Debt

9 Months Ended

Sep. 30, 2011

Note 11. Debt

The following table summarizes the components of debt as of September 30, 2011 and December 31, 2010:


	September 30,			December 31,
	2011			2010
				(as reported)
	(in millions)
Manufacturing/Corporate — Recourse:
Revolving credit facility	$	—		$	—
Convertible subordinated notes		450.0			450.0
Less: unamortized discount		(102.7	)		(111.1	)

		347.3			338.9
Other		4.4			2.8

		351.7			341.7

Leasing — Recourse:
Capital lease obligations		49.2			51.2
Term loan		55.4			57.4

		456.3			450.3

Leasing — Non-recourse:
2006 secured railcar equipment notes		271.7			283.2
Promissory notes		471.5			493.8
2009 secured railcar equipment notes		220.9			229.2
2010 secured railcar equipment notes		357.5			367.1
TILC warehouse facility		280.7			80.2
TRIP Holdings senior secured notes:
Total outstanding		175.0			—
Less: owned by Trinity		(112.0	)		—

		63.0			—
TRIP Master Funding secured railcar equipment notes		850.3			—
TRIP warehouse loan		—			1,003.9

		2,515.6			2,457.4

Total debt	$	2,971.9		$	2,907.7

We have a $425.0 million unsecured revolving credit facility which matures on October 19, 2012. As of September 30, 2011, we had letters of credit issued under our revolving credit facility in an aggregate principal amount of $82.6 million, leaving $342.4 million available for borrowing. Other than with respect to such letters of credit, there were no borrowings under our revolving credit facility as of September 30, 2011 or for the nine month period then ended. Of the outstanding letters of credit as of September 30, 2011, a total of $8.1 million is expected to expire in 2011 and the remainder in 2012. The majority of our letters of credit obligations supports the Company’s various insurance programs and generally renew each year. As of September 30, 2011, borrowings under the credit facility bear interest at Libor plus 75.0 basis points or prime. Trinity’s revolving credit facility requires maintenance of ratios related to interest coverage for the leasing and manufacturing operations, leverage, and minimum net worth. On October 20, 2011, we amended and extended this $425.0 million facility for an additional four years and it now matures on October 20, 2016. Borrowings under the amended credit facility bear interest at Libor plus 150.0 basis points or prime plus 50.0 basis points. Financial covenants are similar to existing covenants but no longer include a minimum net worth requirement. As of September 30, 2011, we were in compliance with all such financial covenants.

The Company’s 3 7/8% convertible subordinated notes are recorded net of unamortized discount to reflect their underlying economics by capturing the value of the conversion option as borrowing costs. As of September 30, 2011 and December 31, 2010, capital in excess of par value included $92.8 million related to the estimated value of the Convertible Subordinated Notes’ conversion options. Debt discount recorded in the consolidated balance sheet is being amortized through June 1, 2018 to yield an effective annual interest rate of 8.42% based upon the estimated market interest rate for comparable non-convertible debt as of the issuance date of the Convertible Subordinated Notes. Total interest expense recognized on the Convertible Subordinated Notes for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
			(in millions)
Coupon rate interest	$	4.4	$	4.4	$	13.1	$	13.1
Amortized debt discount		2.9		2.6		8.4		7.7

	$	7.3	$	7.0	$	21.5	$	20.8

At September 30, 2011, the Convertible Subordinated Notes were convertible at a price of $51.47 per share resulting in 8,742,957 issuable shares. As of September 30, 2011, if the Convertible Subordinated Notes had been converted, no shares would have been issued since the trading price of the Company’s common stock was below the conversion price of the Convertible Subordinated Notes. The Company has not entered into any derivatives transactions associated with these notes.

The $475 million TILC warehouse loan facility, established to finance railcars owned by TILC, had $280.7 million outstanding and $194.3 million available as of September 30, 2011. The warehouse loan is a non-recourse obligation secured by a portfolio of railcars and operating leases, certain cash reserves, and other assets acquired and owned by the warehouse loan facility. The principal and interest of this indebtedness are paid from the cash flows of the underlying leases. Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 2.25% at September 30, 2011. In February 2011, the warehouse loan facility was renewed for an additional two years and now matures in February 2013. Amounts outstanding at maturity, absent renewal, will be payable in three installments in August 2013, February 2014, and August 2014.

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

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

The TRIP Master Funding Secured Railcar Equipment Notes were issued pursuant to an Indenture, dated July 6, 2011 between TRIP Master Funding and Wilmington Trust Company, as indenture trustee, with a final maturity date in July 2041. The TRIP Master Funding Secured Railcar Equipment Notes consist of three classes with the Class A-1a notes bearing interest at 4.37%, the Class A-1b notes bearing interest at Libor plus 2.50%, and the Class A-2 notes bearing interest at 6.02%, all payable monthly. The TRIP Master Funding Secured Railcar Equipment Notes are non-recourse to Trinity, TILC, and the other equity investors in TRIP Holdings and are secured by TRIP Master Funding’s portfolio of railcars and operating leases thereon, its cash reserves and all other assets owned by TRIP Master Funding. As of September 30, 2011, there were $217.7 million, $123.0 million, and $509.6 million of Class A-1a, Class A-1b, and of Class A-2 notes outstanding, respectively.

Terms and conditions of other debt, including recourse and non-recourse provisions, are described in Note 11 of the December 31, 2010 Consolidated Financial Statements filed on Form 10-K.

The remaining principal payments under existing debt agreements as of September 30, 2011 are as follows:


	Remaining
	three
	months of
	2011		2012		2013		2014			2015		Thereafter
					(in millions)
Recourse:
Manufacturing/Corporate	$	0.4	$	1.2	$	1.1	$	1.1		$	0.2	$	450.4
Leasing — capital lease obligations (Note 5)		0.7		2.8		2.9		3.1			3.3		36.4
Leasing — term loan (Note 5)		0.7		2.8		3.0		3.3			3.5		42.1

Non-recourse — leasing (Note 5):
2006 secured railcar equipment notes		3.3		13.5		15.1		16.9			18.6		204.3
Promissory notes		6.4		26.8		29.1		25.9			22.4		360.9
2009 secured railcar equipment notes		2.5		9.2		10.2		9.9			9.6		179.5
2010 secured railcar equipment notes		3.1		12.8		14.6		14.0			15.3		297.7
TILC warehouse facility		2.0		8.1		8.1		5.4			—		—
TRIP Holdings senior secured notes
Total outstanding		—		—		—		175.0			—		—
Less: owned by Trinity		—		—		—		(112.0	)		—		—

								63.0
TRIP Master Funding secured railcar equipment notes		10.3		41.0		41.1		40.2			35.9		681.8
Facility termination payments:
TILC warehouse facility		—		—		85.3		171.8			—		—

Total principal payments	$	29.4	$	118.2	$	210.5	$	354.6		$	108.8	$	2,253.1