Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Warranties / Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 18. Commitments and Contingencies

Litigation and Contingencies

Railworthiness Directive

As previously reported, the Company received a letter from the Federal Railroad Administration (“FRA”) containing a railworthiness directive pertaining to a specific design of tank cars manufactured by the Company for use in transporting poison inhalation hazard (“PIH”) materials. The Company has manufactured 948 railcars of this design. These tank cars are owned or managed by the Company’s wholly-owned, railcar leasing subsidiary. The FRA was notified of five tank cars with potential leaks around the manway nozzles. Pursuant to the directive, 100 recently manufactured tank cars were removed from service. An additional 67 randomly selected tank cars out of 848 manufactured since 2006, which have operated without incident, have been removed from service.

In September 2011, the FRA issued an addendum to its June 2011 railworthiness directive, approving the Company’s voluntary recertification of all 948 tank cars used in PIH service. The recertification process is scheduled to be performed through September 2014 in conjunction with the normal 3 to 5 year, federally mandated inspection cycle for tank cars in PIH service. Maintenance costs associated with this recertification process are expensed as incurred in accordance with generally accepted accounting principles. The additional costs estimated to be incurred for compliance with the directive are not expected to be significant.

Other Matters

In January 2012, a Company subsidiary, Trinity Structural Towers, Inc., filed a law suit against a structural wind tower customer for breach of contract due to the customer’s failure to comply with its’ contractual purchase obligations. The customer and Trinity Structural Towers, Inc. entered into a multi-year contract in which the customer agreed to purchase a fixed number of structural wind towers each year during the term of the contract. The customer purchased a portion of its contractual commitment but defaulted its purchase obligation thereafter and did not remedy such default following notice from Trinity Structural Towers, Inc. to cure the default. The customer has filed an answer in the litigation and the discovery process is expected to commence in the first quarter of 2012.

The Company is involved in claims and lawsuits incidental to our business arising from various matters including product warranty, personal injury, environmental issues, workplace laws, and various governmental regulations. The Company evaluates its exposure to such claims periodically and establishes accruals for these contingencies when a range of loss can be reasonably estimated. The range of loss for such matters, taking into consideration our rights in indemnity and recourse to third parties is $6.2 million to $22.9 million. Total accruals of $12.3 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying consolidated balance sheet. The Company believes any additional liability would not be material to its financial position or results of operations.

Trinity is subject to Federal, state, local, and foreign laws and regulations relating to the environment and the workplace. The Company has reserved $7.6 million to cover our probable and estimable liabilities with respect to the investigations, assessments, and remedial responses to such matters, taking into account currently available information and our contractual rights to indemnification and recourse to third parties. However, estimates of liability arising from future proceedings, assessments, or remediation are inherently imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings involving the environment and the workplace or, if we are found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company. We believe that we are currently in substantial compliance with environmental and workplace laws and regulations.

Other Commitments

Non-cancelable purchase obligations amounted to $399.6 million as of December 31, 2011, of which $347.5 million is for the purchase of raw materials and components, principally by the Rail, Inland Barge, and Energy Equipment Groups.