8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 3, 2005

Trinity Industries, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	1-6903	75-0225040
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	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

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The Registrant hereby furnishes the information set forth in its News Release, dated August 3, 2005, announcing operating results for the three and six months ended June 30, 2005, a copy of which is furnished as exhibit 99.1 and incorporated herein by reference. On August 4, 2005, the Registrant held a conference call and web cast with respect to its financial results for the three and six months ended June 30, 2005. The conference call scripts of Chas Michel, Vice President, Controller, and Chief Accounting Officer, Timothy R. Wallace, Chairman, President and Chief Executive Officer, D. Steven Menzies, President of Trinity Industries Leasing Company, and William A. McWhirter II, Vice President and Chief Financial Officer are furnished as exhibits 99.2, 99.3, 99.4, and 99.5 respectively, and incorporated herein by reference. This information in not "filed" pursuant to the Securities and Exchange Act and is not incorporated by reference into any Securities Act registration statements. Additionally, the su bmission of the report on Form 8-k is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulations FD.

Item 7.01 Regulation FD Disclosure.

The Registrant hereby furnishes the information set forth in its News Release, dated August 3, 2005, announcing operating results for the three and six months ended June 30, 2005, a copy of which is furnished as exhibit 99.1 and incorporated herein by reference. On August 4, 2005, the Registrant held a conference call and web cast with respect to its financial results for the three and six months ended June 30, 2005. The conference call scripts of Chas Michel, Vice President, Controller, and Chief Accounting Officer, Timothy R. Wallace, Chairman, President and Chief Executive Officer, D. Steven Menzies, President of Trinity Industries Leasing Company, and William A. McWhirter II, Vice President and Chief Financial Officer are furnished as exhibits 99.2, 99.3, 99.4, and 99.5 respectively, and incorporated herein by reference. This information in not "filed" pursuant to the Securities and Exchange Act and is not incorporated by reference into any Securities Act registration statements. Additionally, the su bmission of the report on Form 8-k is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulations FD.

SIGNATURES

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.
August 4, 2005	By:	Michael G. Fortado
		Name: Michael G. Fortado
		Title: Vice President and Secretary

Exhibit Index

Exhibit No.	Description
99.1	News Release dated August 3, 2005 with respect to the operating results for the three and six months ended June 30, 2005.
99.2	Conference call script of August 4, 2005 for Chas Michel, Vice President, Controller and Chief Accounting Officer.
99.3	Conference call script of August 4, 2005 for Timothy R. Wallace, Chairman, Presidnet and Chief Executive Officer.
99.4	Conference call script of August 4, 2005 for D. Steven Menzies, President of Trinity Industries Leasing Company.
99.5	Conference call script of August 4, 2005 for William A. McWhirter II, Vice President and Chief Financial Officer.

EX-99.1

Exhibit 99.1

NEWS RELEASE

Media Contact:
Nancy Farrar
Farrar Public Relations
817/937-1557

Investor Contact:
James Perry
Trinity Industries, Inc.
214/589-8412

FOR IMMEDIATE RELEASE

Trinity Industries Reports Improved Earnings for Second Quarter of 2005

DALLAS – August 3, 2005 – Trinity Industries, Inc. (NYSE:TRN) today reported financial results for the three and six months ended June 30, 2005. Revenues increased 33 percent during the second quarter over the same period in 2004. Revenues for the first six months of 2005 were up 37 percent over the first six months of 2004.

For the quarter ended June 30, 2005 the Company reported earnings of $21.8 million, 43 cents per common diluted share, and revenues of $731.3 million. This compares with a net income of $3.6 million, 6 cents per common diluted share, and revenues of $548.7 million in the same quarter of 2004. The second quarter of 2005 included a write-off of goodwill associated with the railcar operations in Europe of $2.3 million (4 cents per common diluted share). The second quarter of 2004 included an after-tax loss provision of $3.1 million (7 cents per common diluted share) due to the effect of cost increases in steel and components containing steel on certain rail and barge contracts.

For the six months ended June 30, 2005 the Company reported earnings of $27.8 million, 55 cents per common diluted share, and revenues of $1,378.2 million. This compares with a net loss of $7.2 million, 19 cents per common diluted share, and revenues of $1,003.6 million in the same period of 2004. The six months ended June 30, 2005, included an after-tax provision of approximately $2.1 million (4 cents per common diluted share) related to the settlement of two lawsuits and two other unrelated warranty issues in the Company’s Inland Barge Group and the previously mentioned write-off of the goodwill associated with the European operations. The six months ended June 30, 2004 included an after-tax loss provision for $7.9 million (17 cents per common diluted share) due to the effect of cost increases in steel and components containing steel on certain rail and barge contracts and an after-tax charge of $769,000 (2 cents per common diluted share) related to the early retirement of debt.

“All of our North American business segments were profitable during the second quarter, building on the momentum we established during the first quarter,” said Timothy R. Wallace, Trinity’s Chairman, President and CEO. “Productivity improvements implemented in our North American railcar businesses are reflected in their increased earnings and our North American railcar backlog increased slightly to approximately 17,500 units. Our Construction Products Group had strong results, in part because of consistent demand and improved pricing.”

Trinity’s Inland Barge Group also returned to profitability during the second quarter. “The performance of our Inland Barge Group demonstrates the ability of this group to be a strong contributor to the bottom line,” Wallace continued. “Market demand has increased and we see growth opportunities in this segment.”

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 Rail Group, the 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.

Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinity’s estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements. Trinity uses the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience of our present expectations. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward looking statements, see “Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the most recent fiscal year.

- TABLES TO FOLLOW -

Trinity Industries, Inc.
Condensed Consolidated Income Statement
(in millions, except per share amounts)

	Three Months Ended June 30,
	2005			2004
Revenues	$	731.3		$	548.7
Operating profit	$	43.5		$	14.3
Other expense		7.7			8.8
Income before income taxes		35.8			5.5
Provision for income taxes		14.0			1.9
Net income		21.8			3.6
Dividends on Series B preferred stock		(0.8	)		(0.7	)
Net income applicable to common shareholders	$	21.0		$	2.9
Net income applicable to common shareholders per common share:
Basic	$	0.45		$	0.06
Diluted	$	0.43		$	0.06
Weighted average number of shares outstanding:
Basic		47.0			46.4
Diluted		50.4			47.4

Trinity Industries, Inc.
Condensed Consolidated Income Statement
(in millions, except per share amounts)

	Six Months Ended June 30,
	2005			2004
Revenues	$	1,378.2		$	1,003.6
Operating profit	$	61.4		$	7.8
Other expense		16.0			18.8
Income (loss) before income taxes		45.4			(11.0	)
Provision (benefit) for income taxes		17.6			(3.8	)
Net income (loss)		27.8			(7.2	)
Dividends on Series B preferred stock		(1.6	)		(1.5	)
Net income (loss) applicable to common shareholders	$	26.2		$	(8.7	)
Net income (loss) applicable to common shareholders per common share:
Basic	$	0.56		$	(0.19	)
Diluted	$	0.55		$	(0.19	)
Weighted average number of shares outstanding:
Basic		47.0			46.3
Diluted		47.8			46.3

Trinity Industries, Inc.
Condensed Segment Data
(in millions)

	Three Months Ended June 30,
Revenues:	2005			2004
Rail Group	$	495.0		$	273.6
Construction Products Group		180.6			153.7
Inland Barge Group		63.8			64.1
Industrial Products Group		37.5			35.4
Railcar Leasing and Management Services Group		48.6			71.7
All Other		27.0			8.3
Eliminations		(121.2	)		(58.1	)
Total Revenues	$	731.3		$	548.7

Operating profit (loss):	Three Months Ended June 30,
	2005			2004
Rail Group	$	17.2		$	0.9
Construction Products Group		23.0			14.5
Inland Barge Group		5.4			(5.4	)
Industrial Products Group		5.7			3.9
Railcar Leasing and Management Services Group		13.0			14.4
All Other		(0.1	)		(1.6	)
Corporate		(9.1	)		(9.0	)
Eliminations		(11.6	)		(3.4	)
Consolidated	$	43.5		$	14.3

Trinity Industries, Inc.
Condensed Segment Data
(in millions)

	Six Months Ended June 30,
Revenues:	2005			2004
Rail Group	$	929.4		$	534.5
Construction Products Group		323.7			273.8
Inland Barge Group		108.7			107.4
Industrial Products Group		73.2			67.2
Railcar Leasing and Management Services Group		101.1			106.8
All Other		47.4			15.9
Eliminations		(205.3	)		(102.0	)
Total Revenues	$	1,378.2		$	1,003.6

Operating profit (loss):	Six Months Ended June 30,
	2005			2004
Rail Group	$	26.0		$	(2.7	)
Construction Products Group		29.7			16.5
Inland Barge Group		2.0			(11.1	)
Industrial Products Group		10.3			4.7
Railcar Leasing and Management Services Group		26.6			24.0
All Other		(1.4	)		(0.3	)
Corporate		(15.7	)		(16.6	)
Eliminations		(16.1	)		(6.7	)
Consolidated	$	61.4		$	7.8

Trinity Industries, Inc.
Condensed Consolidated Balance Sheet
(in millions)

	June 30,			December 31,
	2005			2004
Cash and equivalents	$	93.1		$	182.3
Accounts receivable		295.3			214.2
Inventories		424.3			402.3
Net property, plant and equipment, at cost (1)		940.7			810.9
Other assets		601.8			600.5
	$	2,355.2		$	2,210.2
Accounts payable and accrued liabilities	$	528.5		$	511.7
Debt (2)		606.3			518.0
Deferred income		46.4			47.2
Other liabilities		71.0			62.2
Series B preferred stock		58.5			58.2
Stockholders’ equity		1,044.5			1,012.9
	$	2,355.2		$	2,210.2
(1) Property, Plant and Equipment
Corporate/Manufacturing:
Property, plant and equipment	$	882.0		$	885.2
Accumulated depreciation		(604.2	)		(589.6	)
		277.8			295.6
Leasing:
Equipment on lease		791.8			635.7
Accumulated depreciation		(128.9	)		(120.4	)
		662.9			515.3
	$	940.7		$	810.9
(2) Debt
Corporate/Manufacturing — Recourse
Revolving commitment	$	1.7		$	—
Senior notes		300.0			300.0
Other		7.0			5.3
		308.7			305.3
Leasing – Recourse
Equipment trust certificates		130.1			170.0
		130.1			170.0
Leasing – Non-recourse
Warehouse facility		167.5			42.7
		167.5			42.7
	$	606.3		$	518.0

- END -

Exhibit 99.2

Trinity Industries, Inc.
Second Quarter Results Conference Call
August 4, 2005

Chas Michel:

Thank you Brian

A. Good morning from Dallas, Texas and Welcome to the Trinity Industries’ Second Quarter Results Conference Call. I’m Chas Michel, Vice President, Controller & Chief Accounting Officer for Trinity. Thank you for being with us today.

1. Joining me today on the call are:

a. Tim Wallace, Chairman, President and Chief Executive Officer; Bill McWhirter, Vice President and Chief Financial Officer; and Steve Menzies, President of Trinity Industries Leasing Company

b. Also in the room will be Jim Ivy and Neil Shoop

2. A replay of this conference call will be available starting one hour after the conference call ends today through midnight on Thursday, August 11^th.

3. The replay number is area code (402) 220-7330.

B. I would also like to welcome our audio web cast listeners today. Replay of this broadcast will also be available on our website located at www.trin.net.

1. In a moment, in addition to me, you will hear from Tim Wallace, Steve Menzies and Bill McWhirter. Following that, we’ll move to the Q&A session.

C. 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.

D. Now let me address our current debt position

At June 30, our borrowings at the corporate level were the 300 million dollars of senior notes and 8.7 million dollars of other indebtedness. The Leasing Company’s debt included the 130.1 million dollars of Equipment Trust Certificates and 167.5 million dollars outstanding under our 300 million dollar railcar leasing warehouse facility, which matures in August of this year. We are currently working to renew this warehouse facility and expect it to be renewed.

At June 30, our debt to total capital ratio was 35.5 percent, up slightly from the comparable amount at December 31, 2004 principally due to lease fleet expansion.

At June 30, our cash position was 93.1 million dollars.

E. Now, here’s Tim Wallace

Tim
Steve
Bill

F. Thanks, Bill. Now our operator will prepare us for the Q & A session.

Q & A Session

Brian, thank you for your help today.

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, August 11^th.

3. The access number is area code (402) 220-7330.

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.

Exhibit 99.3

Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Tim Wallace, Chairman, President and CEO
August 4, 2005
FINAL

Thank you Chas, and good morning everyone.

I’m pleased with our progress in our North American businesses. During the 2^nd quarter we continued to build on the momentum from the lst quarter. Currently we are not experiencing any significant issues with unexpected material cost increases like those that occurred last year at this time. The steel industry appears to have sufficient capacity at this time to meet the market demand.

Our European railcar business did not have a good quarter. Demand for railcars in Europe remains very low. Our backlog of orders in Europe decreased 9% to approximately 1000 units at the end of the 2nd quarter. We shipped approximately 240 units during the 2^nd quarter versus 450 units in the lst quarter.

We are actively reviewing our strategic options for this business. Dealing with the challenges of a market trough is always a major struggle for our people. We are confident that demand will eventually improve. The European railcar fleet is old and over time, replacement drivers should improve demand. We are very experienced with surviving cyclical downturns and ramping back up once demand returns to more normal levels. Bill McWhirter will provide financial details about our European railcar business during his report.

Our North American railcar businesses are continuing to improve. Our shipments are consistent and we are seeing the benefits of our strategy of pursuing orders that extend our production runs.

During the 2nd quarter, our North American railcar shipments increased 13.1% to 6015 units. During the balance of this year, our quarterly shipments should remain in the 5400 to 6000 unit range. We expect our 2005 annual shipments to be between 22,000 and 22,500. This will be approximately a 45% increase over 2004. Our short term objective for our North American rail business is to continue to improve our productivity and performance. We will increase our production based upon three factors:

market demand

the ability of our supply chain to provide basic materials and

our ability to efficiently train our workforce.

During the 2^nd quarter of 2006, we expect to begin shipments from our new facility in Mexico. At that point we expect it will take 12 to 18 months for this facility to become completely operational. Our long term goal is to ship between 35 to 50% of our North American railcars from Mexico. We are currently shipping approximately 30% of our overall production from Mexico.

From a sales point of view, we continue to focus on selling and leasing railcars that extend our existing production lines without requiring changeovers. The majority of our 2^nd quarter orders extended our existing production. By focusing on strategic selling, we continue to see improved productivity from our existing lines. We have also broadened our product offering in order to pursue a larger universe of customers. This will cause us to begin to changeover a few of our production lines and to add new lines. Training our employees to make efficient line changeovers is the next phase in our productivity improvement process. Our market share figures will continue to fluctuate as we work on this phase of our productivity plan and as we bring our new facility in Mexico up to speed. By concentrating on early stage growth and then transitioning to productivity improvements, we will be highly competitive when we shift to market share growth. We continue to see current railcar demand as a plateau rather than a short term spike.

As for the company as a whole, I’m very optimistic about the opportunities we see in our market places as well as the improvements we are making this year. Our barge business has become profitable and our construction product businesses are performing well in the peak of their season. We have also had a very successful restart of our wind tower structure business. Our leasing company is continuing to play a vital role in our strategy of diversifying our long term earnings base. With the passage by U.S. Congress of the Energy Bill and the Transportation Bill, we should see additional demand drivers improve for several of our businesses.

I’ll now turn it over to Steve Menzies for his comments.

Exhibit 99.4

Trinity Industries, Inc
Analysts Conference Call
August 4, 2005
Comments by Steve Menzies

Thank you, Tim. Good morning! I’ll make a few comments about the railcar market followed by a few remarks about our leasing and management services business.

Industry demand for railcars in North America remained strong in the 2nd quarter. More than 19,100 railcars were ordered industry-wide, continuing the strong pace set in early 2004. The number of 2^nd quarter railcar orders compares favorably to the approximately 17,600 railcars ordered in the 1^st quarter of 2005 and the quarterly average of 18,000 ordered during the last six quarters. Year-to-date, industry orders through June totaled 36,700 railcars, keeping pace with the almost 72,000 railcars ordered in 2004. Strong railcar demand reflects general economic growth, increased railroad freight loadings and replacement of older, smaller railcars.

During the 2^nd quarter, Trinity received more than 6,100 railcar orders. We continue to focus our sales efforts on orders that meet our pricing requirements and extend our existing production lines. We received orders during the 2^nd quarter that will extend production lines for a variety of cars, including several lines producing various types of covered hoppers, mill gondolas, coal cars, box cars, intermodal cars and tank cars. Current order levels and inquiries indicate continued strong demand for a variety of railcars, supporting our production and sales strategies.

The industry-wide production backlog at the end of the 2nd quarter was approximately 60,700 railcars. Backlog has remained basically stable during the past four quarters. This indicates that industry order levels are keeping pace with increased industry production and that the supply chain is keeping up with demand. Trinity’s railcar production backlog in North America is approximately 17,500 railcars, consistent with our backlog of approximately 17,300 railcars at the end of the 1^st quarter of 2005.

Trinity Industries Railcar Leasing and Management Services Group continued to grow its railcar fleet, taking delivery of approximately 1,500 new railcars during the 2^nd quarter. This represents about 25% of Trinity’s North American 2^nd quarter shipments. Our operating lease fleet now includes more than 22,300 railcars as compared to 19,200 railcars in our fleet on June 30, 2004. Our strategy is to grow our leasing business by developing solid, long term relationships with the end users of our railcars therefore resulting in a significant and stable earnings stream from our leasing business.

Our committed lease backlog at the end of the 2^nd quarter was approximately 3,200 railcars or approximately 18% of Trinity’s North American production backlog. Our fleet utilization remained 99.3% at the end of the 2^nd quarter compared to 99.3% at the end of the lst quarter 2005 and 98.2% at June 30, 2004. The average age of our fleet is 5.2 years and our average remaining lease term is almost six years. Lease rates continue to rise as a result of high fleet utilization, strong levels of new car building and rising new car prices. Our renewal rate, the number of leases renewed as a percentage of expiring leases, has been exceptionally high. Our average fleet lease rate has continued to increase quarter over quarter reflecting the high number of lease renewals and rising new car lease rates.

I’ll now turn it over to Bill McWhirter.

Exhibit 99.5

Trinity Industries, Inc.
Quarterly Conference Call
Aug, 4, 2005

Comments of William McWhirter, Vice President and Chief Financial Officer

Thank you Steve and good morning everyone!

My comments relate primarily to the second quarter of 2005. We will file our Form 10-Q this morning. You will find more details there summarizing the quarter. During my remarks, I will provide earnings per share guidance for the third quarter and the full year. Additionally, I will update the previous guidance with respect to operating margins in our Rail Group and provide new guidance for operating margins in our Inland Barge Group.

We are pleased with our second quarter 2005 earnings of 43 cents per share. These results compare with earning of 11 cents per share in the first quarter of 2005 and earnings of 6 cents per share in the same quarter of 2004. Revenues for the second quarter of 2005 increased 33% over the same quarter last year to $731 million. This revenue level represents the second highest in Trinity’s history.

At this time I will discuss the performance of our individual business segments.

Rail Group
In our Rail Group, North American railcar revenues were 122% higher on a quarter over quarter basis. Rail Group sales to Trinity’s Leasing Group were $107 million in the second quarter of 2005 with profits of $11.6 million, or 15 cents per share. This compared with sales to our Leasing Group in the second quarter of 2004 of $48 million with profits of $3.4 million, or 5 cents per share. These inter-company sales and profits are eliminated in consolidation.

Our European rail business continues to suffer from a depressed market. During the second quarter, we determined that the goodwill for Europe, based on an ongoing assessment of the market conditions, had been impaired. Accordingly, it was written off. In addition to the goodwill charge, we recorded a reserve associated with excess and over valued inventory, and incurred costs associated with a scheduled shutdown. As a result of these items, the quarterly operating loss associated with our European assets was approximately $11.5 million. For the third and fourth quarters of this year, we estimate a significantly smaller operating loss of approximately $3 million per quarter. We currently have fixed assets with a net book value of approximately $57 million in our European Rail operations.

Railcar component revenues for North America increased by 45% in the current quarter as compared with the same quarter of the previous year. This was primarily due to improved unit sales and increased pricing to offset raw material increases.

Our previously forecasted operating margin for the rail segment during the second quarter was 3.5% to 5.0%. Actual results were 3.5%. When you remove the effect of our European operations, North America experienced a 6.2% margin.

Based on our operating performance during the second quarter of 2005, we are adjusting our guidance with regard to operating margins for the Rail Group for the third and fourth quarters to a margin of 5.5% to 6.5%. This guidance is based on the following assumptions:

• European results consistent with the guidance provided today,

• continued production efficiencies in North America, and

• no significant supply problems in steel or other basic materials.

The impact of unrecoverable steel cost for the second quarter in the Rail Group was approximately $5 million, or about 1% of lost operating margin.

Our North American backlog as of June 30, 2005 consisted of approximately 17,500 railcars with an estimated sales value of approximately $1.2 billion. The backlog is subject to a variety of escalation provisions and firm raw material contracts. Together these items are referred to internally as cost coverage. Cost coverage of the current backlog is approximately 91%.

Construction
Our Construction Products Group remains a key part of our earnings diversification strategy. The second quarter is normally strong for this group due to construction-friendly weather conditions. This past quarter proved especially good with revenues up by 17% on a quarter-over-quarter basis. Operating profit increased by $8.5 million and margins improved from 9.4% to 12.7%. These improvements were primarily due to improved pricing that offset raw material price increases and more favorable weather conditions.

Our Concrete and Aggregate business accounted for 56% of the Construction Products Group’s revenue. The business unit’s overall performance was positively impacted by strong demand combined with tight supplies of raw materials. Our Concrete Group enjoys a diversified customer base which provides flexibility in the market sectors we target.

Our Highway Products Business, which accounted for 30% of the Construction Products Group’s revenues, is also performing well. On a year over year basis, revenues from this unit’s proprietary line of products grew by 5%. We believe the passage of the pending Federal Highway Bill will generate improved results in 2006 for our Construction Products Group.

Our Pipe Fittings and Bridge Girder Businesses continue to perform at nice levels.

Inland Barge
The Inland Barge Group’s second quarter marked a return to profitability. We are now receiving orders for Hopper Barges and building a nice backlog. We anticipate Inland Barge revenues of approximately $55 to $60 million in the third quarter and between $65 and $70 million in the 4^th quarter, moving to a run rate of about $80 million per quarter during the first half of 2006. We anticipate operating profit margins of between 7% and 9% for the reminder of this year.

On the tank barge side of the business, we continue to enjoy a strong backlog, and at this time we have very few spots open for 2006 deliveries.

As a reminder, we are in the process of re-opening the hopper barge facility in Louisiana that we closed in December 2004. As for our barge litigation: We settled one case during the quarter. More details about this case can be found in our 10Q. Discovery and pre-trial proceedings on the last case are continuing to move through the court system.

Leasing
In our Railcar Leasing and Management Services Business, we reported revenues of $48 million, which were down $23 million on a quarter over quarter basis. This is primarily due to a $29 million decrease in railcars sold from the fleet quarter over quarter. Total operating profit decreased by $1.4 million due to the profit from car sales in the prior period. When you remove the effects of the car sales, leasing and management operating profit grew by 18% for the quarter over quarter comparison. Growing our Leasing and Management Services Group continues to be a key part of our earnings diversification strategy. We plan to spend between $325 and $375 million on net fleet additions during 2005.

Industrial Products Group
We are very pleased with the Industrial Products Group second quarter performance. On a quarter-over-quarter basis, revenue increased approximately 6% and operating profit jumped by $1.8 million, bringing the quarterly margin to 15%. This business continues to benefit from cost-savings improvements we implemented during late 2003 and early 2004, as well as solid demand in Mexico for our products. The backlog for this business is relatively short as most customers do not make long-term product purchases.

Consolidated
On a consolidated basis, SE&A expenses, as a percent of revenue, have continued to decline to 6.6% from 7.8% for the same quarter of the previous year.

Cash flow from operating activities was a positive $47 million for the quarter. This is an especially strong result when you take into account that revenues increased by $84 million in the second quarter over the first quarter of 2005.

Non-leasing capital expenditures have been reduced and are currently projected to be between $90 and $100 million for 2005. Of this amount, approximately $40 million will be spent on our new railcar plant in Mexico and our new North Texas aggregates facility.

We expect earnings for the third quarter to range between 44 and 51 cents per share, assuming normal weather conditions.

Overall, our updated company guidance for 2005 is for earnings per share of between $1.20 cents and $1.35 for the full year. Included in our assumptions for the remainder of 2005 are:

• the deferral of between $10 and $12 million in profit on sales from our Rail Group to our Leasing Group in each of the next two quarters, or roughly 13 to 16 cents per share, per quarter

• improving results in our European rail operations as discussed earlier,

• continuing to achieve production efficiencies in North America,

• no significant supply problems in steel or components,

• normal weather conditions and

• no unanticipated adverse resolution of legal matters

At this time I will turn the presentation back to Chas for the questions and answers session.