-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CA24GePNdWNiWNFL79R/OoGCVOnZRv3mGzFafsEvxO2zdl/JJ08U03V7jHp6bpDQ OXkc35p6jwvTuOBz7XW7eQ== 0000099780-96-000004.txt : 19960701 0000099780-96-000004.hdr.sgml : 19960701 ACCESSION NUMBER: 0000099780-96-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960628 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITY INDUSTRIES INC CENTRAL INDEX KEY: 0000099780 STANDARD INDUSTRIAL CLASSIFICATION: RAILROAD EQUIPMENT [3743] IRS NUMBER: 750225040 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06903 FILM NUMBER: 96587598 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 2146314420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) - |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 1996 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 1-6903 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) 589-8592 Securities Registered Pursuant to Section 12(b) of the Act Name of each exchange Title of each class on which registered Common stock, $1.00 par value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X The aggregate market value of voting stock held by nonaffiliates of the Registrant is $1,413,996,430 as of May 31, 1996. 41,612,062 ( Number of Shares of common stock outstanding as of May 31, 1996) DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's 1996 Annual Report to Stockholders for the fiscal year ended March 31, 1996 are incorporated by reference into Parts I, II, and IV hereof and portions of the Registrant's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders to be held July 17, 1996 are incorporated by reference into Part III hereof. PART I Item 1. Business General Development of Business. Trinity Industries, Inc. (the "Registrant") was originally incorporated under the laws of the State of Texas in 1933. On March 27, 1987, Trinity became a Delaware corporation by merger into a wholly-owned subsidiary of the same name. Narrative Description of Business and Financial Information About Industry Segments. The Registrant is engaged in the manufacture, marketing, and leasing of a wide variety of products consisting principally of (1) "Railcars" (i.e. railroad freight cars), principally tank cars, hopper cars, gondola cars, intermodal cars and miscellaneous other freight cars; (2) "Marine Products" such as boats, barges and various offshore service vessels for ocean and inland waterway service and military vessels for the United States Government and, to a limited extent, various size vessels for international ocean transportation companies; (3) "Construction Products" such as highway guardrail and highway and railway bridges, power plants, mills, etc, highway safety products, passenger loading bridges and conveyor systems for airports and other people and baggage conveyance requirements, ready-mix concrete production and aggregates including distribution, and providing raw material to owners, contractors and sub-contractors for use in the building and foundation industry; (4) "Containers" such as (a) extremely large, heavy pressure vessels and other heavy welded products including industrial silencers, desalinators, evaporators, and gas processing systems, (b) pressure and non-pressure containers for the storage and transportation of liquefied gases, brewery products and other liquid and dry products, and (c) heat transfer equipment for the chemical, petroleum and petrochemical industries; (5) "Metal Components" such as weld fittings (tees, elbows, reducers, caps, flanges, etc.) used in pressure piping systems and container heads (the ends of pressure and non-pressure containers) for use internally and by other manufacturers of containers; and (6) "Leasing" of Registrant manufactured railcars and barges to various industries. Various financial information concerning the Registrant's industry segments for each of the last three fiscal years is included in the Registrant's 1996 Annual Report to Stockholders on page 22 under the heading "Segment Information", and such section is incorporated herein by reference. Railcars. The Registrant manufactures railroad freight cars, principally pressure and non- pressure tank cars, hopper cars, intermodal cars and gondola cars used for transporting a wide variety of liquids, gases and dry cargo. Tank cars transport products such as liquefied petroleum gas, liquid fertilizer, sulfur, sulfuric acids and corn syrup. Covered hopper cars carry cargo such as grain, dry fertilizer, plastic pellets and cement. Open-top hoppers haul coal, and top-loading gondola cars transport a variety of heavy bulk commodities such as scrap metals, finished flat steel products, machinery and lumber. Intermodal cars transport various products which have been loaded in containers to minimize shipping costs. Marine Products. The Registrant manufactures a variety of marine products pursuant to customer orders. It produces various types of vessels for offshore service including supply, crew, fishing and other types of boats. The Registrant is currently constructing various military vessels for both the United States Army and Navy. The Registrant produces river hopper barges which are used to carry coal, grain and miscellaneous commodities. The purchasers of the Registrant's marine products include inland waterway marine operators, offshore oil and gas drillers and operators, international ocean transportation companies, barge transport companies and domestic and foreign governmental authorities. Construction Products. The construction products manufactured by the Registrant include beams, girders, columns, highway guard rail and highway safety devices and related barrier products, ready-mix concrete and aggregates, passenger loading bridges, and baggage handling systems. These products are used in the bridge, highway construction and building industries and airports. Some of the sales of beams, girders and columns are to general contractors and subcontractors on highway construction projects. Generally, customers for highway guardrail and highway safety devices are highway departments or subcontractors on highway projects. Passenger loading bridges and conveyor systems are generally sold to contractors, airports, or airlines as part of airport terminal equipment. Ready-mix concrete and aggregates are used in the building and foundation industry, and customers include primarily owners, contractors and sub- contractors. Containers. The Registrant is engaged in manufacturing metal containers consisting of extremely large, heavy pressure vessels and other heavy welded products, including industrial silencers, desalinators, evaporators, and gas processing systems for the storage and transportation of liquefied petroleum ("LP") gas and anhydrous ammonia fertilizer. Pressure LP gas containers are utilized at industrial plants, utilities, small businesses and in suburban and rural areas for residential heating and cooking needs. Fertilizer containers are manufactured for highway and rail transport, bulk storage, farm storage and the application and distribution of anhydrous ammonia. The Registrant also makes heat transfer equipment for the chemical, petroleum and petrochemical industries and a complete line of custom vessels, standard steam jacketed kettles, mix cookers, and custom-fabricated cooking vessels for the food, meat, dairy, pharmaceutical, cosmetic and chemical industries. Metal Components. The metal components manufactured by the Registrant are made from ferrous and non-ferrous metals and their alloys and consist principally of butt weld type fittings, flanges and pressure and non-pressure container heads. The weld fittings include caps, elbows, return bends, concentric and eccentric reducers, full and reducing outlet tees, and a full line of pipe flanges, all of which are pressure rated. The Registrant manufactures and stocks, in standard, extra-heavy and double-extra-heavy weights and in various diameters, weld caps, tees, reducers, elbows, return bends, flanges and also manufactures to customer specifications. The basic raw materials for weld fittings and flanges are carbon steel, stainless steel, aluminum, chrome-moly and other metal tubing or seamless pipe and forgings. The Registrant sells its weld fittings and flanges to distributors and to other manufacturers of weld fittings. Container heads manufactured by the Registrant are pressed metal components used in the further manufacture of a finished product. Since the manufacture of container heads requires a substantial investment in heavy equipment and dies, many other manufacturers order container heads from the Registrant. Container heads are manufactured in various shapes and may be pressure rated or non-pressure, depending on the intended use in further manufacture. Other pressed shapes are also hot- or cold-formed to customer requirements. Leasing. The Company has one wholly-owned leasing subsidiary, Trinity Industries Leasing Company ("TILC"), which was incorporated in 1979. TILC is engaged in leasing specialized types of railcars, consisting of both tank cars and hopper cars, to industrial companies in the petroleum, chemical, grain, food processing, fertilizer and other industries which supply cars to the railroads. At March 31, 1996, TILC had under lease 8,283 railcars. During fiscal year 1995, TILC divested its inventory of river hopper barges previously held for lease. The barges were operated under an agreement which provided for management of the barges. The barges were generally used for movement of commodities on the inland waterway system, primarily the Mississippi and Missouri Rivers. Substantially all equipment leased by TILC was purchased from the Registrant at prices comparable to the prices for equipment sold by the Registrant to third parties. As of March 31, 1996, TILC had equipment on lease or available for lease purchased from the Registrant at a cost of $391.5 million. Generally, TILC purchases the equipment to be leased only after a lessee has committed to lease such equipment. The volume of equipment purchased and leased by TILC depends upon a number of factors, including the demand for equipment manufactured by the Registrant, the cost and availability of funds to finance the purchase of equipment, the Registrant's decision to solicit orders for the purchase or lease of equipment and factors which may affect the decision of the Registrant's customers as to whether to purchase or lease equipment. Although the Registrant is not contractually obligated to offer to TILC equipment proposed to be leased by the Registrant's customers, it is the Registrant's intention to effect all such leasing transactions through TILC. Similarly, while TILC is not contractually obligated to purchase from the Registrant any equipment proposed to be leased, TILC intends to purchase and lease all equipment which the Registrant's customers desire to lease when the lease rentals and other terms of the proposed lease are satisfactory to TILC, subject to the availability and cost of funds to finance the acquisition of the equipment. Marketing, Raw Materials, Employees and Competition. As of March 31, 1996, the Registrant operated in the continental United States and Mexico. The Registrant sells substantially all of its products through its own salesmen operating from offices in Montgomery, Alabama; Elizabethtown and Paducah, Kentucky; Shreveport, Louisiana; Flint, Michigan; St. Louis, Missouri; Gulfport, Mississippi; Asheville, North Carolina; Cincinnati and Girard, Ohio; Beaumont, Dallas/Ft. Worth, Houston and Navasota, Texas; Centerville, Utah; and Mexico. Independent sales representatives are also used to a limited extent. The Registrant markets railcars, containers and metal components throughout the United States. Except in the case of weld fittings, guardrail, and standard size LP gas containers, the Registrant's products are ordinarily fabricated to the customer's specifications pursuant to a purchase order. The principal materials used by the Registrant are steel plate, structural steel shapes and steel forgings. There are numerous domestic and foreign sources of such steel and most other materials used by the Registrant. The Registrant currently has approximately 16,300 employees, of which approximately 15,000 are production employees and 1,300 are administrative, sales, supervisory and office employees. There are numerous companies located throughout the United States that are engaged in the business of manufacturing various railcars and containers of the types manufactured by the Registrant, and these industries are highly competitive. Companies manufacturing products which compete with the Registrant's construction products consist of numerous other structural fabricators and ready-mix concrete producers, most of which are smaller than the Registrant. Small shipyards located on inland waterways and medium to large size shipyards located on or near ports on navigable waterways produce marine products which compete with those manufactured by the Registrant. Both domestic and foreign manufacturers of metal components, some of which are larger than the Registrant, compete with the Registrant. A number of well-established companies actively compete with TILC in the business of owning and leasing railcars, as well as banks, investment partnerships and other financial and commercial institutions. Recent Developments. Information concerning the Registrant's business acquisitions are included in the Registrant's 1996 Annual Report to Stockholders under the heading "Business Acquisitions," (pages 23 through 24) and such section is incorporated herein by reference. On June 25, 1996, the Board of Directors of the Registrant approved an initial public offering of one hundred percent (100%) of the common stock of a newly incorporated company which will acquire the assets and liabilities of a portion of the Registrant's Marine Products segment. The newly formed company will engage in the business of constructing and repairing ocean-going marine vessels. Completion of the offering is subject to registration of the offering with the Securities and Exchange Commission. Other Matters. The Registrant is not materially affected by federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. To date, the Registrant has not suffered any material shortages with respect to obtaining sufficient energy supplies to operate its various plant facilities or its transportation vehicles. Future limitations on the availability or consumption of petroleum products (particularly natural gas for plant operations and diesel fuel for vehicles) could have an adverse effect upon the Registrant's ability to conduct its business. The likelihood of such an occurrence or its duration, and its ultimate effect on the Registrant's operations, cannot be reasonably predicted at this time. Item 2. Properties. The Registrant's principal executive offices are located in a ten story office building containing approximately 107,000 sq. ft. and a connected adjacent building containing approximately 66,000 sq. ft., each owned by the Registrant, in Dallas, Texas. The following table sets forth certain salient facts with respect to each of the operating plant properties owned and/or leased by the Registrant at March 31, 1996: Registrant's Uses of Approx. Interest in Premises Bldg. Area Expiration Annual Plant Location Property (1) (Sq Ft.) Date Rentals Ackerman, MS Fee (e) 92,000 - - Ashland City, TN Fee (b) 92,000 - - Asheville, NC Lease (a) 94,000 06/30/99 $198,000 Beaumont, TX Fee (a) 431,000 - - Belpre, OH Fee (c) 42,000 - - Bessemer, AL Fee (a) 1,183,000 - - Brusly, LA Fee (b) 148,000 - - Butler, PA Fee (a) 386,000 - - Butler, PA Lease (a) 30,000 12/31/02 $ 67,000 Caruthersville, MO Fee (b) 266,000 - - Caruthersville, MO Fee (b) 40,000 03/01/99 $ 72,000 Cedartown, GA Fee (d) 143,000 - - Centerville, UT Fee (c) 63,000 - - Cincinnati, OH Fee (d,e) 203,000 - - Dallas, TX (2 plants) Fee (a) 447,000 - - Denton, TX Fee (a) 117,000 - - Elizabethtown, KY Fee (c) 40,000 - - Elkhart, IN Fee (e) 108,000 - - Enid, OK Fee (e) 73,000 - - Flat Rock, NC Lease (a) 8,000 01/31/98 $ 64,000 Ft. Worth, TX (6 plants) Fee (a,c,d) 650,000 - - Girard, OH (2 plants) Fee (c) 326,000 - - Greenville, PA Fee (a) 752,000 - - Gulfport, MS Fee (b) 438,000 - - Harvey, LA Lease (b) 34,000 03/26/01 $ 86,000 Houston, TX (3 plants) Fee (b,c,d) 587,000 - - Huehuetoca, MX Fee (a,d) 264,000 - - Johnstown, PA Fee (a) 148,000 - - Lima, OH Fee (c) 72,000 - - Lockport, LA Fee (b) 43,000 - - Longview, TX (4 plants) Fee (a,d) 631,000 - - Longview, TX Lease (a) 57,000 10/31/00 $ 35,000 Madisonville, LA Fee (b) 137,000 - - McKees Rocks, PA Fee (a) 462,000 - - Monclova, MX Fee (a,d) 81,000 - - Montgomery, AL Fee (c) 310,000 - - Moss Point, MS (2 plants) Fee (b) 73,000 - - Mt. Orab, OH Fee (a) 183,000 - - Nashville, TN Fee (b) 261,000 - - Navasota, TX Fee (e) 170,000 - - New Orleans, LA Lease (2) (b) 254,000 12/31/16 $ 42,000 New Orleans, LA Lease (b) 94,000 12/31/16 $ 53,000 Oklahoma City, OK Fee (a,d) 260,000 - - Orange, TX Fee (d) 735,000 - - Paducah, KY Fee (b) 49,000 - - Panama City, FL Fee (b) 41,000 - - Paris, TN Fee (a) 21,000 - - Pascagoula, MS Fee (b) 40,000 - - Pine Bluff, AR Fee (d) 56,000 - - Quincy, IL Fee (d) 95,000 - - Rocky Mount, NC Fee (d) 53,000 - - Saginaw, TX (2 plants) Fee (a) 291,000 - - San Antonio, TX Fee (c) 224,000 - - Sand Springs, OK Fee (e) 184,000 - - Shreveport, LA Lease (a,d) 691,000 11/30/42 $ 12,000 Tulsa, OK Fee (a,d) 121,000 - - Vallejo, MX Fee (d) 54,000 - - Vidor, TX Fee (a) 126,000 - - West Memphis, AR Fee (e) 77,000 - - (1) (a) Manufacture of Railcars (b) Manufacture of Marine Products (c) Manufacture of Construction Products (d) Manufacture of Containers (e) Manufacture of Metal Components (2) The lease may be canceled by either party after 12/31/96. All machinery and equipment and the buildings occupied by the Registrant are maintained in good condition. The Registrant estimates that its plant facilities were utilized during the fiscal year at an average of approximately 70 percent of present productive capacity for railcars, 65 percent for Marine Products, 75 percent for Construction Products, 65 percent for Containers, and 80 percent for Metal Components. Item 3. Legal Proceedings. See page 28 of the Registrant's 1996 Annual Report to Stockholders which is incorporated herein by reference for a discussion of legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders during the fourth quarter of fiscal year 1996. ___________________ PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. Market for the Registrant's common stock and related stockholder matters are incorporated herein by reference from the information contained on page 3 under the caption "Corporate Profile" and on page 15 under the caption "Financial Summary" of the Registrant's 1996 Annual Report to Stockholders. Item 6. Selected Financial Data. Selected financial data is incorporated herein by reference from the information contained on page 15 under the caption "Financial Summary" of the Registrant's 1996 Annual Report to Stockholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's discussion and analysis of financial condition and results of operations are incorporated herein by reference from the Registrant's 1996 Annual Report to Stockholders, pages 16 through 17. Other persons, who are not executive officers of the Registrant, are listed on page 30 under the caption "Division Officers" of the Annual Report to Stockholders, and such caption is hereby incorporated by reference. Item 8. Financial Statements and Supplementary Data. Financial statements of the Registrant at March 31, 1996 and 1995 and for each of the three years in the period ended March 31, 1996 and the auditor's report thereon, and the Registrant's unaudited quarterly financial data for the two year period ended March 31, 1996, are incorporated by reference from the Registrant's 1996 Annual Report to Stockholders, pages 18 through 29. Item 9. Disagreements on Accounting and Financial Disclosure. No disclosure required. PART III Item 10. Directors and Executive Officers of the Registrant. Information concerning the directors and executive officers of the Registrant is incorporated herein by reference from the Registrant's definitive proxy statement for the Annual Meeting of Stockholders on July 17, 1996, page 3, under the caption "Election of Directors". Executive Officers of the Registrant.* The following table sets forth the names and ages of all executive officers of the Registrant, the nature of any family relationship between them, all positions and offices with the Registrant presently held by them, the year each person first became an officer and the term of each person's office: Officer Term Name(1)(2)(3) Age Office Since Expires(4) W. Ray Wallace 73 Chairman, President & 1958 July 1996 Chief Executive Officer Ralph A. Banks, Jr. 72 Senior Vice President 1962 July 1996 Richard G. Brown 72 Senior Vice President 1979 July 1996 John T. Sanford 44 Senior Vice President 1993 July 1996 Timothy R. Wallace 42 Director & Group 1993 July 1996 Vice President John Dane III 45 Group Vice President 1993 July 1996 Mark W. Stiles 47 Group Vice President 1993 July 1996 Jack L. Cunningham, Jr. 51 Vice President 1982 July 1996 John M. Lee 35 Vice President 1994 July 1996 R. A. Martin 61 Vice President 1974 July 1996 Tim L. Oglesby 38 Vice President 1995 July 1996 F. Dean Phelps, Jr. 52 Vice President 1979 July 1996 Joseph F. Piriano 59 Vice President 1992 July 1996 Linda S. Sickels 45 Vice President 1995 July 1996 Neil O. Shoop 52 Treasurer 1985 July 1996 William J. Goodwin 48 Controller 1986 July 1996 J.J. French, Jr. 65 Secretary 1970 July 1996 * This data is furnished as additional information pursuant to instructions to Item 401 to Regulation S-K and in lieu of inclusion in the Registrant's Proxy Statement. (1) W. Ray Wallace, Chairman, President & Chief Executive Officer, is the father of Timothy R. Wallace, a Director and Group Vice President of the Registrant. (2) Mr. Stiles joined the Registrant in 1991 upon the acquisition by the Registrant of Transit Mix Concrete Company. For at least five years prior thereto, Mr. Stiles was Executive Vice President and General Manager of Transit Mix. Mr. Piriano was Director of Purchasing for the Registrant for at least the last five years. Mr. Lee joined the Registrant in 1994. For at least five years prior thereto, Mr. Lee was a manager for a national public accounting firm. Mr. Oglesby joined the Registrant in 1993. For at least five years prior thereto, Mr. Oglesby was a software manager for a national defense contractor. Ms. Sickels joined the Registrant in 1992. Prior to that, Ms. Sickels was in government relations for a state utility company. All of the other above-mentioned executive officers, except Mr. French, have been in the full-time employ of the Registrant or its subsidiaries for more than five years. Although the titles of certain such officers have changed during the past five years, all have performed essentially the same duties during such period of time. (3) Mr. French, an attorney, is President of Joe French & Associates, a Professional Corporation, since April, 1993. For at least five years prior thereto, Mr. French was employed by Locke Purnell Rain Harrell, a Professional Corporation. (4) It is anticipated that all of such officers will be reelected at the Annual Meeting of the Board of Directors to be held on July 17, 1996. Item 11. Executive Compensation. Information on executive compensation is incorporated herein by reference from the Registrant's definitive proxy statement for the Annual Meeting of Stockholders on July 17, 1996, page 6 under the caption "Executive Compensation and Other Matters". Item 12. Security Ownership of Certain Beneficial Owners and Management. Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Registrant's definitive proxy statement for the Annual Meeting of Stockholders on July 17, 1996, page 2, under the caption "Voting Securities and Stockholders", and page 3, under the caption "Election of Directors". Item 13. Certain Relationships and Related Transactions. Information concerning certain relationships and related transactions is incorporated herein by reference from the Registrant's definitive proxy statement for the Annual Meeting of Stockholders on July 17, 1996, pages 3 through 4, under the caption "Election of Directors". ______________________ PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) 1&2. Financial statements and financial statement schedules. The financial statements and schedules listed in the accompanying indices to financial statements and financial statement schedules are filed as part of this Annual Report Form 10-K. 3. Exhibits. The exhibits listed on the accompanying index to exhibits are filed as part of this Annual Report Form 10-K. (b) Reports on Form 8-K No Form 8-K was filed during the fourth quarter of fiscal 1996. Trinity Industries, Inc. Financial Statements and Financial Statement Schedules for Inclusion in Annual Report Form 10-K Year Ended March 31, 1996 Trinity Industries, Inc. Index to Financial Statements and Financial Statement Schedules (Item 14 (a)) REFERENCE 1996 Annual Form Report to 10-K Stockholders (Page) (Page) Consolidated balance sheet at March 31, 1996 and 1995 . . . . . . . . . . - 19 For each of the three years in the period ended March 31, 1996: Consolidated income statement . . . . . . - 18 Consolidated statement of cash flows. . . - 20 Consolidated statement of stockholders' equity. . . . . . . . . . - 21 Notes to consolidated financial statements . . . . . . . . . . . . . . . - 21 Supplemental information: Supplementary unaudited quarterly data . . - 29 Consolidated financial statement schedule for each of the three years in the period ended March 31, 1996: II - Allowance for doubtful accounts . 13 - Other financial information: Weighted average interest rate on short-term borrowings. . . . . . . . 13 - All other schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the consolidated financial statements, including the notes thereto. The consolidated financial statements and supplementary information listed in the above index which are included in the 1996 Annual Report to Stockholders are hereby incorporated by reference. SCHEDULE II Trinity Industries, Inc. Allowance for Doubtful Accounts Year Ended March 31, 1996, 1995 and 1994 (in millions) Additions Balance at charged to Accounts Balance beginning costs and charged at end of year expenses off of year Year Ended March 31, 1996 $ 0.8 $ 0.8 $0.5 $ 1.1 Year Ended March 31, 1995 $ 1.0 $ 0.3 $0.5 $ 0.8 Year Ended March 31, 1994 $ 1.2 $ 0.3 $0.5 $ 1.0 ___________________________ Trinity Industries, Inc. Other Financial Information Short-Term Borrowings The weighted average interest rate on short-term borrowings outstanding as of March 31, 1996, 1995, and 1994 is 6.04%, 5.28%, and 3.57%, respectively. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. Trinity Industries, Inc. By /s/ F. Dean Phelps, Jr. Registrant F. Dean Phelps, Jr. Vice President June 26, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the Registrant and in the capacities and on the dates indicated: Directors: Principal Executive Officer: /s/ David W. Biegler /s/ W. Ray Wallace David W. Biegler W. Ray Wallace Director President and Chairman June 26, 1996 June 26, 1996 /s/ Barry J. Galt Barry J. Galt Principal Financial Officer: Director /s/ John T. Sanford June 26, 1996 John T. Sanford Senior Vice President /s/ Clifford J. Grum June 26, 1996 Clifford J. Grum Director June 26, 1996 Principal Accounting Officer: /s/ F. Dean Phelps, Jr. /s/ Dean P. Guerin F. Dean Phelps, Jr. Dean P. Guerin Vice President Director June 26, 1996 June 26, 1996 /s/ Jess T. Hay Jess T. Hay Director June 26, 1996 /s/ Edmund M. Hoffman Edmund M. Hoffman Director June 26, 1996 /s/ Ray J. Pulley Ray J. Pulley Director June 26, 1996 /s/ Timothy R. Wallace Timothy R. Wallace Director June 26, 1996 Trinity Industries, Inc. Index to Exhibits (Item 14(a)) NO. DESCRIPTION PAGE (3.1) Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.A to Registration Statement No. 33-10937 filed April 8, 1987). * (3.2) By-Laws of Registrant (incorporated by reference to Exhibit 3.2 to Form 10-K filed June 16, 1992). * (4.1) Specimen Common Stock Certificate of Registrant (incorporated by reference to Exhibit 3B to Registration Statement No. 33-10937 filed April 8, 1987). * (10.1) Fixed Charges Coverage Agreement dated as of January 15, 1980, between Registrant and Trinity Industries Leasing Company (incorporated by reference to Exhibit 10.1 to Registration Statement No. 2-70378 filed January 29, 1981). * (10.2) Tax Allocation Agreement dated as of January 22, 1980 between Registrant and its subsidiaries (including Trinity Industries Leasing Company) (incorporated by reference to Exhibit 10.2 to Registration Statement No. 2-70378 filed January 29, 1981). * (10.3) Form of Executive Severance Agreement entered into between the Registrant and all executive officers of the Registrant (other than Mr. French) (incorporated by reference to Exhibit 10.3 to Form 10-K filed June 19, 1989). * (10.4) Trinity Industries, Inc., Stock Option Plan With Stock Appreciation Rights (incorporated by reference to Registration Statement No. 2-64813 filed July 5, 1979, as amended by Post-Effective Amendment No. 1 dated July 1, 1980, Post-Effective Amendment No.2 dated August 31, 1984, and Post-Effective Amendment No. 3 dated July 13, 1990). * (10.5) Directors' Retirement Plan adopted December 11, 1986 ( incorporated by reference to Exhibit 10.6 to Form 10-K filed June 14, 1990). * (10.6) 1989 Stock Option Plan with Stock Appreciation Rights (incorporated by reference to Registration Statement No. 33-35514 filed June 20, 1990) * (10.7) Supplemental Retirement Benefit Plan for W. Ray Wallace, effective July 18, 1990 (incorporated by reference to Exhibit 10.8 to Form 10-K filed June 13, 1991). * (10.8) 1993 Stock Option and Incentive Plan (incorporated by reference to Registration Statement No. 33-73026 filed December 15, 1993) * Trinity Industries, Inc. Index to Exhibits -- (Continued) (Item 14(a)) NO. DESCRIPTION PAGE (10.9) Pension Plan A for Salaried Employees of Trinity Industries, Inc. and Certain Affiliates dated August 20, 1985, as amended by Amendment No. 1 dated May 27, 1986, Amendment No. 2 dated December 30, 1986, Amendment No. 3 dated December 12, 1986, Amendment No. 4 dated March 31, 1987, Amendment No. 5 dated March 31, 1987, Amendment No. 6 dated December 4, 1987, Amendment No. 7 dated July 26, 1988, Amendment No. 8 dated July 28, 1988, Amendment No. 9 dated March 15, 1989, Amendment No. 10 dated March 31, 1989, and Amendment No. 11 dated July 14, 1989 (incorporated by reference to Exhibit 10.9 to Form 10-K filed June 13, 1991). * (10.10) Supplemental Profit Sharing Plan for Employees of Trinity Industries Inc. and Certain Affiliates dated June 30, 1990, as amended by Amendment No. 1 dated June 13, 1991. Supplemental Profit Sharing Trust for Employees of Trinity Industries, Inc. and Certain Affiliates dated June 30, 1990, as amended by Amendment No. 1 dated June 13, 1991 (incorporated by reference to Exhibit 10.10 to Form 10-K filed June 13, 1991). * (13) Annual Report to Stockholders. * (21) Listing of subsidiaries of the Registrant. 17 (23) Consent of Independent Auditors. 12 (27) Financial Data Schedules. (99.1) Annual Report on Form 11-K for employee stock purchase, savings and similar plans filed pursuant to Rule 15d-21. EXHIBIT 13 Corporate Profile Trinity Industries, Inc. is a leading manufacturer of a variety of products with manufacturing and fabrication operations in six business segments: Railcars, Marine Products, Construction Products, pressure and non-pressure Containers, Metal Components, and Leasing. The Company, headquartered in Dallas, Texas, has seventy-five facilities containing more than thirteen million square feet of manufacturing space in eighteen states and in Mexico. The Company also operates more than eighty ready-mix concrete and aggregate locations in Texas and Louisiana. The Company has a continuing strategy of growth through internal expansion and strategic acquisitions within its established business segments. Trinity's stockholders of record numbered more than 2,500 at March 31, 1996. The Company's common stock is traded on the New York Stock Exchange under the symbol TRN. Highlights (in millions except per share data) Year Ended March 31 1996 1995 1994 Revenues. . . . . . . . . . . . . . . . $2,496.0 2,314.9 1,784.9 Income before cumulative effect of change in accounting for income taxes . . . . $ 113.8 89.1 68.3 Cumulative effect of change in accounting for income taxes. . . . . . - - 7.9 Net income. . . . . . . . . . . . . . . $ 113.8 89.1 76.2 Income per common and common equivalent share before cumulative effect of change in accounting for income taxes. $ 2.72 2.20 1.69 Cumulative effect of change in accounting for income taxes. . . . . . - - 0.20 Net income per common and common equivalent share . . . . . . . . . . . $ 2.72 2.20 1.89 Cash dividends per share. . . . . . . . $ 0.68 0.68 0.64 Stockholders' equity. . . . . . . . . . $ 746.0 641.2 570.5 Total assets: Excluding Leasing Subsidiary. . . . . $1,159.6 1,121.8 959.5 Leasing Subsidiary. . . . . . . . . . $ 296.2 298.2 347.3 $1,455.8 1,420.0 1,306.8 Capital expenditures (net of business acquisitions): Excluding Leasing Subsidiary. . . . . $ 46.9 64.7 45.2 Leasing Subsidiary. . . . . . . . . . $ 86.1 28.7 37.6 $ 133.0 93.4 82.8 PAGE 3 To Our Stockholders By any measure, fiscal 1996 was a very significant year. We are proud to have, once again, achieved record revenues and net income. Trinity is positioned to take advantage of opportunities as they arise, and these opportunities continue to grow. Our primary challenge over the past year has been to find and train qualified employees to accommodate our growth. Additional qualified personnel will continue to be a significant challenge in the year ahead. In the twelve month period ended March 31, 1996, net income increased 28% over the prior fiscal year, to a record $113.8 million, or $2.72 per share. Revenues increased 8% over fiscal 1995 to a record $2.5 billion. Overall, we are seeing our business segments continue to marshal their forces and focus their efforts on some very significant opportunities. It is gratifying to see these segments in which we have invested a considerable amount of time, energy, and resources begin to assume the market positions that we had envisioned several years ago. Our Marine Products segment has taken a major leap forward over the past year. Replacement cycles are creating more demand for various types of vessels. We are seeing particularly good demand for inland hopper barges. Our nation's grain storage is at its lowest level in several decades, creating a need for additional crops and higher yields to meet the escalating export demands. This translates into increasing volumes of both grain and fertilizer shipments. Coal shipments account for a significant percentage of barge use as well. Barge traffic on our rivers remains very strong, and with frequent use and aging, comes the need for replacement. Boats and ships used for oceanographic research, offshore work, patrol, and recreation are an important part of our Marine Products segment. We have signed a contract for a large supply vessel, and if energy demands remain steady and exploration and drilling continue to move farther and farther offshore, we should see an increased need for newer and larger offshore supply boats within the next twenty-four months. The replacement cycle continues to play a vital role in our Railcars segment and is strongly correlated to the advancing age of the total railcar fleet. Railcar retirements and scrappings should continue to create a healthy demand for our products. As our economy continues to expand, we expect to see a growing volume of rail traffic. Good opportunities exist as railroads upgrade their equipment, more private shippers acquire their own railcar fleets, and the demand for specialized railcars increases. All of this bodes well for Trinity. We continue to meet market needs by developing new products and improving our methods for producing railcars and parts. Our Construction Products segment has experienced good growth in revenues and income over the past year, fueled primarily in two areas - highway safety products and ready-mix concrete and related materials. In addition to producing a quality guardrail products, Trinity is playing a leading role in safer highway barrier end treatments. Our impact-absorbing highway safety barriers are rapidly replacing barriers that do not meet the new safety standards that will take effect in 1998. Trinity's ready-mix concrete and aggregates business is enjoying growth in its governmental, residential, and commercial markets. PAGE 4 Our Metal Components segment continues to post record financial results. The intensifying worldwide demand for energy and petrochemical products points to continuing strong demand for Trinity's fittings, flanges and heads, and continuing strong financial performance in this segment. Our Containers segment is profitable and growing, reflecting the expanding needs of residential, commercial, and industrial users of liquefied petroleum gas. We expect this trend to continue. Leasing remains a profitable marketing tool for Trinity, adding to our flexibility, while improving our ability to serve the customer. Overall, our diverse but compatible business segments create unique opportunities for our Company, enhancing our customer service and marketing efforts, while often providing the competitive edge. Our seasoned product managers have learned to draw upon these integrated resources, using them to Trinity's advantage in the marketplace. We are realizing benefits from our acquisition of Trinity Industries de Mexico (formerly Grupo Tatsa) in the first quarter of fiscal 1996. Trinity Industries de Mexico, headquartered in Mexico City, produces a variety of fabricated steel products for use in the United States and Mexico, while affording Trinity a more competitive position in the growing South American market. As we become increasingly global in our operations, we benefit from NAFTA, from the new markets, and from healthy competition. As we grow, we continue to place priority on quality products, excellent service, well-trained employees, and competitive prices. Our QuEST Total Quality Management program serves us well and has expanded significantly since its initiation in the late eighties. In fact, as a result of the innovation and enthusiasm with which our employees have responded to this program, several major companies have recognized Trinity for our quality and service excellence. We use our bilingual, computer-assisted training program to successfully teach both job skills and safety procedures. This program, coupled with intensive on-the-job training, helps our employees master specific tasks and become skilled at their professions. We also are increasing the use of computers and robotics in our manufacturing processes. Today, we find ourselves in a very dynamic environment where change is the only constant. New products are continually being created and improved. Global markets are opening and expanding, and technology is rapidly advancing. Trinity is in an excellent position to take advantage of the opportunities that change presents. The past year brought additional talent to our Board of Directors. Clifford J. Grum, chairman and chief executive officer of Temple-Inland, Inc., became a Trinity director. His leadership and expertise will certainly be an asset to Trinity. In summary, the past year has been good for Trinity, and we look forward to even better days ahead. We are grateful to those whose loyalty and dedication have made our success possible - our employees, customers, suppliers, and stockholders. We will strive to earn your continued confidence. W. Ray Wallace Chairman, President and Chief Executive Officer PAGE 5 Railcars Trinity is one of North America's largest manufacturers of quality tank and freight railcars and related parts. Trinity's tank cars transport a broad spectrum of products, such as chemicals, petroleum products and liquid food products. Our full range of freight cars transport bulk products and commodities, such as coal, cement and other minerals, grain, plastic resins, lumber, and intermodal containers and trailers. Our principal customers include railroads, leasing companies, and private shippers across a sweeping range of North American industries. In fiscal 1996, Railcars segment operating profit increased 34% over fiscal 1995, to a record $118.8 million. Revenues increased 8% over fiscal 1995, to a record $1.3 billion. We develop, build, rebuild, and repair railcars, and also provide parts for our broad mix of customers. Driven by the ongoing need to replace their aging rolling stock and by the positive economics of employing larger and lighter-weight railcars, our customers continue to rely on Trinity to meet their healthy demand for railcars. Based on our outlook for a stable, slow-growth economy and continuing strong exports, we anticipate continued vigorous product demand. We are constantly seeking ways to improve our manufacturing processes, to make our products even better, and to develop new products that meet our customers ever-changing needs. We actively engage in constant dialogue with our customers, jointly exploring the factors that affect their businesses and future equipment demands. Trinity employs sophisticated, computer-based training techniques for our railcar production teams. This training spans all areas of production from quality training and compliance to job skills development to fabrication process training and certification. Our engineers use state-of-the-art computer systems to aid them in developing reliable railcars, using quality materials, to meet our customers requirements. Trinity's Total Quality Management program, QuEST, encourages and empowers all Trinity employees to actively participate in improving product quality and enhancing efficient, low-cost production. Systemwide, key manufacturing personnel form cross-functional teams, coming together to assess and evaluate our manufacturing processes, address quality goals and customer satisfaction, and develop effective cost standards--all with an eye toward Trinity's bottom line results. PAGE 6 We have earned our reputation by keeping our costs low, putting our customers first, and knowing our business well. We are optimistic about the future for our railcar business. By continuing to follow these guiding principles, we will maintain our position as North America's leading railcar manufacturer. PAGE 7 Marine Products Trinity is one of the largest builders of small to mid-size boats, ships, and barges. Our vessels are used around the world by a vast number of governmental, commercial, and individual customers. Trinity-made vessels ply the seas and waterways delivering cargoes, transporting passengers, and maintaining peace -- all vital to world commerce. Trinity is one of North America s foremost makers of hopper and tank barges. And historically, Trinity is North America's leading maker of offshore supply boats and crew boats that service the oil and gas industry. In addition, Trinity builds a variety of tug boats, tow and push boats, fishing boats, fire and rescue boats, container ships, excursion boats, and luxury yachts. Governments around the world rely on Trinity to build their fleets of hydrographic and oceanographic research ships, ocean surveillance ships, landing craft, and high speed patrol vessels. Our marine engineering and architectural capabilities enable us to develop and build optimum vessels to meet our customers requirements. In fiscal 1996, Trinity made substantial investments in expanding our production capacity-investments that should generate increasing benefits beginning in fiscal 1997. We committed significant capital to acquiring additional shipyards and to making our existing shipyards more efficient. We acquired and installed additional production equipment and expanded our ship repair and conversion facilities. We embarked on an aggressive program to hire and train skilled, quality workers. All of this was done to insure that Trinity continues to meet the future needs of our customers throughout the world. In fiscal 1996, Marine Products operating profit was $22.0 million on revenues of $421.4 million. This compares to operating profit of $30.3 million on revenues of $369.7 million in fiscal 1995. Results for fiscal 1996 were affected by the acquisitions and expansions discussed above. Results for fiscal 1995 reflected profits totaling approximately $6.7 million from the sale of Trinity's inventory of hopper barges previously held for lease. PAGE 8 We are now experiencing a replacement cycle that is pushing ever-higher the demand for barges of many types. Aging vessels and expanding volumes of grain and coal exports are continuing to create strong demand for Trinity s hopper barges. Further, recent environmental legislation requires the gradual phase-in of double-skin fuel tanker barges as replacements for the single-hull types. We expect these trends to endure for some time, producing excellent and growing demand for Trinity's barges. We also foresee a similar replacement building trend developing for Trinity's offshore supply boat products. PAGE 9 Construction Products Trinity offers a diverse array of construction products, including highway guardrail and safety barriers, ready-mix concrete and related materials, custom roll-formed shapes for railcars, barges, trailers and other uses, structural components for highway and railroad bridges, and special products, such as airport equipment and dump bodies for mining vehicles. Our products are used nationwide by commercial, industrial, governmental and utility customers. In fiscal 1996, Construction Products operating profit increased 22% over fiscal 1995, to a record $43.4 million. Revenues increased 7% over fiscal 1995, to a record $380.6 million. Trinity is one of the nation s largest manufacturers of highway guardrail and safety end treatments. Trinity's guardrail is used across North America to help protect the lives of the millions who travel our streets and highways. Our safety barriers reduce fatalities and increase the safety of these roadways by efficiently absorbing the energy generated by high-speed vehicle impacts. Recent legislation, providing funding for highway construction and maintenance of the newly-designated National Highway System, points to growth in construction and increased demand for Trinity's highway guardrail and safety products. The other anchor of Trinity's Construction Products segment is our ready-mix concrete and materials business. Our wholly-owned subsidiary, Transit Mix Concrete & Materials Company, is a leading producer of ready-mix concrete in the markets we serve. We continue to be a key supplier of concrete for the rapidly growing highway, residential, commercial, industrial, and municipal construction now taking place in our markets. We anticipate this strong growth in construction to continue for some time, providing significant opportunities for Trinity. PAGE 10 Trinity also mines and supplies a variety of aggregate materials. Through our wholly-owned subsidiary, Trinity Materials, Inc., we operate a number of mining sites across Texas and in Louisiana. We supply our products to a wide range of contractors, to builders of the highway transportation infrastructure, and to other Trinity subsidiaries. Because wasted time is wasted money, Trinity is dedicated to superior service and maintaining state-of-the-art equipment. This insures timely delivery of products to our customers when they need them. We foresee excellent growth opportunities for Trinity's ready-mix concrete and materials business. PAGE 11 Containers Trinity manufactures a range of transportation and storage tanks, custom heavy pressure vessels, and other heavy welded products. Our products are used extensively in the transportation and storage of liquefied petroleum gases (LPG) and other liquid and dry products. Trinity's custom products include large, fabricated and machined gas turbine weldments, refinery and chemical reactors, industrial silencers, heat recovery systems, and seawater evaporators. Trinity's products are manufactured from a variety of materials, including carbon and stainless steel, alloy, and aluminum. In fiscal 1996, Containers operating profit increased 26% over fiscal 1995, to $12.2 million. Revenues increased to $174.3 million in fiscal 1996, up from $169.7 million in fiscal 1995. Trinity markets transportation and storage containers directly to LPG dealers, distributors, and contractors around the world. A core business for decades, our LPG containers are commonly used in a variety of residential markets. We also market an assortment of containers to commercial users and large industrial companies. Trinity's acquisition of Grupo TATSA, now known as Trinity Industries de Mexico, bolsters our production capability and flexibility and provides important inroads into new Latin American markets. Throughout our history, Trinity's experienced people have given continuous attention to improving our low-cost production methods. This focus continues today. We constantly seek new opportunities to reengineer our manufacturing processes to increase efficiency and reduce production time, while improving the product quality and integrity that is the hallmark of Trinity. These business approaches, combined with our commitment to identify and vigorously penetrate new markets, both domestic and foreign, provide excellent growth opportunities for Trinity's Containers segment. PAGE 12 Metal Components Trinity is one of the nation's leading producers of weld fittings, flanges, and container heads. Capitalizing on the acknowledged quality and dependability of our Hackney and Flo-Bend brands, Trinity manufactures and markets a wide range of weld fittings, including elbows, return bends, concentric and eccentric reducers, and full and reducing outlet tees. Trinity's broad offering of forged flanges include standard weldnecks, slip-ons, and blind flanges as well as specialty flanges. Our fittings and flanges are manufactured from carbon and stainless steel, chrome-moly, and other grades of material. Trinity also produces container heads from a wide variety of metals, such as carbon and stainless steel, nickel-base alloys, and titanium. We employ both hot and cold forming processes for our metal component products to help insure low-cost production, maximum efficiency, and product quality. In fiscal 1996, the Metal Components segment's operating profit increased 56% over fiscal 1995, to a record $23.2 million. Revenues increased 24% over fiscal 1995, to a record $131.1 million. Trinity's fittings, flanges, and container heads are used extensively in the energy, chemical, and beverage industries, as well as in other processing industries requiring piping and storage systems. We market our growing range of fitting and flange products to distributors that service these industries, and we market our container heads directly to vessel manufacturers. During fiscal 1996, we expanded our production capacity by adding upgraded manufacturing equipment. As a result, Trinity, now more than ever, is positioned to provide superior products and services to our customers. Trinity's Fitting and Flange Group is ISO 9002 (International Organization for Standardization) registered, recognizing our ability to meet international standards for consistency in product quality, manufacturing processes, and controls. Our continuing investment in operations demonstrates Trinity's commitment to our business and to our customers. As the world moves toward a more globalized economy, Trinity will pursue ever-expanding international marketing opportunities for the Metal Components segment. In particular, we foresee dramatic growth in worldwide energy consumption, leading to increased demand for petrochemical transport and storage. Trinity is ideally positioned to satisfy the storage and delivery demands created by a changing world. PAGE 13 Leasing Trinity's wholly-owned leasing subsidiary, Trinity Industries Leasing Company (TILC), offers our customers a viable alternative to railcar purchasing. We use TILC as a marketing tool to complement our railcar sales activities, thus broadening our penetration of the railcar market. In fiscal 1996, the Leasing segment's operating profit was $23.4 million, on revenues of $135.4 million. This compares to operating profit of $23.6 million, on revenues of $156.9 million in fiscal 1995. Because of the consolidation of TILC under Statement of Financial Accounting Standards Number 94 (see Summary of Significant Accounting Policies and Leasing notes in Notes to Consolidated Financial Statements), intercompany interest income, aggregating $11.2 million, is eliminated from Trinity's consolidated financial statements. PAGE 14
Financial Summary (in millions except for percent and per share data) Year Ended March 31 1996 1995 1994 1993 1992 Revenues . . . . . . . . . . . . . . . $2,496.0 2,314.9 1,784.9 1,540.0 1,273.3 Operating profit . . . . . . . . . . . $ 201.2 157.5 116.6 74.6 43.4 Interest expense, net (excluding Leasing Subsidiary). . . . $ 14.8 11.4 4.0 3.3 6.4 Income before income taxes and cumulative effect of change in accounting for income taxes . . . . . $ 186.3 147.5 114.2 72.1 39.7 Provision for income taxes . . . . . . $ 72.5 58.4 45.9 27.1 15.4 Effective tax rate . . . . . . . . . . % 38.9 39.6 40.2 37.6 38.8 Income before cumulative effect of change in accounting for income taxes. . . . . . . . . . . $ 113.8 89.1 68.3 45.0 24.3 Cumulative effect as of April 1, 1993 of change in accounting for income taxes. . . . . . . . . . . $ - - 7.9 - - Net income . . . . . . . . . . . . . . $ 113.8 89.1 76.2 45.0 24.3 Total assets . . . . . . . . . . . . . $1,455.8 1,420.0 1,306.8 1,089.1 1,021.2 Long-term debt . . . . . . . . . . . . $ 206.4 242.9 277.9 293.2 357.3 Stockholders' equity . . . . . . . . . $ 746.0 641.2 570.5 507.3 379.0 Stock data: Weighted average number of common and common equivalent shares outstanding. . . . . . . . . 41.9 40.5 40.3 35.4 34.2 Income per common and common equivalent share before cumulative effect of change in accounting for income taxes. . . $ 2.72 2.20 1.69 1.27 0.71 Cumulative effect of change in accounting for income taxes . . . . $ - - 0.20 - - Net income per common and common equivalent share . . . . . . $ 2.72 2.20 1.89 1.27 0.71 Dividends per share . . . . . . $ 0.68 0.68 0.64 0.53 0.53 Stock closing price range: First quarter . . . . . . . . . . . $ 40 1/4- 39 3/4- 35 1/2- 22 1/2- 19 3/8- 32 33 7/8 29 5/8 18 16 1/8 Second quarter. . . . . . . . . . . $ 36 1/8- 35 1/4- 38 1/4- 22- 19 1/8- 30 7/8 31 32 1/2 19 7/8 15 7/8 Third quarter . . . . . . . . . . . $ 32 1/2- 35 3/8- 43 7/8- 26 1/2- 20 7/8- 28 1/4 30 1/2 34 3/4 20 5/8 16 1/2 Fourth quarter. . . . . . . . . . . $ 35 3/4- 37 3/8- 47 3/8- 29 7/8- 21 1/8- 31 1/8 31 3/4 37 1/2 25 1/8 17 1/8 Book value per share . . . . . . . . . $ 17.93 15.95 14.37 12.95 11.13 On August 31, 1993, the Company distributed a three-for-two stock split in the form of a stock dividend. Accordingly, in the above table and throughout this report for all prior fiscal years, share and per share information, except for common stock outstanding in the Consolidated Statement of Stockholders' Equity, has been restated to give effect to the stock split. In fiscal 1994, dividends per share were restated to $0.13 in the first quarter and then increased to $0.17 for the last three quarters.
PAGE 15 Management Discussion of Operations and Financial Condition Operations Record revenues of $2.5 billion were recorded for the fiscal year ended March 31, 1996, an increase of $181.1 million compared to fiscal 1995. The Company experienced increased demand in the Railcars, Marine Products, Construction Products, and Metal Components segments. Revenues recorded by the Containers segment remained comparable to the previous fiscal year. Leasing segment revenues declined in comparison to the previous fiscal year's results. The Railcars and Marine Products segments continue to benefit from the ongoing replacement cycle. The Construction Products segment continues to be favorably affected by additional business acquisitions of certain ready-mix concrete operations (see Business Acquisitions in Notes to Consolidated Financial Statements) and by continued federal and state government focus on improving the transportation infrastructure. The Metal Components segment has benefitted from improved market conditions. Total operating profit increased from $157.5 million in fiscal 1995 to $201.2 million in fiscal 1996 due primarily to higher operating profit recorded in the Railcars, Construction Products, Containers, and Metal Components segments, partially offset by slightly lower operating profit recorded in the Marine Products segments. Continuing a trend started in fiscal 1993, revenues and operating profit in the Railcars segment increased in fiscal 1996 compared to the previous fiscal year as a result of continued replacement demand and expansion of railroad traffic. During fiscal 1996, as expected, orders returned to levels more indicative of long-term demand and it is anticipated that this demand will continue in the next fiscal year. Trinity continues to be active in the railcar market with a variety of car types including coal, grain, plastic pellet, cement, and a variety of tank railcars. Revenues increased in the Marine Products segment as the replacement cycle for barges and marine vessels continues to intensify. Operating profit, compared to the previous fiscal year, declined as the Marine segment hired personnel and geared up production facilities that had been closed in the past. Prior year results presented profits of $6.7 million from the sale of hopper barges previously held for lease. Strategic acquisitions (see Business Acquisitions in Notes to Consolidated Financial Statements), continued improvements made to existing capacity, and increased interest by domestic and foreign buyers in offshore supply boats and small container ships has positioned this segment for future growth. The Construction Products segment has expanded its highway guardrail and road barrier products and expanded its ready-mix concrete and aggregate business. Improvements in operating results are reflective of increased efficiencies gained from integrating operations from past acquisitions and recent funding increases for improvements to the nation's highway systems. The strong outlook for commercial, residential, and municipal construction in these markets is expected to continue. Industry demand for products in the Metal Components segment has risen in the current fiscal year. General improvement in the economy has generated some expansion in the industries served by this segment. The Containers segment has benefitted primarily from the general improvement in the economy. Leasing segment's revenues declined in fiscal 1996 due to the sale of selected equipment. Record revenues of $2.3 billion were recorded for the fiscal year ended March 31, 1995, an increase of $530.0 million compared to fiscal 1994. The Company experienced increases in demand in all of its six major business segments, with the Railcars segment contributing the most significant increase. Railcars, the Company's largest segment, enjoyed the benefit of a better market for its railcars and railcar related products. The Construction Products segment's revenues continue to be favorably affected by additional business acquisitions of certain ready-mix concrete operations. (See Business Acquisitions in the Notes to Consolidated Financial Statements.) The Marine Products, Containers and Metal Components segments experienced expanding markets. Total operating profit increased from $116.6 million in fiscal 1994 to $157.5 million in fiscal 1995 due primarily to higher operating profit recorded in the Railcars, Marine Products, Metal Components, and Leasing segments, partially offset by slightly lower operating profit recorded in the Containers segment. A valuation reserve was established for approximately $8.0 million for certain real property which was determined to be in excess of that required for future business operations. Expanding on a trend which began in fiscal 1993, production and deliveries in the Railcars segment again increased in fiscal 1995. Operating profit as a percentage of revenues increased in fiscal 1995 compared to the previous fiscal year as greater efficiencies were achieved as a result of ongoing participation in quality assurance programs established in previous years. Trinity continues to be active in the railcar market with a variety of car types including coal, grain, plastic pellet, cement, intermodal, and a variety of tank railcars. Increased revenues and operating profit in fiscal 1995 are primarily the result of replacement demand and fundamental economic expansion of railroad traffic. In the Marine Products segment, demand for the segment's products, marine vessels and barges, continued to increase. The inland river hopper barge product line is generally benefitted by large grain crops. PAGE 16 The Construction Products segment expanded its highway guardrail and road barrier products and expanded the ready-mix concrete and aggregate business. Acquisitions completed in fiscal 1995 were made at various times during the year. The inclusion of a full year of these acquisitions in future years is expected to show favorable results in year-to-year comparisons. Continuing improvement in the chemical and petroleum industries related to the Clean Air Act and new housing starts led to improvement in the Containers segment, particularly the market for LPG tanks. Competitive markets for the Company's large pressure vessels partially offset segment operating profit. Industry demand for products in the Metal Components segment rose in the proir fiscal year. General improvement in the economy generated some expansion in the industries served by this segment. Leasing segment's operating profit was higher in fiscal 1995 due primarily to additions of new freight and tank railcars to the fleet, and the sale of selected car types, coupled with the sale of its inventory of river hopper barges previously held for lease. Selling, engineering and administrative expenses increased to $120.3 million in fiscal 1996 from $104.5 million in fiscal 1995 due primarily to increased personnel expenses from fiscal 1996 acquisitions and increased personnel expenses from additional hires in the Railcars and Metal Components segments. Selling, engineering and administrative expenses increased to $104.5 million in fiscal 1995 from $94.2 million in fiscal 1994 due principally to additional personnel expenses from fiscal 1995 business acquisitions and increased Railcars segment business. Interest expense of the Leasing Subsidiary decreased by $3.6 million in fiscal 1996 compared to fiscal 1995 and decreased by $2.6 million in fiscal 1995 compared to fiscal 1994 due primarily to the reduction of equipment trust series long-term debt through scheduled debt payments and disposition of certain assets. Retirement plans expense increased to $13.4 million in fiscal 1996 from $12.1 million in fiscal 1995 due primarily to increases in personnel from fiscal 1996 business acquisitions. Retirement plans expense increased to $12.1 million in fiscal 1995 from $9.2 million in fiscal 1994. The increase is due primarily to increases in personnel in fiscal 1995 business acquisitions. Net interest expense of $14.8 million in fiscal 1996 increased as compared to $11.4 million in fiscal 1995 due primarily to the usage of short-term debt to finance business acquisitions and capital expenditures. Net interest expense of $11.4 million in fiscal 1995 increased as compared to $4.0 million in fiscal 1994 primarily due to the increase in the usage of short-term debt for capital expenditures and to finance business acquisitions. The provision for income taxes in fiscal 1996, expressed as a percent of income before income taxes is a 38.9 percent rate as compared to a 39.6 percent rate in fiscal 1995 and a 40.2 percent rate in fiscal 1994. In February, 1992, the Financial Accounting Standards Board issued SFAS No. 109, "Accounting for Income Taxes." The Company was required to adopt SFAS No. 109 in fiscal 1994 and change from the deferred to the liability method of computing income tax. The Company recognized the cumulative effect of the change in method as of April 1, 1993 resulting in an increase to net income of $7.9 million. (See Income Taxes in Notes to the Consolidated Financial Statements.) Liquidity and Financial Resources During fiscal 1996, internally generated funds and short-term borrowing were used to support capital expenditures and payments for business acquisitions. Capital expenditures, excluding Leasing Subsidiary, for fiscal 1996 were $46.9 million. Capital expenditures projected for fiscal 1997 are approximately $40.0 million. Payments for acquisitions in fiscal 1996, net of cash acquired, totalled $28.6 million. Future operating requirements are expected to be financed principally with net cash flows from operations. Internally generated funds, short-term and long- term debt will continue to be used to finance business acquisitions. Additions to TILC's railcar fleet are anticipated to be financed through internally generated funds, the issuance of equipment trust certificates, or similar debt instruments. The percentages of long-term debt and stockholders' equity to total capital (long-term debt and stockholders' equity) of $952.4 million (of which Leasing Subsidiary's long-term debt is $168.8 million) were 21.7 percent (of which Leasing Subsidiary's long-term debt is 17.7 percent of total capital) and 78.3 percent, respectively. Inflation Changes in price levels did not significantly affect the Company's operations in fiscal 1996, 1995 or 1994. PAGE 17 Consolidated Income Statement (in millions except per share data) Year Ended March 31 1996 1995 1994 Revenues. . . . . . . . . . . . . . . . . . . . $2,496.0 $2,314.9 $1,784.9 Operating costs: Cost of revenues . . . . . . . . . . . . . . . 2,143.6 2,019.7 1,541.2 Selling, engineering and administrative expenses . . . . . . . . . . . . . . . . . . 120.3 104.5 94.2 Interest expense of Leasing Subsidiary . . . . 17.5 21.1 23.7 Retirement plans expense . . . . . . . . . . . 13.4 12.1 9.2 2,294.8 2,157.4 1,668.3 Operating profit. . . . . . . . . . . . . . . . 201.2 157.5 116.6 Other (income) expenses: Interest income. . . . . . . . . . . . . . . . (1.8) (0.8) (1.6) Interest expense - excluding Leasing Subsidiary . . . . . . . . . . . . . . . . . 16.6 12.2 5.6 Other, net . . . . . . . . . . . . . . . . . . 0.1 (1.4) (1.6) 14.9 10.0 2.4 Income before income taxes and cumulative effect of change in accounting for income taxes . . . 186.3 147.5 114.2 Provision (benefit) for income taxes: Current. . . . . . . . . . . . . . . . . . . . 92.7 87.6 45.1 Deferred . . . . . . . . . . . . . . . . . . . (20.2) (29.2) (1.3) Effect of statutory rate increase. . . . . . - - 2.1 72.5 58.4 45.9 Income before cumulative effect of change in accounting for income taxes. . . . . . . . . . 113.8 89.1 68.3 Cumulative effect as of April 1, 1993 of change in accounting for income taxes . . . . . . . . - - 7.9 Net income. . . . . . . . . . . . . . . . . . . $ 113.8 $ 89.1 $ 76.2 Income per common and common equivalent share before cumulative effect of change in accounting for income taxes. . . . . . . . . . $ 2.72 $ 2.20 $ 1.69 Cumulative effect of change in accounting for income taxes . . . . . . . . . . . . . . . . . - - 0.20 Net income per common and common equivalent share. . . . . . . . . . . . . . . . . . . . . $ 2.72 $ 2.20 $ 1.89 Weighted average number of common and common equivalent shares outstanding . . . . . . . . 41.9 40.5 40.3 See accompanying notes to consolidated financial statements. PAGE 18 Consolidated Balance Sheet March 31 (in millions except per share data) 1996 1995 Assets Cash and cash equivalents. . . . . . . . . . . . . . $ 15.4 $ 15.3 Receivables. . . . . . . . . . . . . . . . . . . . . 293.5 270.3 Inventories. . . . . . . . . . . . . . . . . . . . . 403.7 395.0 Property, plant and equipment, at cost: Excluding Leasing Subsidiary. . . . . . . . . . . . 745.3 701.4 Leasing Subsidiary. . . . . . . . . . . . . . . . . 353.7 387.3 Less accumulated depreciation: Excluding Leasing Subsidiary. . . . . . . . . . . . (336.5) (306.2) Leasing Subsidiary. . . . . . . . . . . . . . . . . (70.2) (95.4) Other assets . . . . . . . . . . . . . . . . . . . . 50.9 52.3 $1,455.8 $1,420.0 Liabilities and Stockholders' Equity Short-term debt. . . . . . . . . . . . . . . . . . . $ 216.0 $ 220.0 Accounts payable and accrued liabilities . . . . . . 222.9 245.5 Billings in excess of cost and related earnings. . . 19.2 12.0 Long-term debt: Excluding Leasing Subsidiary. . . . . . . . . . . . 37.6 37.7 Leasing Subsidiary. . . . . . . . . . . . . . . . . 168.8 205.2 Deferred income taxes. . . . . . . . . . . . . . . . 30.2 44.9 Other liabilities. . . . . . . . . . . . . . . . . . 15.1 13.5 709.8 778.8 Stockholders' equity: (shares in millions) Common stock - par value $1 per share; authorized - 100.0 shares; shares issued and outstanding in 1996 - 41.6; in 1995 - 40.2 . . . . 41.6 40.2 Capital in excess of par value. . . . . . . . . . . 239.6 221.7 Retained earnings . . . . . . . . . . . . . . . . . 464.8 379.3 746.0 641.2 $1,455.8 $1,420.0 See accompanying notes to consolidated financial statements. PAGE 19 Consolidated Statement of Cash Flows (in millions) Year Ended March 31 1996 1995 1994 Cash flows from operating activities: Net income. . . . . . . . . . . . . . . . . . . . . $113.8 $ 89.1 $ 76.2 Adjustments to reconcile net income to net cash provided (required) by operating activities: Depreciation: Excluding Leasing Subsidiary . . . . . . . . . . 57.8 38.4 36.2 Leasing Subsidiary . . . . . . . . . . . . . . . 18.1 20.2 20.6 Deferred benefit for income taxes . . . . . . . . (20.2) (29.2) (1.3) (Gain) loss on sale of property, plant and equipment. . . . . . . . . . . . . . . . . . 3.1 (0.7) (0.2) Cumulative effect of change in accounting for income taxes . . . . . . . . . . . . . . . . . . - - (7.9) Effect of statutory tax rate increase . . . . . . - - 2.1 Other . . . . . . . . . . . . . . . . . . . . . . (6.7) (6.6) 0.1 Change in assets and liabilities: (Increase) decrease in receivables . . . . . . . (16.0) 4.6 (58.1) (Increase) in inventories. . . . . . . . . . . . - (56.1) (110.9) (Increase) decrease in other assets. . . . . . . 7.8 (11.3) 0.4 Increase (decrease) in accounts payable and accrued liabilities . . . . . . . . . . . . . . . (39.9) 71.4 14.0 Increase (decrease) in billings in excess of cost and related earnings. . . . . . . . . . . 7.2 (0.6) (19.4) Increase (decrease) in other liabilities . . . . 0.9 (4.8) 2.6 Total adjustments. . . . . . . . . . . . . . . 12.1 25.3 (121.8) Net cash provided (required) by operating activities . . . . . . . . . . . . . . 125.9 114.4 (45.6) Cash flows from investing activities: Proceeds from sale of property, plant and equipment 100.2 83.3 29.3 Capital expenditures: Excluding Leasing Subsidiary . . . . . . . . . . . (46.9) (64.7) (45.2) Leasing Subsidiary . . . . . . . . . . . . . . . . (86.1) (28.7) (37.6) Payment for purchase of acquisitions, net of cash acquired . . . . . . . . . . . . . . . (28.6) (63.7) (36.2) Cash of acquired subsidiary . . . . . . . . . . . . 1.2 2.4 0.5 Net cash required by investing activities . . . . (60.2) (71.4) (89.2) Cash flows from financing activities: Issuance of common stock. . . . . . . . . . . . . . 2.9 0.9 8.9 Net borrowings (repayments) under short-term debt . (4.0) 28.0 177.0 Proceeds from issuance of long-term debt. . . . . . 7.0 - 20.0 Payments to retire long-term debt . . . . . . . . . (43.6) (38.1) (45.9) Dividends paid. . . . . . . . . . . . . . . . . . . (27.9) (27.2) (24.0) Net cash provided (required) by financing activities . . . . . . . . . . . . . . (65.6) (36.4) 136.0 PAGE 20 Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . . . . . 0.1 6.6 1.2 Cash and cash equivalents at beginning of period . . 15.3 8.7 7.5 Cash and cash equivalents at end of period . . . . . $ 15.4 $ 15.3 $ 8.7 Excluding Leasing Subsidiary, interest paid in fiscal 1996, 1995, and 1994 was $17.9, $11.4, and $5.0, respectively. Leasing Subsidiary's interest paid in fiscal 1996, 1995, and 1994 was $18.3, $21.6, and $23.8, respectively. See accompanying notes to consolidated financial statements.
Consolidated Statement of Stockholders' Equity (in millions except share and per share data) Common Capital Common Stock in Shares $1.00 Excess Total (100,000,000 Par of Par Retained Stockholders' Authorized) Value Value Earnings Equity Balance at March 31, 1993 . . . . . 26,076,549 $26.1 $214.5 $266.7 $507.3 Three-for-two stock split . . . . 13,158,164 13.2 (13.2) - - Other . . . . . . . . . . . . . . 476,985 0.4 12.1 - 12.5 Net income. . . . . . . . . . . . - - - 76.2 76.2 Cash dividends ($0.64 per share). - - - (25.5) (25.5) Balance at March 31, 1994 . . . . . 39,711,698 39.7 213.4 317.4 570.5 Other . . . . . . . . . . . . . . 508,996 0.5 8.3 - 8.8 Net income. . . . . . . . . . . . - - - 89.1 89.1 Cash dividends ($0.68 per share). - - - (27.2) (27.2) Balance at March 31, 1995 . . . . . 40,220,694 40.2 221.7 379.3 641.2 Other . . . . . . . . . . . . . . 1,375,343 1.4 17.9 - 19.3 Net income. . . . . . . . . . . . - - - 113.8 113.8 Cash dividends ($0.68 per share). - - - (28.3) (28.3) Balance at March 31, 1996 . . . . . 41,596,037 $41.6 $239.6 $464.8 $746.0 The Company has authorized and unissued 1,500,000 shares of no par value voting preferred stock. See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements Summary of Significant Accounting Policies The financial statements of Trinity Industries, Inc. and its consolidated subsidiaries ("Trinity" or the "Company") include the accounts of all significant majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company accounts for its wholly-owned Leasing Subsidiary in accordance with Statement of Financial Accounting Standards No. 94, "Consolidation of All Majority-Owned Subsidiaries," which requires the consolidation of all majority-owned subsidiaries, unless control is temporary or does not reside with the majority owner. The Company's financial statements include the consolidation of the accounts of Trinity Industries Leasing Company ("TILC"). TILC is sometimes referred to as the "Leasing Company" or "Leasing Subsidiary". For purposes of the Consolidated Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash investments and receivables. The Company places its cash investments in investment grade, short-term debt instruments and limits the amount of credit exposure to any one commercial issuer. Concentrations of credit risk with respect to receivables are limited due to the large number of customers in the Company's customer base, and their dispersion across different industries and geographic areas. The Company maintains an allowance for losses based upon the expected collectibility of all receivables. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For financial accounting, profits on long-term contracts are recorded on the percentage-of-completion method. Allocation of profits to various periods is based on costs incurred, units delivered, or other appropriate measures. Provision is made for losses when they become known. TILC enters into lease contracts with third parties with terms generally ranging between one and fifteen years, wherein certain equipment manufactured by Trinity is leased for a specified type of service over the term of the contract. TILC accounts for leases principally by the operating method. Inventories and investments are valued at the lower of cost or market. Inventory cost is determined principally on the specific identification method. Market is replacement cost or net realizable value. Depreciation and amortization are generally computed by the straight-line method on the estimated useful lives of the assets. The costs of ordinary maintenance and repair are charged to expense, while renewals and major replacements are capitalized. Net income per common and common equivalent share is based on the weighted average shares outstanding plus the assumed exercise of dilutive stock options (less the number of treasury shares assumed to be purchased from the proceeds using the average market price of Trinity's common stock). In March 1995, Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," was issued. Adoption is required for the Company beginning in fiscal 1997. The Company does not believe that the adoption of this Statement will have a significant impact on Trinity. PAGE 21 In October 1995, Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," was issued. The disclosure requirements of this Statement are effective for the Company's financial statements beginning in fiscal 1997. The Company intends to elect the option allowing it to continue to apply the accounting provisions of APB Opinion 25, "Accounting for Stock Issued to Employees." With the Company's plan of adoption, the impact will be limited to additional footnote disclosure. Certain reclassifications have been made to prior year statements to conform to the current year presentation. Segment Information The Company manufactures and sells or leases a variety of products consisting primarily of (1) railcars, principally tank cars and freight cars ("Railcars"); (2) boats and barges for ocean and inland waterway service ("Marine Products"); (3) construction products such as highway guardrail, beams, girders, and columns used in construction of highway and railway bridges, passenger loading bridges and conveyor systems, and ready-mix concrete and aggregates ("Construction Products"); (4) pressure and non-pressure containers for the storage and transportation of liquefied gases, other liquid, and dry products ("Containers"); (5) weld fittings (tees, elbows, reducers, caps, flanges, etc.) used in pressure piping systems and container heads (the ends of pressure and non-pressure containers) for use internally and by other manufacturers of containers ("Metal Components"); and (6) railcar and barge leasing to various industries ("Leasing"). Financial information for these segments is summarized in the following table. The Company operates principally in the continental United States. Intersegmental sales are shown at market prices. Corporate operating profit elimination consists principally of the administrative overhead of the Company. Corporate assets consist primarily of cash and cash equivalents, other assets, notes receivable, land held for investment, and certain property, plant and equipment. The Railcars and Leasing segments include revenues from one customer which accounted for 13.4 percent and 12.5 percent of consolidated revenues in fiscal 1996 and 1995, respectively. The Railcars segment includes revenues from one customer which accounted for 11.6 percent of consolidated revenues in fiscal 1994. In the Segments of Business table below, the caption 'Additions (net) to property, plant and equipment' does not include Business Acquisitions.
Eliminations Construc- Metal & Cor- Consol- Segments of Business Rail- Marine tion Con- Com- porate idated (in millions) cars Products Products tainers ponents Leasing Items Total Year ended March 31, 1996 Total revenues: Trade. . . . . . . . . . . . . $1,252.7 421.4 380.6 174.3 131.1 135.4 0.5 2,496.0 Intersegment . . . . . . . . . 86.9 - - - 6.5 - (93.4) - Total . . . . . . . . . . . . $1,339.6 421.4 380.6 174.3 137.6 135.4 (92.9) 2,496.0 Operating profit (loss). . . . . $ 118.8 22.0 43.4 12.2 23.2 23.4 (41.8) 201.2 Identifiable assets . . . . . . $ 437.5 243.9 218.4 89.4 62.2 288.3 116.1 1,455.8 Depreciation . . . . . . . . . . $ 8.7 13.6 19.3 4.7 4.2 18.1 7.3 75.9 Additions (net) to property, plant and equipment . . . . . . $ 8.9 1.5 9.2 0.4 3.7 9.7 8.7 42.1 Year ended March 31, 1995 Total revenues: Trade. . . . . . . . . . . . . $1,157.3 369.7 355.5 169.7 105.5 156.9 0.3 2,314.9 Intersegment . . . . . . . . . 29.4 - - - 3.9 - (33.3) - Total . . . . . . . . . . . . $1,186.7 369.7 355.5 169.7 109.4 156.9 (33.0) 2,314.9 Operating profit (loss). . . . . $ 88.5 30.3 35.6 9.7 14.9 23.6 (45.1) 157.5 Identifiable assets . . . . . . $ 400.9 247.7 228.7 83.1 53.8 295.4 110.4 1,420.0 Depreciation . . . . . . . . . . $ 5.2 4.9 14.6 3.7 3.5 20.2 6.5 58.6 Additions (net) to property, lant and equipment. . . . . . . $ 19.0 7.8 12.9 3.8 3.1 (27.2) 11.3 30.7 Year ended March 31, 1994 Total revenues: Trade. . . . . . . . . . . . . $ 730.6 360.7 333.1 155.6 99.7 104.6 0.6 1,784.9 Intersegment . . . . . . . . . 38.5 - - - 2.8 - (41.3) - Total . . . . . . . . . . . . $ 769.1 360.7 333.1 155.6 102.5 104.6 (40.7) 1,784.9 Operating profit (loss). . . . . $ 53.2 28.9 35.6 9.8 11.7 15.3 (37.9) 116.6 Identifiable assets . . . . . . $ 350.9 201.4 185.8 81.5 47.0 344.3 95.9 1,306.8 Depreciation . . . . . . . . . . $ 7.9 7.8 10.0 2.0 3.2 20.6 5.3 56.8 Additions (net) to property, plant and equipment . . . . . . $ 2.4 7.8 12.2 2.4 1.4 14.8 10.8 51.8
PAGE 22 Receivables (in millions) March 31 1996 1995 Accounts receivable: Excluding Leasing Subsidiary. . . . . $270.9 $254.8 Leasing Subsidiary. . . . . . . . . . 4.8 3.5 275.7 258.3 Contract receivables not yet billed. . 18.9 12.8 294.6 271.1 Allowance for doubtful accounts. . . . ( 1.1) ( 0.8) $293.5 $270.3 Inventories (in millions) March 31 1996 1995 Finished goods . . . . . . . . . . . . $ 38.9 $ 35.0 Work in process. . . . . . . . . . . . 36.8 42.0 Cost related to long-term contracts, net of progress billings of $4.8 and $3.2 at March 31, 1996 and 1995, respectively. . . . . . . . 109.7 110.6 Raw materials and supplies . . . . . . 218.3 207.4 $403.7 $395.0 Property, Plant and Equipment (in millions) March 31 1996 1995 Excluding Leasing Subsidiary: Land . . . . . . . . . . . . . . . . . . . . . . . . $ 40.4 $ 38.9 Buildings and improvements . . . . . . . . . . . . . 209.1 195.0 Machinery. . . . . . . . . . . . . . . . . . . . . . 475.2 430.6 Construction in progress . . . . . . . . . . . . . . 20.6 36.9 745.3 701.4 Leasing Subsidiary: Equipment on lease (predominately long-term) . . . . 353.7 387.3 $1,099.0 $1,088.7 Business Acquisitions The Company made certain business acquisitions during fiscal 1996, 1995 and 1994. All have been accounted for by the purchase method. The operations of these companies have been included in the consolidated financial statements from the effective dates of the acquisitions. In fiscal 1994, the businesses acquired include: (i) certain assets of Caruthersville Shipyard Inc. and Xenium Fiberglass Corporation for cash. These assets are utilized in the manufacture of marine products;(ii) certain assets of A & M Operating Company, Inc. for cash. These assets are used in the manufacture of railcars; (iii) certain assets of Redland Stone Products Company, STCC, Inc., Bluebonnet Paving, Inc., Triple S Crushed Stone Company, Waco Sand and Gravel Company, and Beazer West, Inc. for cash and 100 percent of the common stock of Myre Construction Company for 103,494 shares of Trinity common stock. These businesses are ready-mix concrete producers; and (iv) 100 percent of the common stock of Platzer Shipyard, Inc. for cash and 67,139 shares of Trinity common stock. This business manufactures and repairs barges. The aggregate purchase price of these acquisitions was approximately $56.0 million. There was no goodwill recorded in the acquisitions. In fiscal 1995, the businesses and properties acquired include: (i) 100 percent of the common stock of Concrete Pipe Products Company, Inc. and Midland Concrete, Incorporated for 149,001 shares and 35,033 shares of Trinity common stock, respectively, certain assets of Gemini Industries, Inc., Ratliff Ready-Mix, Inc., and Diamond Ready-Mix for cash, and certain properties acquired for mineral extraction. These companies and assets are utilized in the ready-mix concrete and aggregates business; (ii) certain assets of Port Allen Marine Services, Inc., the Syntechnics Division of The Alpha Corporation of Tennessee, and New NABRICO Corporation for cash and 100 percent of the common stock of Gulf Coast Fabrication, Inc. for 250,000 shares of Trinity common stock. These businesses produce and repair barges and manufacture other marine products; (iii) certain assets of Flo-Bend, Inc. for cash. These assets are utilized in the manufacture of metal components; and (iv) certain assets of the Ready-Mix Concrete Operations and Aggregate Operations of LaFarge Corporation for cash. These operations are utilized in the ready-mix concrete and aggregates business. The aggregate purchase price of these acquisitions was approximately $86.7 million. There was no goodwill recorded in the acquisitions. In fiscal 1996, the businesses acquired include: (i) 100 percent of the capital stock of the holding company which owns Groupo TATSA S. A. de C. V. in exchange for 1,199,000 shares of Trinity common stock. Grupo PAGE 23 TATSA, now know as Trinity Industries de Mexico, headquartered in Mexico City, Mexico,manufactures and distributes a wide variety of fabricated steel products including containers (primarily for the storage or transportation of liquefied petroleum products), rail tankcar barrels, and heads which are used within the Company as well as sold to other manufacturers from its manufacturing facilities in Mexico City, Monclova, and Huehuetoca, Mexico; (ii) certain assets of McDonald's Ready-Mix, Brazos Point, Inc., and Dunn & Gerhart Everready Concrete, Inc. for cash. These assets are utilized in the ready-mix concrete and aggregate business; (iii) certain assets of American Marine Corporation, Hall-Buck Marine, Inc., and CBI NA-Con, Inc. for cash. These assets are utilized in the manufacture and repair of marine products; and (iv) certain assets of The Casteel Group, Inc. for cash. Casteel's assets are utilized in the fabrication of construction products. The aggregate purchase price of these acquisitions was approximately $62.8 million. There was no goodwill recorded in the acquisitions. Contribution of these acquisitions to revenues and operating profit during fiscal 1996 is not material. Stock Options The Company's 1993 Stock Option and Incentive Plan (the "Plan") provides that incentive or non-qualified stock options for a maximum of 1,500,000 shares of common stock may be granted to directors, officers and key employees. Incentive options may be granted over a period not to exceed ten years at a price not less than fair market value on the date of grant. The Plan provides that, to the extent options granted under this Plan or any prior stock option plan are forfeited, expire or cancelled, they may again be granted pursuant to the provisions of this Plan. The Plan provides that if shares already owned by the optionee are surrendered as full or partial payment of the exercise price of an option, a new option (the "Reload Option") may be granted equal to the number of shares surrendered. The exercise price of Reload Options shall be the fair market value on the effective date of the grant.
Stock Options Non- Total Price Incentive Incentive Exercise Range Shares Shares Value Per Share Outstanding at March 31, 1993 . 529,015 892,866 $25,639,153 $ 9.16 - $22.50 Granted . . . . . . . . . . . . - 975,000 26,500,028 $26.67 - $30.00 Cancelled . . . . . . . . . . . (2,265) (750) (50,165) $11.33 - $22.50 Exercised . . . . . . . . . . . (153,429) (264,430) (6,784,597) $ 9.16 - $22.50 Outstanding at March 31, 1994 . 373,321 1,602,686 45,304,419 $ 9.16 - $30.00 Granted . . . . . . . . . . . . 6,100 68,887 2,710,797 $31.25 - $39.25 Cancelled . . . . . . . . . . . (4,080) (6,000) (225,290) $11.58 - $26.67 Exercised . . . . . . . . . . . (31,731) (80,539) (2,561,137) $ 9.16 - $26.67 Outstanding at March 31, 1995 . 343,610 1,585,034 45,228,789 $11.58 - $39.25 Granted . . . . . . . . . . . . 79,500 41,273 4,144,660 $31.50 - $38.88 Cancelled . . . . . . . . . . . (10,212) (11,090) (447,929) $11.58 - $32.50 Exercised . . . . . . . . . . . (56,025) (245,629) (6,794,302) $11.58 - $34.50 Outstanding at March 31, 1996 . 356,873 1,369,588 $42,131,218 $16.00 - $39.25 At March 31, 1996, there were 1,146,660 shares (1,246,131 at March 31, 1995) reserved for future options, and 976,099 stock options were exercisable (843,506 at March 31, 1995).
Stockholder's Rights Plan The Company has adopted a Stockholder's Rights Plan. Effective April 27, 1989, the Company paid a dividend distribution of one purchase right for each outstanding share of the Company's $1.00 par value common stock. Each right entitles the stockholder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise price of one hundred and seventy-five dollars. The rights are not exercisable or detachable from the common stock until ten business days after a person acquires beneficial ownership of twenty percent or more of the Company's common stock or if a person or group commences a tender or exchange offer upon consummation of which that person or group would beneficially own twenty percent or more of the common stock. If any person becomes a beneficial owner of twenty percent or more of the Company's common stock other than pursuant to an offer, as defined, for all shares determined by certain directors to be fair to the stockholders and otherwise in the best interests of both the Company and its stockholders (other than by reason of share purchases by the Company), each right not owned by that person or related parties enables its holder to purchase, at the right's then current exercise price, shares of the Company's common stock having a calculated value of twice the right's exercise price. The rights, which are subject to adjustment, may be redeemed by the Company at a price of one cent per right at any time prior to their expiration on April 27, 1999 or the point at which they become exercisable. PAGE 24 Long-term Debt (in millions) March 31 1996 1995 Excluding Leasing Subsidiary: 4.95-9.25 percent industrial development revenue bonds payable in varying amounts through 2005 . . . . . . . . $ 2.0 $ 4.6 6.0-10.0 percent promissory notes, generally payable annually through 2001 . . . . . . . . . . . . . . . . . 35.6 33.1 37.6 37.7 Leasing Subsidiary: 6.96-15.5 percent equipment trust certificates to institutional investors generally payable in semi- annual installments of varying amounts through 2003 . . 158.1 193.6 11.3 percent notes payable monthly through 2003. . . . . 10.7 11.6 168.8 205.2 $206.4 $242.9 The fair value of non-traded, fixed rate outstanding debt, estimated using discounted cash flow analysis, approximates its carrying value. Long-term debt excluding the Leasing Subsidiary: The Company is required to maintain certain financial ratios, as defined. Principal payments due during the next five years are: 1997 - $2.6; 1998 - $1.9; 1999 - $1.8; 2000 - $2.0; and 2001 - $28.2. Long-term debt of Leasing Subsidiary: The trustees of the equipment trusts have been assigned title to railcars with a cost of $354.4 at March 31, 1996 for the life of the respective equipment trusts. Leases relating to such railcars financed by equipment trust certificates have been assigned as collateral. Trinity is required to pay fees to TILC to maintain net earnings, as defined, at 150 percent of fixed charges, as defined. Pursuant to this agreement, no fees have been paid by Trinity to TILC for the last three fiscal years. Trinity is also required to pay to TILC the current tax benefit which results from the inclusion of TILC in Trinity's federal income tax return. These amounts are eliminated for consolidated financial presentation of Trinity. TILC is required to maintain certain financial ratios, as defined. Principal payments due during the next five years are: 1997 - $24.3; 1998 - $26.3; 1999 - $26.1; 2000 - $23.9; and 2001 - $23.1. Condensed Combined Financial Information of Consolidated Leasing Subsidiary March 31 (in millions) 1996 1995 Assets Total assets (principally railcars). . . . . . . . . . . $442.7 $471.9 Liabilities and Stockholder's Equity Total liabilities (principally long-term debt). . . . . . $246.3 $296.3 Stockholder's equity (including retained earnings of $177.1 and $156.4 in 1996 and 1995, respectively) . . . 196.4 175.6 $442.7 $471.9 Year Ended March 31 1996 1995 1994 Income Revenues . . . . . . . . . . . . . . . . . . . . . $135.4 $156.9 $104.6 Income before income taxes and cumulative effect of change in accounting for income taxes. . . . . $ 31.9 $ 32.0 $ 20.9 Provision for income taxes . . . . . . . . . . . . 11.2 11.2 9.9 Income before cumulative effect of change in accounting for income taxes . . . . . . . . . . . 20.7 20.8 11.0 Cumulative effect as of April 1, 1993 of change in method of accounting for income taxes . . . . . . - - 8.1 Net income . . . . . . . . . . . . . . . . . . . . $ 20.7 $ 20.8 $19.1 Future minimum rental revenues on leases in each fiscal year are approximately $52.5 in 1997, $46.8 in 1998, $41.3 in 1999, $36.0 in 2000, $28.5 in 2001, and $108.4 thereafter. PAGE 25 Consolidating Financial Statements of Trinity Industries, Inc. The following financial statements present the consolidating income statement and consolidating balance sheet of Trinity. Certain accounts have been reclassified to correspond to consolidated financial statement presentation of Trinity. Presentation of accounts does not conform to separate entity financial presentation. These consolidating financial statements are presented to provide additional analysis of, and should be read in conjunction with, the consolidated financial statements of Trinity. Consolidating Income Statement Leasing Subsid- Elimi- Year Ended March 31, 1996 (in millions) Trinity iary nations Total Revenues. . . . . . . . . . . . . . . . . $2,447.5 $135.4 $ (86.9) $2,496.0 Operating costs: Cost of revenues . . . . . . . . . . . . 2,130.4 100.1 (86.9) 2,143.6 Selling, engineering and administrative expenses. . . . . . . . . . . . . . . . 120.3 - - 120.3 Interest expense of Leasing Subsidiary . - 17.5 - 17.5 Retirement plans expense . . . . . . . . 13.4 - - 13.4 Equity in income of Leasing Subsidiary before income taxes . . . . . . . . . . (31.9) - 31.9 - 2,232.2 117.6 (55.0) 2,294.8 Operating profit. . . . . . . . . . . . . 215.3 17.8 (31.9) 201.2 Other (income) expenses: Interest income. . . . . . . . . . . . . (1.6) (0.2) - (1.8) Interest expense - excluding Leasing Subsidiaries. . . . . . . . . . . . . . 27.8 (11.2) - 16.6 Other, net . . . . . . . . . . . . . . . 2.8 (2.7) - 0.1 29.0 (14.1) - 14.9 Income before income taxes. . . . . . . . 186.3 31.9 (31.9) 186.3 Provision (benefit) for income taxes: Current. . . . . . . . . . . . . . . . . 92.7 24.6 (24.6) 92.7 Deferred . . . . . . . . . . . . . . . . (20.2) (13.4) 13.4 (20.2) 72.5 11.2 (11.2) 72.5 Net income . . . . . . . .. . . . . . . . $ 113.8 $ 20.7 $(20.7) $ 113.8 Consolidated Balance Sheet March 31 (in millions except per share data) 1996 1995 Assets Cash and cash equivalents. . . . . . . . . . . . . . $ 15.4 $ 15.3 Receivables. . . . . . . . . . . . . . . . . . . . . 293.5 270.3 Inventories. . . . . . . . . . . . . . . . . . . . . 403.7 395.0 Property, plant and equipment, at cost: Excluding Leasing Subsidiary. . . . . . . . . . . . 745.3 701.4 Leasing Subsidiary. . . . . . . . . . . . . . . . . 353.7 387.3 Less accumulated depreciation: Excluding Leasing Subsidiary. . . . . . . . . . . . (336.5) (306.2) Leasing Subsidiary. . . . . . . . . . . . . . . . . (70.2) (95.4) Other assets . . . . . . . . . . . . . . . . . . . . 50.9 52.3 $1,455.8 $1,420.0 Liabilities and Stockholders' Equity Short-term debt. . . . . . . . . . . . . . . . . . . $ 216.0 $ 220.0 Accounts payable and accrued liabilities . . . . . . 222.9 245.5 Billings in excess of cost and related earnings. . . 19.2 12.0 Long-term debt: Excluding Leasing Subsidiary. . . . . . . . . . . . 37.6 37.7 Leasing Subsidiary. . . . . . . . . . . . . . . . . 168.8 205.2 Deferred income taxes. . . . . . . . . . . . . . . . 30.2 44.9 Other liabilities. . . . . . . . . . . . . . . . . . 15.1 13.5 709.8 778.8 Stockholders' equity: (shares in millions) Common stock - par value $1 per share; authorized - 100.0 shares; shares issued and outstanding in 1996 - 41.6; in 1995 - 40.2 . . . . 41.6 40.2 Capital in excess of par value. . . . . . . . . . . 239.6 221.7 Retained earnings . . . . . . . . . . . . . . . . . 464.8 379.3 746.0 641.2 $1,455.8 $1,420.0 See accompanying notes to consolidated financial statements. PAGE 26 Income Taxes (in millions except per share data) Effective April 1, 1993 the Company 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 Company has elected not to restate the financial statements of any prior period. The cumulative effect of applying the change in accounting method is a decrease in the Company's deferred tax liability and a nonrecurring credit of $7.9 or $0.20 per share. The provision for federal income taxes is determined on a consolidated return basis. The Company and the Leasing Subsidiary file a consolidated federal income tax return. The significant components of the provision (benefit) for income taxes follow to the right: Year Ended March 31 1996 1995 1994 Current Federal . . . . . . . $83.4 $78.6 $42.5 State . . . . . . . . 9.3 9.0 4.7 92.7 87.6 47.2 Deferred. . . . . . . (20.2) (29.2) (1.3) Total . . . . . . . . $72.5 $58.4 $45.9 Deferred income tax was provided in the financial statements for differences between financial and taxable income. The components of deferred liabilities and assets follow: Year Ended March 31 1996 1995 Deferred tax liabilities: Excess of tax depreciation over financial statement depreciation. . . . . . $ 77.5 $ 84.5 Total deferred tax liabilities . . . . . . . 77.5 84.5 Deferred tax assets: Profits on long-term contracts recorded on the percentage of completion method for financial purposes and related items . . . . . . . . . . . . . $ 7.8 $ 0.3 Pensions and other benefits. . . . . . . . . 39.1 33.0 Accounts receivable, inventory, and other asset valuation accounts. . . . . . . . . . 1.7 3.6 Other. . . . . . . . . . . . . . . . . . . . (1.3) 2.7 Total deferred tax assets . . . . . . . . . 47.3 39.6 Net deferred tax liabilities . . . . . . . . $ 30.2 $ 44.9 The provision for income results in effective tax rates different than the statutory rates. The reconciliation between the effective and statutory rates follows: Year Ended March 31 1996 1995 1994 Statutory rate . . . . . . . . . . . . . . . . . 35.0% 35.0% 35.0% State taxes. . . . . . . . . . . . . . . . . . . 3.2 4.0 2.7 Effect of 1% rate increase on deferred taxes . . - - 1.8 Other. . . . . . . . . . . . . . . . . . . . . . 0.7 0.6 0.7 Effective tax rate . . . . . . . . . . . . . . . 38.9% 39.6% 40.2% In fiscal 1996, 1995 and 1994 income taxes of $118.1, $55.9, and $44.7, respectively, were paid net of refunds received. PAGE 27 Employee Benefit Plans (in millions) Pension plans are in effect which provide income and death benefits for eligible employees. The Company's policy is to fund retirement costs accrued to the extent such amounts are deductible for income tax purposes. Plan assets include cash, short-term debt securities, and other investments. Benefits are based on years of credited service and compensation. Net periodic pension expense for fiscal 1996, 1995, and 1994 included the following components: Year Ended March 31 1996 1995 1994 Service cost-benefits earned during the period. $ 8.6 $ 7.6 $ 6.2 Interest cost on projected benefit obligation . 7.8 7.0 6.3 Actual return on assets . . . . . . . . . . . . (18.0) (6.6) (1.5) Net amortization and deferral . . . . . . . . . 10.8 0.4 (4.4) Accrual of profit sharing contribution. . . . . 4.2 3.7 2.6 Net periodic pension expense. . . . . . . . . . $ 13.4 $ 12.1 $ 9.2 Assumptions used for valuation of the projected benefit obligation were: Year Ended March 31 1996 1995 1994 Discount rates. . . . . . . . . . . . . . . . . 7.75% 8.25% 8.25% Rates of increase in compensation levels. . . . 4.75% 5.25% 5.25% Expected long-term rate of return on assets . . 9.00% 9.00% 9.00% Amounts recognized in the Company's Consolidated Balance Sheet follow: March 31 1996 1995 Actuarial present value of benefit obligation: Vested benefit obligation . . . . . . . . . . $ 73.4 $ 56.5 Accumulated benefit obligation. . . . . . . . $ 88.1 $ 69.9 Projected benefit obligation. . . . . . . . . . $118.7 $ 88.7 Plan assets at fair value . . . . . . . . . . . 98.5 75.8 Projected benefit obligation in excess of plan assets . . . . . . . . . . . (20.2) (12.9) Unrecognized net asset at April 1, 1985 . . . . (1.7) (1.9) Unrecognized net asset at January 1, 1986 . . . (0.8) (0.9) Unrecognized net loss at March 31 . . . . . . . 23.9 13.1 Accrued pension expense . . . . . . . . . . . . $ 1.2 $ (2.6) The Company has a contributory profit sharing plan for employees of the Company and certain affiliates. Under the plan, eligible employees are allowed to make voluntary pre-tax contributions. The Company's contribution to this plan, as defined, is based on consolidated earnings and dividends. Contingencies The Company is a defendant in certain litigation involving alleged damages from a construction subcontract over the fabrication and erection of structural steel for the construction of the Marriott Marquis Hotel In Times Square, New York City, New York. A retrial is scheduled for fall 1996 in the United States District Court for the Southern District of New York. While the ultimate liability in this matter is difficult to assess, it is management's belief that the final outcome is not reasonably likely to have a material adverse affect on the Company's consolidated financial position. The Company is involved in various other claims and lawsuits incidental to its business. In the opinion of management, these claims and suits in the aggregate will not have a material adverse affect on the Company's consolidated financial statements. PAGE 28 Report of Independent Auditors The Board of Directors and Stockholders Trinity Industries, Inc. We have audited the accompanying consolidated balance sheets of Trinity Industries, Inc. as of March 31, 1996 and 1995, and the related consolidated statements of income, cash flows and stockholders' equity for each of the three years in the period ended March 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trinity Industries, Inc. at March 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Dallas, Texas May 9, 1996
Supplemental Information Supplementary Unaudited Quarterly Data First Second Third Fourth (in millions except for per share data) Quarter Quarter Quarter Quarter Year Year ended March 31, 1996: Revenues . . . . . . . . . . . . . $ 604.7 628.5 602.3 660.5 2,496.0 Operating profit . . . . . . . . . $ 49.3 50.0 49.6 52.4 201.2 Net income . . . . . . . . . . . . $ 27.6 27.8 28.1 30.3 113.8 Net income per common and common equivalent share . . . . . $ 0.66 0.67 0.67 0.72 2.72 Year ended March 31, 1995: Revenues . . . . . . . . . . . . . $ 544.3 555.5 576.9 638.2 2,314.9 Operating profit . . . . . . . . . $ 32.4 38.9 40.6 45.6 157.5 Net income . . . . . . . . . . . . $ 18.5 22.2 22.7 25.7 89.1 Net income per common and common equivalent share . . . . . $ 0.46 0.55 0.56 0.63 2.20
PAGE 29 DIVISION OFFICERS Railcars Timothy R. Wallace Chairman, Railcars Marvin B. Hughes President, Railcar Repair Jeffrey J. Marsh Executive Vice President John R. Nussrallah Executive Vice President Dan D. Banks Vice President Donald C. Bodinger, Sr. Vice President Fred M. Groff Vice President Dale B. Hill Vice President Helmut F. Hvizdalek Vice President William C. McDowell Vice President W. C. Newby Vice President Timothy R. Schitter Vice President Douglas H. Schneider Vice President Stephen W. Smith Vice President William O. Zollicoffer Vice President Leasing Duncan A. Gillies Executive Vice President Thomas C. Jardine Vice President Construction Products and Metal Components John T. Sanford Chairman, Construction Products and Metal Components Don A. Graham President, Rollform Don H. Johnson President, Syro, Inc. Robert K. Van Noord President, Fittings Group Cecil C. Spear, Jr. Executive Vice President Rodney A. Boyd Vice President Stephen L. Brown Vice President Thomas M. Germanson Vice President Russell D. McBroom Vice President Charles R. Norton Vice President Richard A. Pell Vice President James B. Sanford Vice President Carl E. Stevens Vice President Christine S. Stucker Vice President Construction Products Materials & Aggregates Mark W. Stiles President Haywood Walker, III Executive Vice President Douglas Almond Vice President Richard D. Dalton Vice President James Randall Foil Vice President G. Cliff Kirkmyer, III Vice President William A. McWhirter, II Vice President Marine Products John Dane, III President, Marine Group Neal S. Platzer President, Platzer Shipyards, Inc. Vincent R. Almerico Senoir Vice President Robert E. Kenny Senior Vice President Harvey B. Walpert Senoir Vice President Clifford Anglin Vice President Terry Bollman Vice President Wayne J. Bourgeois Vice President George A. DeBord Vice President Salvadore J. Guarino Vice President A. Fred May Vice President Sidney C. Mizell Vice President W. Philip Nuss Vice President Anil Raj Vice President James G. Rivers, Jr. Vice President Neville Q. Rush Vice President Keith L. Voigts Vice President Containers Custom Vessels Harry W. Hinkle President, Beaird Industries, Inc. E. C. Greene Vice President George W. Gruner Vice President Murphy B. Horton Vice President Charles G. Moore Vice President John H. Wawrzeniak Vice President Steve Zoller Vice President LPG Containers Timothy R. Wallace Chairman, LPG Containers John R. McDearman Executive Vice President Michael C. Cooper Vice President Transportation Patrick A. Turner President, Transportation Trinity Industries de Mexico Manuel Castro, Sr. President Jorge Bracho Vice President Manuel Castro, Jr. Vice President Luis Pardo Vice President Carlos Reynoso Vice President PAGE 30 Directors David W. Biegler Chairman, President and Chief Executive Officer ENSERCH Corporation Barry J. Galt Chairman, President and Chief Executive Officer Seagull Energy Corporation Clifford J. Grum Chairman and Chief Executive Officer Temple-Inland, Inc. Dean P. Guerin Chairman and Chief Executive Officer Berry-Barnett Food Distribution Company Jess T. Hay Retired Chairman and Chief Executive Officer, Lomas Financial Corporation Edmund M. Hoffman Investments Ray J. Pulley Investments Timothy R. Wallace Group Vice President W. Ray Wallace Chairman, President and Chief Executive Officer Executive Officers W. Ray Wallace Chairman, President and Chief Executive Officer Ralph A. Banks, Jr. Senior Vice President Richard G. Brown Senior Vice President John T. Sanford Senior Vice President John Dane, III Group Vice President Mark W. Stiles Group Vice President Timothy R. Wallace Group Vice President Jack L. Cunningham, Jr. Vice President John M. Lee Vice President R. A. Martin Vice President Tim L. Oglesby Vice President F. Dean Phelps, Jr. Vice President Joeseph F. Piriano Vice President Linda S. Sickels Vice President Neil O. Shoop Treasurer William J. Goodwin Controller J. J. French, Jr. Secretary (Employed by outside law firm) Executive Offices 2525 Stemmons Freeway Dallas, Texas 75207-2401 P.O. Box 568887 Dallas, Texas 75356-8887 Tel: (214) 631-4420 Auditors Ernst & Young LLP Transfer Agent and Registrar The Bank of New York New York, New York Annual Meeting The Annual Meeting of Stockholders will be on July 17, 1996, at 9:30 a.m. at the offices of the Company, 2525 Stemmons Freeway, Dallas, Texas 75207-2401. Form 10-K A copy of the Company's Form 10-K, filed with the Securities and Exchange Commission, shall be furnished without charge upon written request to Michael E. Conley, Director of Investor Relations, Trinity Industries, Inc., P. O. Box 568887, Dallas, Texas 75356-8887. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. TRINITY INDUSTRIES, INC. By: Registrant F. Dean Phelps, Jr. Vice President June 26, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the Registrant and in the capacities and on the dates indicated: Directors: Principal Executive Officer: David W. Biegler W. Ray Wallace Director President and Chairman June 26, 1996 June 26, 1996 Barry J. Galt Director Principal Financial Officer June 26, 1996 John T. Sanford Clifford J. Grum Senior Vice President Director June 26, 1996 June 26, 1996 Principal Accounting Officer Dean P. Guerin Director June 26, 1996 F. Dean Phelps, Jr. Vice President June 26, 1996 Jess T. Hay Director June 26, 1996 Edmund M. Hoffman Director June 26, 1996 Ray J. Pulley Director June 26, 1996 Timothy R. Wallace Director June 26, 1996 EXHIBIT 21 Trinity Industries, Inc. Listing of Subsidiaries of the Registrant The Registrant has no parent. At March 31, 1996, the operating subsidiaries of the Registrant were: Percentage of Organized voting securities under the owned by the Name of subsidiary laws of Registrant Beaird Industries, Inc. Delaware 100% Beaird Industries, Inc. of Orange Delaware 100% Flo-Bend, Inc. Delaware 100% Gulf Coast Fabrication, Inc. Mississippi 100% Helmsdale Limited Isle of Man 100% Platzer Shipyard, Inc. Delaware 100% Standard Forged Products, Inc. Delaware 100% Stearns Airport Equipment Co., Inc. Delaware 100% Syntechnics, Inc. Delaware 100% Syro, Inc. Ohio 100% Transit Mix Concrete & Materials Company Delaware 100% Transit Mix Concrete & Materials Company of Louisiana Louisiana 100% Trinity Casteel, Inc. Delaware 100% Trinity Gulf Repair, Inc. Delaware 100% Trinity Industries Leasing Company Delaware 100% Trinity Industries Transportation, Inc. Texas 100% Trinity Marine Baton Rouge, Inc. Delaware 100% Trinity Marine Caruthersville, Inc. Delaware 100% Trinity Marine Gulfport, Inc. Nevada 100% Trinity Marine Nashville, Inc. Delaware 100% Trinity Marine Panama City, Inc. Delaware 100% Trinity Marine Pascagoula, Inc. Delaware 100% Trinity Marine Port Allen, Inc. Delaware 100% Trinity Materials, Inc. Delaware 100% Trinity Mobile Railcar Repair, Inc. Delaware 100% EXHIBIT 23 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Trinity Industries, Inc. of our report dated May 9, 1996, included in the 1996 Annual Report to Stockholders of Trinity Industries, Inc. Our audits also included the financial statement schedule of Trinity Industries, Inc. listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in Post-Effective Amendment No. 3 to the Registration Statement (Form S-8, No. 2-64813), Post-Effective amendment No. 1 to the Registration Statement (Form S-8, No. 33-10937), Post-Effective Amendment No. 1 to the Registration Statement (Form S-3, No. 33-12526), Amendment No. 1 to the Registration Statement (Form S-3, No. 33-57338), Registration Statement (Form S-8, No. 33-35514), Registration Statement (Form S-8, No. 33-73026), Post-Effective Amendment No. 1 to the Registration Statement (Form S-4, No. 33-51709) of Trinity Industries, Inc. and in the related Prospectuses of our report dated May 9, 1996, with respect to the consolidated financial statements and schedules of Trinity Industries, Inc. included or incorporated by reference in this Annual Report (Form 10-K) for the year ended March 31, 1996. ERNST & YOUNG LLP Dallas, Texas June 25, 1996 EXHIBIT 27 [ARTICLE] 5 [PERIOD-TYPE] 12-MOS [FISCAL-YEAR-END] MAR-31-1996 [PERIOD-END] MAR-31-1996 [CASH] 15,400,000 [SECURITIES] 0 [RECEIVABLES] 293,500,000 [ALLOWANCES] 0 [INVENTORY] 403,700,000 [CURRENT-ASSETS] 0 [PP&E] 1,099,000,000 [DEPRECIATION] (406,700,000) [TOTAL-ASSETS] 1,455,800,000 [CURRENT-LIABILITIES] 0 [BONDS] 0 [COMMON] 41,600,000 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [OTHER-SE] 704,400,000 [TOTAL-LIABILITY-AND-EQUITY] 1,455,800,000 [SALES] 0 [TOTAL-REVENUES] 2,496,000,000 [CGS] 0 [TOTAL-COSTS] 2,143,600,000 [OTHER-EXPENSES] 151,200,000 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 16,600,000 [INCOME-PRETAX] 186,300,000 [INCOME-TAX] 72,500,000 [INCOME-CONTINUING] 113,800,000 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 113,800,000 [EPS-PRIMARY] $2.72 [EPS-DILUTED] $2.72
EXHIBIT 99.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 1996 Commission File Number 1-6903 PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES (Full Title of the plan) TRINITY INDUSTRIES, INC. (Name of issuer of the securities held pursuant to the plan) 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) Issuer's telephone number, including area code (214) 631-4420 Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Index to Annual Report on Form 11-K (a) Financial Statements Description Page Report of independent auditors . . . . . . . 4 Statement of financial condition as of March 31, 1996 and 1995 . . . . . . . . . . . 5 - 6 Statement of income and changes in Plan equity for the years ended March 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . 7 - 9 Notes to financial statements . . . . . . . . 10 Schedules - Schedules I, II, and III have been omitted because the information required is included in the Financial Statements or the notes thereto. (b) Exhibits Number Title Page 1 Consent of independent auditors 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this Annual Report to be signed by the undersigned thereunto duly authorized. Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates /S/ F. Dean Phelps, Jr. F. Dean Phelps, Jr. Vice President June 27, 1996 Report of Independent Auditors The Board of Directors Trinity Industries, Inc. We have audited the accompanying statements of financial condition of the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates (the "Plan") as of March 31, 1996 and 1995, and the related statements of income and changes in plan equity for each of the three years in the period ended March 31, 1996. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial condition of the Plan at March 31, 1996 and 1995, and the income and changes in plan equity for each of the three years in the period ended March 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of March 31, 1996 and reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The Fund Information in the statements of financial condition and the statements of income and changes in plan equity is presented for purposes of additional analysis rather than to present the financial condition and income and changes in plan equity of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ERNST & YOUNG LLP Dallas, Texas June 21, 1996
Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Statement of Financial Condition, With Fund Information March 31, 1996 ---------Putnam Mutual Funds--------- Guaranteed U. S. Govt. Stock Investment Growth & Income Participant Assets Account Account Income Trust Voyager Loans Total Cash and short-term investments . . . . . . . . . $ 41,742 $ 259,915 $ 146,926 $ 62,283 $ 180,536 $ 56,300 $ 747,702 Notes receivable from participants . . . . . . - - - - - 863,724 863,724 Investment in Trinity common stock, at market . . . 13,156,629 - - - - - 13,156,629 Investment in guaranteed investment contracts, at contract value . . . . . . . - 38,995,425 - - - - 38,995,425 Investment in Putnam mutual funds, at market . . . . . . - - 7,820,477 4,672,605 7,076,364 - 19,569,446 Interest receivable . . . . . . 390 170,475 179 85 185 400 171,714 Contribution receivable from Trinity . . . . . . . . 695,789 1,862,773 550,244 284,627 609,861 - 4,003,294 Contribution receivable from employees. . . . . . . . 229,860 504,942 176,516 85,831 199,050 - 1,196,199 Plan Equity . . . . . . . . . . $14,124,410 $41,793,530 $8,694,342 $5,105,431 $8,065,996 $ 920,424 $78,704,133 See accompanying notes to financial statements.
Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Statement of Financial Condition, With Fund Information March 31, 1995 ---------Putnam Mutual Funds--------- Guaranteed U. S. Govt. Stock Investment Growth & Income Participant Assets Account Account Income Trust Voyager Loans Total Cash and short-term investments . . . . . . . . . $ 16,953 $ 49,977 $ 6,079 $ - $ 102,359 $ 44,618 $ 219,986 Notes receivable from participants . . . . . . - - - - - 768,096 768,096 Investment in Trinity common stock, at market . . . 11,192,467 - - - - - 11,192,467 Investment in guaranteed investment contracts, at contract value . . . . . . . - 31,592,821 - - - - 31,592,821 Investment in Putnam mutual funds, at market . . . . . . - - 4,395,494 3,385,933 3,463,774 - 11,245,201 Interest receivable . . . . . . 369 195,414 31,851 61,111 491 370 289,606 Contribution receivable from Trinity . . . . . . . . 633,666 1,720,912 383,541 257,537 404,072 - 3,399,728 Contribution receivable from employees. . . . . . . . 187,758 475,196 117,460 73,752 110,260 - 964,426 Plan Equity . . . . . . . . . . $12,031,213 $34,034,320 $4,934,425 $3,778,333 $4,080,956 $ 813,084 $ 59,672,331 See accompanying notes to financial statements.
Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Statement of Income and Changes in Plan Equity, With Fund Information Year Ended March 31, 1996 --------Putnam Mutual Funds-------- Guaranteed U. S. Govt. Stock Investment Growth & Income Participant Assets Account Account Income Trust Voyager Loans Total Net investment income: Interest . . . . . . . . . . . . $ 5,982 $ 2,405,823 $ 2,869 $ 293,918 $ 2,195 $ 5,447 $ 2,716,234 Dividends. . . . . . . . . . . . 227,852 - 443,358 - 329,350 - 1,000,560 233,834 2,405,823 446,227 293,918 331,545 5,447 3,716,794 Realized gain(loss) on investments: Aggregate proceeds . . . . . . . 2,316,897 13,731,385 2,358,759 1,363,200 2,313,851 281,365 22,365,457 Aggregate costs . . . . . . . (2,316,897) (13,731,385) (2,326,454) (1,370,449) (2,294,191) (281,365) (22,320,741) Net realized gain(loss) . . . . . . - - 32,305 (7,249) 19,660 - 44,716 Unrealized appreciation (depreciation) of investments . . . . . . . . . (788,303) - 1,204,205 84,158 1,331,542 (44) 1,831,558 Contributions: Employee contribution. . . . . . 2,772,131 6,118,003 1,996,984 1,087,979 2,027,629 289,602 14,292,328 Employer contribution. . . . . . 695,789 1,862,773 570,775 284,627 589,330 - 4,003,294 3,467,920 7,980,776 2,567,759 1,372,606 2,616,959 289,602 18,295,622 Withdrawals, distributions and transfers. . . . . . . . . . (820,254) (2,627,389) (490,579) (416,335) (314,666) (187,665) (4,856,888) Net increase in Plan equity . . . . 2,093,197 7,759,210 3,759,917 1,327,098 3,985,040 107,340 19,031,802 Plan equity: Beginning of year . . . . . . . 12,031,213 34,034,320 4,934,425 3,778,333 4,080,956 813,084 59,672,331 End of year . . . . . . . . . . $14,124,410 $41,793,530 $8,694,342 $5,105,431 $8,065,996 $ 920,424 $78,704,133 See accompanying notes to financial statements.
Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Statement of Income and Changes in Plan Equity, With Fund Information Year Ended March 31, 1995 ---------Putnam Mutual Funds--------- Guaranteed U. S. Govt. Stock Investment Growth & Income Participant Assets Account Account Income Trust Voyager Loans Total Net investment income: Interest . . . . . . . . . . . . $ 5,210 $ 2,201,037 $ 871 $ 224,450 $ 1,276 $ 2,707 $ 2,435,551 Dividends. . . . . . . . . . . . 181,964 - 233,501 - 124,601 - 540,066 Other . . . . . . . . . . . . - - - - - 426,863 426,863 187,174 2,201,037 234,372 224,450 125,877 429,570 3,402,480 Realized gain(loss) on investments: Aggregate proceeds . . . . . . . 2,434,730 14,249,171 1,683,054 1,386,786 1,492,338 - 21,246,079 Aggregate costs . . . . . . . (2,434,730) (14,249,171) (1,678,150) (1,402,797) (1,482,447) - (21,247,295) Net realized gain(loss) . . . . . . - - 4,904 (16,011) 9,891 - (1,216) Unrealized appreciation (depreciation) of investments . . . . . . . . . (245,895) - 248,330 (50,592) 303,866 (81) 255,628 Contributions: Employee contribution. . . . . . 1,827,576 4,499,784 1,270,743 930,977 1,145,353 (17,444) 9,656,989 Employer contribution. . . . . . 633,665 1,720,912 428,277 257,537 359,336 - 3,399,727 2,461,241 6,220,696 1,699,020 1,188,514 1,504,689 (17,444) 13,056,716 Withdrawals, distributions and transfers. . . . . . . . . . (218,585) (2,225,366) (369,160) (477,085) (131,969) (240,072) (3,662,237) Net increase in Plan equity . . . . 2,183,935 6,196,367 1,817,466 869,276 1,812,354 171,973 13,051,371 Plan equity: Beginning of year . . . . . . . 9,847,278 27,837,953 3,116,959 2,909,057 2,268,602 641,111 46,620,960 End of year . . . . . . . . . . $12,031,213 $34,034,320 $4,934,425 $3,778,333 $4,080,956 $ 813,084 $59,672,331 See accompanying notes to financial statements.
Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Statement of Income and Changes in Plan Equity, With Fund Information Year Ended March 31, 1994 ---------Putnam Mutual Funds--------- Guaranteed U. S. Govt. Stock Investment Growth & Income Participant Assets Account Account Income Trust Voyager Loans Total Net investment income: Interest . . . . . . . . . . . . $ 2,683 $ 1,873,188 $ 420 $ 200,136 $ 223 $ 1,759 $ 2,078,409 Dividends. . . . . . . . . . . . 144,518 - 177,194 - 57,555 - 379,267 Other. . . . . . . . . . . . . . - - - - - 321,766 321,766 147,201 1,873,188 177,614 200,136 57,778 323,525 2,779,442 Realized gain(loss) on investments: Aggregate proceeds . . . . . . . 2,636,953 9,307,147 1,197,660 2,041,323 801,574 - 15,984,657 Aggregate costs. . . . . . . . . (2,649,556) (9,307,147) (1,187,943) (2,051,444) (799,916) - (15,996,006) Net realized gain(loss) . . . . . . (12,603) - 9,717 (10,121) 1,658 - (11,349) Unrealized appreciation (depreciation) of investments . . . . . . . . . 1,197,204 - (131,217) (156,008) 47,923 (57) 957,845 Contributions: Employee contribution. . . . . . 1,301,604 3,663,011 821,311 875,662 605,778 6,379 7,273,745 Employer contribution. . . . . . 460,564 1,288,379 321,176 250,827 255,198 - 2,576,144 1,762,168 4,951,390 1,142,487 1,126,489 860,976 6,379 9,849,889 Withdrawals, distributions and transfers . . . . . . . . . . (837,596) (1,714,241) 57,912 (743,825) 251,648 (154,737) (3,140,839) Net increase in Plan equity . . . . 2,256,374 5,110,337 1,256,513 416,671 1,219,983 175,110 10,434,988 Plan equity: Beginning of year. . . . . . . . 7,590,904 22,727,616 1,860,446 2,492,386 1,048,619 466,001 36,185,972 End of year. . . . . . . . . . . $9,847,278 $27,837,953 $3,116,959 $2,909,057 $2,268,602 $ 641,111 $46,620,960 See accompanying notes to financial statements.
Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Notes to Financial Statements March 31, 1996 1. Description of the Plan General - The Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates (the "Plan") was adopted by the Board of Directors of Trinity Industries, Inc. (the "Board") on December 11, 1986 and became effective January 1, 1987, for eligible employees of Trinity Industries, Inc. and Certain Affiliates (the "Employer"). The Plan was amended and restated effective April 1, 1994. The Plan is a defined contribution plan designed to comply with the provisions of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"). The following is a brief description of the Plan. Participants should refer to the Plan document for complete information regarding the Plan. The Plan's fiscal year end is March 31. Participation - Each employee is eligible to contribute to the Plan on the first day of the calendar quarter on or immediately following his employment date with the Company and must meet the following requirements: * Must be classified as a full-time, part-time, or temporary employee of Trinity Industries, Inc.; and * Must be in a unit of employees who are designated as eligible to participate in the Plan; and * Must not be included in a unit of employees covered by a collective bargaining agreement unless benefits under this Plan were included in an agreement as a result of good faith bargaining. Eligible employees automatically become participants and must indicate on the form or forms provided by the Committee whether or not they want to make contributions to the plan. If they elect to contribute, they will authorize the Employer to make payroll deductions for contributions to the Plan. Contributions - Each Plan participant agrees to contribute not less than two percent nor more than ten percent of their compensation in one percent increments as designated by the participant. A participant's salary reduction may not exceed $9,500 and $9,240 per calendar year ended 1996 and 1995, respectively. A salary reduction and contribution agreement must be entered into by each employee as the employee begins participation in the Plan and may be amended by such employee twice each year. Employer matching contributions shall be made if Company earnings are at least $0.333 per share of common stock and sufficient to pay dividends to stockholders ($0.68, $0.68 and $0.64 per share for the years ended March 31, 1996, 1995, and 1994, respectively). If the Employer matching contribution is made, then each participant with at least five years of service, shall receive an amount equal to 50 percent of that portion of such participant's employee contribution which does not exceed six percent of such participant's total compensation for the year. If the Employer matching contribution is made, then each participant with at least one but less than five years of service shall receive an amount equal to 25 percent of that portion of such participant's employee contribution which does not exceed six percent of such participant's total compensation for the year. Employer contributions are net of forfeitures, as defined. Employer contributions for a given plan year shall be deposited in the Profit Sharing Trust for Employees of Trinity Industries, Inc. and Certain Affiliates (the "Trust Fund") as defined below, no later than the date on which the Employer files its Federal income tax return for such year. The Employer and Texas Commerce Bank - Dallas (the "Trustee"), have entered into a Trust Agreement under which the latter acts as Trustee under the Plan. Texas Commerce Bank - Dallas is the successsor Trustee to First City Bank of Dallas, N.A. pursuant to the acquisition by Texas Commerce Bank - Dallas of the assets and certain liabilities of the former First City Bank of Dallas, N.A. In its capacity as Trustee, Texas Commerce Bank - Dallas invests the employee contributions and Employer contributions in the following investment options (hereafter collectively referred to as the "Trust Fund"): (a) Trinity Stock Investment Account ("Stock Account") holds shares of Employer common stock purchased on behalf of the participants. Idle cash is invested in interest-bearing accounts until such time as it can be utilized to purchase Employer common stock. (b) Guaranteed Investment Contract Investment Account (the "Guaranteed Investment Account") invests in guaranteed investment contracts issued by various insurance companies selected annually by the Committee. At March 31, 1996, the guaranteed investment contracts had guaranteed annual rates of return of 9.06% (GAC 5027), 6.24% (GAC 627-05387), 6.08% (GAC 20254),8.31% (GAC 7614) and 5.15% (GAC 7219). At March 31, 1995, the guaranteed investment contracts had guaranteed annual rates of return of 8.8% (GAC 4854), 9.06% (GAC 5027), 6.24% (GAC 627-05387), 8.31% (GAC 7614) and 5.15% (GAC 7219). Participant's accounts invested in the Guaranteed Investment Account earn interest at a rate blended from all of the contracts included in the Guaranteed Investment Account. The account is credited with earnings on the underlying investments and charged for plan withdrawals and administrative expenses charged by the insurance companies. Transfers of participants accounts to and from the Guaranteed Investment Account are not permitted. (c) Putnam Mutual Funds Investment Accounts (the "Putnam Mutual Funds") invests in three mutual funds selected by the Committee. At March 31, 1996, the funds are U.S. Government Income Trust, Growth and Income, and Voyager. Participants may elect the extent to which assets are invested in the options described above in increments of 10 percent or 25 percent. At March 31, 1996, 1995 and 1994, the majority of participants had elected to participate in the guaranteed investment contracts. Benefits - Distribution of a participant's account balance is payable upon retirement at or after age 65, total disability, death, or termination of employment. Distribution is equal to the salary reduction contribution and related earnings plus the vested portion of the Employer contribution and related earnings. Withdrawal of up to 100 percent of the employee contribution can be made only to meet "immediate and heavy financial needs" (medical care, college tuition, the purchase of a principal residence, or to prevent the foreclosure on a principal residence) as long as the funds are not available for such needs from other sources. No withdrawal can be made against the earnings on the employee contributions or against the Employer contribution and related earnings. These restrictions no longer apply when the participant reaches age 59 1/2. Loans for "immediate and heavy financial needs" may be made for a minimum of $1,000 up to a maximum of $50,000, not to exceed 50 percent of the Employee contribution and related earnings and not to exceed 50 percent of the vested portion of the Employer contribution and related earnings. Loans are subject to rules and regulations established by the Plan Administrator, as defined in the Plan. Vesting - The Employer contribution and related earnings (losses) vest to participants, depending upon the number of years of vesting service, as defined, completed by such participant as follows: Years of Service Percentage Vested Less than 1 0 1 but less than 2 20 2 but less than 3 40 3 but less than 4 60 4 but less than 5 80 5 or more 100 Participants are 100 percent vested in their Employer contribution and allocated portion of related earnings (losses) upon their attainment of age 65 and are always 100 percent vested in their employee contribution and related earnings (losses) on such contribution. Administration of the Plan - The Plan is administered by the Committee, consisting of at least three persons who are appointed by the Board. The members of the Committee serve at the pleasure of the Board, and any committee member who is an employee of the Employer shall not receive compensation for his services. A separate account is maintained for each participant. The Plan provides that account balances for participants are adjusted periodically as follows: (a) Employee contributions are generally allocated on a quarterly basis; (b) Participant's share of the Employer contribution shall be allocated to the participant's account as of a date no later than the last day of the Plan year; (c) Earnings and appreciation or depreciation of investment assets of the Trust Fund for each calendar quarter shall be allocated to the accounts of participants, former participants and beneficiaries who had unpaid balances in their accounts on the last day of such calendar quarter in proportion to the balances in such accounts at the beginning of the calendar quarter. Upon request, distributions shall be made no earlier than the later of the last day of the calendar quarter in which entitlement occurs or the date on which the Committee determines the final balances. Distributions from the Stock Account shall be made in cash unless otherwise designated by the participant. Income tax status - The Plan has received a determination letter from the Internal Revenue Service dated November 4, 1994 stating that the Plan is a qualified plan under Section 401(a) of the Internal Revenue Code of 1986 (the "Code") and that the Trust is exempt from federal income tax under Section 501(a) of the Code. Certain changes have been made to the Plan and a determination letter has been requested from the Internal Revenue Service. The Committee believes the Plan is being operated in compliance with applicable requirements of the code. The Committee is not aware of any course of action or series of events that have occurred that might adversely affect the plan's qualified status. Employee contributions and Employer contributions are not included in the participant's federal taxable income in the year such contributions are made. A participant shall not be subject to federal income taxes with respect to participation in the Plan until the amounts are withdrawn or distributed. Amendment or termination of the Plan - The Employer may amend the Plan at any time. However, no amendment, unless made to secure approval of the Internal Revenue Service or other governmental agency, may operate retroactively to reduce or divest the then vested interest in the Plan of any participant, former participant or beneficiary, or to reduce or divest any benefit payable under the Plan unless all participants, former participants and beneficiaries then having vested interests or benefit payments affected thereby consent to such amendment. The Employer may terminate the Plan at any time. Upon complete or partial termination, the accounts of all participants affected thereby shall become 100 percent vested, and the Committee shall direct the Trustee to distribute the assets in the Trust Fund, after receipt of any required approval by the Internal Revenue Service and payment of any expenses properly chargeable thereto, to participants, former participants, and beneficiaries in proportion to their respective account balances. 2. Significant Accounting Policies Investments and investment income - Investments in the common stock of the Employer and the Putnam Mutual Funds are valued at the last reported sales price on the last business day of the Plan year as reported on a national securities exchange. The investments in guaranteed investment contracts are valued at cost which approximates market value. The Plan is in compliance with AICPA Statement of Position 94-4, "Reporting of investment contracts held by health and welfare benefit plans and defined contribution pension plans," with fair market value approximating stated value for the guaranteed investment contracts. Security transactions are recorded on a trade date basis. The statement of income and changes in Plan equity include net unrealized appreciation or depreciation in market value on investments. The Plan's financial statements are prepared on an accrual basis. Realized gains and losses - Realized gains and losses have been calculated using historical cost (first in, first out). Use of estimates in the preparation of financial statements - The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates from which actual results may differ. Prior year financial statements have been restated in order to comply with the provisions of the AICPA Statement of Position 92-6 "Accounting and Reporting by Health and Welfare Benefit Plans." Amounts previously reported as benefits payable have been included in plan equity and the distributed amounts have been adjusted accordingly. 3. Investments Investments are as follows: March 31, 1996 March 31, 1995 Cost Market Cost Market Trinity Industries, Inc. common stock $10,343,845 $13,156,629* $ 7,591,381 $11,192,467 Guaranteed investment contracts GAC 20254 9,330,804 9,330,804* - - GAC 4854 - - 7,669,687 7,669,687 GAC 7219 8,226,153 8,226,153* 7,823,255 7,823,255 GAC 5027 4,776,358 4,776,358* 4,347,428 4,347,428 GAC 627-05387 3,667,622 3,667,622 3,451,726 3,451,726 GAC 7614 12,994,488 12,994,488* 8,300,725 8,300,725 38,995,425 38,995,425 31,592,821 31,592,821 Putnam mutual funds U.S. Govt. Income Trust 4,823,110 4,672,605* 3,620,596 3,385,933 Growth & Income 6,434,059 7,820,477* 4,213,280 4,395,494 Voyager 5,347,346 7,076,364* 3,066,299 3,463,774 16,604,515 19,569,446 10,900,175 11,245,201 Participant loans 864,088 863,724 768,416 768,096 $66,807,873 $72,585,224 $50,852,793 $54,798,585 * Investment represents 5 percent or more of the fair value of total assets. 4. Reconciliation of Financial Statements to the Form 5500 The following is a reconciliation of plan equity per the financial statements to the Form 5500: March 31 1996 1995 Plan equity per the financial statements $78,704,133 $59,672,331 Amounts allocated to withdrawing participants (1,545,308) (778,329) Plan equity per the Form 5500 $77,158,825 $58,894,002 The following is a reconciliation of withdrawals, distributions and transfers per the financial statements to the Form 5500: Year Ended March 31 1996 1995 Withdrawals, distributions and transfers per the financial statements $4,856,888 $3,662,237 Amounts allocated to withdrawing participants at end of year 1,545,308 778,329 Amounts allocated to withdrawing participants at beginning of year (778,329) (930,061) Withdrawals, distributions and transfers per the Form 5500 $5,623,867 $3,510,505 Amounts allocated to withdrawing participants are recorded on the Form 5500 for withdrawals that have been processed and approved for payment prior to March 31 but not yet paid as of that date. 5. Unrealized Appreciation (Depreciation) of Investments Unrealized appreciation (depreciation) of investments in Trinity common stock, Putnam mutual funds, and Participant loans for the years ended March 31, 1996, 1995, and 1994 were determined as follows: Net Investments Investments increase at market at cost (decrease) March 31, 1996 Trinity common stock March 31, 1996 $13,156,629 $10,343,846 $2,812,783 March 31, 1995 11,192,467 7,591,381 3,601,086 1,964,162 2,752,465 (788,303) Putnam mutual funds March 31, 1996 19,569,446 16,604,515 2,964,931 March 31, 1995 11,245,201 10,900,175 345,026 8,324,245 5,704,340 2,619,905 Participant loans March 31, 1996 863,724 864,088 (364) March 31, 1995 768,096 768,416 (320) 95,628 95,672 (44) Increase in unrealized appreciation of investments $10,384,035 $ 8,552,477 $1,831,558 Net Investments Investments increase at market at cost (decrease) March 31, 1995 Trinity common stock March 31, 1995 $11,192,467 $ 7,591,381 $3,601,086 March 31, 1994 9,280,170 5,433,189 3,846,981 1,912,297 2,158,192 (245,895) Putnam mutual funds March 31, 1995 11,245,201 10,900,175 345,026 March 31, 1994 7,191,495 7,348,073 (156,578) 4,053,706 3,552,102 501,604 Participant loans March 31, 1995 768,096 768,416 (320) March 31, 1994 567,334 567,573 (239) 200,762 200,843 (81) Increase in unrealized appreciation of investments $ 6,166,765 $ 5,911,137 $ 255,628 Net Investments Investments increase at market at cost (decrease) March 31, 1994 Trinity common stock March 31, 1994 $ 9,280,170 $ 5,433,189 $3,846,981 March 31, 1993 7,176,868 4,527,091 2,649,777 2,103,302 906,098 1,197,204 Putnam mutual funds March 31, 1994 7,191,495 7,348,073 (156,578) March 31, 1993 4,760,031 4,677,307 82,724 2,431,464 2,670,766 (239,302) Participant Loans March 31, 1994 567,334 567,573 (239) March 31, 1993 449,509 449,691 (182) 117,825 117,882 (57) Increase in unrealized appreciation of investments $ 4,652,591 $ 3,694,746 $ 957,845 6. Expenses The expenses incurred by the Trustee in the performance of its duties, including the Trustee's compensation and the services of the recordkeeper, shall be paid by the Plan unless paid by the Employer. The Employer paid $300,751, $268,624, and $196,608, for recordkeeping and trustee fees on behalf of the Plan for the fiscal years ended March 31, 1996, 1995, and 1994, respectively. Index to Exhibits Number Description Page 1 Consent of Independent Auditors 20 Consent of Independent Auditors We consent to the incorporation by reference in Post Effective Amendment No. 1 to the Registration Statement (Form S-8, File No. 33- 10937) pertaining to the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates and in the related Prospectus of our report dated June 21, 1996, with respect to the financial statements and supplemental schedules of the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates included in this Annual Report (Form 11-K) for the year ended March 31, 1996. ERNST & YOUNG LLP Dallas, Texas June 27, 1996 Profit Sharing Plan for Employees of Trinity Industries, Inc. And Certain Affiliates Item 27(a) - Assets Held for Investment March 31, 1996 Units, shares, or face Current Identity amount Cost value Short Term Money Market investments $ 747,702 $ 747,702 Trinity Industries, Inc. common stock 377,251 10,343,845 13,156,629 Guaranteed Investment Contracts Allstate Life Insurance Co. GAC 5027, 9.06% 4,776,358 4,776,358 John Hancock Mutual Life GAC 7219, 5.15% 8,226,153 8,226,153 GAC 7614 8.31% 12,994,488 12,994,488 Metropolitan Life Ins Co. GAC 20254 6.08% 9,330,804 9,330,804 Provident Life & Accident Insurance Co. GAC 627-05387, 6.24% 3,667,622 3,667,622 38,995,425 38,995,425 Putnam mutual funds U. S. Govt. Income Trust 365,333 4,823,110 4,672,605 Growth & Income 458,679 6,434,059 7,820,477 Voyager 437,082 5,347,346 7,076,364 16,604,515 19,569,446 Participant loans - 863,724 $66,691,487 $73,332,926 Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates Item 27(d) - Reportable Transactions Year Ended March 31, 1996 (Pursuant to ERISA 2520.103-6(d)(2)) ----- Purchases ----- ---------- Sales ---------- Number of Number of Net trans- trans- gain actions Cost actions Proceeds (loss) Category (i) Individual transactions in excess of 5% of Plan equity Allstate Life - - 1 $8,233,530 - Insurance Co. GAC 4854, 8.8% Category (iii) Series of securities transactions in excess of 5% of Plan equity John Hancock Mutual 2 $4,693,763 - - - Life GAC 7614, 8.31% Metropolitan Life 3 $9,330,804 - - - Insurance Co. GAC 20254, 6.08% Putnam Growth and Income Fund $3,424,983 Putnam Voyager Fund $3,513,229 There were no category (ii) or (iv) reportable transactions. -----END PRIVACY-ENHANCED MESSAGE-----