Edgar Filing: TRINITY INDUSTRIES INC

TRN 12.31.2014 10K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K



(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014



	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6903

Trinity Industries, Inc.

(Exact name of registrant as specified in its charter)



Delaware	75-0225040
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2525 N. Stemmons Freeway, Dallas, Texas	75207-2401
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (214) 631-4420

Securities Registered Pursuant to Section 12(b) of the Act



Title of each class	Name of each exchange on which registered
Common Stock ($1.00 par value)	New York Stock Exchange, Inc.

Securities registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

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 (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the Registrant's most recently completed second fiscal quarter (June 30, 2014) was $6,706.8 million.

At January 31, 2015 the number of shares of common stock outstanding was 155,668,747.

The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the Registrant's definitive 2015 Proxy Statement.

TRINITY INDUSTRIES, INC.

FORM 10-K

TABLE OF CONTENTS



Caption	Page
PART I
Item 1. Business	3
Item 1A. Risk Factors	9
Item 1B. Unresolved Staff Comments	16
Item 2. Properties	16
Item 3. Legal Proceedings	16
Item 4. Mine Safety Disclosures	16

PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6. Selected Financial Data	20
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	44
Item 8. Financial Statements and Supplementary Data	45
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	96
Item 9A. Controls and Procedures	96
Item 9B. Other Information	98

PART III
Item 10. Directors, Executive Officers and Corporate Governance	98
Item 11. Executive Compensation	98
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	99
Item 13. Certain Relationships and Related Transactions, and Director Independence	99
Item 14. Principal Accountant Fees and Services	99

PART IV
Item 15. Exhibits and Financial Statement Schedules	100

All share and per share information, including dividends, has been retroactively adjusted to reflect the 2-for-1 stock split. except

for the statement of stockholders' equity which reflects the stock split by reclassifying from "Capital in Excess of Par Value" to "Common Stock" an amount equal to the par value of the additional shares issued to effect the stock split.

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PART I

Item 1. Business.

General Development of Business. Trinity Industries, Inc. and its consolidated subsidiaries, (“Trinity”, “Company”, “we”, or “our”) headquartered in Dallas, Texas, is a diversified industrial company that owns a variety of market-leading businesses providing products and services to the energy, transportation, chemical, and construction sectors. Trinity was incorporated in 1933.

Trinity became a Delaware corporation in 1987. Our principal executive offices are located at 2525 N. Stemmons Freeway, Dallas, Texas 75207-2401, our telephone number is 214-631-4420, and our Internet website address is www.trin.net.

Financial Information About Industry Segments. Financial information about our industry segments for the years ended December 31, 2014, 2013, and 2012 is presented in Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Narrative Description of Business. As a diversified industrial company, we manufacture and sell a variety of products and services principally including:


•	railcars and railcar parts;


•	the leasing, management, and maintenance of railcars;


•	inland barges;


•	highway products;


•	aggregates;


•	storage and distribution containers;


•	structural wind towers;


•	electric utility structures; and


•	parts and steel components.

We serve our customers through the following five business groups:

Rail Group. Through wholly-owned subsidiaries with manufacturing facilities in the U.S. and Mexico, our Rail Group is a leading manufacturer of freight and tank railcars in North America used for transporting a wide variety of liquids, gases, and dry cargo (“Trinity Rail Group” or “Rail Group”).

Trinity Rail Group offers a complete array of railcar solutions to our customers. We are capable of manufacturing a full line of railcars, including:

Autorack Cars - Autoracks and flatcars transport finished automobiles and light trucks.

Box Cars - Box cars carry a wide variety of bulk cargo such as auto parts, paper, and food products.

Covered Hopper Cars - Covered hopper cars transport commodities such as industrial sand and cement, grain products, dry fertilizer, and plastics. Pressure differential covered hopper cars carry products such as flour and starch.

Gondola Cars - Rotary gondola cars are primarily used for coal service. Other gondola cars carry bulk commodities such as scrap metal, aggregate, ores, and finished steel.

Intermodal Cars - Intermodal cars transport shipping containers in single or double stacked configurations as well as truck trailers.

Open Hopper Cars - Open hopper cars are used to transport coal, aggregates, and other similar products.

Tank Cars - Non-pressurized tank cars transport a wide variety of liquid commodities including chemicals, food products, and petroleum products. Pressurized tank cars are used to transport liquefied gases.

Our Rail Group is capable of manufacturing a diversified railcar product line, allowing us to capitalize on changing industry trends and developing opportunities in the construction, agricultural, energy, chemical and automotive markets, among others. We also manufacture and sell a variety of railcar parts and components used in manufacturing and repairing railcars including couplers, axles, and other equipment. We have plants in Mexico and the U.S. that manufacture parts and components, primarily for the North American market. We provide railcar maintenance services at multiple facilities in the U.S.

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Our customers include railroads, leasing companies, and industrial shippers of products, such as utilities, petrochemical companies, grain shippers, agricultural product companies, and major construction and industrial companies. We compete in the North American market primarily against five major railcar manufacturers.

For the year ended December 31, 2014 we shipped 30,255 railcars, or 44% of total North American railcar shipments. As of December 31, 2014, our Rail Group backlog consisted of 61,035 railcars valued at $7.2 billion. This amount included approximately $2.0 billion in orders from our Railcar Leasing and Management Services Group (“Leasing Group”). The total amount of orders in our backlog from the Leasing Group was supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery.

We hold patents of varying duration for use in our manufacture of railcars and components. We believe patents offer a marketing advantage in certain circumstances. No material revenues are received from the licensing of these patents.

Railcar Leasing and Management Services Group. Our Railcar Leasing and Management Services Group is a leading provider in North America of comprehensive rail industry services. Through wholly-owned subsidiaries, primarily Trinity Industries Leasing Company ("TILC"), and partially-owned subsidiaries, TRIP Rail Holdings LLC (“TRIP Holdings”) and RIV 2013 Rail Holdings LLC ("RIV 2013"), we offer operating leases for tank and freight railcars. TILC also offers management, maintenance, and administrative services to railcar investors. By providing leasing and management, maintenance, and administrative services, in addition to management services for investor-owned funds, our Leasing Group is an important strategic resource that further links our Rail Group with our customers. Trinity's Rail Group and TILC coordinate sales and marketing activities under the registered trade name TrinityRail^®, thereby providing a single point of contact for railroads and shippers seeking rail equipment and services.

The railcars in our lease fleet are leased to industrial shippers and railroads. These companies operate in the chemical, agricultural, and energy industries, among others. Substantially all of the railcars in our lease fleet were manufactured by our Rail Group. The terms of our railcar leases generally vary from one to twenty years and provide for fixed monthly rentals. A small percentage of our fleet is leased on a per diem basis. As of December 31, 2014, the lease fleet of our subsidiaries included 75,930 owned or leased railcars that were 99.5% utilized. Of this total, 63,520 railcars were owned by TILC or its affiliates and 12,410 railcars were financed in sale-leaseback transactions.

We also manage railcar fleets on behalf of third parties. Our railcar fleet management services complement our leasing business by generating stable fee income, strengthening customer relationships, and enhancing the view of Trinity as a leading provider of railcar products and services.

Our railcar leasing businesses compete against a number of well-established entities that are also in the business of leasing railcars.

Construction Products Group. Through wholly-owned subsidiaries, our Construction Products Group manufactures highway products as well as other primarily-steel products for infrastructure-related projects; mines and produces aggregates; and provides galvanizing services. Many of these lines of business are seasonal and revenues are impacted by weather conditions and fluctuations in government spending levels.

Our Highway Products business is a leading U.S. manufacturer of guardrail, crash cushions, and other protective barriers. The Federal Highway Administration, which determines product eligibility for cost reimbursement using federal funds, has approved many of our products as eligible for Federal-aid reimbursement based on satisfactory performance testing pursuant to criteria established under either the National Cooperative Highway Research Program Report 350 or the Manual for Assessing Safety Hardware, as applicable. Our crash cushion, protective barrier, and guardrail products include multiple proprietary products manufactured under license from certain public and private research organizations and inventors as well as Company-held patents. We sell highway products in Canada, Mexico, and throughout the U.S., and we export highway products, including proprietary products to more than 60 countries. The Company does not perform any installation services with respect to its highway products, except in Mexico. We compete against several national and regional highway products manufacturers.

We are a leading producer and distributor of lightweight and natural aggregates, including expanded shale and clay; crushed stone; sand and gravel; asphalt rock; and various other products in the western and southwestern U.S. Our aggregates customers are concrete producers; commercial, residential, and highway contractors; manufacturers of masonry products; and state and local municipalities. We compete with lightweight aggregates producers nationwide and natural aggregates producers located in the regions where we operate.

We provide hot-dip galvanizing services to manufacturers of fabricated steel materials from our service facilities in Texas, Louisiana, and Mississippi. We also manufacture a line of trench shields and shoring products for the construction industry and a line of construction equipment for the mining industry.

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Energy Equipment Group. Through wholly-owned subsidiaries, our Energy Equipment Group manufactures structural wind towers; utility steel structures for electricity transmission and distribution; ambient and cryogenic storage and distribution containers; and tank heads for pressure and non-pressure vessels.

We are a leading manufacturer in North America of structural wind towers used in the wind energy market. These towers are manufactured in the U.S. and Mexico to customer specifications and installed by our customers. Our customers are generally wind turbine producers. Our structural wind towers backlog as of December 31, 2014 was approximately $473.5 million.

With the acquisition of the assets of Meyer Steel Structures ("Meyer"), the utility steel structures division of Thomas & Betts Corporation, a member of the ABB Group, in August 2014, we became one of the leading manufacturers of steel structures for electricity transmission and distribution, which are used principally by municipalities and other local and state governmental entities, as well as by public and private utilities. These structures are manufactured in the U.S. and Mexico to customer specifications and installed by our customers.

We manufacture storage and distribution containers that support the oil, gas, and chemical industries and are used by industrial plants, utilities, residences, and small businesses in suburban and rural areas. Additionally, we manufacture fertilizer storage and distribution containers for bulk storage, farm storage, and the application and distribution of anhydrous ammonia. We also manufacture cryogenic tanks for the distribution of industrial gases and liquefied natural gas. Our storage and distribution container products range from nine-gallon containers for motor fuel use to 1.8 million-gallon bulk storage spheres. We sell our storage and distribution containers to dealers and large industrial users. In the U.S., we generally deliver storage and distribution containers to our customers who install and fill the containers. Our competitors include large and small manufacturers of storage and distribution containers.

We manufacture tank heads, which are pressed metal components used in the manufacturing of many of our finished products, both pressure rated and non-pressure rated, depending on their intended use. We use a significant portion of the tank heads we manufacture in the production of our railcars and storage and distribution containers. We also sell our tank heads to a broad range of other manufacturers. There is strong competition in the tank heads business.

We are a leading manufacturer in North America of storage and distribution containers and tank heads for pressure and non-pressure vessels. We manufacture these products in the U.S. and Mexico. We market a portion of our products in Mexico under the brand name of TATSA^®.

In February 2014, we acquired the assets of Platinum Energy Services Corporation ("Platinum"), based in Alberta, Canada, which manufactures and sells oil and gas process and storage equipment, including various types of containers, separators, and treaters used at the well-site and in midstream locations.

There are a number of well-established entities that actively compete with us in the business of manufacturing energy equipment .

Inland Barge Group. Through wholly-owned subsidiaries, our Inland Barge Group is a leading U.S. manufacturer of inland barges and fiberglass barge covers. We manufacture a variety of dry cargo barges, such as deck barges, and open or covered hopper barges that transport various commodities, such as grain, coal, and aggregates. We also manufacture tank barges used to transport liquids such as crude oil, chemicals and a variety of petroleum products. Our fiberglass reinforced lift covers are used primarily for grain barges. Our four barge manufacturing facilities are located along the U.S. inland river systems, allowing for rapid delivery to our customers. Our Inland Barge Group backlog as of December 31, 2014 was approximately $437.9 million.

Our primary Inland Barge customers are commercial marine transportation companies. Many companies have the capability to enter into, and from time to time do enter into, the inland barge manufacturing business. We strive to compete through operational efficiency, timely delivery, and quality products. We have a number of competitors for our products in this industry.

All Other. All Other includes our captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; and other peripheral businesses.

Foreign Operations. Trinity's foreign operations are primarily located in Mexico. Continuing operations included sales to foreign customers, primarily in Mexico, which represented 5.8%, 11.7%, and 10.0% of our consolidated revenues for the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014 and 2013, we had 3.9% and 3.7%, respectively, of our long-lived assets not held for sale located outside the U.S. We manufacture railcars, storage and distribution containers, tank heads, structural wind towers, utility structures, parts and steel components, and other products at our Mexico facilities for local consumption as well as for export to the U.S. and other countries.

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Backlog. As of December 31, 2014 and 2013, our backlog of firm and noncancellable orders was as follows:



	December 31, 2014		December 31, 2013
	(in millions)
Rail Group
External Customers	$	5,204.3	$	4,189.6
Leasing Group	2,010.5		827.0
	$	7,214.8	$	5,016.6
Inland Barge Group	$	437.9	$	429.6
Wind towers	$	473.5	$	553.9

For the twelve months ended December 31, 2014, our rail manufacturing businesses received orders for 51,395 railcars, including a multi-year railcar order received in November 2014 from GATX Corporation to deliver 8,950 railcars over a four-year period beginning in 2016. The increase in backlog as of December 31, 2014 reflects the value of orders taken during the year. The orders in our backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery as directed by our customers. Approximately 55% of our railcar backlog is expected to be delivered in the twelve months ending December 31, 2015 with the remainder to be delivered from 2016 through 2020. All of our Inland Barge backlog is expected to be delivered in the twelve months ending December 31, 2015. Deliveries for multi-year barge agreements are included in the backlog when specific production quantities for future years have been determined. Approximately 57% of our structural wind towers backlog is expected to be delivered in the twelve months ending December 31, 2015 with the remainder to be delivered in 2016. The Company does not report backlog from its utility structures business because certain contracts contain partial order cancellation provisions.

Marketing. We sell or lease substantially all of our products and services through our own sales personnel operating from offices in multiple locations in the U.S. as well as Canada, Mexico, the United Kingdom, Singapore, Sweden, and Peru. We also use independent sales representatives on a limited basis.

Raw Materials and Suppliers.

Railcar Specialty Components and Steel. Products manufactured at our railcar manufacturing facilities require a significant supply of raw materials such as steel, as well as numerous specialty components such as brakes, wheels, axles, side frames, bolsters, and bearings. Although the number of alternative suppliers of specialty components has declined in recent years, at least two suppliers continue to produce most components.

The principal material used in our manufacturing segments is steel. During 2014, the supply of steel was sufficient to support our manufacturing requirements. Market steel prices were relatively stable during the year with 2014 prices averaging slightly higher than 2013. Steel prices may be volatile in the future in part as a result of market conditions. We often use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers, to mitigate the effect of steel price volatility on our operating profits for the year. In general, we believe there is enough capacity in the supply industry to meet current production levels and that our existing contracts and other relationships we have in place will meet our current production forecasts.

Aggregates. Natural and lightweight aggregates can be found throughout the U.S., and many producers exist nationwide. Shipments of natural aggregates from an individual quarry are generally limited in geographic scope because the cost of transporting processed aggregates to customers is high in relation to the value of the product itself. Lightweight aggregates have a much wider, multi-state distribution area due to their higher value relative to their distribution costs. We currently operate 14 mining facilities strategically located in Texas, Louisiana, Colorado, and California.

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Employees. The following table presents the approximate headcount breakdown of employees by business group:



Business Group	December 31, 2014
Rail Group	10,980
Construction Products Group	1,670
Inland Barge Group	2,130
Energy Equipment Group	6,340
Railcar Leasing and Management Services Group	200
All Other	420
Corporate	330
	22,070

As of December 31, 2014, approximately 12,520 employees were employed in the U.S. and 9,430 employees were employed in Mexico.

Acquisitions and Divestitures. See Note 2 of the Notes to Consolidated Financial Statements.

Environmental Matters. We are subject to comprehensive federal, state, local, and foreign environmental laws and regulations relating to the release or discharge of materials into the environment; the management, use, processing, handling, storage, transport, and disposal of hazardous and non-hazardous waste and materials; and other activities relating to the protection of human health and the environment.

Environmental operating permits are, or may be, required for our operations under these laws and regulations. These operating permits are subject to modification, renewal, and revocation. We regularly monitor and review our operations, procedures, and policies for compliance with our operating permits and related laws and regulations. We believe that our operations and facilities, whether owned, managed, or leased, are in substantial compliance with applicable environmental laws and regulations and that any non-compliance is not likely to have a material adverse effect on our operations or financial condition.

Governmental Regulation.

Railcar Industry. The primary regulatory and industry authorities involved in the regulation of the railcar industry are the U.S. Environmental Protection Agency ("USEPA"); the Research and Special Programs Administration, the Federal Railroad Administration ("FRA"), and the Pipeline and Hazardous Materials Safety Administration ("PHMSA"), all divisions of the U.S. Department of Transportation ("USDOT"); and the Association of American Railroads ("AAR"). These organizations establish rules and regulations for the railcar industry, rail infrastructure, and rail interchange, including product specifications and standards for the design and manufacture of railcars and railcar parts; mechanical, maintenance, and related standards for railcars; safety of railroad equipment, tracks, and operations; and packaging and transportation of hazardous or toxic materials. We believe that our product designs and operations are in compliance with these specifications, standards and regulations.

Recent derailments in North America of trains transporting crude oil have caused various regulatory agencies and industry organizations, including but not limited to the USDOT; FRA; PHMSA; Transport Canada ("TC"); AAR and the AAR Tank Car Committee; American Petroleum Institute; and Railway Supply Institute, as well as community governments, to focus attention on transportation by rail of flammable materials. In August 2014, PHMSA published a Notice of Proposed Rulemaking seeking interested party comments on potential regulatory initiatives pertaining to the transportation of flammable materials by rail. A similar rulemaking process and request for comments was initiated in Canada in July 2014 under the direction of TC - Transport Dangerous Goods. Comment periods for PHMSA and TC have closed and agency review of comments is in process at both PHMSA and TC. Regulatory certainty from PHMSA and TC is expected in 2015. While the regulatory process itself and the scope of any potential regulatory change is uncertain, the Company is assessing its position under a variety of potentially diverse, final rule scenarios. Any final rule may or may not materially impact the rail industry as a whole; railroad operations; older and newer tank railcars that meet or exceed currently mandated PHMSA and TC standards; future tank railcar specifications; market decisions relative to capital investment in rail products; and the capability of the nation’s railcar manufacturing, repair and maintenance infrastructure to implement mandated modification configurations or new construction.

Inland Barge Industry. The primary regulatory and industry authorities involved in the regulation of the inland barge industry are the U.S. Coast Guard; the U.S. National Transportation Safety Board; the U.S. Customs Service; the Maritime Administration of the U.S. Department of Transportation; and private industry organizations such as the American Bureau of Shipping. These organizations establish safety criteria, investigate vessel accidents, and recommend improved safety standards. We believe that our product specifications and operations are in compliance with applicable laws and regulations.

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Highway Products. The primary regulatory and industry authorities involved in the regulation of highway products manufacturers are the USDOT, the Federal Highway Administration ("FHWA"), and various state highway departments. These organizations, with participation from the American Association of State Highway and Transportation Officials, establish certain standards, specifications, and product testing criteria related to the manufacture of our highway products. If our products were found to be not in compliance with these standards, specifications, or product testing criteria, we could be required to re-qualify our products for installation on state and national highways, recall products already in use or installed, or replace products in use or installed with other products manufactured by us or manufactured by our competitors.We believe that our highway products are in compliance with all applicable standards and specifications.

Occupational Safety and Health Administration and Similar Regulations. Our operations are subject to regulation of health and safety matters by the U.S. Occupational Safety and Health Administration and the U.S. Mine Safety and Health Administration. We believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities. However, claims that may be asserted against us for work-related illnesses or injury and the further adoption of occupational and mine safety and health regulations in the U.S. or in foreign jurisdictions in which we operate could increase our operating costs. While we do not anticipate having to make material expenditures in order to remain in substantial compliance with health and safety laws and regulations, we are unable to predict the ultimate cost of compliance.

See Item 1A for further discussion of risk factors with regard to environmental, governmental, and other matters.

Executive Officers and Other Corporate Officers of the Company.

The following table sets forth the names and ages of all of our executive officers and other corporate officers, their positions and offices presently held by them, and the year each person first became an officer. All officer terms expire in May 2015.



Name	Age	Office	Officer Since
Timothy R. Wallace*	61	Chairman, Chief Executive Officer, and President	1985
James E. Perry*	43	Senior Vice President and Chief Financial Officer	2005
Melendy E. Lovett*	56	Senior Vice President and Chief Administrative Officer	2014
William A. McWhirter II*	50	Senior Vice President and Group President	2005
D. Stephen Menzies*	59	Senior Vice President and Group President	2001
S. Theis Rice*	64	Senior Vice President and Chief Legal Officer	2002
Kathryn A. Collins	51	Vice President, Human Resources	2014
Tammy D. Gilbert	54	Vice President, Information Technology	2012
Virginia C. Gray, Ph.D.	55	Vice President, Organizational Development	2007
Mary E. Henderson*	56	Vice President and Chief Accounting Officer	2009
John M. Lee	54	Vice President, Business Development	1994
Steven L. McDowell	53	Vice President and Chief Audit Executive	2013
Gail M. Peck	47	Vice President, Finance and Treasurer	2010
Heather Perttula Randall	41	Vice President, Legal Affairs and Government Relations	2011
Jared S. Richardson	42	Vice President, Associate General Counsel and Secretary	2010
Stephen W. Smith	65	Vice President and Chief Technical Officer	2012

^*Executive officer subject to reporting requirements under Section 16 of the Securities Exchange Act of 1934.

Ms. Collins joined Trinity in 2014 as Vice President, Human Resources. Prior to joining Trinity, she worked for RealPage, Inc. from 2012 to 2014, most recently serving as Vice President, Talent Management and HR Systems. She served as Divisional Vice President, Organization Effectiveness and Vice President, Associate Recruitment at J.C. Penney Company, Inc. where she held management and executive positions from 2009 to 2012.

Ms. Gilbert joined Trinity in 2012 as Vice President, Information Technology. Prior to joining Trinity, she worked for Hewlett-Packard from 2006 to 2012, most recently serving as the America's Vice President, Transition, Transformation, and Project/Program Management. She has also held executive positions with Electronic Data Systems, Sabre Holdings, American Airlines, and Harris Methodist Hospital.

Ms. Henderson joined the Company in 2003 as Director of Financial Reporting. She was named Assistant Controller in 2005 and Controller in 2009. In 2010, Ms. Henderson was elected Vice President and Chief Accounting Officer.

Ms. Lovett joined the Company in 2014 as Senior Vice President and Chief Administrative Officer. She was a member of the Company's Board of Directors since 2012 but resigned from her Board position at Trinity in connection with her appointment as an officer of the Company. Prior to joining Trinity, she worked for Texas Instruments ("TI") from 1993 to 2014 serving as Senior

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Vice President and President of TI's Education Technology business from 2004. She previously served as Vice President in TI's human resources organization from 1998. Prior to joining TI, she was a senior manager with the consulting firm of Coopers & Lybrand.

Mr. McWhirter joined the Company in 1985 and held various accounting positions until 1992, when he became a business group officer. In 1999, he was elected to a corporate position as Vice President for Mergers and Acquisitions. In 2001, he was named Executive Vice President of a business group. In March 2005, he became Vice President and Chief Financial Officer and in 2006, Senior Vice President and Chief Financial Officer. In 2010, Mr. McWhirter was named Senior Vice President and Group President of the Construction Products and Inland Barge Groups. In 2012, Mr. McWhirter was named Senior Vice President and Group President of the Construction Products, Energy Equipment, and Inland Barge Groups.

Mr. McDowell joined the Company in 2013 as Vice President and Chief Audit Executive. Prior to joining Trinity, he worked for Dean Foods from 2007 to 2013, where he held a variety of management positions and most recently served as Vice President, Internal Audit and Risk Management. Prior to his tenure at Dean Foods, he served as Vice President - Internal Audit at Centex Corporation.

Ms. Peck joined Trinity in 2010 as Treasurer and was appointed Vice President and Treasurer in 2011 and Vice President, Finance and Treasurer in 2014. Prior to joining Trinity, she worked for Centex Corporation from 2001 to 2009, serving as Vice President and Treasurer beginning in 2004.

Mr. Perry joined Trinity in 2004 and was appointed Treasurer in April 2005. Mr. Perry was named a Vice President of Trinity in 2006 and appointed its Vice President, Finance in 2007. In 2010, Mr. Perry was appointed Chief Financial Officer and in 2011 was elected Senior Vice President and Chief Financial Officer.

Ms. Randall joined the Company in 2005 as Chief Counsel of TrinityRail. In 2006, she became Deputy General Counsel in charge of litigation for Trinity. In 2011, Ms. Randall was elected Vice President, Legal Affairs and Government Relations.

Mr. Rice joined the Company in 1991 and held various legal and business positions until 2005, when he was elected Vice President and Chief Legal Officer. He was named Senior Vice President, Human Resources and Chief Legal Officer in 2011 and was named Senior Vice President and Chief Legal Officer in 2013.

Mr. Richardson joined the Company in 2010 as Associate General Counsel and Secretary. In 2012, Mr. Richardson was elected Vice President, Associate General Counsel, and Secretary. From 2004 to 2009, he handled legal, corporate governance, and secretary matters for Energy Future Holdings Corp. (formerly TXU Corp.).

Mr. Smith joined the Company in 1976 and held various engineering positions, advancing to Senior Vice President Engineering for TrinityRail. In 2008, Mr. Smith was promoted to a corporate position and serving as an engineering and technical advisor to Trinity's Group Presidents and corporate officers. In 2012, Mr. Smith was elected Vice President and was named Chief Technical Officer in 2013.

Messrs. Wallace, Menzies, and Lee and Dr. Gray have been in full time employment of Trinity or its subsidiaries for more than five years and have performed essentially the same respective duties during such time.

Item 1A. Risk Factors.

There are risks and uncertainties that could cause our actual results to be materially different from those mentioned in forward-looking statements that we make from time to time in filings with the Securities and Exchange Commission (“SEC”), news releases, reports, proxy statements, registration statements, and other written communications, as well as oral forward-looking statements made from time to time by representatives of our Company. All known material risks and uncertainties are described below. The cautionary statements below discuss important factors that could cause our business, financial condition, operating results, and cash flows to be materially adversely affected. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements contained herein. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Many of the industries in which we operate are cyclical, and, accordingly, our business is subject to changes in the economy. We operate in cyclical industries. Downturns in overall economic conditions usually have a significant adverse effect on cyclical industries due to decreased demand for new and replacement products. Decreased demand could result in lower sales volumes, lower prices, and/or a loss of profits. The railcar, barge, and wind energy industries have previously experienced sharp cyclical downturns and at such times operated with a minimal backlog. The business cycles of our different operations may not typically coincide but an economic downturn could impact disparate cycles contemporaneously. In such cases, the effect of an economic downturn may have a magnified negative effect on our business.

Volatility in the global markets may adversely affect our business and operating results. Instability in the global economy, negative conditions in the global credit markets, volatility in the industries that our products serve, fluctuations in commodity

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prices that our customers produce and transport, changes in legislative policy, adverse changes in the availability of raw materials and supplies, or adverse changes in the financial condition of our customers could lead to customers' requests for deferred deliveries of our backlog orders. Additionally such events could result in our customers' attempts to cancel orders in whole or in part or unilaterally terminate firm contracts resulting in un-remedied contract breaches or purchase order breaches, and increased commercial litigation costs. Such occurrences could adversely affect our cash flows and results of operations.

If volatile conditions in the global credit markets prevent our customers' access to credit, product order volumes may decrease or customers may default on payments owed to us. Likewise, if our suppliers face challenges obtaining credit, selling their products to customers that require purchasing credit, or otherwise operating their businesses, the supply of materials we purchase from them to manufacture our products may be interrupted. Any of these conditions or events could result in reductions in our revenues, increased price competition, or increased operating costs, which could adversely affect our business, results of operations, and financial condition.

Litigation claims could increase our costs and weaken our financial condition. We are currently, and may from time to time be, involved in various claims or legal proceedings arising out of our operations. Adverse judgments and outcomes in some or all of these matters could result in significant losses and costs that could weaken our financial condition. Although we maintain reserves for our reasonably estimable liability, our reserves may be inadequate to cover our portion of claims or judgments after taking into consideration rights in indemnity and recourse to third parties. Any such claims or judgments could have a material adverse effect on our business, operations, or overall financial condition.

Increases in the price and demand for steel could lower our margins and profitability. The principal material used in our manufacturing segments is steel. Market steel prices may exhibit short periods of volatility. Steel prices may experience further volatility as a result of scrap surcharges assessed by steel mills and other market factors. We often use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to mitigate the effect of this volatility on our operating profits for the year. To the extent that we do not have such arrangements in place, an increase in steel prices could materially lower our profitability. In addition, meeting production demands is dependent on our ability to obtain a sufficient amount of steel. An unanticipated interruption in our supply chain could have an adverse impact on both our margins and production schedules.

We have potential exposure to environmental liabilities, which may increase costs and lower profitability. We are subject to comprehensive federal, state, local, and foreign environmental laws and regulations relating to: (i) the release or discharge of materials into the environment at our facilities or with respect to our products while in operation; (ii) the management, use, processing, handling, storage, transport, and disposal of hazardous and non-hazardous waste and materials; and (iii) other activities relating to the protection of human health and the environment. Such laws and regulations not only expose us to liability for our own acts, but also may expose us to liability for the acts of others or for our actions which were in compliance with all applicable laws at the time these actions were taken. In addition, such laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations. Our operations involving hazardous materials also raise potential risks of liability under common law.

Environmental operating permits are, or may be, required for our operations under these laws and regulations. These operating permits are subject to modification, renewal, and revocation. Although we regularly monitor and review our operations, procedures, and policies for compliance with our operating permits and related laws and regulations, the risk of environmental liability is inherent in the operation of our businesses, as it is with other companies operating under environmental permits.

However, future events, such as changes in, or modified interpretations of, existing environmental laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards associated with the manufacture of our products and related business activities and properties, may give rise to additional compliance and other costs that could have a material adverse effect on our financial condition and operations.

In addition to environmental laws, the transportation of commodities by railcar, barge, or storage container raises potential risks in the event of an accident that results in the release of an environmentally sensitive substance. Generally, liability under existing laws for a derailment or other accident depends upon causation analysis and the acts, errors, or omissions, if any, of a party involved in the transportation activity, including, but not limited to, the railroad, the shipper, the buyer and seller of the substances being transported, or the manufacturer of the railcar, barge, or storage container, or its components. Additionally, the severity of injury or property damage arising from an incident may influence the causation responsibility analysis, exposing the Company to potentially greater liability. Under certain circumstances, strict liability concepts may apply and if we are found liable in any such incident, it could have a material adverse effect on our financial condition, business, and operations.

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We operate in highly competitive industries. We may not be able to sustain our market leadership positions, which may impact our financial results. We face aggressive competition in all geographic markets and each industry sector in which we operate. In addition to price, we face competition in product performance and technological innovation, quality, reliability of delivery, customer service, and other factors. This competition is often intense, the effects of which could reduce our revenues and operating profits, limit our ability to grow, increase pricing pressure on our products, and otherwise affect our financial results.

The limited number of customers in certain of our businesses, the variable purchase patterns of our customers in all our segments, and the timing of completion, delivery, and customer acceptance of orders may cause our revenues and income from operations to vary substantially each quarter, which would result in significant fluctuations in our quarterly results. Some of the markets we serve are dominated by a limited number of customers. Customers in each of our business segments do not purchase a similar volume of products each year nor make purchases consistently from year-to-year. As a result, the order levels for our products have varied significantly from quarterly period to quarterly period in the past and may continue to vary significantly in the future. Therefore, our results of operations in any particular quarterly period may be significantly affected. As a result of these quarterly fluctuations, we believe that comparisons of our sales and operating results between quarterly periods may not be meaningful and should not be relied upon as indicators of future performance.

Our access to capital may be limited or unavailable due to deterioration of conditions in the global capital markets, weakening of macroeconomic conditions, and negative changes in credit ratings. In general, the Company, and more specifically its leasing subsidiaries' operations, rely in large part upon banks and capital markets to fund its operations and contractual commitments and refinance existing debt. These markets can experience high levels of volatility and access to capital can be constrained for an extended period of time. In addition to conditions in the capital markets, a number of other factors could cause the Company to incur increased borrowing costs and to have greater difficulty accessing public and private markets for both secured and unsecured debt. These factors include the Company's financial performance and its credit ratings and rating outlook as determined primarily by rating agencies such as Standard & Poor's Financial Services LLC, Moody's Investors Service, Inc., and Fitch Ratings, Inc. If the Company is unable to secure financing on acceptable terms, the Company's other sources of funds, including available cash, bank facilities, and cash flow from operations may not be adequate to fund its operations and contractual commitments and refinance existing debt.

We may be unable to maintain railcar assets on lease at satisfactory rates. The profitability of our railcar leasing business depends on our ability to lease railcars at satisfactory rates, to re-lease railcars upon the expiration and non-renewal of existing leases, and to sell railcars in the secondary market as part of our ordinary course of business. Our ability to lease, re-lease or sell leased or unleased railcars profitably is dependent upon several factors, including, among others:


•	the cost of and demand for leases or ownership of newer or specific-use railcar types;


•	the availability in the market generally of competing used or new railcars;


•	the degree of obsolescence of leased or unleased railcars, including railcars subject to regulatory obsolescence;


•	the prevailing market and economic conditions, including the availability of credit, interest rates, and inflation rates;


•	the market demand or governmental mandate for refurbishment; and


•	the volume and nature of railcar traffic and loadings

A downturn in the industries in which our lessees operate and decreased demand for railcars could also increase our exposure to re-marketing risk because lessees may demand shorter lease terms or newer railcars, requiring us to re-market leased railcars more frequently. Furthermore, the resale market for previously leased railcars has a limited number of potential buyers. Our inability to re-lease or sell leased or unleased railcars on favorable terms could result in lower lease rates, lower lease utilization percentages, and reduced revenues.

Fluctuations in the price and supply of specialty and other component parts used in the production of our products could have a material adverse effect on our ability to cost-effectively manufacture and sell our products. In some instances, we rely on a limited number of suppliers for certain components needed in our production. A significant portion of our business depends on the adequate supply of numerous specialty and other parts and components at competitive prices such as brakes, wheels, side frames, bolsters, and bearings for the railcar business, as well as flanges for the wind towers business. Our manufacturing operations partially depend on our ability to obtain timely deliveries of materials, parts, and components in acceptable quantities and quality from our suppliers. Certain parts and components of our products are currently available from a limited number of suppliers and, as a result, we may have limited control over pricing, availability, and delivery schedules. If we are unable to purchase a sufficient quantity of parts and components on a timely basis, we could face disruptions in our production and incur delays while we attempt

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to engage alternative suppliers. Fewer suppliers could result from unimproved or worsening economic or commercial conditions which could increase our rejections for poor quality and require us to source unknown and distant supply alternatives. Any such disruption or conditions could harm our business and adversely impact our results of operations.

Reductions in the availability of energy supplies or an increase in energy costs may increase our operating costs. We use various gases, including natural gas, at our manufacturing facilities and use diesel fuel in vehicles to transport our products to customers and to operate our plant equipment. An outbreak or escalation of hostilities between the U.S. and any foreign power and, in particular, prolonged conflicts could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of natural gas or energy in general. Hurricanes or other natural disasters could result in a real or perceived shortage of petroleum and/or natural gas potentially resulting in an increase in natural gas prices or general energy costs. Speculative trading in energy futures in the world markets could also result in an increase in natural gas and general energy cost. Future limitations on the availability (including limitations imposed by increased regulation or restrictions on rail, road, and pipeline transportation of energy supplies) or consumption of petroleum products and/or an increase in energy costs, particularly natural gas for plant operations and diesel fuel for vehicles and plant equipment, could have an adverse effect upon our ability to conduct our business cost effectively.

Our manufacturer's warranties expose us to product replacement and repair claims. Depending on the product, we warrant against manufacturing defects due to our workmanship and certain materials (including surface coatings, primers, sealants, and interior linings), parts, and components pursuant to express limited contractual warranties. Accordingly, we may be subject to significant warranty claims in the future such as multiple claims based on one defect repeated throughout our production process or claims for which the cost of repairing or replacing the defective part, component or material is highly disproportionate to the original price. These types of warranty claims could result in costly product recalls, significant repair or replacement costs, and damage to our reputation.

Increasing insurance claims and expenses could lower profitability and increase business risk. The nature of our business subjects us to product liability, property damage, and personal injury claims, especially in connection with products we manufacture that our customers install along US highways or that our customers use to transport hazardous, flammable, toxic, or explosive materials. Over the last several years, insurance carriers have raised premiums for many companies operating in our industries. Increased premiums may further increase our insurance expense as coverage expires or otherwise cause us to raise our self-insured retention. If the number or severity of claims within our self-insured retention increases, we could suffer costs in excess of the reserves we maintain for the reasonably estimable liability in such claims or such number. Also the severity of such claims could expose us to uninsured damages if we were unable or elected not to insure against certain hazards because of high premiums or other reasons. While our liability insurance coverage is at or above levels based on commercial norms in our industries, an unusually large liability claim or a string of claims coupled with an unusually large damage award could exceed our liability insurance coverage. In addition, the availability of, and our ability to collect on, insurance coverage is often subject to factors beyond our control. If any of our third-party insurers fail, cancel our coverage, or otherwise are unable to provide us with adequate insurance coverage, then our overall risk exposure and our operational expenses would increase and the management of our business operations would be disrupted. Moreover, any accident or incident involving our industries in general or us or our products specifically, even if we are fully insured, contractually indemnified, or not held to be liable, could negatively affect our reputation among customers and the public, thereby making it more difficult for us to compete effectively, and could significantly affect the cost and availability of insurance in the future.

Many of our products are sold to leasing companies, contractors, distributors, and installers who may misuse, abuse, improperly install or improperly or inadequately maintain or repair such products thereby potentially exposing the Company to claims that could increase our costs and weaken our financial condition. The products we manufacture are designed to work optimally when properly operated, installed, repaired, and maintained. When this does not occur, the Company may be subjected to claims or litigation associated with injuries or property damage.

Risks related to our operations outside of the U.S., particularly Mexico, could decrease our profitability. Our operations outside of the U.S. are subject to the risks associated with cross-border business transactions and activities. Political, legal, trade, economic change or instability, unrestrained criminal activities, or social unrest could limit or curtail our respective foreign business activities and operations, including the ability to hire and retain employees. Violence in Mexico associated with drug trafficking has not abated. We have not, to date, been materially affected by any of these risks, but we cannot predict the likelihood of future effects from such risks or any resulting adverse impact on our business, results of operations, or financial condition. Many items manufactured by us in Mexico are sold primarily in the U.S. and the transportation and import of such products may be disrupted. Some foreign countries where we operate have regulatory authorities that regulate railroad safety, railcar and railcar component part design, performance, and manufacture of equipment used on their railroad systems. If we fail to obtain and maintain certifications of our railcars and railcar parts and components within the various foreign countries where we operate, we may be unable to market and sell our railcars, parts, and components in those countries. In addition, unexpected changes in laws, rules, and regulatory requirements; tariffs and other trade barriers, including regulatory initiatives for buying goods produced in America;

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more stringent or restrictive laws, rules, and regulations relating to labor or the environment; adverse tax consequences; and price exchange controls could limit operations affecting production throughput and making the manufacture and distribution of our products less timely or more difficult. Furthermore, any material change in the quotas, regulations, or duties on imports imposed by the U.S. government and agencies, or on exports by the government of Mexico or its agencies, could affect our ability to export products that we manufacture in Mexico. Because we have operations outside the U.S., we could be adversely affected by final judgments of non-compliance with the U.S. Foreign Corrupt Practices Act or import/export rules and regulations and similar anti-corruption or import/export laws of other countries.

Equipment failures or extensive damage to our facilities, including as might occur as a result of natural disasters, could lead to production, delivery, or service curtailments or shutdowns, loss of revenue or higher expenses. We operate a substantial amount of equipment at our production facilities, several of which are situated in tornado and hurricane zones and on navigable waterways in the U.S. An interruption in production capabilities or maintenance and repair capabilities at our facilities, as a result of equipment failure or acts of nature, including non-navigation orders resulting from low-water conditions issued from time to time by the U.S. Army Corps of Engineers on one or more U.S. rivers which serve our facilities, could reduce or prevent our production, delivery, service, or repair of our products and increase our costs and expenses. A halt of production at any of our manufacturing facilities could severely affect delivery times to our customers. While we maintain business recovery plans that are intended to allow us to recover from natural disasters that could disrupt our business, we cannot provide assurances that our plans would fully protect us from the effects of all such disasters. In addition, insurance may not adequately compensate us for any losses incurred as a result of natural or other disasters, which may adversely affect our financial condition. Any significant delay in deliveries not otherwise contractually mitigated by favorable force majeure provisions could result in cancellation of all or a portion of our orders, cause us to lose future sales, and negatively affect our reputation and our results of operations.

Because we do not have employment contracts with our key management employees, we may not be able to retain their services in the future. Our success depends on the continued services of our key management employees, none of whom currently have an employment agreement with us. Although we have historically been largely successful in retaining the services of our key management, we may not be able to do so in the future. The loss of the services of one or more key members of our management team could result in increased costs associated with attracting and retaining a replacement and could disrupt our operations and result in a loss of revenues.

Repercussions from terrorist activities or armed conflict could harm our business. Terrorist activities, anti-terrorist efforts, and other armed conflict involving the U.S. or its interests abroad may adversely affect the U.S. and global economies, potentially preventing us from meeting our financial and other obligations. In particular, the negative impacts of these events may affect the industries in which we operate. This could result in delays in or cancellations of the purchase of our products or shortages in raw materials, parts, or components. Any of these occurrences could have a material adverse impact on our operating results, revenues, and costs.

Violations of or changes in the regulatory requirements applicable to the industries in which we operate may increase our operating costs. Our railcar manufacturing and leasing businesses are regulated by multiple governmental regulatory agencies such as the USEPA; the USDOT and the administrative agencies it oversees, including the FRA, PHMSA, and the Research and Special Programs Administration; and industry authorities such as the AAR. All such agencies and authorities promulgate rules, regulations, specifications, and operating standards affecting railcar design, configuration, and mechanics; maintenance, and rail-related safety standards for railroad equipment, tracks, and operations, including the packaging and transportation of hazardous or toxic materials. Future regulatory changes in the rail industry, including rules, regulations, and specifications mandating modified railcar designs, configurations, materials, and equipment could affect compliance costs and may have a material adverse effect on our financial condition and operations.

Recent derailments in North America of trains transporting crude oil have caused various U.S. and Canadian regulatory agencies and industry organizations, as well as community governments, to focus attention on transportation by rail of flammable materials. In July and August of 2014, PHMSA and TC, published notices of proposed rulemakings seeking interested party comments on potential regulatory initiatives pertaining to the transportation of flammable materials by rail. Regulatory certainty from PHMSA and TC is expected in 2015. While the regulatory process itself and the scope of any potential regulatory change is uncertain, any final rule or rules may or may not materially impact the rail industry as a whole; railroad operations; older and newer tank railcars that meet or exceed currently mandated PHMSA and TC standards; future tank railcar specifications; market decisions relative to capital investment in rail products; and the capability of the nation’s railcar manufacturing, repair and maintenance infrastructure to implement mandated modification configurations or new construction. The Company cannot assure that costs incurred to comply with standards and regulations emerging from PHMSA’s and TC's rulemaking processes will not be material to the Company’s financial position or results of operations.

Our Inland Barge operations are subject to regulation by the U.S. Coast Guard; the U.S. National Transportation Safety Board; the U.S. Customs Service; the Maritime Administration of the U.S. Department of Transportation; and private industry organizations

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such as the American Bureau of Shipping. These organizations establish safety criteria, investigate vessel accidents and recommend improved safety standards.

Our Construction Products Group is subject to regulation by the USDOT; the FHWA; and state highway departments and administrative agencies. These organizations establish certain standards, specifications, and product testing criteria related to the manufacture of our highway products. If our products were found to be not in compliance with these standards, specifications, or product testing criteria, or if additional testing criteria not previously contemplated by the applicable rules or regulations are required, we could be required to re-qualify our products for installation on state and national highways, recall products already in use or installed, or replace products in use or installed with other products manufactured by us or manufactured by our competitors.

Our operations are also subject to regulation of health and safety matters by the U.S. Occupational Safety and Health Administration and the U.S. Mine Safety and Health Administration. Although we believe we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities, claims that may be asserted against us for work-related illnesses or injury, and the further adoption of occupational and mine safety and health regulations in the U.S. or in foreign jurisdictions in which we operate could increase our operating costs. We are unable to predict the ultimate cost of compliance with these health and safety laws and regulations.

Some of our customers place orders for our products in reliance on their ability to utilize tax benefits or tax credits such as accelerated depreciation or the production tax credit for renewable energy, or to recover the cost of products acquired to comply with federal requirements or standards. There is no assurance that the U.S. government will reauthorize, modify, or otherwise not allow the expiration of such tax benefits, tax credits, or reimbursement policies, and in cases where such subsidies and policies are materially modified to reduce the available benefit, credit, or reimbursement or are otherwise allowed to expire, the demand for our products could decrease, thereby creating the potential for a material adverse effect on our financial condition or results of operations.

We may be required to reduce the value of our long-lived assets and/or goodwill, which would weaken our financial results. We periodically evaluate for potential impairment the carrying values of our long-lived assets to be held and used. The carrying value of a long-lived asset to be held and used is considered impaired when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the asset is less than the carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced commensurate with the estimated cost to dispose of the assets. In addition, goodwill is required to be tested for impairment annually, or on an interim basis whenever events or circumstances change, indicating that the carrying amount of the goodwill might be impaired. Impairment losses related to reductions in the value of our long-lived assets or our goodwill could weaken our financial condition and results of operations.

We may incur increased costs due to fluctuations in interest rates and foreign currency exchange rates. We are exposed to risks associated with fluctuations in interest rates and changes in foreign currency exchange rates. Under varying circumstances, we may seek to minimize these risks through the use of interest rate hedges and similar financial instruments and other activities, although these measures, if and when implemented, may not be effective. Any material and untimely changes in interest rates or exchange rates could result in significant losses to us.

Railcars as a significant mode of transporting freight could decline, become more efficient over time, experience a shift in types of modal transportation, and/or certain railcar types could become obsolete. As the freight transportation markets we serve continue to evolve and become more efficient, the use of railcars may decline in favor of other more economic transportation modalities or the number of railcars needed to transport current or an increasing volume of goods may decline. Features and functionality specific to certain railcar types could result in those railcars becoming obsolete as customer requirements for freight delivery change or as regulatory mandates are promulgated that affect railcar design, configuration, and manufacture.

Business, regulatory, and legal developments regarding climate change may affect the demand for our products or the ability of our critical suppliers to meet our needs. We have followed the current debate over climate change in general, and the related science, policy discussion, and prospective legislation. Additionally, the potential challenges and opportunities for the Company that climate change policy and legislation may pose have been reviewed. However, any such challenges or opportunities are heavily dependent on the nature and degree of climate change legislation and the extent to which it applies to our industries. At this time, the Company cannot predict the ultimate impact of climate change and climate change legislation on the Company's operations or opportunities. Potential opportunities could include greater demand for wind towers and certain types of railcars, while potential challenges could include decreased demand for certain types of railcars and higher energy costs. Further, when or if these impacts may occur cannot be assessed until scientific analysis and legislative policy are more developed and specific legislative proposals begin to take shape.

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Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial results. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Some of these policies require use of estimates and assumptions that may affect the reported value of our assets or liabilities and financial results and are critical because they require management to make difficult, subjective, and complex judgments about matters that are inherently uncertain. Accounting standard setters and those who interpret the accounting standards (such as the Financial Accounting Standards Board, the SEC, and our independent registered public accounting firm) may amend or even reverse their previous interpretations or positions on how these standards should be applied. These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements. For a further discussion of some of our critical accounting policies and standards and recent accounting changes, see Critical Accounting Policies and Estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1 Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.

Shortages of skilled labor could adversely impact our operations. We depend on skilled labor in the manufacture, maintenance, and repair of our products. Some of our facilities are located in areas where demand for skilled laborers may exceed supply. Shortages of some types of skilled laborers, such as welders, could restrict our ability to maintain or increase production rates and could increase our labor costs.

Some of our employees belong to labor unions, and strikes or work stoppages could adversely affect our operations. We are a party to collective bargaining agreements with various labor unions at some of our operations in the U.S. and all of our operations in Mexico. Disputes with regard to the terms of these agreements or our potential inability to negotiate acceptable contracts with these unions in the future could result in, among other things, strikes, work stoppages or other slowdowns by the affected workers. We cannot be assured that our relations with our workforce will remain positive or that union organizers will not be successful in future attempts to organize at some of our facilities. If our workers were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized, or the terms and conditions in future labor agreements were renegotiated, we could experience a significant disruption of our operations and higher ongoing labor costs. In addition, we could face higher labor costs in the future as a result of severance or other charges associated with lay-offs, shutdowns or reductions in the size and scope of our operations or difficulties of restarting our operations that have been temporarily shuttered.

From time to time we may take tax positions that the Internal Revenue Service or other taxing jurisdictions may contest. We have in the past and may in the future take tax positions that the Internal Revenue Service (“IRS”) or other taxing jurisdictions may challenge. We are required to disclose to the IRS as part of our tax returns particular tax positions in which we have a reasonable basis for the position but not a "more likely than not" chance of prevailing. If the IRS successfully contests a tax position that we take, we may be required to pay additional taxes or fines which may not have been previously accrued that may adversely affect our results of operations and financial position.

Our inability to produce and disseminate relevant and/or reliable data and information pertaining to our business in an efficient, cost-effective, secure, and well-controlled fashion may have significant negative impacts on confidentiality requirements and obligations and proprietary needs and expectations and, therefore, our future operations, profitability, and competitive position. Management relies on information technology infrastructure and architecture, including hardware, network, software, people, and processes to provide useful and confidential information to conduct our business in the ordinary course, including correspondence and commercial data and information interchange with customers, suppliers, legal counsel, governmental agencies, and financial institution consultants, and to support assessments and conclusions about future plans and initiatives pertaining to market demands, operating performance, and competitive positioning. In addition, any material failure, interruption of service, compromised data security, or cybersecurity threat could adversely affect our relations with suppliers and customers, place us in violation of confidentiality and data protection laws, rules, and regulations, and result in negative impacts to our market share, operations, and profitability. Security breaches in our information technology could result in theft, destruction, loss, misappropriation, or release of confidential data or intellectual property which could adversely impact our future results.

Discord, conflict, and lack of compromise within and amongst the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, and U.S. borrowing/debt ceiling limits could adversely affect our business and operating results. The legislative and executive branches of the U.S. government have encountered one or more impasses or deadlocks relative to federal government budgeting, tax revenue requirements, deficit spending, and management of short and long term U.S. government borrowing, debt ratings, and debt ceiling adjustments. Continuing impasse or deadlock could negatively impact U.S. domestic and global financial markets thereby reducing demand by our customers for our products and services and potentially result in reductions in our revenues, increased price competition, or increased operating costs, any of which could adversely affect our business results of operations and financial condition.

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The Company could potentially fail to successfully integrate new businesses or products into its current business. The Company routinely engages in the search for growth opportunities, including assessment of merger and acquisition prospects in new markets and/or products. Any merger or acquisition in which the Company becomes involved and ultimately concludes is subject to integration into the Company's businesses and culture. If such integration is unsuccessful to any material degree, such lack of success could result in unexpected claims or otherwise have a material adverse effect on our business, operations, or overall financial condition.

Additional Information. Our Internet website address is www.trin.net. Information on the website is available free of charge. We make available on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto, as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. The contents of our website are not intended to be incorporated by reference into this report or in any other report or document we file and any reference to our website is intended to be an inactive textual reference only.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We principally operate in various locations throughout the U.S. and in Mexico and Canada. Our facilities are considered to be in good condition, well maintained, and adequate for our purposes.



	Approximate Square Feet		Approximate Square Feet Located In
	Owned	Leased	US	Mexico	Canada
Rail Group	6,586,100	129,500	4,638,800	2,076,800	—
Construction Products Group	1,859,500	101,900	1,930,300	31,100	—
Inland Barge Group	996,700	81,000	1,077,700	—	—
Energy Equipment Group	2,805,800	554,600	2,589,100	687,900	83,400
Corporate Offices	231,200	3,100	211,000	23,300	—
	12,479,300	870,100	10,446,900	2,819,100	83,400

Our estimated weighted average production capacity utilization for the twelve month period ended December 31, 2014 is reflected by the following percentages:



	Production Capacity Utilized
Rail Group	90	%
Construction Products Group	65	%
Inland Barge Group	85	%
Energy Equipment Group	85	%

Item 3. Legal Proceedings.

See Note 18 of the Notes to Consolidated Financial Statements.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the New York Stock Exchange under the ticker symbol “TRN”. The following table shows the closing price range of our common stock by quarter for the years ended December 31, 2014 and 2013⁽¹⁾.



	Prices
Year Ended December 31, 2014	High		Low
Quarter ended March 31, 2014	$	37.32	$	27.08
Quarter ended June 30, 2014	43.74		33.82
Quarter ended September 30, 2014	50.30		41.56
Quarter ended December 31, 2014	43.12		26.57



Year Ended December 31, 2013	High		Low
Quarter ended March 31, 2013	$	22.70	$	18.10
Quarter ended June 30, 2013	22.31		17.65
Quarter ended September 30, 2013	23.09		17.88
Quarter ended December 31, 2013	28.33		21.79

⁽¹⁾Stock prices have been adjusted to reflect a 2-for-1 stock split issued in the form of a 100% stock dividend in June 2014.

Our transfer agent and registrar as of December 31, 2014 was American Stock Transfer & Trust Company.

Holders

At December 31, 2014, we had 1,885 record holders of common stock. The par value of the common stock is $1.00 per share.

Dividends

Trinity has paid 203 consecutive quarterly dividends. Quarterly dividends declared by Trinity for the years ended December 31, 2014 and 2013 are as follows⁽²⁾:



	Year Ended December 31,
	2014		2013
Quarter ended March 31,	$	0.075	$	0.055
Quarter ended June 30,	0.100		0.065
Quarter ended September 30,	0.100		0.075
Quarter ended December 31,	0.100		0.075
Total	$	0.375	$	0.270

⁽²⁾Per share amounts have been adjusted to reflect a 2-for-1 stock split issued in the form of a 100% stock dividend in June 2014.

Recent Sales of Unregistered Securities

None.

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Performance Graph

The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.

The following graph compares the Company's cumulative total stockholder return (assuming reinvestment of dividends) during the five-year period ended December 31, 2014 with an overall stock market index (New York Stock Exchange Composite Index) and the Company's peer group index (Dow Jones US Commercial Vehicles & Trucks Index). The data in the graph assumes $100 was invested on December 31, 2009.



	2009	2010	2011	2012	2013	2014
Trinity Industries, Inc.	100	155	177	214	331	343
Dow Jones US Commercial Vehicles & Trucks Index	100	165	145	162	194	201
New York Stock Exchange Composite Index	100	114	110	128	161	172

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Issuer Purchases of Equity Securities N EED

This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended December 31, 2014:



Period	Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share ⁽¹⁾		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs⁽²⁾
October 1, 2014 through October 31, 2014	2,358	$	36.98	—	$	218,529,671
November 1, 2014 through November 30, 2014	441	$	35.01	—	$	218,529,671
December 1, 2014 through December 31, 2014	299	$	28.85	—	$	218,529,671
Total	3,098	$	35.91	—	$	218,529,671

⁽¹⁾These columns include the following transactions during the three months ended December 31, 2014: (i) the surrender to the Company of 618 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees and (ii) the purchase of 2,480 shares of common stock by the Trustee for assets held in a non-qualified employee profit-sharing plan trust.

⁽²⁾In March 2014, the Company's Board of Directors authorized a new $250 million share repurchase program that expires on December 31, 2015 and replaced the Company's previously authorized $200 million share repurchase program. Under the new program, no shares were repurchased during the three months ended December 31, 2014. The approximate dollar value of shares that were eligible to be repurchased under such share repurchase program is shown as of the end of such month or quarter.

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Item 6. Selected Financial Data.

The following financial information for the five years ended December 31, 2014 has been derived from our audited consolidated financial statements. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included elsewhere herein.



	Year Ended December 31,
	2014			2013			2012			2011			2010
	(in millions, except percent and per share data)
Statement of Operations Data:
Revenues	$	6,170.0		$	4,365.3		$	3,811.9		$	2,938.3		$	1,930.7
Operating profit	1,251.0			772.9			574.8			426.8			294.2
Income from continuing operations	709.3			386.1			251.9			146.8			69.4
Gain on sale of discontinued operations, net of provision for income taxes of $-, $5.4, $-, $-, and $-	—			7.1			—			—			—
Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $-, $(0.8), $1.1, $(0.4), and $3.6	—			(0.8		)	1.8			(1.1		)	6.0
Net income	$	709.3		$	392.4		$	253.7		$	145.7		$	75.4
Net income attributable to Trinity Industries, Inc.	$	678.2		$	375.5		$	255.2		$	142.2		$	67.4
Net income attributable to Trinity Industries, Inc. per common share:
Basic:
Continuing operations	$	4.35		$	2.34		$	1.59		$	0.89		$	0.39
Discontinued operations	—			0.04			0.01			(0.01		)	0.04
	$	4.35		$	2.38		$	1.60		$	0.88		$	0.43
Diluted:
Continuing operations	$	4.19		$	2.34		$	1.58		$	0.89		$	0.39
Discontinued operations	—			0.04			0.01			(0.01		)	0.04
	$	4.19		$	2.38		$	1.59		$	0.88		$	0.43
Weighted average number of shares outstanding:
Basic	151.0			152.8			154.7			154.9			153.7
Diluted	156.7			152.9			155.1			155.4			154.0
Dividends declared per common share	$	0.375		$	0.270		$	0.210		$	0.175		$	0.160

Balance Sheet Data:
Total assets	$	8,733.8		$	7,313.4		$	6,669.9		$	6,121.0		$	5,760.0
Debt - recourse	$	829.3		$	419.0		$	458.1		$	455.0		$	449.4
Debt - non-recourse	$	2,723.7		$	2,570.8		$	2,596.9		$	2,517.2		$	2,457.4
Stockholders' equity	$	3,397.4		$	2,749.1		$	2,137.6		$	1,948.3		$	1,845.7
Ratio of total debt to total capital	51.1		%	52.1		%	58.8		%	60.4		%	61.2		%
Book value per share	$	21.83		$	17.75		$	13.52		$	12.15		$	11.57

Per share and share amounts have been adjusted to reflect a 2-for-1 stock split issued in the form of a 100% stock dividend in June 2014.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

•Company Overview

•Executive Summary

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Commercial Commitments

•Critical Accounting Policies and Estimates

•Recent Accounting Pronouncements

•Forward-Looking Statements

Our MD&A should be read in conjunction with our Consolidated Financial Statements and related Notes in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Company Overview

Trinity Industries, Inc., headquartered in Dallas, Texas, is a diversified industrial company that owns market-leading businesses providing products and services to the energy, transportation, chemical, and construction sectors. We operate in five distinct business groups which we report on a segment basis: the Rail Group, Construction Products Group, Inland Barge Group, Energy Equipment Group, and Railcar Leasing and Management Services Group. We also report the All Other segment which includes the Company's captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; and other peripheral businesses.

Our Rail and Inland Barge Groups and our structural wind towers, utility structures, and storage and distribution containers businesses operate in cyclical industries. Results in our Construction Products and Energy Equipment Groups are subject to seasonal fluctuations with the first quarter historically being the weakest quarter. Railcar sales from the lease fleet are the primary driver of fluctuations in results in the Railcar Leasing and Management Services Group.

Demand conditions and corresponding order levels for new railcars continue to be favorable across a wide variety of industries. While demand conditions and corresponding order levels for barges serving the oil and gas markets have slowed recently, favorable conditions exist long term for barges in the chemical and petrochemical markets. In other markets, such as agricultural products, demand has recently been strong for hopper barges. Budgetary constraints at the Federal and state levels, and pending litigation in our Highway Products business have negatively impacted the results of our Construction Products Group.

We continually assess our manufacturing capacity and take steps to align our production capacity with demand for our products. Due to improvements in demand for certain products, we have continued to increase production staff at certain facilities. We expect that facilities on non-operating status will be available for future operations should demand increase further.

Executive Summary

The Company’s revenues for 2014 were $6.2 billion, representing an increase of $1.8 billion or 41% over last year. Operating profit increased to $1.3 billion compared to $0.8 billion last year for an increase of 61.9%. Operating margin improved to 20.3% in 2014 from 17.7% in 2013. The increase in revenues for 2014, when compared to the prior year, resulted primarily from higher shipment volumes and higher pricing due to increased overall demand and a more favorable product mix in our Rail Group. Additionally, our Leasing Group experienced significantly higher revenues from external railcar sales along with higher leasing and management revenues related to higher utilization and rental rates. Revenues in our Energy Equipment Group increased primarily due to higher volumes and acquisitions. Revenues in our Construction Products Group were higher in our Aggregates business due to acquisitions and higher volumes. Increased deliveries and a more favorable product mix led to higher revenues for our Inland Barge Group. Overall operating profit and margin grew for the year ended December 31, 2014, when compared with the prior year, primarily due to higher shipment levels and the effects of a more favorable product mix in our Rail Group, higher railcar sales from our Leasing Group, and increased volumes in our Construction Products, Inland Barge, and Energy Equipment Groups. Selling, engineering, and administrative expenses increased for the year ended December 31, 2014, primarily due to increased staffing and higher performance-related compensation costs in addition to increased legal expenses. The Company's headcount, including both production and non-production personnel, has increased approximately 20% since the end of 2013 primarily due to production expansion and acquisitions. Net income from continuing operations for the year ended December 31, 2014 was $709.3 million and increased $323.2 million or 83.7% over the prior year. Net income attributable to Trinity Industries, Inc. common stockholders for the year ended December 31, 2014 was $678.2 million and increased $302.7 million or 80.6% over the prior year.

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As of December 31, 2014 and 2013 our backlog of firm and noncancellable orders was as follows:



	December 31, 2014		December 31, 2013
	(in millions)
Rail Group
External Customers	$	5,204.3	$	4,189.6
Leasing Group	2,010.5		827.0
	$	7,214.8	$	5,016.6
Inland Barge Group	$	437.9	$	429.6
Wind towers	$	473.5	$	553.9

Capital expenditures for 2014 were $464.6 million with $245.3 million utilized for net lease fleet additions, net of deferred profit of $133.1 million. Manufacturing and corporate capital expenditures for 2015 are projected to be between $250.0 million and $300.0 million. For 2015, we expect the annual net cash investment in new railcars in our lease fleet to be between $55.0 million and $70.0 million after considering the expected proceeds received from leased railcar sales during the year.

During the year ended December 31, 2014, the Company received proceeds of $882.7 million from the sale of leased railcars to Element Financial Corporation ("Element") under the strategic alliance with Element announced in December 2013, including $200.4 million recorded as revenue by the Rail Group. From the total proceeds received from Element, the Leasing Group recorded $446.6 million in revenue from the sale of railcars owned one year or less at the time of sale. The remainder of the proceeds of $235.7 million is attributable to the sale of railcars owned more than one year at the time of sale and is, consequently, excluded from revenue. Since the inception of our alliance, the Company has received proceeds of $987.7 million from the sale of leased railcars to Element.

In March 2014, the Company’s Board of Directors authorized a new $250 million share repurchase program that expires on December 31, 2015 and replaced the Company's previously authorized $200 million share repurchase program. Under the new program, 747,246 shares were repurchased during the year ended December 31, 2014, at a cost of $31.5 million.

In May 2014, the Company's partially-owned leasing subsidiary, TRIP Rail Holdings LLC ("TRIP Holdings"), acquired $388 million in railcar equipment from Trinity Industries Leasing Company ("TILC"). In connection with this portfolio purchase, TRIP Master Funding issued $335.7 million in aggregate principal amount of Series 2014-1 Secured Railcar Equipment Notes pursuant to the Master Indenture between TRIP Master Funding and Wilmington Trust Company, as indenture trustee, with a final maturity date of April 2044. The TRIP Master Funding Series 2014-1 Secured Railcar Equipment Notes consist of two classes with the Class A-1 notes bearing interest at 2.86% and the Class A-2 notes bearing interest at 4.09%. The TRIP Master Funding Secured Railcar Equipment Notes are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings and are secured by TRIP Master Funding's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRIP Master Funding. As of December 31, 2014, there were $108.7 million and $220.7 million of Class A-1 and Class A-2 notes outstanding, respectively. The remainder of the purchase price was provided by TILC and the third-party investors of TRIP Holdings who contributed $21.6 million and $49.6 million, respectively, net of expenses.

In May 2014, the Company's Board of Directors authorized a 2-for-1 stock split. The stock split was issued in the form of a 100% stock dividend. The additional shares were distributed on June 19, 2014, to shareholders of record at the close of business on June 5, 2014. All share and per share information, including dividends, has been retroactively adjusted to reflect the 2-for-1 stock split, except for the statement of stockholders' equity which will reflect the stock split by reclassifying from "Capital in Excess of Par Value" to "Common Stock" in the amount of $78.0 million which equals the par value of the additional shares issued to effect the stock split.

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Additionally, the Company increased its quarterly dividend in May 2014 by 33%. On a stock-split adjusted basis, the Company increased its quarterly dividend to $0.10 per share compared to the previous, split-adjusted level of $0.075 per share.

In August 2014, Trinity completed its acquisition of the assets of Meyer, the utility steel structures division of Thomas & Betts Corporation, a member of the ABB Group, for approximately $595.6 million in cash. Meyer is one of North America's leading providers of tubular steel structures for electricity transmission and distribution. During the year ended December 31, 2014, we completed the acquisitions of the assets of WesMor Cryogenic Companies and Alloy Custom Products, Inc., expanding the Company's engineering and manufacturing capabilities to provide cryogenic storage and distribution products. We also completed the acquisition of the assets of Platinum Energy Services Corporation in Alberta, Canada, a manufacturer and seller of oil and gas process and storage equipment as well as the acquisition of a galvanizing services business located in Texas.

In September 2014, the Company issued $400.0 million aggregate principal amount of 4.55% senior notes ("Senior Notes") due October 2024. Interest on the Senior Notes is payable semiannually commencing April 1, 2015. The Senior Notes rank senior to existing and future subordinated debt including the Company's Convertible Subordinated Notes and rank equal to existing and future senior indebtedness, including the Company's revolving credit facility. The Senior Notes are subordinated to all the Company's existing and future secured debt to the extent of the value of the collateral securing such indebtedness. The Senior Notes could restrict our ability to incur additional debt; make certain distributions, investments, and other restricted payments; create certain liens; and consolidate, merge, or transfer all or substantially all of our assets. The Company’s Senior Notes are fully and unconditionally and jointly and severally guaranteed by certain of Trinity’s 100%-owned subsidiaries. See Note 19 of the Notes to the Consolidated Financial Statements for Financial Statements for Guarantors of the Senior Notes. Proceeds from the note issuance are intended to be used for general corporate purposes.

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Results of Operations

Years Ended December 31, 2014, 2013, and 2012

Overall Summary for Continuing Operations

Revenues



	Year Ended December 31, 2014
	Revenues								Percent Change 2014 versus 2013
	External		Intersegment			Total			Percent Change 2014 versus 2013
	($ in millions)
Rail Group	$	3,077.6	$	739.2		$	3,816.8		33.1		%
Construction Products Group	546.1		5.6			551.7			5.1
Inland Barge Group	638.5		—			638.5			10.7
Energy Equipment Group	796.0		196.3			992.3			49.1
Railcar Leasing and Management Services Group	1,106.4		11.9			1,118.3			73.3
All Other	5.4		105.0			110.4			27.5
Segment Totals before Eliminations	6,170.0		1,058.0			7,228.0			34.7
Eliminations – Lease subsidiary	—		(710.1		)	(710.1		)
Eliminations – Other	—		(347.9		)	(347.9		)
Consolidated Total	$	6,170.0	$	—		$	6,170.0		41.3		%

	Year Ended December 31, 2013
	Revenues								Percent Change 2013 versus 2012
	External		Intersegment			Total			Percent Change 2013 versus 2012
	($ in millions)
Rail Group	$	2,093.5	$	774.0		$	2,867.5		42.4		%
Construction Products Group	508.6		16.4			525.0			8.5
Inland Barge Group	576.6		0.1			576.7			(14.6	)
Energy Equipment Group	536.5		128.9			665.4			19.1
Railcar Leasing and Management Services Group	645.4		—			645.4			(0.3	)
All Other	4.7		81.9			86.6			6.4
Segment Totals before Eliminations	4,365.3		1,001.3			5,366.6			20.4
Eliminations – Lease subsidiary	—		(756.5		)	(756.5		)
Eliminations – Other	—		(244.8		)	(244.8		)
Consolidated Total	$	4,365.3	$	—		$	4,365.3		14.5		%

	Year Ended December 31, 2012
	Revenues
	External		Intersegment			Total
	($ in millions)
Rail Group	$	1,512.1	$	500.9		$	2,013.0
Construction Products Group	461.2		22.5			483.7
Inland Barge Group	675.2		—			675.2
Energy Equipment Group	506.0		52.6			558.6
Railcar Leasing and Management Services Group	644.4		2.7			647.1
All Other	13.0		68.4			81.4
Segment Totals before Eliminations	3,811.9		647.1			4,459.0
Eliminations – Lease subsidiary	—		(485.9		)	(485.9		)
Eliminations – Other	—		(161.2		)	(161.2		)
Consolidated Total	$	3,811.9	$	—		$	3,811.9

Our revenues for the year ended December 31, 2014, increased by 41.3% from the previous year. The increase was primarily due to higher shipment volumes and pricing due to increased overall demand and a more favorable product mix in our Rail Group combined with the effects of higher volumes in our Construction Products, Inland Barge, and Energy Equipment Groups. In addition to higher volumes, revenues from our Inland Barge Group increased as a result of favorable product mix changes while an increase in revenues from our Energy Equipment Group was primarily due to acquisitions completed in 2014. Our Leasing Group experienced higher leasing and management revenues due to increased rental rates and higher utilization as well as higher external railcar sales.

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Our revenues for the year ended December 31, 2013, increased by 14.5% from the previous year. The overall increase was primarily due to higher shipment volumes and a favorable change in product mix in our Rail Group, acquisition-related higher shipment volumes in the Aggregates and Other product lines of our Construction Products Group, and higher revenues in our Energy Equipment Group resulting primarily from increased demand for storage and distribution container vessels and other product lines. Lower revenues in our Inland Barge Group were due to lower volumes and a less favorable product mix while revenues in our Railcar Leasing and Management Services Group were substantially unchanged as higher revenue from leasing and management were offset by lower revenues from railcar sales.

Operating Costs

Operating costs are comprised of cost of revenues; selling, engineering, and administrative costs; and gains or losses on property disposals.



	Year Ended December 31,
	2014			2013			2012
	(in millions)
Rail Group	$	3,092.7		$	2,377.8		$	1,814.0
Construction Products Group	486.3			472.4			438.9
Inland Barge Group	524.1			480.7			550.5
Energy Equipment Group	884.2			604.0			540.4
Railcar Leasing and Management Services Group	602.0			348.6			346.2
All Other	136.0			100.3			91.6
Segment Totals before Eliminations and Corporate Expenses	5,725.3			4,383.8			3,781.6
Corporate	119.0			73.4			51.5
Eliminations – Lease subsidiary	(577.0		)	(621.1		)	(435.1		)
Eliminations – Other	(348.3		)	(243.7		)	(160.9		)
Consolidated Total	$	4,919.0		$	3,592.4		$	3,237.1

Operating costs for the year ended December 31, 2014, increased by 36.9% over the previous year primarily due to higher shipment levels in our manufacturing segments and higher railcar sales in our Leasing Group. Selling, engineering, and administrative expenses increased overall primarily due to higher performance-related compensation costs and increased staffing in addition to increased legal expenses. For 2013, the 11.0% increase in operating costs over the previous year was primarily due to higher shipment levels in our Rail, Construction Products, and Energy Equipment Groups. Operating costs from our Inland Barge Group decreased due to lower shipment volumes and a change in the mix of barge types. As a percentage of revenue, our selling, engineering, and administrative expenses were 6.5% for 2014 as compared to 6.7% for 2013 and 5.9% for 2012.

Operating Profit (Loss)



	Year Ended December 31,
	2014			2013			2012
	(in millions)
Rail Group	$	724.1		$	489.7		$	199.0
Construction Products Group	65.4			52.6			44.8
Inland Barge Group	114.4			96.0			124.7
Energy Equipment Group	108.1			61.4			18.2
Railcar Leasing and Management Services Group	516.3			296.8			300.9
All Other	(25.6		)	(13.7		)	(10.2		)
Segment Totals before Eliminations and Corporate Expenses	1,502.7			982.8			677.4
Corporate	(119.0		)	(73.4		)	(51.5		)
Eliminations – Lease subsidiary	(133.1		)	(135.4		)	(50.8		)
Eliminations – Other	0.4			(1.1		)	(0.3		)
Consolidated Total	$	1,251.0		$	772.9		$	574.8

Our operating profit for the year ended December 31, 2014 increased by 61.9% primarily as a result of higher shipments in our manufacturing segments as well as higher railcar sales in our Leasing Group. Our operating profit for the year ended December 31, 2013 increased by 34.5% primarily as a result of higher shipment levels in our Rail Group in addition to improved efficiencies in our Energy Equipment Group.

For a further discussion of revenues, costs, and the operating results of individual segments, see Segment Discussion below.

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Other Income and Expense. Other income and expense is summarized in the following table:



	Year Ended December 31,
	2014			2013			2012
	(in millions)
Interest income	$	(1.9	)	$	(2.1	)	$	(1.5	)
Interest expense	193.4			187.3			194.7
Other, net	(4.6		)	(2.8		)	(4.3		)
Consolidated Total	$	186.9		$	182.4		$	188.9

Interest expense in 2014 increased $6.1 million over the prior year primarily due to the issuance of the Company's Senior Notes in September 2014. Interest expense in 2013 decreased $7.4 million over the prior year primarily due to the TRIP Holdings debt refinancing completed in May 2013. The increase in Other, net income for the year ended December 31, 2014 was primarily due to higher foreign currency translation gains. The decrease in Other, net income for the year ended December 31, 2013 was due to higher foreign currency translation gains in 2012 exceeding the gains recognized in 2013 from the change in fair value of certain equity repurchase agreements.

Income Taxes. The provision for income taxes results in effective tax rates that differ from the statutory rates. The following is a reconciliation between the statutory U.S. Federal income tax rate and the Company’s effective income tax rate on income from continuing operations:



	Year Ended December 31,
	2014		2013		2012
Statutory rate	35.0	%	35.0	%	35.0	%
State taxes	1.4		2.1		2.0
Domestic production activities deduction	(2.0	)	(1.4	)	—
Noncontrolling interest in partially-owned subsidiaries	(1.1	)	(0.9	)	—
Tax assessments and settlements	—		—		(0.6	)
Changes in valuation allowances and reserves	0.1		(0.8	)	(1.4	)
Other, net	(0.1	)	0.6		(0.3	)
Effective rate	33.3	%	34.6	%	34.7	%

Our effective tax rate reflects a current tax benefit available for U.S. manufacturing activity in addition to income attributable to the noncontrolling interests in TRIP Holdings and RIV 2013. In 2013, TRIP Holdings and RIV 2013 elected to be treated as partnerships for income tax purposes and, consequently, no income tax expense has been provided with respect to income earned after this election attributable to the noncontrolling interests. See Note 5 of the Notes to the Consolidated Financial Statements for a further explanation of activities with respect to TRIP Holdings and RIV 2013. See Note 13 of the Notes to the Consolidated Financial Statements for a further discussion of income taxes.

Income from continuing operations before income taxes for the years ended December 31, 2014, 2013, and 2012 was $1,051.4 million, $571.2 million, and $376.3 million, respectively, for U.S. operations, and $12.6 million, $19.3 million, and $9.6 million, respectively, for foreign operations. The Company provides deferred income taxes on the un-repatriated earnings of its foreign operations where it results in a deferred tax liability.

At December 31, 2014, the Company had $33.5 million of Federal consolidated net operating loss carryforwards and $3.6 million of tax-effected state loss carryforwards remaining. The Federal net operating loss carryforwards were acquired as part of an acquisition of a company in 2010 and are subject to limitations on the amount that can be utilized in any one tax year. The Federal net operating loss carryforwards are due to expire in 2028 and 2029. We have established a valuation allowance for Federal, state, and foreign tax operating losses and credits which we have estimated may not be realizable.

The IRS field work for our 2006-2008 audit cycle has concluded and all issues, except for transfer pricing, have been agreed upon and tentatively settled. The transfer pricing issue has been appealed and we are working with both the U.S. and Mexican taxing authorities to coordinate taxation in a formal mutual agreement process (“MAP”). During 2013, we received the revenue agent report for the 2009-2011 audit cycle. All issues have been concluded and agreed to except for transfer pricing issues. The transfer pricing issues have been appealed and we have requested they be addressed in the same MAP as the 2006-2008 cycle. At this time, we cannot determine when the 2006-2008 or the 2009-2011 cycle will close and all issues formally settled.

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Income tax payments, net of refunds, compared to our current provision are different based on 1) when estimated tax payments are due as compared to when the income was earned, 2) changes in our uncertain tax positions that are reflected in current expense, and 3) excess tax benefits from stock-based compensation that are reflected in stockholders' equity. At December 31, 2014, the Company's consolidated income tax position was a net receivable of $48.3 million from Federal, state, and foreign jurisdictions whereas at December 31, 2013, the Company's tax position was a net payable of $28.9 million for a net change of $77.2 million. Income taxes paid, net of refunds, during the years ended December 31, 2014, 2013, and 2012 totaled $399.0 million, $110.9 million, and $18.4 million, respectively.

Segment Discussion

Rail Group



	Year Ended December 31,									Percent Change
	2014			2013			2012			2014 versus 2013		2013 versus 2012
	($ in millions)
Revenues:
Rail	$	3,674.8		$	2,736.7		$	1,850.5		34.3	%	47.9	%
Components	142.0			130.8			162.5			8.6		(19.5	)
Total revenues	3,816.8			2,867.5			2,013.0			33.1		42.4

Operating costs:
Cost of revenues	3,027.2			2,330.8			1,773.9			29.9		31.4
Selling, engineering, and administrative costs	65.5			47.0			40.1			39.4		17.2
Operating profit	$	724.1		$	489.7		$	199.0		47.9		146.1
Operating profit margin	19.0		%	17.1		%	9.9		%

As of December 31, 2014, 2013, and 2012 our Rail Group backlog of railcars was as follows:



	Year Ended December 31,
	2014		2013		2012
	(in millions)
External Customers	$	5,204.3	$	4,189.6	$	2,867.5
Leasing Group	2,010.5		827.0		834.7
Total	$	7,214.8	$	5,016.6	$	3,702.2

The changes in the number of railcars in the Rail Group backlog are as follows:



	Year Ended December 31,
	2014		2013		2012
Beginning balance	39,895		31,990		29,000
Orders received	51,395		32,240		22,350
Shipments	(30,255	)	(24,335	)	(19,360	)
Ending balance	61,035		39,895		31,990

Revenues increased for the year ended December 31, 2014 by 33.1% when compared with the prior year with approximately three-fourths of the increase resulting from higher unit deliveries and the remainder of the increase due to improved pricing and product mix changes. Cost of revenues increased for the year ended December 31, 2014 by 29.9% when compared with the prior year primarily due to an increase in unit deliveries.

Revenues increased for the year ended December 31, 2013 by 42.4% when compared to 2012 with slightly more than half of the increase resulting from an increase in unit deliveries and the remainder due to improved pricing and product mix changes. Cost of revenues increased for the year ended December 31, 2013 by 31.4% when compared with the prior year with approximately 80% of the increase resulting from an increase in unit deliveries and the remainder arising from product mix changes.

Unit increases and higher prices increased total backlog dollars by 43.8% when comparing December 31, 2014 to the prior year. The average selling price in the backlog at December 31, 2014 was 6.0% lower as compared to the previous year due to product mix changes. Backlog increased when comparing 2013 versus 2012 due to unit and price increases, as well as product mix change. The backlog dedicated to the Leasing Group is fully supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery as directed by our customers.

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For the year ended December 31, 2014, railcar shipments included sales to the Leasing Group of $710.1 million compared to $756.5 million in the comparable period in 2013, with a deferred profit of $133.1 million compared to $135.4 million for the same period in 2013. Results for the year ended December 31, 2012, included $485.9 million in sales to the Leasing Group with a deferred profit of $50.8 million. Sales to the Leasing Group and related profits are included in the operating results of the Rail Group but are eliminated in consolidation.

The Leasing Group purchases a portion of our railcar production, financing a portion of the purchase price through a non-recourse warehouse loan facility or cash, and periodically refinances those borrowings through equipment financing transactions. In 2014, the Leasing Group purchased 22.5% of our railcar production compared to 27.2% in 2013. On a segment basis, sales to the Leasing Group and related profits are included in the operating results of our Rail Group but are eliminated in consolidation.

Construction Products Group



	Year Ended December 31,									Percent Change
	2014			2013			2012			2014 versus 2013		2013 versus 2012
	($ in millions)
Revenues:
Highway products	$	317.6		$	335.9		$	376.1		(5.4	)%	(10.7	)%
Aggregates	152.1			112.7			65.1			35.0		73.1
Other	82.0			76.4			42.5			7.3		79.8
Total revenues	551.7			525.0			483.7			5.1		8.5

Operating costs:
Cost of revenues	430.9			409.6			387.0			5.2		5.8
Selling, engineering, and administrative costs	67.8			63.3			52.0			7.1		21.7
Property disposition gains	(12.4		)	(0.5		)	(0.1		)
Operating profit	$	65.4		$	52.6		$	44.8		24.3		17.4
Operating profit margin	11.9		%	10.0		%	9.3		%

Revenues increased for the year ended December 31, 2014 by 5.1% compared to the same period in 2013. During the year ended December 31, 2014, slightly more than half of the 35.0% increase in revenues in our Aggregates business was due to the timing of acquisitions and the remainder was due to increased sales volume. The 5.4% decrease in Highway Products revenue resulted from lower sales volumes. Cost of revenues increased by 5.2% for the year ended December 31, 2014 when compared to the prior year due to higher volumes in our Aggregates business partially offset by a $2.6 million gain from the settlement of certain liabilities related to Aggregates acquisitions in 2013. Selling, engineering, and administrative costs increased by 7.1% for the year ended December 31, 2014 compared to the same period in 2013 primarily due to higher compensation expenses. The property disposition gains for the year ended December 31, 2014 primarily related to the sale of certain land held by our Aggregates business.

Revenues increased for the year ended December 31, 2013 by 8.5% compared to the same period in 2012. Increases in revenue in our Aggregates and Other businesses were due to acquisitions while the 10.7% decrease in our Highway Products business was due to lower sales volumes. Similarly, cost of revenues increased by 5.8% for the year ended December 31, 2013, due to acquisition-related increases of approximately 15.6% offset by lower costs from lower Highway Products volumes of 9.8%. Selling, engineering, and administrative costs increased by 21.7% in 2013 primarily due to acquisitions.

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Inland Barge Group



	Year Ended December 31,									Percent Change
	2014			2013			2012			2014 versus 2013		2013 versus 2012
	($ in millions)
Revenues	$	638.5		$	576.7		$	675.2		10.7	%	(14.6	)%

Operating costs:
Cost of revenues	506.6			461.5			538.9			9.8		(14.4	)
Selling, engineering, and administrative costs	17.5			19.2			15.4			(8.9	)	24.7
Property disposition gains	—			—			(3.8		)
Operating profit	$	114.4		$	96.0		$	124.7		19.2		(23.0	)
Operating profit margin	17.9		%	16.6		%	18.5		%

Revenues increased for the year ended December 31, 2014 by 10.7% compared to the same period in 2013 with two-thirds of the increase resulting from higher delivery volumes and the remainder due to product mix changes. Cost of revenues increased at a lower rate than the increase in revenues for the year ended December 31, 2014 when compared to the same period in the prior year due to product mix changes. Selling, engineering, and administrative costs decreased for the year ended December 31, 2014 compared to the same period in 2013 due to a legal reserve regarding a matter originating over ten years ago involving a foreign subsidiary recorded during the three months ended March 31, 2013 as well as decreased employee-related and consulting costs.

Revenues decreased for the year ended December 31, 2013 by 14.6% compared to the same period in the prior year with two-thirds of the decrease resulting from lower delivery volumes and the remainder arising from a change in the mix of barge types. Cost of revenues decreased primarily due to product mix changes. Selling, engineering, and administrative costs increased by 24.7% for the year ended December 31, 2013 primarily as a result of increased employee-related and consulting costs as well as a legal reserve recorded during the three month period ended March 31, 2013 regarding a matter originating over ten years ago involving a foreign subsidiary. Operating costs for the year ended December 31, 2012 included a $3.4 million net gain from sales of barges previously included in property, plant, and equipment that were under lease to third-party customers.

As of December 31, 2014, the backlog for the Inland Barge Group was $437.9 million compared to $429.6 million as of December 31, 2013. Deliveries for multi-year barge agreements are included in the backlog when specific production quantities for future years have been determined.

Energy Equipment Group



	Year Ended December 31,									Percent Change
	2014			2013			2012			2014 versus 2013		2013 versus 2012
	($ in millions)
Revenues:
Wind towers and utility structures	$	454.6		$	280.1		$	294.0		62.3	%	(4.7	)%
Other	537.7			385.3			264.6			39.6		45.6
Total revenues	992.3			665.4			558.6			49.1		19.1

Operating costs:
Cost of revenues	810.5			559.0			510.3			45.0		9.5
Selling, engineering, and administrative costs	74.8			45.0			30.8			66.2		46.1
Property disposition gains	(1.1		)	—			(0.7		)
Operating profit	$	108.1		$	61.4		$	18.2		76.1		237.4
Operating profit margin	10.9		%	9.2		%	3.3		%

In August 2014, Trinity completed its acquisition of the assets of Meyer for approximately $595.6 million in cash. Meyer is one of North America's leading providers of tubular steel structures for electricity transmission and distribution. Along with three other acquisitions completed earlier in the year, the operations of Meyer are included with the Company's Energy Equipment Group. We have combined revenues from our wind towers and utility structures product lines due to the similarity of the related products and markets. Previously reported amounts have been restated to reflect this change.

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Revenues for the year ended December 31, 2014 increased by 49.1% compared to the same period in 2013 with revenue from acquisitions completed during 2014 totaling $186.1 million and the remainder of the increase due to higher volumes. Revenues from the wind towers and utility structures product lines increased by 62.3% while other revenues increased by 39.6% for the year ended December 31, 2014. Other revenues includes results primarily from our storage and distribution containers and tank heads product lines. Cost of revenues increased by 45.0% for the year ended December 31, 2014 compared to 2013. A little less than two-thirds of the increase was due to acquisitions while the remainder of the increase was due to higher volumes. Selling, engineering, and administrative costs increased by 66.2% for the year ended December 31, 2014 compared to 2013 primarily due to acquisitions.

Revenues for the year ended December 31, 2013 increased by 19.1% compared to the same period in 2012. Other revenues increased by 45.6%, with two-thirds of the increase due to volume increases and the remainder due to an acquisition. Revenue from wind towers and utility structures decreased by 4.7% due primarily to a change in the type of wind towers produced. Cost of revenues for the year ended December 31, 2013 increased 9.5% consisting of a 19.9% increase due to higher volumes in our storage and distribution containers, tank heads, and utility structures businesses partially offset by a 10.4% decrease due to product mix changes in our structural wind towers business. Selling, engineering, and administrative costs increased in 2013 by 46.1% primarily related to an acquisition and additional compensation costs.

As of December 31, 2014, the backlog for wind towers was $473.5 million compared to $553.9 million as of December 31, 2013. The Company does not report backlog from its utility structures business because certain contracts contain partial order cancellation provisions.

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Railcar Leasing and Management Services Group



	Year Ended December 31,									Percent Change
	2014			2013			2012			2014 versus 2013		2013 versus 2012
	($ in millions)
Revenues:
Leasing and management	$	632.0		$	586.9		$	528.5		7.7	%	11.1	%
Sale of railcars owned one year or less at the time of sale	486.3			58.5			118.6
Total revenues	$	1,118.3		$	645.4		$	647.1		73.3		(0.3	)

Operating profit:
Leasing and management	$	287.9		$	267.3		$	242.6		7.7		10.2
Railcar sales:
Railcars owned one year or less at the time of sale	136.1			9.1			24.8
Railcars owned more than one year at the time of sale	92.3			20.4			33.5
Total operating profit	$	516.3		$	296.8		$	300.9		74.0		(1.4	)

Operating profit margin:
Leasing and management	45.6		%	45.5		%	45.9		%
Railcar sales	*			*			*
Total operating profit margin	46.2			46.0			46.5

Selected expense information⁽¹⁾:
Depreciation	$	130.0		$	129.0		$	120.5		0.8		7.1
Maintenance	$	78.9		$	71.5		$	59.4		10.3		20.4
Rent	$	52.9		$	53.3		$	50.9		(0.8	)	4.7
Interest:
External	$	153.3		$	153.5		$	161.2
Intercompany	—			3.8			13.1
Total interest expense	$	153.3		$	157.3		$	174.3		(2.5	)	(9.8	)

* Not meaningful

⁽¹⁾ Depreciation, maintenance, and rent expense are components of operating profit. Amortization of deferred profit on railcars sold from the Rail Group to the Leasing Group is included in the operating profits of the Leasing Group resulting in the recognition of depreciation expense based on the Company's original manufacturing cost of the railcars. Interest expense is not a component of operating profit and includes the effect of hedges. Intercompany interest expense is eliminated in consolidation and arises from Trinity’s previous ownership of a portion of TRIP Holdings’ Senior Secured Notes, which notes were retired in full in May 2013. See Note 11 Debt of the Notes to the Consolidated Financial Statements.

Total revenues increased by 73.3% for the year ended December 31, 2014 compared to 2013 due to increased railcar sales. Forty-five percent of the increase in leasing and management revenues was due to higher average rental rates on renewals and 25% was due to net fleet additions with the remainder resulting from higher utilization and other fees. Sales of railcars owned one year or less at the time of sale included $446.6 million in railcar sales to Element for the year ended December 31, 2014. Additionally, proceeds from the sale of railcars owned more than one year included $235.7 million in railcar sales to Element for the year ended December 31, 2014. These transactions were completed as part of the Company's strategic alliance with Element announced in December 2013.

Total revenues for the year ended December 31, 2013 were substantially unchanged compared to the prior year, reflecting a decrease in railcar sales from the lease fleet primarily due to lower volumes, offset by an 11.1% increase in leasing and management revenues. Of the increase in leasing and management revenues, 70% was due to lease fleet additions while the remainder was due primarily to higher rental rates in our lease fleet.

Operating profit increased by 74.0% for the year ended December 31, 2014 compared to 2013 due to higher profit from railcar sales. Leasing and management profits increased primarily due to higher average rental rates in our lease fleet, partially offset by increased maintenance costs resulting from higher regulatory compliance activity for the year ended December 31, 2014 when compared to 2013. Selling, engineering, and administrative costs increased to $49.6 million for the year ended December 31, 2014 from $37.6 million for the year ended December 31, 2013 primarily due to increased staffing and higher performance-related compensation costs.

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Operating profit for the year ended December 31, 2013 was substantially unchanged compared to the prior year with lower profit from railcar sales offset by higher profit from operations. Increased profit from operations resulting from higher rental rates and additions to the lease fleet more than offset higher operating costs for the year ended December 31, 2013 when compared to the prior year. Depreciation, maintenance, and rent expense increased due to lease fleet additions and additional maintenance costs resulting primarily from increased mileage and regulatory requirements. Interest expense decreased as a result of lower borrowings.

The Leasing Group generally uses its non-recourse $475 million warehouse facility or cash to provide initial financing for a portion of the purchase price of the railcars. After initial financing, the Leasing Group generally obtains long-term financing for the railcars in the lease fleet through non-recourse asset-backed securities, long-term non-recourse operating leases pursuant to sales/leaseback transactions; long-term recourse debt such as equipment trust certificates; or third-party equity. See Other Financing Activities.

Information regarding the Leasing Group’s lease fleet follows:



	December 31, 2014		December 31, 2013		December 31, 2012
Number of railcars	75,930		75,685		71,455
Average age in years	7.8		7.2		6.7
Average remaining lease term in years	3.4		3.3		3.3
Fleet utilization	99.5	%	99.5	%	98.6	%

All Other



	Year Ended December 31,									Percent Change
	2014			2013			2012			2014 versus 2013		2013 versus 2012
	($ in millions)
Revenues	$	110.4		$	86.6		$	81.4		27.5	%	6.4	%

Operating costs:
Cost of revenues	125.2			94.6			86.8			32.3		9.0
Selling, engineering, and administrative costs	9.4			6.0			5.2			56.7		15.4
Property disposition losses/(gains)	1.4			(0.3		)	(0.4		)
Operating loss	$	(25.6	)	$	(13.7	)	$	(10.2	)

Revenues increased by 27.5% for the year ended December 31, 2014 compared to 2013 due to increased revenues from our transportation company resulting from higher internal shipments. The increase in operating loss for the year ended December 31, 2014 was due to higher costs of facility maintenance activities, higher costs related to commodity hedges, and higher reserves.

The increase in revenues for the year ended December 31, 2013 compared to the prior year of 6.4% was primarily due to higher internal billings related to facility maintenance activities. The increase in operating loss for the year ended December 31, 2013 was primarily due to certain reserves related to non-operating facilities.

Corporate



	Year Ended December 31,						Percent Change
	2014		2013		2012		2014 versus 2013		2013 versus 2012
	($ in millions)
Operating costs	$	119.0	$	73.4	$	51.5	62.1	%	42.5	%

The increase in operating costs for the year ended December 31, 2014