UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

~~(Mark One)~~


(Mark One)

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

~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004~~


		FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

		OR

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

		For the transition period from ___ to ___.

~~For the transition period from~~to.

Commission File Number 1-6903

Trinity Industries, Inc.

(Exact name of registrant as specified in its charter)


Delaware		75-0225040
(State of Incorporation)		(I.R.S. Employer Identification No.)

2525 Stemmons Freeway
Dallas, Texas		75207-2401
(Address of principal executive offices)		(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yesþ Noo.

At ~~October~~April 29, ~~2004~~2005 there were ~~47,557,191~~47,832,021 shares of the Registrant’s common stock outstanding.

Trinity Industries, Inc. and Subsidiaries
Consolidated ~~Statements of Operations~~Balance Sheets

Nine Months Ended September 30,
2004
2003
(unaudited)
(in millions except per share amounts)
Revenues $ 1,570.8 $ 1,018.3
Operating costs:
Cost of revenues 1,436.0 901.1
Selling, engineering and administrative expenses 123.2 108.1

1,559.2 1,009.2

Operating profit 11.6 9.1
Other (income) expense:
Interest income (9.5 ) (0.4 )
Interest expense 32.1 26.3
Other, net (1.7 ) (3.6 )

20.9 22.3

Loss before income taxes (9.3 ) (13.2 )
Provision (benefit) for income taxes (3.0 ) (4.0 )

Net loss (6.3 ) (9.2 )
Dividends on Series B preferred stock (2.3 ) (0.8 )

Net loss applicable to common shareholders $ (8.6 ) $ (10.0 )

Net loss applicable to common shareholders per common share:
Basic $ (0.19 ) $ (0.22 )

Diluted $ (0.19 ) $ (0.22 )

Weighted average number of shares outstanding:
Basic 46.4 45.6
Diluted 46.4 45.6


	March 31,			December 31,
	2005			2004
	(unaudited)			(as reported)
	(in millions)
Assets
Cash and cash equivalents	$	113.7		$	182.3

Receivables, net of allowance		281.8			214.2

Inventories:
Raw materials and supplies		275.0			248.0
Work in process		117.0			100.0
Finished goods		56.4			54.3

		448.4			402.3

Property, plant and equipment, at cost		1,578.8			1,520.9
Less accumulated depreciation		(719.2	)		(710.0	)

		859.6			810.9

Goodwill		420.4			420.4

Other assets		168.7			180.1

	$	2,292.6		$	2,210.2


Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	$	535.3		$	511.7

Debt:
Recourse		435.8			475.3
Non-recourse		134.4			42.7

		570.2			518.0

Deferred income		46.6			47.2
Other liabilities		64.1			62.2

		1,216.2			1,139.1

Series B redeemable convertible preferred stock, no par value, $0.1 liquidation value		58.3			58.2

Stockholders’ equity:

Preferred stock – 1.5 shares authorized and unissued		—			—

Common stock –shares authorized – 100.0; shares issued and outstanding at March 31, 2005 - 50.9; at December 31, 2004 – 50.9		50.9			50.9

Capital in excess of par value		432.6			432.6

Retained earnings		628.6			626.2

Accumulated other comprehensive loss		(23.1	)		(25.3	)

Treasury stock – at March 31, 2005 – 3.1 shares; at December 31, 2004 – 3.1 shares		(70.9	)		(71.5	)

		1,018.1			1,012.9

	$	2,292.6		$	2,210.2

See accompanying notes to consolidated financial statements.

Trinity Industries, Inc. and Subsidiaries
Consolidated ~~Balance Sheets~~Statements Cash Flows

September 30, December 31,
2004
2003
(unaudited) (as reported)
(in millions)
Assets

Cash and cash equivalents $ 154.2 $ 46.0
Receivables, net of allowance 263.4 198.1
Inventories:
Raw materials and supplies 231.2 158.4
Work in process 104.7 60.0
Finished goods 47.3 39.6

383.2 258.0
Property, plant and equipment, at cost 1,491.7 1,627.1
Less accumulated depreciation (699.8 ) (681.9 )

791.9 945.2
Goodwill 420.3 415.1
Other assets 167.7 145.5

$ 2,180.7 $ 2,007.9

Liabilities and Stockholders’ Equity

Accounts payable and accrued liabilities $ 484.5 $ 460.2
Debt:
Recourse 475.3 298.5
Non-recourse 47.1 96.7

522.4 395.2
Deferred income 44.4 32.2
Other liabilities 62.9 58.7

1,114.2 946.3
Series B redeemable convertible preferred stock, no par value, $0.1 liquidation value 58.1 57.8
Stockholders’ equity:
Preferred stock - 1.5 shares authorized and unissued — —
Common stock — shares issued and outstanding at September 30, 2004 - 50.9; at December 31, 2003 - 50.9 50.9 50.9
Capital in excess of par value 432.7 434.7
Retained earnings 632.8 649.9
Accumulated other comprehensive loss (26.4 ) (27.3 )
Treasury stock (3.4 shares at September 30, 2004 and 4.3 shares at December 31, 2003) (81.6 ) (104.4 )

1,008.4 1,003.8

$ 2,180.7 $ 2,007.9


	Three Months Ended March 31,
	2005			2004
	(unaudited)
	(in millions)
Operating activities:
Net income (loss)	$	6.0		$	(10.8	)
Adjustments to reconcile net income (loss) to net cash required by operating activities:
Depreciation and amortization		20.7			22.1
Deferred income taxes		3.6			(5.7	)
Gain on sale of property, plant, equipment and other assets		(1.6	)		(0.6	)
Other		(6.5	)		0.5
Changes in assets and liabilities:
Increase in receivables		(67.6	)		(37.5	)
Increase in inventories		(46.1	)		(16.8	)
Decrease (increase) in other assets		11.3			(6.8	)
Increase (decrease) in accounts payable and accrued liabilities		24.0			(15.2	)
Decrease in other liabilities		(3.0	)		(0.9	)

Net cash required by operating activities		(59.2	)		(71.7	)


Investing activities:
Proceeds from sale of property, plant, equipment and other assets		16.7			4.1
Capital expenditures – lease subsidiary		(67.8	)		(31.8	)
Capital expenditures – other		(6.4	)		(5.0	)
Payment for purchase of acquisitions, net of cash acquired		—			(15.7	)
Sale of investment in equity trust		—			8.5

Net cash required by investing activities		(57.5	)		(39.9	)


Financing activities:
Issuance of common stock		0.1			6.5
Payments to retire debt		(40.5	)		(177.6	)
Proceeds from issuance of debt		92.7			392.2
Dividends paid to common shareholders		(2.8	)		(2.8	)
Dividends paid to preferred shareholders		(1.4	)		(1.4	)

Net cash provided by financing activities		48.1			216.9


Net (decrease) increase in cash and cash equivalents		(68.6	)		105.3
Cash and cash equivalents at beginning of period		182.3			46.0

Cash and cash equivalents at end of period	$	113.7		$	151.3

Interest paid for the three months ended March 31, 2005 and 2004 was $17.3 million and $10.7 million, respectively. Taxes paid, net of refunds received, were $0.9 million and $4.0 million for the three months ended March 31, 2005 and 2004, respectively.

See accompanying notes to consolidated financial statements.

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

Nine Months Ended September 30,
2004
2003
(unaudited)
(in millions)
Operating activities:
Net loss $ (6.3 ) $ (9.2 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 66.5 64.7
Deferred income taxes (3.0 ) 26.6
Gain on sale of property, plant, equipment and other assets (4.4 ) (6.0 )
Other (5.6 ) 2.8
Changes in assets and liabilities:
Increase in receivables (65.6 ) (43.1 )
Decrease in tax receivable — 23.7
Increase in inventories (124.2 ) (12.3 )
(Increase) decrease in other assets (18.6 ) 9.4
Increase in accounts payable and accrued liabilities 24.4 21.2
Increase (decrease) in other liabilities 7.5 (12.1 )

Net cash (required) provided by operating activities (129.3 ) 65.7

Investing activities:
Proceeds from sale of property, plant, equipment and other assets 230.4 33.6
Capital expenditures — lease subsidiary (112.5 ) (188.5 )
Capital expenditures — other (24.4 ) (16.7 )
Payment for purchase of acquisitions, net of cash acquired (15.7 ) —
Sale of investment in equity trust 8.5 —

Net cash provided (required) by investing activities 86.3 (171.6 )

Financing activities:
Issuance of redeemable preferred stock — 57.6
Payments to retire debt (297.0 ) (145.6 )
Proceeds from issuance of debt 449.8 194.4
Proceeds from issuance of common stock, net 9.5 2.4
Dividends paid to common shareholders (8.4 ) (8.4 )
Dividends paid to preferred shareholders (2.7 ) —

Net cash provided by financing activities 151.2 100.4

Net increase in cash and cash equivalents 108.2 (5.5 )
Cash and cash equivalents at beginning of period 46.0 19.1

Cash and cash equivalents at end of period $ 154.2 $ 13.6


	Three Months Ended March 31,
	2005			2004
	(unaudited)
	(in millions, except par value
	and dividend per share)
Common Stock (par value $1.00)
Balance, beginning and end of period	$	50.9		$	50.9

Capital in Excess of Par Value
Balance, beginning of period		432.6			434.7
Restricted shares issued		—			(0.1	)
Stock options exercised		—			(3.1	)

Balance, end of period		432.6			431.5

Retained Earnings
Balance, beginning of period		600.9			622.6

Net income (loss)		6.0			(10.8	)
Other comprehensive income (loss):
Currency translation adjustments, net of tax		2.2			0.1
Unrealized loss on derivative financial instruments, net of tax		—			(0.4	)

Comprehensive net income (loss)		8.2			(11.1	)

Dividends on Common Stock ($0.06 per common share)		(2.8	)		(2.8	)
Dividends on Series B preferred stock		(0.8	)		(0.8	)

Balance, end of period		605.5			607.9

Treasury Stock
Balance, beginning of period		(71.5	)		(104.4	)
Restricted shares issued		0.5			0.6
Stock options exercised		0.1			9.6

Balance, end of period		(70.9	)		(94.2	)


Total Stockholders’ Equity	$	1,018.1		$	996.1

Interest paid for the nine months ended September 30, 2004 and 2003 was $30.6 and $26.3, respectively. Taxes paid, net of refunds received, were $5.9 for the nine months ended September 30, 2004 and taxes received, net of payments made were $43.5 for the nine months ended September 30, 2003.

See accompanying notes to consolidated financial statements.

~~Trinity Industries, Inc. and Subsidiaries~~
Notes to Consolidated Financial Statements
(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The foregoing consolidated financial statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. (“Trinity” or the “Company”). In the opinion of management, all adjustments, consisting only of normal and recurring adjustments necessary for a fair presentation of the financial position of the Company as of ~~September 30, 2004~~March 31, 2005 and the results of operations for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2005 and 2004, ~~and 2003,~~ and cash flows for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2005 and 2004, ~~and 2003,~~ in conformity with generally accepted accounting principles, have been made. Because of seasonal and other factors, the results of operations for the three-month ~~and nine-month periods~~period ended ~~September 30, 2004~~March 31, 2005 may not be indicative of expected results of operations for the year ending December 31, ~~2004.~~2005. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated financial statements of the Company included in its Form 10-K for the year ended December 31, ~~2003.~~2004.

Stock Based Compensation

The Company has elected to apply the accounting provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB No. 25) and its interpretations and, accordingly, no compensation expense has been recorded for the stock options. The effect of computing compensation expense in accordance with Statement of Accounting Standards No. 123, “Accounting for Stock Based Compensation,” using the Black-Scholes option pricing method for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2005 and 2004 ~~and 2003 are~~is shown in the accompanying ~~table (in millions)~~table.


	Three Months Ended
	March 31,
	2005			2004
	(in millions)
Pro forma
Net income (loss) applicable to common shareholders, as reported	$	5.2		$	(11.6	)

Add: Stock compensation expense related to restricted stock, net of related income tax effect		0.5			0.5

Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related income tax effects		(1.1	)		(1.2	)


Pro forma net income (loss) applicable to common shareholders	$	4.6		$	(12.3	)


Pro forma net income (loss) applicable to common shareholders per diluted share	$	0.10		$	(0.27	)


Net income (loss) applicable to common shareholders per diluted share – as reported	$	0.11		$	(0.25	)

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payments”. SFAS No. 123R is a revision of SFAS No. 123, “Accounting for Stock Based Compensation”, and supersedes APB 25. Among other items, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is currently the beginning of the next fiscal year that begins after June 15, 2005, which is the first quarter of the Company’s year ending December 31, 2006. The Company currently expects to adopt SFAS 123R using the “modified prospective” method. Under the modified prospective method, compensation expense is recognized in

the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Financial information for periods prior to the date of adoption of SFAS 123R would not be restated. The Company currently utilizes a standard option pricing model (i.e., Black-Scholes) to measure the fair value of stock options granted to employees. While SFAS 123R permits entities to use other models, the Company has not yet determined which model will be used to measure the fair value of awards of equity instruments to employees upon the adoption.

The impact of SFAS 123R on the Company’s results of operations cannot be predicted at this time, because it will depend on the number of equity awards granted in the future, as well as the model and assumptions used to value the awards.

SFAS 123R also requires that the benefits associated with the tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. Future amounts cannot be estimated because they depend on, among other things, when employees exercise stock options. However, the amounts recognized in prior periods for such excess tax deductions were not material for the three month periods ended March 31, 2005 and 2004.

Diluted net income applicable to common shareholders is based on the weighted average shares outstanding plus the dilutive impact of stock options and Series B preferred stock. Basic net income applicable to common shareholders is based on the weighted average number of common shares outstanding for the period. The numerator for both basic ~~net income (loss) applicable to common shareholders is net income (loss) adjusted for dividends on the Series B preferred stock in 2004~~ and ~~2003. The numerator for~~ diluted net income (loss) applicable to common shareholders is net income (loss), adjusted for dividends on the Series B preferred stock in ~~2004~~2005 and ~~2003.~~2004. The difference between the denominator in the basic calculation and the denominator in the diluted calculation for the three months ended ~~September 30, 2004 and September 30, 2003~~March 31, 2005 was

attributable to the effect of employee stock options. Employee stock options were antidilutive for ~~all other periods presented.~~the three months ended March 31, 2004. The assumed conversion of the Series B preferred stock was antidilutive for all periods presented and therefore not considered in the diluted net income (loss) per common share calculation.

~~Reclassifications~~

~~Certain reclassifications have been made to prior year statements to conform to the current period presentation.~~

Note 2. Segment Information

The Company reports operating results in the following business segments: (1) the Rail Group, which manufactures and sells railcars and component parts; (2) the ~~Constructions~~Construction Products Group, which manufactures and sells highway safety products, concrete and aggregates, girders and beams used in the construction of highway and railway bridges, and weld fittings used in pressure piping systems; (3) the Inland Barge Group, which manufactures and sells barges and related products for inland waterway services; (4) the Industrial Products Group, which manufactures and sells tank heads and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products; and (5) the Railcar Leasing and Management Services Group, which provides fleet management, maintenance and leasing services. Finally, All Other includes the Company’s captive insurance and transportation companies, structural towers, and other peripheral businesses.

Sales and related profits from the Rail Group to Railcar Leasing and Management Services Group are recorded in Rail Group and eliminated in consolidation. Sales of railcars from the lease fleet are included in the Railcar Leasing and Management Services Group. Sales between groups are recorded at prices comparable to those charged to external customers.

Three Months Ended ~~September 30, 2004 (in millions)~~March 31, 2005


																				Operating
	Revenues								Operating			Revenues								Profit
									Profit			Outside		Intersegment			Total			(Loss)
	Outside		Intersegment			Total			(Loss)			(in millions)
Rail Group	$	279.8	$	35.4		$	315.2		$	(14.5	)	$	361.8	$	72.6		$	434.4		$	8.8
Construction Products Group		170.3		0.5			170.8			18.5			142.8		0.3			143.1			6.7
Inland Barge Group		46.2		—			46.2			(1.7	)		44.9		—			44.9			(3.4	)
Industrial Products Group		33.0		2.0			35.0			4.5			33.5		2.2			35.7			4.6
Railcar Leasing and Management Services Group		36.5		—			36.5			7.9			52.5		—			52.5			13.6
All Other		1.4		7.9			9.3			(1.7	)		11.4		9.0			20.4			(1.3	)
Corporate		—		—			—			(7.2	)		—		—			—			(6.6	)
Eliminations		—		(45.8	)		(45.8	)		(2.0	)		—		(84.1	)		(84.1	)		(4.5	)

Consolidated Total	$	567.2	$	—		$	567.2		$	3.8		$	646.9	$	—		$	646.9		$	17.9

The following table summarizes the components of property, plant and equipment as of ~~September 30, 2004~~March 31, 2005 and December 31, ~~2003 (in millions).~~2004.

The Company had a deposit agreement with Altos Hornos de Mexico, SA de C.V. (“AHMSA”) that provided funds on deposit with AHMSA that were used along with other funds from the Company to purchase steel from AHMSA. The balance of this deposit has been collected in full, including $8.1 million of accrued interest which was recognized as income on a cash basis in the quarter ended September 30, 2004.

In ~~March 2004,~~April 2005, the ~~Company issued $300~~$250 million aggregate principal amount 6 1/2% senior notes (Senior Notes) due 2014, through a private offering. Interest on the Senior Notes is payable semiannually commencing September 15, 2004. The Senior Notes rank equally with all of the Company’s existingrevolving credit facility was extended and future senior debt and are subordinated to all the Company’s existing and future secured debt to the extent of the value of the assets securing such debt. The Company may redeem some or all of the Senior Notes at any time on or after March 15, 2009 at a redemption price of 103.25% in 2009, 102.167% in 2010, 101.083% in 2011 and 100.0% in 2012 and thereafter plus accrued interest. The Company may also redeem up to 35% of the aggregate principal amount of the Senior Notes using the proceeds from certain public equity offerings completed on or before March 15, 2007 at a redemption price of 106.5% of the principal amount plus accrued and unpaid interest. The Senior Notes could restrict the Company’s ability to incur additional debt; make certain distributions, investments and other restricted payments; create certain liens; merge; consolidate; or sell substantially all or a portion of its assets. The Company applied approximately $163 million of the net proceeds of the offering to repay all indebtedness under its existing bank credit facility. In September 2004, as required by the contract with the purchasers of the Senior Notes due 2014, the Company made an offer to exchange all of the privately placed Senior Notes for an equal principal amount of the Senior Notes due 2014, which are registered with the Security and Exchange Commission and have substantially identical terms. As of September 30, 2004 all of the privately placed Senior Notes were exchanged for Senior Notes due 2014.

~~In connection with the issuance of the Senior Notes, the Company extended its secured credit agreement~~expanded to provide for a ~~three-year, $250~~five-year, $350 million secured revolving credit facility. ~~Amounts borrowed under~~Two of the ~~revolving credit facility for periods after~~financial covenants, the ~~first quarter of 2004 will bear interest at LIBOR plus a margin based upon financial performance. The Company’s accounts receivable~~asset coverage ratio and ~~inventory secure~~ the ~~agreement. The agreement limits the amount of~~ capital expenditures ~~related to~~limitation, were eliminated, while the ~~Company’s leasing business, requires maintenance of ratios related to interest coverage for the leasing and manufacturing operations,~~permitted leverage ~~asset coverage and minimum net worth, and restricts the amount of dividend payments based upon the~~

~~current credit rating of the Company not to exceed $25 million annually.~~ratio was increased. At ~~September 30, 2004,~~March 31, 2005, there were no borrowings under the revolving credit facility.

Trinity Industries Leasing Company (“TILC”), through a wholly owned and consolidated business trust, has ~~$47.1~~$134.4 million outstanding of a $300 million non-recourse warehouse facility to finance or refinance railcars acquired or owned by TILC. The warehouse facility ~~is due~~matures in August 2005 and unless renewed, outstanding borrowings would be payable in three equal installments in February 2006, August 2006, and February 2007. Railcars financed by the warehouse facility have historically been refinanced under long-term financing agreements. Specific railcars and the underlying leases secure the facility. Advances under the facility may not exceed 75% of the fair market value of the eligible railcars securing the facility as defined by the agreement. Advances under the facility bear interest at LIBOR plus ~~1.375% (3.0524%~~a margin (for an all in rate of 4.09% at ~~September 30, 2004)~~March 31, 2005). At ~~September 30, 2004, $252.9~~March 31, 2005, $165.6 million was available under this facility.

As of December 31, 2003, the Railcar Leasing and Management Services Group (“Leasing Group”) had an equity ownership in a trust formed to finance the purchase of railcars. This trust was capitalized with $9.5 million from the Leasing Group and outside debt of $25.6 million. Because this trust is a variable interest entity for which the equity investor is the primary beneficiary, the financial statements of the trust were consolidated with the Company’s financial statements as of and for the year ended December 31, 2003. In February 2004, the Leasing Group sold its equity ownership in the trust to a third party. Consequently, the trust, including the non-recourse debt of $25.6 million, is no longer consolidated in the Company’s financial statements.

Terms and conditions of other debt are described in the Annual Report.

The remaining principal payments under existing debt agreements as of ~~September 30, 2004~~March 31, 2005 are as ~~follows (in millions):~~follows:


													Remaining
	Remaining												nine months
	three months of												of 2005		2006		2007		2008		2009		Thereafter
	2004		2005		2006		2007		2008		Thereafter		(in millions)
Recourse:
Corporate/Manufacturing	$	0.2	$	1.0	$	0.3	$	0.3	$	0.1	$	303.4	$	0.9	$	0.8	$	0.5	$	0.1	$	—	$	303.4
Leasing — equipment trust certificates (Note 7)		—		39.9		10.3		43.4		14.2		62.2
Leasing – equipment trust certificates (Note 6)														—		10.3		43.5		14.2		62.1		—

Non-recourse:
Leasing -warehouse facility (Note 7)		0.4		1.0		30.5		15.2		—		—
Leasing –warehouse facility (Note 6)														1.6		88.5		44.3		—		—		—

Total principal payments	$	0.6	$	41.9	$	41.1	$	58.9	$	14.3	$	365.6	$	2.5	$	99.6	$	88.3	$	14.3	$	62.1	$	303.4

Three Months Ended Nine Months Ended
September 30,
September 30,
2004
2003
2004
2003
Statement of Operations

Revenues $ 36.5 $ 29.9 $ 143.3 $ 112.7
Operating Profit $ 7.9 $ 9.3 $ 31.9 $ 30.5

The decline in the Leasing Group operating profit for the three months ended September 30, 2004 was due to the refinancing of railcars under the non-recourse warehouse facility with long-term, fixed rate, off-balance sheet, sale/leaseback financings in November 2003 and August 2004 which effectively converted interest expense (which is not deducted from operating profit) to lease expense (which is deducted from operating profit).

Interest expense, which is not a component of operating profit, was ~~$4.7~~$4.3 million and ~~$14.0~~$4.6 million for the three months ended March 31, 2005 and ~~nine month periods ended September 30,~~ 2004, ~~and $4.1 and $12.2 for the same periods last year.~~

During the quarter ended September 30, 2004, the Leasing Group completed a transaction whereby $180.1 million of railcars were sold to independent trusts. These trusts financed the purchase of the railcars with $134.0 million in debt and $46.1 million in third party equity. The equity participants in the trusts are the primary beneficiaries of the trusts. The Leasing Group, through a newly formed, wholly owned qualified subsidiary, leased railcars from the trusts under operating leases with terms of 22 years and subleased the railcars to independent third parties under shorter term operating leases. This qualified subsidiary had total assets of $49.7 million as of September 30, 2004 including cash of $6.1 million, and Leasing Group railcars of $43.6 million. The 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 subsidiary’s lease obligations. Under the terms of the operating lease agreement, the Leasing Group has options to purchase at a predetermined, fixed price, certain of the railcars from the trusts in 2019. The Leasing Group also has options to purchase the railcars at the end of the lease agreement at the then fair market value of the railcars as determined by a third party, independent appraisal. At the expiration of the operating lease agreement, the Leasing Group’s qualified subsidiary has no further obligation.. An independent trustee for the trust has authority for appointment of the railcar fleet manager, which at September 30, 2004 was TILC. As fleet manager, TILC is required 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. TILC receives management fees under the terms of the agreement for services it provides. 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 third parties leases, to be available to Trinity. The sales of railcars by Trinity to the trusts were accounted for as a sale/leaseback transaction. No revenue or profit was recorded at the time of the transactions and all profit was deferred and is being amortized over the terms of the operating leases. Neither the assets, the liabilities, nor equity of the trusts are reflected on the balance sheet of Trinity.respectively.

Equipment ~~on lease, as shown in the table above,~~ consists primarily of railcars leased toby third parties. The Leasing Group enters into lease contracts with third parties with terms generally ranging between one and twenty years, wherein equipment manufactured by Trinity is leased for a specified type of service over the term of the lease.

~~As lessor, the~~ The Company primarily enters into operating leases. Future minimum rental revenues ~~to be received by the Company~~ on ~~such leases, including the~~ leases in ~~the transaction described above, as of September 30, 2004~~each year are ~~as follows:~~(in millions): the remaining ~~three~~nine months of ~~2004 — $25.9 million;~~ 2005 — ~~$95.9 million;~~$83.7; 2006 — ~~$82.9 million;~~$101.8; 2007 — ~~$71.9 million;~~$89.3; 2008 — ~~$59.6~~$73.0; 2009 — $59.7 and $286.6 thereafter. Leasing Group equipment with a net book value of $471.4 million ~~and $316.4 million thereafter.~~is pledged as collateral for debt.

The Leasing Group’s debt consists of both recourse and non-recourse debt. See Note 65 for maturities ~~for~~of the debt. ~~Leasing Group equipment with a~~

Note 7. Other, Net

Other, net ~~book value~~consists of ~~$304.9 million is pledged as collateral for debt.~~other (income) expense of the following items:


	Three Months Ended
	March 31,
	2005			2004
	(in millions)
Gain on sale of property, plant and equipment	$	(1.6	)	$	(0.6	)
Foreign currency exchange transactions		(0.2	)		0.8
Loss on equity investments		0.3			—
Other		(0.1	)		(0.1	)

Other, net	$	(1.6	)	$	0.1

1311

The Company contributed ~~$13.2~~$1.1 million ~~and $8.8 million, respectively,~~ to the Company’s defined benefit pension ~~plan~~plans for the three month ~~periods~~period ended ~~September 30, 2004 and 2003 and $16.8 million and $9.3 million, respectively,~~March 31, 2005. No contributions were made to the Company’s defined benefit pension plans for the ~~nine~~three month ~~periods~~period ended ~~September 30, 2004 and 2003.~~March 31, 2004. Total contributions to the Company’s pension ~~plan~~plans in ~~2004~~2005 are expected to be approximately ~~$17.8~~$5.4 million.

The Company and its wholly owned subsidiary, Trinity Marine Products, Inc. (“TMP”), settled a lawsuit filed by Florida Marine Transporters, Inc. (“FMT”) related to twenty-eight tank barges owned and/or operated by FMT. The settlement involves, among other elements, a joint monitoring of the barge coatings and void compartment maintenance procedures, and a mutual release of all claims against one another.

~~The Company and TMP,~~ and certain material suppliers and others, are named as co-defendants in ~~four~~two separate lawsuits ~~filed~~alleging same or similar causes of action related to defects in coating materials supplied by ~~multiple plaintiffs on various dates.~~a co-defendant and coatings selection, application and workmanship by TMP. In one of ~~these four~~the cases filed by Waxler Transportation Company, Inc. (“Waxler”), the plaintiff has petitioned the court for certification of a class which, if certified by the court, could increase the total number of barges involved in that case. Absent certification of the class, the current class representative owns four ~~suits involve 24~~ tank barges sold at an average price of approximately $1.4 ~~million,~~million. Legal counsel for the Company and ~~140~~TMP has advised that factual disputes exist regarding the legal merits of class certification. The other case filed by Marquette Transportation Company and Iowa Fleeting Services, Inc. (“Marquette”), involves 84 hopper barges sold at an average price of approximately $280,000. ~~All four cases allege similar causes of action related~~In each case discovery has yet to ~~defects in coating materials supplied by a co-defendant~~be concluded and ~~coatings application workmanship by TMP.~~neither case is set for trial. The plaintiffs seek both compensatory and punitive damages and/or rescission of the barge purchase contracts. Independent experts investigating the claims have expressed the opinion that ~~technical arguments presented by~~ the ~~plaintiffs in this litigation are~~plaintiffs’ assertion the coating applied to the barges is a food source for microbiologically influenced corrosion is without merit. Factual disputes concerning the allegations of the cause, nature, and extent of alleged corrosion in the barges exist between the parties. The Company and TMP are defending these cases vigorously. As of September 30, 2004, one of the plaintiffs owes TMP approximately $8.9 million related to contracts for barges not involved in the litigation. TMP has filed suit for collection of the past due amount.

In ~~a proceeding unrelated to the foregoing litigation,~~April 2005 the Company and TMP ~~filed~~settled a case involving tank barges. Under the terms of the settlement agreement the plaintiff and Trinity Marine Leasing, Inc. (the barge leasing subsidiary of the Company) will enter into a sale and lease-back of a limited number of tank barges coupled with a sale by TMP to the plaintiff of a like number of new barges. In a separate mediation conducted in April 2005, the Company and TMP reached an agreement in principle resolving a barge case involving hopper barges. The terms of this agreement in principle provide for a purchase by Trinity Marine Leasing, Inc. of certain barges owned by plaintiff and plaintiff’s payment to TMP of the plaintiff’s outstanding receivable.

In the April 2005 mediation the Company and TMP also reached an agreement in principle resolving a separate declaratory judgment ~~action petitioning~~l proceeding filed by the Company and TMP seeking declaration by the Court ~~to declare~~of the Company’s and TMP’s obligations related to allegations of certain barge owners ~~as to~~regarding tank barge exterior coatings and coatings application ~~on 65 tank barges~~ and TMP’s rights and remedies relative to an insurance policy in which TMP was named as an additional insured (which policy is applicable to the coatings on the 65subject tank barges). ~~On December 9, 2003,~~The tank barge owners’ response pleading seeking actual and punitive damages was also resolved.

For the agreements noted above and unrelated barge ~~owners filed~~warranty matters, a ~~response proceeding to~~provision of $3.3 million was recorded during the ~~declaratory judgment action claiming actual damages of $6.5 million and~~three month period ended March 31, 2005.

~~punitive damages of $10 million.~~Other Litigation

A subsidiary of the Company, Transit Mix Concrete and Materials Company, Inc. (“Transit Mix”), is named as a defendant in a case involving the death of an employee of an independent contractor following an accident that occurred while the decedent was working at a ~~Company owned~~Transit Mix facility. Following a jury verdict in favor of the plaintiff, the presiding judge entered a final judgment ~~in the amount of $38.1 million (inclusive of~~that together with fees, costs and judgment ~~interest).~~interest now totals $39.9 million. This case has been appealed by Transit Mix and its insurers. Management believes liability in this case, if any, exceeding $3.0 million, will be covered by insurance. The appellate court has informed the parties that the appeal is stayed pending further mediation between the parties.

The Company is also involved in other claims and lawsuits incidental to its business. Based on information currently available, it is management’s opinion that the ultimate outcome of all current litigation and other claims, including settlements, in the aggregate will not have a material adverse effect on the Company’s overall financial condition for purposes of financial reporting. However, resolution of certain claims or lawsuits by settlement or otherwise could have a significant impact on the operating results of the reporting period in which such resolution occurs.

The Company is subject to federal, state, local, and foreign laws and regulations relating to the environment and to the workplace. The Company believes that it is currently in substantial compliance with such laws and regulations.

The Company is involved in various proceedings relating to environmental matters. The Company has reserved ~~$12.6~~$10.3 million to cover probable and estimable liabilities of the Company with respect to investigation and remedial response to such matters, taking into account currently available information and the Company’s contractual rights to indemnification. However, estimates of future remedial response costs are necessarily imprecise. Accordingly, there can be no assurance that the Company will not become involved in future environmental litigation or other proceedings or, if the Company were found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company.

Note ~~11:~~10. Financial Statements for Guarantors of the Senior Notes

On March 10, 2004, $300,000,000 of Senior Notes due 2014 were issued by Trinity Industries, Inc. (Parent) which includes the corporate operations and certain operations of the Construction Products Group and the Industrial Products Group. The Senior Notes are fully and unconditionally and jointly and severally guaranteed by certain of Trinity’s wholly owned subsidiaries: Transit Mix Concrete & Material Company, Trinity Industries Leasing Company, Trinity Marine Products, Inc., Trinity Rail Group, LLC, Thrall Trinity Freight Car, Inc., Trinity Tank Car, Inc., and Trinity Rail Components and Repair, Inc. No other subsidiaries guarantee the Senior Notes. As of ~~September 30, 2004,~~March 31, 2005, assets held by the non guarantor subsidiaries include ~~$44.4~~$50.8 million of restricted assets that are not available for distribution to the Parent, ~~$57.7~~$179.3 million of assets securing certain debt held by the non guarantor subsidiaries, and ~~$254.2~~$285.4 million of assets located in foreign locations.

~~Condensed Consolidating Statements~~Statement of ~~Income for~~Operations
For the Three Months Ended ~~September 30, 2004~~March 31, 2005


																				Combined
																	Combined			Non
				Combined		Combined											Guarantor			Guarantor
				Guarantor		Non Guarantor								Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated		(in millions)
Revenues	$	89.7		$	335.1	$	183.8		$	(41.4	)	$	567.2	$	104.2		$	363.9		$	216.2		$	(37.4	)	$	646.9
Operating costs:
Cost of revenues		67.0			308.4		185.5			(41.4	)		519.5
Cost of sales															90.8			319.7			209.6			(37.4	)		582.7
Selling, engineering and administrative expenses		12.9			18.6		12.4			—			43.9		13.5			22.1			10.7			—			46.3

		79.9			327.0		197.9			(41.4	)		563.4		104.3			341.8			220.3			(37.4	)		629.0

Operating profit (loss)		9.8			8.1		(14.1	)		—			3.8		(0.1	)		22.1			(4.1	)		—			17.9
Other (income) expense		9.5			1.4		(13.0	)		4.2			2.1
Other (income) expense:
Interest income															0.8			(1.1	)		(0.2	)		—			(0.5	)
Interest expense															8.9			4.6			(3.1	)		—			10.4
Equity in earnings of subsidiaries															(9.5	)		(2.9	)		—			12.4			—
Other, net															0.1			(0.2	)		(1.5	)		—			(1.6	)

															0.3			0.4			(4.8	)		12.4			8.3

Income (loss) before income taxes		0.3			6.7		(1.1	)		(4.2	)		1.7		(0.4	)		21.7			0.7			(12.4	)		9.6
Provision (benefit) for income taxes		(0.6	)		2.5		(1.1	)		—			0.8		(6.4	)		9.1			0.9			—			3.6

Net income (loss)	$	0.9		$	4.2	$	—		$	(4.2	)	$	0.9	$	6.0		$	12.6		$	(0.2	)	$	(12.4	)	$	6.0

~~Condensed Consolidating Statements~~Balance Sheet
December 31, 2004


						Combined
			Combined			Non
			Guarantor			Guarantor
	Parent		Subsidiaries			Subsidiaries		Eliminations			Consolidated
	(in millions)
Assets:
Cash	$	138.3	$	0.4		$	43.6	$	—		$	182.3
Accounts receivable		57.1		98.1			59.0		—			214.2
Inventory		58.4		200.5			143.4		—			402.3
Property and equipment, net		51.4		374.8			384.7		—			810.9
Investments in subsidiaries/ intercompany receivable (payable), net		1,181.8		(260.3	)		60.3		(981.8	)		—
Other		173.6		354.5			175.4		(103.0	)		600.5

	$	1,660.6	$	768.0		$	866.4	$	(1,084.8	)	$	2,210.2

Liabilities:
Accounts payable and accrued liabilities	$	219.8	$	154.4		$	137.5	$	—		$	511.7
Deferred income		33.5		3.0			10.7		—			47.2
Other liabilities		31.7		119.1			14.4		(103.0	)		62.2
Debt		304.5		170.0			43.5		—			518.0
Redeemable convertible preferred stock		58.2		—			—		—			58.2
Total stockholders’ equity		1,012.9		321.5			660.3		(981.8	)		1,012.9

	$	1,660.6	$	768.0		$	866.4	$	(1,084.8	)	$	2,210.2

Statement of ~~Income for~~Cash Flows
For the ~~Nine~~Three Months Ended ~~September 30, 2003~~March 31, 2005

Combined Combined
Guarantor Non Guarantor
Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Revenues $ 151.4 $ 465.3 $ 446.1 $ (44.5 ) $ 1,018.3
Operating costs:
Cost of revenues 109.7 398.9 437.0 (44.5 ) 901.1
Selling, engineering and administrative Expenses 36.2 42.2 29.7 — 108.1

145.9 441.1 466.7 (44.5 ) 1,009.2

Operating profit (loss) 5.5 24.2 (20.6 ) — 9.1
Other (income) expense 19.5 12.7 (11.7 ) 1.8 22.3

Income (loss) before income taxes (14.0 ) 11.5 (8.9 ) (1.8 ) (13.2 )
Provision (benefit) for income taxes (4.8 ) 3.3 (2.5 ) — (4.0 )

Net income (loss) $ (9.2 ) $ 8.2 $ (6.4 ) $ (1.8 ) $ (9.2 )


							Combined
				Combined			Non
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations		Consolidated
	(in millions)
Net cash (used) provided by operating activities	$	(58.1	)	$	(28.9	)	$	27.8		$	—	$	(59.2	)
Net cash (required) provided by investing activities		(1.7	)		68.4			(124.2	)		—		(57.5	)
Net cash (required) provided by financing activities		(3.6	)		(39.9	)		91.6			—		48.1

Net (decrease) increase in cash and cash equivalents		(63.4	)		(0.4	)		(4.8	)		—		(68.6	)
Cash and equivalents at beginning of period		138.3			0.4			43.6			—		182.3

Cash and equivalents at end of period	$	74.9		$	—		$	38.8		$	—	$	113.7

~~Condensed Consolidating Balance Sheets as of September 30, 2004~~

Combined Combined
Guarantor Non Guarantor
Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Assets

Cash and cash equivalents $ 106.0 $ 0.9 $ 47.3 $ — $ 154.2
Receivables, net of allowance 81.5 143.9 38.0 — 263.4
Inventories 56.1 204.1 123.0 — 383.2
Property, plant and equipment, net 52.3 357.4 382.2 — 791.9
Investments in subsidiaries / intercompany receivable (payable), net 1,111.5 (242.8 ) 100.4 (969.1 ) —
Other assets 205.1 354.1 156.5 (127.7 ) 588.0

$ 1,612.5 $ 817.6 $ 847.4 $ (1,096.8 ) $ 2,180.7

Liabilities and Stockholders’ Equity

Accounts payable and accrued liabilities $ 181.0 $ 178.8 $ 124.7 $ — $ 484.5
Deferred income 28.2 3.0 13.2 — 44.4
Other liabilities 32.4 163.3 (5.1 ) (127.7 ) 62.9
Debt 304.4 170.1 47.9 — 522.4
Redeemable convertible preferred stock 58.1 — — — 58.1
Total stockholder’s equity 1,008.4 302.4 666.7 (969.1 ) 1,008.4

$ 1,612.5 $ 817.6 $ 847.4 $ (1,096.8 ) $ 2,180.7

~~Condensed Consolidating Balance Sheets as of December 31, 2003~~

Combined Combined
Guarantor Non Guarantor
Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Assets
��
Cash and cash equivalents $ 31.5 $ 1.0 $ 13.5 $ — $ 46.0
Receivables, net of allowance 51.1 97.5 49.5 — 198.1
Inventories 19.8 127.9 110.3 — 258.0
Property, plant and equipment, net 60.0 458.2 427.0 — 945.2
Investments in subsidiaries / intercompany receivable (payable), net 1,050.4 (266.0 ) 168.3 (952.7 ) —
Other assets 194.6 351.7 141.3 (127.0 ) 560.6

$ 1,407.4 $ 770.3 $ 909.9 $ (1,079.7 ) $ 2,007.9

Liabilities and Stockholder’ Equity

Accounts payable and accrued liabilities $ 171.0 $ 154.3 $ 134.9 $ — $ 460.2
Deferred income 18.6 3.1 10.5 — 32.2
Other liabilities 29.0 152.6 4.1 (127.0 ) 58.7
Debt 127.2 170.2 97.8 — 395.2
Redeemable convertible preferred stock 57.8 — — — 57.8
Total stockholder’s equity 1,003.8 290.1 662.6 (952.7 ) 1,003.8

$ 1,407.4 $ 770.3 $ 909.9 $ (1,079.7 ) $ 2,007.9

~~Condensed Consolidating Statements~~Statement of Cash ~~Flow for~~Flows
For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2004

Combined Combined
Guarantor Non Guarantor
Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated

Net cash provided (required) by operating activities $ (104.8 ) $ (88.1 ) $ 63.6 $ — $ (129.3 )
Net cash provided (required) by investing activities 3.7 88.1 (5.5 ) — 86.3
Net cash provided by financing activities 175.6 (0.1 ) (24.3 ) — 151.2

Net increase in cash and cash equivalents 74.5 (0.1 ) 33.8 — 108.2
Cash and cash equivalents at beginning of period 31.5 1.0 13.5 — 46.0

Cash and cash equivalents at end of period $ 106.0 $ 0.9 $ 47.3 $ — $ 154.2


							Combined
				Combined			Non
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations		Consolidated
	(in millions)
Net cash (used) provided by operating activities	$	(83.6	)	$	(3.7	)	$	15.6		$	—	$	(71.7	)
Net cash provided (required) by investing activities		3.0			3.2			(46.1	)		—		(39.9	)
Net cash provided (required) by financing activities		179.7			(0.1	)		37.3			—		216.9

Net increase (decrease) in cash and cash equivalents		99.1			(0.6	)		6.8			—		105.3
Cash and equivalents at beginning of period		31.5			1.0			13.5			—		46.0

Cash and equivalents at end of period	$	130.6		$	0.4		$	20.3		$	—	$	151.3

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion should be read in conjunction with the unaudited consolidated financial statements and related notes thereto appearing elsewhere in this document.

Three Months Ended ~~September 30, 2004~~March 31, 2005 Compared with Three Months Ended ~~September 30, 2003~~March 31, 2004 — Results of Operations

Our consolidated net income for the three months ended ~~September 30, 2004~~March 31, 2005 was ~~$0.9~~$6.0 million compared to a net ~~income~~loss of ~~$1.8~~$10.8 million for the same period last year. Net income applicable to common shareholders for the three months ended ~~September 30, 2004~~March 31, 2005 was ~~$0.1~~$5.2 million ($~~0.00~~0.11 per diluted share) as compared to ~~$1.0~~a net loss of $11.6 million ($~~0.02~~0.25 per diluted share) for the three months ended ~~September 30, 2003.~~March 31, 2004. The difference between net income and net income applicable to common shareholders for the three months ended ~~September 30,~~March 31, 2005 and 2004 ~~and 2003~~ was the $0.8 million in accrued dividends and accreted discount costs on the Series B preferred stock.

Revenues. Revenues were ~~$567.2~~$646.9 million for the three months ended ~~September 30, 2004~~March 31, 2005 compared to ~~$363.4~~$454.9 million for the three months ended ~~September 30, 2003.~~March 31, 2004. The increase was primarily due to a significant increase in outside sales by the Rail Group. ~~The~~Additionally, the increase in revenues for the Construction Products Group was the result of increased market ~~demand in the Highway Safety and Fittings businesses and the acquisitions made by Concrete and Aggregates business during the latter part of 2003 and early 2004.~~demand. The increased revenue from the Railcar Leasing and Management Services Group was athe result of an increase in fleet sales, an increase in the size of the fleet, ~~as well as~~and an improvement in ~~utilization and an increase in lease fleet sales.~~utilization.

The following table reconciles the revenue amounts discussed under our operating segments with the consolidated total ~~revenues (in millions).~~revenues.


																	Three Months Ended March 31, 2005								Three Months Ended March 31, 2004
	Three Months Ended September 30, 2004								Three Months Ended September 30, 2003								Revenues								Revenues
	Revenues								Revenues								Outside		Intersegment			Total			Outside		Intersegment			Total
	Outside		Intersegment			Total			Outside		Intersegment			Total			(in millions)
Rail Group	$	279.8	$	35.4		$	315.2		$	126.4	$	63.8		$	190.2		$	361.8	$	72.6		$	434.4		$	225.2	$	35.7		$	260.9
Construction Products Group		170.3		0.5			170.8			133.3		0.4			133.7			142.8		0.3			143.1			120.0		0.1			120.1
Inland Barge Group		46.2		—			46.2			42.5		—			42.5			44.9		—			44.9			43.3		—			43.3
Industrial Products Group		33.0		2.0			35.0			30.1		1.4			31.5			33.5		2.2			35.7			30.4		1.4			31.8
Railcar Leasing and Management Services Group		36.5		—			36.5			29.9		—			29.9			52.5		—			52.5			35.1		—			35.1
All Other		1.4		7.9			9.3			1.2		6.7			7.9			11.4		9.0			20.4			0.9		6.7			7.6
Eliminations		—		(45.8	)		(45.8	)		—		(72.3	)		(72.3	)		—		(84.1	)		(84.1	)		—		(43.9	)		(43.9	)

Consolidated Total	$	567.2	$	—		$	567.2		$	363.4	$	—		$	363.4		$	646.9	$	—		$	646.9		$	454.9	$	—		$	454.9

Operating Profit (Loss)

Operating profit ~~decreased $6.3~~increased $24.4 million to ~~$3.8~~$17.9 million for the three months ended ~~September 30, 2004~~March 31, 2005 compared to ~~$10.1~~a loss of $6.5 million for the same period in ~~2003.~~2004. This ~~decrease~~increase is primarily the result of improved efficiencies due to increased volumes, an increase in the size and utilization of our lease fleet, and a significant decrease in expense related to losses on contracts resulting from increases in ~~steel and component costs and temporary shortages~~the prices of steel and components, primarily in our Rail and Inland Barge Groups as well as an increase in lease expense in the Railcar Leasing and Management Services Group associated with the refinancing of cars under the non-recourse warehouse facility with long-term, fixed rate, off-balance sheet, sale/leaseback financings in November 2003 and August 2004 which effectively converted interest expense (which is not deducted from operating profit) to lease expense (which is deducted from operating profit), partiallyother raw materials, offset by an increase in ~~our leasing fleet size and utilization.~~barge litigation costs.

Railcars shipped in North America increased ~~90.0%~~89.2% to approximately ~~4,150~~5,300 cars during the three months ended ~~September 30, 2004~~March 31, 2005 compared to the same period in ~~2003,~~2004, resulting in a revenue increase for the North American Rail operations of ~~101.7%~~112.2% over the same period last year. As of ~~September 30, 2004,~~March 31, 2005, the North American backlog ~~increased 71.5% to~~was approximately ~~19,800~~17,300 cars, ~~compared to~~which is consistent with the ~~same date last year.~~backlog as of March 31, 2004.

Revenues for the European operations decreased ~~24.1%~~38.0% over the same period in ~~2003~~2004 due to a ~~change in product mix and a 36.4%~~40.6% decrease in railcars shipped in Europe to approximately ~~330 cars, primarily due to a scheduled plant shut-down for maintenance.~~450 cars. As of ~~September 30, 2004,~~March 31, 2005, the European backlog was approximately ~~1,700~~1,100 cars compared to ~~2,100~~1,900 for the same date last year.

The operating profit for the Rail Group ~~decreased $17.4~~increased $12.4 million, toresulting in a ~~loss~~profit of ~~$14.5~~$8.8 million for the three months ended ~~September 30, 2004~~March 31, 2005 compared to the same period last year. Operating ~~profit was adversely affected primarily by~~margins improved due to increased ~~steel~~pricing and ~~component costs~~improved operating efficiencies, particularly in North American Rail. The three months ended March 31, 2005 included a loss provision of ~~$17.0~~$0.9 million ~~compared~~related to costs anticipated for contracts that existed at the beginning of the year, including a $4.6 million contract loss on railcars to be delivered in 2005, and an increased operating loss in Europe of $1.2 million as a result of a third quarter plant shut-down for maintenance. While we have taken steps to mitigate the impact of cost volatility, such as adding price escalation clauses to sales contracts and other measures, steel and component cost ~~and availability could continue~~increases on certain contracts in our European operations compared to ~~adversely impact operations going forward. At September 30, 2004, approximately 71%~~a loss provision of our North American railcar backlog orders included price escalation clauses. Escalation clauses vary and may be less than 100% effective in passing costs through to customers. Material cost increases above increases anticipated$2.7 million for ~~contracts that existed at~~ the ~~beginning of the year that cannot be passed on to customers are expected to reduce operating profit in the~~same period last ~~three months of 2004 by $13.2 million.~~year.

In the three months ended ~~September 30, 2004~~March 31, 2005 railcar sales to the Railcar Leasing and Management Services Group included in the Rail Group results were ~~$34.3~~$72.2 million compared to ~~$63.6~~$34.2 million in the comparable period in ~~2003~~2004 with profit of ~~$2.0~~$4.5 million compared to ~~$4.9~~$3.3 million for the same period in ~~2003.~~2004. Sales to the Railcar Leasing and Management Services Group and related profits are eliminated in consolidation.

Revenues increased 19.2% for the three months ended March 31, 2005 compared to the same period in 2004. The increase in revenue is attributable to improved market demand. Additionally, increased raw material costs have resulted in higher sales prices which have increased overall revenues. The operating profit margin increase was the result of increased demand across all businesses as well as price increases and operational efficiencies.

~~Construction Products~~Inland Barge Group

Three Months
Ended
September 30,
2004
2003
(in millions)
Revenues $ 170.8 $ 133.7
Operating profit $ 18.5 $ 11.4
Operating profit margin 10.8 % 8.5 %


	Three Months
	Ended
	March 31,
	2005			2004
	(in millions)
Revenues	$	44.9		$	43.3
Operating loss	$	(3.4	)	$	(5.7	)
Operating loss margin		(7.6	)%		(13.2	)%

Revenues increased ~~27.7%~~$1.6 million for the three months ended ~~September 30, 2004~~March 31, 2005 compared to the same period in 2003. The increase in revenues was primarily attributable to an increase in the Highway Safety, Fittings, and Concrete and Aggregates businesses. Market demand for selected Highway Safety products has steadily improved in 2004. In addition, there have been price increases resulting from the increase in raw material costs in both the Highway Safety and Fittings businesses. The Concrete and Aggregates business has increased due to acquisitions in the latter part of 2003 and early 2004. The improvement in operating profit percentage for the quarter over the same period last year is a result of improved efficiencies and lower operating costs and a result of an increase in demand in both our Highway Safety and Fittings businesses.

~~Inland Barge Group~~

Three Months
Ended
September 30,
2004
2003
(in millions)
Revenues $ 46.2 $ 42.5
Operating profit (loss) $ (1.7 ) $ 0.3
Operating profit (loss) margin (3.7 )% 0.7 %

~~Revenues increased $3.7 million for the three months ended September 30, 2004 compared to the same period in 2003.~~ This was primarily due to an increase in sales of tank barges, offset by a decrease in hopper ~~barges.~~barge sales. Operating loss in the current quarter was ~~$1.7~~$3.4 million, a ~~change~~decrease of ~~$2.0~~$2.3 million compared to ~~$0.3~~the $5.7 million in operating ~~profit~~loss for the same period last year. This improvement was primarily due to $4.6 million expense in the prior year for losses on contracts due to steel ~~costs increases which were approximately $2.5 million~~surcharges and operating efficiencies in ~~excess of costs anticipated at~~ the ~~beginning of the year.~~current year, offset by an increase in barge litigation and related costs. Barge litigation and related costs were ~~$1.0~~$1.3 million and ~~$1.1~~$1.0 million for the three months ended ~~September 30,~~March 31, 2005 and 2004, ~~and 2003,~~ respectively. Barge litigation settlements for the three months ended March 31, 2005 were $3.3 million

Industrial Products Group


	Three Months						Three Months
	Ended						Ended
	September 30,						March 31,
	2004			2003			2005			2004
	(in millions)						(in millions)
Revenues	$	35.0		$	31.5		$	35.7		$	31.8
Operating profit	$	4.5		$	2.7		$	4.6		$	0.8
Operating profit margin		12.9	%		8.6	%		12.9	%		2.5	%

Revenues increased ~~11.1%~~12.3% for the three months ended ~~September 30, 2004~~March 31, 2005 compared to the same period in ~~2003.~~2004. This increase of ~~$3.5~~$3.9 million was primarily due to increased sales ~~of domestic tanks in the U.S. and an increase in the sale~~ of heads used for tank car production and other railcar ~~equipment.~~equipment in the United States as well as an increase in Mexico’s sales of portable cylinders, bobtails, and heads. The operating profit margin for the current quarter was higher than the same quarter last year due to favorable market conditions for heads products, increased activity for bobtails and heads from Mexico, as well as improved efficiencies ~~based~~ on increased ~~volume and increased sales of tank car heads and other railcar equipment.~~volume.

Total revenues increased ~~$6.6~~$17.4 million for the three months ended ~~September 30, 2004~~March 31, 2005 compared to the same period last year. This increase of ~~22.1%~~49.6% was due to lease fleet sales and increased rental revenues related to additions to the lease fleet and improved fleet ~~utilization of 98.5%.~~utilization. Operating profit increased to $13.6 million for the three months ended March 31, 2005. This increase is primarily attributable to lease fleet sales.

The Company continues to expand its lease fleet size. To fund the expansion of its lease fleet to meet ~~this~~market demand, the Leasing Group uses its non-recourse warehouse line to provide initial financing for a portion of the manufacturing costs of the cars. Subsequently, the Leasing Group generally obtains long-term financing for the cars in the lease fleet through long-term recourse debt such as equipment trust certificates or long-term non-recourse operating leases pursuant to sales/leaseback transactions.

The increase in EBITDAR for the three months ended ~~September 30, 2004~~March 31, 2005 was due to improved fleet utilization, higher average lease rates and an increase in the ~~increase~~ size of the ~~fleet and improved utilization.~~fleet.

As of ~~September 30, 2004,~~March 31, 2005, the Leasing and Management Services Group’s rental fleet of approximately ~~19,700~~21,000 owned or leased railcars ~~has~~had an average age of ~~5.42~~5.36 years and an average remaining lease term of ~~6.02~~5.87 years.

Revenues in All Other increased to ~~$9.3~~$20.4 million for the three months ended ~~September 30, 2004~~March 31, 2005 from ~~$7.9~~$7.6 million for the same period last year. This increase was primarily attributable to an increase in ~~intersegment sales by our transportation company.~~the structural towers operation. Operating loss was ~~$1.7~~$1.3 million for the three months ended ~~September 30, 2004~~March 31, 2005 compared to ~~$2.0~~a profit of $1.3 million in the same period in ~~2003.~~2004. The ~~decrease~~operating loss in the current period is primarily due to ~~severance~~ costs ~~of approximately $0.4 million related to our transportation company that was paid in the prior year.~~

~~Nine Months Ended September 30, 2004 Compared~~associated with ~~Nine Months Ended September 30, 2003 — Results of Operations~~

Our consolidated net loss for the nine months ended September 30, 2004 was $6.3 million compared to a net loss of $9.2 million for the same period last year. Net loss applicable to common shareholders for the nine months ended September 30, 2004 was $8.6 million ($0.19 per diluted share) as compared to $10.0 million ($0.22 per diluted share) for the nine months ended September 30, 2003. The difference between net loss and net loss applicable to common shares for the nine months ended September 30, 2004 and 2003 was $2.3 million and $0.8 million, respectively in accrued dividends and accreted discount costs on the Series B preferred stock.

~~Revenues.~~Revenues were $1,570.8 million for the nine months ended September 30, 2004 compared to $1,018.3 million for the nine months ended September 30, 2003. The increase was primarily due to a significant increase in outside salesnon-operating plants partially offset by the Rail Group. The increase in revenues for the Construction Products Group was the result of increased market demand in the Highway Safety and Fittings businesses and the acquisitions made by Concrete and Aggregates during the latter part of 2003 and early 2004. The increased revenue from the Railcar Leasing and Management Services Group resulted from an increase in the ~~size of the fleet, an improvement in utilization, and an increase in sales from the lease fleet.~~

~~The following table reconciles the revenue amounts discussed under our operating segments with the consolidated total revenues (in millions).~~

Nine Months Ended September 30, 2004
Nine Months Ended September 30, 2003
Revenues
Revenues
Outside
Intersegment
Total
Outside
Intersegment
Total
Rail Group $ 729.6 $ 120.1 $ 849.7 $ 317.2 $ 176.8 $ 494.0
Construction Products Group 443.5 1.1 444.6 368.9 0.6 369.5
Inland Barge Group 153.6 — 153.6 129.8 — 129.8
Industrial Products Group 97.7 4.5 102.2 85.5 3.0 88.5
Railcar Leasing and Management Services Group 143.3 — 143.3 112.7 — 112.7
All Other 3.1 22.1 25.2 4.2 18.7 22.9
Eliminations — (147.8 ) (147.8 ) �� — (199.1 ) (199.1 )

Consolidated Total $ 1,570.8 $ — $ 1,570.8 $ 1,018.3 $ — $ 1,018.3

~~Operating Profit (Loss)~~

Nine Months
Ended
September 30,
2004
2003
(in millions)
Rail Group $ (17.2 ) $ (13.5 )
Construction Products Group 35.0 29.8
Inland Barge Group (12.8 ) 0.5
Industrial Products Group 9.2 4.3
Railcar Leasing and Management Services Group 31.9 30.5
All Other (2.0 ) (5.0 )
Corporate (23.8 ) (25.0 )
Eliminations (8.7 ) (12.5 )

Consolidated Total $ 11.6 $ 9.1

Operating profit increased $2.5 million to $11.6 million for the nine months ended September 30, 2004 compared to an operating profit of $9.1 million for the same period in 2003. This improvement was primarily the result of increased production volumes and an increase in our leasing fleet size and utilization. Improvements have been partially offset by significant increases in steel and component costs and temporary shortages of steel and components, primarily in our Rail and Inland Barge Groups and barge litigation and related costs.

~~Other Income and Expenses.~~Other income and expense included interest income, interest expense and other, net. Interest expense, net of interest income decreased $3.3 million to $22.6 million for the nine months ended September 30, 2004 compared to $25.9 million for the same period in 2003, a decrease of 12.7%. Interest income increased $9.1 million to $9.5 million for the nine months ended September 30, 2004 compared to $0.4 million for the same period last year. This increase was primarily attributable to an increase in interest income of $8.1 million received on our AMSHA deposit. Interest expense increased $5.8 million to $32.1 million for the nine months ended September 30, 2004 compared to $26.3 million for the same period last year, an increase of 22.1%. This increase is due to the write-off of deferred loan fees of $1.2 million in connection with early retirement of the term loan in March of 2004 and an increase in debt balances during the second quarter, primarily associated with the senior notes.

Other, net was income of $1.7 million for the nine months ended September 30, 2004 compared to income of $3.6 million for the comparable period in 2003. The decrease was primarily due to a decrease of $1.6 million in the amount of gains on sales of property, plant, and equipment and an increase of $0.7 million in foreign currency losses in 2004.

~~Income Taxes.~~The current year effective tax rate of 32.6% was less than the statutory rate of 35% due to foreign income which has lower effective tax rates. The prior year effective tax rate of 30.2% was due to the absence of tax benefits on certain foreign losses.

~~Rail Group~~

Nine Months
Ended
September 30,
2004
2003
(in millions)
Revenues:
North American Rail $ 628.0 $ 318.4
Europe Rail 134.6 104.3
Components 87.1 71.3

Total revenues $ 849.7 $ 494.0
Operating loss $ (17.2 ) $ (13.5 )
Operating loss margin (2.0 )% (2.7 )%

Railcars shipped in North America increased 88% to approximately 10,100 cars during the nine months ended September 30, 2004 compared to the same period in 2003, resulting in a revenue increase for the North American operations of 97.2% over the same period last year.

~~Revenues for the European operations increased 29.1% over the same period in 2003 due to a 10% increase in railcars shipped in Europe to approximately 1,750 cars and a change in product mix.~~

The operating loss for the Rail Group increased $3.7 million to $17.2 million for the nine months ended September 30, 2004 compared to the same period last year. Operating profit was adversely affected by the mix of orders which were completed during the first quarter as well as increased material costs above costs anticipated for contracts that existed at the beginning of the year ($23.5 million), shortages of materials and unanticipated plant shut-downs ($6.6 million), start-up costs related to reopening manufacturing facilities ($1.9 million), and unabsorbed costs in the third quarter related to the shut-down of a European plant for maintenance ($1.2 million). While we have taken steps to mitigate the impact of cost volatility, such as adding price escalation clauses to sales contracts and other measures, steel and component cost and availability could continue to adversely impact operations going forward. Material cost increases above increases anticipated for contracts that existed at the beginning of the year that cannot be passed on to customers are expected to reduce operating profit in the last three months of 2004 by $13.2 million.

In the nine months ended September 30, 2004 railcar sales to the Railcar Leasing and Management Services Group included in the Rail Group results were $117.0 million compared to $173.8 million in the comparable period in 2003 with profit of $8.7 million compared to $12.5 million for the same period in 2003. Sales to the Railcar Leasing and Management Services Group and related profits are eliminated in consolidation.

~~Construction Products Group~~

Nine Months
Ended
September 30,
2004
2003
(in millions)
Revenues $ 444.6 $ 369.5
Operating profit $ 35.0 $ 29.8
Operating profit margin 7.9 % 8.1 %

Revenues increased 20.3% for the nine months ended September 30, 2004 compared to the same period in 2003. The increase in revenues was primarily attributable to an increase in the Highway Safety, Concrete and Aggregates, and Fittings business units. The Highway Safety business increased due to favorable weather conditions in the first quarter as well as an improvement in the market demand for selected products and price increases resulting from an increase in raw material costs. The Concrete and Aggregates business increased due to acquisitions in the latter part of 2003 and early 2004, offset by

unfavorable weather conditions in the second quarter. The increase in revenues in the Fittings business was also attributable to an increase in market demand as well as price increases resulting from an increase in raw material costs. Operating profit percentage for the nine months ended September 30, 2004 decreased over the same period last year as a result of the steel price increases in the Structural Bridge portion of this segment and competitive pricing pressure in certain markets of our Concrete and Aggregates business as well as the impact of year over year unfavorable weather, offset by the increase in production volumes in our Highway Safety and Fittings businesses.

~~Inland Barge Group~~

Nine Months
Ended
September 30,
2004
2003
(in millions)
Revenues $ 153.6 $ 129.8
Operating profit (loss) $ (12.8 ) $ 0.5
Operating profit (loss) margin (8.3 )% 0.4 %

Revenues increased $23.8 million for the nine months ended September 30, 2004 compared to the same period in 2003. This was primarily due to an increase in hopper barge sales volume. Operating loss for the nine months ended September 30, 2004 was $12.8 million, a decrease of $13.3 million compared to $0.5 million in operating profit for the same period last year. This was primarily due to steel cost increases which were approximately $12.4 million in excess of costs anticipated at the beginning of the year and increased barge litigation and related costs. Steel cost increases in excess of costs anticipated at the beginning of the year for the quarter ending December 31, 2004 are presently estimated to be $2.9 million. Where such increases have resulted in expected loss on contracts, the estimated losses have been recorded during the nine months ended September 30, 2004. The loss reserve balance related to barges to be delivered in the next two quarters is $7.0 million at September 30, 2004. Barge litigation and related costs were $4.1 million and $2.5 million for the nine months ended September 30, 2004 and 2003, respectively.

~~Industrial Products Group~~

Nine Months
Ended
September 30,
2004
2003
(in millions)
Revenues $ 102.2 $ 88.5
Operating profit $ 9.2 $ 4.3
Operating profit margin 9.0 % 4.9 %

Revenues increased 15.5% for the nine months ended September 30, 2004 compared to the same period in 2003. The increase of $13.7 million was due to increased sales of domestic tanks in the U.S. and an increase in the sale of heads used for tank car production and other railcar equipment. The operating profit margin for the current nine months was higher than the same period last year due to improved efficiencies based on increased volume and increased sales of tank car heads and other railcar equipment.

~~Railcar Leasing and Management Services Group~~

Nine Months
Ended
September 30,
2004
2003
(in millions)
Revenues:
Leasing and management $ 105.5 $ 86.0
Lease fleet sales 37.8 26.7

Total revenues $ 143.3 $ 112.7
Operating Profit:
Leasing and management $ 27.4 $ 27.0
Lease fleet sales 4.5 3.5

Total operating profit. $ 31.9 $ 30.5
Operating profit margin 22.3 % 27.1 %
Fleet utilization 98.5 % 96.8 %

Total revenues increased $30.6 million for the nine months ended September 30, 2004 compared to the same period last year. This increase of 27.2% was due to increased lease fleet sales and increased rental revenues related to additions to the lease fleet and improved fleet utilization.

The Company continues to expand its lease fleet size. To fund the expansion of its lease fleet to meet this demand, the Leasing Group uses its non-recourse warehouse line to provide initial financing for a portion of the manufacturing costs of the railcars. Subsequently, the Leasing Group generally obtains long-term financing for the cars in the lease fleet through long-term recourse debt such as equipment trust certificates or long-term non-recourse operating leases pursuant to sales/leaseback transactions.

The decline in the Leasing Group operating profit in the third quarter was due to the refinancing of cars under the non-recourse warehouse facility with long-term, fixed rate, off-balance sheet, sale/leaseback financings in November 2003 and August 2004 which effectively converted interest expense (which is not deducted from operating profit) to lease expense (which is deducted from operating profit). The Company uses a non-GAAP measure to compare performance between periods. This non-GAAP measure is EBITDAR, which is Operating Profit of the Leasing Group plus depreciation and rental or lease expense. We use this measure to eliminate the costs resulting from financings. EBITDAR should not be considered as an alternative to operating profit or other GAAP financial measurements as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. EBITDAR is shown below (in millions):

Nine Months Ended Nine Months Ended
September 30, 2004
September 30, 2003
Lease Lease
Leasing and Fleet Leasing and Fleet
Management
Sales
Total
Management
Sales
Total
Operating profit (loss) $ 27.4 $ 4.5 $ 31.9 $ 27.0 $ 3.5 $ 30.5
Add: Depreciation 17.3 0.0 17.3 18.2 0.0 18.2
Rental expense 28.6 0.0 28.6 15.3 0.0 15.3

EBITDAR $ 73.3 $ 4.5 $ 77.8 $ 60.5 $ 3.5 $ 64.0

~~The increase in EBITDAR for the nine months ended September 30, 2004 was due to the increase size of the fleet and improved utilization.~~

~~All Other~~

Revenues in All Other increased to $25.2 million for the nine months ended September 30, 2004. This increase was primarily attributable to an increase in intersegment sales by our transportation company. Operating loss was $2.0 million for the nine months ended September 30, 2004 compared to an operating loss of $5.0 million in the same period in 2003.structural towers operation.

Liquidity and Capital Resources

~~2004~~2005 Financing Activity

In March 2004, we issued $300 million aggregate principal amount 6 1/2% senior notes (Senior Notes) due 2014, through a private offering. Interest on the Senior Notes is payable semiannually commencing September 15, 2004. The Senior Notes rank equally with all of our existing and future senior debt and are subordinated to all our existing and future secured debt to the extent of the value of the assets securing such debt. We may redeem some or all of the Senior Notes at any time on or after March 15, 2009 at a redemption price of 103.25% in 2009, 102.167% in 2010, 101.083% in 2011 and 100.0% in 2012 and thereafter plus accrued interest. We may also redeem up to 35% of the aggregate principal amount of the Senior Notes using the proceeds from certain public equity offerings completed on or before March 15, 2007 at a redemption price of 106.5% of the principal amount plus accrued and unpaid interest. The Senior Notes could restrict our ability to incur additional debt; make certain distributions, investments and other restricted payments; create certain liens; merge; consolidate; or sell substantially all or a portion of our assets. We applied approximately $163 million of the net proceeds of the offering to repay all indebtedness under our existing bank credit facility. In September 2004, as required by the contract with the purchasers of the Senior Notes due 2014, the Company made an offer to exchange all of the privately placed Senior Notes for an equal principal amount of the Senior Notes due 2014, which are registered with the Security and Exchange Commission and have substantially identical terms. As of September 30, 2004 all of the privately placed Senior Notes were exchanged for Senior Notes due 2014.

~~In connection with the issuance of our Senior Notes,~~April, we extended and expanded our ~~secured~~current revolving credit ~~agreement~~facility to provide for a ~~three-year, $250~~five-year, $350 million secured revolving credit ~~facility~~facility. Two of the financial covenants, the asset coverage ratio and ~~repaid~~ the existing term loan facility. Amounts borrowed under the revolving credit facility for periods after the first quarter of 2004 will bear interest at LIBOR plus a margin based upon financial performance. Our accounts receivable and inventory secure the agreement. The agreement limits the amount of capital expenditures ~~related to our leasing business, requires maintenance of ratios related to interest coverage for~~limitation, were eliminated, while the ~~leasing and manufacturing operations,~~permitted leverage ~~asset coverage and minimum net worth, and restricts the amount of dividend payments based upon our current credit rating not to exceed $25 million annually.~~ratio was increased. At ~~September 30, 2004,~~March 31, 2005, there were no borrowings under ~~the~~this revolving credit facility.

Cash Flows

Operating Activities. Net cash required by operating activities for the ~~nine~~three months ended ~~September 30, 2004~~March 31, 2005 was ~~$129.3~~$59.2 million compared to ~~$65.7~~$71.7 million net cash ~~provided~~required by operating activities for the same period in ~~2003.~~2004. This was ~~partially~~primarily due to an increase in ~~working capital~~inventory and receivables related to increased production ~~volumes. In addition, a tax refund of $48.5 million was collected~~volumes, partially offset by an increase in accounts payable and accrued liabilities as well as an increase in earnings for the ~~nine months ended September 30, 2003.~~quarter. The increase in ~~working capital needs~~inventory and receivables is reflective of the upturn in our businesses.

Investing Activities.Net cash ~~provided~~required by investing activities for the ~~nine~~three months ended ~~September 30, 2004~~March 31, 2005 was ~~$86.3~~$57.5 million compared to ~~$171.6~~$39.9 million ~~net cash required~~ for the same period last year. Capital expenditures for the ~~nine~~three months ended ~~September 30, 2004~~March 31, 2005 were ~~$136.9~~$74.2 million, of which ~~$112.5~~$67.8 million were for additions to the lease subsidiary. This compares to ~~$205.2~~$36.8 million of capital expenditures for the same period last year, of which ~~$188.5~~$31.8 million ~~was~~were for additions to the lease subsidiary. Proceeds from the sale of property, plant and equipment were ~~$230.4~~$16.7 million for the ~~nine~~three months ended ~~September 30, 2004~~March 31, 2005 composed primarily of railcar sales from the lease fleet and the sale of non-operating assets, compared to ~~$33.6~~$4.1 million for the same period in ~~2003~~2004 composed primarily of railcar sales from the lease ~~fleet.~~fleet and non-operating assets. In ~~addition,~~2004, $15.7 million of cash was required for an acquisition by our Construction Products Group and $8.5 million of cash was provided by the sale of the Leasing’s Group equity ownership in a trust.

Financing Activities.Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2004~~March 31, 2005 was ~~$151.2~~

$48.1 million compared to ~~$100.4~~$216.9 million for the same period in ~~2003.~~2004. During the first quarter of 2004, we issued $300 million aggregate principal amount 6 ~~1/2%~~¹/2% senior notes due 2014 (Senior Notes) through a private offering. We applied approximately $163 million of the net proceeds of the offering to repay all indebtedness under our existing credit facility. In September 2004, as required by the contract with the purchasers of the Senior Notes due 2014, the Company made an offer to exchange all of the privately placed Senior Notes for an equal principal amount of the Senior Notes due 2014, which are registered with the Securities and Exchange Commission and have substantially identical terms. As of September 30, 2004 all of the privately placed Senior Notes were exchanged for Senior Notes due 2014.

~~Off-Balance Sheet Arrangements.~~During the quarter ended September 30, 2004, the Leasing Group completed a transaction whereby $180.1 million of railcars were sold to independent trusts. These trusts financed the purchase of the railcars with $134.0 million in debt and $46.1 million in third party equity. The equity participants in the trusts are the primary beneficiaries of the trusts. The Leasing Group, through a newly formed, wholly owned qualified subsidiary, leased railcars from the trusts under operating leases with terms of 22 years and subleased the railcars to independent third parties under shorter term operating leases. This qualified subsidiary had total assets of $49.7 million as of September 30, 2004 including cash of $6.1 million, and Leasing Group railcars of $43.6 million. The 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 subsidiary’s lease obligations. Under the terms of the operating lease agreement, the Leasing Group has options to purchase at a predetermined, fixed price, certain of the railcars from the trusts in 2019. The Leasing Group also has options to purchase the railcars at the end of the lease agreement at the then fair market value of the railcars as determined by a third party, independent appraisal. At the expiration of the operating lease agreement, the Leasing Group’s qualified subsidiary has no further obligation. An independent trustee for the trust has authority for appointment of the railcar fleet manager, which at September 30, 2004 was Trinity Industries Leasing Company (“TILC”), a wholly owned subsidiary of the Company. As fleet manager, TILC is required 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. TILC receives management fees under the terms of the agreement for services it provides. 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 third parties leases, to be available to Trinity. The sales of railcars by Trinity to the trusts were accounted for as a sale/leaseback transaction. No revenue or profit was recorded at the time of the transactions and all profit was deferred and is being amortized over the terms of the operating leases. Neither the assets, the liabilities, nor equity of the trusts are reflected on the balance sheet of Trinity.

Contractual Obligation and Commercial Commitments

As of ~~September 30, 2004~~March 31, 2005 other commercial commitments related to letters of credit have decreased to ~~$113.8~~$121.6 million from ~~$116.4~~$124.2 million as of December 31, ~~2003.~~2004. Refer to Note 65 in the financial statements for changes to our outstanding debt and maturities. Other commercial commitments that relate to operating leases under sale/leaseback transactions were basically ~~unchanged.~~unchanged as of March 31, 2005.

Recently Issued Accounting Standards

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 151, “Inventory Costs,” which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. SFAS No. 151 will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not believe the adoption of SFAS No. 151 will have a material impact on our financial condition.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,” which eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have a commercial substance. SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not believe that the adoption of SFAS No. 153 will not have a material impact on our financial statements.

Forward-Looking Statements.This quarterly report on Form 10-Q 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 performance, estimates, projections, goals and forecasts. 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 products;

• the cyclical nature of both the railcar and barge industries;

• variations in weather in areas where construction products are sold and used;

• the timing of introduction of new products;

• the timing of customer orders;

• price changes;

• changes in mix of products sold;

• the extent of utilization of manufacturing capacity;

• availability and costs of component parts, supplies, and raw materials;

• competition and other competitive factors;

• changing technologies;

• steel prices;

• surcharges added to fixed pricing agreements for raw materials;

• interest rates and capital costs;

• long-term funding of our leasing warehouse facility;

• taxes;

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

• changes in import and export quotas and regulations;

• business conditions in emerging economies;

• 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.

PART II

Item 1.Legal Proceedings

~~On March 15, 2004,~~The information provided in Note 9 to the financial statements on page 12 is hereby incorporated into this Part II, Item 1 by reference.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

This table provides information with respect to purchases by the Company ~~and~~of shares of its wholly owned subsidiary, Trinity Marine Products, Inc. (“TMP”), settled its claims in a case filed by Florida Marine Transporters, Inc. (“FMT”) related to twenty-eight tank barges owned and/or operated by FMT. The settlement involves, among other elements, a joint monitoring ofCommon Stock during the ~~barge coatings and void compartment maintenance procedures, and a mutual release of all claims against one another.~~

The Company and TMP, and certain material suppliers and others, are named as co-defendants in four separate lawsuits filed by J. Russell Flowers, Inc. (“Flowers”) on October 7, 2002, Marquette Transportation Company and Iowa Fleeting Services, Inc. (“Marquette”) onquarter ended March 7, 2003, Waxler Transportation Company, Inc. (“Waxler”) on April 7, 2003 and LeBeouf Bros. Towing (“LeBeouf”) on July 3, 2003. The Marquette and Waxler cases are pending in the 25th Judicial District Court in Plaquemines Parish, Louisiana, and the Flowers case is pending in the U.S. District Court, Northern District of Mississippi, Greenville, Mississippi, and the LeBeouf case is pending in the U.S. District Court for the Eastern District of Louisiana. In Waxler, the plaintiff has petitioned the court for certification of a class which if certified by the court, could increase the total number of barges involved in the Waxler litigation. Absent certification of a class in the Waxler case, the Waxler and LeBeouf suits~~currently involve 24~~tank barges sold at an approximate average price of $1.4 million and the Marquette and Flowers suits involve 140 hopper barges sold at an approximate average price of $280,000. Each of the four cases set forth allegations pertaining to damages arising from alleged defects in coating materials supplied by a co-defendant and coatings application workmanship by TMP. The plaintiffs seek both compensatory and punitive damages and/or rescission of the barge purchase contracts. Independent experts investigating the claims on behalf of the Company and TMP have expressed the opinion that technical arguments presented by the plaintiffs in the litigation are without merit. As of September 30, 2004, one of the four plaintiffs owes TMP approximately $8.9 million related to contracts for barges not involved in the litigation. TMP has filed suit for collection of the past due amounts.

In a proceeding unrelated to the foregoing litigation, the Company and TMP filed a declaratory judgment action petitioning the Court to declare the Company’s and TMP’s obligations related to allegations of certain barge owners as to exterior coatings and coatings application on 65 tank barges and TMP’s rights and remedies relative to an insurance policy in which TMP was named as an additional insured (which policy is applicable to the coatings on the 65 barges). On December 9, 2003, the barge owners filed a response proceeding to the declaratory judgment claiming actual damages of $6.5 million and punitive damages of $10 million.

A subsidiary of the Company, Transit Mix Concrete and Materials Company, Inc., is named as a defendant in a case involving the death of an employee of an independent contractor following an accident that occurred while the decedent was working at a Company owned facility. Following a jury verdict in favor of the plaintiff, the presiding judge entered a final judgment in the amount of $38.1 million (inclusive of fees, costs, and judgment interest). This case has been appealed by Transit Mix and its insurers. Management believes liability in this case, if any, exceeding $3.0 million, will be covered by insurance.

31, 2005:


	Number of		Average Price Paid
Period	Shares Purchased (1)		per Share (1)
January 1, 2005 through January 31, 2005		203	$	29.67
February 1, 2005 through February 28, 2005		—	$	—
March 1, 2005 through March 31, 2005		—	$	—

Total		203	$	29.67

(1)

This column includes the purchase of 203 shares of Common Stock by the Trustee for assets held in a non-qualified employee profit sharing plan trust.

Item 5.Other Information

None.

Item 6.Exhibits ~~and Reports on Form 8-K~~

a)~~Exhibits.~~


Exhibit Number		Description
10.1		Summary of changes being made to Profit Sharing 401(k) Plan for Employees of Trinity Industries, Inc. and Certain Affiliates as restated effective April 1, 1999. *

~~10.1~~10.2		~~Equipment Lease~~Form of Restricted Stock Unit Agreement ~~(TRL IV 2004-1A) between TRL IV 2004-1A Statutory Trust, lessor, and Trinity Rail Leasing IV L.P., lessee.~~

~~10.1.1~~		~~Participation Agreement (TRL IV 2004-1A) among Trinity Rail Leasing IV, L.P., lessee, et. al.~~

~~10.17.4~~		~~Amendment No. 4 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

~~10.17.5~~		~~Amendment No. 5 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

~~10.17.6~~		~~Amendment No. 6 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

~~10.17.7~~		~~Amendment No. 7 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

12		~~Computation of Ratio of Earnings to Fixed Charges~~for Non-Employee Directors. *

31.1		Rule 13a-15(e) and 15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e) and 15d-15(e) Certification of Chief Financial Officer.

32.1		Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~b) Reports on Form 8-K during the quarter ended September 30, 2004.~~

	~~(1)~~*		~~Trinity filed a current Report on Form 8-K dated August 5, 2004, reporting, under Item 9~~Management contracts and ~~12, operating results for the second quarter of 2004, and attaching a news release dated August 4, 2004 and a script of the conference call dated May 6, 2004.~~

	~~(1)~~		Trinity filed a current Report on Form 8-K dated August 5, 2004, reporting, under item 5 and 7 a Statement of computation of Ratio of Earnings to Fixed Charges and Selected Historical Consolidated Financial Data, each reflecting updated financial information for the six month period ending June 30, 2004.

	~~(2)~~		~~Trinity filed a current Report on Form 8-K dated October 14, 2004, reporting, under Item 8.01 the elimination of the position of Chief Executive Officer of Trinity Rail Group, LLC.~~compensatory plan arrangements.

3122

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. ~~Registrant~~		By /s/ ~~JIM S. IVY~~ ~~Jim S. Ivy~~ ~~Senior~~ WILLIAM A. MCWHIRTER II
Registrant

		William A. McWhirter II
		Vice President and
		Chief Financial Officer ~~November 3, 2004~~
		May 4, 2005

3223

INDEX TO EXHIBITS


Exhibit Number		Description
10.1		Summary of changes being made to Profit Sharing 401(k) Plan for Employees of Trinity Industries, Inc, and Certain Affiliates as restated effective April 1, 1999. *

~~10.1~~10.2		~~Equipment Lease~~Form of Restricted Stock Unit Agreement ~~(TRL IV 2004-1A) between TRL IV 2004-1A Statutory Trust, lessor, and Trinity Rail Leasing IV L.P., lessee.~~

~~10.1.1~~		~~Participation Agreement (TRL IV 2004-1A) among Trinity Rail Leasing IV, L.P., lessee, et. al.~~

~~10.17.4~~		~~Amendment No. 4 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

~~10.17.5~~		~~Amendment No. 5 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

~~10.17.6~~		~~Amendment No. 6 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

~~10.17.7~~		~~Amendment No. 7 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.~~

12		~~Computation of Ratio of Earnings to Fixed Charges~~for Non-Employee Directors. *

31.1		Rule 13a-15(e) and 15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e) and 15d-15(e) Certification of Chief Financial Officer.

32.1		Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Management contracts and compensatory plan arrangements.


		Caption	Page
PART I		FINANCIAL INFORMATION

Item 11.		Financial Statements	3
	3
Item 22.		~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	20
Item 33.		Quantitative and Qualitative Disclosures About Market Risk		29	21
~~Item 4~~		~~Controls and Procedures~~		29
~~PART II~~		~~OTHER INFORMATION~~
Item 14.		~~Legal Proceedings~~Controls and Procedures		30	21
~~Item 6~~		~~Exhibits and Reports on Form 8-K~~		31
~~SIGNATURES~~				32
~~CERTIFICATIONS~~
PART II		OTHER INFORMATION

Item 1.		Legal Proceedings	22

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 5.		Other Information	22

Item 6.		Exhibits	22

SIGNATURES			23

CERTIFICATIONS
~~Equipment Lease~~Summary of Changes Being Made to Profit Sharing 401(K) Plan for Employees
Form of Restricted Stock Unit Agreement
~~Participation Agreement~~
~~Amendment No. 4 to the Warehouse Loan Agreement~~
~~Amendment No. 5 to the Warehouse Loan Agreement~~
~~Amendment No. 6 to the Warehouse Loan Agreement~~
~~Amendment No. 7 to the Warehouse Loan Agreement~~
~~Computation of Ratio of Earnings to Fixed Charges~~
rule 13a-15(e) and 15d-15(e) Certification of Chief Executive Officer
rule 13a-15(e) and 15d-15(e) Certification of Chief Financial Officer
~~Certification~~Certificaiton Pursuant to 18 U.S. C., Section ~~906~~1350
~~Certification~~Certificaiton Pursuant to 18 U.S. C., Section ~~906~~1350


							March 31,			December 31,
	September 30,			December 31,			2005			2004
	2004			2003			(in millions)
Corporate/Manufacturing:
Property, plant and equipment	$	872.9		$	868.6		$	886.8		$	885.2
Less accumulated depreciation		(581.6	)		(569.0	)		(596.9	)		(589.6	)

		291.3			299.6			289.9			295.6

Leasing:
Property, plant and equipment		618.8			758.5			692.0			635.7
Less accumulated depreciation		(118.2	)		(112.9	)		(122.3	)		(120.4	)

		500.6			645.6			569.7			515.3

	$	791.9		$	945.2
							$	859.6		$	810.9


	Three Months Ended September 30,						Three Months Ended March 31,
	2004			2003			2005			2004
	(unaudited)						(unaudited)
	(in millions except per share amounts)						(in millions except per share amounts)
Revenues	$	567.2		$	363.4		$	646.9		$	454.9
Operating costs:
Cost of revenues		519.5			314.2			582.7			425.1
Selling, engineering and administrative expenses		43.9			39.1			46.3			36.3

		563.4			353.3			629.0			461.4

Operating profit		3.8			10.1
Operating profit (loss)								17.9			(6.5	)

Other (income) expense:
Interest income		(8.8	)		(0.1	)		(0.5	)		(0.2	)
Interest expense		11.1			8.4			10.4			10.1
Other, net		(0.2	)		(0.2	)		(1.6	)		0.1

		2.1			8.1			8.3			10.0

Income before income taxes		1.7			2.0
Provision for income taxes		0.8			0.2
Income (loss) before income taxes								9.6			(16.5	)

Net income		0.9			1.8
Provision (benefit) for income taxes								3.6			(5.7	)


Net income (loss)								6.0			(10.8	)

Dividends on Series B preferred stock		(0.8	)		(0.8	)		(0.8	)		(0.8	)

Net income applicable to common shareholders	$	0.1		$	1.0

Net income applicable to common shareholders per common share:
Net income (loss) applicable to common shareholders							$	5.2		$	(11.6	)


Net income (loss) applicable to common shareholders per common share:
Basic	$	0.00		$	0.02		$	0.11		$	(0.25	)

Diluted	$	0.00		$	0.02		$	0.11		$	(0.25	)


Weighted average number of shares outstanding:
Basic	��	46.5			45.6			47.0			46.2
Diluted		47.5			46.2			47.8			46.2


	Nine Months Ended September 30,
	2004			2003
	(unaudited)
	(in millions except per share amounts)
Revenues	$	1,570.8		$	1,018.3
Operating costs:
Cost of revenues		1,436.0			901.1
Selling, engineering and administrative expenses		123.2			108.1

		1,559.2			1,009.2

Operating profit		11.6			9.1
Other (income) expense:
Interest income		(9.5	)		(0.4	)
Interest expense		32.1			26.3
Other, net		(1.7	)		(3.6	)

		20.9			22.3

Loss before income taxes		(9.3	)		(13.2	)
Provision (benefit) for income taxes		(3.0	)		(4.0	)

Net loss		(6.3	)		(9.2	)
Dividends on Series B preferred stock		(2.3	)		(0.8	)

Net loss applicable to common shareholders	$	(8.6	)	$	(10.0	)

Net loss applicable to common shareholders per common share:
Basic	$	(0.19	)	$	(0.22	)

Diluted	$	(0.19	)	$	(0.22	)

Weighted average number of shares outstanding:
Basic		46.4			45.6
Diluted		46.4			45.6


	Common		Common		Capital						Accumulated
	Shares		Stock		in Excess						Other						Treasury			Total
	(100,000,000		$1.00 Par		of Par			Retained			Comprehensive			Treasury			Stock at			Stockholders'
	Authorized)		Value		Value			Earnings			Loss			Shares			Cost			Equity
	(unaudited)
	(in millions except share and per share data)
Balance at December 31, 2003		50,940,351	$	50.9	$	434.7		$	649.9		$	(27.3	)		(4,260,860	)	$	(104.4	)	$	1,003.8
Net loss		—		—		—			(6.3	)		—			—			—			(6.3	)
Currency translation adjustments		—		—		—			—			0.1			—			—			0.1
Unrealized loss on derivative financial instruments		—		—		—			—			0.7			—			—			0.7

Comprehensive net loss																					(5.5	)
Cash dividends ($0.18 per common share)		—		—		—			(8.4	)		—			—			—			(8.4	)
Dividends on Series B preferred stock		—		—		—			(2.3	)		—			—			—			(2.3	)
Restricted shares issued		—		—		3.1			—			—			383,400			7.9			11.0
Stock options exercised		—		—		(4.8	)		—			—			415,025			14.1			9.3
Other		—		—		(0.3	)		(0.1	)		0.1			25,425			0.8			0.5

Balance at September 30, 2004		50,940,351	$	50.9	$	432.7		$	632.8		$	(26.4	)		(3,437,010	)	$	(81.6	)	$	1,008.4


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Pro forma Net income (loss) applicable to common shareholders, as reported	$	0.1		$	1.0		$	(8.6	)	$	(10.0	)
Add: Stock compensation expense related to restricted stock		0.9			0.5			2.2			1.4
Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related income tax effects		(1.5	)		(1.4	)		(4.2	)		(4.4	)

Pro forma net income (loss) applicable to common shareholders	$	(0.5	)	$	0.1		$	(10.6	)	$	(13.0	)

Pro forma net income (loss) applicable to common shareholders per diluted share	$	(0.01	)	$	0.00		$	(0.23	)	$	(0.29	)

Net income (loss) applicable to common shareholders per diluted share — as reported	$	0.00		$	0.02		$	(0.19	)	$	(0.22	)


	Nine Months Ended September 30, 2004									Nine Months Ended September 30, 2003
	Revenues									Revenues
	Outside		Intersegment			Total				Outside		Intersegment			Total
Rail Group	$	729.6	$	120.1		$	849.7			$	317.2	$	176.8		$	494.0
Construction Products Group		443.5		1.1			444.6				368.9		0.6			369.5
Inland Barge Group		153.6		—			153.6				129.8		—			129.8
Industrial Products Group		97.7		4.5			102.2				85.5		3.0			88.5
Railcar Leasing and Management Services Group		143.3		—			143.3				112.7		—			112.7
All Other		3.1		22.1			25.2				4.2		18.7			22.9
Eliminations		—		(147.8	)		(147.8	)	��		—		(199.1	)		(199.1	)

Consolidated Total	$	1,570.8	$	—		$	1,570.8			$	1,018.3	$	—		$	1,018.3


	Nine Months Ended						Nine Months Ended
	September 30, 2004						September 30, 2003
			Lease						Lease
	Leasing and		Fleet				Leasing and		Fleet
	Management		Sales		Total		Management		Sales		Total
Operating profit (loss)	$	27.4	$	4.5	$	31.9	$	27.0	$	3.5	$	30.5
Add: Depreciation		17.3		0.0		17.3		18.2		0.0		18.2
Rental expense		28.6		0.0		28.6		15.3		0.0		15.3

EBITDAR	$	73.3	$	4.5	$	77.8	$	60.5	$	3.5	$	64.0

•		the cyclical nature of both the railcar and barge industries;

•		variations in weather in areas where construction products are sold and used;

•		availability and costs of component parts, supplies, and raw materials;

•		surcharges added to fixed pricing agreements for raw materials;

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