.4    9.3    7.5  

Reductions for tax positions of prior years

   (0.1)   (5.6)   (4.5) 

Settlements

   (3.5)   (9.5)   (1.5) 

Expirations of statute of limitations

   (0.9)   (0.8)   (0.1) 
  

 

 

  

 

 

  

 

 

 

Ending balance

  $52.5   $36.8   $40.1  
  

 

 

  

 

 

  

 

 

 

The additions

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Beginning balance$52.5
 $36.8
 $40.1
Additions for tax positions related to the current year4.1
 3.8
 3.3
Additions for tax positions of prior years—
 16.4
 9.3
Reductions for tax positions of prior years(1.1) (0.1) (5.6)
Settlements(3.4) (3.5) (9.5)
Expiration of statute of limitations(3.4) (0.9) (0.8)
Ending balance$48.7
 $52.5
 $36.8


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Table of Contents

Additions for tax positions related to the current year infor 2012 were amounts provided for tax positions that will be taken for Federal and state income tax purposes when we file those tax returns. Additions for tax positions related to the amounts of $3.8 million and $3.3 millioncurrent year for the years ended December 31, 2011 and December 31, 2010 respectively, were amounts provided for tax positions previously taken in foreign jurisdictions and tax positions taken for Federal and state income tax purposes as well as deferred tax liabilities that have been reclassified to uncertain tax positions.


Additions for tax positions of prior years for the year ended December 31, 2011 and December 31, 2010 of $16.4 million and $9.3 million, respectively, arewere primarily due to Federal tax positions taken on prior year returns that have beenwere proposed by the IRS but not previously reserved. TheseSince these items are primarily timing differences, and thus we wouldwill be allowed a future tax deduction. We haveDuring 2011, we recorded a corresponding deferred tax asset for the future tax reduction of taxes related to these adjustments.


The reduction in tax positions of prior years of $0.1 million and $5.6 million for the years ended December 31, 2011 and December 31, 2010, respectively, was primarily related to new guidance issued in March 2012 by the IRS regarding the capitalization of fixed assets as well as state taxes.


Settlements during 2012 primarily related to the year ended December 31,settlement of our 2004-2005 IRS audit as well as the related impact on state tax returns. Settlements during 2011 primarily relaterelated to thean audit of a separate tax return of our Swiss subsidiary that resulted in the payment of $2.8 million of taxes and interest. Subsequent to the payment of the taxes, we applied for and received treaty relief from the Swiss tax authorities and received $1.8 million in tax refunds. The tax that was not refunded is creditable against future US income tax and thus is being carried as a deferred tax asset.

subsidiary. Settlements during the year ended December 31, 2010 related to a first quarter tax settlement of a 2002 Mexico tax issue of one of our subsidiaries and a third quarter settlement of the 1998-2002 IRS audit.


The expiration of statute of limitations primarily relate to state taxes where the statute has closed.

The total amount of unrecognized tax benefits including interest and penalties at December 31, 20112012 and 2010,2011, that would affect the Company’s overall effective tax rate if recognized was $19.4$13.2 million and $14.9$19.4 million, respectively. There is a reasonable possibility that unrecognized Federal and stateUnrecognized tax benefits will decrease by December 31, 2012 duesubject to a lapse in the statute of limitations for assessing tax. Amounts subject to a lapse in statute by December 31, 20122013 total $2.5 million.$1.0 million. Further, there is a reasonable possibility that the unrecognized Federal tax benefits will decrease by December 31, 20122013 due to settlements with taxing authorities. Amounts expected to settle by December 31, 20122013 total $3.3 million.

$28.7 million.


Trinity accounts for interest expense and penalties related to income tax issues as income tax expense. Accordingly, interest expense and penalties associated with an uncertain tax position are included in the income tax provision. The total amount of accrued interest and penalties as of December 31, 20112012 and 20102011 was $13.3$10.3 million and $11.2$13.3 million, respectively. Income tax expense for the yearsyear ended December 31, 2011 and 20102012, included an increase to income tax expense of $2.1 million and reductiona decrease in income tax expense of $4.8$3.0 million respectively, in interest expense and penalties related to uncertain tax positions.

Income tax expense for the year ended December 31, 2011, included an increase in income tax expense of $2.1 million in interest expense and penalties related to uncertain tax positions.



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Note 14. Employee Retirement Plans


The Company sponsors defined benefit plans and defined contribution profit sharing plans whichthat provide retirement income and death benefits for eligible employees. The annual measurement date of the benefit obligations, fair value of plan assets, and funded status is December 31.


Actuarial Assumptions

   Year Ended December 31, 
   2011  2010  2009 

Assumptions used to determine benefit obligations at the annual measurement date were:

    

Obligation discount rate

   5.40%   5.90%   6.10% 

Compensation increase rate

   3.00%   3.00%   3.00% 

Assumptions used to determine net periodic benefit costs were:

    

Obligation discount rate

   5.90%   6.10%   6.50% 

Long-term rate of return on plan assets

   7.75%   7.75%   7.75% 

Compensation increase rate

   3.00%   3.00%   4.00% 

 Year Ended December 31,
 2012 2011 2010
Assumptions used to determine benefit obligations at the annual measurement date were:     
Obligation discount rate4.25% 5.40% 5.90%
Compensation increase rate4.00% 3.00% 3.00%
Assumptions used to determine net periodic benefit costs were:     
Obligation discount rate5.40% 5.90% 6.10%
Long-term rate of return on plan assets7.75% 7.75% 7.75%
Compensation increase rate3.00% 3.00% 3.00%

The obligation discount rate assumption is determined by deriving a single discount rate from a theoretical settlement portfolio of high quality corporate bonds sufficient to provide for the plans’plans' projected benefit payments. The expected long-term rate of return on plan assets is an assumption reflecting the anticipated weighted average rate of earnings on the portfolio over the long-term. To arrive at this rate, we developed estimates based upon the anticipated performance of the assets in its portfolio. The compensation increase rate pertains solely to the pension plan of the Company’sCompany's Inland Barge segment as the accrued benefits of the Company’sCompany's remaining pension plans were frozen in 2009.


Components of Net Retirement Cost
 Year Ended December 31,
 2012 2011 2010
 (in millions)
Expense Components     
Service cost$0.9
 $0.8
 $0.9
Interest19.4
 19.6
 18.7
Expected return on plan assets(22.9) (22.8) (20.1)
Amortization and deferral:     
Actuarial loss3.2
 1.8
 1.9
Prior service cost0.1
 0.1
 0.1
Other—
 —
 0.2
Defined benefit expense0.7
 (0.5) 1.7
Profit sharing11.9
 9.3
 8.3
Net expense$12.6
 $8.8
 $10.0
















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Table of Contents

   Year Ended December 31, 
   2011  2010   2009 
   (in millions) 

Expense Components

     

Service cost

  $0.8   $0.9    $3.0  

Interest

   19.6    18.7     19.7  

Expected return on plan assets

   (22.8)   (20.1)    (15.7) 

Amortization and deferral:

     

Actuarial loss

   1.8    1.9     4.2  

Prior service cost

   0.1    0.1     0.1  

Other

   —    0.2     (0.4) 
  

 

 

  

 

 

   

 

 

 

Defined benefit expense

   (0.5)   1.7     10.9  

Profit sharing

   9.3    8.3     7.6  
  

 

 

  

 

 

   

 

 

 

Net expense

  $8.8   $10.0    $18.5  
  

 

 

  

 

 

   

 

 

 


Obligations and Funded Status

   Year Ended December 31, 
   2011  2010 
   (in millions) 

Accumulated Benefit Obligations

  $364.8   $335.7  
  

 

 

  

 

 

 

Projected Benefit Obligations:

   

Beginning of year

  $335.8   $326.1  

Service cost

   0.8    0.9  

Interest

   19.6    18.7  

Benefits paid

   (14.7)   (12.9) 

Actuarial loss

   23.3    3.3  

Amendments

   —    0.2  

Settlements

   —    (0.5) 
  

 

 

  

 

 

 

End of year

  $364.8   $335.8  
  

 

 

  

 

 

 

Plans’ Assets:

   

Beginning of year

  $291.1   $257.6  

Actual return on assets

   (1.2)   35.3  

Employer contributions

   15.4    11.6  

Benefits paid

   (14.7)   (12.9) 

Settlements

   —    (0.5) 
   

 

 

 

End of year

  $290.6   $291.1  
  

 

 

  

 

 

 

Consolidated Balance Sheet Components:

   

Funded status

  $(74.2)  $(44.7) 
  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011
 (in millions)
Accumulated Benefit Obligations$442.5
 $364.8
Projected Benefit Obligations:   
Beginning of year$364.8
 $335.8
Service cost0.9
 0.8
Interest19.4
 19.6
Benefits paid(13.3) (14.7)
Actuarial loss70.7
 23.3
End of year$442.5
 $364.8
Plans' Assets:   
Beginning of year$290.6
 $291.1
Actual return on assets45.5
 (1.2)
Employer contributions17.3
 15.4
Benefits paid(13.3) (14.7)
End of year$340.1
 $290.6
Consolidated Balance Sheet Components:   
Funded status$(102.4) $(74.2)
Percent of projected benefit obligations funded76.9% 79.7%

The unfunded status of the plans of $74.2$102.4 million and $44.7$74.2 million at December 31, 20112012 and 2010,2011, respectively, was recognized in the accompanying balance sheets as accrued pension liability and included in Accrued Liabilities. No plan assets are expected to be returned to us during the year ending December 31, 2012.

2013.


Amounts Recognized in Other Comprehensive Income (Loss)

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Actuarial gain (loss)

  $(47.3)  $11.9   $18.7  

Amortization of actuarial loss

   1.7    1.9    4.2  

Amortization of prior service cost

   0.1    0.1    0.1  

Other

   —    (0.2)   —  

Curtailments

   —    —    33.5  

Settlements

   —    0.2    —  
  

 

 

  

 

 

  

 

 

 

Total before income taxes

   (45.5)   13.9    56.5  

Income tax expense (benefit)

   (16.9)   5.2    20.9  
  

 

 

  

 

 

  

 

 

 

Net amount recognized in other comprehensive income (loss)

  $(28.6)  $8.7   $35.6  
  

 

 

  

 

 

  

 

 

 

 Year Ended December 31,
 2012 2011 2010
 (in millions)
Actuarial gain (loss)$(48.1) $(47.3) $11.9
Amortization of actuarial loss3.2
 1.7
 1.9
Amortization of prior service cost0.1
 0.1
 0.1
Other—
 —
 (0.2)
Settlements—
 —
 0.2
Total before income taxes(44.8) (45.5) 13.9
Income tax expense (benefit)(16.7) (16.9) 5.2
Net amount recognized in other comprehensive income (loss)$(28.1) $(28.6) $8.7

Included in AOCL at December 31, 20112012 were the following amounts that have not been recognized in net periodic pension cost: prior service cost of $0.3 million ($$0.2 million ($0.1 million net of related income taxes) and unrecognized actuarial losses of $112.1$156.9 million ($70.5 ($98.7 million net of related income taxes).


Actuarial loss included in AOCL and expected to be recognized in net periodic pension cost for the year ended December 31, 20122013 is $3.4$4.8 million ($2.2 ($3.0 million net of related income taxes).



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Plan Assets


The estimated fair value of plan assets at year end 20112012 and 2010,2011, indicating input levels used to determine fair value, and the range of target asset allocations are as follows:

   Target
Allocation		  December 31,
2011		  December 31,
2010		 

Cash and cash equivalents

    3%   1% 

Equity securities

   55-65%   66    68  

Debt securities

   35-45%   31    31  
   

 

 

  

 

 

 

Total

    100%   100% 
   

 

 

  

 

 

 

   Fair Value Measurement as of
December 31, 2011		 
   (in millions) 
   Level 1   Level 2   Level 3   Total 

Temporary cash investments

  $9.7    $—    $—    $9.7  

Common trust funds

   —     207.4     —     207.4  

Registered investment companies

   73.5     —     —     73.5  
  

 

 

   

 

 

   

 

 

   

 

 

 
  $83.2    $207.4    $—    $290.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

   Fair Value Measurement as of
December 31, 2010		 
   (in millions) 
   Level 1   Level 2   Level 3   Total 

Temporary cash investments

  $3.5    $—    $—    $3.5  

Common trust funds

   —     210.3     —     210.3  

Registered investment companies

   71.7     —     —     71.7  

Corporate stock

   2.9     —     —     2.9  

Corporate bonds

   2.0     —     —     2.0  

U.S. government obligations

   0.7     —     —     0.7  
  

 

 

   

 

 

   

 

 

   

 

 

 
  $80.8    $210.3    $—    $291.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

 
Target
Allocation
 December 31,
2012		 December 31,
2011
Cash and cash equivalents   1% 3%
Equity securities60-80% 73
 66
Debt securities20-40% 26
 31
Total  100% 100%
 Fair Value Measurement as of December 31, 2012
 (in millions)
 Level 1 Level 2 Level 3 Total
  
Temporary cash investments$3.3
 $—
 $—
 $3.3
Common trust funds—
 336.8
 —
 336.8
 $3.3
 $336.8
 $—
 $340.1
 Fair Value Measurement as of December 31, 2011
 (in millions)
 Level 1 Level 2 Level 3 Total
  
Temporary cash investments$9.7
 $—
 $—
 $9.7
Common trust funds—
 207.4
 —
 207.4
Registered investment companies73.5
 —
 —
 73.5
 $83.2
 $207.4
 $—
 $290.6

The Company’sCompany's pension investment strategies have been developed as part of a comprehensive asset/liability management process that considers the relationship between both the assets and liabilities of the plans. These strategies consider not only the expected risk and returns on plan assets, but also the actuarial projections of liabilities, projected contributions, and funded status. The equity allocation is heavily weighted toward domestic large capitalized companies. There is also a lesser exposure to domestic small/mid cap companies, as well as international equities.equities, and domestic real estate investment trusts. The fixed income allocation is equally split betweenweighted toward domestic long duration bonds. There is also a limited duration portfoliolesser exposure to domestic high yield and a core plus portfolio that has a duration in-line with published bond indices.emerging market sovereign debt. This asset mix is designed to meet the longer-term obligations of the plan as projected by actuarial studies.


The principal pension investment strategies include asset allocation and active asset management. The range of target asset allocations has been determined after giving consideration to the expected returns of each asset category, the expected performance of each asset category, the volatility of the asset returns over time, and the complementary nature of the asset mix within the portfolio. Each asset category is managed by external money managers with the objective of generating returns that exceed market-based benchmarks.


The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used in determining fair value, including the general classification of such instruments pursuant to the valuation hierarchy as described further in Note 3 Fair Value Accounting.


Temporary cash investments —- These investments consist of U.S. dollars held in master trust accounts with the trustee. These temporary cash investments are classified as Level 1 instruments.


Common trust funds —- Common trust funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. Holdings of common trust funds are classified as Level 2 investments.


Registered investment companies —- Registered investment companies are mutual funds registered with the Securities and Exchange Commission. Mutual fund shares are traded actively on public exchanges. The share prices for mutual funds are published at the close of each business day. Holdings of mutual funds are classified as Level 1 investments.

Corporate stock —This investment category consists



76
Table of stock issued by U.S. companies traded actively on exchanges. Price quotes for these shares are readily available. Holdings of corporate stock are classified as Level 1 investments.Contents

Corporate bonds — Corporate bonds consist of fixed income securities of U.S. and non-U.S. corporations. These assets are valued using quoted prices in active markets. Corporate bonds are classified as Level 1 investments.

U.S. government obligations — U.S government obligations consist of fixed income securities issued directly by the U.S. Treasury or by government-sponsored enterprises. These assets are valued using quoted prices in active markets. U.S. government obligations are classified as Level 1 investments.


Cash Flows


Employer contributions for the year ending December 31, 20122013 are expected to be $17.3$18.9 million for the defined benefit plans compared to $15.4$17.3 million contributed during 2011.2012. Employer contributions to the 401(k) plans and the Supplemental Profit Sharing Plan for the year ending December 31, 20122013 are expected to be $9.3$11.9 million compared to $8.2$9.3 million $7.9, $8.2 million and $7.4$7.9 million during 2012, 2011 2010,, and 2009,2010, respectively.


Benefit payments expected to be paid during the next ten years are as follows:

   Amounts 
   (in millions) 

2012

  $14.7  

2013

   15.7  

2014

   16.8  

2015

   18.0  

2016

   19.3  

2017-2021

   116.1  

During the first quarter of 2009, the Company amended its Supplemental Retirement Plan (the “Supplemental Plan”) to reduce future retirement plan costs. This amendment provides that all benefit accruals under the Supplemental Plan cease effective March 31, 2009, and the Supplemental Plan was frozen as of that date. In addition, the Company amended the Trinity Industries, Inc. Standard Pension Plan (the “Pension Plan”). This amendment was designed to reduce future pension costs and provides that, effective March 31, 2009, all future benefit accruals under the Pension Plan automatically ceased for all participants, and the accrued benefits under the Pension Plan were determined and frozen as of that date. Accordingly, as a result of these amendments, the accrued pension liability was reduced by $44.1 million with an offsetting reduction in funded status of pension liability included in AOCL.

 Years ending December 31,
 (in millions)
2013$15.8
201416.8
201518.0
201619.2
201720.6
2018-2022122.5

Participants in the Pension Plan are now eligible to receive future retirement benefits through a company-funded annual retirement contribution provided through the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates. The contribution ranges from one to three percent of eligible compensation based on service. Both the annual retirement contribution and the company matching contribution are discretionary, requiring board approval, and are made annually with the investment of the funds directed by the participants.


Note 15. Accumulated Other Comprehensive Loss

Comprehensive net income (loss) is as follows:

   Year Ended December 31, 
   2011  2010  2009 
   (in millions) 

Net income (loss) attributable to Trinity Industries, Inc.

  $142.2   $67.4   $(137.7) 

Other comprehensive income (loss):

    

Change in funded status of pension liability, net of tax expense (benefit) of $(16.9), $5.2, and $20.9

   (28.6)   8.7    35.6  

Change in unrealized (loss) gain on derivative financial instruments, net of tax (benefit) expense of $0.4, $(2.6), and $14.2

   0.1    (7.3)   27.8  

Other changes, net of tax benefit of $—, 0.7, and (0.0)

   —    1.1    (0.1) 
  

 

 

  

 

 

  

 

 

 

Comprehensive net income (loss) attributable to Trinity Industries, Inc.

  $113.7   $69.9   $(74.4) 
  

 

 

  

 

 

  

 

 

 

The components of

Changes in accumulated other comprehensive loss for the twelve months ended December 31, 2012, 2011, and 2010are as follows:

   December 31,
2011		  December 31,
2010		 
   (in millions) 

Currency translation adjustments, net of tax benefit of $(0.2) and $(0.2)

  $(17.1)  $(17.1) 

Funded status of pension liability, net of tax benefit of $(41.7) and $(24.8)

   (70.7)   (42.1) 

Unrealized loss on derivative financial instruments, net of tax benefit of $(34.9) and $(21.4)

   (46.2)   (36.3) 
  

 

 

  

 

 

 
  $(134.0)  $(95.5) 
  

 

 

  

 

 

 

 Currency translation adjustments Unrealized loss on derivative financial instruments Net actuarial gains/(losses) of defined benefit plans Other 
Accumulated
Other
Comprehensive
Loss
 (in millions)
Balances at December 31, 2009$(17.1) $(29.0) $(50.8) $(1.1) $(98.0)
Other comprehensive income (loss)—
 (7.3) 8.7
 1.1
 2.5
Balances at December 31, 2010(17.1) (36.3) (42.1) —
 (95.5)
Other comprehensive income (loss)—
 0.1
 (28.6) —
 (28.5)
Reclassification of purchase of additional interest in TRIP Holdings—
 (15.5) —
 —
 (15.5)
Tax expense allocation related to TRIP Holdings unrealized loss on derivative financial instruments—
 5.5
 —
 —
 5.5
Balances at December 31, 2011(17.1) (46.2) (70.7) —
 (134.0)
Other comprehensive income (loss)0.6
 11.4
 (28.1) —
 (16.1)
Balances at December 31, 2012$(16.5) $(34.8) $(98.8) $—
 $(150.1)
See Note 7 Derivative Instruments for information on the reclassification of amounts in accumulated other comprehensive loss into earnings.



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Note 16. Stock-Based Compensation


The Company’sCompany's 2004 Amended and Restated Stock Option and Incentive Plan (“the Plan”) provides for awarding 6,000,000 (adjusted for stock splits) shares of common stock plus (i) shares covered by forfeited, expired, and canceled options granted under prior plans; and (ii) shares tendered as full or partial payment for the purchase price of an award or to satisfy tax withholding obligations. At December 31, 2011,2012, a total of 2,062,1021,443,350 shares were available for issuance. The Plan provides for the granting of nonqualified and incentive stock options having maximum ten-yearten-year terms to purchase common stock at its market value on the award date; stock appreciation rights based on common stock fair market values with settlement in common stock or cash; restricted stock awards; restricted stock units; and performance awards with settlement in common stock or cash on achievement of specific business objectives. Under previous plans, nonqualified and incentive stock options, restricted shares, and restricted stock units were granted at their fair market values. Options become exercisable in various percentages over periods ranging up to five years.


The cost of employee services received in exchange for awards of equity instruments are referred to as share-based payments and are based on the grant date fair-value of those awards. Stock-based compensation includes compensation expense, recognized over the applicable vesting periods, for both new share-based awards and share-based awards granted prior to, but not yet vested, as of January 1, 2006. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options granted to employees. Stock-based compensation totaled approximately $23.5$28.3 million $15.7, $23.5 million, and $13.5$15.7 million for the years ended December 31, 2012, 2011 2010,, and 2009,2010, respectively.


The income tax benefit related to stock-based compensation expense was $10.0$6.4 million $4.0, $10.0 million, and $2.3$4.0 million for the years ended December 31, 2012, 2011 2010,, and 2009,2010, respectively. The Company has presented excess tax benefits from the exercise of stock-based compensation awards as a financing activity in the consolidated statement of cash flows. No stock-based compensation costs were capitalized as part of the cost of an asset for the years ended December 31, 2012, 2011 2010,, and 2009.

2010.


Stock Options


Expense related to stock options issued to eligible employees under the Plan is recognized over their vesting period on a straight line basis. Stock options generally vest over 5 years and have contractual terms of 10 years.

   Number
of
Shares		  Weighted-
Average
Exercise
Price		   Weighted-
Average
Remaining
Contractual
Terms
(Years)		   Aggregate
Intrinsic
Value		 
   (in millions) 

Options outstanding at December 31, 2010

   880,087   $ 16.35      

Granted

   —    —      

Exercised

   (226,571)  $16.51      

Cancelled

   —    —      
  

 

 

      

Options outstanding at December 31, 2011

   653,516   $16.30     5.3    $9.0  
  

 

 

      

Options exercisable:

       

December 31, 2010

   449,587   $16.46     3.1    $4.6  

December 31, 2011

   223,016   $16.42     2.1    $3.0  

 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value
       (in millions)
Options outstanding at December 31, 2011653,516
 $16.30
    
Granted—
 —
    
Exercised(419,158) $16.04
    
Cancelled(373) 14.47
    
Options outstanding at December 31, 2012233,985
 $16.78
 4.1 $4.5
        
Options exercisable:       
December 31, 2011223,016
 $16.42
 2.1 $3.0
December 31, 2012233,985
 $16.78
 4.1 $4.5

At December 31, 2011,2012, there was no unrecognized compensation expense related to stock options was $0.4 million. At December 31, 2011, for unrecognized compensation expense related to stock options, the weighted average recognition period was 0.4 years.options. The intrinsic value of options exercised totaled approximately $3.6$6.6 million $0.9, $3.6 million, and $0.3$0.9 million during fiscal years 2012, 2011 2010,, and 2009,2010, respectively.


Restricted Stock


Restricted share awards consist of restricted stock, restricted stock units, and performance units. Restricted stock and restricted stock units generally vest for periods ranging from one to fifteen years from the date of grant. Certain restricted stock and restricted stock units vest in their entirety upon the employee's retirement from the Company, the employee's reaching the age of 65, or when the employee's age plus years of vested service equal 80. Restricted stock units issued to non-employee directors under the Plan vest on the grant date or on the first business day immediately preceding the next Annual Meeting of Stockholders and are released upon completion of the directors' service to the Company. Expense related to restricted stock and restricted stock units issued to eligible employees under the Plan is recognized ratably over the vesting period or to the date on which retirement eligibility is achieved, if shorter. Restricted stock and restricted stock units generally vest for periods ranging from one to fifteen years from the date of grant. Certain restricted stock and restricted stock units vest in their entirety upon the employee’s retirement from the Company, the employee’s reaching the age of 65 or when the employee’s age plus years of vested service equal 80. Restricted stock units issued to non-employee directors under the Plan vest on the grant date or on the first business day immediately preceding the next Annual Meeting of Stockholders. Performance units are amortized from their award date to the end of the performance period, generally either two or three years. Performance units are granted to employees based upon their target value however, depending upon the achievement of certain specified goals, may increase in value up to 200% of target. Certain performance awards provide that the Board of Directors has the right to disallow the granting of performance units for values in excess of target and, accordingly, no expense in excess of the target value is recognized for any units subject to such negative discretion. The performance units vest

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upon certification by the Human Resources Committee of the Board of Directors of the achievement of the specified performance goals.

   Number of
Restricted
Share
Awards		  Weighted
Average
Fair
Value
per
Award		 

Restricted share awards outstanding at December 31, 2010

   2,976,128   $24.79  

Granted

   925,140    34.21  

Vested

   (745,147)   25.62  

Forfeited

   (93,460)   26.17  
  

 

 

  

Restricted share awards outstanding at December 31, 2011

   3,062,661   $27.39  
  

 

 

  

Expense related to performance units is recognized ratably from their award date to the end of the performance period, generally either two or three years.

 Number of Restricted Share Awards Weighted Average Fair Value per Award
Restricted share awards outstanding at December 31, 20113,062,661
 $27.39
Granted1,067,105
 29.44
Vested(644,044) 27.78
Forfeited(184,351) 30.30
Restricted share awards outstanding at December 31, 20123,301,371
 $27.82

At December 31, 2011,2012, unrecognized compensation expense related to restricted share awards totaled approximately $67.2$62.8 million which will be recognized over a weighted average period of 4.2 years. The total fair value of shares vested and released during fiscal years 2012, 2011 2010,, and 20092010 was $23.3$16.9 million $11.7, $23.3 million, and $7.4$11.7 million, respectively. The weighted average fair value of restricted share awards granted during 2012, 2011 2010,, and 20092010 was $34.21, $25.18$29.44, $34.21 and $15.68$25.18 per share, respectively.


Note 17. Earnings Per Common Share


Basic net income attributable to Trinity Industries, Inc. per common share is computed by dividing net income attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period. Except when the effect would be antidilutive, the calculation of diluted net income attributable to Trinity per common share includes the net impact of unvested restricted shares and shares that could be issued under outstanding stock options. Total weighted average restricted shares and antidilutive stock options were 3.1 million shares, 3.0 million shares, 2.8 million shares, and 3.72.8 million shares, respectively, for the years ended December 31, 2012, 2011 2010, and 2009,2010, respectively.


The computation of basic and diluted net income (loss) attributable to Trinity Industries, Inc. is as follows:

   Year Ended December 31, 2011 
   Income
(Loss)		  Avg. Shares
Outstanding		   Earnings
Per Share		 
   (in millions, except per share amounts) 

Net income attributable to Trinity Industries, Inc.

  $142.2     

Unvested restricted share participation

   (4.8)    
  

 

 

    

Net income attributable to Trinity Industries, Inc. — basic

   137.4    77.5    $1.77  
     

 

 

 

Effect of dilutive securities:

     

Stock options

   —    0.3    
  

 

 

  

 

 

   

Net income attributable to Trinity Industries, Inc. — diluted

  $137.4    77.8    $1.77  
  

 

 

  

 

 

   

 

 

 

   Year Ended December 31, 2010 
   Income
(Loss)		  Avg. Shares
Outstanding		   Earnings
Per Share		 
   (in millions, except per share amounts) 

Net income attributable to Trinity Industries, Inc.

  $67.4     

Unvested restricted share participation

   (2.3)    
  

 

 

    

Net income attributable to Trinity Industries, Inc. — basic

   65.1    76.8    $0.85  
     

 

 

 

Effect of dilutive securities:

     

Stock options

   —    0.2    
  

 

 

  

 

 

   

Net income attributable to Trinity Industries, Inc. — diluted

  $65.1    77.0    $0.85  
  

 

 

  

 

 

   

 

 

 

   Year Ended December 31, 2009 
   Income (Loss)  Avg. Shares
Outstanding		   Loss
Per Share		 
   (in millions, except per share amounts) 

Net loss attributable to Trinity Industries, Inc.

  $(137.7)    

Unvested restricted share participation

   (1.0)    
  

 

 

    

Net loss attributable to Trinity Industries, Inc. — basic

   (138.7)   76.4    $(1.81) 
     

 

 

 

Effect of dilutive securities:

     

Stock options

   —    —    
  

 

 

  

 

 

   

Net loss attributable to Trinity Industries, Inc. — diluted

  $(138.7)   76.4    $(1.81) 
  

 

 

  

 

 

   

 

 

 

follows. Amounts previously reported have been adjusted to reflect discontinued operations resulting from the expected sale of the Company's ready-mix concrete operations. See Note 2 Acquisitions and Divestitures.

 Year Ended
December 31, 2012
 (in millions, except per share amounts)
 
Income
(Loss)
 
Average
Shares
 EPS
Net income from continuing operations$251.9
    
Less: net loss from continuing operations attributable to noncontrolling interest(1.5)    
Net income from continuing operations attributable to Trinity Industries, Inc.253.4
    
Unvested restricted share participation(7.7)    
Net income from continuing operations attributable to Trinity Industries, Inc. – basic245.7
 77.3
 $3.18
Effect of dilutive securities:     
Stock options—
 0.2
  
Net income from continuing operations attributable to Trinity Industries, Inc. – diluted$245.7
 77.5
 $3.17
      
Net income from discontinued operations, net of taxes$1.8
    
Unvested restricted share participation(0.1)    
Net income from discontinued operations, net of taxes – basic1.7
 77.3
 $0.02
Effect of dilutive securities:     
Stock options—
 0.2
  
Net income from discontinued operations, net of taxes – diluted$1.7
 77.5
 $0.02

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 Year Ended
December 31, 2011
 (in millions, except per share amounts)
 
Income
(Loss)
 
Average
Shares
 EPS
Net income from continuing operations$146.8
    
Less: net income from continuing operations attributable to noncontrolling interest3.5
    
Net income from continuing operations attributable to Trinity Industries, Inc.143.3
    
Unvested restricted share participation(5.0)    
Net income from continuing operations attributable to Trinity Industries, Inc. – basic138.3
 77.5
 $1.78
Effect of dilutive securities:     
Stock options—
 0.3
  
Net income from continuing operations attributable to Trinity Industries, Inc. – diluted$138.3
 77.8
 $1.78
      
Net loss from discontinued operations, net of taxes$(1.1)    
Unvested restricted share participation—
    
Net loss from discontinued operations, net of taxes – basic(1.1) 77.5
 $(0.01)
Effect of dilutive securities:     
Stock options—
 0.3
  
Net loss from discontinued operations, net of taxes – diluted$(1.1) 77.8
 $(0.01)
 Year Ended
December 31, 2010
 (in millions, except per share amounts)
 
Income
(Loss)
 
Average
Shares
 EPS
Net income from continuing operations$69.4
    
Less: net income from continuing operations attributable to noncontrolling interest8.0
    
Net income from continuing operations attributable to Trinity Industries, Inc.61.4
    
Unvested restricted share participation(2.1)    
Net income from continuing operations attributable to Trinity Industries, Inc. – basic59.3
 76.8
 $0.77
Effect of dilutive securities:     
Stock options—
 0.2
  
Net income from continuing operations attributable to Trinity Industries, Inc. – diluted$59.3
 77.0
 $0.77
      
Net income from discontinued operations, net of taxes$6.0
    
Unvested restricted share participation(0.2)    
Net income from discontinued operations, net of taxes – basic5.8
 76.8
 $0.08
Effect of dilutive securities:     
Stock options—
 0.2
  
Net income from discontinued operations, net of taxes – diluted$5.8
 77.0
 $0.08


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Note 18. Commitments and Contingencies


Highway Products Litigation

On September 2, 2011, the Company and Contingenciesthe Texas A&M University System, as Plaintiffs, filed litigation in Virginia asserting claims of patent and trademark infringement against SPIG Industry, LLC, SPIG Industry, Inc., and Selco Construction Services, Inc. The litigation alleged that without authorization SPIG Industry, LLC and SPIG Industry, Inc. manufactured and sold, and Selco Construction Services, Inc. installed certain highway guardrail end terminal products that copied the Plaintiffs' ET-Plus System (“ET-Plus”).

The ET-Plus is a patented, energy-absorbing, guardrail end terminal system designed by engineers at the Texas A&M Transportation Institute. The ET-Plus is manufactured under license, marketed and sold by Trinity Highway Products, LLC, a wholly owned subsidiary of the Company. The ET-Plus is typically purchased by state Departments of Transportation and highway construction contractors for use along roadways and medians. The Company settled the infringement lawsuit on acceptable terms and thereafter proceeded with defamation and disparagement lawsuits in Texas and Georgia alleging that Joshua Harman, an officer in each of SPIG Industry, LLC, SPIG Industry, Inc., and Selco Construction Services, Inc. has made and continues to make egregiously false and misleading statements and claims about the ET-Plus and the Company.

In a related matter, on January 28, 2013, the Company was advised that the United States filed a “Notice of Election to Decline Intervention” in a False Claims Act (Qui Tam) complaint filed under seal on March 6, 2012 in the United States District Court for the Eastern District of Texas, Marshall Division styled

JOSHUA HARMAN, on behalf of the UNITED STATES OF AMERICA, PLAINTIFF/Relator (“Mr. Harman”) v. TRINITY INDUSTRIES, INC., DEFENDANT, Case 2:12-cv-00089-JRG. Although the Company has not received service of process in this litigation, it has obtained a copy of the complaint. Mr. Harman alleges that the Company presented false or fraudulent claims, records or statements to the United States to obtain payment or approval, ostensibly related to the ET-Plus, and seeks damages equaling the cost to recall and replace all installations of the ET-Plus plus treble civil penalties, costs, and interest. The Company notes that since its introduction in 2000, including all improvement modifications thereafter, the ET-Plus has satisfied the testing criteria required by the governing National Cooperative Highway Research Program Report 350 and the product approval requirements of the Federal Highway Administration. The Company intends to vigorously defend Mr. Harman's allegations which will likely result in certain legal expenses. We do not believe that a loss is probable nor can a range of losses be determined. Accordingly, no accrual or range of loss has been included in the accompanying consolidated financial statements.


Railworthiness Directive


As previously reported, in 2011the Company received a letter fromthe approval of the Federal Railroad Administration (“FRA”) containingto implement a railworthiness directive pertaining to a specific designvoluntary recertification of948 tank cars manufacturedowned or managed by the Company for useCompany’s wholly-owned, railcar leasing subsidiary and used in transporting poison inhalation hazard (“PIH”) materials. The Company has manufactured 948 railcars of this design. These tank cars are owned or managed by the Company’s wholly-owned, railcar leasing subsidiary. The FRA was notified of five tank cars with potential leaks around the manway nozzles. Pursuant to the directive, 100 recently manufactured tank cars were removed from service. An additional 67 randomly selected tank cars out of 848 manufactured since 2006, which have operated without incident, have been removed from service.

In September 2011, the FRA issued an addendum to its June 2011 railworthiness directive, approving the Company’s voluntary recertification of all 948 tank cars used in PIH service. The recertification process is scheduled to beunderway and being performed through September 2014 in conjunction with the normal 3three to 5five year, federally mandated inspection cycle for tank cars in PIH service. Maintenance costs associated with this recertification process are expensed as incurred in accordance with generally accepted accounting principles.incurred. The additional costs estimated to be incurred for compliance with the directive are not expected to be significant.


Other Matters

In January 2012, a Company subsidiary,


As previously reported, Trinity Structural Towers, Inc., filed a law suit againstwholly-owned subsidiary of the Company, is in litigation with a structural wind towertowers customer for the customer’s breach of a long-term supply contract due tofor the customer’s failure to comply with its’ contractual purchase obligations. The customer and Trinity Structural Towers, Inc. entered into a multi-year contract in whichmanufacture of towers. While the customer agreed to purchase a fixed number of structural wind towers each year duringpartially performed the term of the contract. The customer purchased a portion of its contractual commitment butcontract, it ultimately defaulted on its purchase obligation thereafter and did not remedy such default following notice from Trinity Structural Towers, Inc. to cure the default. The customer has filed an answerwritten notice. Discovery in thethis litigation and the discovery process is expected to commence in the first quarter of 2012.

continuing.


The Company is involved in claims and lawsuits incidental to our business arising from various matters including product warranty, personal injury, environmental issues, workplace laws, and various governmental regulations. The Company evaluates its exposure to such claims and suits periodically and establishes accruals for these contingencies when a range of loss can be reasonably estimated. The range of loss for such matters, taking into consideration our rights in indemnity and recourse to third parties is $6.2$4.0 million to $22.9 million.$29.4 million. Total accruals of $12.3$16.1 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying consolidated balance sheet. The Company believes any additional liability would not be material to its financial position or results of operations.



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Trinity is subject to remedial orders and Federal, state, local, and foreign laws and regulations relating to the environment and the workplace. The Company has reserved $7.6$7.2 million to cover our probable and estimable liabilities with respect to the investigations, assessments, and remedial responses to such matters, taking into account currently available information and our contractual rights to indemnification and recourse to third parties. However, estimates of liability arising from future proceedings, assessments, or remediation are inherently imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings involving the environment and the workplace or, if we are found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company. We believe that we are currently in substantial compliance with environmental and workplace laws and regulations.


Other Commitments


Non-cancelable purchase obligations amounted to $399.6$649.6 million as of December 31, 2011,2012, of which $347.5$567.1 million is for the purchase of raw materials and components, principally by the Rail, Inland Barge, and Energy Equipment Groups.


82
Table of Contents

Note 19. Selected Quarterly Financial Data (Unaudited)

Effective December 31, 2011, the Company adopted the emerging industry policy

 Three Months Ended
 March 31,
2012		 June 30,
2012		 September 30, 2012 December 31,
2012
 (in millions except per share data)
Revenues:       
Manufacturing$754.1
 $803.2
 $748.0
 $862.2
Leasing142.1
 192.3
 159.3
 150.7
 896.2
 995.5
 907.3
 1,012.9
Operating costs:       
Costs of revenues:       
Manufacturing645.7
 665.8
 630.7
 707.7
Leasing73.4
 112.1
 84.3
 80.5
Other11.1
 14.4
 13.1
 12.7
 730.2
 792.3
 728.1
 800.9
Selling, engineering, and administrative expenses50.7
 53.0
 55.8
 64.6
Gain on disposition of property, plant, and equipment7.4
 2.3
 17.3
 11.5
Operating profit122.7
 152.5
 140.7
 158.9
Net income from continuing operations52.4
 66.1
 62.4
 71.0
Discontinued operations, net of tax(0.1) 1.4
 0.7
 (0.2)
Net income52.3
 67.5
 63.1
 70.8
Net income attributable to Trinity Industries, Inc.52.9
 67.8
 63.2
 71.3
Net income attributable to Trinity Industries, Inc. per common share:       
Basic:       
Continuing operations$0.66
 $0.82
 $0.79
 $0.90
Discontinued operations—
 0.02
 0.01
 —
 $0.66
 $0.84
 $0.80
 $0.90
Diluted:       
Continuing operations$0.66
 $0.82
 $0.79
 $0.90
Discontinued operations—
 0.02
 0.01
 —
 $0.66
 $0.84
 $0.80
 $0.90

83
Table of recognizing revenueContents

 Three Months Ended
 March 31,
2011		 June 30,
2011		 September 30,
2011		 December 31,
2011
 (in millions except per share data)
Revenues:       
Manufacturing$473.3
 $546.1
 $609.2
 $758.3
Leasing119.8
 128.2
 147.4
 156.0
 593.1
 674.3
 756.6
 914.3
Operating costs:       
Costs of revenues:       
Manufacturing393.0
 466.8
 518.3
 661.2
Leasing60.5
 63.3
 78.6
 87.9
Other8.1
 7.4
 7.1
 5.3
 461.6
 537.5
 604.0
 754.4
Selling, engineering, and administrative expenses45.8
 43.7
 50.0
 54.5
Gain on disposition of property, plant, and equipment1.6
 2.3
 2.0
 34.1
Operating profit87.3
 95.4
 104.6
 139.5
Net income from continuing operations26.8
 31.6
 31.1
 57.3
Discontinued operations, net of tax(1.2) 0.0
 0.5
 (0.4)
Net income25.6
 31.6
 31.6
 56.9
Net income attributable to Trinity Industries, Inc.24.2
 30.0
 31.9
 56.1
Net income (loss) attributable to Trinity Industries, Inc. per common share:       
Basic:       
Continuing operations$0.32
 $0.37
 $0.39
 $0.71
Discontinued operations(0.02) —
 0.01
 (0.01)
 $0.30
 $0.37
 $0.40
 $0.70
Diluted:       
Continuing operations$0.32
 $0.37
 $0.39
 $0.71
Discontinued operations(0.02) —
 0.01
 (0.01)
 $0.30
 $0.37
 $0.40
 $0.70

Amounts previously reported have been adjusted to reflect discontinued operations resulting from the salesexpected sale of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset.Company's ready-mix concrete operations. See Note 12 Acquisitions and Divestitures.

84
Table of the Notes to Consolidated Contents

Item 9. Changes in and Disagreements with Accountants on Accounting andFinancial Statements.

september 30september 30september 30september 30
   Three Months Ended 
   March 31,
2011		   June 30,
2011		   September 30,
2011		  December 31,
2011		 
   (in millions except per share data) 

Revenues:

       

Manufacturing

   $  514.4     $  580.1     $  643.7    $  785.5  

Leasing

   119.8     128.2     147.4    156.0  
  

 

 

   

 

 

   

 

 

  

 

 

 
   634.2     708.3     791.1    941.5  

Operating costs:

       

Costs of revenues:

       

Manufacturing

   431.7     498.2     548.4    686.4  

Leasing

   60.5     63.3     78.6    87.9  

Other

   8.1     7.4     7.1    5.3  
  

 

 

   

 

 

   

 

 

  

 

 

 
   500.3     568.9     634.1    779.6  

Selling, engineering, and administrative expenses

   50.3     47.5     53.5    57.8  

Gain (loss) on disposition of property, plant, and equipment:

       

Net gains on lease fleet sales

   1.1     0.4     1.6    13.1  

Disposition of flood-damaged property, plant, and equipment

   —     —     0.6    17.0  

Other

   0.8     3.1     (0.3)   4.8  
  

 

 

   

 

 

   

 

 

  

 

 

 
   1.9     3.5     1.9    34.9  

Operating profit

   85.5     95.4     105.4    139.0  

Net income

   25.6     31.6     31.6    56.9  

Net income attributable to Trinity Industries, Inc.

   24.2     30.0     31.9    56.1  

Net income attributable to Trinity Industries, Inc. per common share – basic and diluted

   $  0.30     $  0.37     $  0.40    $  0.70  

   Three Months Ended 
   March 31,
2010		   June 30,
2010		   September 30,
2010		   December 31,
2010		 
   (in millions except per share data) 

Revenues:

        

Manufacturing

   $  332.8     $  423.5     $  417.9     $  516.8  

Leasing

   114.9     115.2     115.2     119.2  
  

 

 

   

 

 

   

 

 

   

 

 

 
   447.7     538.7     533.1     636.0  

Operating costs:

        

Costs of revenues:

        

Manufacturing

   283.1     351.7     348.1     451.8  

Leasing

   64.0     61.8     59.2     59.0  

Other

   4.1     2.1     2.1     2.6  
  

 

 

   

 

 

   

 

 

   

 

 

 
   351.2     415.6     409.4     513.4  

Selling, engineering, and administrative expenses

   48.4     45.5     48.7     43.7  

Gain (loss) on disposition of property, plant, and equipment:

        

Net gains on lease fleet sales

   1.7     0.3     2.3     2.3  

Disposition of flood-damaged property, plant, and equipment

   —     —     10.2     (0.5) 

Other

   2.2     1.0     4.4     0.3  
  

 

 

   

 

 

   

 

 

   

 

 

 
   3.9     1.3     16.9     2.1  

Operating profit

   52.0     78.9     91.9     81.0  

Net income

   4.3     21.1     31.5     18.5  

Net income attributable to Trinity Industries, Inc.

   2.0     18.4     29.7     17.3  

Net income attributable to Trinity Industries, Inc. per common share – basic and diluted

   $  0.02     $  0.23     $  0.37     $  0.22  

Effective December 31, 2011, deferred loan issuance costs incurred have been classified in our Consolidated Statements of Cash Flows in financing activities as a deduction from debt proceeds to properly state such costs as financing activities. Previously such costs were classified as an operating activity within the change in other assets. The impact to properly state operatingDisclosure.


None.

Item 9A. Controls and financing activities for the three months ended March 31, 2011 and the six months ended June 30, 2011 was $5.9 million and the nine months ended September 30, 2011 impact was $21.1 million. The impact in 2010 to properly state operating and financing activities for the periods ended March 31, 2010 and June 30, 2010, was $0.2 million, while the impact for the nine months ended September 30, 2010 was $0.3 million. The impact for the year ended December 31, 2010 was $6.6 million. The following quarterly Consolidated Statements of Cash Flows for 2011 and 2010 are summarized as follows 1) originally reported as adjusted for the change in accounting for lease fleet railcar sales explained above and 2) as adjusted for the change in accounting for lease fleet railcar sales and the proper recognition of deferred loan issuance costs as financing activities:

Three MonthsThree MonthsThree MonthsThree Months
   Originally Reported as Adjusted for the Change in Presentation
for Lease Fleet Railcar Sales		 
   Three Months
Ended
March  31,
2011		  Six Months
Ended
June  30,
2011		  Nine Months
Ended
September 30,
2011		    
   (in millions)   

Total cash provided by (required by):

     

Operating activity

  $(11.5)  $(3.2)  $28.6   

Investing activity

   (35.6)   (58.3)   (125.6)  

Financing activity

   (46.6)   (35.4)   15.8   
  

 

 

  

 

 

  

 

 

  

Net increase (decrease) in cash and cash equivalents

  $(93.7)  $(96.9)  $(81.2)  
   Three Months
Ended
March 31,
2010		  Six Months
Ended
June 30,
2010		  Nine Months
Ended
September 30,
2010		  Year
Ended
December
31,
2010		 
   (in millions)  

Total cash provided by (required by):

     

Operating activity

  $(16.2)  $6.1   $47.5   $163.9  

Investing activity

   (268.4)   (304.0)   (333.0)   (308.2) 

Financing activity

   (69.5)   (103.6)   (175.1)   (113.5) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash and cash equivalents

  $(354.1)  $(401.5)  $(460.6)  $(257.8) 

Three MonthsThree MonthsThree MonthsThree Months
   As Adjusted for the Change in Presentation for Lease  Fleet Railcar
Sales and the Recognition of Deferred Loan Issuance Costs as
Financing Activities		 
   Three Months
Ended
March 31,
2011		  Six Months
Ended
June 30,
2011		  Nine Months
Ended
September 30,
2011		    
   (in millions)   

Total cash provided by (required by):

     

Operating activity

  $(5.6)  $2.7   $49.7   

Investing activity

   (35.6)   (58.3)   (125.6)  

Financing activity

   (52.5)   (41.3)   (5.3)  
  

 

 

  

 

 

  

 

 

  

Net increase (decrease) in cash and cash equivalents..

  $(93.7)  $(96.9)  $(81.2)  
   Three Months
Ended
March  31,
2010		  Six Months
Ended
June  30,
2010		  Nine Months
Ended
September 30,
2010		  Year
Ended
December
31,
2010		 
   (in millions)  

Total cash provided by (required by):

     

Operating activity

  $(16.0)  $6.3   $47.8   $170.5  

Investing activity

   (268.4)   (304.0)   (333.0)   (308.2) 

Financing activity

   (69.7)   (103.8)   (175.4)   (120.1) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash and cash equivalents..

  $(354.1)  $(401.5)  $(460.6)  $(257.8) 

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.Controls and Procedures.

Procedures.


Disclosure Controls and Procedures.


The Company maintains controls and procedures designed to ensure that it is able to collect the information it is required to disclose in the reports it files with the SEC, and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. The Company’sCompany's Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluating their effectiveness. Based on their evaluation of the Company’sCompany's disclosure controls and procedures which took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers believe that these procedures are effective to ensure that the Company is able to collect, process, and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods.

Management’s


Management's Report on Internal Control over Financial Reporting.


Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934. The Company’sCompany's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance, as opposed to absolute assurance, of achieving their internal control objectives.


Management assessed the effectiveness of the Company’sCompany's internal control over financial reporting as of December 31, 2011.2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control —- Integrated Framework. Based on our assessment, we believe that, as of December 31, 2011,2012, the Company’sCompany's internal control over financial reporting was effective based on those criteria.


The effectiveness of internal control over financial reporting as of December 31, 2011,2012, has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited the Company’sCompany's consolidated financial statements. Ernst & Young LLP’sLLP's attestation report on effectiveness of the Company’sCompany's internal control over financial reporting follows:

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Table of Contents


Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
  Trinity Industries, Inc.

We have audited Trinity Industries, Inc. and Subsidiaries' internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Trinity Industries, Inc. and Subsidiaries' management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is included herein.

a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Trinity Industries, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Trinity Industries, Inc. and Subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity for each of the three years in the period ended December 31, 2012 of Trinity Industries, Inc. and Subsidiaries and our report dated February 21, 2013 expressed an unqualified opinion thereon.

Item 9B.
Other Information.
/s/ ERNST & YOUNG LLP

None.



Dallas, Texas
February 21, 2013



86
Table of Contents

Item 9B. Other Information.

None.

PART III

Item 10.

 Directors, Executive Officers and Corporate Governance.

Item 10.
Directors, Executive Officers and Corporate Governance.

Information regarding the directors of the Company is incorporated by reference to the information set forth under the caption “Proposal 1 —- Election of Directors” in the Company’sCompany's Proxy Statement for the 20122013 Annual Meeting of Stockholders (the “2012“2013 Proxy Statement”). Information relating to the executive officers of the Company is set forth in Part I of this report under the caption “Executive Officers and Other Corporate Officers of the Company.” Information relating to the Board of Directors’Directors' determinations concerning whether at least one of the members of the Audit Committee is an “audit committee financial expert” as that term is defined under Item 407 (d)(5) of Regulation S-K is incorporated by reference to the information set forth under the caption “Corporate Governance —- Board Committees —- Audit Committee” in the Company’s 2012Company's 2013 Proxy Statement. Information regarding the Company’sCompany's Audit Committee is incorporated by reference to the information set forth under the caption “Corporate Governance —- Board Committees —- Audit Committee” in the Company’s 2012Company's 2013 Proxy Statement. Information regarding compliance with Section 16(a) of the Securities and Exchange Act of 1934 is incorporated by reference to the information set forth under the caption “Additional Information —- Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s 2012Company's 2013 Proxy Statement.


The Company has adopted a Code of Business Conduct and Ethics that applies to all of its directors, officers, and employees. The Code of Business Conduct and Ethics is on the Company’sCompany's website atwww.trin.net under the caption “Investor Relations/ Governance.” The Company intends to post any amendments or waivers for its Code of Business Conduct and Ethics to the Company’sCompany's website atwww.trin.net to the extent applicable to an executive officer or director of the Company.


Item 11. Executive Compensation.

Item 11.
Executive Compensation.

Information regarding compensation of executive officers and directors is incorporated by reference to the information set forth under the caption “Executive Compensation” in the Company’s 2012Company's 2013 Proxy Statement. Information concerning compensation committee interlocks and insider participation is incorporated by reference to the information set forth under the caption “Corporate Governance —- Compensation Committee Interlocks and Insider Participation” in the Company’s 2012Company's 2013 Proxy Statement. Information about the compensation committee report is incorporated by reference to the information set forth under the caption “Executive Compensation —- Human Resources Committee Report” in the Company’s 2012Company's 2013 Proxy Statement.



87

Item 12. Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters.

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Company’s 2012Company's 2013 Proxy Statement, under the caption “Security Ownership —- Security Ownership of Certain Beneficial Owners and Management.”


The following table sets forth information about Trinity common stock that may be issued under all of Trinity’sTrinity's existing equity compensation plans as of December 31, 2011.

2012Equity.

Equity Compensation Plan Information
 (a) (b) (c)
 Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Plan Category:     
Equity compensation plans approved by security holders:     
Stock Options233,985
 $16.78
  
Restricted stock units and performance units901,219
1 
$—
  
 1,135,204
   1,443,350
Equity compensation plans not approved by security holders—
2 
  —
Total1,135,204
   1,443,350
____________
1 Includes 306,074 shares of common stock issuable upon the vesting and conversion of restricted stock units and 595,145 shares of common stock issuable upon the vesting and conversion of performance units. The Board of Directors has the right to disallow the granting of performance units for values in excess of target and, accordingly, no expense or number of shares in excess of the target value is recognized for any units subject to negative discretion. The restricted stock units and performance units do not have an exercise price.

2 Excludes information regarding the Trinity Deferred Plan for Director Fees. This plan permits the deferral of the payment of the annual retainer fee and board and committee meeting fees. At the election of the participant, the deferred fees may be converted into phantom stock units with a fair market value equal to the value of the fees deferred, and such phantom stock units are credited to the director's account (along with the amount of any dividends or stock distributions). At the time a participant ceases to be a director, cash will be distributed to the participant. At December 31, 2012, there were 111,753 phantom stock units credited to the accounts of participants. Also excludes information regarding the Trinity Industries Supplemental Profit Sharing Plan (“Supplemental Plan”) for certain of its highly compensated employees. Information about the Supplemental Plan is incorporated herein by reference from the Company's 2013 Proxy Statement, under the caption “Executive Compensation Plan Information- Post-Employment Benefits.” At December 31, 2012, there were 45,480 stock units credited to the accounts of participants under the Supplemental Plan.

   (a)  (b)   (c) 
          Number of Securities 
   Number of Securities      Remaining Available for 
   to be Issued  Weighted-Average   Future Issuance under 
   Upon Exercise of  Exercise Price of   Equity Compensation 
   Outstanding Options,  Outstanding Options,   Plans (Excluding Securities 
   Warrants and Rights  Warrants and Rights   Reflected in Column (a)) 

Plan Category

     

Equity compensation plans approved by security holders:

     

Stock Options

   653,516   $16.30    

Restricted stock units and performance units

   614,654(1)   —    
  

 

 

    
   1,268,170      2,062,102  

Equity compensation plans not approved by security holders

   —(2)     —  
  

 

 

    

 

 

 

Total

   1,268,170      2,062,102  


Item 13. Certain Relationships and Related Transactions, and DirectorIndependence.

(1)

Includes 287,264 shares of common stock issuable upon the vesting and conversion of restricted stock units and 327,390 shares of common stock issuable upon the vesting and conversion of performance units. The restricted stock units and performance units do not have an exercise price.

(2)

Excludes information regarding the Trinity Deferred Plan for Director Fees. This plan permits the deferral of the payment of the annual retainer fee and board and committee meeting fees. At the election of the participant, the deferred fees may be converted into phantom stock units with a fair market value equal to the value of the fees deferred, and such phantom stock units are credited to the director’s account (along with the amount of any dividends or stock distributions). At the time a participant ceases to be a director, cash will be distributed to the participant. At December 31, 2011, there were 106,126 phantom stock units credited to the accounts of participants. Also excludes information regarding the Trinity Industries Supplemental Profit Sharing Plan (“Supplemental Plan”) for certain of its highly compensated employees. Information about the Supplemental Plan is incorporated herein by reference from the Company’s 2012 Proxy Statement, under the caption “Executive Compensation — Post-Employment Benefits.” At December 31, 2011, there were 45,904 stock units credited to the accounts of participants under the Supplemental Plan.

Item 13.Certain Relationships and Related Transactions, and Director Independence.

Information regarding certain relationships and related person transactions is incorporated by reference to the information set forth under the captions “Corporate Governance-Compensation Committee Interlocks and Insider Participation” and “Transactions with Related Persons” in the Company’s 2012Company's 2013 Proxy Statement. Information regarding the independence of directors is incorporated by reference to the information set forth under the captions “Corporate Governance-Independence of Directors” in the Company’s 2012Company's 2013 Proxy Statement.


Item 14. Principal Accountant Fees and Services.

Item 14.
Principal Accountant Fees and Services.

Information regarding principal accountant fees and services is incorporated by reference to the information set forth under the captions “Fees of Independent Registered Public Accounting Firm for Fiscal Years 20112012 and 2010”2011” in the Company’s 2012Company's 2013 Proxy Statement.


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Table of Contents

PART IV

Item 15.

Item 15.Exhibits and Financial Statement Schedules.

 Exhibits and Financial Statement Schedules.


(a) (1) Financial Statements.


See Item 8.


(2) Financial Statement Schedule.


All schedules are omitted because they are not required, not significant, not applicable or the information is shown in the financial statements or the notes to consolidated financial statements.


(3) Exhibits.


See Index to Exhibits for a listing of Exhibits which are filed herewith or incorporated herein by reference to the location indicated.


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Table of Contents

EXHIBIT 23


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We consent to the incorporation by reference in the following Registration Statements:


1)Post-Effective Amendment No. 3 to the Registration Statement (Form S-8, No. 2-64813),
2)Post-Effective Amendment No. 1 to the Registration Statement (Form S-8, No. 33-10937),
3)Registration Statement (Form S-8, No. 33-35514),
4)Registration Statement (Form S-8, No. 33-73026),
5)Registration Statement (Form S-8, No. 333-77735),
6)Registration Statement (Form S-8, No. 333-91067),
7)Registration Statement (Form S-8, No. 333-85588),
8)Registration Statement (Form S-8, No. 333-85590),
9)Registration Statement (Form S-8, No. 333-114854),
10)Registration Statement (Form S-8, No. 333-115376),
11)Registration Statement (Form S-3, No. 333-134596),
12)Registration Statement (Form S-8, No. 333-159552), and
13)Registration Statement (Form S-8, No. 333-169452), and
14)Registration Statement (Form S-8, No. 333-183941);


of our reports dated February 16, 201221, 2013 with respect to the consolidated financial statements of Trinity Industries, Inc. and Subsidiaries and the effectiveness of internal control over financial reporting of Trinity Industries, Inc. and Subsidiaries included in this Annual Report (Form 10-K) of Trinity Industries, Inc. and Subsidiaries for the year ended December 31, 2011.

2012.


/s/ ERNST & YOUNG LLP


Dallas, Texas

February 16, 2012

21, 2013



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Table of Contents

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.

TRINITY INDUSTRIES, INC.By/s/ James E. Perry
Registrant 
 James E. Perry
 

Senior Vice President and

Chief Financial Officer

Dated:

February 16, 2012

21, 2013


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 dates indicated.


Directors:

/s/  John L. Adams/s/  Diana S. Natalicio

Melendy Lovett
John L. AdamsDiana S. NatalicioMelendy Lovett
DirectorDirector
Dated: February 16, 201221, 2013Dated: February 16, 201221, 2013
/s/  Rhys J. Best/s/  Douglas L. Rock

Rhys J. BestDouglas L. Rock
DirectorDirector
Dated: February 16, 201221, 2013Dated: February 16, 201221, 2013
/s/  David W. Biegler 

David W. Biegler
Director
Dated: February 16, 2012Principal Executive Officer:
Director
/s/ Leldon E. EcholsDated: February 21, 2013/s/ Timothy R. Wallace

Leldon E. Echols Timothy R. Wallace
Director/s/  Leldon E. EcholsChairman, Chief Executive Officer, President, and Director
Dated: February 16, 2012Leldon E. EcholsDated: February 16, 201221, 2013
Director
Dated: February 21, 2013 
 Principal Financial Officer:
/s/  Ronald J. Gafford 
Ronald J. Gafford/s/  James E. Perry

Ronald J. GaffordDirectorJames E. Perry
DirectorDated: February 21, 2013Senior Vice President and Chief Financial Officer
Dated: February 16, 2012 Dated: February 16, 2012
21, 2013
/s/  Ronald W. Haddock 

Ronald W. Haddock 
Director
Dated: February 16, 2012Principal Accounting Officer:
/s/ Adrián LajousDated: February 21, 2013 
 /s/  Mary E. Henderson

/s/  Adrián LajousMary E. Henderson
DirectorAdrián LajousVice President, Chief Accounting Officer, and Controller
Dated: February 16, 2012DirectorDated: February 16, 201221, 2013
Dated: February 21, 2013
/s/  Charles W. Matthews 

Charles W. Matthews 
Director 
Dated: February 16, 201221, 2013 



91
Table of ContentsTrinity Industries, Inc.

Index to Exhibits

(Item 15(b))


INDEX TO EXHIBITS
Trinity Industries, Inc.
Index to Exhibits
(Item 15(b))

NO. 

DESCRIPTION

(3.1) Certificate of Incorporation of Trinity Industries, Inc., as amended May 23, 2007 (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007)(filed herewith).
(3.2) Amended and Restated By-Laws of Trinity Industries, Inc., as amended May 2, 2011December 7, 2012 (incorporated by reference to Exhibit 3.199.1 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011)8-K filed December 12, 2012).
(4.01)(4.1) Indenture, dated June 7, 2006, between Trinity Industries, Inc. and Wells Fargo Bank, National Association, as trustee (including the Form of 3 7/8% Convertible Subordinated Note due 2036 as an exhibit thereto) (filed herewith)(incorporated by reference to Exhibit 4.01 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).
(4.01.1)(4.1.1) Officers’Officers' Certificate of Trinity Industries, Inc. pursuant to the Indenture dated June 7, 2006, relating to the Company’sCompany's 3 7/8% Convertible Subordinated Notes due 2036 (filed herewith)(incorporated by reference to Exhibit 4.01.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).
(4.1)(4.2) Specimen Common Stock Certificate of Trinity Industries, Inc. (incorporated by reference to Exhibit 4.1 of Registration Statement No. 333-159552 filed May 28, 2009).
(4.2)(4.3) Pass Through Trust Agreement dated as of February 15, 2002 among Trinity Industries Leasing Company, Trinity Industries, Inc. and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 4.4 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(4.2.1)(4.3.1) Trust Indenture and Security Agreement dated as of February 15, 2002 among Trinity Industries Leasing Company, Trinity Industries, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(4.2.2)(4.3.2) Trust Indenture and Security Agreement dated as of February 15, 2002 among Trinity Industries Leasing Company, Trinity Industries, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(4.2.3)(4.3.3) Trust Indenture and Security Agreement dated as of February 15, 2002 among Trinity Industries Leasing Company, Trinity Industries, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4.3 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.1.1) Form of Amended and Restated Executive Severance Agreement entered into between Trinity Industries, Inc. and the Chief Executive Officer, and each of the Senior Vice Presidents (incorporated by reference to Exhibit 10.1.1 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008).*
(10.1.2)(10.1.2 Form of Amended and Restated Executive Severance Agreement entered into between Trinity Industries, Inc. and certain executive officers and certain other subsidiary and divisional officers of Trinity Industries, Inc. (incorporated by reference to Exhibit 10.1.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2008).*
(10.2) Trinity Industries, Inc. Directors’Directors' Retirement Plan, as amended September 10, 1998 (incorporated by reference to Exhibit 10.2 of Registration Statement No. 333-117526 filed July 21, 2004).*
(10.2.1) Amendment No. 2 to the Trinity Industries, Inc. Directors’Directors' Retirement Plan (incorporated by reference to Exhibit 10.2.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2010).*
(10.2.2) Amendment No. 3 to the Trinity Industries, Inc. Directors’Directors' Retirement Plan (filed herewith)(incorporated by reference to Exhibit 10.2.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.3) 1993 Stock Option and Incentive Plan (incorporated by reference to Exhibit 4.1 of Registration Statement No. 33-73026 filed December 15, 1993).*
(10.3.1) Amendment No. 1 to the 1993 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.3.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.3.2) Amendment No. 2 to the 1993 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.3.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.3.3) Amendment No. 3 to the 1993 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.3.3 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.3.4) Amendment No. 4 to the 1993 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.3.4 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.3.5) Amendment No. 5 to the 1993 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.3.5 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.4) Supplemental Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates as restated effective January 1, 2005 (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).*
(10.5) Trust Agreement for Trinity Industries, Inc. Deferred Compensation Trust dated December 15, 2011 (filed herewith)(incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*


92
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INDEX TO EXHIBITS
Trinity Industries, Inc.
Index to Exhibits
(Item 15(b))

NO. 

DESCRIPTION

(10.6) Trust Agreement for Trinity Industries, Inc. Supplemental Profit Sharing and Directors Fee Trust dated December 15, 2011 (filed herewith)(incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.7) Supplemental Retirement Plan as Amended and Restated effective January 1, 2009 (incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008).*
(10.7.1) Amendment No. 1 to the Supplemental Retirement Plan as Amended and Restated effective January 1, 2009 (incorporated by reference to Exhibit 10.7.1 to our Form 8-K filed February 17, 2009).*
(10.8) Trinity Industries, Inc. Deferred Plan for Director Fees, as amended (incorporated by reference to Exhibit 10.9 of Registration Statement No. 333-117526 filed July 21, 2004).*
(10.8.1) Amendment to Trinity Industries, Inc. Deferred Plan for Director Fees dated December 7, 2005 (filed herewith)(incorporated by reference to Exhibit 10.8.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.8.2) Trinity Industries, Inc. 2005 Deferred Plan for Director Fees (filed herewith)(incorporated by reference to Exhibit 10,8.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.9) Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (incorporated by reference to Exhibit 4.2 of Registration Statement No. 333-77735 filed May 4, 1999).*
(10.9.1) Amendment No. 1 to the Trinity Industries, Inc. 1998 Stock Option Plan and Incentive Plan (incorporated by reference to Exhibit 10.9.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2009).*
(10.9.2) Amendment No. 2 to the Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.9.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2009).*
(10.9.3) Amendment No. 3 to the Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.9.3 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.9.4) Amendment No. 4 to the Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (filed herewith)(incorporated by reference to Exhibit 10.9.4 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.10) Amended and Restated Trinity Industries, Inc. 2004 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K filed May 4, 2010).*
(10.10.1) Form of Notice of Grant of Stock Options and Non-Qualified Option Agreement with Non-Qualified Stock Option Terms and Conditions as of September 8, 2004 (incorporated by reference to Exhibit 10.10.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2010).*
(10.10.1.1) Non-Qualified Stock Option Terms and Conditions as of December 6, 2005 (filed herewith)( incorporated by reference to Exhibit 10.10.1.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.10.1.2) Form of Notice of Grant of Stock Options and Non-Qualified Option Agreement with Non-Qualified Stock Option Terms and Conditions as of December 9, 2008 (incorporated by reference to Exhibit 10.11.1.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2008).*
(10.10.2) Form of Notice of Grant of Stock Options and Incentive Stock Option Agreement with Incentive Stock Option Terms and Conditions as of September 8, 2004 (incorporated by reference to Exhibit 10.10.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2010).*
(10.10.2.1) Incentive Stock Option Terms and Conditions as of December 6, 2005 (filed herewith)(incorporated by reference to Exhibit 10.10.2.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).*
(10.10.2.2) Form of Notice of Grant of Stock Options and Incentive Stock Option Agreement with Incentive Stock Option Terms and Conditions as of December 9, 2008 (incorporated by reference to Exhibit 10.11.2.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2008).*
(10.10.3) Form of Restricted Stock Grant Agreement for grants issued prior to 2008 (incorporated by reference to Exhibit 10.11.3 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).*
(10.10.3.1) Form of Restricted Stock Grant Agreement for grants issued commencing 2008 (incorporated by reference to Exhibit 10.11.3 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008).*
(10.10.4) Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (incorporated by reference to Exhibit 10.10.4 to our Annual Report on Form 10-K for the annual period ended December 31, 2010).*
(10.10.5) Form of Restricted Stock Unit Agreement for Non-Employee Directors for grants issued prior to 2008 (incorporated by reference to Exhibit 10.11.5 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).*

93
Table of Contents

INDEX TO EXHIBITS
Trinity Industries, Inc.
Index to Exhibits
(Item 15(b))

NO. DESCRIPTION
(10.10.5.1) Form of Restricted Stock Unit Agreement for Non-Employee Directors for grants issued commencing 2008 (incorporated by reference to Exhibit 10.11.5 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008).*
(10.10.6) Form of Performance Restricted Stock Unit Grant Agreement for grants issued commencing 2011 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).*

NO.

DESCRIPTION

(10.11) Supplemental Retirement and Director Retirement Trust of Trinity Industries, Inc. Supplemental Retirement Plan Trust (incorporated by reference to Exhibit 10.1110.1 to our AnnualQuarterly Report on Form 10-K10-Q/A for the annualquarterly period ended DecemberMarch 31, 2009)2012).*
(10.12) Form of 2008 Deferred Compensation Plan and Agreement as amended and restated entered into between Trinity Industries, Inc. and certain officers of Trinity Industries, Inc. or its subsidiaries (incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).*
(10.13) Trinity Industries, Inc. Short-Term Management Incentive Plan (incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).*
(10.14) Equipment Lease Agreement (TRL 1 2001-1A) dated as of May 17, 2001 between TRLI-1A Railcar Statutory Trust, lesser, and Trinity Rail Leasing I L.P., lessee (incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.14.1) Participation Agreement (TRL 1 2001-1A) dated as of May 17, 2001 among Trinity Rail Leasing I L.P., lessee, et. al. (incorporated by reference to Exhibit 10.15.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.14.2) Equipment Lease Agreement (TRL 1 2001-1B) dated as of July 12, 2001 between TRL 1 2001-1B Railcar Statutory Trust, lessor, and Trinity Rail Leasing I L.P., lessee (incorporated by reference to Exhibit 10.15.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.14.3) Participation Agreement (TRL 1 2001-1B) dated as of May 17, 2001 among Trinity Rail Leasing I L.P., lessee, et. al. (incorporated by reference to Exhibit 10.15.3 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.14.4) Equipment Lease Agreement (TRL 1 2001-1C) dated as of December 28, 2001 between TRL 1 2001-1C Railcar Statutory Trust, lessor, and Trinity Rail Leasing 1 L.P., lessee (incorporated by reference to Exhibit 10.15.4 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.14.5) Participation Agreement (TRL 1 2001-1C) dated as of December 28, 2001 among Trinity Rail Leasing 1 L.P., lessee, et. al. (incorporated by reference to Exhibit 10.15.5 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.15) Equipment Lease Agreement (TRL III 2003-1A) dated as of November 12, 2003 between TRL III-1A Railcar Statutory Trust, lessor, and Trinity Rail Leasing III L.P., lessee (incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.15.1) Participation Agreement (TRL III 2003-1A) dated as of November 12, 2003 between TRL III-1A among Trinity Rail Leasing III L.P., lessee, et. al. (incorporated by reference to Exhibit 10.16.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.15.2) Equipment Lease Agreement (TRL III 2003-1B) dated as of November 12, 2003 between TRL III-1B Railcar Statutory Trust, lessor, and Trinity Rail Leasing III L.P., lessee, (incorporated by reference to Exhibit 10.16.2 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.15.3) Participation Agreement (TRL III 2003-1B) dated as of November 12, 2003 between TRL III-1B among Trinity Rail Leasing III L.P., lessee, et. al. (incorporated by reference to Exhibit 10.16.3 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.15.4) Equipment Lease Agreement (TRL III 2003-1C) dated as of November 12, 2003 between TRL III-1C Railcar Statutory Trust, lessor, and Trinity Rail Leasing III L.P., lessee (incorporated by reference to Exhibit 10.16.4 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.15.5) Participation Agreement (TRL III 2003-1C) dated as of November 12, 2003 between TRL III-1C among Trinity Rail Leasing III L.P., lessee, et. al. (incorporated by reference to Exhibit 10.16.5 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.16) Equipment Lease Agreement (TRL IV 2004-1A) between TRL IV 2004-1A Statutory Trust, lessor, and Trinity Rail Leasing IV L.P., lessee (incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).
(10.16.1) Participation Agreement (TRL IV 2004-1A) among Trinity Rail Leasing IV, L.P., lessee, et. al (incorporated by reference to Exhibit 10.17.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2007).


94
Table of Contents

INDEX TO EXHIBITS
Trinity Industries, Inc.
Index to Exhibits
(Item 15(b))

NO. DESCRIPTION
(10.17) Third Amended and Restated Credit Agreement dated as of October 20, 2011 among Trinity Industries, Inc, as Borrower, JP Morgan Chase Bank, N.A., individually and as Administrative Agent, and certain other Lenders party thereto from time to time (filed herewith)(incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).
(10.18) Second Amended and Restated Warehouse Loan Agreement dated as of May 29, 2009 among Trinity Industries

NO.

DESCRIPTION

Leasing Company, Trinity Rail Leasing Warehouse Trust (formerly known as Trinity Rail Leasing Trust II), The Committed Lenders and the Conduit Lenders from time to time party hereto, Credit Suisse, New York Branch, as Agent, and Wilmington Trust Company, as Collateral Agent and Depositary (incorporated by reference to Exhibit 10.19 to our Form 8-K filed on June 2, 2009).
(10.18.1) Amendment No.1 to the Second Amended and Restated Warehouse Loan Agreement, dated February 4, 2011, amending the Second Amended and Restated of Warehouse Loan Agreement dated May 29, 2009 (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on February 8, 2011).
(10.19)(10.18.2) Amendment No. 3 to the Second Amended and Restated Warehouse Loan Agreement, dated February 1, 2013, amending the Second Amended and Restated Warehouse Loan Agreement dated May 29, 2009 (incorporated by reference to Exhibit 10.1 to our From 8-K filed on February 4, 2013).
(10.19) Term Loan Agreement dated as of May 9, 2008 among Trinity Rail Leasing VI LLC, the Committed Lenders and the Conduit Lenders From Time to Time Party Hereto, DVB Bank AG, as Agent, and Wilmington Trust Company; as Collateral and Depositary (incorporated by reference to Exhibit 10.20 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008).
(10.19.1) Purchase and Sale Agreement (TILC) dated as of May 9, 2008 among Trinity Industries Leasing Company, as Seller and Trinity Rail Leasing VI LLC, as Buyer (incorporated by reference to Exhibit 10.20.1 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008).
(10.19.2) Purchase and Sale Agreement (TRLT-II) dated as of May 9, 2008 among Trinity Rail Leasing Trust II, as Seller, Trinity Rail Leasing VI LLC, as Buyer and Trinity Industries Leasing Company (incorporated by reference to Exhibit 10.20.2 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008).
(10.20) Master Indenture dated November 5, 2009, between Trinity Rail Leasing VII LLC and Wilmington Trust Company, as indenture trustee (incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K for the annual period ended December 31, 2009).
(10.20.1) Purchase and Contribution Agreement, dated November 5, 2009, among Trinity Industries Leasing Company, Trinity Rail Leasing Warehouse Trust, and Trinity Rail Leasing VII L.L.C. (incorporated by reference to Exhibit 10.20.1 to our Annual Report on Form 10-K for the annual period ended December 31, 2009).
(10.21) Perquisite Plan beginning January 1, 2004 in which the Company’sCompany's Executive Officers participate (incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K for the annual period ended December 31, 2010).*
(10.22) Purchase and Contribution Agreement, dated May 18, 2006, among Trinity Industries Leasing Company, Trinity Leasing Trust II, and Trinity Rail Leasing V L.P. (filed herewith)(incorporated by reference to Exhibit 10.22 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).
(10.22.1) Master Indenture dated May 24, 2006, between Trinity Rail Leasing V L.P. and Wilmington Trust Company, as indenture trustee (filed herewith).
(10.23)Board Compensation Summary Sheet (incorporated by reference to Exhibit 10.27 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008).*
(10.24)

Retirement Transition Agreement between Trinity North American Freight Car, Inc. and Martin Graham (incorporated by reference to Exhibit 10.2810.22.1 to our Annual Report on Form

10-K for the annual period ended December 31, 2007)2011).*

(10.25)(10.23) Retirement Transition Agreement between Trinity Industries, Inc. and Mark W. Stiles (incorporated by reference to Exhibit 10.1 to our Form 8-K filed July 30, 2010)Board Compensation Summary Sheet (filed herewith).*
(10.26)(10.25) Indenture dated as of October 25, 2010, between Trinity Rail Leasing 2010 LLC and Wilmington Trust Company, as indenture trustee (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010).
(10.26.1)(10.25.1) Purchase and Contribution Agreement, dated as of October 25, 2010, among Trinity Rail Leasing Warehouse Trust, Trinity Industries Leasing Company, and Trinity Rail Leasing 2010 LLC (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010).
(10.26.2)(10.25.2) Note Purchase Agreement dated October 18, 2010 among Trinity Industries, Inc., Trinity Industries Leasing Company, Trinity Rail Leasing 2010 LLC, Credit Suisse Securities (USA) LLC, Lloyds TSB Bank PLC, Credit Agricole Securities (USA) Inc., Wells Fargo Securities, LLC, and Rabo Securities USA, Inc. (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010).


95
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INDEX TO EXHIBITS
Trinity Industries, Inc.
Index to Exhibits
(Item 15(b))

NO. (10.27)DESCRIPTION
(10.26) Note Purchase Agreement dated June 29, 2011, among Trinity Industries Leasing Company, TRIP Rail Holdings LLC, TRIP Rail Leasing LLC, and TRIP Rail Master Funding LLC, and Credit Suisse Securities (USA) LLC (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
(10.27.1)(10.26.1) Purchase and Contribution Agreement dated July 6, 2011, among TRIP Rail Leasing, LLC, Trinity Industries

NO.

DESCRIPTION

Leasing Company, TRIP Rail Master Funding LLC (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
(10.27.2)(10.26.2) Master Indenture dated July 6, 2011, among TRIP Rail Master Funding LLC and Wilmington Trust Company, as indenture trustee (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
(10.28)(10.27) Form of Indemnification Agreement between Trinity Industries, Inc. and certain directors and executive officers (incorporated by reference to Exhibit 10.28 to our Annual Report on Form 10-K for the annual period ended December 31, 2011).
(10.28)Note Purchase Agreement dated December 12, 2012, among Trinity Industries, Inc., Trinity Industries Leasing Company, Trinity Rail Leasing 2012 LLC, Credit Suisse Securities (USA) LLC, Credit Agricole Securities (USA) Inc., Lloyd's Securities Inc., Rabo Securities USA, Inc., and Wells Fargo Securities, LLC (filed herewith).
(12)(10.28.1) Master Indenture dated December 19, 2012, between Trinity Rail Leasing 2012 LLC and Wilmington Trust Company, as Indenture Trustee (filed herewith).
(10.28.2)Purchase and Contribution Agreement, dated December 19, 2012, among Trinity Rail Leasing Warehouse Trust, Trinity Industries Leasing Company, and Trinity Rail Leasing 2012 LLC (filed herewith).
(12) Computation of Ratio of Earnings to Fixed Charges (filed herewith).
(21) Listing of subsidiaries of Trinity Industries, Inc. (filed herewith).
(23) Consent of Ernst & Young LLP (contained on page 8790 of this document and filed herewith).
(31.1) Rule 13a-15(e) and 15d-15(e) Certification of the Chief Executive Officer (filed herewith).
(31.2) Rule 13a-15(e) and 15d-15(e) Certification of the Chief Financial Officer (filed herewith).
(32.1) Certification pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
(32.2) Certification pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
(95) Mine Safety Disclosure Exhibit (filed herewith).
101.INS XBRL Instance Document (filed electronically herewith)**
101.SCH XBRL Taxonomy Extension Schema Document (filed electronically herewith)**
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (filed electronically herewith)**
101.LAB XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith)**
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith)**
101.DEF XBRL Taxonomy Extension Definition Linkbase Document (filed electronically herewith)**

____________

*Management contracts and compensatory plan arrangements.
**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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