-----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, GAT2JQh7xJsae3n/ek2MCth+950XYx4fX09RxWa3I48QrU2Wxgiip7EjF+7WAU8F +UN4U9krCyj5dcyRVMG5cA== 0000950134-03-014514.txt : 20031106 0000950134-03-014514.hdr.sgml : 20031106 20031106110110 ACCESSION NUMBER: 0000950134-03-014514 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031106 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06903 FILM NUMBER: 03981296 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 10-Q 1 d09606e10vq.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-Q --------------- (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 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) 631-4420 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 WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT). YES [X] NO [ ] AT OCTOBER 31, 2003 THERE WERE 46,348,566 SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING. TRINITY INDUSTRIES, INC. FORM 10-Q TABLE OF CONTENTS
CAPTION PAGE -------------------------------------------------------------- ---- PART I FINANCIAL INFORMATION Item 1 Financial Statements.......................................... 3 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations........................... 15 Item 3 Quantitative and Qualitative Disclosures About Market Risk.... 22 Item 4 Controls and Procedures....................................... 23 PART II OTHER INFORMATION Item 1 Legal Proceedings............................................. 23 Item 6 Exhibits and Reports on Form 8-K.............................. 24 SIGNATURES...................................................................... 25 CERTIFICATIONS.................................................................. 27
2 ITEM 1. FINANCIAL STATEMENTS TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2003 2002 ---------- ---------- (UNAUDITED) (IN MILLIONS EXCEPT PER SHARE AMOUNTS) Revenues............................................ $ 363.4 $ 387.6 Operating costs: Cost of revenues.................................. 311.5 334.8 Selling, engineering and administrative expenses........................................ 41.8 39.1 -------- -------- 353.3 373.9 -------- -------- Operating profit.................................... 10.1 13.7 Other (income) expense: Interest income................................... (0.1) (0.3) Interest expense.................................. 8.4 9.1 Other, net........................................ (0.2) (3.4) -------- -------- 8.1 5.4 -------- -------- Income before income taxes.......................... 2.0 8.3 Provision (benefit) for income taxes: Current........................................... (18.5) (1.5) Deferred.......................................... 18.7 3.6 -------- -------- 0.2 2.1 -------- -------- Net income.......................................... 1.8 6.2 Dividends on Series B preferred stock............... (0.8) -- -------- -------- Net income applicable to common shareholders........ $ 1.0 $ 6.2 ======== ======== Net income per common share: Basic............................................. $ 0.02 $ 0.14 ======== ======== Diluted........................................... $ 0.02 $ 0.14 ======== ======== Weighted average number of shares outstanding: Basic............................................. 45.6 45.5 Diluted........................................... 46.2 45.6
See accompanying notes to consolidated financial statements. 3 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2003 2002 -------- -------- (UNAUDITED) (IN MILLIONS EXCEPT PER SHARE AMOUNTS) Revenues............................................ $1,018.3 $1,137.9 Operating costs: Cost of revenues.................................. 892.1 1,004.9 Selling, engineering and administrative expenses........................................ 117.1 120.3 -------- -------- 1,009.2 1,125.2 -------- -------- Operating profit.................................... 9.1 12.7 Other (income) expense: Interest income................................... (0.4) (0.9) Interest expense.................................. 26.3 26.4 Other, net........................................ (3.6) (2.0) -------- -------- 22.3 23.5 -------- -------- Loss before income taxes............................ (13.2) (10.8) Provision (benefit) for income taxes: Current........................................... (30.6) (42.8) Deferred.......................................... 26.6 40.1 -------- -------- (4.0) (2.7) -------- -------- Net loss............................................ (9.2) (8.1) Dividends on Series B preferred stock............... (0.8) -- -------- -------- Net loss applicable to common shareholders.......... $ (10.0) $ (8.1) ======== ======== Net loss per common share: Basic............................................. $ (0.22) $ (0.18) ======== ======== Diluted........................................... $ (0.22) $ (0.18) ======== ======== Weighted average number of shares outstanding: Basic............................................. 45.6 44.5 Diluted........................................... 45.6 44.5
See accompanying notes to consolidated financial statements. 4 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 2003 2002 ------------- ------------ (UNAUDITED) (IN MILLIONS) ASSETS Cash and cash equivalents........................... $ 13.6 $ 19.1 Receivables, net of allowance....................... 211.3 168.2 Income tax receivable............................... 26.3 50.0 Inventories: Raw materials and supplies...................... 132.7 115.9 Work in process................................. 54.5 42.3 Finished goods.................................. 38.4 55.1 ---------- --------- 225.6 213.3 Property, plant and equipment, at cost.............. 1,756.7 1,551.8 Less accumulated depreciation....................... (685.3) (604.4) ---------- --------- 1,071.4 947.4 Goodwill............................................ 412.9 411.3 Other assets........................................ 123.9 133.6 ---------- --------- $ 2,085.0 $ 1,942.9 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities............ $ 414.6 $ 396.0 Debt................................................ 537.7 488.9 Other liabilities................................... 82.6 56.4 ---------- --------- 1,034.9 941.3 Series B redeemable convertible preferred stock, no par value, $0.1 liquidation value........ 57.7 -- Stockholders' equity: Preferred stock - 1.5 shares authorized and unissued........................................ -- -- Common stock -- shares issued and outstanding at September 30, 2003 - 50.9; at December 31, 2002 - 50.9.......................................... 50.9 50.9 Capital in excess of par value.................... 436.4 442.1 Retained earnings................................. 654.2 672.6 Accumulated other comprehensive loss.............. (33.7) (34.9) Treasury stock (4.6 shares at September 30, 2003 and 5.0 shares at December 31, 2002)............. (115.4) (129.1) ---------- --------- 992.4 1,001.6 ---------- --------- $ 2,085.0 $ 1,942.9 ========== =========
See accompanying notes to consolidated financial statements. 5 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 2002 -------- --------- (UNAUDITED) (IN MILLIONS) Operating activities: Net loss.................................................................... $ (9.2) $ (8.1) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization........................................... 64.7 67.8 Deferred income taxes................................................... 26.6 40.1 Gain on sale of property, plant, equipment and other assets........................................................ (6.0) (4.7) Other.................................................................. 5.2 2.9 Changes in assets and liabilities: (Increase) decrease in receivables.............................. (43.1) 2.1 Decrease in tax receivable...................................... 23.7 1.7 (Increase) decrease in inventories.............................. (12.3) 31.5 Decrease (increase) in other assets............................. 9.4 (33.5) Increase (decrease) in accounts payable and accrued liabilities. 21.2 (47.7) (Decrease) increase in other liabilities........................ (12.1) 6.0 -------- --------- Total adjustments.............................................. 77.3 66.2 -------- --------- Net cash provided by operating activities................................... 68.1 58.1 -------- --------- Investing activities: Proceeds from sale of property, plant, equipment and other assets........... 33.6 13.9 Capital expenditures - lease subsidiary..................................... (188.5) (97.7) Capital expenditures - other................................................ (16.7) (25.5) Payment for purchase of acquisitions, net of cash acquired.................. -- (1.4) -------- --------- Net cash required by investing activities................................... (171.6) (110.7) -------- --------- Financing activities: Issuance of common stock.................................................... -- 31.2 Issuance of redeemable preferred stock....................................... 57.6 -- Payments to retire debt..................................................... (145.6) (370.2) Proceeds from issuance of debt.............................................. 194.4 397.9 Dividends paid.............................................................. (8.4) (13.6) -------- --------- Net cash provided by financing activities................................... 98.0 45.3 -------- --------- Net increase (decrease) in cash and cash equivalents.......................... (5.5) (7.3) Cash and cash equivalents at beginning of period.............................. 19.1 22.2 -------- --------- Cash and cash equivalents at end of period.................................... $ 13.6 $ 14.9 ======== =========
Interest paid for the nine months ended September 30, 2003 and 2002 was $26.3 and $21.8, respectively. Taxes received, net of payments made, for the nine months ended September 30, 2003 and 2002 were $43.5 and $6.8, respectively. See accompanying notes to consolidated financial statements. 6 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
COMMON COMMON CAPITAL ACCUMULATED SHARES STOCK IN EXCESS OTHER TREASURY TOTAL (100,000,000 $1.00 PAR OF PAR RETAINED COMPREHENSIVE TREASURY STOCK AT STOCKHOLDERS' AUTHORIZED) VALUE VALUE EARNINGS LOSS SHARES COST EQUITY ---------- ----- ------ -------- ---- ------ ---- ------ (IN MILLIONS EXCEPT SHARE AND PER SHARE DATA) Balance at December 31, 2002........................ 50,940,351 $ 50.9 $442.1 $ 672.6 $ (34.9) (5,040,709) $(129.1) $ 1,001.6 Net loss.................... -- -- -- (9.2) -- -- -- (9.2) Currency translation adjustments............... -- -- -- -- 1.1 -- -- 1.1 Unrealized gain on derivative financial instruments............... -- -- -- -- .1 -- -- 0.1 --------- Comprehensive net loss...... (8.0) Cash dividends ($0.18 per common share)......... -- -- -- (8.4) -- -- -- (8.4) Dividend on Series B preferred stock......... -- -- -- (0.8) -- -- -- (0.8) Other....................... -- -- (5.7) -- -- 447,160 13.7 8.0 ---------- ------ ------ ------- -------- ---------- ------- --------- Balance at September 30, 2003. 50,940,351 $ 50.9 $436.4 $ 654.2 $ (33.7) (4,593,549) $(115.4) $ 992.4 ========== ====== ======= ======= ======== ========== ======= =========
See accompanying notes to consolidated financial statements. 7 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN MILLIONS EXCEPT PER SHARE DATA) NOTE 1. BASIS OF PRESENTATION The foregoing consolidated financial statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. ("Trinity" or the "Company"). In the opinion of management, all adjustments, consisting only of normal and recurring adjustments necessary for a fair presentation of the financial position of the Company as of September 30, 2003 and the results of operations for the three-month and nine-month periods ended September 30, 2003 and 2002, and cash-flows for the nine month periods ended September 30, 2003 and 2002, in conformity with generally accepted accounting principles, have been made. Because of seasonal and other factors, the results of operations for the three-month and nine-month periods ended September 30, 2003 may not be indicative of expected results of operations for the year ending December 31, 2003. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated financial statements of the Company included in its Form 10-K for the year ended December 31, 2002. NOTE 2. UNUSUAL CHARGES Restructuring reserve activity for the nine months ended September 30, 2003 was:
RESERVES RESERVES DECEMBER 31, RECLASSIFI- SEPTEMBER 30, 2002 PAYMENTS CATIONS 2003 ------------ -------- ----------- ------------- Property, plant & equipment -- shut down costs ..................... $ 4.6 $ 0.3 $ (4.3) $ -- Environmental liabilities................. 10.6 0.5 (10.1) -- Severance costs........................... 0.6 0.4 (0.2) -- Adverse jury verdict...................... 14.8 0.1 (14.7) -- Other..................................... 0.4 -- (0.4) -- ------- ------ ------- ------ $ 31.0 $ 1.3 $ (29.7) $ -- ======= ====== ======= ======
The lawsuit representing the adverse jury verdict was resolved during the three-month period ended June 30, 2003. This amount was paid in July 2003 and the balance of the restructuring reserve was reclassified to the Company's litigation reserves. The restructuring reserves related to environmental liabilities were reclassified to the Company's environmental reserves. Amounts for shut down costs, severance costs, and other have been reclassified to other accrued liabilities. None of the reclassifications impacted operating profit. NOTE 3. SEGMENT INFORMATION The Company reports operating results in the following business segments: (1) the Trinity Rail Group, which manufactures and sells railcars and component parts and provides railcar repair services; (2) the Constructions Products Group, which manufactures and sells highway guardrail and safety products, concrete and aggregate, girders and beams used in the construction of highway and railway bridges, and weld fittings used in pressure piping systems; (3) the Inland Barge Group, which manufactures and sells barges and related products for inland waterway services; (4) the Industrial Products Group, which manufactures and sells container heads and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products; and (5) the Trinity Railcar Leasing and Management Services Group, which provides services such as fleet management and leasing. Finally, All Other includes the Company's captive insurance and transportation companies, structural towers, and other peripheral businesses. Sales and related profits from Trinity Rail Group to Trinity Railcar Leasing and Management Services Group are recorded in Trinity Rail Group and eliminated in consolidation. Sales of railcars from the lease fleet are included in the Trinity Railcar Leasing and Management Services Group segment. Sales among groups are recorded at prices comparable to those charged to external customers. 8 THREE MONTHS ENDED SEPTEMBER 30, 2003
REVENUES OPERATING --------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) --------- ------------ --------- -------- Trinity Rail Group......................... $ 126.4 $ 63.8 $ 190.2 $ 2.9 Construction Products Group................ 133.3 0.4 133.7 11.4 Inland Barge Group......................... 42.5 -- 42.5 0.3 Industrial Products Group.................. 30.1 1.4 31.5 2.7 Trinity Railcar Leasing and Management Services Group................ 29.9 -- 29.9 9.3 All Other.................................. 1.2 6.7 7.9 (2.0) Eliminations & Corporate Items.................................... -- (72.3) (72.3) (14.5) --------- -------- --------- -------- Consolidated Total......................... $ 363.4 $ -- $ 363.4 $ 10.1 ========= ======== ========= ========
THREE MONTHS ENDED SEPTEMBER 30, 2002
REVENUES OPERATING --------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) --------- ------------ --------- --------- Trinity Rail Group......................... $ 123.2 $ 34.7 $ 157.9 $ (6.1) Construction Products Group................ 141.4 0.1 141.5 17.2 Inland Barge Group......................... 47.7 -- 47.7 1.3 Industrial Products Group.................. 40.0 1.0 41.0 3.0 Trinity Railcar Leasing and Management Services Group........................... 28.1 -- 28.1 7.2 All Other.................................. 7.2 7.3 14.5 (1.1) Eliminations & Corporate Items............. -- (43.1) (43.1) (7.8) -------- -------- -------- -------- Consolidated Total......................... $ 387.6 $ -- $ 387.6 $ 13.7 ======== ======== ======== ========
NINE MONTHS ENDED SEPTEMBER 30, 2003
REVENUES OPERATING --------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) --------- ------------ --------- --------- Trinity Rail Group......................... $ 317.2 $ 176.8 $ 494.0 $ (13.5) Construction Products Group................ 368.9 0.6 369.5 29.8 Inland Barge Group......................... 129.8 -- 129.8 0.5 Industrial Products Group.................. 85.5 3.0 88.5 4.3 Trinity Railcar Leasing and Management Services Group................ 112.7 -- 112.7 30.5 All Other.................................. 4.2 18.7 22.9 (5.0) Eliminations & Corporate Items.................................... -- (199.1) (199.1) (37.5) --------- -------- --------- -------- Consolidated Total......................... $ 1,018.3 $ -- $ 1,018.3 $ 9.1 ========= ======== ========= ========
9 NINE MONTHS ENDED SEPTEMBER 30, 2002
REVENUES OPERATING -------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) -------- ------------ --------- --------- Trinity Rail Group......................... $ 374.9 $ 93.5 $ 468.4 $ (31.1) Construction Products Group................ 400.0 0.8 400.8 41.9 Inland Barge Group......................... 166.8 -- 166.8 4.3 Industrial Products Group.................. 103.1 2.1 105.2 2.3 Trinity Railcar Leasing and Management Services Group........................... 81.7 -- 81.7 21.4 All Other.................................. 11.4 20.5 31.9 (4.9) Eliminations & Corporate Items............. -- (116.9) (116.9) (21.2) -------- -------- --------- -------- Consolidated Total......................... $1,137.9 $ -- $ 1,137.9 $ 12.7 ======== ======== ========= ========
NOTE 4. STOCK BASED COMPENSATION The Company has elected to apply the accounting provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," (APB No. 25) and its interpretations and, accordingly, no compensation expense has been recorded for the stock options. The effect of computing compensation expense in accordance with Statement of Accounting Standards No. 123, "Accounting for Stock Based Compensation," and the weighted average fair value of options granted during the three and nine months ended September 30, 2003 and 2002 using the Black-Scholes option pricing method are shown in the accompanying table.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------- ------------- 2003 2002 2003 2002 ---- ---- ---- ---- Pro forma Net income (loss) applicable to common shareholders, as reported.............. $ 1.0 $ 6.2 $ (10.0) $ (8.1) Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related income tax effects......................... (0.9) (1.3) (2.9) (3.6) ------- ------- -------- -------- Pro forma net income (loss) applicable to common shareholders ................ $ 0.1 $ 4.9 $ (12.9) $ (11.7) ======= ======= ======== ======== Pro forma diluted share ............... $ 0.00 $ 0.11 $ (0.28) $ (0.26) ======= ======= ======== ======== Net income (loss) applicable to common shareholders per diluted share - as reported............................... $ 0.02 $ 0.14 $ (0.22) $ (0.18) ======= ======= ======== ========
10 NOTE 5. PROPERTY, PLANT AND EQUIPMENT
SEPTEMBER 30, DECEMBER 31, 2003 2002 ---- ---- Manufacturing/Corporate: Property, plant and equipment....... $ 944.7 $ 901.8 Accumulated depreciation............ (560.7) (493.6) ---------- ---------- 384.0 408.2 ---------- ---------- Leasing: Equipment on lease.................. 812.0 650.0 Accumulated depreciation............ (124.6) (110.8) ---------- ---------- 687.4 539.2 ---------- ---------- $ 1,071.4 $ 947.4 ========== ==========
NOTE 6. WARRANTIES The Company provides for the estimated cost of product warranties at the time revenue is recognized and assesses the adequacy of the resulting reserves on a quarterly basis. The change in the accruals for warranties for the three months and the nine months ended September 30, 2003 and 2002 was as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------- ------------- 2003 2002 2003 2002 ---- ---- ---- ---- Beginning balance............. $ 21.5 $ 15.8 $ 20.8 $ 18.1 Additions..................... 2.6 8.2 9.6 16.6 Reductions.................... (3.4) (3.6) (9.7) (14.3) -------- -------- -------- -------- Ending balance................ $ 20.7 $ 20.4 $ 20.7 $ 20.4 ======== ======== ======== ========
NOTE 7. DEBT
SEPTEMBER 30, DECEMBER 31, 2003 2002 ---- ---- Corporate/Manufacturing: Revolving commitment................... $ 20.0 $ 48.0 Term commitment........................ 123.1 149.3 Other.................................. 5.2 6.4 -------- -------- 148.3 203.7 -------- -------- Leasing: Equipment trust certificates........... 170.0 171.4 Warehouse facility..................... 219.4 113.8 -------- -------- 389.4 285.2 -------- -------- $ 537.7 $ 488.9 ======== ========
In June 2002, the Company completed a secured credit agreement for $425 million. The agreement includes a $275 million 3-year revolving commitment and a $150 million 5-year term commitment. The agreement calls for quarterly payments of principal on the term debt in the amount of $375 thousand beginning September 30, 2002 through June 30, 2006 and quarterly payments of $36.0 million beginning on September 30, 2006 through the maturity date. Amounts borrowed under the revolving commitment bear interest at LIBOR plus 2.25% or Prime rate plus 0.25% (4.25% at September 30, 2003). Amounts borrowed under the term commitment bear interest at LIBOR plus 3.25% (4.45% at September 30, 2003). The Company's accounts receivable and inventory and a portion of its property, plant and equipment secure the agreement. During September 2003, the Company modified the terms of the debt covenants under the agreement to separate the Company's leasing and manufacturing operations for debt compliance purposes and paid off $25.0 million of the 5-year term commitment. The agreement limits the amount of capital expenditures related to the Company's leasing business, requires maintenance of ratios related to interest coverage for both the leasing and manufacturing operations, leverage, asset coverage and minimum net worth, and restricts the amount of dividend payments. At September 30, 2003, 11 $143.1 million was borrowed under this agreement. At September 30, 2003, the most restrictive of the debt covenants based on trailing twelve month calculations as defined by the debt agreements allows for approximately $65.4 million additional principal and approximately $6.8 million and $9.0 million additional annual interest expense for leasing and manufacturing operations, respectively. In June 2002 Trinity Industries Leasing Company ("TILC") through a newly formed, wholly owned and consolidated business trust entered into a $200 million non-recourse warehouse facility to finance or refinance railcars acquired or owned by TILC. Specific railcars and the underlying leases secure the facility. Advances under the facility may not exceed 75% of the fair market value of the eligible railcars securing the facility as defined by the agreement. Advances under the facility bear interest at LIBOR plus 1.375% (2.495% at September 30, 2003). In August 2003, TILC expanded this facility to $300 million and extended the term through August 2004. At September 30, 2003, $80.6 million was available under this facility. The Company is currently in discussions with long-term lenders to provide permanent financing for the amount currently outstanding under the facility, which is expected to be completed during the fourth quarter of 2003. Terms and conditions of other debt are described in the Annual Report. The remaining principal payments under the debt agreements as of September 30, 2003 are as follows: the remaining three months of 2003 - $2.5; 2004 - $6.7; 2005 - $203.8; 2006 - $154.2; 2007 - $90.6; and $79.9 thereafter. NOTE 8. SALE/LEASEBACK FINANCING During the nine months ended December 31, 2001, the Company completed a lease arrangement for $199.0 million in railcars. Trinity sold the railcars to an independent trust. The trust financed the purchase of the railcars with $151.3 million in debt and $47.7 million in equity provided by large independent financial institutions. The equity investor in the trust has the risk of ownership of the assets in the trust except for the collateral pledged to support the operating lease. Trinity has made no guarantees with respect to amounts at risk. An independent trustee for the trust has the authority for the appointment of the railcar fleet manager. Trinity, through a newly formed, wholly owned qualified subsidiary, leased railcars from the trust and subleased the railcars to independent third party customers. This subsidiary had a net worth as of September 30, 2003 of $ 47.3 including cash of $22.8 million, of which $6.5 million was collateral for the equity investor, and company-owned railcars of $23.1 million. The cash (other than the $6.5 million) and railcars are pledged to secure the lease obligation to the trust and are included in the consolidated financial statements of the Company. Trinity does not guarantee the performance of the subsidiary's lease obligation. Under the terms of the operating lease agreement, Trinity has the option to purchase the railcars from the trust in 2017 at a predetermined, fixed price. Trinity also has an option to purchase the railcars at the end of the lease agreement in 2023 at the then fair market value of the railcars as determined by a third party, independent appraisal. At the expiration of the operating lease agreement, Trinity has no further obligation thereunder. Trinity, under the terms of a servicing and remarketing agreement, will endeavor, consistent with customary commercial practice as would be used by a prudent person, to maintain railcars under lease for the benefit of the trust. Trinity also receives management fees under the terms of the agreement. Certain ratios must be maintained by the subsidiary in order for excess cash flow, as defined, from the lease to third parties, to be available to Trinity. The sale of the railcars by Trinity to the trust was accounted for as a sale/leaseback transaction. No revenue or profit was recorded at the time of the transaction and all profit was deferred and is being amortized over the term of the operating lease. Neither the assets, the liabilities, nor equity of the trust are reflected on the balance sheet of Trinity. NOTE 9. DEPOSIT AGREEMENT The Company has a deposit agreement with Altos Hornos de Mexico, SA de C.V. ("AHMSA") that provides for funds to be deposited with AHMSA that are then used along with other funds from the Company to purchase steel from AHMSA. As of September 30, 2003, total funds on deposit including interest due amounted to approximately $25.0 million. Since May 1999 AHMSA has been operating under a judicial declaration of suspension of payments, which under applicable Mexican law, allows companies in Mexico to (1) seek a debt restructuring agreement with their creditors in an orderly fashion; (2) continue their operations; and (3) avoid declaration of bankruptcy and liquidation of assets. The Company's understanding of Mexican law is that all funds on deposit are required to be returned to the Company regardless of whether the supplier is able to operate under the declaration of suspension of payments. Trinity reduced $3.5 of this deposit through inventory purchases in the quarter ended September 30, 2003. The timing of future reductions of the deposit balance will depend on the rate of future steel purchases. 12 NOTE 10. SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK In June 2003 the Company issued 600 shares of Series B Redeemable Convertible Preferred Stock (Series B preferred stock). Each share of Series B preferred stock has an initial liquidation value of $100,000 per share. The liquidation value, plus accrued but unpaid dividends, is payable on June 25, 2008, the mandatory redemption date, at the option of the Company in cash or in shares of common stock valued at 90% of the then current market price of the Company's common stock. Each share of Series B preferred stock may be converted at any time at the option of the holder into shares of the Company's common stock, based on the initial conversion price of $22.46 per share, which is equivalent to 4,452 shares of common stock for each $100,000 initial liquidation preference. Holders of the Series B preferred stock are entitled to receive dividends payable semi-annually, on July 1 and January 1 of each year, beginning January 1, 2004 at an annual rate of 4.5% of the liquidation preference. The Company may, at its option, pay dividends either in cash or in shares of the Company's common stock at the then current market price. The holders of shares of Series B preferred stock are entitled to vote with the holders of the common stock on an as-if converted basis on all matters brought before the stockholders. The Series B preferred stock has been classified outside the Stockholders' Equity section because there is not absolute assurance that the number of authorized and unissued common shares would be adequate to redeem the Series B preferred stock. At September 30, 2003, the number of shares authorized and unissued would be adequate to redeem the Series B preferred stock as long as the market value of the Company's common stock was at least $1.37 per share. NOTE 11. OTHER, NET Other (income) expense consists of the following items:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------ ----------------- 2003 2002 2003 2002 ------ ------ ------ ------ Gain on sale of property, plant and equipment .............. $ (1.6) $ (4.3) $ (6.0) $ (4.7) Foreign exchange transactions ................ 0.8 0.4 0.8 1.4 Loss on equity investments .... 0.6 0.5 1.6 1.5 Other ......................... -- -- -- (0.2) ------ ------ ------ ------ Other, net .................. $ (0.2) $ (3.4) $ (3.6) $ (2.0) ====== ====== ====== ======
NOTE 12. CONTINGENCIES The Company and its wholly owned subsidiary, Trinity Marine Products, Inc. ("TMP"), and certain material suppliers and others, have been named as co-defendants in six separate lawsuits filed by multiple plaintiffs on various dates. In October 2003 one of these six cases was dismissed as a result of a settlement between the Company and TMP and ACF Barge Acceptance I, LLC ("ACF"). The settlement involved the purchase of eleven barges which are leased to a barge operator under long-term lease agreements. The Company's Leasing Subsidiary purchased the barges for $19.1 million and succeeded ACF as lessor. The estimated fair value of the operating leases and residual value of the barges approximated the purchase price. In one of the remaining five cases the plaintiff has petitioned the court for certification of a class, which, if certified by the court, could potentially increase the total number of barges involved in the five cases. Absent certification of a class in that case, the remaining five separate suits involve 37 tank barges sold at an average prices of approximately $1.4 million, and 140 hopper barges sold at an average price of approximately $280,000. Each of the five remaining cases set forth allegations pertaining to damages arising from alleged defects in coating materials supplied by a co-defendant and coatings application workmanship by TMP. The plaintiffs seek both compensatory and punitive damages and/or recision of the barge purchase contracts. Independent experts investigating the claims on behalf of the Company and TMP have expressed the opinion that technical arguments presented by the plaintiffs in this litigation are without merit. As of September 30, 2003, two of the plaintiffs owe TMP approximately $11.4 million, of which $7.9 million is past due, related to contracts for barges not involved in the litigation. TMP has filed suit for collection of the past due amount. A subsidiary of the Company, Transit Mix Concrete and Materials Company, Inc. ("Transit Mix"), was named as a defendant in a case involving the death of an employee of an independent contractor who died following an accident that occurred while the decedent was working at a Company owned facility. Following a jury verdict in the favor of the plaintiff, the presiding judge entered a final judgment in the amount of $33.9 million (inclusive of fees, costs, and judgment interest). This case has been appealed by Transit Mix 13 and its insurers. Management believes liability in this case, if any, exceeding $3.0 million, will be covered by insurance. The Company is also involved in other claims and lawsuits incidental to its business. Based on information currently available, it is management's opinion that the ultimate outcome of all current litigation and other claims, including settlements, in the aggregate will not have a material adverse effect on the Company's overall financial condition for purposes of financial reporting. However, resolution of certain claims or lawsuits by settlement or otherwise could have a significant impact on the operating results of the reporting period in which such resolution occurs. The Company is subject to federal, state, local, and foreign laws and regulations relating to the environment and to the workplace. The Company believes that it is currently in substantial compliance with such laws and regulations. The Company is involved in various proceedings relating to environmental matters. The Company has provided reserves amounting to $19.3 million to cover probable and estimable liabilities of the Company with respect to such investigations and cleanup activities, taking into account currently available information and the Company's contractual rights of indemnification. However, estimates of future response costs are necessarily imprecise. Accordingly, there can be no assurance that the Company will not become involved in future litigation or other proceedings or, if the Company were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to the Company. NOTE 13. NET INCOME (LOSS) PER SHARE Diluted net income per common share is based on the weighted average shares outstanding plus the dilutive impact of stock options and Series B preferred stock. Basic net income per common share is based on the weighted average number of common shares outstanding for the period. The numerator for basic net income (loss) per common share is net income (loss) adjusted for dividends on the Series B preferred stock in 2003 and net income (loss) in 2002. The numerator for diluted net income (loss) per common share is net income (loss), adjusted for dividends on the Series B preferred stock in 2003. The difference between the denominator in the basic calculation and the denominator in the diluted calculation for the three months ended September 30, 2003 and September 30, 2002 was attributable to the effect of employee stock options. Employee stock options were antidilutive for all other periods presented. The Series B preferred stock was antidilutive for all periods presented and therefore not considered in the diluted net income (loss) per common share calculation. NOTE 14. RECENT ACCOUNTING PRONOUNCEMENTS During January 2003, the FASB issued Interpretation No. 46 "Consolidation of Variable Interest Entities" (FIN 46). The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and apply to existing variable interest entities in the first fiscal year or interim periods beginning after June 15, 2003. In October 2003, the FASB agreed to a broad-based deferral of the effective date for public companies until the end of the periods ending after December 15, 2003. Until now, one company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. A company that consolidates a variable interest entity is called the primary beneficiary of that entity. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company is not the primary beneficiary for any variable interest entities. In May 2003, the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150). SFAS 150 establishes standards for how a company classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that a company classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first period beginning after June 15, 2003. The provisions of this statement did not have an impact on the Company's statement of financial position. 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL The following discussion should be read in conjunction with the unaudited consolidated financial statements and related notes thereto appearing elsewhere in this document. THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2002 -- RESULTS OF OPERATIONS Revenues were $363.4 million for the three months ended September 30, 2003 compared to $387.6 million for the three months ended September 30, 2002. The decrease in revenues was primarily due to lower demand for Highway Safety and Fittings products, reduced production in the Structural Bridge Group, and reduced Hopper Barge volume, offset by increased railcar sales to third parties and leasing revenues due to the growth of the lease fleet. The following table reconciles the revenue amounts discussed under each segment with the consolidated total revenues shown in the Selected Financial Data (in millions).
THREE MONTHS ENDED SEPTEMBER 30, 2003 THREE MONTHS ENDED SEPTEMBER 30, 2002 ------------------------------------- ------------------------------------- REVENUES REVENUES ------------------------------------- ------------------------------------- OUTSIDE INTERSEGMENT TOTAL OUTSIDE INTERSEGMENT TOTAL ------- ------------ ------- -------- ------------ ------- Trinity Rail Group .............. $ 126.4 $ 63.8 $ 190.2 $ 123.2 $ 34.7 $ 157.9 Construction Products Group ..... 133.3 0.4 133.7 141.4 0.1 141.5 Inland Barge Group .............. 42.5 -- 42.5 47.7 -- 47.7 Industrial Products Group ....... 30.1 1.4 31.5 40.0 1.0 41.0 Trinity Railcar Leasing and Management Services Group ..... 29.9 -- 29.9 28.1 -- 28.1 All Other ....................... 1.2 6.7 7.9 7.2 7.3 14.5 Eliminations & Corporate Items... -- (72.3) (72.3) -- (43.1) (43.1) ------- ------- ------- ------- ------- ------- Consolidated Total .............. $ 363.4 $ -- $ 363.4 $ 387.6 $ -- $ 387.6 ======= ======= ======= ======= ======= =======
Operating profit decreased $3.6 million to $10.1 million for the three months ended September 30, 2003 compared to $13.7 million for the same period in 2002. The decline in operating profit was due to reduced volumes and competitive pricing pressures offset by improved efficiencies from an increase in railcar sales and lease operations. During the year ended December 31, 2002, the Company signed a managed services contract to implement a new financial system and to outsource certain accounting and processing activities. While expected to produce overall savings in future years, this project is expected to result in incremental selling, engineering, and administrative costs in 2003 of approximately $9.6 million or $0.15 cents per share. During the quarter ended September 30, 2003 these incremental costs were approximately $2.8 million or $0.04 per share. Interest expense decreased $0.7 million to $8.4 million for the three months ended September 30, 2003 compared to $9.1 million for the same period in 2002, a decrease of 7.7%. The decrease was primarily attributable to replacing higher cost term commitment debt with lower cost warehouse debt offset by higher average debt levels. Other, net was $0.2 million of income for the three months ended September 30, 2003 compared to income of $3.4 million for the comparable period in 2002. The decrease was primarily due to a smaller amount of gains on sale of property, plant, and equipment and an increase in foreign currency losses in 2003. The current year effective tax rate of 30.2% was less than the statutory rate of 35% due to the absence of tax benefits on certain foreign losses. Net income for the three months ended September 30, 2003 was $1.8 million compared to net income of $6.2 million for the same period in 2002. Net income applicable to common shares for the three months ended September 30, 2003 was $1.0 million or $0.02 per diluted share compared to $6.2 million or $0.14 per diluted share, for the same period in 2002. The difference between net income and net income applicable to common shares for the three months ended September 30, 2003 is the $0.8 million in accrued dividends and accreted offering costs on the Series B preferred stock. 15 TRINITY RAIL GROUP
THREE MONTHS ENDED SEPTEMBER 30, ------------------- 2003 2002 -------- -------- (IN MILLIONS) Revenues............................................ $ 190.2 $ 157.9 Operating profit (loss)............................. $ 2.9 $ (6.1) Operating profit (loss) margin...................... 1.5% (3.9)%
Revenues for the North American operations were $156.6 million for the three months ended September 30, 2003, a 40.7% increase over the same period last year. Railcars shipped in North America increased 88.7% to approximately 2,200 cars during the three months ended September 30, 2003 compared to the same period in 2002. The increase in revenues was due to an increase in cars sold as well as an increase in the components business, offset by a change in product mix for the railcars. Revenues for the European operations were $33.6 million for the three months ended September 30, 2003, a 27.9% decrease from the same period last year. Railcars shipped in Europe decreased 8.5% to approximately 510 cars during the three months ended September 30, 2003 compared to the same period in 2002. The decrease in revenues is primarily related to the closure of plants during 2002. The operating profit for the Trinity Rail Group increased $9.0 million to $2.9 million for the three months ended September 30, 2003 compared the same period last year. The operating margin improved primarily due to improved efficiencies from increased volumes in North America. In the three months ended September 30, 2003 railcar sales to Trinity Industries Leasing Company included in the Rail Group results were $63.6 million compared to $31.0 million in the comparable period in 2002 with profit of $4.9 million compared to $2.5 million for the same period in 2002. Sales to Trinity Industries Leasing Company and related profits are eliminated in consolidation. CONSTRUCTION PRODUCTS GROUP
THREE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------- ------- (IN MILLIONS) Revenues............................................. $ 133.7 $ 141.5 Operating profit..................................... $ 11.4 $ 17.2 Operating profit margin.............................. 8.5% 12.2%
Revenues declined 5.5% for the three months ended September 30, 2003 compared to the same period in 2002. The decrease in revenues was primarily attributable to a lower demand in Highway Safety and Fittings products along with reduced production in the Structural Bridge group, partially offset by improvements in the Concrete and Aggregates group due to strong demand and good weather. Operating profit margin decreased as a result of reduced volume and competitive pricing pressures. 16 INLAND BARGE GROUP
THREE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------- ------- (IN MILLIONS) Revenues............................................. $ 42.5 $ 47.7 Operating profit..................................... $ 0.3 $ 1.3 Operating profit margin.............................. 0.7% 2.7%
Revenues decreased 10.9% for the three months ended September 30, 2003 compared to the same period in 2002. This was primarily due to a decrease in hopper barge volume. Operating profit for the current quarter was $0.3 million, a decrease of $1.0 million compared to the prior year's quarter. This was primarily due to the reduction in hopper barge volume and increased barge litigation costs. Barge litigation costs were $1.1 and $0.7 million for the three months ended September 30, 2003 and 2002, respectively. INDUSTRIAL PRODUCTS GROUP
THREE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------- ------- (IN MILLIONS) Revenues............................................. $ 31.5 $ 41.0 Operating profit..................................... $ 2.7 $ 3.0 Operating profit margin.............................. 8.6% 7.3%
Revenues declined 23.2% for the three months ended September 30, 2003 compared to the same period in 2002. The decline in revenues was primarily due to a decline in LPG related sales in Mexico and the sale of a specialty heads product line in the United States during 2002. Additionally, operating profit was adversely impacted by a decline in LPG related sales in Mexico. TRINITY RAILCAR LEASING AND MANAGEMENT SERVICES GROUP
THREE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------- ------- (IN MILLIONS) Revenues....................................... $ 29.9 $ 28.1 Operating profit............................... $ 9.3 $ 7.2 Operating profit margin........................ 31.1% 25.6% Fleet utilization ............................. 96.8% 95.2%
Revenues increased $1.8 million to $29.9 million in the current quarter. This increase was primarily due to an increase in rental revenues from additions to the lease fleet. Revenues from the sale of railcars from the lease fleet were $0.5 million in the three months ended September 30, 2003 and $0.4 million in the same period in 2002. Operating profit increased $2.1 million to $9.3 million in the current quarter. This increase is primarily due to an increase in the size of the rental fleet, improved utilization, as well as a decrease in lost revenues due to maintenance related downtime. Operating profit on the sale of railcars from the lease fleet, including recognition of deferred manufacturing profit, was $0.2 million for the three months ended September 30, 2003 and $0.1 million for the same period in 2002. ALL OTHER Revenues in All Other decreased primarily due to a decline in the structural tower business. Operating loss was $2.0 million for the three months ended September 30, 2003 and $1.1 million in the same period in 2002. The increase in the operating loss is primarily due to costs associated with non-operating plants. 17 NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2002 - RESULTS OF OPERATIONS Revenues decreased $119.6 million to $1,018.3 million for the nine months ended September 30, 2003 compared to $1,137.9 million for the nine months ended September 30, 2002. The decrease in revenues was due to a reduction in demand for hopper barges, Highway Safety products and certain LPG markets in Mexico as well as a reduction in rail car sales to third parties, offset by an increase in railcar sales from the lease fleet and increased leasing revenues due to growth in the lease fleet. The following table reconciles the revenue amounts discussed under each segment with the consolidated total revenues shown in the Selected Financial Data (in millions).
NINE MONTHS ENDED SEPTEMBER 30, 2003 NINE MONTHS ENDED SEPTEMBER 30, 2002 ------------------------------------ ------------------------------------ REVENUES REVENUES ------------------------------------ ------------------------------------ OUTSIDE INTERSEGMENT TOTAL OUTSIDE INTERSEGMENT TOTAL --------- ------------ --------- --------- ------------ --------- Trinity Rail Group............... $ 317.2 $ 176.8 $ 494.0 $ 374.9 $ 93.5 $ 468.4 Construction Products Group...... 368.9 0.6 369.5 400.0 0.8 400.8 Inland Barge Group............... 129.8 -- 129.8 166.8 -- 166.8 Industrial Products Group........ 85.5 3.0 88.5 103.1 2.1 105.2 Trinity Railcar Leasing and Management Services Group........ 112.7 -- 112.7 81.7 -- 81.7 All Other........................ 4.2 18.7 22.9 11.4 20.5 31.9 Eliminations & Corporate Items... -- (199.1) (199.1) -- (116.9) (116.9) --------- -------- --------- --------- -------- --------- Consolidated Total............... $ 1,018.3 $ -- $ 1,018.3 $ 1,137.9 $ -- $ 1,137.9 ========= ======== ========= ========= ======== =========
Operating profit was $9.1 million for the nine months ended September 30, 2003 and $12.7 million for the same period in 2002. For the nine months ended September 30, 2003 compared to the same period in 2002, operating profit was impacted by the decrease in revenues as described above for the period, competitive pricing pressures, the implementation of a new financial system, and the impact of under-absorbed overhead costs. During the year ended December 31, 2002, the Company signed a managed services contract to implement a new financial system and to outsource certain accounting and processing activities. During the nine month period ended September 30, 2003 these incremental costs were approximately $8.0 million or $0.12 per share. Interest expense decreased $0.1 million to $26.3 million for the nine months ended September 30, 2003 compared to $26.4 million for the same period in 2002. This decrease was due to higher average debt levels and higher interest rates during the nine-month period, offset by the charge of $1.3 million to write off debt issuance costs in the prior year. Other, net was income of $3.6 million for the nine months ended September 30, 2003 compared to income of $2.0 million for the comparable period in 2002. The income in 2003 was primarily due to a larger amount of gains on sale of property, plant, and equipment and smaller foreign currency losses in 2003. The current year effective tax rate of 30.2% was less than the statutory rate of 35% due to the absence of tax benefits on certain foreign losses. Net loss for the nine months ended September 30, 2003 was $9.2 million compared to a net loss of $8.1 million for the same period in 2002. Net loss applicable to common shares for the nine months ended September 30, 2003 was $10.0 million or $0.22 per diluted share compared to $8.1 million or $0.18 per diluted share, for the same period in 2002. The difference between net loss and net loss applicable to common shares for the nine months ended September 30, 2003 is the $0.8 million in accrued dividends and accreted offering costs on the Series B preferred stock. 18 TRINITY RAIL GROUP
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------ ------- (IN MILLIONS) Revenues............................................ $ 494.0 $ 468.4 Operating loss...................................... $ (13.5) $ (31.1) Operating loss margin............................... (2.7)% (6.6)%
Revenues for the North American operations were $389.7 million for the nine months ended September 30, 2003, a 12.6% increase over the same period last year. Railcars shipped in North America increased 60.4% to approximately 5,400 cars during the nine months ended September 30, 2003 compared to the same period in 2002. The increase in revenues was due to an increase in cars sold as well as an increase in the components business, offset by a change in product mix and fewer high-revenue specialty cars in early 2003. Revenues for the European operations were $104.3 million for the nine months ended September 30, 2003, a 14.8% decrease from the same period last year. Railcars shipped in Europe remained constant at approximately 1,600 cars during the nine months ended September 30, 2003 and 2002. The decrease in revenues is primarily related to the closure of plants during 2002. The operating loss for the Trinity Rail Group decreased $17.6 million to a loss of $13.5 million for the nine months ended September 30, 2003 compared to the same period last year. The operating margins for all of Trinity Rail Group improved primarily due to improved efficiencies from increased volumes in North America. As of September 30, 2003, overall backlog increased 95% to approximately 13,500 cars from the same period last year. The North American backlog increased 139% to approximately 11,500 cars and European backlog decreased 5% to approximately 2,000 cars from the same period in 2002. In the nine months ended September 30, 2003 railcar sales to Trinity Industries Leasing Company included in the Rail Group results were $173.8 million compared to $88.4 million in the comparable period in 2002 with profit of $12.5 million compared to $4.8 million for the same period in 2002. Sales to Trinity Industries Leasing Company and related profits are eliminated in consolidation. CONSTRUCTION PRODUCTS GROUP
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------ ------- (IN MILLIONS) Revenues............................................. $ 369.5 $ 400.8 Operating profit..................................... $ 29.8 $ 41.9 Operating profit margin.............................. 8.1% 10.5%
Revenues declined 7.8% for the nine months ended September 30, 2003 compared to the same period in 2002. The decrease in revenues was primarily attributable to exiting certain non-core product lines since the first quarter of 2002, lower demand in Highway Safety products, reduced production in the Structural Bridge group, and reduced volume and competitive pricing pressures in the fittings business, partially offset by an increase in production in the Concrete and Aggregate group due to good weather and strong demand. Operating profit margin decreased as a result of reduced volume and competitive pricing pressures. 19 INLAND BARGE GROUP
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------ ------- (IN MILLIONS) Revenues.............................................. $ 129.8 $ 166.8 Operating profit...................................... $ 0.5 $ 4.3 Operating profit margin............................... 0.4% 2.6%
Revenues decreased 22.2% for the nine months ended September 30, 2003 compared to the same period in 2002. This was primarily due to a decrease in hopper barge volume as a result of the downturn in the hopper barge market. Operating profit decreased $3.8 million to $0.5 million for the current nine-month period. This change was primarily due to the decline in the hopper barge volumes and increased barge litigation costs. Barge litigation costs were $2.5 and $1.9 million for the nine months ended September 30, 2003 and 2002, respectively. INDUSTRIAL PRODUCTS GROUP
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------ ------- (IN MILLIONS) Revenues............................................. $ 88.5 $ 105.2 Operating profit..................................... $ 4.3 $ 2.3 Operating profit margin.............................. 4.9% 2.2%
Revenues declined 15.9% for the nine months ended September 30, 2003 compared to the same period in 2002. The decline in revenues was primarily due to the sale of a specialty heads product line in the United States during 2002 and a decline in LPG related sales. Overall, the increase in operating profit was primarily due to the establishment of a $2.2 million allowance for bad debt in the prior year as well as an improvement in margins in the US LPG business, partially offset by a decline in LPG related sales in Mexico. TRINITY RAILCAR LEASING AND MANAGEMENT SERVICES GROUP
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 2003 2002 ------ ------- (IN MILLIONS) Revenues............................................. $ 112.7 $ 81.7 Operating profit..................................... $ 30.5 $ 21.4 Operating profit margin.............................. 27.1% 26.2% Fleet utilization ................................... 96.8% 95.2%
Revenues increased $31.0 million to $112.7 million for the nine-month period ended September 30, 2003. This increase was primarily due to railcar sales and an increase in rental revenues due to growth in the lease fleet. Included in the results of this group are revenues from the sale of railcars from the lease fleet of $26.7 million in the nine months ended September 30, 2003 and $1.7 million in the same period in 2002. Operating profit increased $9.1 million to $30.5 million in the current nine-month period. This increase is primarily due to an increase in the size of the rental fleet, improved utilization, as well as a decrease in lost revenues due to maintenance related downtime. Operating profits on the sale of railcars from the lease fleet, including recognition of deferred manufacturing profit, were $3.4 million for the nine months ended September 30, 2003 and $0.3 million for the same period in 2002. ALL OTHER Revenues in All Other decreased primarily due to a decline in the structural tower business. Operating loss remained constant at $5.0 million for the nine months ended September 30, 2003 and 2002. The decrease in the operating loss was primarily due to the sale of inventory in the structural tower business offset by costs associated with the non-operating plants. 20 LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the nine months ended September 30, 2003 increased to $68.1 million compared to $58.1 million for the same period in 2002. This was due to the collection of a $48.5 million tax refund, an increase in accounts payable and accrued liabilities of $21.2 million offset by an increase in inventory and accounts receivable of $55.4 million, a decrease in other liabilities of $12.1 million and a net loss in the current period. Capital expenditures for the nine months ended September 30, 2003 were $205.2 million, of which $188.5 million were for additions to the lease subsidiary. This compares to $123.2 million of capital expenditures for the same period last year, of which $97.7 million was for additions to the lease subsidiary. Proceeds from the sale of property, plant and equipment were $33.6 million for the nine months ended September 30, 2003 composed primarily of the sale of railcars from the lease fleet and other assets, compared to $13.9 million for the same period in 2002. In June 2002 TILC, through a newly formed, wholly owned business trust, entered into a $200 million non-recourse warehouse facility to finance railcars owned by TILC. Specific railcars and the underlying leases secure the facility. Advances under the facility may not exceed 75% of the fair market value of the eligible railcars securing the facility as defined by the agreement. Advances under the facility bear interest at LIBOR plus 1.375% (2.495% at September 30, 2003). In August 2003, TILC expanded this facility to $300 million and extended the term through August 2004. At September 30, 2003, $80.6 million was available under this facility. The Company is currently in discussions with long-term lenders to provide permanent financing for the amount currently outstanding under the facility, which is expected to be completed during the fourth quarter of 2003. In June 2002, the Company completed a secured credit agreement for $425 million. The agreement includes a $275 million 3-year revolving commitment and a $150 million 5-year term commitment. The agreement calls for quarterly payments of principal on the term debt in the amount of $375 thousand beginning September 30, 2002 through June 30, 2006 and quarterly payments of $36.0 million beginning on September 30, 2006 through the maturity date. Amounts borrowed under the revolving commitment bear interest at LIBOR plus 2.25% or Prime rate plus 0.25% (4.25% at September 30, 2003). Amounts borrowed under the term commitment bear interest at LIBOR plus 3.25% (4.45% at September 30, 2003). The Company's accounts receivable and inventory and a portion of its property, plant and equipment secure the entire agreement. During September 2003, the Company modified the terms of these debt covenants to separate the Company's leasing and manufacturing operations and paid off $25.0 million of the 5-year term commitment. The agreement limits the amount of capital expenditures related to the Company's leasing business, requires maintenance of ratios related to interest coverage for both the leasing and manufacturing operations, leverage, asset coverage and minimum net worth, and restricts the amount of dividend payments. At September 30, 2003, $143.1 million was borrowed under this agreement. At September 30, 2003, the most restrictive of the debt covenants based on trailing twelve month calculations as defined by the debt agreements allow approximately $65.4 million additional principal and approximately $6.8 million and $9.0 million additional annual interest expense for leasing and manufacturing operations, respectively. In June 2003 the Company issued 600 shares of Series B Redeemable Convertible Preferred Stock. Each share of Series B preferred stock has an initial liquidation value of $100,000 per share. The liquidation value, plus accrued but unpaid dividends, is payable on June 25, 2008, the mandatory redemption date, at our option in cash or in shares of common stock valued at 90% of the then current market price of our common stock. Each share of Series B preferred stock may be converted at any time at the option of the holder into shares of our common stock, based on the initial conversion price of $22.46 per share, which is equivalent to 4,452 shares of common stock for each $100,000 initial liquidation preference. Holders of the Series B preferred stock are entitled to receive dividends payable semi-annually, on July 1 and January 1 of each year, beginning January 1, 2004 at an annual rate of 4.5% of the liquidation preference. The Company may, at our option, pay dividends either in cash or in shares of our common stock at the then current market price. The holders of shares of Series B preferred stock are entitled to vote with the holders of the common stock on an as-if converted basis on all matters brought before the stockholders. The Company expects to finance future operating requirements with cash flows from operations and, depending on market conditions, debt and/or privately or publicly placed equity. CONTRACTUAL OBLIGATION AND COMMERCIAL COMMITMENTS As of September 30, 2003 other commercial commitments related to letters of credit have decreased to $99.8 million from $110.2 million as of December 31, 2002. Other commercial commitments that relate to operating leases under sales/leaseback transactions were basically unchanged. 21 RECENT PRONOUNCEMENTS During January 2003, the FASB issued Interpretation No. 46 "Consolidation of Variable Interest Entities (FIN 46). The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and apply to existing variable interest entities in the first fiscal year or interim periods beginning after June 15, 2003. In October 2003, the FASB agreed to a broad-based deferral of the effective date for public companies until the end of periods ending after December 15, 2003. Until now, one company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. A company that consolidates a variable interest entity is called the primary beneficiary of that entity. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company has no variable interest entities in which it is the primary beneficiary. In May 2003, the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150). SFAS 150 establishes standards for how a company classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that a company classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first period beginning after June 15, 2003. The provisions of this statement did not have an impact on the Company's statement of financial position. FORWARD-LOOKING STATEMENTS. This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performance, estimates, projections, goals and forecasts. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements, include among others: - - market conditions and demand for our products; - - the cyclical nature of both the railcar and barge industries; - - variations in weather in areas where construction products are sold and used; - - the timing of introduction of new products; - - the timing of customer orders; - - price changes; - - changes in mix of products sold; - - the extent of utilization of manufacturing capacity; - - availability and costs of component parts, supplies, and raw materials; - - competition and other competitive factors; - - changing technologies; - - steel prices; - - interest rates and capital costs; - - long-term funding of our leasing warehouse facility; - - taxes; - - the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico and Romania; - - changes in import and export quotas and regulations; - - business conditions in emerging economies; - - results of litigation; and - - legal, regulatory, and environmental issues. Any forward-looking statement speaks only as of the date on which such statement is made. Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has been no material change in our market risks since December 31, 2002. 22 ITEM 4. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES The Company maintains controls and procedures designed to ensure that it is able to collect the information it is required to disclose in the reports it files with the SEC, and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. The Company's Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluate their effectiveness. Based on their evaluation of the Company's disclosure controls and procedures which took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers believe that these procedures are effective to ensure that the Company is able to collect, process, and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods. INTERNAL CONTROLS The Company maintains a system of internal controls designed to provide reasonable assurance that: transactions are executed in accordance with management's general or specific authorization; transactions are recorded as necessary (1) to permit preparation of financial statements in conformity with generally accepted accounting principles, and (2) to maintain accountability for assets; access to assets is permitted only in accordance with management's general or specific authorization; and the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since the date of the most recent evaluation of the Company's internal controls by the Chief Executive and Chief Financial Officers, there have been no significant changes in such controls or in other factors that could have significantly affected those controls, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II ITEM 1. LEGAL PROCEEDINGS The Company and its wholly owned subsidiary, Trinity Marine Products, Inc. ("TMP"), and certain material suppliers and others, have been named as co-defendants in six separate lawsuits filed by Florida Marine Transporters, Inc. ("FMT") on May 15, 2002, J. Russell Flowers, Inc. ("Flowers") on October 7, 2002, ACF Barge Acceptance I, LLC ("ACF") on December 4, 2002, Marquette Transportation Company and Iowa Fleeting Services, Inc. ("Marquette") on March 7, 2003, Waxler Transportation Company, Inc. ("Waxler") on April 7, 2003 and LeBeouf Bros. Towing ("LeBeouf") on July 3, 2003. The FMT, Marquette, Waxler, and LeBeouf cases are pending in the 25th Judicial District Court in Plaquemines Parish, Louisiana, and the Flowers case is pending in the U.S. District Court, Northern District of Mississippi in Greenville, Mississippi. On October 8, 2003, one of the six cases was dismissed as a result of a settlement between the Company and TMP and ACF. The settlement involved the purchase of eleven barges which are leased to a barge operator under long-term lease agreements. The Company's Leasing subsidiary purchased the barges for $ 19.1 million and succeeded ACF as lessor. The estimated fair value of the operating leases and residual value of the barges approximated the purchase price. In the Waxler case, the plaintiff has petitioned the court for certification of a class, which could potentially increase the total number of barges involved in the litigation. Absent certification of a class in the Waxler case, these remaining five separate suits involve 37 tank barges sold at an approximate average price of $1.4 million, and 140 hopper barges sold at an approximate average price of $280,000. Each of the cases set forth allegations pertaining to damages arising from alleged defects in coating materials supplied by a co-defendant and coatings application workmanship by TMP. The plaintiffs seek both compensatory and punitive damages and/or recision of the barge purchase contracts. Independent experts investigating the claims on behalf of the Company and TMP have expressed the opinion that technical arguments presented by the plaintiffs in the litigation are without merit. As of September 30, 2003, two of the five plaintiffs owe TMP approximately $11.4 million, of which $7.9 million is past due, related to contracts for barges not involved in the litigation. TMP has filed suit for collection of the past due amounts. A subsidiary of the Company, Transit Mix Concrete and Materials Company, Inc. ("Transit Mix"), was named as a defendant in a case involving the death of an employee of an independent contractor who died following an accident that occurred while the decedent was working at a Company owned facility. Following a jury verdict in the favor of the plaintiff, the presiding judge entered a final judgment in the amount of $33.9 million (inclusive of fees, costs, and judgment interest). This case has been appealed by Transit Mix and its insurers. Management believes liability in this case, if any, exceeding $3.0 million, will be covered by insurance. As previously reported, a wholly owned subsidiary of the Company, Trinity Marine Baton Rouge, Inc. ("TMBR") was named in a two-count felony indictment charging TMBR with transporting hazardous waste without a proper manifest to a non-permitted facility 23 in violation of the Resource Conservation and Recovery Act. Following four (4) years of investigation, on September 17, 2003 the United States government voluntarily dismissed all charges against TMBR and no further enforcement will take place in this matter. The Company is also involved in other claims and lawsuits incidental to its business. Based on information currently available, it is management's opinion that the ultimate outcome of all current litigation and other claims, including settlements, in the aggregate will not have a material adverse effect on the Company's overall financial condition for purposes of financial reporting. However, resolution of certain claims or lawsuits by settlement or otherwise could have a significant impact on the operating results of the reporting period in which such resolution occurs. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. Exhibit Number Description 10.17.1 First Amendment to the Credit Agreement dated as of October 16, 2002, amending the Credit Agreement dated June 4, 2002, among Trinity Industries, Inc., as Borrower, JPMorgan Chase Bank, individually as a Lender and Issuing Bank and Administrative Agent, and Dresdner Bank AG New York and Grand Cayman Branches and The Royal Bank of Scotland plc., each individually as a Lender and collectively as Syndication Agents, and certain other Lenders party thereto from time to time. 10.17.2 Second Amendment to the Credit Agreement dated as of September 26, 2003, amending the Credit Agreement dated June 4, 2002, among Trinity Industries, Inc., as Borrower, JPMorgan Chase Bank, individually as a Lender and Issuing Bank and Administrative Agent, and Dresdner Bank AG New York and Grand Cayman Branches and The Royal Bank of Scotland plc., each individually as a Lender and collectively as Syndication Agents, and certain other Lenders party thereto from time to time. 10.18.1 Amendment No. 1 to the Warehouse Loan Agreement dated as of June 27, 2003, amending the Warehouse Loan Agreement dated as of June 27, 2002. 10.18.2 Amendment No. 2 to the Warehouse Loan Agreement dated as of July 29, 2003, amending the Warehouse Loan Agreement dated as of June 27, 2002. 10.18.3 Amendment No. 3 to the Warehouse Loan Agreement dated as of August 29, 2003, amending the Warehouse Loan Agreement dated as of June 27, 2002. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K during the quarter ended September 30, 2003 (1) A Current Report on Form 8-K was filed on August 11, 2003, under Item 9, reporting operating results for the second quarter of 2003, and attaching a news release dated August 6, 2003 and script of conference call of August 7, 2003. (2) A Current Report on Form 8-K was filed on October 9, 2003, under Item 5, announcing litigation settlement with ACF Barge Acceptance I LLC, and attaching a news release dated October 8, 2003. 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRINITY INDUSTRIES, INC. By /s/ JIM S. IVY Registrant Jim S. Ivy Senior Vice President and Chief Financial Officer November 6, 2003 25 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION 10.17.1 First Amendment to the Credit Agreement dated as of October 16, 2002, amending the Credit Agreement dated June 4, 2002. 10.17.2 Second Amendment to the Credit Agreement dated as of September 26, 2003, amending the Credit Agreement dated June 4, 2002. 10.18.1 Amendment No. 1 to the Warehouse Loan Agreement dated as of June 27, 2003, amending the Warehouse Loan Agreement dated as of June 27, 2002. 10.18.2 Amendment No. 2 to the Warehouse Loan Agreement dated as of July 29, 2003, amending the Warehouse Loan Agreement dated as of June 27, 2002. 10.18.3 Amendment No. 3 to the Warehouse Loan Agreement dated as of August 29, 2003, amending the Warehouse Loan Agreement dated as of June 27, 2002. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EX-10.17.1 3 d09606exv10w17w1.txt FIRST AMENDMENT TO THE CREDIT AGREEMENT EXHIBIT 10.17.1 FIRST AMENDMENT TO CREDIT AGREEMENT This First Amendment to Credit Agreement (this "First Amendment") is executed effective as of October 16, 2002 (the "Effective Date"), by and among Trinity Industries, Inc., a Delaware corporation (the "Borrower"), JPMorgan Chase Bank, as the Administrative Agent (the "Administrative Agent"), and the financial institutions parties hereto as Lenders (individually a "Lender" and collectively the "Lenders"). W I T N E S S E T H: WHEREAS, the Borrower, the Administrative Agent, the Syndication Agents and the Lenders are parties to that certain Credit Agreement dated as of June 4, 2002 (the "Credit Agreement") (unless otherwise defined herein, all terms used herein with their initial letter capitalized shall have the meaning given such terms in the Credit Agreement); and WHEREAS, pursuant to the Credit Agreement, the Lenders have made Loans to the Borrower; and WHEREAS, the Borrower has requested that the Lenders amend certain terms of the Credit Agreement in certain respects; and WHEREAS, subject to the terms and conditions herein contained, the Lenders party hereto have agreed to the Borrower's request. NOW THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Borrower, the Administrative Agent and each Lender party hereto hereby agree as follows: Section 1. AMENDMENTS. In reliance on the representations, warranties, covenants and agreements contained in this First Amendment, and subject to the terms and conditions contained herein, the Credit Agreement is hereby amended, effective as of the Effective Date, in the manner provided in this Section 1. 1.1 ADDITIONAL DEFINITION. Section 1.01 of the Credit Agreement is amended to add thereto in alphabetical order the definition of "First Amendment" which shall read in full as follows: "First Amendment" means that certain First Amendment to Credit Agreement dated as of October 16, 2002, among the Borrower, the Administrative Agent and the Lenders party thereto. 1.2 AMENDMENT TO DEFINITION. The definition of "Loan Documents" set forth in Section 1.01 of the Credit Agreement is amended to read in full as follows: "Loan Documents" means this Agreement, the First Amendment, the Notes, the Subsidiary Guaranties, the Security Instruments, the Intercreditor Agreement, the Letters of Credit, any Borrowing Request, any Interest Election Request, any Assignment and Acceptance, 1 the Fee Letter, and all other agreements (including Hedging Agreements) relating to this Agreement, the Loans, the Lender Indebtedness or the Collateral entered into from time to time between or among the Borrower (or any or all of its Subsidiaries) and the Administrative Agent or any Lender (or, with respect to the Hedging Agreements, any Affiliates of any Lender), and any document delivered by the Borrower or any of its Subsidiaries in connection with the foregoing, as such documents, instruments or agreements may be amended, modified or supplemented from time to time. 1.3 AMENDMENT TO FUNDAMENTAL CHANGE COVENANT. Section 7.03(a) of the Credit Agreement is amended to read in full as follows: "(a) Except as otherwise set forth herein, the Borrower will not, and will not permit any Subsidiary to, (i) merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it; (ii) except for (A) sales of inventory in the ordinary course of business, (B) the sale of assets described on Schedule 7.03 (or the sale of the voting securities or other equity interests of Subsidiaries whose only substantial assets are those described on Schedule 7.03), (C) the sale of all of the Equity of SC Meva SA, a Romanian joint stock company and a Subsidiary of the Borrower, and (D) in addition to the sales otherwise expressly permitted hereunder, the sale of all or any interest in one or more assets (to the extent, and only to the extent, such assets do not (or any portion thereof proposed to be sold does not) constitute Collateral) including all or any interest in Subsidiaries, to the extent the book value of such interest or interests, measured on a cumulative basis from and after the date of this Agreement, does not exceed an amount equal to $20,000,000, (y) sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or (z) sell, transfer, lease or otherwise dispose of any Collateral; provided, that the Borrower may sell, transfer or otherwise dispose of the Collateral if each of the following conditions is satisfied: (1) the Borrower shall have provided the Administrative Agent and the Collateral Agent with not less than thirty (30) Business Days prior written notice of such sale, transfer or other disposition, (2) no Default has occurred which is continuing and no Default will result after giving effect to such sale, transfer or disposition, (3) without limiting the foregoing, after giving effect to such sale, transfer or other disposition, the Borrower shall be in compliance with Section 7.09(d), (4) the Borrower will immediately upon the consummation of such sale, transfer or other disposition submit additional Property owned by the Borrower or its Subsidiaries and reasonably acceptable to the Administrative Agent, the Collateral Agent and Required Lenders with a value (as determined by the Administrative Agent and Collateral Agent in their sole discretion) equal to or greater than the disposed of Collateral as security for the Obligations, and (5) simultaneously with submission of additional Property pursuant to clause (4) above, the Borrower shall deliver to the Administrative Agent 2 and the Collateral Agent such Security Instruments and other documents, instruments, financing statements, certificates and agreements (including, without limitation, title policies and surveys, as applicable) as the Administrative Agent or Collateral Agent shall deem necessary or appropriate in its sole discretion to create, evidence and perfect the Liens contemplated by this Agreement and the Security Instruments; or (iii) liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (A) any Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (B) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (C)(i) the Borrower may sell, transfer, lease or otherwise dispose of its assets to any Subsidiary, and (ii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or any other Subsidiary, and (D) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 7.04." Section 2. EFFECTIVENESS OF AMENDMENT. This First Amendment shall be effective automatically and without the necessity of any further action by the Administrative Agent, the Borrower or any Lender when counterparts hereof have been executed by the Administrative Agent, the Borrower and the Required Lenders. Section 3. LEGAL FEES. Upon execution of this First Amendment by the Required Lenders, the Borrower shall pay all reasonable fees and expenses of counsel to the Administrative Agent incurred by the Administrative Agent in connection with this First Amendment and all related documents and transactions. Section 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. To induce the Lenders and the Administrative Agent to enter into this First Amendment, the Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows: 4.1 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each representation and warranty of the Borrower contained in the Credit Agreement and the other Loan Documents is true and correct on the date hereof after giving effect to the amendments set forth in Section 1 hereof. 4.2 DUE AUTHORIZATION, NO CONFLICTS. The execution, delivery and performance by the Borrower of this First Amendment are within the Borrower's corporate powers, have been duly authorized by necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not violate or constitute a default under any provision of applicable law or any material agreement binding upon the Borrower or its Subsidiaries, or result in the creation or imposition of any Lien upon any of the assets of the Borrower or its Subsidiaries except for Permitted Encumbrances. 3 4.3 VALIDITY AND BINDING EFFECT. This First Amendment constitutes the valid and binding obligations of the Borrower enforceable in accordance with its terms, except as (a) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditor's rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general application. 4.4 NO DEFENSES. The Borrower has no defenses to payment, counterclaim or rights of set-off with respect to the indebtedness, obligations and liabilities of the Borrower under the Loan Documents existing on the date hereof. 4.5 ABSENCE OF DEFAULTS. After giving effect to the amendments set forth in Section 1 hereof, neither a Default nor an Event of Default has occurred which is continuing. Section 5. MISCELLANEOUS. 5.1 REAFFIRMATION OF LOAN DOCUMENTS. Any and all of the terms and provisions of the Credit Agreement and the other Loan Documents shall, except as amended and modified hereby, remain in full force and effect. The Borrower hereby agrees that the amendments and modifications herein contained shall in no manner adversely affect or impair the indebtedness, obligations and liabilities of the Borrower under the Loan Documents. 5.2 PARTIES IN INTEREST. All of the terms and provisions of this First Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 5.3 COUNTERPARTS. This First Amendment may be executed in counterparts, and all parties need not execute the same counterpart; however, no party shall be bound by this First Amendment until counterparts hereof have been executed by the Borrower and the Required Lenders. Facsimiles shall be effective as originals. 5.4 COMPLETE AGREEMENT. THIS FIRST AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES. 5.5 HEADINGS. The headings, captions and arrangements used in this First Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this First Amendment, nor affect the meaning thereof. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed by their respective Authorized Officers on the date and year first above written. [Signature Pages Follow] 4 SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS TRINITY INDUSTRIES, INC. By: /s/ S. Theis Rice S. Theis Rice, Vice President, Legal Affairs [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS JPMORGAN CHASE BANK, as a Revolving Lender, a Term Lender and as Administrative Agent By: /s/ Allen King Allen King, Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as a Revolving Lender and a Term Lender By: /s/ Deborah Carlson Name: Deborah Carlson Title: Director By: /s/ Stephen Kovach Name: Stephen Kovach Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS THE ROYAL BANK OF SCOTLAND PLC, as a Revolving Lender By: /s/ David Apps Name: David Apps Title: Senior Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS BANK ONE, NA, as a Revolving Lender By: /s/ John A. Horst Name: John A. Horst Title: Director [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS WACHOVIA BANK, N.A., as a Revolving Lender and a Term Lender By: /s/ Frederick E. Blumer Name: Frederick E. Blumer Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS BNP PARIBAS, as a Revolving Lender By: /s/ David C. Schad Name: _David C. Schad Title: Managing Director By: /s/ Jeff Tebeaux Name: Jeff Tebeaux Title: Associate [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH, as a Revolving Lender By: /s/ Bill O'Daly Name: Bill O'Daly Title: Director By: /s/ Cassandra Droogan Name: Cassandra Droogan Title: Associate [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. AMMC CDO I, LIMITED By: American Money Management Corp., as Collateral Manager By:/s/ David P. Meyer Name: David P. Meyer Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. AMMC CDO II, LIMITED By: American Money Management Corp., as Collateral Manager By: /s/ David P. Meyer Name: David P. Meyer Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Ares III CLO, Ltd. By: /s/ [illegible] Name: _____________________________________ Title:_____________________________________ [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Ares IV CLO, Ltd. By: /s/ [illegible] Name: _____________________________________ Title: ____________________________________ [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Ares VI CLO, Ltd. By: /s/ [illegible] Name: _____________________________________ Title: ____________________________________ [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Franklin CLO I, Limited By: /s/ Richard D' Addario Name: Richard D' Addario Title: Senior Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Franklin CLO II, Limited By: /s/ Richard D' Addario Name: Richard D' Addario Title: Senior Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Franklin CLO III, Limited By: /s/ Richard D' Addario Name: Richard D' Addario Title: Senior Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Franklin Floating Rate Trust By: /s/ Richard D' Addario Name: Richard D' Addario Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Franklin Floating Rate Master Series By: /s/ Richard D' Addario Name: Richard D' Addario Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Franklin Floating Rate Daily Access Fund By: /s/ Richard D' Addario Name: Richard D' Addario Title: Vice President [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. ARCHIMEDES FUNDING III, LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. ARCHIMEDES FUNDING IV (CAYMAN), LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. BALANCED HIGH-YIELD FUND II, LTD. By: ING Capital Advisors LLC, as Asset Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. ENDURANCE CLO I, LTD. By: ING Capital Advisors LLC, as Portfolio Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. SEQUILS-ING I (HBDGM), LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. ORYX CLO, LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. NEMEAN CLO, LTD. By: ING Capital Advisors LLC, as Investment Manager By: /s/ Steven Gorski Name: Steven Gorski Title: Vice President & Senior Credit Analyst [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. KZH CYPRESSTREE-1 LLC By: /s/ Susan Lee Name: Susan Lee Title: Authorized Agent [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. KZH ING-2 LLC By: /s/ Susan Lee Name: Susan Lee Title: Authorized Agent [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. KZH STERLING LLC By: /s/ Susan Lee Name: Susan Lee Title: Authorized Agent [Signature Page] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this First Amendment to Credit Agreement. Protective Life Insurance Company By: /s/ Diane S. Griswold Name: Diane S. Griswold Title: Assistant Vice President [Signature Page] EX-10.17.2 4 d09606exv10w17w2.txt SECOND AMENDMENT TO THE CREDIT AGREEMENT EXHIBIT 10.17.2 SECOND AMENDMENT TO CREDIT AGREEMENT This Second Amendment to Credit Agreement (this "Second Amendment") is executed effective as of September 26, 2003 (the "Effective Date"), by and among Trinity Industries, Inc., a Delaware corporation (the "Borrower"), JPMorgan Chase Bank, as the Administrative Agent (the "Administrative Agent"), and the financial institutions parties hereto as Lenders (individually a "Lender" and collectively the "Lenders"). W I T N E S S E T H: WHEREAS, the Borrower, the Administrative Agent, the Syndication Agents and the Lenders are parties to that certain Credit Agreement dated as of June 4, 2002, as amended by that certain First Amendment to Credit Agreement dated as of October 16, 2002 (as amended, the "Credit Agreement") (unless otherwise defined herein, all terms used herein with their initial letter capitalized shall have the meaning given such terms in the Credit Agreement); and WHEREAS, pursuant to the Credit Agreement, the Lenders have made Loans to the Borrower; and WHEREAS, the Borrower has requested that the Lenders amend certain terms of the Credit Agreement in certain respects; and WHEREAS, subject to the terms and conditions herein contained, the Lenders party hereto have agreed to the Borrower's request. NOW THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Borrower, the Administrative Agent and each Lender party hereto hereby agree as follows: Section 1. AMENDMENTS. In reliance on the representations, warranties, covenants and agreements contained in this Second Amendment, and subject to the terms and conditions contained herein, the Credit Agreement is hereby amended, effective as of the Effective Date, in the manner provided in this Section 1. 1.1 ADDITIONAL DEFINITIONS. Section 1.01 of the Credit Agreement is amended to add thereto in alphabetical order the definitions of "Convertible Preferred Stock," "Equity Contribution," "ETC Indebtedness," "Second Amendment," "Second Amendment Closing Date" and "TILC Interest Coverage Ratio" which shall read in full as follows: "Convertible Preferred Stock" means the Borrower's 4.5% Series B Redeemable Convertible Preferred Stock (a) containing the rights and preferences set forth in the Certificate of Designations of Series B Redeemable Convertible Preferred Stock of Trinity Industries, Inc. filed with the Secretary of State of Delaware, and (b) issued pursuant to the Equity Contribution. "Equity Contribution" means a cash contribution to the equity capital of the Borrower in an aggregate gross amount equal to $60,000,000, such contribution being made on June 25, 2003 in connection with the Borrower's issuance of its Convertible Preferred Stock. 1 "ETC Indebtedness" means the Indebtedness evidenced by Equipment Trust Certificate Financing (Series 12) in an aggregate amount not to exceed $170,000,000, which Indebtedness is secured by leased rail equipment pledged to a trustee acting on behalf of the holders of such Equipment Trust Certificates. "Second Amendment" means that certain Second Amendment to Credit Agreement dated as of September 26, 2003, among the Borrower, the Administrative Agent and the Lenders party thereto. "Second Amendment Closing Date" means the date on which all conditions precedent to the effectiveness of the Second Amendment shall have been satisfied, which date shall be September 26, 2003. "TILC Interest Coverage Ratio" means, on any day, the ratio of (a) EBITDA derived from the assets pledged to (i) the TILC Conduit Indebtedness, and (ii) the ETC Indebtedness for the Rolling Period ending on the then most recent Quarterly Date to (b) cash interest payments made by the Borrower and its Subsidiaries on a consolidated basis during such Rolling Period with respect to the TILC Conduit Indebtedness and/or the ETC Indebtedness during such Rolling Period. 1.2 AMENDMENT TO DEFINITIONS. The definitions of "EBITDA," "Interest Coverage Ratio," "Leverage Ratio," "Loan Documents," "TILC Conduit Indebtedness" and "Total Debt" set forth in Section 1.01 of the Credit Agreement are amended to read in full as follows: "EBITDA" means, as to any Person for any period, without duplication, the amount equal to the following calculated for such Person and its consolidated subsidiaries on a consolidated basis: net income determined in accordance with GAAP, plus to the extent deducted from net income, the sum of (a) Interest Expense, depreciation, amortization, income and franchise tax expenses, plus (b) one-time cash charges in an aggregate amount not to exceed an amount agreed to by the Lenders based upon existing facts and circumstances; provided that non-recurring, non-cash gains or losses and/or extraordinary gains or losses for any such period, including, but not limited to, gains or losses on the disposition of assets (other than in connection with the sale of rail cars from the lease fleet in the ordinary course of business) shall not be included in EBITDA. EBITDA will be adjusted on a pro forma basis (determined in accordance with GAAP) to give effect during applicable historical periods to Permitted Acquisitions as if such Permitted Acquisitions had been made at the beginning of the applicable period. "Interest Coverage Ratio" means, on any day, the ratio of (a) EBITDA (excluding any EBITDA for such Rolling Period derived from the assets pledged to (i) the TILC Conduit Indebtedness, (ii) the ETC Indebtedness) for the Rolling Period ending on the then most recent Quarterly Date less Capital Expenditures (Non-Leasing Company) (excluding such Capital Expenditures (Non-Leasing Company) financed with the proceeds of the Equity Contribution) for such Rolling Period to (b) cash interest payments made by the Borrower and its Subsidiaries on a consolidated basis during such Rolling Period, excluding any such interest payments (as applicable) made with respect to the TILC Conduit Indebtedness and/or the ETC Indebtedness during such Rolling Period. 2 "Leverage Ratio" means, on any day, the ratio of (a) Total Debt of t he Borrower and its Subsidiaries on a consolidated basis as of the date of determination to (b) EBITDA for the Rolling Period ending on the most recent Quarterly Date as of the date of determination excluding EBITDA derived from the assets pledged to (i) the TILC Conduit Indebtedness, and (ii) the ETC Indebtedness, calculated on a pro forma basis. "Loan Documents" means this Agreement, the First Amendment, the Second Amendment, the Notes, the Subsidiary Guaranties, the Security Instruments, the Intercreditor Agreement, the Letters of Credit, any Borrowing Request, any Interest Election Request, any Assignment and Acceptance, the Fee Letter, and all other agreements (including Hedging Agreements) relating to this Agreement, the Loans, the Lender Indebtedness or the Collateral entered into from time to time between or among the Borrower (or any or all of its Subsidiaries) and the Administrative Agent or any Lender (or, with respect to the Hedging Agreements, any Affiliates of any Lender), and any document delivered by the Borrower or any of its Subsidiaries in connection with the foregoing, as such documents, instruments or agreements may be amended, modified or supplemented from time to time. "TILC Conduit Indebtedness" means the Indebtedness created or incurred after the date hereof (including Indebtedness pursuant to the warehouse facility established by Credit Suisse First Boston, New York Branch and certain other financial institutions, and any term out of such facility) in favor of a wholly-owned special purpose subsidiary of TILC in an aggregate amount not to exceed $600,000,000, such Indebtedness to be (i) used to finance a portion of the lease fleet owned (or to be owned) by such subsidiary, (ii) secured by such applicable railcars and associated underlying third party leases, and (iii) non-recourse to the Borrower. "Total Debt" means, for any period, all Indebtedness (other than the TILC Conduit Indebtedness and the ETC Indebtedness) of the Borrower and its Subsidiaries on a consolidated basis, excluding, without duplication, the sum of (a) LC Exposure for such period plus (b) Existing LC Exposure for such period. 1.3 AMENDMENT TO LETTER OF CREDIT SUBLIMIT. Sections 2.05(b) and 4.02(d) of the Credit Agreement are each amended by deleting the references to "$100,000,000" in each such section and inserting in lieu thereof a reference to "$150,000,000." 1.4 AMENDMENT TO PREPAYMENT OF LOANS. Section 2.11 of the Credit Agreement is amended to add a new clause (f) thereto which shall read in full as follows: "(f) Notwithstanding anything to the contrary contained in this Agreement or in any other Loan Document, on or prior to the Second Amendment Closing Date, the Borrower shall make a mandatory prepayment of the Term Loans in an amount equal to $25,000,000, such prepayment to be applied on a pro rata basis among the Term Lenders." 1.5 AMENDMENT TO INVESTMENT COVENANT. Section 7.04(f) of the Credit Agreement is amended to read in full as follows: "(f) investments existing on the Second Amendment Closing Date and set forth in Schedule 7.04." 3 1.6 AMENDMENT TO RESTRICTED PAYMENTS COVENANT. Section 7.06 of the Credit Agreement is amended to read in full as follows: "SECTION 7.06 RESTRICTED PAYMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) the Borrower may declare and pay dividends with respect to its capital stock payable solely in additional shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their capital stock, (c) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, including, without limitation, pursuant to any severance packages for management or employees of the Borrower and its Subsidiaries and approved by the Board of Directors of the Borrower, (d) provided no Default has occurred which is continuing, the Borrower may, for each Fiscal Year, commencing with the Fiscal Year ending December 31, 2003, declare and pay dividends in an aggregate amount not in excess of $15,000,000 (the "Dividend Basket"); provided, that, in the event the ratings established by S&P and Moody's for the Index Debt are increased to BBB- (stable)/Ba1 (stable) or above, and for so long as such Index Debt remains at or above such level or category with respect to both S&P and Moody's (and further provided no Default has occurred which is continuing), the Dividend Basket shall be increased to an aggregate amount not in excess of $20,000,000 for any Fiscal Year; provided, further that, in the event the ratings established by S&P and Moody's for the Index Debt are increased to BBB- (stable)/Baa3 (stable) or above, and for so long as such Index Debt remains at or above such level or category with respect to both S&P and Moody's (and further provided no Default has occurred which is continuing), the Dividend Basket shall be increased to an aggregate amount not in excess of $35,000,000 for any Fiscal Year, and (e) provided no Default has occurred which is continuing, the Borrower may, for each Fiscal Year, commencing with the Fiscal Year ending December 31, 2003, declare and pay dividends (in addition to those contemplated by clause (d) of this definition) in respect of its Convertible Preferred Stock in an aggregate amount not in excess of $3,500,000 (the "CPS Dividend Basket"); provided, that, in the event the Borrower elects (by written notice to the Administrative Agent) to reduce the CPS Dividend Basket, the Dividend Basket shall (subject to the foregoing terms and conditions) increase (on a dollar for dollar basis) by an aggregate amount equal to the lesser of (i) the amount of the reduction to the CPS Dividend Basket, and (b) $2,000,000." 1.7 AMENDMENTS TO FINANCIAL COVENANTS. Sections 7.09(a), (b) and (d) of the Credit Agreement are amended to read in full as follows: "(a) The Borrower will not permit the Interest Coverage Ratio to be less than the ratio for each Rolling Period indicated below: 4 - ------------------------------------------------------------------- Period Ratio ------ ----- - ------------------------------------------------------------------- Rolling Period ending September 30, 2003 1.75 to 1.00 - ------------------------------------------------------------------- Rolling Period ending December 31, 2003 2.25 to 1.00 - ------------------------------------------------------------------- Rolling Period ending March 31, 2004 2.25 to 1.00 - ------------------------------------------------------------------- Each Rolling Period thereafter 2.75 to 1.00 - ------------------------------------------------------------------- (b) The Borrower will not permit the Leverage Ratio to be greater than the ratio for each Rolling Period indicated below: - ------------------------------------------------------------------- Period Ratio ------ ----- - ------------------------------------------------------------------- Rolling Period ending September 30, 2003 3.50 to 1.00 - ------------------------------------------------------------------- Rolling Period ending December 31, 2003 3.00 to 1.00 - ------------------------------------------------------------------- Each Rolling Period thereafter 2.75 to 1.00 - ------------------------------------------------------------------- (d) The Borrower will not permit the Asset Coverage Ratio to be less than 2.50 to 1.00 at any time." 1.8 ADDITIONAL FINANCIAL COVENANT. Section 7.09 of the Credit Agreement is amended to add a new clause (e) thereto which shall read in full as follows: "(e) The Borrower will not permit the TILC Interest Coverage Ratio to be less than 1.50 to 1.00 for each Rolling Period ending on and after September 30, 2003." 1.9 AMENDMENT TO EXHIBIT E AND SCHEDULE 7.04. Exhibit E and Schedule 7.04 to the Credit Agreement are each hereby deleted in their entirety and each replaced by Exhibit E and Schedule 7.04, respectively, attached to this Second Amendment. Section 2. EFFECTIVENESS OF AMENDMENT. This Second Amendment shall be effective automatically and without the necessity of any further action by the Administrative Agent, the Borrower or any Lender when counterparts hereof have been executed by the Administrative Agent, the Borrower and the Required Lenders, and all conditions to the effectiveness hereof set forth herein (including, without limitation, the conditions set forth in Section 3 hereof) have been satisfied. Section 3. CLOSING DELIVERIES. Unless otherwise provided herein, simultaneously with the execution and delivery hereof, and as a condition to the effectiveness hereof, the Borrower shall deliver or pay to, or cause the delivery or payment to, the Administrative Agent: (a) the prepayment on the Term Loans due on or prior to the date hereof pursuant to Section 2.11(f) of the Credit Agreement (after giving effect to this Second Amendment), (b) the amendment fee due and payable in accordance with Section 4 hereof, (c) such arrangement and other fees due and payable to the Administrative Agent and/or its Affiliates (for their own account) pursuant to any separate agreement among or between the Borrower, the Administrative Agent and its Affiliates, (d) the fees and expenses of counsel to the Administrative 5 Agent due and payable in accordance with Section 5 hereof, and (e) such certificates of Authorized Officers of the Borrower, certified copies of resolutions of the Board of Directors of the Borrower, and such other documents, instruments and agreements as the Administrative Agent shall require to evidence the due authorization, execution and delivery of this Second Amendment and the transactions contemplated hereby. Section 4. AMENDMENT FEE. Upon execution of this Second Amendment by the Required Lenders (any such Lender executing and delivering this Second Amendment to the Administrative Agent prior to 5:00 p.m. (Dallas, Texas time) on September 26, 2003, being referred to herein as an "Executing Lender"), the Borrower shall pay to the Administrative Agent for the ratable benefit of the Executing Lenders a fee in the aggregate amount of two-tenths of one percent (.20%) of the aggregate Commitments of all Executing Lenders on the date hereof. Such fee shall be distributed by the Administrative Agent ratably to each such Executing Lender provided that such Executing Lender has executed and delivered this Second Amendment to the Administrative Agent prior to 5:00 p.m. (Dallas, Texas time) on September 26, 2003. Section 5. LEGAL FEES. Upon execution of this Second Amendment by the Required Lenders, the Borrower shall pay all reasonable fees and expenses of counsel to the Administrative Agent incurred by the Administrative Agent in connection with this Second Amendment and all related documents and transactions. Section 6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. To induce the Lenders and the Administrative Agent to enter into this Second Amendment, the Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows: 6.1 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each representation and warranty of the Borrower contained in the Credit Agreement and the other Loan Documents is true and correct on the date hereof after giving effect to the amendments set forth in Section 1 hereof. 6.2 DUE AUTHORIZATION, NO CONFLICTS. The execution, delivery and performance by the Borrower of this Second Amendment are within the Borrower's corporate powers, have been duly authorized by necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not violate or constitute a default under any provision of applicable law or any material agreement binding upon the Borrower or its Subsidiaries, or result in the creation or imposition of any Lien upon any of the assets of the Borrower or its Subsidiaries except for Permitted Encumbrances. 6.3 VALIDITY AND BINDING EFFECT. This Second Amendment constitutes the valid and binding obligations of the Borrower enforceable in accordance with its terms, except as (a) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditor's rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general application. 6 6.4 NO DEFENSES. The Borrower has no defenses to payment, counterclaim or rights of set-off with respect to the indebtedness, obligations and liabilities of the Borrower under the Loan Documents existing on the date hereof. 6.5 ABSENCE OF DEFAULTS. After giving effect to the amendments set forth in Section 1 hereof, neither a Default nor an Event of Default has occurred which is continuing. Section 7. MISCELLANEOUS. 7.1 REAFFIRMATION OF LOAN DOCUMENTS. Any and all of the terms and provisions of the Credit Agreement and the other Loan Documents shall, except as amended and modified hereby, remain in full force and effect. The Borrower hereby agrees that the amendments and modifications herein contained shall in no manner adversely affect or impair the indebtedness, obligations and liabilities of the Borrower under the Loan Documents. 7.2 PARTIES IN INTEREST. All of the terms and provisions of this Second Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 7.3 COUNTERPARTS. This Second Amendment may be executed in counterparts, and all parties need not execute the same counterpart; however, no party shall be bound by this Second Amendment until counterparts hereof have been executed by the Borrower and the Required Lenders. Facsimiles shall be effective as originals. 7.4 COMPLETE AGREEMENT. THIS SECOND AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES. 7.5 HEADINGS. The headings, captions and arrangements used in this Second Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Second Amendment, nor affect the meaning thereof. IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed by their respective Authorized Officers on the date and year first above written. [Signature Pages Follow] 7 SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS TRINITY INDUSTRIES, INC. By: /s/ S. Theis Rice S. Theis Rice, Vice President, Legal Affairs [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS JPMORGAN CHASE BANK, as a Revolving Lender, a Term Lender and as Administrative Agent By: /s/ Michael J. Lister Michael J. Lister, Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as a Revolving Lender By: /s/ Deborah Carlson Name: Deborah Carlson Title: Director By: /s/ Stephen Kovach Name: Stephen Kovach Title: Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS THE ROYAL BANK OF SCOTLAND PLC, as a Revolving Lender By: /s/ David Apps Name: David Apps Title: Senior Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS BANK ONE, NA, as a Revolving Lender By: /s/ Randall Taylor Name: Randall Taylor Title: Managing Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS THE BANK OF TOKYO - MITSUBISHI, LTD., as a Revolving Lender By: /s/ D. Barnell Name: D. Barnell Title: Vice President By: /s/ J. Mearns Name: J. Mearns Title: Vice President and Manager [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS WACHOVIA BANK, N.A., as a Revolving Lender and a Term Lender By: /s/ Frederick E. Blumer Name: Frederick E. Blumer Title: Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS BNP PARIBAS, as a Revolving Lender By: /s/ Jeff Tebeaux Name: Jeff Tebeaux Title: Vice President By: /s/ Henry F. Setina Name: Henry F. Setina Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH, as a Revolving Lender By: /s/ Karl Studer Name: Karl Studer Title: Director By: /s/ Erik Boehmer Name: Erik Boehmer Title: Assistant Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS THE BANK OF NOVA SCOTIA, as a Revolving Lender By: /s/ Chris J. Allen Name: Chris J. Allen Title: Managing Director & Office Head [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Landmark CDO Limited By: Aladdin Capital Management LLC As Manager By: /s/ Joesph Moroney, CFA Name: Joesph Moroney, CFA Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Landmark II CDO Limited By: Aladdin Capital Management LLC As Manager By: /s/ Joesph Moroney, CFA Name: Joesph Moroney, CFA Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. AMMC CDO I, LIMITED By: American Money Management Corp., as Collateral Manager By: /s/ David P. Meyer Name: David P. Meyer Title: Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. AMMC CDO II, LIMITED By: American Money Management Corp., as Collateral Manager By: /s/ David P. Meyer Name: David P. Meyer Title: Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Gallatin Funding I Ltd. By: Bear Stearns Asset Management Inc. as its Collateral Manager By: /s/ Jonathan Berg Name: Jonathan Berg Title: Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Atrium CDO By: /s/ David H. Lerner Name: David H. Lerner Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. CSAMI By: /s/ David H. Lerner Name: David H. Lerner Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. CSAMII By: /s/ David H. Lerner Name: David H. Lerner Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. First Dominion Funding I By: /s/ David H. Lerner Name: David H. Lerner Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. First Dominion Funding II By: /s/ David H. Lerner Name: David H. Lerner Title: Authorized Signatory [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Franklin CLO I, Limited Franklin CLO II, Limited Franklin CLO III, Limited Franklin Floating Rate Trust Franklin Floating Rate Master Serioes Franklin Floating Rate Daily Access Fund By: /s/ Richard Hsu Name: Richard Hsu Title: Asst. Vice President [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. INDOSUEZ CAPITAL FUNDING VI, LIMITED By: Indosuez Capital as Collateral Manager By: /s/ Charles Kobayashi Name: Charles Kobayashi Title: Principal and Portfolio Manager [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. ARCHIMEDES FUNDING III. LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorsk Name: Steven Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. ARCHIMEDES FUNDING IV (CAYMAN), LTD.. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorsk Name: Steven Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. BALANCED HIGH-YIELD FUND II, LTD. By: ING Capital Advisors LLC, as Asset Manager By: /s/ Steven Gorsk Name: Stevn Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. ENDURANCE CLO I, LTD. C/o ING Capital Advisors LLC, as Portfolio Manager By: /s/ Steven Gorsk Name: Steven Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. ORYX CLO, LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorsk Name: Steven Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. NEMEAN CLO, LTD. By: ING Capital Advisors LLC, as Investment Manager By: /s/ Steven Gorsk Name: Steven Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. SEQUILS-ING I (HBDGM), LTD. By: ING Capital Advisors LLC, as Collateral Manager By: /s/ Steven Gorsk Name: Steven Gorsk Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. /s/ James Dingler Madison Avenue CDO IV, Limited By Metropolitan Life Insurance Company, as Collateral Manager Name: James Dingler Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. /s/ James Dingler By Metropolitan Life Insurance Company Name: James Dingler Title: Director [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Clydesdale CLO 2001-1, Ltd. By: /s/ Richard W. Stewart Name: Richard W. Stewart Title: Managing Director Nomura Corporate Research and Asset Management Inc. as Collateral Manager [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Nomura Bond Loan By: /s/ Richard W. Stewart Name: Richard W. Stewart Title: Managing Director By: UFJ Trust Bank Limited as Trustee By: Nomura Corporate Research and Asset Management Inc. Attorney in Fact [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Octagon Investment Partners III, Ltd. By: Octagon Credit Investors, LLC as Portfolio Manager By: /s/ Michael B. Nechamkin Name: Steven Gorsk Title: Portfolio Manager [Signature Page] SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT AND THE FINANCIAL INSTITUTIONS PARTIES THERETO AS LENDERS CONSENT OF ADDITIONAL TERM LENDERS The undersigned Term Lenders hereby consent and agree to this Second Amendment to Credit Agreement. Protective Life Insurance Company By: /s/ Diane S. Griswold Name: Diane S. Griswold Title: AVP [Signature Page] EXHIBIT E [FORM OF] COMPLIANCE CERTIFICATE _____________, 200__ JPMorgan Chase Bank, as Administrative Agent 2200 Ross Avenue, 3rd Floor Dallas, Texas 75201 Attention: Mike Lister Ladies and Gentlemen: Reference is made to that certain Credit Agreement dated as of June 4, 2002 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the "Credit Agreement"), by and among Trinity Industries, Inc., a Delaware corporation ("Borrower"), the Lenders named therein, JPMorgan Chase Bank, as Administrative Agent to the Lenders ("Administrative Agent"), and the other Agents named therein. Capitalized terms used herein without definition and which are defined in the Credit Agreement shall have the respective meanings assigned to such terms in the Credit Agreement. Pursuant to Section 6.01(c) of the Credit Agreement, the undersigned Financial Officer of Borrower hereby certifies to Administrative Agent as follows: (a) the information furnished in the calculations attached hereto was true and correct as of the last day of the Fiscal [Year] [Quarter] ended _____________; (b) as of the date of this Compliance Certificate, there exists no Default or Event of Default or condition which would, with either or both the giving of notice or the lapse of time, result in a Default of an Event of Default; and (c) the financial statements delivered herewith were prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods. IN WITNESS WHEREOF, the undersigned officer has executed this Compliance Certificate as of the date first written above. TRINITY INDUSTRIES, INC. By: ______________________________ Name: ____________________________ Title: ___________________________ Exhibit E-1 COMPLIANCE CERTIFICATE WORKSHEET 1. MINIMUM INTEREST COVERAGE RATIO - SECTION 7.09(a) (a) consolidated net income $____________ (b) to the extent deducted in the calculation of $____________ consolidated net income, Interest Expense (c) to the extent deducted in the calculation of $____________ consolidated net income, depreciation and amortization (d) to the extent deducted in the calculation of $____________ consolidated net income, income and franchise tax expenses (e) to the extent deducted in the calculation of $____________ consolidated net income, one-time cash charges not to exceed an amount agreed to by the Lenders (f) to the extent deducted in the calculation of $____________ consolidated net income, $ non-recurring, non-cash gains or losses and/or extraordinary gains or losses, including, but not limited to, gains or losses on the disposition of assets (other than in connection with the sale of rail cars from the lease fleet in the ordinary course of business) (g) EBITDA (the sum of items (a), (b), (c), (d) $____________ and (e) above, minus item (f) above) (h) EBITDA derived from the assets pledged to $____________ the TILC Conduit Indebtedness and the ETC Indebtedness (i) Capital Expenditures (Non-Leasing Company) $____________ (excluding such expenditures $ financed with the proceeds of the Equity Contribution, which such expenditures, as of the date hereof, aggregate $_________) (j) cash interest payments (excluding such $____________ payments made with respect to $ the TILC Conduit Indebtedness and the ETC Indebtedness) (k) Interest Coverage Ratio (item (g) above less _____ to 1.00 items (h) and (i) above to divided by item (j) above) (l) Minimum Interest Coverage Ratio (from _____ to 1.00 Section 7.09(a)) 2. MAXIMUM LEVERAGE RATIO - SECTION 7.09(b) (a) Indebtedness (other than the TILC Conduit $____________ Indebtedness and the ETC Indebtedness) Exhibit E-2 (b) LC Exposure $____________ (c) Total Debt (item (a) above minus item (b) $____________ above) (d) EBITDA (from item 1(g) above) less item 1(h) $____________ above (e) Leverage Ratio (item (c) above divided by ____ to 1.00 item (d) above) (f) Maximum Leverage Ratio (from Section 7.09(b)) ____ to 1.00 3. MINIMUM NET WORTH - SECTION 7.09(c) (a) Amount from Section 7.09(c)(i) of the Credit $ 800,000,000 Agreement (b) cumulative consolidated net income $____________ (c) 50% of item (b) above $____________ (d) 100% of net cash proceeds from the issuance $____________ of Equity (e) Consolidated Net Worth $____________ (f) Minimum Consolidated Net Worth (the sum of $____________ items (a), (c) and (d) above) 4. MINIMUM ASSET COVERAGE RATIO - SECTION 7.09(d) (a) Book Value of accounts receivable (net of $____________ applicable reserves) (b) Book Value of inventory (net of applicable $____________ reserves) (c) Book Value of property, plant and equipment $____________ (net) (d) Asset Value (the sum of items (a), (b) and $____________ (c) above) (e) Aggregate Credit Exposure $____________ (f) Existing LC Exposure $____________ (g) Asset Coverage Ratio (item (d) above divided ____ to 1.00 by the sum of items (e) and (f) above) (h) Minimum Asset Coverage Ratio 2.50 to 1.00 5. MINIMUM TILC INTEREST COVERAGE RATIO - SECTION 7.09(e) (a) EBITDA derived from the assets pledged to $____________ the TILC Conduit Indebtedness $ and the ETC Indebtedness Exhibit E-3 (b) cash interest payments made with respect to $_____________ the TILC Conduit Indebtedness and the ETC Indebtedness (c) TILC Interest Coverage Ratio (item (a) above _____ to 1.00 divided by item (b) above) (d) Minimum TILC Interest Coverage Ratio (from 1.50 to 1.00 Section 7.09(e)) 6. CAPITAL EXPENDITURES -SECTION 7.11 (a) Capital Expenditures (Leasing Company) $_____________ (b) Maximum Capital Expenditures (Leasing $ 150,000,000 Company) per Fiscal Year (from Section 7.11) Exhibit E-4 SCHEDULE 7.04 EXISTING INVESTMENTS
REMAINING INVESTMENT COMPANY INTEREST COMMITMENT - ------- -------- ---------- Transport Capital 17.0% $ -0- American Made 48.3 1.7 mil Communispace 3.0 -0- Townsend Tarnell 3.5 -0- GoFigure Technologies 27.0 -0- Vellis Knowledge 25.0 -0- EPCAD 25.0 -0- 7th View 21.0 -0- Q-Hire 15.0 -0- Media Truck 10.0 -0- Alpha Biosystems 17.0 -0- Knowledge 2 Share 50.0 -0- e-World Freight 5.0 -0- Iktan 1.0 -0- WorldO.com 5.0 -0- Starguide Digital 1.0 -0- Hybrigen 2.0 -0- Point to Point 10.0 -0- ----- TOTAL $ 1.7 MIL =====
Schedule 7.04 - 1 EX-10.18.1 5 d09606exv10w18w1.txt AMENDMENT NO. 1 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.18.1 AMENDMENT NO. 1 TO WAREHOUSE LOAN AGREEMENT AMENDMENT NO. 1 TO WAREHOUSE LOAN AGREEMENT, dated as of June 26, 2003 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware business trust (the "Borrower"), each Lender party to the Agreement referenced below, and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS: WHEREAS, the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (the "Agreement"); WHEREAS, the parties hereto desire to amend the Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: AMENDMENT: 1. The definition of "Revolving Termination Date" is hereby amended by deleting "the date which is 364 days after the Closing Date" occurring therein and by inserting in its place "July 31, 2003". MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received executed signature pages of each party to this Amendment (including each Lender). 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in Article V of the Agreement are true and correct on and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to the Agreement shall be deemed to be references to the Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. 6. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof. [SIGNATURE PAGES FOLLOW] -2- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. TRINITY INDUSTRIES LEASING COMPANY By: __________________________________ Name: Title: TRINITY RAIL LEASING TRUST II By: __________________________________ Name: Title: S-1 CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH as Agent and as a Committed Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: GRAMERCY CAPITAL CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: GREENWICH FUNDING CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: ALPINE SECURITIZATION CORP, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: S-2 WACHOVIA BANK, NATIONAL ASSOCIATION, as a Committed Lender By: __________________________________ Name: Title: VARIABLE FUNDING CAPITAL CORPORATION, as a Conduit Lender By: Wachovia Securities, Inc., as attorney-in-fact By: __________________________________ Name: Title: S-3 EX-10.18.2 6 d09606exv10w18w2.txt AMENDMENT NO. 2 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.18.2 AMENDMENT NO. 2 TO WAREHOUSE LOAN AGREEMENT AMENDMENT NO. 2 TO WAREHOUSE LOAN AGREEMENT, dated as of July 29, 2003 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware business trust (the "Borrower"), each Lender party to the Agreement referenced below, and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS: WHEREAS, the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Agreement"); WHEREAS, the parties hereto desire to amend the Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: AMENDMENT: 1. The definition of "Revolving Termination Date" is hereby amended by deleting "July 31, 2003" occurring therein and by inserting in its place "August 29, 2003". MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received executed signature pages of each party to this Amendment (including each Lender). 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in Article V of the Agreement are true and correct on and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to the Agreement shall be deemed to be references to the Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. 6. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof. [SIGNATURE PAGES FOLLOW] -2- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. TRINITY INDUSTRIES LEASING COMPANY By: __________________________________ Name: Title: TRINITY RAIL LEASING TRUST II By: __________________________________ Name: Title: S-1 CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH as Agent and as a Committed Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: GRAMERCY CAPITAL CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: GREENWICH FUNDING CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: ALPINE SECURITIZATION CORP, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: S-2 WACHOVIA BANK, NATIONAL ASSOCIATION, as a Committed Lender By: __________________________________ Name: Title: VARIABLE FUNDING CAPITAL CORPORATION, as a Conduit Lender By: WACHOVIA SECURITIES, INC., as attorney-in-fact By: __________________________________ Name: Title: S-3 EX-10.18.3 7 d09606exv10w18w3.txt AMENDMENT NO. 3 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.18.3 AMENDMENT NO. 3 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS AMENDMENT NO. 3 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS, dated as of August 29, 2003 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware statutory trust (the "Borrower"), each Lender party to the Agreement referenced below, CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent") and, solely with respect to the amendments contained under the heading "Amendments to Depository Agreement", WILMINGTON TRUST COMPANY, in its capacity as depository (the "Depository") under the Depository Agreement (as defined below). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS: WHEREAS, (i) the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (as heretofore amended, the "Agreement"), (ii) the Manager and Borrower are parties to that certain Operation, Maintenance, Servicing and Remarketing Agreement, dated as of June 27, 2002 (as heretofore amended, the "Management Agreement") and (iii) the Manager, the Borrower, the Depository and the Agent are parties to that certain Depository Agreement, dated as of July 15, 2002 (as heretofore amended, the "Depository Agreement"); WHEREAS, the parties hereto desire to amend the Agreement, the Management Agreement and the Depository Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: I. AMENDMENTS TO WAREHOUSE LOAN AGREEMENT: 1. The following definitions are hereby added to Section 1.01 of the Agreement in appropriate alphabetical order: "'Aggregated Default Interest' has the meaning set forth in Section 2.05(a)." "'Aggregated Default Interest Rate' means, for any day during any Interest Period, the sum of the Adjusted Eurodollar Rate for such Interest Period plus 500 basis points." "'CP Rate' means, with respect to any portion of a Loan funded and maintained by a Conduit Lender through the issuance of commercial paper for any day during any Interest Period, the sum of (i) the rate applicable to such day in such Interest Period as calculated in the manner specified by such Conduit Lender in writing to the Agent and the Borrower as such Conduit Lender's "CP Rate" plus (ii) the Facility Margin; provided that prior consent of the Borrower is required before such manner of calculating the CP Rate can go into effect, which consent may not be unreasonably withheld or delayed." "'Scheduled Payment Date' means each of (i) the first Settlement Date which falls 180 days or more after the Revolving Termination Date, (ii) the sixth Settlement Date thereafter and (iii) the sixth Settlement Date after the date set forth in clause (ii) herein." "'Termination Date' means June 27, 2025." 2. Section 1.01 of the Agreement is hereby amended by amending each of the following definitions in its entirety to read as follows: "'Advance Rate' means a rate of 75%, or such other percentage not less than 75% and not to exceed 80% that is agreed to by all of the Lenders from time to time in each of their sole discretion as contemplated in Section 2.13." "'Applicable Rate' means with respect to any Loan for any day during any Interest Period the sum of the Adjusted Eurodollar Rate for such Interest Period plus the Facility Margin." "'Borrowing Base' means, at any time, a Dollar amount equal to the product of (i) the Advance Rate in effect at such time and (ii) the difference of (A) the Aggregate FMV of all Eligible Railcars at such time less (B) the Excluded Assets Amount at such time." "'Conduit Lender" shall mean Beethoven Funding Corporation or any other Lender which is designated as a Conduit Lender pursuant to Section 11.06(h)." "'Manager's Fee' means as of any Settlement Date an amount equal to (i) the Base Component (as defined in the Management Agreement), without giving effect to any adjustment, amendment or other modification thereto not expressly approved in writing by the Agent (acting with the consent of the Required Lenders), if the Manager is TILC or one of its Affiliates, (ii) such other percentage as may be agreed among the Manager, the Borrower, the Agent, each Conduit Lender and the Required Lenders, if the Agent or one of its Affiliates is the Manager or (iii) such other percentage as may be agreed among the Manager, the Borrower and the Agent, if the Manager is not TILC, the Agent or one of their Affiliates, in each case of the Monthly Rent actually collected under the Portfolio Leases during the measuring period ending on the Calculation Date immediately preceding such Settlement Date." 3. The definition of "Committed Amount" contained in Section 1.01 of the Agreement is hereby amended by deleting "$200,000,000" occurring therein and by inserting in its place "$300,000,000". -2- 4. The definition of "Default Margin" contained in Section 1.01 of the Agreement is hereby amended by deleting "500 basis points" occurring therein and by inserting in its place "375 basis points". 5. The definition of "Interim Maturity Date" contained in Section 1.01 of the Agreement is hereby deleted in its entirety. 6. The definition of "Excluded Assets Amount" contained in Section 1.01 of the Agreement is hereby amended by inserting the following clause (vii) immediately after clause (vi) thereof and by relettering the remaining clauses: "(vii) the amount by which the Aggregate FMV of all Eligible Railcars leased to a Lessee organized under the laws of, or having its principal place of business in, Mexico or a subdivision thereof, exceeds 7% of the Committed Amount; plus" 7. The definition of "Final Maturity Date" contained in Section 1.01 of the Agreement is hereby deleted in its entirety and the words "Final Maturity Date" are hereby deleted in each occurrence throughout the Agreement and the words "third Scheduled Payment Date" are hereby inserted in each such occurrence. 8. The definition of "Liquidity Reserve Target Amount" contained in Section 1.01 of the Agreement is hereby amended (i) by deleting the word "two" occurring therein and by inserting in its place the word "six" and (ii) by deleting the proviso occurring therein. 9. The definition of "Required Lenders" contained in Section 1.01 of the Agreement is hereby amended by (i) inserting ", collectively, (x) the Agent and (y)" immediately after the occurrence of the word "means" and (ii) replacing the percentage "66 2/3%" contained therein with the percentage "70.0%". 10. The definition of "Revolving Termination Date" contained in Section 1.01 of the Agreement is hereby amended by deleting the date "August 29, 2003" occurring therein and by inserting in its place "August 27, 2004". 11. Article II of the Agreement is hereby amended by inserting the following Section 2.13 at the end thereof: "SECTION 2.13 ADJUSTMENTS TO ADVANCE RATE AND BORROWING BASE. The percentage included in the definition of "Advance Rate" may be changed in accordance with the parameters set forth in such definition by agreement of all of the Lenders. The Agent shall give the Borrower and the Lenders prior notice of any change in such percentage. Any change in any such percentage shall take effect on the next succeeding Settlement Date. 12. Section 2.01 of the Agreement is hereby amended in its entirety to read as follows: "(a) Each Lender severally agrees, subject to the Agent's determination that the terms and conditions of Sections 2.02 and 4.02 applicable to any Funding -3- Date have been (i) satisfied or, (ii) solely to the extent permitted by the last sentence of this clause (a) temporarily waived by the Agent or, (iii) in all other cases, waived by the Agent and all of the Lenders, and on the other terms and conditions set forth in this Agreement, to make Loans to the Borrower pursuant to this Section 2.01 on each Funding Date during the Availability Period in order to fund the acquisition of Railcars and related Leases by the Borrower on such Funding Date. The Loans advanced on any Funding Date with respect to any Railcars and related Leases shall not: (i) in the case of any Committed Lender, exceed (after giving effect to all Loans of such Committed Lender and any Conduit Lender designated by such Committed Lender repaid concurrently with the making of such Loans) its Available Commitment; (ii) exceed the lesser of (A) the Unused Commitment Amount and (B) the product of the Advance Rate multiplied by the aggregate Fair Market Value of all Eligible Railcars included in such Railcars; or (iii) when added to the aggregate amount of the Loans then outstanding (after giving effect to all Loans repaid concurrently with the making of such Loans), exceed the lesser of (A) the Commitment Amount and (B) the Borrowing Base (after giving effect to the addition to and/or removal of the respective Fair Market Values of any Eligible Railcars to be added to or removed from the Portfolio on such Funding Date). Each Borrowing shall be in an aggregate principal amount of $5,000,000, in the case of the first Borrowing hereunder, or $1,000,000, in the case of subsequent Borrowings, or, in each case, any larger amount (except that any such Borrowing may be in the aggregate amount of the unused Commitments) and shall be made from the several Committed Lenders ratably in proportion to their respective Commitments. The Lenders have no obligation to make any Loan hereunder except as expressly set forth in this Agreement. Within the foregoing limits, the Borrower may borrow under this Section 2.01, repay, or, to the extent permitted by Section 2.07, prepay, Loans and reborrow under this Section 2.01. In connection with the transactions on any Funding Date, the Agent may in its sole discretion grant the Borrower a temporary waiver for a specified period of time to perform its obligations under clauses (a) or (b) or the last sentence of clause (c) of Section 2.02 and to fulfill the conditions set forth in Section 4.02 (other than clauses (b), (c), (d), (g) or (n) thereof). (b) Notwithstanding any other provision of this Agreement which requires Borrowings to be made from the Committed Lenders (or from their related Conduit Lenders) ratably in proportion to the respective Commitments of such Committed Lenders, or which requires payments of principal and interest on the Loans to be made and allocated, or Loans to be continued or converted, based on Commitment Percentages rather than outstanding principal amounts: (1) If, as a result of any increase in a Committed Lender's Commitment, its Commitment Percentage is greater than the percentage which the Loans of such Committed Lender and its related Conduit Lenders constitutes of the aggregate outstanding Loans of all Lenders, then any further Borrowing will be made from such Committed Lender and its related Conduit Lenders on a non-pro-rata basis until their outstanding Loans constitute -4- the same percentage of all the outstanding Loans as such Committed Lender's Commitment Percentage, (2) payments of principal and interest on the Loans will be made to the Lenders according to the respective outstanding principal amounts of such Loans, and (3) outstanding Loans will be continued and converted according to their outstanding principal amounts rather than the Committed Percentages of the applicable Lenders." 13. Section 2.01(ii)(B) of the Agreement is hereby amended by inserting the words "then in effect" immediately after the words "Advance Rate" therein. 14. Section 2.05(a) of the Agreement is hereby amended in its entirety to read as follows: "(a) Rate of Interest. (i) Each Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the Applicable Rate for such day, or if any Conduit Lender shall so designate (in accordance with the definition of CP Rate) for any Loan funded and maintained by such Conduit Lender through the issuance of commercial paper, the CP Rate for such day; provided that any change to the interest rate shall not take effect until the next succeeding Interest Period after such designation. Such interest shall be payable in arrears on each Settlement Date and on the Termination Date. (ii) At any time during which an Event of Default has occurred and is continuing, each Loan shall bear additional interest (in addition to the interest payable pursuant to Section 2.05(a)(i)) on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the Default Margin and such accrued additional interest shall be aggregated on the last day of such Interest Period (all such aggregated additional interest, the "Aggregated Default Interest"). Such Aggregated Default Interest shall bear interest on the outstanding amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the Aggregated Default Interest Rate and such accrued interest shall be aggregated on the last day of such Interest Period with the Aggregated Default Interest and shall be deemed "Aggregated Default Interest" upon such aggregation. Aggregated Default Interest and the interest thereon shall be payable in arrears on the date on which the aggregate principal amount of the Loans have been paid in full pursuant to the terms of this Agreement." 15. Section 2.06 of the Agreement is hereby amended in its entirety to read as follows: "SECTION 2.06 REPAYMENT AND MATURITY OF LOANS. On each of the first two Scheduled Payment Dates, the Borrower shall repay, and there shall become due and payable (together with accrued interest thereon), one-third of the -5- aggregate principal amount of the Loans outstanding as of the Revolving Termination Date, and the Loans of each Lender shall be ratably repaid. On the third Scheduled Payment Date, the Borrower shall repay, and there shall become due and payable, the remainder of the aggregate outstanding principal amount of the Loans and all accrued interest thereon (including all Aggregate Default Interest and all accrued interest thereon), and the Loans of each Lender shall be ratably repaid. In the event that any of such payments are not made when due, the Agent may, with the prior written consent of each Lender (which such consent shall be in the sole discretion of each such Lender) extend any such payment date on terms satisfactory to such Lenders (in their sole discretion); provided that, any such extension shall not extend any such payment beyond the Termination Date. For the avoidance of doubt, principal amounts of the Loans prepaid after the Revolving Termination Date in accordance with Section 2.07(a) or (b) below shall not reduce the amount of any repayment scheduled to become due and payable on any Scheduled Payment Date in accordance with this Section 2.06." 16. Section 2.07(b) of the Agreement is hereby amended by inserting the following clause (iv) at the end thereof: "(iv) On the first Business Day after receipt thereof by the Borrower, and notwithstanding the provisions of Section 2.07(c)(i), (ii) or (iii), any Net Cash Proceeds received from an Asset Disposition in connection with a Securitization permitted by Section 7.05(iii) shall be applied in accordance with the provisions of clauses second, third, fourth, fifth, sixth, seventh, ninth, tenth, and twelfth of Section 2.07(c)(ii) in such order." 17. Section 2.07(b)(iii) of the Agreement is hereby amended by deleting the parenthetical contained therein and inserting the following parenthetical: "(or, (x) if such Collateral Deficiency exists solely as a result of an exclusion of a designation by the Agent of any Designated Ineligible Type of Railcar or Lease or as a result of an exclusion of one or more Eligible Railcars pursuant to clause (x) of the definition of "Excluded Assets Amount", the second succeeding Settlement Date, or (y) if such Collateral Deficiency exists solely as a result of a reduction in the Borrowing Base caused solely by a reduction of the percentage which then constituted the Advance Rate as contemplated in Section 2.13, the sixth Settlement Date after notice of such reduction is delivered to the Borrower)" 18. Section 2.07(c)(i) clause fifth of the Agreement is hereby amended by inserting the parenthetical "(except for Aggregated Default Interest and accrued and unpaid interest thereon)" immediately after the occurrence of the words "accrued and unpaid interest". 19. Section 2.07(c)(i) clause eleventh of the Agreement is hereby amended by inserting the phrase "and, thereafter, only if the outstanding Manager Advances have been paid in full, then to the ratable payment of the unpaid Aggregated Default Interest and any accrued and unpaid interest thereon" at the end of such clause eleventh. -6- 20. Section 2.07(c)(ii) clause fifth of the Agreement is hereby amended by inserting the parenthetical "(except for Aggregated Default Interest and accrued and unpaid interest thereon)" immediately after the occurrence of the words "accrued and unpaid interest". 21. Section 2.07(c)(ii) clause ninth of the Agreement is hereby amended by inserting the phrase "and, thereafter, only if the aggregate outstanding amount of all Loans has been paid in full, then to the ratable payment of the unpaid Aggregated Default Interest and any accrued and unpaid interest thereon" at the end of such clause ninth. 22. Section 2.07(c)(iii) clause fifth of the Agreement is hereby amended by inserting the parenthetical "(except for Aggregated Default Interest and accrued and unpaid interest thereon)" immediately after the occurrence of the words "accrued and unpaid interest". 23. Section 2.07(c)(iii) clause seventh of the Agreement is hereby amended by inserting the phrase "and, thereafter, only if the aggregate outstanding amount of all Loans has been paid in full, then to the ratable payment of the unpaid Aggregated Default Interest and any accrued and unpaid interest thereon" at the end of such clause seventh. 24. Section 2.10 of the Agreement is amended by inserting the words "(including without limitation in Section 2.01 (b))" after the words "otherwise provided herein". 25. Section 6.01(f) of the Agreement is hereby amended by inserting the following immediately at the end of the first sentence thereof: ",together with an executed and fully completed officer's certificate substantially in the form of Exhibit M hereto (if expenses are to be reimbursed to the Manager as described in such certificate)." 26. Section 6.01(k) of the Agreement is hereby amended by replacing the words "the Required Lenders" with the words "any Lender". 27. The first sentence of Section 6.10(a) of the Agreement is hereby amended in its entirety to read as follows: "Upon reasonable notice and during normal business hours, each Facility Party will permit representatives appointed by the Agent or any Lender (at the expense of the Agent or such Lender, as applicable, except as set forth in the proviso hereto), including independent accountants, agents, employees, attorneys and appraisers, to visit, audit and inspect its property and operations, including its books, records, reports and other papers related to the Collateral or to its accounts receivable and inventory, its facilities and its other business assets, and to make photocopies or photographs thereof and to write down and record any information such representatives obtain and shall permit the Agent or any Lender or such representatives to investigate and verify the accuracy of information provided to the Agent or Lenders and to discuss all such matters with the officers and independent accountants and representatives of each Facility Party; provided that (i) so long as no Event of Default or Manager Event of Default has occurred and is continuing, the Borrower shall pay the costs and expenses incurred in -7- connection with one such audit or inspection a year conducted at the request of the Agent or the Required Lenders and (ii) if an Event of Default or a Manager Event of Default shall have occurred and be continuing, the Borrower shall pay the costs and expenses of any and all such inspections conducted at the request of the Agent or the Required Lenders." 28. Section 6.14 of the Agreement is hereby amended in its entirety to read as follows: "SECTION 6.14 MANAGER. The Borrower acknowledges and agrees that, subject to the provisions of the next sentence, while any Obligation remains outstanding, TILC shall remain the Manager. The Borrower, the Manager and the Agent further agree that, upon the occurrence and continuance of an Event of Default, a Manager Default or a Manager Event of Default and as otherwise provided in the Management Documents, the Agent (acting at the direction of the Required Lenders), without the consent of any Facility Party, shall have the right to remove the Manager, terminate any Management Document(s), appoint a new Manager that is reasonably satisfactory to both the Agent and the Required Lenders, in accordance with Section 8.04 of the Management Agreement, and enter into new Management Document(s) with such new Manager; provided that, as a condition precedent to the Agent removing and replacing the Manager, the Agent shall request from each of Moody's and S&P, a determination whether, as a result of such removal or replacement, it would cause the rating of the Notes to be reduced or withdrawn." 29. Section 9.01(b) of the Agreement is hereby amended in its entirety to read as follows: "Out of Formula. A Collateral Deficiency shall exist on any two consecutive Settlement Dates (after giving effect to all Loans made pursuant to Section 2.01 and all amounts applied to repay the Loans pursuant to Section 2.07(c) on each such Settlement Date), unless (i) such Collateral Deficiency exists solely as a result of a designation by the Agent of any Designated Ineligible Type of Railcar or Lease or as a result of an exclusion of one or more Eligible Railcars pursuant to clause (ix) of the definition of "Excluded Asset Amount", in which case such Collateral Deficiency shall exist on any three consecutive Settlement Dates (after giving effect to all Loans made pursuant to Section 2.01 and all amounts applied to repay the Loans pursuant to Section 2.07(c) on each such Settlement Date) or (ii) such Collateral Deficiency exists solely as a result of a reduction in the Borrowing Base caused solely by a reduction of the percentage which then constituted the Advance Rate as contemplated in Section 2.13, in which case such Collateral Deficiency shall exist on any six consecutive Settlement Dates after the Agent delivers notice of the percentage reduction to the Borrower (after giving effect to all Loans made pursuant to Section 2.01 and all amounts applied to repay the Loans pursuant to Section 2.07(c) on each such Settlement Date)." 30. Section 9.01(d)(iii) of the Agreement is hereby amended by (i) deleting the expressions "Article VII" and "or (d)(iii)" and (ii) by replacing the comma after the expression (d)(i) with an "or". -8- 31. The preamble Section 11.03 of the Agreement is hereby amended in its entirety to read as follows: "Neither this Agreement nor any other Loan Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated except, (a) in the case of this Agreement, upon the Agent requesting from each of Moody's and S&P a determination whether, as a result of any such amendment (except for changes to the definition of "Committed Amount," "Scheduled Payment Date" or the dates on which payments are due pursuant to Section 2.06, or other changes or agreements in respect of the subject matter herein which are, in the judgment of the Agent, ministerial or address mechanical matters not raising any substantive credit-related concerns, including in respect of such repayment and release matters associated with Asset Dispositions under Section 7.05), it would cause the rating of the Notes to be reduced or withdrawn, and (b) in the case of this Agreement or any other Loan Document, pursuant to an agreement or agreements or a consent or consents in writing entered into by the Borrower, each other Facility Party which is party thereto, the Required Lenders, and the Agent; provided that the foregoing shall not restrict the ability of the Required Lenders to waive any Event of Default prior to the time the Agent shall have declared, or the Required Lenders shall have requested the Agent to declare, the Loans immediately due and payable pursuant to Article IX; provided, however, that:" 32. Section 11.03(i)(A) of the Agreement is hereby amended by (i) deleting the words "Final Maturity Date" occurring therein and replacing them with the words "Termination Date" and (ii) deleting the words "Interim Maturity Date" occurring therein and replacing them with the words "Scheduled Payment Date". 33. Schedule 1.01 of the Agreement is hereby amended in its entirety to read as set forth in Schedule 1.01 hereto. 34. The Agreement is hereby amended by inserting an "Exhibit M" thereto identical to Exhibit M hereto, and by making appropriate revisions to the Table of Contents reflecting such insertion. II. AMENDMENT TO OPERATION, MAINTENANCE, SERVICING AND REMARKETING AGREEMENT 1. Section 8.02 of the Management Agreement is hereby amended by inserting the following clause (i) immediately after clause (h) therein and by re-lettering the remaining clauses: "(i) If the senior unsecured and uncredit enhanced long term debt rating of Trinity shall be downgraded to B3 or below by Moody's or to B- or below by S&P." -9- III. AMENDMENTS TO DEPOSITORY AGREEMENT 1. Section 2.01 of the Depository Agreement is hereby amended by inserting the following immediately after the first occurrence of the words "The Borrower": "shall, or cause the Manager to, pay all Cash Flows and other amounts payable by the Borrower under the Loan Documents directly into the Collection Account and" 2. Section 3.01 of the Depository Agreement is hereby amended by inserting and "Section 3.05" immediately following the occurrence of "Section 3.04". 3. Article III of the Depository Agreement is hereby amended by inserting the following "Section 3.05" immediately after "Section 3.04" therein: SECTION 3.05 ALLOCATIONS OF NET CASH PROCEEDS. The Depository shall apply the amount of any Net Cash Proceeds held in the Collection Account at the time and in the manner directed by the Agent (which manner shall be in accordance with Section 2.07 of the Loan Agreement). MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received executed signature pages of each party to this Amendment (including each Lender). 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in Article V of the Agreement are true and correct on and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to the Agreement shall be deemed to be references to the Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. 6. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof. [SIGNATURE PAGES FOLLOW] -10- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. TRINITY INDUSTRIES LEASING COMPANY By: __________________________________ Name: Title: TRINITY RAIL LEASING TRUST II By: __________________________________ Name: Title: CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH as Agent and as a Committed Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: WILMINGTON TRUST COMPANY, in its capacity as Depository By: __________________________________ Name: Title: S-11 GRAMERCY CAPITAL CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: GREENWICH FUNDING CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: ALPINE SECURITIZATION CORP, as a Conduit Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: S-12 DRESDNER BANK AG, NEW YORK BRANCH, as a Committed Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By: __________________________________ Name: Title: S-13 SCHEDULE 1.01 LENDERS AND COMMITMENTS
Commitment Commitment Commitment Lender Amount Percentage Date ------ ------ ---------- ---- Credit Suisse First Boston, New York Branch $ 200,000,000 66.66667% June 27, 2002 Dresdner Bank AG, New York Branch $ 100,000,000 33.33333% August 29, 2003 - ----------------------------------------------------------------------------------------- Totals $ 300,000,000 100.0000%
Exhibit M FORM OF OFFICER'S CERTIFICATE Trinity Rail Leasing Trust II 2525 Stemmons Freeway Dallas, Texas 75207 Attn: [NAME] Ladies and Gentlemen: Reference is made to that certain Warehouse Loan Agreement, dated as of June 27, 2002 (as amended, supplemented, amended and restated or otherwise modified in writing from time to time, the "Loan Agreement"), among Trinity Industries Leasing Company (the "Manager"), Trinity Rail Leasing Trust II (the "Company"), the banks and other lending institutions from time to time party thereto (the "Lenders") and Credit Suisse First Boston, New York Branch, as Agent for the Lenders (the "Agent"). Capitalized terms used but not defined herein have the meaning set forth in the Loan Agreement. This constitutes a certification of the following and is related to expenses reimbursed to the Manager on [insert date] Settlement Date pursuant to Section 5.01 of the Management Agreement and in accordance with Section 2.07(c) of the Loan Agreement: 1. The funds being reimbursed to the Manager relate to expenses that have been paid by or on behalf of the Company; 2. The referenced expenses were incurred and paid while the railcars were funded in the Company; 3. The referenced expenses relate to eligible maintenance and other expenses incurred in connection with the railcars funded in the Company as described in the Loan Agreement; 4. The Manager has sufficient 3rd party invoices, related to the referenced expenses being reimbursed (to the extent applicable), available for the Agent's inspection should the Agent make such a request. TRINITY RAIL LEASING TRUST II By: _________________________ Name: Title: EX-31.1 8 d09606exv31w1.txt CERTIFICATION OF CEO PURSUANT TO SECTION 302 EXHIBIT 31.1 CERTIFICATION I, Timothy R. Wallace, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Trinity Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(15e) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made know to us by others within those entities, particularly during the period in which this report is being prepared; b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986) c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 6, 2003 /s/ Timothy R. Wallace Timothy R. Wallace Chairman, President and Chief Executive Officer EX-31.2 9 d09606exv31w2.txt CERTIFICATION OF CFO PURSUANT TO SECTION 302 EXHIBIT 31.2 CERTIFICATION I, Jim S. Ivy, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Trinity Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(15e) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made know to us by others within those entities, particularly during the period in which this report is being prepared; b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986) c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 6, 2003 s/ Jim S. Ivy Jim S. Ivy Senior Vice President and Chief Financial Officer EX-32.1 10 d09606exv32w1.txt CERTIFICATION PURSUANT TO 18 U.S.C., SECTION 1350 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Trinity Industries, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy R. Wallace, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Timothy R. Wallace Timothy R. Wallace Chairman, President and Chief Executive Officer November 6, 2003 EX-32.2 11 d09606exv32w2.txt CERTIFICATION PURSUANT TO 18 U.S.C., SECTION 1350 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Trinity Industries, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jim S. Ivy, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Jim S. Ivy Jim S. Ivy Senior Vice President and Chief Financial Officer November 6, 2003 -----END PRIVACY-ENHANCED MESSAGE-----