-----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, PUXUs7Z0iRyUAJcdrXMdaDnkQ1yLFjxj7fR4Ik0Ap4SnqbZ++P71lv41N7go6Rmd hQ81m3MCc3Vw5SbJR6xr9w== 0000950134-03-007573.txt : 20030512 0000950134-03-007573.hdr.sgml : 20030512 20030512105807 ACCESSION NUMBER: 0000950134-03-007573 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030507 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030512 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06903 FILM NUMBER: 03691821 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 214-631-4420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 8-K 1 d05752e8vk.txt FORM 8-K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 7, 2003 TRINITY INDUSTRIES, INC. DELAWARE 1-6903 75-0225040 (STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.) 2525 STEMMONS FREEWAY, DALLAS, TEXAS 75207-2401 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 631-4420 - -------------------------------------------------------------------------------- ITEM 7. EXHIBITS (c) Exhibits Exhibit 99.1 - News Release of Registrant dated May 7, 2003 with respect to the financial results for the first quarter of 2003. Exhibit 99.2 - Conference call script of May 8, 2003 of John L. Adams, Executive Vice President. Exhibit 99.3 - Conference call script of May 8, 2003 of Jim S. Ivy, Senior Vice President and Chief Financial Officer. Exhibit 99.4 - Conference call script of May 8, 2003 of Timothy R. Wallace, Chairman, President and Chief Executive Officer. ITEM 9. REGULATION FD DISCLOSURE The following information is furnished pursuant to this Item 9 and also pursuant to "Item 12. Results of Operations and Financial Condition." The Registrant hereby furnishes the information set forth in its News Release, dated May 7, 2003, announcing first quarter 2003 results, a copy of which is included as exhibit 99.1. On May 8, 2003, the Registrant held a conference call and web cast with respect to its financial results for the first quarter of 2003. The conference call scripts of John L. Adams, Executive Vice President, Jim S. Ivy, Senior Vice President and Chief Financial Officer, and Timothy R. Wallace, Chairman, President and Chief Executive Officer are furnished as exhibits 99.2, 99.3 and 99.4 respectively, and incorporated herein by reference. This information is not "filed" pursuant to the Securities and Exchange Act and is not incorporated by reference into any Securities Act registration statements. Additionally, the submissions of this report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRINITY INDUSTRIES, INC. By: /s/ Michael G. Fortado ---------------------------- Michael G. Fortado Vice President and Secretary Date: May 8, 2003 EXHIBIT INDEX
Exhibit No. Description of Exhibit - ----------- ---------------------- Exhibit 99.1 News Release of Registrant dated May 7, 2003 with respect to the financial results for the first quarter of 2003. Exhibit 99.2 Conference call script of May 8, 2003 of John L. Adams, Executive Vice President. Exhibit 99.3 Conference call script of May 8, 2003 of Jim S. Ivy, Senior Vice President and Chief Financial Officer. Exhibit 99.4 Conference call script of May 8, 2003 of Timothy R. Wallace, Chairman, President and Chief Executive Officer.
EX-99.1 3 d05752exv99w1.txt NEWS RELEASE EXHIBIT 99.1 TRINITY INDUSTRIES REPORTS OPERATING RESULTS FOR FIRST QUARTER OF 2003 DALLAS - May 7, 2003 - Trinity Industries, Inc., (NYSE:TRN) today reported financial results for the first quarter of 2003. For the quarter ended March 31, 2003, the company reported a net loss of $14.5 million, or 32 cents per diluted share, on revenues of $289.1 million. This compares to a net loss of $8.6 million, or 19 cents per diluted share, on revenues of $384.3 million in the first quarter of 2002. "Even though our operating results for the 1st quarter are in line with the guidance we provided at our last conference call, we are still not pleased when we lose money," said Timothy R. Wallace, Trinity's chairman, president and CEO. "The 1st quarter was full of a variety of challenges such as winter weather, which affects our construction related businesses, a drastic drop in the demand for barges, an unusual amount of uncertainty associated with the war and a large portion of our railcar shipments going to customers in our leasing company." "We do have encouraging news in our business. The North American railcar industry backlog grew for the fourth consecutive quarter. Our market share percentage for the 1st quarter for new orders slipped to the low 20's, but we are pleased with our market share for orders in the railcar types we are most focused on. Our market share ranged from 40% to 73% on certain railcar models. The majority of our businesses have all shown an improvement in their backlogs as well. Our barge business has booked some very crucial orders which provide a base load. We continue to expect to return to profitability during the 3rd quarter," Wallace said. Trinity Industries, Inc., with headquarters in Dallas, Texas, is one of the nation's leading diversified industrial companies. Trinity reports five principal business segments: the Trinity Rail Group, Trinity Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group, and the Industrial Products Group. Trinity's web site may be accessed at http://www.trin.net. This news release contains "forward looking statements" as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to expectations, intentions and predictions of future financial performance. Statements that are not historical facts are forward looking. Readers are directed to Trinity's Form 10-K and other SEC filings for a description of certain of the business issues and risks, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward looking statements. Any forward looking statement speaks only as of the date on which such statement is made. Trinity undertakes no obligation to update any forward looking statement or statements to reflect events or circumstances after the date on which such statement is made. - TABLES TO FOLLOW - TRINITY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts)
Three Months Ended March 31, 2002 2003 ------------ ------------ Revenues $ 384.3 $ 289.1 Operating loss $ (4.2) $ (11.4) Other expense 7.2 8.6 ------------ ------------ Loss before income taxes (11.4) (20.0) Provision (benefit) for income taxes (2.8) (5.5) ------------ ------------ Net loss $ (8.6) $ (14.5) ============ ============ Net loss per common share: Basic $ (0.19) $ (0.32) ============ ============ Diluted $ (0.19) $ (0.32) ============ ============ Weighted average number of shares outstanding: Basic 44.4 45.5 Diluted 44.4 45.5
TRINITY INDUSTRIES, INC. Condensed Segment Data (in millions) REVENUES:
Three Months Ended March 31, 2002 2003 ------------ ------------ Trinity Rail Group $ 171.1 $ 149.1 Construction Products Group 113.1 103.5 Inland Barge Group 61.2 44.1 Industrial Products Group 31.3 28.5 Trinity Railcar Leasing & Management Services Group 26.7 28.5 All Other 9.2 7.3 Eliminations (28.3) (71.9) ------------ ------------ Total revenues $ 384.3 $ 289.1 ============ ============
OPERATING PROFIT (LOSS):
Three Months Ended March 31, 2002 2003 ------------ ------------ Trinity Rail Group $ (12.2) $ (10.3) Construction Products Group 7.5 3.1 Inland Barge Group 1.9 (0.8) Industrial Products Group 0.9 -- Trinity Railcar Leasing & Management Services Group 7.1 8.6 All Other (2.9) (0.9) Corporate & Eliminations (6.5) (11.1) ------------ ------------ Consolidated $ (4.2) $ (11.4) ============ ============
TRINITY INDUSTRIES, INC. Condensed Consolidated Balance Sheets (in millions)
December 31, March 31, 2002 2003 ------------ ------------ Cash and equivalents $ 19.1 $ 45.3 Receivables and inventories 381.5 360.4 Income tax receivable 50.0 3.8 Property, plant and equipment, at cost 1,551.8 1,616.1 Less accumulated depreciation (604.4) (624.0) Other assets 544.9 535.7 ------------ ------------ $ 1,942.9 $ 1,937.3 ============ ============ Accounts payable and accrued liabilities $ 396.0 $ 399.7 Debt 488.9 496.2 Other liabilities 56.4 55.4 Stockholders' equity 1,001.6 986.0 ------------ ------------ $ 1,942.9 $ 1,937.3 ============ ============
- END - EX-99.2 4 d05752exv99w2.txt CONFERENCE CALL SCRIPT OF EXECUTIVE VICE PRESIDENT EXHIBIT 99.2 JOHN ADAMS CONFERENCE CALL NOTES FIRST QUARTER MAY 8, 2003 GOOD MORNING, I AM JOHN ADAMS AND WE APPRECIATE YOUR JOINING US. AT OUR LAST CONFERENCE CALL, I DISCUSSED OUR DEBT AND ITS AMORTIZATION WITH YOU. AS LIQUIDITY AND FINANCING FLEXIBILITY ARE SO IMPORTANT TODAY, I WILL GO INTO MORE DETAIL AND REVIEW OUR DEBT FROM THE PERSPECTIVE OF A BANKER OR CREDITOR. WHEN I LOOK AT OUR BALANCE SHEET, I SEPARATE OUR DEBT INTO 2 CATEGORIES OR BUCKETS - (1) OUR LEASING COMPANY DEBT AND (2) OUR CORPORATE DEBT. FIRST IS THE DEBT TIED TO OUR LEASING COMPANY. WE HAVE 2 TYPES OF FINANCING - OUR $170 MILLION EQUIPMENT TRUST CERTIFICATE AND OUR $200 MILLION LEASED RAILCAR WAREHOUSE FACILITY. IN FEBRUARY 2002, WE ISSUED $170MM ETC AT 7.755% WITH A MATURITY OF 2/15/09. THIS DEBT IS TOTALLY SUPPORTED BY THE LEASING INCOME FROM THE 5,174 RAILCARS SECURING THIS INDEBTEDNESS. THE LEASED RAILCARS COLLATERALIZING THIS DEBT SUPPORTS THE INTEREST PAYMENTS PLUS PROVIDES AN ADDITIONAL $10MM ANNUALLY IN FREE CASH TO THE PARENT AS NO PRINCIPAL PAYMENTS ARE REQUIRED UNTIL 2005. THE OTHER INDEBTEDNESS OF OUR LEASING COMPANY IS THE $200MM COMMITTED WAREHOUSE OR INTERIM RAILCAR LEASE FINANCING PROVIDED BY CSFB AND WACHOVIA. WE HAD $171 MILLION OUTSTANDING AS OF 3/31/03. THIS FINANCING FACILITY HAS WORKED VERY NICELY FOR US - AND I WOULD LIKE TO REVIEW IT WITH YOU. CSFB AND WACHOVIA AGREED LAST SUMMER TO LEND US UP TO $200MM TO FINANCE LEASED RAILCARS UNTIL A LARGE ENOUGH AMOUNT WAS BORROWED TO ACCESS THE LONG-TERM OR PERMANENT MARKET - SAY $150-$200MM. WE ARE TOLD THE $200 MILLION INTERIM FINANCING COULD EASILY BE INCREASED IF WE DESIRE. THE FACILITY HAS BEEN RATED A- BY S&P. SEVENTY-FIVE PERCENT OF THE FAIR MARKET VALUE OF THE RAILCAR IS FINANCED. WE WERE BORROWING $171 MILLION AT 3/31/03 AND ARE IN THE PROCESS OF DOING A SALE LEASEBACK NON-RECOURSE BORROWING WHICH WILL PAY DOWN THE WAREHOUSE AND REFUND TRINITY'S EQUITY OF 25% OR APPROXIMATELY $50MM. THIS SALE LEASEBACK WILL BE VERY SIMILAR TO ONE WE DID LAST YEAR. THE WAREHOUSE WILL THEN BE RENEWED AND USED AGAIN TO FINANCE OUR LEASED RAILCARS. THUS, IF YOU WERE TO LOOK AT THE LEASING COMPANY AS A STAND ALONE COMPANY, YOU WOULD SEE A LEASING COMPANY WITH 2 FINANCINGS OF $340 MILLION, A BOOK VALUE OF $640 MILLION AND A MARKET VALUE THAT WOULD EXCEED THAT NUMBER. CASH FLOW IS $52 MILLION. OUR LEASING COMPANY IS NOT AT ALL HEAVILY LEVERAGED. AS MOST OF YOU KNOW, MOST LEASING COMPANIES HAVE EQUITY MORE IN THE 20-30% RANGE. IF WE ELECTED, WE COULD ADD ADDITIONAL LEVERAGE, SELL AN EQUITY INTEREST, OR POSSIBLY SELL OR FINANCE THE UNENCUMBERED CARS OF APPROXIMATELY $130 MILLION. AS ONE INVESTMENT BANKER SAID TO ME, "YOU HAVE A LOT OF FINANCING OPTIONS AND A LOT OF FLEXIBILITY". THE SECOND KIND OR BUCKET OF DEBT IS ATTRIBUTABLE TO OUR CORPORATE OR THE NON-LEASING PARTS OF OUR BUSINESS. WE ONLY HAD $150MM OUTSTANDING AT 3/31 AS WE HAD NO BORROWINGS UNDER OUR 2 YEAR REMAINING $275MM REVOLVING CREDIT. THE $150MM JUST MENTIONED DOES NOT MATURE UNTIL JUNE 2007. THE CASH FLOW OF OUR NON-LEASING BUSINESSES SUPPORTS THIS DEBT. OUR CORPORATE PRINCIPAL PAYMENTS ARE LESS THAN $1 MILLION EACH YEAR FOR 2003, 2004, AND 2005. SO WHEN YOU CONSIDER THE CORPORATE NON-LEASING DEBT AND COMPARE TO THE EQUITY AND CASH FLOW OF THE COMPANY, THE COMPANY IN MY OPINION IS NOT HIGHLY LEVERAGED AND CAN EASILY SERVICE ITS PRINCIPAL AND INTEREST. NOW WHILE THE DEBT MENTIONED PREVIOUSLY IS THE ONLY DEBT ON OUR BALANCE SHEET, WE DO HAVE A LEVERAGE LEASE OF $200MM - THIS AGAIN IS TOTALLY SUPPORTED BY THE OPERATING LEASE INCOME OF THE 3,356 RAILCARS SECURING THIS OFF BALANCE SHEET DEBT. IT IS RATED AA-. THE INCOME FROM THE LEASED RAILCARS COMFORTABLY COVER THE PRINCIPAL AND INTEREST. ALTHOUGH MOST OF OUR DEBT IS TIED TO RAILCARS UNDER LEASE, ONE CAN MISTAKENLY BELIEVE WE HAVE TOO MUCH DEBT FOR A MANUFACTURING COMPANY. BUT WE ARE NOT JUST A MANUFACTURING COMPANY - WE HAVE A LARGE CAPTIVE LEASING SUBSIDIARY. WHEN YOU SEPARATE OUR DEBT INTO THE BUCKETS JUST MENTIONED, HOPEFULLY ONE CAN BETTER UNDERSTAND THE ASSETS AND CASH FLOW AND THUS THE LEVERAGE OF OUR COMPANY. NOW, JIM IVY WILL REVIEW OUR FIRST QUARTER RESULTS WITH YOU. EX-99.3 5 d05752exv99w3.txt CONFERENCE CALL SCRIPT OF SENIOR VICE PRESIDENT EXHIBIT 99.3 TRINITY INDUSTRIES, INC QUARTERLY CONFERENCE CALL MAY 8, 2003 COMMENTS OF JIM S. IVY, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER I WILL MENTION SOME DETAILS TO HELP YOU UNDERSTAND THE COMPARISON OF OUR FIRST QUARTER RESULTS TO THE FIRST QUARTER OF LAST YEAR. WE HAVE FILED OUR FORM 10-Q FOR THE FIRST QUARTER THIS MORNING AND YOU WILL FIND MORE DETAILS THERE. LOSS PER SHARE FOR THE FIRST QUARTER OF 2003 WAS 32 CENTS OR, IN THE MIDDLE OF THE 5 CENTS PER SHARE RANGE MENTIONED IN OUR CONFERENCE CALL LAST QUARTER. THE PER SHARE LOSS FOR THE FIRST QUARTER OF LAST YEAR WAS 19 CENTS. GOING THROUGH THE SEGMENTS IN THE ORDER LISTED IN THE PRESS RELEASE, THE RAIL GROUP SHOWED A DECLINE IN REVENUES AND AN IMPROVED OPERATING LOSS FOR THE SEGMENT COMPARED TO LAST YEAR. IN OUR EUROPEAN RAILCAR BUSINESS, BOTH VOLUMES AND TOTAL REVENUE DOLLARS DECLINED BUT OPERATING PROFIT WAS FLAT AT ABOUT BREAKEVEN. IN NORTH AMERICA, A 37% INCREASE IN UNITS WAS MORE THAN OFFSET BY A CHANGE IN THE MIX OF RAILCARS DELIVERED. THE INCREASED VOLUME DID IMPROVE BURDEN ABSORPTION AND MARGINS FOR THE GROUP. SUBSTANTIALLY MORE OF THIS QUARTER'S SHIPMENTS WERE TO OUR OWN LEASING COMPANY THAN IN THE SAME QUARTER LAST YEAR. IN THE 1ST QUARTER THIS YEAR, APPROXIMATELY $64.3 MILLION IN REVENUES AND $3.9 MILLION IN OPERATING PROFIT FOR THIS SEGMENT WERE PRODUCED BY SALES TO OUR OWN LEASING SUBSIDIARY. IN THE YEAR AGO QUARTER, SALES TO OUR LEASING GROUP WERE $20.4 MILLION AND RELATED OPERATING PROFIT WAS $900 THOUSAND. THE REVENUES AND PROFITS FROM THESE INTERCOMPANY SALES ARE ELIMINATED IN CONSOLIDATION. OUR NORTH AMERICAN RAILCAR BACKLOG GREW FOR THE FOURTH STRAIGHT QUARTER TO OVER 8,200 UNITS, OR A GROWTH OF 12% FOR THE QUARTER. YEAR OVER YEAR, REVENUES IN THE CONSTRUCTION PRODUCTS GROUP DECLINED DUE TO EXITING CERTAIN NON CORE PRODUCT LINES, BAD WEATHER IN SOME MARKETS AND REDUCED DEMAND IN THE FITTINGS BUSINESS. OPERATING PROFITS WERE IMPACTED BY THESE FACTORS AS WELL AS BY COMPETITIVE PRICING PRESSURES. BACKLOGS ARE STRONG IN THIS GROUP AS THEY MOVE INTO THE TRADITIONALLY GOOD WEATHER OF THE 2ND AND 3RD QUARTERS. THE INLAND BARGE GROUP REVENUES DECLINED PRIMARILY DUE TO A 47% DECLINE IN HOPPER BARGE SHIPMENTS. OPERATING PROFITS FOLLOWED THE DECLINE IN VOLUME AND THE RELATED EFFECT OF LOWER VOLUME ON OVERHEAD ABSORPTION. BARGE CORROSION/LITIGATION EXPENSES WERE APPROXIMATELY $600 THOUSAND COMPARED TO $300 THOUSAND IN THE FIRST QUARTER OF LAST YEAR. RECENT ORDERS INCLUDING THE ORDER FOR 16 TANK BARGES ANNOUNCED EARLIER THIS WEEK HAVE GROWN THE BACKLOG IN THIS GROUP AS WELL. REVENUES IN THE INDUSTRIAL PRODUCTS GROUP DECLINED DUE TO REDUCED VOLUME OF TANK HEADS PRIMARILY RESULTING FROM THE SALE OF A PLANT IN DECEMBER 2002 WHICH MANUFACTURED CUSTOM HEADS AND, TO A LESSER EXTENT, REDUCED DEMAND FOR HEADS IN THE PETROCHEMICAL AND PHARMACEUTICAL INDUSTRIES. OPERATING PROFITS WERE 1 AFFECTED BY THE REDUCED HEADS SALES AND LOWER AVERAGE PRICING FOR CERTAIN PRODUCTS IN THE MEXICO LPG MARKET. IN OUR RAILCAR LEASING AND MANAGEMENT SERVICES GROUP, REVENUES AND OPERATING PROFITS GREW YEAR OVER YEAR WITH THE GROWTH IN THE SIZE OF THE FLEET. THE NUMBER OF RAILCARS IN OUR LEASE FLEET AT MARCH 31, 2003 WAS APPROXIMATELY 16,000 COMPARED TO APPROXIMATELY 13,000 AT THE SAME TIME LAST YEAR. UTILIZATION OF THE FLEET WAS FAIRLY STEADY AT 94% COMPARED TO 93.9% AT THE SAME TIME LAST YEAR. GROSS ADDITIONS TO OUR LEASE FLEET FOR 2003 ARE ON TRACK TO BE ABOUT $230 MILLION. THIS $230 MILLION IS BEFORE REDUCTION FOR THE $200 MILLION WAREHOUSE FACILITY SALE/LEASEBACK REFINANCING JOHN MENTIONED AND BEFORE ANY RETURN OF CAPITAL RELATED TO A SALE OF FLEET ASSETS. IN THE ALL OTHER GROUP, YEAR OVER YEAR PROFIT IMPROVED DUE TO SELLING CERTAIN INVENTORY RELATED TO A CANCELLED CONTRACT IN THE WIND TOWER BUSINESS. ON A CONSOLIDATED BASIS, SE&A EXPENSE INCLUDES APPROXIMATELY $2.6 MILLION OF INCREMENTAL COSTS RELATED TO OUTSOURCING ACCOUNTING AND FINANCE PROCESSING ACTIVITIES AND IMPLEMENTATION OF A NEW ORACLE FINANCIAL SYSTEM WHICH WENT LIVE ON APRIL 6TH. EXCLUDING THOSE COSTS CONSOLIDATED SE&A EXPENSES DECLINED ABOUT $3.6 MILLION OVER THE FIRST QUARTER OF LAST YEAR AS A RESULT OF HEADCOUNT AND OTHER REDUCTIONS. LOOKING AT OUR BALANCE SHEET, DEBT INCREASED $7.3 MILLION AS THE WAREHOUSE FACILITY JOHN REFERRED TO NEARS THE POINT WHERE IT WILL BE REFINANCED. OUR INVESTMENT IN INVENTORY AND RECEIVABLES DECLINED ANOTHER $21 MILLION DURING THE QUARTER WHICH BRINGS THE TOTAL REDUCTION IN INVENTORY AND RECEIVABLES SINCE MARCH 31, 2001 TO $225 MILLION. 2 EX-99.4 6 d05752exv99w4.txt CONFERENCE CALL SCRIPT OF PRESIDENT EXHIBIT 99.4 TRW'S COMMENTS EARNINGS RELEASE CONFERENCE CALL THURSDAY, MAY 8, 2003 Good morning: Our 1st quarter results were very close to what we expected. Our leasing company's earnings continued to be our strongest performance. During the 1st quarter, the winter weather came on stronger and lasted longer than last year. As a result, we had a difference in our year-over-year performance in our construction products business. Our highway safety products businesses were affected the most by winter weather conditions because we ship products into several key Northern states. During the past 30 days, as the winter weather has become less of an issue, we are seeing a significant improvement in demand in the majority of our construction products businesses. Our backlogs have improved significantly. Our industrial products group operated at a breakeven level during the 1st quarter. The U.S. LP gas industry in the northeast was consumed by the winter weather challenges. In March and April, we started to see some signs of improvement. As I mentioned in our last conference call, we have consolidated our executive oversight of our industrial group into our construction products group and we are very pleased with the early results. 1 During the first quarter, our barge group felt the effects of an industry wide reduction in the demand for hopper barges. Our hopper barge business hit bottom in February. Recently, we've been fortunate to book some additional hopper barges which provide a base load for our business into the fall. The orders we received have options for additional barges and if our customers exercise their options, we will have our base load covered through the end of the year. We have also booked some tank barge business recently and our existing production extends for a year. I'm very pleased with the way the barge business has rebounded as quickly as it has. Discovery and pre-trial proceedings continue in our barge lawsuits. We have begun to explore the possibility of settling with certain of the parties, but there is no assurance that any agreement will be reached with any party. At this time, it is too premature for me to make any additional comments. Now I'll provide some comments pertaining to our railcar businesses. During the 1st quarter, the North American railcar industry continued to improve. The industry order levels were slightly over 11,700 units. The majority of the orders placed during the first quarter were for railcars used to transport coal and intermodal container equipment. These two categories account for almost 60% of the entire 1st quarter industry orders. As I've stated before, we are not pursuing orders based on market share percentage goals. During the 1st quarter, in the coal and intermodal markets, we booked enough orders to keep our existing production lines running through the end of the year. We did not see value in investing in additional production capacity on these product lines until there is a 2 sustainable order level. Sustainability is a key word for us as we assess the railcar industry order levels. At the end of the 1st quarter our backlog of orders for railcars in North America improved about 11% over the 4th quarter to approximately 8200 units. Plus, we have the additional 4000 units with our multi-year agreement with GATX which have not been included in our backlog. In North America, we shipped approximately 1700 railcars during the first quarter. Our shipments increased 18% from the 4th quarter. This sounds like a significant increase in shipments from a percentage point of view, but it's still a very reduced rate. Let me remind you that during 2000, Trinity and Thrall shipped an average of 6700 railcars per quarter and in 2001, we shipped an average of 4000 railcars per quarter. During 2002 our shipments averaged 1200 units per quarter. Until we reach the 3000 - 3500 units per quarter range, our objectives and priorities in our rail-related businesses remain focused on obtaining a base load of business. When our shipments are at such a reduced level, our product mix significantly impacts our financial performance. Our financial results will fluctuate as our product mix changes. Also, at a low rate of production, when we deliver a large portion of railcars to our lease fleet, it has an effect on our consolidated earnings because we defer profits on cars delivered to our leasing company. In the 1st quarter 68% of our shipments were delivered to lease fleet customers. During the 2nd quarter, we expect to ship a comparable amount of cars as we did in the first quarter with approximately half of our production going to lease fleet customers. 3 In the 2nd quarter, from an earnings point of view, we are expecting our rail group's operating performance to improve around a million dollars. In the 3rd quarter, we are expecting to increase our railcar production in North America to a level between 2500 to 2700. At that point, we plan to be profitable. The primary issue we see which could affect our ability to increase our production is related to the current casting shortage. The North American railcar manufacturing industry is currently constrained by the casting industry's ability to produce under frame castings. Recently, our production has been affected by this shortage and we are hopeful we will be able to obtain a sufficient supply as we increase our production. In our European rail group, the demand for rail wagons in Europe remains relatively steady. We have recently announced we are closing our Czech Republic facility and consolidating our manufacturing into our Romanian operation. This move will improve our absorption of costs in Romania. Our backlog for orders extends into 2004 and we have booked some nice orders recently. We expect to be profitable in Europe by the 4th quarter. From an overall earnings point of view, our first quarter should be our worst quarter. We expect our 2nd quarter to be break even to a loss of 20 cents per share. We expect to return to profitability during the 3rd quarter. There is still too much uncertainty with the general economy for us to project a precise figure for the year. At this point, I'll turn it back over to Neil for questions. 4 -----END PRIVACY-ENHANCED MESSAGE-----