-----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, DwMLXlcOettKbPav/8EHeTPPa6F3hr/DiKoffsQqMs0YboaBJfoLFAgUdy2AM9qy 64u3tR791DaBlzhAuh8yLg== 0000950134-03-014646.txt : 20031110 0000950134-03-014646.hdr.sgml : 20031110 20031107180056 ACCESSION NUMBER: 0000950134-03-014646 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20031105 ITEM INFORMATION: ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20031110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITY INDUSTRIES INC CENTRAL INDEX KEY: 0000099780 STANDARD INDUSTRIAL CLASSIFICATION: RAILROAD EQUIPMENT [3743] IRS NUMBER: 750225040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06903 FILM NUMBER: 03986388 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 214-631-4420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 8-K 1 d10370e8vk.txt FORM 8-K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 5, 2003 TRINITY INDUSTRIES, INC. DELAWARE 1-6903 75-0225040 (STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.) 2525 STEMMONS FREEWAY, DALLAS, TEXAS 75207-2401 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 631-4420 - -------------------------------------------------------------------------------- ITEM 9. REGULATION FD DISCLOSURE ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following information is furnished pursuant to both Item 9 and Item 12. The Registrant hereby furnishes the information set forth in its News Release, dated November 5, 2003, announcing third quarter 2003 results, a copy of which is furnished as exhibit 99.1 and incorporated herein by reference. On November 6, 2003, the Registrant held a conference call and web cast with respect to its financial results for the third quarter of 2003. The conference call scripts of Neil O. Shoop, Treasurer, John L. Adams, Executive Vice President, Jim S. Ivy, Senior Vice President and Chief Financial Officer, D. Stephen Menzies, President of Trinity Industries Leasing Company, and Timothy R. Wallace, Chairman, President and Chief Executive Officer are furnished as exhibits 99.2, 99.3, 99.4, 99.5, and 99.6 respectively, and incorporated herein by reference. This information is not "filed" pursuant to the Securities and Exchange Act and is not incorporated by reference into any Securities Act registration statements. Additionally, the submissions of this report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRINITY INDUSTRIES, INC. By: /s/ Michael G. Fortado ----------------------- Michael G. Fortado Vice President and Secretary Date: November 7, 2003 EXHIBIT INDEX Exhibit No. Description of Exhibit Exhibit 99.1 News Release of Registrant dated November 5, 2003 with respect to the financial results for the third quarter of 2003. Exhibit 99.2 Conference call script of November 6, 2003 of Neil O. Shoop, Treasurer. Exhibit 99.3 Conference call script of November 6, 2003 of John L. Adams, Executive Vice President. Exhibit 99.4 Conference call script of November 6, 2003 of Jim S. Ivy, Senior Vice President and Chief Financial Officer. Exhibit 99.5 Conference call script of November 6, 2003 of D. Stephen Menzies, President of Trinity Industries Leasing Company. Exhibit 99.6 Conference call script of November 6, 2003 of Timothy R. Wallace, Chairman, President and Chief Executive Officer. EX-99.1 3 d10370exv99w1.txt NEWS RELEASE EXHIBIT 99.1 NEWS RELEASE Media Contact: Investor Contact: Nancy Farrar Neil Shoop Farrar Public Relations Treasurer (817)937-1557 (214) 589-8561 FOR IMMEDIATE RELEASE TRINITY INDUSTRIES REPORTS NET INCOME FOR THIRD QUARTER OF 2003 DALLAS -- November 5, 2003 -- Trinity Industries, Inc., (NYSE:TRN) today reported financial results for the third quarter of 2003. For the quarter ended September 30, 2003, the company reported net income of $1.8 million, on revenues of $363.4 million, or 2 cents per diluted share. This compares to net income of $6.2 million, or 14 cents per diluted share, on revenues of $387.6 million in the third quarter of 2002. The company reported that results for the quarter included approximately $1.0 million in after-tax gains on the sale of excess assets compared to $2.8 million in the same quarter last year. For the nine months ended September 30, 2003, the Company reported a net loss of $9.2 million, or 22 cents per diluted share, on revenues of $1.018 billion compared to a net loss of $8.1 million, or 18 cents per diluted share, on revenues of $1.138 billion in the same period last year. Results for the nine months included approximately $3.9 million in after-tax gains on the sale of excess assets compared to $3.1 million in the same period last year. "During the 3rd quarter we began to see signs of improvement in our railcar manufacturing group. Our North American railcar shipments increased 45% from the 2nd quarter to approximately 2200 units. Our North American railcar market share doubled to 46% as our backlog increased 9%. The most positive sign of a recovery was the fact that our railcar group made its first operating profit in nine quarters," said Timothy R. Wallace, Trinity's Chairman, President and CEO. "The capital we have committed to our railcar leasing business is beginning to be reflected in an increase in the year-over-year operating profit for our leasing business. We were very pleased to announce during the 3rd quarter we renewed our short-term leasing financing facility for another year while at the same time it was increased by $100 million to $300 million. This was a crucial step in positioning us to continue to offer our railcar customers leasing alternatives." "During the 3rd quarter we also saw how reduced spending on highway projects affects our construction-related businesses. The gains we made in our rail-related businesses were partially offset by the decrease in profit by our construction--related businesses. We are watching this closely as we are transitioning into the off-season for our construction-related products," Wallace said. "We were pleased to announce in October that we settled the lawsuit between our Inland Barge Group and ACF Barge Acceptance I, LLC without an adverse outcome," added Wallace. Trinity Industries, Inc., with headquarters in Dallas, Texas, is one of the nation's leading diversified industrial companies. Trinity reports five principal business segments: the Trinity Rail Group, Trinity Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group and the Industrial Products Group. Trinity's web site may be accessed at http://www.trin.net. This news release contains "forward looking statements" as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to expectations, beliefs and future financial performance, or assumptions underlying or concerning matters herein. These statements that are not historical facts are forward looking. Readers are directed to Trinity's Form 10-K and other SEC filings for a description of certain of the business issues and risks, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward looking statements. Any forward looking statement speaks only as of the date on which such statement is made. Trinity undertakes no obligation to update any forward looking statement or statements to reflect events or circumstances after the date on which such statement is made. - TABLES TO FOLLOW - TRINITY INDUSTRIES, INC. CONDENSED CONSOLIDATED INCOME STATEMENTS (in millions, except per share amounts)
Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Revenues $ 363.4 $ 387.6 $ 1,018.3 $ 1,137.9 Operating profit $ 10.1 $ 13.7 $ 9.1 $ 12.7 Other expense 8.1 5.4 22.3 23.5 -------- -------- --------- --------- Income (loss) before income taxes 2.0 8.3 (13.2) (10.8) Provision (benefit) for income taxes 0.2 2.1 (4.0) (2.7) -------- -------- --------- --------- Net income (loss) 1.8 6.2 (9.2) (8.1) Dividends on Series B preferred stock (0.8) -- (0.8) -- -------- -------- --------- --------- Net income applicable to common shareholders $ 1.0 $ 6.2 $ (10.0) $ (8.1) ======== ======== ========= ========= Net income (loss) per common share: Basic $ 0.02 $ 0.14 $ (0.22) $ (0.18) ======== ======== ========= ========= Diluted $ 0.02 $ 0.14 $ (0.22) $ (0.18) ======== ======== ========= ========= Weighted average number of shares outstanding: Basic 45.6 45.5 45.6 44.5 Diluted 46.2 45.6 45.6 44.5
-4- Trinity Industries, Inc. Condensed Segment Data (in millions) REVENUES:
Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Trinity Rail Group $ 190.2 $ 157.9 $ 494.0 $ 468.4 Construction Products Group 133.7 141.5 369.5 400.8 Inland Barge Group 42.5 47.7 129.8 166.8 Industrial Products Group 31.5 41.0 88.5 105.2 Trinity Railcar Leasing & Management Services Group 29.9 28.1 112.7 81.7 All Other 7.9 14.5 22.9 31.9 Eliminations (72.3) (43.1) (199.1) (116.9) -------- -------- ---------- ---------- Total Revenues $ 363.4 $ 387.6 $ 1,018.3 $ 1,137.9 ======== ======== ========== ========== OPERATING PROFIT (LOSS): Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Trinity Rail Group $ 2.9 $ (6.1) $ (13.5) $ (31.1) Construction Products Group 11.4 17.2 29.8 41.9 Inland Barge Group 0.3 1.3 0.5 4.3 Industrial Products Group 2.7 3.0 4.3 2.3 Trinity Railcar Leasing & Management Services Group 9.3 7.2 30.5 21.4 All Other (2.0) (1.1) (5.0) (4.9) Corporate & Eliminations (14.5) (7.8) (37.5) (21.2) -------- -------- ---------- ---------- Total Operating Profit $ 10.1 $ 13.7 $ 9.1 $ 12.7 ======== ======== ========== ==========
-5- TRINITY INDUSTRIES, INC. Condensed Consolidated Balance Sheet (in millions)
September 30, December 31, 2003 2002 ---- ---- Cash and equivalents $ 13.6 $ 19.1 Receivables and inventories 436.9 381.5 Income tax receivable 26.3 50.0 Net property, plant and equipment, at cost (1) 1,071.4 947.4 Other assets 536.8 544.9 ---------- ---------- $ 2,085.0 $ 1,942.9 ========== ========== Accounts payable and accrued liabilities $ 414.6 $ 396.0 Debt (2) 537.7 488.9 Other liabilities 82.6 56.4 Series B preferred stock 57.7 -- Stockholders' equity 992.4 1,001.6 ---------- ---------- $ 2,085.0 $ 1,942.9 ========== ========== (1) PROPERTY, PLANT AND EQUIPMENT Corporate/Manufacturing: 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 ========== ========== (2) DEBT 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 ========== ==========
- END - - 6 - EX-99.2 4 d10370exv99w2.txt CONFERENCE CALL SCRIPT - NEIL O. SHOOP EXHIBIT 99.2 Third Quarter Results Conference Call Neil Shoop November 6, 2003 Thank you Sarah A. Good morning from Dallas, Texas and Welcome to the Trinity Industries' Third Quarter Results Conference Call. I'm Neil Shoop, Treasurer for Trinity. Thank you for being with us today. 1. With me today are: a. Tim Wallace, Chairman, President and Chief Executive Officer b. John Adams, Executive Vice President c. Jim Ivy, Sr. Vice President and Chief Financial Officer d. Chas Michel, Controller, and e. Steve Menzies, President of Trinity Industries Leasing Company 2. A replay of this conference call will be available starting one hour after the conference call ends today through midnight on Thursday, November, 13th. 3. The replay number is (402) 220-0423. B. I would also like to welcome our audio webcast listeners today. Replay of this broadcast will also be available on our website located at www.trin.net. C. In a moment, John Adams and Jim Ivy will have some brief comments, followed by Tim Wallace's comments. 1. Then, Steve Menzies will provide some brief comments. 2. Following that, we'll move to the Q&A session. D. Before we get started, let me remind you that: "Today's conference call contains forward looking statements as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to expectations, intentions and predictions of future financial performance. Statements that are not historical facts are forward looking. Participants are directed to Trinity's Form 10-K and other SEC filings for a description of certain of the business issues and risks, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward looking statements. E. Now, here's John Adams. John ... John Jim Tim Steve F. Thanks, Steve. Now our operator will prepare us for the Q & A session. Sarah. Q & A Session Thanks, Sarah 1. This concludes today's conference call. 2. Remember, a replay of this call will be available starting one hour after this call ends today through midnight, Thursday, November 13th. 3. The access number is (402) 220-0423. 4. Also, this replay will be available on our website located at www.trin.net. 5. We look forward to visiting with you again on our next conference call. 6. Thank you for joining us this morning. EX-99.3 5 d10370exv99w3.txt CONFERENCE CALL SCRIPT - JOHN L. ADAMS EXHIBIT 99.3 JOHN L. ADAMS THIRD QUARTER ANALYST CALL NOVEMBER 6, 2003 Good morning. This is John Adams and we appreciate you joining us. Since our last conference call in August, we have been quite active - and successful - on three separate financings. Two for our railcar leasing wholly owned subsidiary and one for the corporation. First, let me discuss our financing for the leasing company. In late August, we renewed and increased the size of our railcar warehouse leasing facility. As we have previously mentioned to you, this structure has worked very well for us and has given us a great deal of flexibility in financing our leased railcar fleet. CSFB continues to be the lead and we have increased the facility by $100 million to $300 million. It expires in late August, 2004. At maturity, we expect to renew the facility for another year and then at the appropriate time will go to the long-term market when the outstanding balance is large enough. We had $219 million outstanding under the facility at September 30. Last week we priced a $235 million leveraged lease which will pay down the interim warehouse. The equity market has been very tight for leveraged leases and we have been told this will be the first one done this year. The debt was priced at 80 basis points over the benchmark and was significantly oversubscribed by 18 separate very respected institutions. Closing should occur next week. Then most of the warehouse will once again be available for usage. These are the two financings for our leasing company -- renewal of the warehouse and terming out of the warehouse. In addition to these, on September 26, we restructured our corporate credit with our banks to give us more flexibility. This was essentially done to redo our covenants so as to more closely align them with our business -- we are a manufacturing company and we have a large leasing subsidiary. Before this redo, we only had manufacturing covenants in our bank agreement and as you know, a typical leasing operation is more leveraged than a manufacturing company. Our new covenants better reflect this and will allow us to borrow more under our $400 million committed facility. The number of bank participants was expanded from 9 to 10 as we added a bank that has called on us for some time. We are very pleased with the changes and the banks and especially our agent, JPMorgan, were most helpful in working with us. As you review our Balance Sheet in the press release, you will notice the debt I just discussed. You will notice under Corporate/Manufacturing on page 6 that we had $20 million outstanding under our $275 million bank facility and $123 million under our term facility. These expire in June 2005 and June 2007 respectively. Under the caption Leasing, you will notice Equipment Trust Certificate debt of $170 million and the warehouse lease debt of $219 million, previously mentioned. When you compare this debt to the assets listed in the chart on page 6, you will see the company is not highly leveraged. With the financings we have just completed and as we go into 2004, the company has the flexibility to adjust to improvements in our business and strategically address any new opportunities. Jim Ivy will now give you his perspective on the quarter. Jim EX-99.4 6 d10370exv99w4.txt CONFERENCE CALL SCRIPT - JIM S. IVY EXHIBIT 99.4 Trinity Industries, Inc Quarterly Conference Call November 6, 2003 Comments of Jim S. Ivy, Senior Vice President and Chief Financial Officer I will make a few comments regarding the comparison of our third quarter results to the third quarter of last year and both Tim Wallace and Steve Menzies will have further comments regarding the quarter. We have filed our Form 10-Q for the third quarter this morning and you will find more details there. Net income per share for the third quarter of 2003 was 2 cents. In the third quarter of last year, we had a net income of 14 cents per share. As mentioned in our press release, after-tax gains on asset sales in the third quarter of last year exceeded similar gains this year by about $1.8 million, or 4 cents per share. Incremental costs related to implementation of a new financial system that we have discussed previously included in SE&A expense in the current year quarter was $2.8 million. The Rail Group`s operating profit for the quarter improved over last year by almost $9 million. North American revenue increases for the quarter were partially offset by about a $13 million decline in European revenues compared to last year. Despite the European revenue decline, which is primarily related to plant closures in Europe since last year, European operating results were relatively flat year over year. In the 3rd quarter this year, $63.6 million in revenues and $4.9 million in operating profit for the Rail Group were produced by sales to our own leasing subsidiary. In the year ago quarter, sales to our leasing group were $31.0 million and related operating profit was $2.5 million. The revenues and profits from these intercompany sales are eliminated in consolidation. Year over year, revenues for the quarter in the Construction Products Group declined due to reduced demand in the highway and fittings businesses partially offset by strong demand and better weather than last year in the concrete and aggregates business. Operating profits in the segment declined year over year primarily due to reduced volumes in highway related products. The Inland Barge Group revenues were down year over year due to lower volumes of hopper barges. Litigation expenses in the barge group were approximately $1.1 million compared to $700 thousand in the third quarter of last year. Revenues in the Industrial Products Group declined due to reduced volume of tank heads primarily resulting from the sale last December of a plant, which manufactured custom heads, and lower sales in Mexico. Operating profits were down slightly due to the lower sales volume in Mexico. In our Railcar Leasing and Management Services Group, leasing revenues and operating profits grew year over year with the growth in the size of the fleet and, to a lesser extent, improvement in utilization of the fleet. 1 In the All Other Group, reduced revenues were primarily due to structural tower sales in last year's results and the increased expense in this category is primarily due to expenses associated with maintaining closed facilities. Looking at our balance sheet, our investment in inventory and receivables is the same as at this time last year but has increased since last quarter due to the increasing volumes in the Rail Group. We also reported a $25 million tax refund receivable that is in addition to the approximately $50 million tax refund we received in March. The $25 million was received in October. On-balance sheet debt and equipment on lease have increased pending the term-out of our warehouse debt facility that John Adams mentioned. 2 EX-99.5 7 d10370exv99w5.txt CONFERENCE CALL SCRIPT - D. STEPHEN MENZIES EXHIBIT 99.5 INVESTOR CONFERENCE CALL COMMENTS D. STEPHEN MENZIES NOVEMBER 6, 2003 Thank you, Tim. Good morning. Let me provide a few comments, first, regarding the North American railcar market and, then, concerning TrinityRail's 3rd quarter market performance. I will conclude with a few remarks regarding our leasing and management services business. During the 3rd quarter, the North American railcar industry ordered approximately 6,700 railcars. This was a decrease from the peak order rate of 17,000 railcars ordered during the 2nd quarter. However, the rapid growth of the intermodal sector and the aggressive purchasing strategy of TTX, the railroad owned intermodal equipment pool operator, fueled a significant portion of industry orders in the 1st and 2nd quarters of 2003. Similar order activity did not occur in the 3rd quarter. We expect further industry orders for intermodal equipment in 2004. The 3rd quarter industry orders did include a broad array of different railcar types serving a number of different end user markets giving credibility to a broader railcar market recovery. We are encouraged to see increased demand for covered hoppers which serve the grain industry as expanding grain exports, significant crop yields and replacement of older, smaller covered hoppers spurs renewed demand. With low coal inventories at power plants and the market supply and demand for aluminum coal cars finally reaching equilibrium, we are experiencing improved coal car demand. Increased shipments of paper and railroad replacement of older, poor condition railcars has resulted in growing demand for box cars. However, industry demand for new tank cars continues to be lower than normal reflecting sluggish demand for commodity chemicals and plastics. A bright spot is the demand for tank cars built to transport ethanol as ethanol's use as a fuel oxygenate grows. During the 3rd quarter, Trinity received orders for approximately 3,100 railcars or 46% of the industry's total. Trinity maintained its strong position in covered hoppers with 70% of covered hopper orders and 61% of coal cars ordered during the quarter. In addition, Trinity received orders for intermodal cars, box cars and tank cars. While the industry railcar order backlog dropped slightly in the 3rd quarter to a little less than 32,000 railcars, Trinity's railcar order backlog of over 11,500 railcars grew for the sixth consecutive quarter to its highest level since the 1st quarter 2000. Our growing railcar order backlog has allowed TrinityRail management to develop a plant deployment plan matching increased production capacity with increased market demand. Current customer inquiries for covered hoppers, boxcars and coal cars remain strong. We have seen recent improvement in demand for pressure tank cars and new demand for autoracks. Current order and customer inquiry activity supports our long term view of the railcar market. Our leasing subsidiary continues to be an important strategic tool for TrinityRail. Trinity Industries Leasing Company showed continued fleet growth, improved fleet utilization and operating earnings growth in the 3rd quarter. During the 3rd quarter, TILC added more than 1,100 new railcars to its fleet including coal cars, mill gons for steel, intermodal, covered hoppers for grain products, and various tank cars. Our owned and leased railcar fleet has grown to approximately 17,700 railcars. The average lease term of the 3rd quarter fleet additions is over 12 years. All fleet additions in the 3rd quarter were placed on lease with customers. Our entire lease portfolio is performing well. The average remaining lease term of the portfolio is approximately 6.5 years. The average railcar age in the fleet is just over 5 years. Fleet utilization increased to 96.8% at the end of the 3rd quarter as idle tank cars and covered hoppers were assigned to leasing customers. Our portfolio is well diversified by car type, industries served and customer concentration. Our portfolio credit quality is stable. As railcar prices firm and fleet utilization increases, we expect to begin to see improvement in lease rates, as well. Supporting the growth of our lease fleet is our ability to access the capital markets. John Adams has previously addressed the renewal of and increase in Trinity Industries Leasing Company's $300 million warehousing line of credit and the anticipated closing of our permanent financing. These important financings demonstrate Trinity Industries Leasing Company's ability to access the capital markets and enable us to support TrinityRail's production goals and to effectively respond to our customers' leasing requirements. I'll now turn this back over to Neil Shoop for questions. EX-99.6 8 d10370exv99w6.txt CONFERENCE CALL SCRIPT - TIMOTHY R. WALLACE EXHIBIT 99.6 TRW'S COMMENTS EARNINGS RELEASE CONFERENCE CALL THURSDAY, NOVEMBER 6, 2003 FINAL Good morning: Our railcar group crossed over a threshold during the 3rd quarter by generating an operating profit at a relatively low level of production. Steve Menzies will cover the market statistics so I'll hit the business highlights in my update. Our railcar shipments in North America increased from 1500 units in the 2nd quarter to approximately 2200 units in the 3rd quarter. Our rail revenue increased from $90 million in the 2nd quarter to $131 in the 3rd quarter. 53% of our shipments were delivered to our leasing customers. During the 4th quarter we are increasing our shipments to a point between 3,000 and 3300 units. Our revenue should increase 35% to 50% in this segment between the 3rd and 4th quarter. We expect approximately 30% of our shipments or 1000 units will be delivered to leasing customers during the 4th quarter. We anticipate our production rate during the first half of 2004 will be in the range of 3300 -- 3500 units per quarter. Our lease fleet additions should decrease to a level between 18% to 25% of our shipments during the first half of 2004. Once our shipments reach 3500 units per quarter, it will mark the end of our first phase of increasing our production. We use the term "first phase" to distinguish between production increases using the facilities we currently have open vs incremental production from facilities which are currently idle. Based on our current backlog of orders and the strength of customer inquiries for potential orders, we expect to enter into phase 2 during 2nd quarter of 2004. We expect to be at a shipment level of approximately 4200 railcars per quarter by the fall of 2004. We currently believe the demand will support this type of action and are very pleased to announce our intentions to reopen some of our idle facilities. I must also state, we have been very cautious in our decision to enter into the second phase of production increases. Every time we increase our production we absorb additional costs associated with retraining our workforce. There are also additional one-time expenses associated with reopening idle facilities. As I've said before, sustainability is a key word for us as we assess the railcar industry order levels. Our objective is to avoid short-term production spikes and the costs associated with them. The other primary issue, outside of a sustainable market demand which could affect our ability to increase our production, is related to the railcar casting shortage. The North American railcar manufacturing industry continues to be constrained by the casting industry's ability to produce under frame castings. We are continuing to have executive level meetings with our suppliers in order to ensure their ability to support our production. Our lead supplier, the Amsted Rail Group, continues to add capacity through its domestic and international network of foundries in order to satisfy our requirements. We are confident that our relationship and supply agreement between our two companies will play a major role in assisting us to meet our needs for these critical railcar components. In our European rail business, our backlog of rail wagons is around 2000 units. At the end of the 2nd quarter, our backlog was slightly above 2250 units. We expect to ship approximately 500 units during the 4th quarter. This is a decrease from what we previously expected to ship in the 4th quarter. Our European rail business is experiencing some production delays as we consolidate our manufacturing operations into our Romanian facility. Long-term we remain optimistic about the benefits associated with our consolidation strategy. Short-term it's been a challenge for our employees in Europe. We are hopeful by the middle of the lst quarter that the majority of our consolidation issues will be behind us. We are continuing to search for a variety of strategic options to improve our European Rail business. We expect our railcar group's operating profit to be a little erratic and difficult to project until we complete our 2nd phase of production increases in North America and consolidate our European rail business. During the 4th quarter of 2003, we anticipate we will make approximately $6 - $7 million in this segment on a stand-alone basis. However, the elimination of inter-company gross profit due to sales to our lease fleet will substantially reduce this number at the consolidated level. Our product mix and learning curves continue to have an effect on our rail business until we reach a sustainable level of orders. During the 3rd quarter, our construction products businesses experienced a reduced demand for our highway-related products. We have seen a decline in highway spending in some states. In October the federal government extended available funding for the highway spending at the same level for the next 5 months. This is a temporary situation. As we move into the slow season for this business we are closely monitoring our demand levels. The demand for highway safety products in the east and mid-west was also affected by the unusual amount of precipitation during the late summer and early fall. Our concrete and aggregates backlog in Texas remains healthy and the weather was very "construction friendly" during October. Our industrial products group generated a small profit during the 3rd quarter. The U.S. LP gas industry is preparing for the winter and our backlog is normal for this time of year. During the 3rd quarter, our barge group broke even as they recharged their production lines with the new orders we booked in the 2nd quarter. We have a base load of orders for our hopper barge business through 2004 and our tank barge business has a full order book until next summer. We are continuing to sell some very nice orders for long runs of hopper barges. The year-over-year difference in our backlog of orders for this business is phenomenal. Last year at this time we were struggling to book enough orders to maintain our core employee base. This year we are shuffling our production schedules in order to 2 squeeze more production out. I'm very optimistic about the strength of the recovery of our barge business. Our barge legal proceedings continue to progress slowly through the pre-trial stages. We announced our settlement with ACF earlier this month. At this time, it is premature to make any additional comments in this area. From an overall earnings point of view, we hit bottom during the first quarter of 2003. Our 2nd quarter will probably be the best quarter in '03 because of the extra asset sales. We expect the 4th quarter will end up somewhere between a small loss and slightly profitable. The 4th quarter is subject to weather conditions in our construction-related businesses. Fortunately, October was very decent from a weather point of view. At this point, I'll turn it over to Steve Menzies for his update before we turn it back to Neil for questions. 3 -----END PRIVACY-ENHANCED MESSAGE-----