SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8099 TRINITY INDUSTRIES LEASING COMPANY (Exact name of registrant as specified in its charter) Incorporated Under the Laws 75-1640393 of the State of Delaware (I.R.S. Employer Identification No.) 2000 Gardner Expressway Quincy, IL 62306 (Address of Principal (Zip Code) Executive Offices) Registrant's Telephone Number, Including Area Code (217) 224-7236 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ___X___ No_______ 1,000 (Number of shares of common stock outstanding as of December 31, 1994) Part I Item I - Financial Statements Trinity Industries Leasing Company Balance Sheet (unaudited) (in millions except share data) December 31 March 31 1994 1994 Assets Cash and cash equivalents. . . . . . . . . . $ 0.2 $ 0.2 Note receivable from Trinity . . . . . . . . 107.0 90.8 Equipment on lease (predominantly long-term), at cost. . . . . . . . . . . . 510.4 536.1 Less accumulated depreciation. . . . . . . . (135.3) (139.9) Other assets . . . . . . . . . . . . . . . . 6.3 7.9 $488.6 $495.1 Liabilities and Stockholder's Equity Accounts payable and accrued liabilities . . $ 15.6 $ 3.9 Long-term debt . . . . . . . . . . . . . . . 207.3 236.0 Deferred federal income tax. . . . . . . . . 92.7 95.8 Other liabilities. . . . . . . . . . . . . . 3.0 4.5 318.6 340.2 Stockholder's equity: Common stock $1 par; authorized 10,000 shares; issued 1,000 shares . . . . - - Additional paid-in capital . . . . . . . . 19.3 19.3 Retained earnings. . . . . . . . . . . . . 150.7 135.6 170.0 154.9 $488.6 $495.1 Trinity Industries Leasing Company Statements of Income and Retained Earnings (unaudited) (in millions) Nine Months Ended December 31 1994 1993 Revenues . . . . . . . . . . . . . . . . . . $ 87.7 $63.4 Operating costs: Cost of revenues. . . . . . . . . . . . . . 53.8 33.0 Interest expense. . . . . . . . . . . . . . 16.1 18.0 69.9 51.0 Operating profit . . . . . . . . . . . . . . 17.8 12.4 Other income: Interest income (including $5.4 and $3.8 from Trinity in 1994 and 1993, respectively). . . . . . . . . . 5.4 3.8 Other, net. . . . . . . . . . . . . . . . . 0.1 0.6 5.5 4.4 Income before income taxes and cumulative effect of change in accounting for income taxes . . . . . . . . . . . . . . . . . . . 23.3 16.8 Provision for income taxes: Current. . . . . . . . . . . . . . . . . . 11.3 0.6 Deferred . . . . . . . . . . . . . . . . . (3.1) 5.4 Effect of statutory rate increase. . . . . - 2.6 8.2 8.6 Income before cumulative effect of change in accounting for income taxes . . . 15.1 8.2 Cumulative effect as of April 1, 1993 of change in accounting for income taxes . . . . . . . . . . . . . . . . . . . - 8.1 Net income . . . . . . . . . . . . . . . . . 15.1 16.3 Retained earnings at beginning of year . . . 135.6 116.5 Retained earnings at end of period . . . . . $150.7 $132.8 Trinity Industries Leasing Company Statements of Income and Retained Earnings (unaudited) (in millions) Three Months Ended December 31 1994 1993 Revenues . . . . . . . . . . . . . . . . . . $ 35.7 $24.4 Operating costs: Cost of revenues. . . . . . . . . . . . . . 22.2 13.1 Interest expense. . . . . . . . . . . . . . 4.9 5.9 27.1 19.0 Operating profit . . . . . . . . . . . . . . 8.6 5.4 Other income: Interest income (including $2.1 and $1.3 from Trinity in 1994 and 1993, respectively). . . . . . . . . . 2.1 1.3 Other, net. . . . . . . . . . . . . . . . . - 0.4 2.1 1.7 Income before income taxes . . . . . . . . . 10.7 7.1 Provision for income taxes: Current. . . . . . . . . . . . . . . . . . 5.8 0.7 Deferred . . . . . . . . . . . . . . . . . (2.0) 1.9 3.8 2.6 Net income . . . . . . . . . . . . . . . . . 6.9 4.5 Retained earnings at beginning of period . . 143.8 128.3 Retained earnings at end of period . . . . . $150.7 $132.8 Trinity Industries Leasing Company Statement Of Cash Flows (unaudited) (in millions) Nine Months Ended December 31 1994 1993 Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . $ 15.1 $ 16.3 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation. . . . . . . . . . . . . . . 15.4 15.1 Deferred provision for federal income tax. . . . . . . . . . . . . . . . . . . (3.1) 5.4 Gain on retirement of equipment . . . . . (5.6) (1.9) Other . . . . . . . . . . . . . . . . . . 0.8 0.7 Cumulative effect of change in accounting for income taxes . . . . . . . . . . . . - (5.5) Changes in assets and liabilities: (Increase) decrease in other assets . . 1.6 (0.1) Increase (decrease) in accounts payable and accrued liabilities . . . . . . . . 11.7 (1.2) Increase in other liabilities . . . . . (1.5) (1.1) Total adjustments . . . . . . . . . . . 19.3 11.4 Net cash provided by operating activities . . . . . . . . . . . . . . . 34.4 27.7 Cash flows from investing activities: Proceeds from retirement of equipment. . . . 25.6 13.1 Capital expenditures . . . . . . . . . . . . (15.1) (27.0) Net cash provided (required) by investing activities . . . . . . . . . . 10.5 (13.9) Cash flows from financing activities: Increase in note receivable from parent. . . (16.2) (10.5) Payments to retire long-term debt. . . . . . (28.1) (22.8) Proceeds from issuance of long term debt . . - 20.0 Decrease in long-term obligation under capital lease . . . . . . . . . . . . . . . (0.6) (0.6) Net cash required by financing activities . . . . . . . . . . . . . . . (44.9) (13.9) Net decrease in cash and cash equivalents . . - (0.1) Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . 0.2 0.2 Cash and cash equivalents at end of period. . $ 0.2 $ 0.1 The foregoing financial statements are unaudited and have been prepared from the books and records of the Registrant. In the opinion of the Registrant, all adjustments, consisting only of normal and recurring adjustments necessary to a fair presentation of the financial position of the Registrant as of December 31, 1994 and March 31, 1994 and the results of operations for the nine and three month periods ended December 31, 1994 and 1993 and cash flows for the nine month periods ended December 31, 1994 and 1993, in conformity with generally accepted accounting principles, have been made. Trinity Industries Leasing Company Notes to Financial Statements December 31, 1994 Income Taxes Effective April 1, 1993, the Registrant adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." This statement requires a change from the deferred to the liability method of computing income taxes. As permitted by Statement No. 109, the Registrant elected not to restate the financial statements of any prior period. The effect of the change on pretax income for the period ended December 31, 1993 is not material. The cumulative effect of applying the change in accounting method is a decrease in the Registrant's deferred tax liability and a nonrecurring credit of $8.1 million. The net deferred tax liability at April 1, 1993 is $89.9 million and is comprised primarily of the excess of tax depreciation over financial statement depreciation. All other items are not material. Trinity Industries Leasing Company Management's Discussion and Analysis of Financial Condition and Results of Operations The Registrant is a wholly-owned subsidiary of Trinity Industries, Inc. ("Trinity"). Financial Condition The increase in 'Note receivable from Trinity' at December 31, 1994 compared to March 31, 1994 is due to cash, not required for operations, loaned to Trinity, at prevailing market rates and partially offset by equipment purchases from, and scheduled long-term debt payments made by, Trinity. The decrease in 'Equipment on lease' at December 31, 1994 compared to March 31, 1994 is due primarily to sales of selected car types previously for lease, partially offset by equipment purchases from Trinity. The decrease in 'Long-term debt' at December 31, 1994 compared to March 31, 1994 is due to scheduled principal payments, coupled with the retirement of an equipment trust certificate. Results of Operations Nine Months Ended December 31, 1994 vs. Nine Months Ended December 31, 1993 Revenues increased primarily due to an escalation in barge revenues caused by market-dictated freight rates. Barge operations returned to normal historic levels after flooding in the midwestern United States abated barge revenues during the previous nine month period. The Company routinely acquires new railcars for lease. Such additions to the railcar fleet generally cause increases in revenues derived from leasing activities. Certain dispositions of selected railcar types further contributed to the increase in revenues in the current period, and such dispositions will reduce future lease revenues. Additions and dispositions of selected equipment is in the ordinary course of business for the lease operations. Operating profit increased principally due to a reduction of interest expense caused by scheduled principal payments. The disposition of selected railcar types, offset slightly by a reduction in railcar rental profits caused by the disposition, added to the operating profit increase. Three Months Ended December 31, 1994 vs. Three Months Ended December 31, 1993 Revenues increased due principally to the increase in barge maritime freight rates, coupled with the disposition of selected railcar types previously for lease. Operating profit increased principally due to a reduction in interest expense resulting from scheduled principal payments, along with the disposition of selected railcar types previously for lease. PART II Item 6 - Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description 27 Financial Data Schedule (b) No Form 8-K was filed during the quarter. 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 Leasing Company By: /S/ F. Dean Phelps F. Dean Phelps Vice President February 10, 1995 Index to Exhibit NO. Description PAGE 27 Financial Data Schedule * *