<HTML>
<HEAD>
<TITLE>ORIGINAL FILING ON FORM S-1</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>As filed with the Securities and Exchange Commission on
August
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],
2005</B>
</DIV>

<DIV align="right" style="font-size: 10pt;">
<B>Registration
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>
</DIV>

<DIV align="left" style="font-size: 6pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Form&nbsp;S-1</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>REGISTRATION STATEMENT</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>UNDER</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Exact name of Registrant as specified in its charter)</I>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B>Missouri</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>3743</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>43-1481791</B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <I>(State or other jurisdiction of<BR>
    incorporation or organization)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I>(Primary Standard Industrial<BR>
    Classification Code Number)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I>(I.R.S. employer<BR>
    identification number)</I></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>100 Clark Street</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>St. Charles, MO 63301</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(636)&nbsp;940-6000</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Address, including zip code, and telephone number, including
area code, of registrant&#146;s principal executive offices)</I>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>James J. Unger</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>President and Chief Executive Officer</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>100 Clark Street</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>St. Charles, MO 63301</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(636)&nbsp;940-6000</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(Name, address, including zip code, and telephone number,</I>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>including area code, of agent for service)</I>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Copies To:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B>Philip J. Flink, Esquire<BR>
    Samuel P. Williams, Esquire<BR>
    BROWN RUDNICK BERLACK ISRAELS LLP<BR>
    One Financial Center<BR>
    Boston, MA 02111<BR>
    (617) 856-8200</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>Lisa L. Jacobs, Esquire<BR>
    SHEARMAN&nbsp;&#38; STERLING LLP<BR>
    599 Lexington Avenue<BR>
    New York, NY 10022<BR>
    (212) 848-4000</B></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Approximate date of commencement of proposed sale to the
public:</B> As soon as practicable after the effectiveness of
this registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to
Rule&nbsp;415 under the Securities Act of 1933, please check the
following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this form is filed to register additional securities for an
offering pursuant to Rule&nbsp;462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this form is a post-effective amendment filed pursuant to
Rule&nbsp;462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this form is a post-effective amendment filed pursuant to
Rule&nbsp;462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If delivery of the prospectus is expected to be made pursuant to
Rule&nbsp;434, please check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="center" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALCULATION OF REGISTRATION FEE</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Proposed Maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Title of Each Class of</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Aggregate Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Amount of</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Securities to be Registered</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Price(a)(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Registration Fee</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common Stock, par value $0.01&nbsp;per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    $150,000,000</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    $17,655</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    Includes shares of Common Stock to cover over-allotments, if any.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    Estimated solely for the purpose of calculating the registration
    fee in accordance with Rule&nbsp;457(o) promulgated under the
    Securities Act of 1933, as amended.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section&nbsp;8(a)
of the Securities Act, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section&nbsp;8(a), may determine.</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 8pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" cellpadding="5" style="border: 3pt double #000000; margin-bottom: 6pt; font-size: 10pt"><TR><TD>
<B><FONT style="font-size: 9pt" color="#E8112D">The information
in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This preliminary prospectus is not an offer to sell
these securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
</FONT></B>
</TD></TR></TABLE>

<DIV style="margin-top: 1pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
</TR>

<TR valign="top">
    <TD align="left"> <FONT style="font-size: 8pt" color="#E8112D">PRELIMINARY PROSPECTUS</FONT></TD>
    <TD align="center"><FONT color="#E8112D">Subject to Completion</FONT></TD>
    <TD align="right"><FONT color="#E8112D">August [&nbsp; <FONT face="wingdings">l</FONT>&nbsp; ], 2005</FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 14pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;Shares</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084806.gif" alt="(ARI LOGO)">
</DIV>

<DIV align="left" style="font-size: 14pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 14pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Common Stock</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
This is our initial public offering of our common stock. No
public market currently exists for our common stock. We are
offering &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock by this prospectus. We expect the public
offering price to be between
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We expect to apply to have our common stock approved for
quotation on the Nasdaq National Market under the trading symbol
&#147;ARII.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Investing in our common stock involves a high degree of risk.
Before buying any shares, you should carefully read the
discussion of material risks of investing in our common stock in
&#147;Risk factors&#148; beginning on page&nbsp;11 of this
prospectus.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Per share</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Total</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Public offering price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Underwriting discounts and commissions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds, before expenses, to us</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The underwriters may also purchase up to an
additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock at the public offering price, less the
underwriting discounts and commissions, to cover
over-allotments, if any, within 30&nbsp;days from the date of
this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The underwriters are offering the common stock as set forth
under &#147;Underwriting.&#148; Delivery of the shares will be
made on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2005.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Joint Book-Running Managers</I>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 16pt;">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><B>UBS Investment Bank</B></TD>
    <TD align="right"><B>Bear, Stearns&nbsp;&#38; Co. Inc.</B></TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The date of this prospectus
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2005.
</DIV>
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<DIV align="left" style="font-size: 10pt;">

</DIV>

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<!-- TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name="tocpage"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
You should rely only on the information contained in this
prospectus. We have not, and the underwriters have not,
authorized anyone to provide you with additional information or
information different from that contained in this prospectus. We
are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of shares
of our common stock.
</DIV>

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Table of contents
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="93%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#101'>Prospectus summary</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    1</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#102'>Risk factors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    12</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#103'>Special note regarding forward-looking
    statements</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    33</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#104'>Use of proceeds</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    35</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#105'>Dividend policy and restrictions</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    37</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#106'>Capitalization</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    38</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#107'>Dilution</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    39</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#108'>Selected consolidated financial data</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    40</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#109'>Management&#146;s discussion and analysis
    of financial condition and results of operations</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    43</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#110'>Industry</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    67</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#111'>Business</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    74</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#112'>Management</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    93</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#113'>Certain relationships and related party
    transactions</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    102</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#114'>Description of capital stock</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    118</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#115'>Shares eligible for future sale</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    122</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#116'>Material U.S.&nbsp;income tax
    considerations for non-U.S.&nbsp;holders</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    124</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#117'>Underwriting</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    128</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#118'>Legal matters</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    132</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#119'>Experts</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    132</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#120'>Where you can find more information</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    133</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Index to financial statements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    F-1</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y10848exv10w18.htm">EX-10.18: MULTI-YEAR PURCHASE AND SALE AGREEMENT</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y10848exv21w1.htm">EX-21.1: SUBSIDIARIES</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y10848exv23w1.htm">EX-23.1: CONSENT OF GRANT THORNTON LLP</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y10848exv23w2.htm">EX-23.2: CONSENT OF KPMG LLP</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y10848exv24w1.htm">EX-24.1: POWERS OF ATTORNEY</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;">
<!-- /TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In this prospectus, references to &#147;our company,&#148;
&#147;we,&#148; &#147;us&#148; and &#147;our&#148; refer to
American Railcar Industries, Inc. and its subsidiaries, except
where the context otherwise indicates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI&#174;, Pressureaide&#174;, Center Flow&#174; and our railcar
logo are our U.S.&nbsp;registered trademarks. Each trademark,
trade name or service mark of any other company appearing in
this prospectus belongs to its respective holder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The market and industry data and forecasts included in this
prospectus are based upon independent industry sources,
including the Association of American Railroads, the Railway
Supply Institute, Inc., Global Insight and the
U.S.&nbsp;Department of Agriculture. Although we believe that
these independent sources are reliable, we have not
independently verified the accuracy and completeness of this
information, nor have we independently verified the underlying
economic assumptions relied upon in preparing any forecasts. See
&#147;Risk factors&#151; Risks related to our business&#151; The
market and industry data contained in this prospectus, including
estimates and forecasts relating to the growth of the railcar
market, cannot be verified with certainty and may prove to be
inaccurate.&#148;
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Until &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2005 (the 25th&nbsp;day after the date of this prospectus), all
dealers that effect transactions in our common stock, whether or
not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers&#146;
obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<B>i</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt;">
<A name='101'></A>
</DIV>

<!-- link1 "Prospectus summary" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prospectus summary
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>This summary highlights information contained elsewhere in
this prospectus. It is not complete and may not contain all the
information that may be important to you. You should read the
entire prospectus carefully before making an investment
decision, especially the information presented under the heading
&#147;Risk factors&#148; and our consolidated financial
statements and the related notes included elsewhere in this
prospectus.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR COMPANY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are a leading North American manufacturer of covered hopper
and tank railcars. We also repair and refurbish railcars,
provide fleet management services and design and manufacture
certain railcar and industrial components used in the production
of our railcars as well as railcars and non-railcar industrial
products produced by others. We provide our railcar customers
with integrated solutions through a comprehensive set of high
quality products and related services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our primary customers include companies that purchase railcars
for lease by third parties, or leasing companies, industrial
companies that use railcars for freight transport, or shippers,
and Class&nbsp;I railroads. In servicing this customer base, we
believe our integrated railcar repair and refurbishment and
fleet management services and our railcar components
manufacturing business help us further penetrate the general
railcar manufacturing market. These products and services
provide us with significant cross-selling opportunities and
insights into our customers&#146; railcar needs that we use to
improve our products and services and enhance our reputation for
high quality. Although we build, service and manage railcars
through an integrated, complementary set of products and
services, we have chosen not to offer railcar leasing services
so that we do not compete with our leasing company customers,
which represent a significant source of our revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For the year ended December&nbsp;31, 2004, we generated total
revenues of $355.1&nbsp;million and net income of
$2.3&nbsp;million. For the six months ended June&nbsp;30, 2005,
we generated total revenues of $291.6&nbsp;million and net
income of $9.0&nbsp;million. As of June&nbsp;30, 2005, our total
railcar backlog was 7,084 railcars. This amount excludes the
9,000 to 12,000 railcars that the CIT Group/ Equipment
Financing, Inc., or CIT, has agreed to purchase from us during
the 2006 to 2008 period, subject to conditions, under an
agreement we entered into with CIT on July&nbsp;29, 2005,
described below under &#147;Recent Developments.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR HISTORY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Since our formation in 1988, we have grown our business from
being a small provider of railcar components and maintenance
services to one of North America&#146;s leading integrated
providers of railcars, railcar components, railcar maintenance
services and fleet management services. In October 1994 we
acquired railcar components manufacturing and railcar
maintenance assets from ACF Industries, Incorporated (now known
as ACF Industries, LLC), or ACF, a company controlled by
Carl&nbsp;C. Icahn, our principal beneficial stockholder and the
chairman of our board of directors. Through this acquisition, we
also hired members of ACF&#146;s management, many of whom,
including our president, remain a significant part of our
current management team. These executives brought with them
established relationships with important customers and suppliers
and extensive industry knowledge, as ACF and its predecessor
companies have roots in the railcar manufacturing industry that
trace back to 1873. Led by this management team, we entered the
railcar manufacturing business through the construction of new
manufacturing facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In August 1995 we produced our first railcar at our Paragould,
Arkansas manufacturing facility. We primarily manufacture
covered hopper railcars at our Paragould facility, but we have
the ability to manufacture many other types of railcars at this
facility. The Paragould facility initially had two railcar
manufacturing lines. We added to this facility painting and
lining capabilities in 1999 and a third manufacturing line in
December 2004. We are currently constructing additional painting
and lining
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 1</B>
</DIV>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt;">
capabilities at our Paragould facility to increase efficiency,
which we expect to open at the end of 2005. Our Paragould
facility also features component manufacturing capabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In January 2000 we produced our first railcar at our Marmaduke,
Arkansas manufacturing facility. We manufacture tank railcars at
this facility. The design of this facility enables us to
manufacture many different types of tank railcars at the same
time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Since 1994 we have significantly expanded our components
manufacturing and railcar services operations. Our operations
now include three railcar assembly, sub-assembly and fabrication
facilities, three railcar and industrial component manufacturing
facilities, six railcar repair plants and four mobile repair
units. Our services business has grown to include online access
by customers, remote fleet management, expanded painting, lining
and cleaning offerings, regulatory consulting and engineering
support. Additionally, members of our management team helped
found and develop, and continue to operate, a joint venture,
Ohio Castings Company, LLC, which we refer to as Ohio Castings,
in which we own a one-third interest and that manufactures and
sells sideframes, bolsters, couplers and yokes for distribution
to third parties and to us. We believe that our involvement in
this joint venture helps us maintain our levels of production at
competitive prices, despite industry-wide shortages of these
potentially capacity constraining components.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR INDUSTRY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Overview.</I> Demand for railcars reflects their importance
to the North American economy in moving goods and raw materials.
In periods of rising economic activity, fleet utilization
typically increases, driving an increase in demand for new
railcars, which also increases backlog for new railcars.
Conversely, during economic slowdowns, fleet utilization
typically declines, resulting in reduced demand, deliveries and
backlog for new railcars. According to Global Insight, orders
for new railcars are expected to be strong with deliveries
projected to average&nbsp;59,100 railcars per year from 2005
through 2010. This compares to deliveries of 17,714 railcars in
2002, 32,184 railcars in 2003 and 46,871 railcars in 2004, as
reported by Railway Supply Institute, or RSI. RSI reported that
at the end of 2004, the total backlog for the railcar
manufacturing industry reached 58,677 railcars. This growth
trend has continued through the first six months of 2005, with
36,695 new railcars ordered and 33,695 railcars delivered, with
total backlog increasing to 60,544 railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe the main characteristics and trends affecting the
North American railcar industry are:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the cyclical nature of the railcar
    market;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the replacement demand for the
    aging North American railcar fleet;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the shift in the customer base
    from railroads to leasing companies and shippers;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the consolidation of railcar
    manufacturers.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Covered hopper railcars.</I> North American demand for
covered hopper railcars has shown renewed strength due to
increased shipments of a variety of products including plastics,
chemicals and food. We believe there will be strong demand for
covered hopper railcars in the North American market over the
next several years. Global Insight forecasts a significant
increase in deliveries of covered hopper railcars, from 3,801 in
2003 and 5,602 in 2004 to 13,924 in 2005 and 16,779 in 2006,
with deliveries averaging approximately 15,750 railcars per year
from 2007 through 2010. We believe the main characteristics and
trends affecting the North American covered hopper railcar
market are:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the health of the
    U.S.&nbsp;economy;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">increases in production of a
    number of consumer and business durable goods;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">increases in domestic and
    international demand for U.S.&nbsp;agricultural products;
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 2</B>
</DIV>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">increases in demand for corn used
    in ethanol production;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the need to replace aging covered
    hopper railcars.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Tank railcars.</I> Tank railcars are in higher demand in
North America as manufacturing activity, and the need for
liquids and gases used in manufacturing, increases. The
manufacturing of tank railcars is highly regulated and their
production requires a specially trained workforce and dedicated
manufacturing facilities. As a result, the tank railcar market
is difficult to enter and competition is concentrated. We
believe the demand for tank railcars in the North American
market will continue to be strong and stable over the next
several years. Global Insight projects an increase in tank
railcar deliveries, from 8,176 in 2003 and 8,939 in 2004, to
10,803 in 2005 and 11,058 in 2006, with deliveries averaging
approximately 9,900 tank railcars per year from 2007 through
2010. We believe the main characteristics and trends affecting
the North American tank railcar market are:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">increases in manufacturing
    activity and the resulting demand for higher volumes of
    chemicals and gases;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">increases in demand for
    petrochemicals, ethanol, edible and lubricating oils and liquid
    food products;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the need to replace aging tank
    railcars.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
These trends affecting the railcar industry and the covered
hopper and tank railcar markets are discussed in the section
entitled &#147;Industry.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR BUSINESS STRENGTHS AND COMPETITIVE ADVANTAGES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that the following key business strengths and
competitive advantages will contribute to our growth:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Leading railcar manufacturer
    with focus on the covered hopper and tank railcar
    markets.</FONT></I></B><FONT style="font-size: 10pt"> We are a
    leading North American manufacturer of covered hopper and tank
    railcars. Over the last three years we believe we have produced
    an estimated 33% of the covered hopper railcars and an estimated
    16% of the tank railcars delivered in North America. Based on a
    report by the Association of American Railroads, these represent
    the two largest segments of the North American railcar industry,
    with covered hopper railcars representing approximately 30% and
    tank railcars representing approximately 19% of the total North
    American railcar fleet, based on the number of railcars in
    service. We believe our railcars are differentiated by their
    superior quality, innovation and reliability.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Modern non-union, low cost
    railcar manufacturing facilities in strategic
    locations.</FONT></I></B><FONT style="font-size: 10pt"> Unlike
    many of our competitors, we manufacture all of our railcars in
    modern facilities built in the last ten years. We designed these
    facilities to provide manufacturing flexibility and allow for
    the production of a variety of railcar sizes and types. We
    strategically located these facilities in close proximity to our
    main customers and suppliers. This reduces freight time and
    costs for the components we purchase and the time for delivery
    of completed railcars. Over the past several years, we have
    increased our production capacity and efficiency and reduced our
    fixed costs per railcar through a number of targeted operational
    improvements, such as design changes that reduce the amount of
    raw materials necessary for production of railcars. Currently
    none of our over 1,100 employees at our Paragould and Marmaduke
    railcar manufacturing facilities are represented by a union.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Preferred access to
    components through in-house production, a joint venture and
    strategic sourcing
    arrangements.</FONT></I></B><FONT style="font-size: 10pt"> We
    produce many of the components necessary to our railcar
    manufacturing business ourselves and we own a one-third interest
    in, and our management team operates, our Ohio Castings joint
    venture, from which we obtain certain other components. We
    believe our in-house production capabilities and our involvement
    in this joint venture help us
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 3</B>
</DIV>
</DIV>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

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    <TD width="97%"></TD>
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    <TD></TD>
    <TD align="left">
    maintain access to components at competitive prices, despite
    industry-wide shortages of these potentially capacity
    constraining components. We also have developed and actively
    maintain strategic sourcing arrangements and strong
    relationships with our suppliers. These arrangements and
    relationships help ensure our continued access to critical
    components and raw materials that we use to produce railcars,
    including steel, wheels, and heavy castings. We believe our
    attention to strengthening our supply chain helps us maintain
    operational continuity and high production levels.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT style="font-size: 8pt">&#149;</FONT></TD>
    <TD align="left">
    <B><I>Integrated railcar repair and refurbishment and fleet
    management services complement railcar manufacturing.</I></B> We
    provide a wide array of complementary products and services to
    the railcar industry. Unlike some other railcar manufacturers,
    we also repair, maintain and provide fleet management services
    for existing railcars, including railcars built by others, and
    manufacture railcar components for third parties and us. We
    believe this diverse product and service offering provides us
    with a competitive advantage relative to other railcar
    manufacturers, primarily in the form of cross-selling
    opportunities. We also believe that our ability to address the
    needs of our customers throughout the lifecycle of a railcar
    enhances our customer relationships and provides us with
    additional growth opportunities and unique insights into
    industry trends.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT style="font-size: 8pt">&#149;</FONT></TD>
    <TD align="left">
    <B><I>Strong relationships with a long-term and diverse customer
    base.</I></B> We believe that our customers value our products
    and services. Many of our major customers have been doing
    business with us for a number of years, including CIT, Dow
    Chemical Company, GE Capital Corporation and Solvay America,
    Inc. Many of our customers have demonstrated a willingness to
    purchase several different types of our products and services
    over time. We believe we deliver high quality products and
    services to our customers with low operating and maintenance
    costs, while maintaining what we believe are low levels of
    warranty claims.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT style="font-size: 8pt">&#149;</FONT></TD>
    <TD align="left">
    <B><I>Strong management team with long-standing industry
    experience.</I></B> We have an experienced senior operations
    management team that has an average of over 25&nbsp;years of
    experience in the railcar and related manufacturing industries.
    Our senior operations management team, including our president,
    James J. Unger, has been with us since we began manufacturing
    railcars. This team conceived and built our Paragould and
    Marmaduke railcar manufacturing facilities and has been
    responsible for growing our revenues from $84.7&nbsp;million in
    1994 to $355.1&nbsp;million in 2004.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR STRATEGY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The key elements of our business strategy are as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Maintain and expand presence
    in covered hopper and tank railcar
    markets.</FONT></I></B><FONT style="font-size: 10pt"> We intend
    to maintain and expand our presence in the covered hopper and
    tank railcar markets by continuing to deliver high quality and
    innovative products. We believe our excellent customer
    relationships have enabled us to identify market demands that we
    then target through our product development and marketing
    efforts. We intend to continue the close collaboration between
    our customers and our engineering, marketing, operations and
    management personnel to meet demand and, where appropriate, to
    selectively expand production capacity.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Continue to improve
    operating
    efficiencies.</FONT></I></B><FONT style="font-size: 10pt"> We
    intend to build on the success of our production initiatives at
    our Paragould and Marmaduke railcar manufacturing facilities and
    plan to continue to identify opportunities to enhance operating
    efficiencies across these and our other manufacturing
    facilities. These opportunities include our continued
    streamlining of our manufacturing processes and our quality
    control initiatives. We also intend to continue the efforts of
    our design cost reduction team, formed in 2003, which has
    already significantly reduced our railcar production costs
    through standardization of components used in our railcars,
    design changes to reduce the amount of raw material required for
    our railcars and improved manufacturing techniques that reduce
    our labor requirements. These efforts should allow us to reduce
    our costs and maintain competitive prices.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 4</B>
</DIV>
</DIV>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Continue to grow railcar
    service and fleet management businesses and increase sales of
    railcar and industrial
    components.</FONT></I></B><FONT style="font-size: 10pt"> As the
    existing North American railcar fleet continues to age, we
    anticipate increased demand for maintenance and repair services
    and railcar components used in the maintenance and repair of
    railcars. Additionally, we expect growing demand for our fleet
    management services as ownership of railcars continues to shift
    away from the railroads and toward the shippers and leasing
    companies, which often outsource their fleet management
    activities to third-party service providers such as us. We
    intend to capitalize on these trends and we believe we are well
    positioned to provide increased services through our
    strategically located network of railcar repair and service
    facilities.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Leverage manufacturing
    expertise to selectively expand product
    portfolio.</FONT></I></B><FONT style="font-size: 10pt"> We may
    seek to expand our product portfolio to other selected types of
    railcars. Our management designed and constructed our Paragould
    manufacturing facility to be able to produce most railcar types,
    and we believe our adaptive production lines and flexible
    employees are able to shift production among various railcar
    types with minimal interruption to our operations. In addition,
    as the existing fleet of North American railcars is aging,
    expansion of our product portfolio into new railcar types will
    allow us to grow our business by capturing a portion of the
    natural replacement demand for existing railcar types. Our
    ability to produce other types of railcars positions us to
    respond to customer requests for production outside of our
    traditional markets and provides us additional manufacturing
    flexibility in the event the covered hopper or tank railcar
    markets weaken.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Selectively pursue strategic
    external growth
    opportunities.</FONT></I></B><FONT style="font-size: 10pt"> By
    significantly reducing our debt through this offering and with
    the establishment of a public market for our common stock, we
    believe we will have increased financial flexibility to
    supplement internal growth with select acquisitions and
    alliances. We also believe our in-house fabrication of railcar
    components and our Ohio Castings joint venture provide us with
    competitive advantages and we intend to enhance these advantages
    by selectively acquiring or establishing strategic relationships
    with railcar components manufacturers and suppliers of critical
    raw materials. We may also seek to expand our railcar components
    business into international markets on an opportunistic basis.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>THE TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to use the proceeds of this offering to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">repay outstanding borrowings under
    our revolving credit facility;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">repay the notes payable that we
    issued to ACF Industries Holding Corp. in connection with the
    acquisition of our joint venture interest in Ohio Castings, and
    that we issued to Arnos Corp., both of which are entities
    controlled by Carl C. Icahn, our principal beneficial
    stockholder and the chairman of our board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">redeem all of our industrial
    revenue bonds;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">redeem all of the outstanding
    shares of our preferred stock, all of which are held by Carl C.
    Icahn and his affiliates;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">pay fees and expenses related to
    this offering and the transactions identified above.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For more information, see &#147;Use of proceeds.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our outstanding shares of preferred stock include our
mandatorily redeemable preferred stock and our new preferred
stock. See &#147;Description of capital stock.&#148;
Concurrently with this offering, we expect our president and
chief executive officer, James&nbsp;J. Unger, to exercise an
option to purchase
<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</B>&nbsp;shares
of our common stock for
$<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;</B>per
share, after giving effect to the stock split described below.
See &#147;Management&#151;Executive compensation&#151;Employment
and noncompetition agreements.&#148; Concurrently with this
offering, we also intend to amend provisions of our revolving
credit facility to increase its size, extend its term and modify
certain of its covenants. See
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 5</B>
</DIV>
</DIV>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt;">
&#147;Management&#146;s discussion and analysis of financial
condition and results of operations&#151; Revolving credit
facility&#148; for a description of our existing revolving
credit facility. Immediately prior to the closing of this
offering, we will effect a
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]-for-one
stock split of our common stock, which we refer to as the stock
split. We refer to this offering, the application of the
proceeds of this offering as described above, the exercise of
James&nbsp;J. Unger&#146;s option, the amendment of our
revolving credit facility and the stock split collectively as
the &#147;Transactions.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RECENT DEVELOPMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On July&nbsp;29, 2005 we entered into a multi-year purchase and
sale agreement with The CIT Group/ Equipment Financing, Inc., or
CIT, to manufacture and sell to CIT covered hopper and tank
railcars. Under this agreement, CIT has agreed to buy a minimum
of 3,000 railcars from us in each of 2006, 2007 and 2008 and we
have agreed to offer to sell to CIT up to 1,000 additional
railcars in each of those years. CIT may choose to satisfy its
purchase obligations from among a variety of covered hopper and
tank railcars described in the agreement. CIT may reduce its
future purchase obligations or cancel pending purchase orders,
upon prior written notice to us, under certain conditions. Under
the agreement, purchase prices for railcars are subject to steel
surcharges and certain other material cost increases applicable
at the time of production.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CORPORATE INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We were incorporated in Missouri in 1988 as Corbitt Holding
Corporation, Inc. and changed our name to American Railcar
Industries, Inc. in 1995. The address of our principal executive
offices is 100&nbsp;Clark Street, St. Charles, Missouri, 63301.
Our telephone number is (636)&nbsp;940-6000. Our website address
is www.americanrailcar.com. Information contained in or
connected to our website is not part of this prospectus.
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 6</B>
</DIV>
</DIV>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The offering
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Unless otherwise indicated, all of the information in this
prospectus assumes the underwriters do not exercise their
over-allotment option to purchase additional shares of our
common stock. Please see &#147;Description of capital
stock&#148; for a summary of the terms of our common stock.</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Common stock offered by us</B></TD>
    <TD></TD>
    <TD valign="top">
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Common stock outstanding after this&nbsp;offering</B></TD>
    <TD></TD>
    <TD valign="top">
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Common stock subject to the over-allotment option</B></TD>
    <TD></TD>
    <TD valign="top">
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Use of proceeds</B></TD>
    <TD></TD>
    <TD valign="top">
    We expect to receive net proceeds from the offering of
    approximately
    $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    million, after deducting underwriting discounts and commissions
    and estimated expenses of this offering payable by us, assuming
    an initial offering price of
    $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    per share, which represents the midpoint of the range on the
    cover of this prospectus.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    We intend to use the net proceeds from this offering to repay
    amounts outstanding under our revolving credit facility, repay
    notes due to our affiliates, redeem all of our industrial
    revenue bonds, redeem all shares of our outstanding preferred
    stock and pay the fees and expenses related to the Transactions.
    See &#147;Use of proceeds.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Dividend policy</B></TD>
    <TD></TD>
    <TD valign="top">
    Although our board of directors has never declared or paid any
    cash dividends on our common stock, following this offering we
    intend to pay cash dividends on our common stock. Payment of
    dividends will be at the discretion of our board of directors
    and will depend upon our operating results, strategic plans,
    capital requirements, financial condition, covenants under our
    borrowing arrangements, applicable law and other factors our
    board of directors considers relevant. See &#147;Risk
    factors&#151;Risks related to the purchase of our common stock
    in this offering&#151;Payments of cash dividends on our common
    stock may be made only at the discretion of our board of
    directors and Missouri law may restrict, and the agreements
    governing our revolving credit facility contain various
    covenants that limit, our ability to pay dividends&#148; and
    &#147;Dividend policy and restrictions.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Nasdaq symbol</B></TD>
    <TD></TD>
    <TD valign="top">
    ARII.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Risk factors</B></TD>
    <TD></TD>
    <TD valign="top">
    You should carefully read and consider the information set forth
    under the caption &#147;Risk factors&#148; beginning on
    page&nbsp;11 and all other information set forth in this
    prospectus before investing in our common stock.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Unless otherwise indicated, all of the information in this
prospectus relating to the number of shares of common stock to
be outstanding after this offering gives effect to the
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]-for-one
stock split of our common stock immediately prior to the closing
of this offering and the exercise of the option we granted to
our chief executive officer to purchase
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
shares of our common stock, after giving effect to the stock
split. See &#147;Management&#151;Executive
compensation&#151;Employment and noncompetition agreements.&#148;
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 7</B>
</DIV>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Summary consolidated financial data
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table sets forth our summary consolidated
financial data for the periods presented. The consolidated
statements of operations and cash flow data for the years ended
December&nbsp;31, 2002, 2003 and 2004 and the consolidated
balance sheet data as of December&nbsp;31, 2003 and 2004 are
derived from our audited consolidated financial statements and
related notes included elsewhere in this prospectus. The
consolidated statements of operations and cash flow data for the
years ended December&nbsp;31, 2000 and 2001 and the consolidated
balance sheet data as of December&nbsp;31, 2000, 2001 and 2002
are derived from our audited consolidated financial statements
not included in this prospectus. The consolidated statements of
operations and cash flow data for the six months ended
June&nbsp;30, 2004 and 2005 and the consolidated balance sheet
data as of December&nbsp;31, 2004 and June&nbsp;30, 2005 have
been derived from unaudited consolidated financial statements
and related notes included elsewhere in this prospectus and
reflect all adjustments (consisting only of normal, recurring
adjustments) which are, in the opinion of management, necessary
for a fair presentation of our financial position, the results
of operations and cash flows for the periods presented.
Operating results for the six months ended June&nbsp;30, 2005
are not necessarily indicative of the results that may be
expected for the year ended December&nbsp;31, 2005 or any other
future period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
You should read this information together with
&#147;Capitalization,&#148; &#147;Management&#146;s discussion
and analysis of financial condition and results of
operations&#148; and our consolidated financial statements and
the related notes thereto included elsewhere in this prospectus.
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 8</B>
</DIV>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SUMMARY CONSOLIDATED FINANCIAL DATA</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2000</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="31" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="24">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(unaudited)</B></TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(in thousands, except per share data and railcar amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated Statement of Operations Data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Manufacturing operations(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>200,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>181,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>138,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>188,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>316,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>140,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>269,978</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar services(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,665</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>238,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>214,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>217,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>291,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of manufacturing operations(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>187,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>174,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>305,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>251,060</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar services(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,575</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>224,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>203,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>340,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>269,635</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, administrative and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,651</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,573</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,357</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(604</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(609</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,159</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>924</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before income tax (benefit) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,305</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,040</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,807</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,953</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax (benefit) expense)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,074</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,894</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,745</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income (loss)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,966</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,208</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less preferred dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,090</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss available to common shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,036</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,052</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,921</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,406</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted average shares outstanding (actual shares)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,195</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss) per common share (actual dollars)<BR>
    Basic and diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,036</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,052</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,047</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,406</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated balance sheet data (at period end):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,804</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net working capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,545</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>194,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>356,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,974</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,423</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mandatorily redeemable preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,057</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>77,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>89,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>95,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>135,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>94,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>106,551</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated other operating data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EBITDA(8)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,203</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Items decreasing EBITDA(9)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital expenditures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,560</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcars delivered</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,345</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcar orders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,682</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcar backlog</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,084</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Estimated backlog value(10)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,417</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>129,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>507,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>203,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>505,385</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated cash flow data</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,638</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(18,546</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11,274</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,782</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,189</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(535</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,251</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,441</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(606</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,704</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(12,111</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,369</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>36,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,290</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 9</B>
</DIV>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (1)&nbsp;</I></TD>
    <TD align="left">
    <I>Includes revenues from transactions with affiliates of
    $52.8&nbsp;million, $64.8&nbsp;million, $63.6&nbsp;million,
    $62.9&nbsp;million and $64.4&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $26.4&nbsp;million and
    $28.1&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (2)&nbsp;</I></TD>
    <TD align="left">
    <I>Includes revenues from transactions with affiliates of
    $16.1&nbsp;million, $8.6&nbsp;million, $12.8&nbsp;million,
    $11.0&nbsp;million and $19.4&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $7.7&nbsp;million and
    $11.2&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (3)&nbsp;</I></TD>
    <TD align="left">
    <I>Including costs from transactions with affiliates of
    $46.6&nbsp;million, $57.6&nbsp;million, $55.7&nbsp;million,
    $54.4&nbsp;million and $59.9&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $24.4&nbsp;million and
    $25.9&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (4)&nbsp;</I></TD>
    <TD align="left">
    <I>Includes costs from transactions with affiliates of
    $12.8&nbsp;million, $7.2&nbsp;million, $12.2&nbsp;million,
    $10.1&nbsp;million and $15.5&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $5.9&nbsp;million and
    $9.1&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (5)&nbsp;</I></TD>
    <TD align="left">
    <I>Includes interest income from affiliates of
    $5.6&nbsp;million, $4.3&nbsp;million, $3.4&nbsp;million,
    $3.0&nbsp;million and $3.9&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $1.2&nbsp;million and
    $0.8&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (6)&nbsp;</I></TD>
    <TD align="left">
    <I>Includes interest expense to affiliates of $0.2&nbsp;million
    in 2001, and $1.5&nbsp;million in 2004 and $0.2&nbsp;million and
    $1.2&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (7)&nbsp;</I></TD>
    <TD align="left">
    <I>Share and per share data have not been restated to give
    effect to the stock split.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>&nbsp; (8)&nbsp;</I></TD>
    <TD align="left">
    <I>EBITDA represents net income (loss) before income tax
    expense, interest expense, net and amortization and depreciation
    of property and equipment. We believe EBITDA is useful to
    investors in evaluating our operating performance compared to
    that of other companies in our industry. In addition, our
    management uses EBITDA to evaluate our operating performance.
    The calculation of EBITDA eliminates the effects of financing,
    income taxes and the accounting effects of capital spending.
    These items may vary for different companies for reasons
    unrelated to the overall operating performance of a
    company&#146;s business. EBITDA is not a financial measure
    presented in accordance with U.S.&nbsp;generally accepted
    accounting principles, or U.S.&nbsp;GAAP. Accordingly, when
    analyzing our operating performance, investors should not
    consider EBITDA in isolation or as a substitute for net income
    (loss), cash flows from operating activities or other statements
    of operations or statements of cash flow data prepared in
    accordance with U.S.&nbsp;GAAP. Our calculation of EBITDA is not
    necessarily comparable to that of other similarly titled
    measures reported by other companies.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The following is a reconciliation of net income (loss) to
EBITDA:</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2000</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="28" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(in thousands</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Net income (loss)</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>(1,592</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>(1,966</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>(3,913</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>1,253</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>2,320</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>2,213</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>9,208</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Income tax (benefit) expense</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(713</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(1,074</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(1,894</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>1,256</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>2,438</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>1,714</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>5,745</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Interest expense</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>13,687</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>9,525</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>4,853</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>3,591</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>3,578</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>1,506</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>2,305</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Interest income</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(5,777</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(4,770</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(3,619</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(3,161</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(4,422</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(1,482</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>(977</I></TD>
    <TD align="left" valign="bottom" nowrap><I>)</I></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Depreciation and amortization</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>6,597</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>7,049</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>6,271</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>6,184</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>6,289</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>1,501</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>1,836</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>EBITDA:</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>12,202</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>8,764</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>1,698</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>9,123</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>10,203</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>5,452</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>18,117</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><I>(9)</I></TD>
    <TD align="left">
    <I>Our net income (loss) and EBITDA decreased in the periods
    specified below as a result of the following items:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><I>(a)</I></TD>
    <TD align="left">
    <I>In 2000 and 2001, we incurred start-up expenses totaling
    $8.8&nbsp;million and $1.7&nbsp;million, respectively, in
    connection with our Marmaduke tank railcar manufacturing
    facility. The start-up expenses related to costs associated with
    introducing new tank railcar products, learning new
    manufacturing processes and commencing new operating procedures
    to reach normal productive capacity.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
    <TD width="3%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><I>(b)</I></TD>
    <TD align="left">
    <I>In 2003, we recorded an asset impairment charge of
    $1.2&nbsp;million to reduce the carrying value of inventory,
    buildings and improvements, and equipment related to our Milton,
    Pennsylvania railcar</I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 8pt;">
<B> 10</B>
</DIV>
</DIV>

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    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <I><FONT style="font-size: 9pt">repair plant. Due to reduced
    demand for railcar repairs at this location we elected to idle
    this facility until business conditions warrant its
    reopening.</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD><I>(c)</I></TD>
    <TD align="left">
    <I>In 2004 and in the six months ended June&nbsp;30, 2004 and
    June&nbsp;30, 2005, we incurred an estimated $7.9&nbsp;million,
    $3.1&nbsp;million and $2.4&nbsp;million, respectively, in
    increased raw materials costs, consisting primarily of costs
    relating to steel, and railcar component costs, which we were
    unable to pass on to our customers under our then existing
    fixed-price customer contracts. Since the first quarter of 2004,
    we have renegotiated most of our railcar manufacturing contracts
    to include provisions that adjust the selling prices of our
    railcars to reflect increases or decreases in the costs of
    certain raw materials and railcar components. As a result of
    this change to our railcar manufacturing contracts, we were able
    to pass on to our customers approximately 32% of the increased
    raw material and railcar component costs with respect to the
    railcars that we produced and delivered in 2004. Most of our
    railcar manufacturing contracts covering railcars to be produced
    after June&nbsp;30, 2005 allow for variable pricing to protect
    us against future changes in the cost of certain raw materials
    and railcar components.</I></TD>
</TR>

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    <TD><I>(10)</I></TD>
    <TD align="left">
    <I>Estimated backlog reflects the total sales attributable to
    the backlog reported at the end of the particular period as if
    such backlog were converted to actual sales. Estimated backlog
    does not reflect potential price increases or decreases under
    most of our customer contracts that provide for variable pricing
    based on changes in the cost of certain raw materials and
    railcar components or the possibility that contracts may be
    canceled or railcar delivery dates delayed and does not reflect
    the effects of any cancellation or delay of railcar orders that
    may occur. See &#147;Management&#146;s discussion and analysis
    of financial condition and results of
    operations&#151;Backlog.&#148;</I></TD>
</TR>

</TABLE>

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<DIV align="right" style="font-size: 8pt;">
<B> 11</B>
</DIV>
</DIV>

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</DIV>

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<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<A name='102'></A>
</DIV>

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<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Risk factors
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Investing in our common stock involves a high degree of risk.
Before you invest in our common stock, you should understand and
carefully consider the risks below, as well as all of the other
information contained in this prospectus and our financial
statements and the related notes included elsewhere in this
prospectus. Any of these risks could materially adversely affect
our business, financial condition, results of operations and the
trading price of our common stock, and you may lose all or part
of your investment.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RISKS RELATED TO OUR BUSINESS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Due in part to the highly cyclical nature of the railcar
industry, we have incurred substantial operating losses in the
past and may experience declines in revenue and substantial
operating losses in the future.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Historically, the North American railcar market has been highly
cyclical and we expect it to continue to be highly cyclical.
During the most recent industry cycle, industry-wide railcar
deliveries declined from a peak of 75,704 in 1998 to a low of
17,714 railcars in 2002. During this downturn, our revenues
dropped from $238.8&nbsp;million in 2000 to $168.8&nbsp;million
in 2002 and we incurred losses of $1.6&nbsp;million,
$2.0&nbsp;million and $3.9&nbsp;million in 2000, 2001 and 2002,
respectively. We believe that downturns in the railcar
manufacturing industry will occur in the future and will result
in decreased demand for our products and services. The cycles in
our industry result from many factors that are beyond our
control, including economic conditions in the United States.
Although railcar production has increased since 2002, it may not
persist if favorable economic and other conditions are not
sustained. Even if a sustained economic recovery occurs in the
United States, demand for our railcars may not match or exceed
expected levels. An economic downturn may result in increased
cancellations of railcar orders which could have a material
adverse effect on our ability to convert our railcar backlog
into revenues. In addition, an economic downturn in the United
States could result in lower sales volumes, lower prices for
railcars and a loss of profits for us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
A substantial number of the end users of our railcars acquire
railcars through leasing arrangements with our leasing company
customers. Economic conditions that result in higher interest
rates would increase the cost of new leasing arrangements, which
could cause our leasing company customers to purchase fewer
railcars. A reduction in the number of railcars purchased by our
leasing company customers could have a material adverse effect
on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Increases in the cost of the raw materials that we use to
manufacture railcars, particularly steel, or delivery delays of
these raw materials may materially adversely affect our
business, financial condition and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The production of railcars requires substantial amounts of
steel. The cost of steel and all other materials, including
scrap metal, used in the production of our railcars represents
approximately 80% to 85% of our manufacturing costs. Although we
have negotiated variable pricing provisions in most of our
railcar manufacturing contracts that pass certain increases or
decreases in our steel costs on to our customers, our business
remains subject to risks related to price increases and periodic
delays in the delivery of steel and other raw materials, all of
which are beyond our control. The price for steel, the primary
raw material component of our railcars, increased sharply in
2004 as a result of strong worldwide demand and supply
limitations caused, in part, by steel industry consolidation and
import trade barriers. Price levels for steel have increased
again in 2005 and we expect worldwide demand for steel to
increase, supplies to be more limited and prices to continue to
increase in 2006. In addition,
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 12</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
the price and availability of other railcar components that are
made of steel have been adversely affected by the increased cost
and limited availability of steel. Any fluctuations in the price
or availability of steel, or any other material used in the
production of our railcars, may have a material adverse effect
on our business, financial condition and results of operations.
In addition, if any of our raw material suppliers were unable to
continue its business or were to seek bankruptcy relief, the
availability or price of the materials we use could be adversely
affected. Deliveries of our raw materials, and the components
made from those raw materials, may also fluctuate depending on
supply and demand for the raw material or governmental
regulation relating to the raw material, including regulation
relating to the importation of the raw material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have entered into contracts with most of our railcar
customers that allow for variable pricing to protect us against
future increases in the cost of certain raw materials and
components, including steel. However, in 2004 and in the six
months ended June&nbsp;30, 2005, we were unable to pass on an
estimated $7.9&nbsp;million and $2.4&nbsp;million, respectively,
in increases in raw material and components costs. As prices for
steel, other raw materials and components increase, we may not
be able to pass on such price increases to our customers in the
future, which could adversely affect our operating margins and
cash flows. Even if we are able to increase prices, any such
price increases may reduce demand for our railcars. In addition,
our customers may not be willing to accept contractual terms
that provide for variable pricing and our competitors, in an
effort to gain market share or otherwise, have agreed in the
past, and may in the future agree, to railcar supply
arrangements that provide for fixed pricing. As a result, we may
lose railcar orders or we may be required to agree to supply
railcars with fixed pricing provisions or be subject to less
favorable contract terms, any of which could have a material
adverse effect on our business, financial condition and results
of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Fluctuations in the supply of components and raw materials we
use in manufacturing railcars could cause production delays or
reductions in the number of railcars we manufacture, which could
materially adversely affect our business, financial condition
and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar manufacturing business depends on the adequate
supply of numerous components, such as railcar wheels, brakes,
tank railcar heads, sideframes, axles, bearings, yokes, bolsters
and other heavy castings, and raw materials, such as normalized
steel plate. Over the last few years many suppliers have been
acquired or ceased operations, which has caused the number of
alternative suppliers of components and raw materials to
decline. The combination of industry consolidation and high
demand has caused recent industry-wide shortages of many
critical components as reliable suppliers are frequently at or
near production capacity. For example, with respect to railcar
wheels, there are only two significant suppliers that continue
to produce the type of component we use in our products. We rely
on one of these suppliers for most of our railcar wheels. Also,
a small percentage of the railcar wheels we use are refurbished
and are obtained from scrapped railcars. Supply of these
refurbished railcar wheels is available in limited quantities
and is unpredictable because the supply of refurbished railcar
wheels depends on the level and type of railcars being scrapped
in any given period. The supply of steel is similarly limited.
While we receive regular steel from three suppliers, we have
entered agreements this year requiring us to buy the lesser of a
fixed volume or 75% of our steel requirements from one supplier.
In addition, there is currently only one North American supplier
of the types and sizes of normalized steel plate we use in the
production of many of our tank railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Supply constraints are exacerbated in our industry because,
although multiple suppliers may produce certain components,
railcar manufacturing regulations and the physical capabilities
of manufacturing facilities restrict the types and sizes of
components and raw materials that manufacturers may use. In
addition, we do not carry significant inventories of components
and procure many of our components on a just-in-time basis. With
the recent increased demand for railcars, our remaining
suppliers are facing significant challenges in providing
components and materials on a timely basis to all railcar
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 13</B>
</DIV>

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<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
manufacturers, including to us. In the event that our suppliers
of railcar components and raw materials were to stop or reduce
the production of railcar components and raw materials that we
use, go out of business, refuse to continue their business
relationships with us or become subject to work stoppages, our
business would be disrupted. Our inability to obtain components
and raw materials in required quantities or of acceptable
quality could result in significant delays or reductions in
railcar shipments. Any of these events would materially and
adversely affect our operating results. Furthermore, our ability
to increase our railcar production to expand our business
depends on our ability to obtain an increased supply of these
railcar components and raw materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
While we believe that we may, in certain circumstances, secure
alternative sources of these components and materials, we may
incur substantial delays and significant expense in doing so,
the quality and reliability of alternative sources may not be
the same and our operating results may be materially adversely
affected. Alternative suppliers might charge significantly
higher prices for railcar components and materials than we
currently pay. Even if alternative suppliers are available to
us, these suppliers may be unacceptable to our customers because
our customers often specify the components we may use in
railcars manufactured for them. Under such circumstances, the
disruption to our business could have a material adverse impact
on our customer relationships, business, financial condition and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We operate in a highly competitive industry and we may be
unable to compete successfully, which would materially adversely
affect our results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We face intense competition in all of our markets. In each of
our covered hopper and tank railcar manufacturing businesses we
have two principal competitors. In addition, some of these and
other railcar manufacturers produce railcars primarily for use
in their own railcar leasing operations, competing directly with
leasing companies, some of which are our largest customers. Some
of our competitors have greater financial and technological
resources than we have. Our competitors may increase their
participation in the railcar markets in which we compete and
other railcar manufacturers that currently do not manufacture
covered hopper or tank railcars may choose to compete directly
with us. Railcar purchasers&#146; sensitivity to price and
strong price competition within the industry have historically
limited our ability to increase prices to obtain better margins
on our railcars. Additionally, as we selectively seek to
manufacture different types of railcars we will be competing
against railcar manufacturers with significantly more experience
than we have with regard to such railcar types. Our competition
for the sale of railcar components includes our competitors in
the railcar manufacturing market as well as a concentrated group
of companies whose primary business focus is the production of
one or more specialty components. We compete with numerous
companies in our railcar fleet management and railcar repair
services business, ranging from companies with greater resources
than we have to small, local companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In all our markets, in addition to price, competition is based
on quality, reputation, reliability of delivery, product
performance, customer service and other factors. In particular,
technological innovation by any of our existing competitors, or
new competitors entering any of the markets in which we do
business, could put us at a competitive disadvantage. We may be
unable to compete successfully or retain our market share in our
established markets. Increased competition for the sales of our
railcars, our fleet management and repair services and our
railcar components could result in price reductions, reduced
margins and loss of market share, which could materially
adversely affect our prospects, business, financial condition
and results of operations.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 14</B>
</DIV>

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<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equipment failures, delays in deliveries or extensive damage
to our facilities, particularly our railcar manufacturing
facilities in Paragould or Marmaduke, Arkansas, could lead to
production or service curtailments or shutdowns.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We manufacture our railcars at manufacturing facilities in
Paragould and Marmaduke, Arkansas. An interruption in
manufacturing capabilities at either of these facilities, as a
result of equipment failure or other reasons, could reduce or
prevent the production of our railcars. A halt of production at
either facility could severely delay scheduled railcar delivery
dates to our customers and affect our production schedule, which
would delay future production. Any significant delay in
deliveries to our customers could result in the termination of
orders, cause us to lose future sales and negatively affect our
reputation among our customers and in the railcar industry, all
of which would materially adversely affect our business and
results of operations. Additionally, production delays or
interruptions at our Jackson, St.&nbsp;Charles or Kennett,
Missouri components manufacturing facilities or at our Ohio
Castings joint venture, all of which provide key components to
our Paragould and Marmaduke railcar manufacturing facilities,
could contribute to delays of railcar deliveries and order
cancellations. Interruptions at our repair, cleaning and
maintenance facilities, including our mobile repair units, may
also have a material adverse effect on our business. All of our
manufacturing and service facilities are also subject to the
risk of catastrophic loss due to unanticipated events, such as
fires, earthquakes, explosions, floods or weather conditions. We
may experience plant shutdowns or periods of reduced production
as a result of equipment failures, loss of power, gray outs,
delays in deliveries or extensive damage to any of our
facilities, which could have a material adverse effect on our
business, results of operations or financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We depend upon a small number of customers that represent a
large percentage of our revenues. The loss of any single
customer, or a reduction in sales to any such customer, could
have a material adverse effect on our business, financial
condition and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Railcars are typically sold pursuant to large, periodic orders
and, therefore, a limited number of customers typically
represents a significant percentage of our railcar sales in any
given year. Our top ten customers based on revenues represented,
in the aggregate, approximately 79%, 79% and 82% in 2002, 2003
and 2004, respectively, of our total revenues. Moreover, our top
three customers based on revenues represented, in the aggregate,
approximately 65%, 70% and 59% in 2002, 2003 and 2004,
respectively, of our total revenues. In 2004, sales to our top
three customers accounted for approximately 24%, 20% and 16%,
respectively, of our total revenues. In the six months ended
June&nbsp;30, 2005, sales to our top three customers accounted
for approximately 26%, 21% and 14%, respectively, of our total
revenues. The loss of any significant portion of our sales to
any major customer, the loss of a single major customer or a
material adverse change in the financial condition of any one of
our major customers could have a material adverse effect on our
business, financial condition and financial results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>If we lose key personnel, our operations and ability to
manage the day-to-day aspects of our business may be materially
adversely affected.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe our success depends to a significant degree upon the
continued contributions of our executive officers and key
employees, both individually and as a group. Our future
performance will substantially depend on our ability to retain
and motivate them. If we lose members of our senior management
team or key employees or are unable to recruit qualified
personnel, our ability to manage the day-to-day aspects of our
business may be materially adversely affected. It would be
difficult to replace members of our senior management team or
key employees without materially adversely affecting our
business operations because members of our senior management
team or key employees have many years of experience with our
company and within the railcar industry and other
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 15</B>
</DIV>

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<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
manufacturing industries and strong personal ties with many of
our important customers and suppliers. The loss of the services
of one or more members of our senior management team or key
employees could have a material adverse effect on our business,
financial condition and results of operations. We do not
currently maintain &#147;key person&#148; life insurance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>If we face labor shortages or increased labor costs our
growth and results of operations could be materially adversely
affected.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Due to the cyclical nature of the demand for our products, we
have had to reduce and then rebuild our workforce as our
business has gone through downturns followed by upturns in
business activity. Due to the competitive and rural nature of
the labor markets in which we operate, this type of employment
cycle increases our risk of not being able to retain and recruit
the personnel we require in our railcar manufacturing and other
businesses, particularly in periods of economic expansion. Our
Paragould and Marmaduke facilities are located in sparsely
populated communities and we have experienced a high turnover
rate at these locations among newly-hired employees. The
additional painting and lining capabilities that we are adding
to our Paragould facility, which we expect will be completed by
the end of 2005, will require additional employees to operate.
Our inability to recruit, retain and train adequate numbers of
qualified personnel on a timely basis could materially adversely
affect our ability to operate our businesses, our financial
condition and our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The variable purchase patterns of our railcar customers and
the timing of completion, delivery and acceptance of customer
orders may cause our revenues and income from operations to vary
substantially each quarter, which could result in significant
fluctuations in our quarterly results.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Most of our individual railcar customers do not make railcar
purchases every year because they do not need to replace or
replenish their railcar fleets on a yearly basis. Many of our
customers place orders for railcars on an as-needed basis,
sometimes only once every few years. As a result, the order
levels for railcars, the mix of railcar types ordered and the
railcars ordered by any particular customer have varied
significantly from quarterly period to quarterly period in the
past and may continue to vary significantly in the future.
Railcar sales comprised approximately 75% of our total revenue
in 2004 and 80.7% of our total revenue in the six months ended
June&nbsp;30, 2005, and our results of operations in any
particular quarterly period may be significantly affected by the
number and type of railcars manufactured and delivered in any
given quarterly period. We record the sale of a railcar after
completion of production of the railcar, the railcar is accepted
by the customer following inspection, the risk for any damage or
loss with respect to the railcar passes to the customer and
title to the railcar transfers to the customer. This revenue
recognition policy determines when we record the revenues
associated with our railcar sales and, as a result, will cause
fluctuations in our quarterly results. As a result of these
fluctuations, we believe that comparisons of our sales and
operating results between quarterly periods within the same
fiscal year and between quarterly periods within different
fiscal years may not be meaningful and, as such, these
comparisons should not be relied upon as indicators of our
future performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our relationships with our partners in our Ohio Castings
joint venture may not be successful, which could materially
adversely affect our business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Effective on January&nbsp;1, 2005, we acquired from ACF
Industries Holding Corp., an affiliate of Carl C. Icahn, our
principal beneficial stockholder and the chairman of our board
of directors, its one-third ownership interest in Ohio Castings,
our joint venture with affiliates of Amsted Industries Inc., a
railcar components manufacturing company, and The Greenbrier
Companies, a railcar manufacturer and leasing company. We
acquired this joint venture interest in order to increase our
supply
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 16</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
alternatives for heavy castings, which are critical components
for the manufacture of railcars and the supply of which is
constrained. The companies that supply the railcar industry with
heavy castings have been unable to meet the short-term or
long-term demand of railcar manufacturers and, as such, the
production capacity of many railcar manufacturers, including
ours, is restricted by the limited availability of these
components. Although the allocation of castings that we receive
from Ohio Castings does not provide us with all of our castings
requirements, the joint venture does provide us with a committed
source for a critical portion of the castings that we require
for the successful operation of our business. If Ohio Castings
is unable to provide us with our allocation of castings on a
timely basis or at all, our manufacturing costs could increase
and we may have to delay or cancel the production of ordered
railcars, all of which could materially adversely affect our
business and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The level of our reported railcar backlog may not necessarily
indicate what our future revenues will be and our actual
revenues may fall short of the estimated revenue value
attributed to our railcar backlog.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We define backlog as the number of railcars, and the revenue
value in dollars attributed to these railcars, to which our
customers have committed in writing to purchase from us that
have not yet been recognized as revenues. Our competitors may
not define railcar backlog in the same manner as we do, which
could make comparisons of our railcar backlog with theirs
misleading. In this prospectus, we have disclosed our railcar
backlog for various periods and the estimated revenue value in
dollars that would be attributed to this railcar backlog once
the railcar backlog is converted to actual sales. We consider
railcar backlog to be an indicator of future revenues. However,
our reported railcar backlog may not be converted into revenues
in any particular period, if at all, and the actual revenues
from such sales may not equal our reported estimates of railcar
backlog value. For example, if the price for raw materials, such
as steel, and other components used in the production of our
railcars decreases or increases and we have entered into
applicable variable pricing contracts with a customer or we are
otherwise able to pass on these price changes to a customer, our
actual revenues will differ from the estimated revenue value
attributed to our railcar backlog. In addition, our railcar
manufacturing business relies on third-party suppliers for heavy
castings, wheels and other components and raw materials and if
these third parties were to stop or reduce their supply of
components or raw materials, our production would decline and
our actual revenues would fall short of the estimated revenue
value attributed to our railcar backlog. Customer orders may be
subject to cancellation, inspection rights and other customary
industry terms, all of which could affect our recognition of
revenue currently reflected in our backlog. Furthermore,
delivery dates may be subject to deferral, thereby delaying the
date on which we will deliver the associated railcars and
realize revenues attributable to such railcar backlog.
Therefore, our current level of reported railcar backlog may not
necessarily represent the level of revenues that we may generate
in any future period. Furthermore, any contract included in our
reported railcar backlog that actually generates revenues may
not be profitable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our management and auditors have identified three significant
deficiencies in our internal controls as of December&nbsp;31,
2004, which, if not properly remediated could result in
misstatements in our financial statements in future periods.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our independent auditors, Grant Thornton LLP, issued a letter to
our board of directors in which they identified three
significant deficiencies in the design and operation of our
internal controls as of December&nbsp;31, 2004. A significant
deficiency is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that
a misstatement of the financial statements that is more than
inconsequential will not be prevented or detected. A control
deficiency exists when the design or operation of a control does
not allow management or employees, in the
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 17</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
normal course of performing their assigned functions, to prevent
or detect misstatements on a timely basis. The letter
specifically noted the following significant deficiencies:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Inventory
    cut-off.</FONT></I></B><FONT style="font-size: 10pt"> Our
    manufacturing facilities recorded inventory shipped by our
    vendors to us on the date we received the inventory in our
    facilities, rather than on the date of shipment, which is our
    current procedure.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Construction in
    process.</FONT></I></B><FONT style="font-size: 10pt"> We
    transferred assets from construction in process to fixed assets
    on a quarterly basis rather than at the time assets are actually
    placed into service. There was insufficient documentation
    authorizing the movement of assets from construction in process
    to fixed assets. Certain assets were still being classified as
    construction in process even though the asset was in service.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Fixed asset recording and
    reconciliation.</FONT></I></B><FONT style="font-size: 10pt"> Our
    fixed asset subsidiary ledgers were not updated in a timely
    manner. Supporting ledgers for depreciation schedules were
    tracked using Microsoft Excel. The schedules were not reconciled
    on a timely basis. The procedures surrounding the compilation of
    the data was manual and subject to error.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In light of the noted significant deficiencies, we have
instituted control improvements that we believe will reduce the
likelihood of similar errors. If the remedial policies and
procedures we have implemented are insufficient to address the
three significant deficiencies or if additional significant
deficiencies or other conditions relating to our internal
controls are discovered in the future, we may fail to meet our
future reporting obligations, our financial statements may
contain material misstatements and our operating results may be
adversely affected. Any such failure could also adversely affect
the results of the periodic management evaluations and annual
auditor attestation reports regarding the effectiveness of our
internal controls over financial reporting, which will be
required when the SEC&#146;s rules under Section&nbsp;404 of the
Sarbanes-Oxley Act of 2002 become applicable to us beginning
with the filing of our Annual Report on Form&nbsp;10-K for the
year ended December&nbsp;31, 2006. Internal control deficiencies
could also cause investors to lose confidence in our reported
financial information. Although we believe we have addressed our
significant deficiencies in internal controls with the remedial
measures we have implemented, we cannot guarantee that the
measures we have taken to date or any future measures will
remediate the significant deficiencies identified or that any
additional significant deficiencies will not arise in the future
due to a failure to implement and maintain adequate internal
controls over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Once we become a public company, we will need to comply with
the reporting obligations of the Exchange Act and
Section&nbsp;404 of the Sarbanes-Oxley Act. If we fail to comply
with the reporting obligations of the Exchange Act and
Section&nbsp;404 of the Sarbanes-Oxley Act, or if we fail to
achieve and maintain adequate internal controls over financial
reporting, our business, results of operations and financial
condition, and investors&#146; confidence in us, could be
materially adversely affected.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As a public company, we will be required to comply with the
periodic reporting obligations of the Exchange Act, including
preparing annual reports, quarterly reports and current reports.
Our failure to prepare and disclose this information in a timely
manner could subject us to penalties under federal securities
laws, expose us to lawsuits and restrict our ability to access
financing. In addition, we will be required under applicable law
and regulations to integrate our systems of internal controls
over financial reporting. We plan to evaluate our existing
internal controls with respect to the standards adopted by the
Public Company Accounting Oversight Board. During the course of
our evaluation, we may identify areas requiring improvement and
may be required to design enhanced processes and controls to
address issues identified through this review. This could result
in significant delays and cost to us and require us to divert
substantial resources, including management time, from other
activities.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 18</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For example, during the audit of our 2004 fiscal year, our
independent registered public accounting firm issued a letter to
our board of directors noting certain significant deficiencies,
as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We expect to dedicate significant management, financial and
other resources in connection with our compliance with
Section&nbsp;404 of the Sarbanes-Oxley Act in the second half of
2005. We expect these efforts to include a review of our
existing internal control structure. As a result of this review,
we may either hire or outsource additional personnel to expand
and strengthen our finance function. There have been no external
costs associated with this effort through June&nbsp;30, 2005,
and we cannot be certain at this time that we will be able to
comply with all of our reporting obligations and successfully
complete the procedures, certification and attestation
requirements of Section&nbsp;404 of the Sarbanes-Oxley Act by
the time that we are required to file our Annual Report on
Form&nbsp;10-K for the year ended December&nbsp;31, 2006. If we
fail to achieve and maintain the adequacy of our internal
controls and do not address the deficiencies identified in the
letter received by our board of directors from our auditors, we
may not be able to ensure that we can conclude on an ongoing
basis that we have effective internal controls over financial
reporting in accordance with the Sarbanes-Oxley Act. Moreover,
effective internal controls are necessary for us to produce
reliable financial reports and are important to help prevent
fraud. As a result, our failure to satisfy the requirements of
Section&nbsp;404 of the Sarbanes-Oxley Act on a timely basis
could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could
harm our business and negatively impact the trading price of our
common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Rapid growth is straining our operations and requiring us to
incur costs to upgrade our infrastructure.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
During the last five quarters, we have experienced extremely
rapid growth in our operations, the number of our employees and
our product offerings. Our growth places a significant strain on
our management, operations and financial systems and also on our
ability to retain employees. Our future operating results will
depend in part on our ability to continue to implement and
improve our operating and financial controls and management
information systems. If we fail to manage our growth
effectively, our business, financial condition and results of
operations could be materially adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>After this offering, companies affiliated with Carl C. Icahn
will continue to be important suppliers and customers.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We manufacture railcars and railcar components and provide
railcar services for companies affiliated with Carl C. Icahn,
our principal beneficial stockholder and the chairman of our
board of directors. To the extent our relationships with
affiliates of Mr.&nbsp;Icahn change, our results of operations
and financial condition may be materially adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Affiliates of Mr.&nbsp;Icahn have accounted for approximately
45%, 34%, 24% and 14% of our revenues in 2002, 2003, 2004 and
the six months ended June&nbsp;30, 2005, respectively. This
revenue is primarily attributable to our sale of railcars.
American Railcar Leasing LLC, or ARL, a railcar leasing company
owned by affiliates of Mr.&nbsp;Icahn, currently purchases all
of its railcars from us. However, we have no long-term
agreements with ARL or any other affiliates of Mr.&nbsp;Icahn to
purchase our railcars, and we cannot assure you that ARL or
other affiliates of Mr.&nbsp;Icahn will continue to do so. ARL
could, in the future, purchase railcars from one of our
competitors. In addition, we have a railcar servicing agreement
with ARL, under which we provide fleet management services for
the entire railcar fleet of ARL and its subsidiaries. These
railcars represented approximately 39% of the railcars for which
we provided fleet management services as of June&nbsp;30, 2005.
This agreement is terminable by either party at the end of any
contract year upon six months prior notice and ARL is not
restricted from using the services of our competitors for its
existing fleet of railcars or any other railcars it may
purchase. A
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 19</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
significant change in the nature of the business relationship
with ARL and other affiliates of Mr.&nbsp;Icahn could have a
material adverse effect on our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We also purchase railcar and industrial components from ACF,
another entity affiliated with Mr.&nbsp;Icahn. ACF has been the
supplier of approximately $19.0&nbsp;million, $31.3&nbsp;million
and $35.4&nbsp;million of our inventory purchases in 2003, 2004
and the six months ended June&nbsp;30, 2005, respectively.
Currently ACF is our sole supplier of tank railcar heads and one
of a limited number of suppliers for other important railcar
components that we use in our manufacturing operations. These
railcar components are manufactured and sold to us under a
supply agreement that is terminable by ACF at the end of any
contract year on six months prior notice. We cannot guarantee
that we would be able to obtain alternative supplies of these
railcar components on a timely basis and on comparable terms if
we were no longer able to purchase these railcar components from
ACF. A failure to obtain component supplies from ACF could
materially adversely affect our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For more information on these arrangements, see &#147;Certain
relationships and related party transactions.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Services being provided to us by ARL, an entity controlled by
Carl C. Icahn, may not be sufficient to meet our needs, which
may require us to incur additional costs.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We use certain outsourced information technology and
administrative services from ARL, an entity controlled by
Mr.&nbsp;Icahn. We also sublease our headquarters office space
in St. Charles, Missouri from ARL. We cannot assure you that
these services will be provided at the same level as they are
currently being provided or that we will be able to maintain our
sublease on the same terms as currently in effect. These
arrangements may be terminated by ARL or by us upon six months
notice and, if they were terminated, we would be required to
find a third-party provider of these services or begin to
provide them for ourselves and relocate our office headquarters.
As these agreements were negotiated with ARL, an entity
affiliated with us, the prices and rates charged to us under
these agreements may be lower than the prices and rates that may
be charged by unaffiliated third parties for similar services
and an office sublease or for us to provide these services on
our own. We cannot assure you that, if these agreements are
terminated, we will be able to replace these services and the
sublease in a timely manner or on terms and conditions,
including cost, as favorable as those we are currently
receiving. Additional expenses incurred in replacing these
services and relocation of our office facilities or the failure
to replace these services could materially adversely affect our
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>After this offering, we may have reduced access to resources
of, and benefits provided by, entities affiliated with Carl C.
Icahn.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have in the past obtained access to significant management,
financial and other resources from entities affiliated with Carl
C. Icahn. For example, in the past some of our capital needs
have been satisfied by entities affiliated with Mr.&nbsp;Icahn.
Additionally, Mr.&nbsp;Icahn and his affiliated entities have
been key resources for strategic and management advice, which we
have obtained at no cost. We believe access to these resources
has provided us with a competitive advantage. In addition, we
believe that our relationship with entities affiliated with
Mr.&nbsp;Icahn have, in many cases, provided us with a
competitive advantage in identifying opportunities for sales of
our products and identifying and attracting partners for
critical supply arrangements. For example, we participate in
product and service purchasing arrangements with entities
controlled by Mr.&nbsp;Icahn, which we believe may provide us
with favorable pricing as a result of larger aggregate purchases
by the Icahn-affiliated buying group. If we were unable to
participate in these buying group arrangements our manufacturing
costs would increase and our results of operations and financial
condition may be materially adversely affected. Also, lease
sales agents of ARL and ACF, in connection with their own
leasing sales activities have, from time to time, referred their
customers or contacts to us that prefer to purchase rather than
lease railcars, which
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 20</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
has, in some cases, led to us selling railcars to these
customers or contacts. At this time there is no formal
arrangement under which these services are provided and we do
not compensate ARL, ACF or any of their leasing sales agents for
any railcar sales that we may make as a result of these
referrals. To the extent that ARL or ACF discontinue referring
potential customers to us, or require us to compensate them for
these referrals, our results of operations and financial
condition may be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Lack of acceptance of our new railcar offerings by our
customers could materially adversely affect our business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our strategy depends in part on our continued development and
sale of new railcar designs to expand or maintain our market
share in the railcar markets in which we currently compete. The
investment required by us in connection with the development of
new railcar designs is considerable and we usually make
decisions to develop and market new railcars and railcars with
modified designs without firm indications of customer
acceptance. New or modified railcar designs may require
customers to alter their existing business methods or displace
existing equipment in which these customers may have a
substantial capital investment. Additionally, many railcar
purchasers prefer to maintain a standardized fleet of railcars
and railcar purchasers with established railcar fleets are
generally resistant to railcar design changes. Therefore, any
new or modified railcar designs that we develop may not gain
widespread acceptance in the marketplace and any such products
may not be able to compete successfully with existing railcar
designs or new railcar designs that may be introduced by our
competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our production of new railcar product lines may not be
initially profitable and may result in financial losses.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our strategy includes developing new railcars and selectively
expanding beyond the covered hopper and tank railcar markets.
When we begin production of a new railcar product line, we
usually experience higher initial costs of production due to
training and labor and operating inefficiencies associated with
new manufacturing processes. Due to pricing pressures in our
industry, the pricing for new railcars in customer contracts
usually does not reflect the initial additional costs, and our
costs of production may exceed the anticipated revenues until we
are able to gain labor efficiencies. For example, in 2004 and
2005, we used a portion of the railcar production capacity at
our Paragould facility, which we primarily use to manufacture
covered hopper railcars, to manufacture centerbeam platform
railcars. This was the first time we manufactured centerbeam
platform railcars and as a result of training and increased
production costs in the early stages of this production run, we
incurred a loss on this product. To the extent that the total
costs of production significantly exceed our anticipated costs
of production, we may incur a loss on our sale of new railcar
product lines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We may pursue acquisitions or joint ventures that involve
inherent risks, any of which may cause us not to realize
anticipated benefits.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our business strategy includes the potential acquisition of
businesses and entering into joint ventures and other business
combinations that we expect will complement and expand our
business. We may not be able to successfully identify suitable
acquisition or joint venture opportunities or complete any
particular acquisition, combination, joint venture or other
transaction on acceptable terms. Our identification of suitable
acquisition candidates and joint venture opportunities involves
risks inherent in assessing the values, strengths, weaknesses,
risks and profitability of these opportunities including their
effects on our business, diversion of our management&#146;s
attention and risks associated with unanticipated problems or
unforeseen liabilities. If we are successful in pursuing future
acquisitions or joint ventures, we may be required to expend
significant funds, incur additional debt or issue
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 21</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
additional securities, which may materially adversely affect our
results of operations and be dilutive to our stockholders. If we
spend significant funds or incur additional debt, our ability to
obtain financing for working capital or other purposes could
decline and we may be more vulnerable to economic downturns and
competitive pressures. In addition, we cannot guarantee that we
will be able to finance additional acquisitions or that we will
realize any anticipated benefits from acquisitions or joint
ventures that we complete. Should we successfully acquire
another business, the process of integrating acquired operations
into our existing operations may result in unforeseen operating
difficulties and may require significant financial resources
that would otherwise be available for the ongoing development or
expansion of our existing business. Our failure to identify
suitable acquisition or joint venture opportunities may restrict
our ability to grow our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>If we are unable to protect our intellectual property and
prevent its improper use by third parties, our ability to
compete in the market may be harmed.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We rely on patent protection and a combination of copyright,
trade secret and trademark laws to protect our proprietary
technology and prevent others from duplicating our products.
However, these means afford only limited protection and may not
prevent our competitors from duplicating our products or gaining
access to our proprietary information and technology. These
means also may not permit us to gain or maintain a competitive
advantage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Any of our patents may be challenged, invalidated, circumvented
or rendered unenforceable. We cannot guarantee that we will be
successful should one or more of our patents be challenged for
any reason. If our patent claims are rendered invalid or
unenforceable, or narrowed in scope, the patent coverage
afforded our products could be impaired, which could
significantly impede our ability to market our products,
negatively affect our competitive position and materially
adversely affect our business and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We cannot assure you that any pending or future patent
applications held by us will result in an issued patent, or that
if patents are issued to us, that such patents will provide
meaningful protection against competitors or against competitive
technologies. The issuance of a patent is not conclusive as to
its validity or its enforceability. The United States federal
courts may invalidate our patents or find them unenforceable.
Competitors may also be able to design around our patents. Our
patents and patent applications cover particular aspects of our
products. Other parties may develop and obtain patent protection
for more effective technologies, designs or methods. If these
developments were to occur, it could have an adverse effect on
our sales. If our intellectual property rights are not
adequately protected, we may not be able to commercialize our
technologies, products or services and our competitors could
commercialize our technologies, which could result in a decrease
in our sales and market share and could materially adversely
affect our business and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our products could infringe the intellectual property rights
of others, which may lead to litigation that could itself be
costly, could result in the payment of substantial damages or
royalties, and could prevent us from using technology that is
essential to our products.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We cannot guarantee you that our products, manufacturing
processes or other methods do not infringe the patents or other
intellectual property rights of third parties. Infringement and
other intellectual property claims and proceedings brought
against us, whether successful or not, could result in
substantial costs and harm our reputation. Such claims and
proceedings can also distract and divert management and key
personnel from other tasks important to the success of our
business. In addition, intellectual property litigation or
claims could force us to do one or more of the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">cease selling or using any of our
    products that incorporate the asserted intellectual property,
    which would adversely affect our revenue;
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 22</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">pay substantial damages for past
    use of the asserted intellectual property;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">obtain a license from the holder
    of the asserted intellectual property, which license may not be
    available on reasonable terms, if at all;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">redesign or rename, in the case of
    trademark claims, our products to avoid infringing the
    intellectual property rights of third parties, which may not be
    possible and could be costly and time-consuming if it is
    possible to do.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In the event of an adverse determination in an intellectual
property suit or proceeding, or our failure to license essential
technology, our sales could be harmed and our costs could
increase, which could materially adversely affect our financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We are subject to a variety of environmental laws and
regulations and the cost of complying, or our failure to comply,
with such requirements may have a material adverse effect on our
business, financial condition and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are subject to a variety of federal, state and local
environmental laws and regulations relating to the release or
discharge of materials into the environment, the management,
use, processing, handling, storage, transport or disposal of
hazardous materials, or otherwise relating to the protection of
human health and the environment. These laws and regulations
expose us to liability for the environmental condition of our
current or formerly owned or operated facilities, and also may
expose us to liability for the conduct of others or for our
actions that were in compliance with all applicable laws at the
time these actions were taken. Despite our intention to be in
compliance, we cannot guarantee that we will at all times be in
compliance with all such requirements. The cost of complying
with environmental requirements may also increase substantially
in future years. If we violate or fail to comply with these
regulations, we could be fined or otherwise sanctioned by
regulators. In addition, these requirements are complex, change
frequently and may become more stringent over time, which could
have a material adverse effect on our business. We are also
required to maintain a variety of environmental permits. Our
failure to maintain and comply with these permits could result
in fines or penalties or other sanctions and have a material
adverse effect on our operations or results. Future events, such
as new environmental regulations or changes in or modified
interpretations of existing laws and regulations or enforcement
policies, or further investigation or evaluation of the
potential health hazards of products or business activities, may
give rise to additional compliance and other costs that could
have a material adverse effect on our financial conditions and
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are involved in investigation and remediation activities at
properties that we now own or lease to address historic
contamination and potential contamination by third parties. We
are also involved with state agencies in the cleanup of two
sites under these laws. These investigations are at a
preliminary stage, and it is impossible to estimate, with any
certainty, the timing and extent of remedial actions that may be
required, and the costs that would be involved in such
remediation. Substantially all of the issues identified relate
to the use of the properties prior to their transfer to us in
1994 by ACF and for which ACF has retained liability and agreed
to indemnify us. However, if ACF fails to honor its obligations
to us, we would be responsible for the cost of such remediation.
We have been advised that ACF estimates that, for the remainder
of 2005, ACF will spend approximately $150,000 on environmental
investigation and, in each of 2006 and 2007, it will spend
approximately $200,000 on environmental investigation, relating
to contamination that existed at properties prior to their
transfer to us in 1994 and for which ACF has retained liability
and agreed to indemnify us. We expense all costs associated with
environmental investigation and remediation relating to our
properties even if we receive indemnification from ACF.
ACF&#146;s indemnification is not treated as an offset to that
expense, but rather as an additional capital contribution. The
discovery of historic contamination or the release of substances
into the environment at our current or formerly owned or
operated facilities could
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 23</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
require ACF or us in the future to incur investigative or
remedial costs or other liabilities that could be material or
that could interfere with the operation of our business. Any
environmental liabilities that we may incur that are not covered
by adequate insurance or indemnification from a party other than
ACF will also increase our costs and have a negative impact on
our profitability. See &#147;Business&#151; Environmental
matters&#148; for more information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Failure of ACF to honor its indemnification obligations to us
may have a material adverse effect on our business and financial
condition.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with our 1994 acquisition from ACF of assets and
certain properties relating to ACF&#146;s railcar components
manufacturing and railcar manufacturing and railcar maintenance
businesses, ACF agreed to retain and indemnify us for certain
liabilities relating to its ownership of those assets and
operation of its business prior to the transfer, including
liabilities relating to employee benefit plans, worker&#146;s
compensation, environmental contamination and third-party
litigation. The total of such liabilities accrued through
December&nbsp;31, 2004 is $11.1&nbsp;million. Additional such
liabilities may accrue in the future. If ACF fails to honor its
indemnification obligations, whether as a result of a dispute
related to the applicability of the indemnification, ACF having
insufficient assets to pay liabilities or otherwise, our
business and financial condition could be materially adversely
affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Changes in assumptions or investment performance of pension
and other postretirement benefit plans that we either sponsor or
participate in could materially adversely affect our financial
condition and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We either sponsor or participate in several pension plans,
including two plans that were frozen effective April&nbsp;1,
2004 and in which our employees are therefore no longer accruing
additional benefits. To the extent we continue to sponsor or
participate in these plans, we will be responsible for making
funding contributions to the plans, including the frozen pension
plans, and may be liable for a share of any unfunded liabilities
that may exist at the time we cease to participate in the plans
or the plans are terminated. Our liability and resulting costs
for these plans may increase or decrease based upon a number of
factors, including actuarial assumptions used, the discount rate
used in calculating the present value of future liabilities and
investment performance. An adverse change or result in one or
more of these factors could have a material adverse effect on
our financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We also provide other postretirement benefits to certain of our
employees. Our postretirement benefit obligations and related
expense with respect to these postretirement benefits also
increase or decrease based on several factors, including changes
in health care cost trend rates, and could similarly be
materially adversely affected by adverse changes in these
factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We could be liable for liabilities associated with pension
plans sponsored by companies controlled by Carl C. Icahn.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Icahn, our principal beneficial stockholder and the
chairman of our board of directors, and his affiliates currently
hold over 80% of our outstanding voting securities. Applicable
pension and tax laws make each member of a plan sponsor&#146;s
controlled group, generally defined as entities in which there
is at least an 80% common ownership interest, jointly and
severally liable for pension plan obligations sponsored by other
members of the controlled group. These pension obligations
include liability for any unfunded liabilities that may exist at
the time the plans are terminated. We and our subsidiaries are
currently members of a controlled group that includes ACF, an
entity in which Mr.&nbsp;Icahn has an indirect ownership
interest of at least 80%. ACF is the sponsor of several pension
plans that are underfunded, as of December&nbsp;31, 2004, by a
total of approximately $23.7&nbsp;million on an ongoing
actuarial basis and $175.4&nbsp;million if those plans were
terminated, as most recently reported
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 24</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
by the plans&#146; actuaries. These liabilities could increase
or decrease, depending on a number of factors, including future
changes in promised benefits, investment returns and the
assumptions used to calculate the liability. As members of the
controlled group, we would be jointly and severally liable for
any failure of ACF to pay the unfunded liabilities upon a
termination of the ACF pension plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Upon completion of this offering, we believe that we should no
longer be a member of the ACF controlled group. As a result, we
should no longer be subject to ACF&#146;s pension liabilities,
unless it were determined that we were otherwise a member of the
ACF controlled group or that a principal purpose of the offering
or other transactions that resulted in our ceasing to be a
member of the ACF controlled group was to evade pension
liabilities and the termination date of the underfunded plan was
within five years after the offering or other transactions. If
such a determination were made and upheld by a court, we could
remain jointly and severally liable for pension plan obligations
of ACF, which could have a material adverse effect on our
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our manufacturer&#146;s warranties expose us to potentially
significant claims.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We warrant the workmanship and materials of many of our products
under express limited warranties. Accordingly, we may be subject
to significant warranty claims in the future such as multiple
claims based on one defect repeated throughout our mass
production process or claims for which the cost of repairing the
defective component is highly disproportionate to the original
cost of the part. These types of warranty claims could result in
costly product recalls, significant repair costs and damage to
our reputation, which could materially adversely affect our
business and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Increasing insurance claims and expenses could lower
profitability and increase business risk.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The nature of our business subjects us to product liability,
property damage and personal injury claims, especially in
connection with our manufacture and repair of products that
transport hazardous or volatile materials, such as pressure tank
railcars. We maintain reserves and liability insurance coverage
at levels based upon commercial norms in the industries in which
we operate and our historical claims experience. Over the last
several years, insurance carriers have raised premiums for many
companies operating in our industry. Increased premiums may
further increase our insurance expense as coverages expire or
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 our reserves. An unusually
large liability claim or a series of claims based on a failure
repeated throughout our mass production process may exceed our
insurance coverage or result in direct damages if we were unable
or elected not to insure against certain hazards because of high
premiums or other reasons. In addition, the availability of, and
our ability to collect on, insurance coverage is often subject
to factors beyond our control. Moreover, any accident or
incident involving us, even if we are fully insured 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 materially adversely affect
the cost and availability of insurance in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Covenants in our revolving credit facility currently restrict
and, following amendments to our revolving credit facility that
we expect to enter into concurrently with this offering,
covenants in our revolving credit facility will continue to
restrict our discretion in operating our business and provide
for certain minimum financial requirements.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We expect to amend our revolving credit facility concurrently
with this offering. Following these amendments, our revolving
credit facility will contain various covenants, similar to those
in our
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 25</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
existing revolving credit facility, that, among other things,
will require us to satisfy certain financial covenants and will
limit our management&#146;s discretion by restricting our
ability to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">incur additional debt;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">redeem our capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">enter into certain transactions
    with affiliates;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">pay dividends and make other
    distributions;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">make investments and other
    restricted payments;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">create liens.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our failure to comply with any covenants under the amended
revolving credit facility could lead to an event of default
under the agreements governing our indebtedness that we may have
outstanding at the time, permitting our lenders to accelerate
our borrowings and to foreclose on any collateral.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Some of our railcar services and component manufacturing
employees belong to labor unions and strikes or work stoppages
by them or unions formed by some or all of our other employees
in the future could adversely affect our operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are a party to collective bargaining agreements with labor
unions at our Longview, Texas, North Kansas City, Missouri and
our Milton, Pennsylvania repair facilities and at our Longview,
Texas steel foundry and components manufacturing facility. As of
June&nbsp;30, 2005, the covered employees at these sites
collectively represent approximately 11% of our entire
workforce. 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 guarantee that our relations with
our railcar services workforce will remain positive. We cannot
guarantee that union organizers will not be successful in future
attempts to organize our railcar manufacturing employees or our
other employees at some of our other 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 layoffs, shutdowns or reductions in the
size and scope of our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The market and industry data contained in this prospectus,
including estimates and forecasts relating to the growth of the
railcar market, cannot be verified with certainty and may prove
to be inaccurate.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
This prospectus contains market and industry data obtained
primarily from industry publications of the Association of
American Railroads, the Railway Supply Institute, Global Insight
and information from the U.S.&nbsp;Department of Agriculture.
Industry publications typically indicate that they have derived
the published data from sources believed to be reasonable,
including other railcar manufacturers, but do not guarantee the
accuracy or completeness of the data. While we believe these
publications to be reliable, we have not independently verified
the data or any of the assumptions on which the estimates and
forecasts are based, and the data may prove to be inaccurate.
This data includes estimates and forecasts regarding future
growth in these industries, specifically data related to railcar
production, railcar growth and the historical average age of
active railcars in North America. Forecasts and estimates
regarding future growth of the railcar industry included in
these reports are based on assumptions of the growth and
improvement of the U.S.&nbsp;economy. The growth and improvement
of the U.S.&nbsp;economy during the period of these forecasts
and estimates are not assured.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 26</B>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The failure of the U.S.&nbsp;economy to perform as assumed in
these forecasts and estimates would cause the forecasted
expansion of the railcar industry not to occur or to occur to a
lesser extent than predicted. The failure of the rail industry
or the railcar supply industry to continue to grow as forecasted
by the market and industry data included in this prospectus may
have a material adverse effect on our business and the market
price of our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our failure to comply with regulations imposed by federal and
foreign agencies could negatively affect our financial
results.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar operations are subject to extensive regulation by
governmental regulatory and industry authorities and by federal
and foreign agencies. These organizations establish rules and
regulations for the railcar industry, including construction
specifications and standards for the design and manufacture of
railcars; mechanical, maintenance and related standards; and
railroad safety. New regulatory rulings and regulations from
these federal or foreign agencies may impact our financial
condition and results of operations. If we fail to comply with
the requirements and regulations of these agencies, we may face
sanctions and penalties that could materially adversely affect
our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Further consolidation of the railroad industry may materially
adversely affect our business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Over the past ten years there has been a consolidation of
railroad carriers operating in North America. Railroad carriers
are large purchasers of railcars and represent a significant
portion of our historical customer base. With fewer railroad
carriers, each railroad carrier will have proportionately
greater buying power and operating efficiency. This may
intensify competition among railcar manufacturers to retain
customer relationships with the consolidated railroad carriers
and cause our prices to decline. Future consolidation of
railroad carriers may materially adversely affect our sales and
reduce our income from operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Reductions in the availability of energy supplies or an
increase in energy costs may increase our operating costs.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We use electricity and natural gas at our manufacturing
facilities and to operate our equipment. Over the past three
years, prices for electricity and natural gas have fluctuated
significantly. An outbreak or escalation of hostilities between
the United States and any foreign power and, in particular, a
prolonged armed conflict in the Middle East, could result in a
real or perceived shortage of petroleum and/or natural gas,
which could result in an increase in the cost of electricity or
energy generally. Future limitations on the availability or
consumption of petroleum products and/or an increase in energy
costs, particularly electricity for plant operations, could have
a materially adverse effect upon our business and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We may be required to reduce our inventory carrying values,
which could materially adversely affect our financial condition
and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are required to record our inventories at the lower of cost
or market. In assessing the ultimate realization of inventories,
we are required to make judgments as to future demand
requirements and compare them with the current or committed
inventory levels. We have recorded reductions in inventory
carrying values in recent periods due to the discontinuance of
product lines and changes in market conditions due to changes in
demand requirements. We may be required to reduce inventory
carrying values in the future due to a decline in market
conditions in the railcar business, which could have a material
adverse effect on our financial condition and results of
operations.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 27</B>
</DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We may be required to reduce the value of our long-lived
assets, which could materially adversely affect our financial
condition and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We periodically evaluate the carrying values of our long-lived
assets for potential impairment. The carrying value of a
long-lived asset 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
reduced by the estimated cost to dispose of the asset. Any
resulting impairment loss related to reductions in the value of
our long-lived assets could materially adversely affect our
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RISKS RELATED TO THE PURCHASE OF OUR COMMON STOCK IN THIS
OFFERING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>As a new investor, you will experience immediate and
substantial dilution.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
You will pay a price for each share of our common stock that
exceeds the per share value attributed from our tangible assets
less our total liabilities. Therefore, if we distributed our
consolidated tangible assets after deducting our consolidated
liabilities to our stockholders following this offering, our
stockholders would receive less per share of common stock than
you paid in this offering. After giving effect to the sale of
our shares of common stock in this offering at the assumed
initial public offering price of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share, which represents the midpoint of the range on the cover
of this prospectus, after deducting the underwriting discount
and estimated offering expenses payable by us and after giving
effect to the Transactions, our net tangible book value would
have been approximately
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;million,
or
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share. Accordingly, if you purchase shares of our common stock
in this offering you will suffer immediate dilution of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share in net tangible book value. Net tangible book value per
share represents the amount of our total consolidated tangible
assets less our total consolidated liabilities, divided by the
total number of shares of common stock outstanding adjusted for
this offering and the expected use of the proceeds of this
offering, based on an assumed initial offering price of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share of common stock, which represents the midpoint of the
range on the cover of this prospectus. This dilution is due in
large part to the fact that our earlier investors paid
substantially less than the initial public offering price when
they purchased their shares of our capital stock. You may suffer
additional dilution to the extent outstanding options to
purchase shares of our common stock are exercised. For more
information, see &#147;Dilution.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our common stock may trade at prices below the initial public
offering price and may be susceptible to declines based on
securities analysts&#146; or industry research and reports.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prior to this offering, you could not buy or sell our common
stock publicly. We cannot predict the extent to which an active
trading market for our common stock will develop or be sustained
after this offering. The initial public offering price will be
determined by negotiations between us and representatives of the
underwriters based on factors that may not be indicative of
future performance and may not bear any relationship to the
price at which our common stock will trade upon completion of
this offering. You may not be able to resell our common stock at
or above the initial public offering price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition, the trading market for our common stock will be
influenced by the research and reports that industry or
securities analysts publish about us or our business. If one or
more of the analysts who cover us or our industry downgrade our
stock or project a downturn in our industry, our stock price
would likely decline. If one or more of these analysts cease
coverage of our company or fail to regularly publish reports on
us, we could lose visibility in the financial markets, which in
turn could cause our stock price or trading volume to decline.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 28</B>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The price of our common stock is subject to volatility and
you could lose all or part of your investment.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Various factors, such as general economic changes in the
financial markets, announcements or significant developments
with respect to the railcar industry, actual or anticipated
variations in our or our competitors&#146; quarterly or annual
financial results, the introduction of new products or
technologies by us or our competitors, changes in other
conditions or trends in our industry or in the markets of any of
our significant customers, changes in governmental regulation,
our financial results failing to meet expectations of analysts
or investors, or changes in securities analysts&#146; estimates
of our future performance or of that of our competitors or our
industry, could cause the market price of our common stock to
fluctuate substantially. In addition, our customers&#146;
practice of placing large, periodic orders for products on an as
needed basis makes our quarterly sales and operating results
difficult to predict and could cause our operating results in
some quarters to vary from market expectations and also lead to
volatility in our stock price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Our stock price may decline due to sales of shares by Carl C.
Icahn and other stockholders.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Sales of substantial amounts of our common stock, or the
perception that these sales may occur, may adversely affect the
price of our common stock and impede our ability to raise
capital through the issuance of equity securities in the future.
There will be
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock outstanding immediately after this offering.
Of these shares, [&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]%
will be beneficially owned by our principal beneficial
stockholder and the chairman of our board of directors, Carl C.
Icahn. All shares sold in this offering will be freely
transferable without restriction or further registration under
the Securities Act of 1933. All of our other outstanding shares
of common stock are subject to restrictions applicable to our
&#147;affiliates,&#148; as that term is defined in Rule&nbsp;144
of the Securities Act and subject to 180-day lock-up agreements.
See &#147;Shares eligible for future sale&#148; and
&#147;Underwriting.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We and our executive officers, directors and all our
stockholders have entered into 180-day lock-up agreements with
the underwriters. The lock-up agreements prohibit us and our
executive officers, directors and stockholders from selling or
otherwise disposing of shares of common stock, except in limited
circumstances. The terms of the lock-up agreements can be
waived, at any time, by UBS Securities LLC, at its sole
discretion, without prior notice or announcement, to allow us or
our officers, directors and stockholders to sell shares of our
common stock. If the terms of the lock-up agreements are waived,
shares of our common stock will be available for sale in the
public market, which could reduce the price of our common stock.
See &#147;Shares eligible for future sale&#151; Lock-up
agreements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Following the expiration of the lock-up period, certain
shareholders under our new registration rights agreement will be
entitled, subject to certain exceptions, to exercise their
demand registration rights to register their shares under the
Securities Act. If this right is exercised, holders of any of
our common stock subject to the registration rights agreement
will be entitled to participate in such registration. By
exercising their registration rights, and selling a large number
of shares, these holders could cause the price of our common
stock to decline. An estimated
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock will be subject to our registration rights
agreement upon completion of this offering. See &#147;Shares
eligible for future sale,&#148; &#147;Certain relationships and
related party transactions&#151; Registration rights&#148; and
&#147;Description of capital stock&#151; Registration
rights.&#148;
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 29</B>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>We may require additional capital in the future and sales of
our equity securities to provide this capital may dilute your
ownership in us.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We may need to raise additional funds through public or private
equity financings to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">expand and grow our business;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">develop new products and services;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">respond to competitive
    pressures;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">acquire complementary businesses
    or technologies.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Any additional capital raised through the sale of our equity
securities may dilute your percentage ownership interest in us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Carl C. Icahn will continue to exert significant influence
over us and his interests may conflict with the interests of our
other stockholders.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have been advised that affiliates of Carl C. Icahn, our
principal beneficial stockholder and the chairman of our board
of directors, are currently negotiating with the Foundation for
a Greater Opportunity, or the Foundation, our other significant
beneficial stockholder, to acquire all of our common stock held
by the Foundation prior to consummation of this offering. If
that purchase occurs, we expect that Mr.&nbsp;Icahn will control
100% of the voting power of our outstanding capital stock prior
to the offering and approximately
[&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]% of the voting
power of our capital stock following the offering. As a result,
Mr.&nbsp;Icahn is, and will be, able to exert substantial
influence over us, elect our directors and control most matters
requiring board or shareholder approval, including
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">any determination with respect to
    our business strategy and policies;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">mergers or other business
    combinations involving us;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our acquisition or disposition of
    assets;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">future issuances of common stock
    or other securities by us;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our incurrence of debt or
    obtaining other sources of financing;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the payment of dividends on our
    common stock.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Icahn owns and controls and has an interest in a wide
array of companies, some of which may compete directly or
indirectly with us. As a result, his interests may not always be
consistent with our interests or the interests of our other
stockholders. For example, ARL, a railcar leasing company owned
by Mr.&nbsp;Icahn, competes directly with our other customers
that are in the railcar leasing business and ACF, which supplies
us with critical component products, also provides products to
our competitors. ACF has also previously manufactured railcars
and may do so in the future. Mr.&nbsp;Icahn and entities
controlled by him may also pursue acquisitions or business
opportunities that may be complementary to our business. Our
restated articles of incorporation will allow Mr.&nbsp;Icahn,
entities controlled by him, and any director, officer, member,
partner, stockholder or employee of Mr.&nbsp;Icahn or entities
controlled by him, to take advantage of such corporate
opportunities without first presenting such opportunities to us,
unless such opportunities are expressly offered to any such
party solely in, and as a direct result of, his or her capacity
as our director, officer or employee. As a result, corporate
opportunities that may benefit us may not be available to us in
a timely manner, or at all. See &#147;Description of Capital
Stock&#151; Corporate Opportunities.&#148; To the extent that
conflicts of interest may arise between us and Mr.&nbsp;Icahn
and his affiliates, those conflicts may be resolved in a manner
adverse to us or to you or other holders of our securities.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 30</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition, the existence of a controlling stockholder may have
the effect of making it difficult for a third party to acquire,
or may discourage or delay a third party from seeking to
acquire, a majority of our outstanding common stock, which may
adversely affect the market price of the stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Upon the closing of this offering we may be a
&#147;controlled company&#148; within the meaning of the Nasdaq
National Market rules and you will not have the same protections
afforded to shareholders of companies that are not
&#147;controlled companies&#148; and, therefore, are subject to
all of the Nasdaq National Market corporate governance
requirements.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have been advised that affiliates of Carl C. Icahn may
acquire all of our common stock held by the Foundation prior to
consummation of this offering. If that purchase occurs, we
expect that Mr.&nbsp;Icahn will control approximately
[&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]&nbsp;% of the
voting power of our outstanding common stock following the
offering. Consequently, after the offering, we will be a
&#147;controlled company&#148; within the meaning of the
corporate governance standards of the Nasdaq National Market.
Under these rules, a &#147;controlled company&#148; may elect
not to comply with certain Nasdaq National Market corporate
governance requirements, including requirements that a majority
of the board of directors consist of independent directors;
compensation of officers be determined or recommended to the
board of directors by a majority of its independent directors or
by a compensation committee that is composed entirely of
independent directors; and director nominees be selected or
recommended for selection by a majority of the independent
directors or by a nominating committee composed solely of
independent directors. If we are a &#147;controlled
company&#148; following this offering, we intend to use these
exemptions. As a result, we expect that we would not have a
majority of independent directors, we would not have a
compensation committee and we would not have a nominating
committee. Accordingly, if we are a &#147;controlled
company&#148; following this offering, you will not have the
same protections afforded to shareholders of other companies
that are not &#147;controlled companies&#148; and, therefore,
are subject to all of the Nasdaq National Market corporate
governance requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Payments of cash dividends on our common stock may be made
only at the discretion of our board of directors and Missouri
law may restrict, and the agreements governing our revolving
credit facility contain various covenants that limit, our
ability to pay dividends.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our board of directors has never declared or paid any cash
dividends on our common stock. Our board of directors may, in
its discretion, refuse to pay dividends and any payment of
dividends will depend upon our operating results, strategic
plans, capital requirements, financial condition, covenants
under our borrowing arrangements and other factors our board of
directors considers relevant. In addition, the agreements
governing our revolving credit facility restrict our ability to
declare and pay dividends on our capital stock and the amended
revolving credit facility we expect to enter into concurrently
with this offering will also restrict our ability to declare and
pay dividends. Furthermore, Missouri law imposes restrictions on
our ability to pay dividends. For example, we may not declare or
pay a dividend when our net assets are less than our stated
capital, or when payment of a dividend would reduce our net
assets below our stated capital. Accordingly, we may not be able
to pay dividends in any given amount in the future, or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>As a result of being a public company, we will incur
increased costs that may place a strain on our resources and our
management&#146;s attention may be diverted from other business
concerns.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As a public company, we will incur significant legal, accounting
and other expenses that we did not incur as a private company.
In addition, the Sarbanes-Oxley Act, as well as new rules
subsequently implemented by the Securities and Exchange
Commission, or SEC, and the Nasdaq National Market, have
required changes in corporate governance practices of public
companies. We expect these new rules and regulations to increase
our legal and financial compliance costs and to make some
activities
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 31</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Risk factors</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
more time-consuming and costly. These requirements may place a
strain on our systems and resources. The Exchange Act requires
that we file annual, quarterly and current reports with respect
to our business and financial condition. The Sarbanes-Oxley Act
requires that we maintain effective disclosure controls and
procedures and internal controls over financial reporting. We
currently do not have an internal audit group. We will require
significant resources and management oversight to maintain and
improve the effectiveness of our disclosure controls and
procedures and internal controls over financial reporting. This
may divert management&#146;s attention from other business
concerns, which could have a material adverse effect on our
business, financial condition, results of operations and cash
flows. In addition, we will need to hire or outsource additional
accounting and financial staff with appropriate public company
experience and technical accounting knowledge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are currently evaluating and monitoring developments with
respect to these new rules, and we cannot predict or estimate
the amount of costs we may incur with respect to them or the
timing of such costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>This offering may cause us to undergo an &#147;ownership
change&#148; for purposes of Section&nbsp;382 of the Internal
Revenue Code, which may limit our ability to use our net
operating loss carryforwards and certain other tax
attributes.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our estimated federal net operating loss carryforwards for the
period ending June&nbsp;30, 2005 were approximately
$7.1&nbsp;million. Under Section&nbsp;382 of the Internal
Revenue Code, if a corporation undergoes an &#147;ownership
change,&#148; generally defined as a greater than 50% change (by
value) in its equity ownership over a three-year period, the
corporation&#146;s ability to use its pre-change of control net
operating loss carryforward and other pre-change tax attributes
against its post-change income may be limited. Although no
definite determination can be made at this time, there is a
possibility that this offering will cause us to undergo an
ownership change under the Internal Revenue Code. These
limitations may have the effect of reducing our after-tax cash
flow. Even if this offering does not cause an ownership change
to occur, we may undergo an ownership change after the offering
due to subsequent changes in ownership of our common stock.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 32</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='103'></A>
</DIV>

<!-- link1 "Special note regarding forward-looking statements" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Special note regarding forward-looking statements
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
This prospectus contains some forward-looking statements
including, in particular, statements about our industry, plans,
strategies and prospects. These statements involve known and
unknown risks, uncertainties and other factors that may cause
our actual results, financial position or performance to be
materially different from any future results, financial
position, or performance expressed or implied by such
forward-looking statements. We have used the words
&#147;may,&#148; &#147;will,&#148; &#147;expect,&#148;
&#147;anticipate,&#148; &#147;believe,&#148;
&#147;forecast,&#148; &#147;estimate,&#148; &#147;plan,&#148;
&#147;projected,&#148; &#147;intend&#148; and similar
expressions in this prospectus to identify forward-looking
statements. We have based these forward-looking statements on
our current views with respect to future events and financial
performance. Our actual results or those of our industry could
differ materially from those projected in the forward-looking
statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our forward-looking statements are subject to risks and
uncertainties, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the cyclical nature of our
    business;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">adverse economic and market
    conditions;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">fluctuating costs of raw
    materials, including steel and railcar components, and delays in
    the delivery of such raw materials and components;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our ability to maintain
    relationships with our suppliers of railcar components and raw
    materials;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">fluctuations in the supply of
    components and raw materials we use in railcar manufacturing;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the highly competitive nature of
    our industry;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the risk of damage to our primary
    railcar manufacturing facilities or equipment in Paragould or
    Marmaduke, Arkansas;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our reliance upon a small number
    of customers that represent a large percentage of our revenues;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the variable purchase patterns of
    our railcar customers and the timing of completion, delivery and
    acceptance of customer orders;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our dependence on our key
    personnel;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the risks of a labor shortage in
    light of our recent growth;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">risks associated with the
    conversion of our railcar backlog into revenues;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the risk of lack of acceptance of
    our new railcar offerings by our customers;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the cost of complying with
    environmental laws and regulations;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the costs associated with being a
    public company;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our relationship with Carl C.
    Icahn, our principal beneficial stockholder and the chairman of
    our board of directors, and his affiliates as a purchaser of our
    products, supplier of components and services to us and as a
    provider of significant capital, financial and managerial
    support;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">potential failure by ACF to honor
    its indemnification obligations to us;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">potential risk of increased
    unionization of our workforce;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our ability to manage our pension
    costs;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">potential significant warranty
    claims;&nbsp;and
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 33</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Special note regarding forward-looking statements</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">covenants in our revolving credit
    facility and other agreements as they presently exist and may be
    amended governing our indebtedness that limit our
    management&#146;s discretion in the operation of our businesses.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our actual results could be different from the results described
in or anticipated by our forward-looking statements due to the
inherent uncertainty of estimates, forecasts and projections and
may be better or worse than anticipated. Given these
uncertainties, you should not rely on forward-looking
statements. Forward-looking statements represent our estimates
and assumptions only as of the date that they were made. We
expressly disclaim any duty to provide updates to
forward-looking statements, and the estimates and assumptions
associated with them, after the date of this prospectus, in
order to reflect changes in circumstances or expectations or the
occurrence of unanticipated events except to the extent required
by applicable securities laws. All of the forward-looking
statements are qualified in their entirety by reference to the
factors discussed above under &#147;Risk factors.&#148; We
caution you that these risks may not be exhaustive. We operate
in a continually changing business environment and new risks
emerge from time to time. You should carefully read this
prospectus in its entirety as it contains information you should
consider when making your investment decision.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 34</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='104'></A>
</DIV>

<!-- link1 "Use of proceeds" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Use of proceeds
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We estimate that we will receive net proceeds from this offering
of approximately $[<FONT face="wingdings">l</FONT>]&nbsp;million
(or $[<FONT face="wingdings">l</FONT>]&nbsp;million, if the
underwriters exercise their over-allotment option in full),
after deducting underwriting discounts and other estimated fees
and expenses related to this offering payable by us, assuming an
initial offering price of $[<FONT face="wingdings">l</FONT>] per
share, which represents the midpoint of the range on the cover
of this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The table below shows the application of the net proceeds of
this offering to give effect to the Transactions, as if the
Transactions were completed as of June&nbsp;30, 2005. Actual
amounts will vary from the amounts shown below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Amount</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><I>Uses of Funds</I></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment of amounts outstanding under revolving credit
    facility(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>30,770</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment of notes due to affiliates(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment of all industrial revenue bonds(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,510</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Redemption of all outstanding shares of preferred stock(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fees and expenses relating to this offering(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total uses</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B>$</B></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>Borrowings under our revolving credit facility bear interest
    at various rates based on either the LIBOR or the
    U.S.&nbsp;prime rate. As of June&nbsp;30, 2005, the interest
    rate on the borrowings under the revolving credit facility was
    6.0%, based on the U.S.&nbsp;prime rate at that time. The
    revolving credit facility currently matures in March&nbsp;2006.
    In conjunction with this offering we intend to amend the
    revolving credit facility to increase its size, extend its term
    and modify certain of its covenants. See &#147;Management&#146;s
    discussion and analysis of financial condition and results of
    operations&#151; Liquidity and capital resources&#151; Revolving
    credit facility&#148; for a description of the material terms of
    our revolving credit facility and the proposed amendments.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(2)</I></TD>
    <TD align="left">
    <I>Includes indebtedness owed to Arnos Corp. and ACF Industries
    Holding Corp., both of which are beneficially-owned and
    controlled by Carl C. Icahn, our principal beneficial
    stockholder and the chairman of our board of directors. On
    December&nbsp;17, 2004, we issued a note payable to Arnos Corp.
    in the amount of $7.0&nbsp;million that bears interest at the
    U.S.&nbsp;prime plus 1.75% and is payable on demand. We refer to
    this note as the Arnos note. We used the proceeds of the Arnos
    note to provide additional working capital. As of June&nbsp;30,
    2005, the interest rate on the Arnos note was 8.0%. As of
    June&nbsp;30, 2005, we had $7.0&nbsp;million in principal amount
    and $0.3&nbsp;million in accrued interest on the Arnos note
    outstanding. As of January&nbsp;1, 2005, in connection with our
    purchase of Castings LLC, the entity through which we own our
    interest in the Ohio Castings joint venture, from ACF Industries
    Holding Corp., we issued a note payable to ACF Industries
    Holding Corp. in the principal amount of $12.0&nbsp;million. We
    refer to this note as the Castings note. The Castings note bears
    interest at the U.S.&nbsp;prime rate plus 0.5% and is due on
    demand. As of June&nbsp;30, 2005, the interest rate on the
    Castings note was 6.75%. As of June&nbsp;30, 2005, we had
    $12.0&nbsp;million in principal amount and $0.4&nbsp;million in
    accrued interest on the Castings note outstanding. See
    &#147;Certain relationships and related party transactions&#151;
    Certain transactions with ACF Industries LLC and American
    Railcar Leasing LLC&#151; Amounts due to affiliates.&#148;</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(3)</I></TD>
    <TD align="left">
    <I>The industrial revenue bonds are due at varying dates through
    2011 and bear interest at rates ranging from 7.75% to 8.5%, with
    a weighted average interest rate as of June&nbsp;30, 2005 of
    8.31%&nbsp;per year. See &#147;Management&#146;s discussion and
    analysis of financial condition and results of operations&#151;
    Liquidity and capital resources&#151; Industrial revenue
    bonds.&#148; The industrial revenue bonds are guaranteed by
    affiliates of Mr.&nbsp;Icahn, and these affiliates will be
    released from such guarantees upon repayment of the industrial
    revenue bonds. In addition, James J. Unger, our president and
    chief executive officer, and his wife own $405,000 of the
    industrial revenue bonds issued by Paragould, Arkansas.
    Mr.&nbsp;Unger and his wife will receive approximately
    $[<FONT face="wingdings">l</FONT>] upon our repayment in full of
    the amounts due under the industrial revenue bonds. See</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 35</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Use of proceeds</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <I><FONT style="font-size: 9pt">&#147;Certain relationships and
    related party transactions&#151; Guarantees of indebtedness by
    ACF and other related parties&#151; Industrial revenue
    bonds&#148; and &#147;Certain relationships and related party
    transactions&#151; Certain transactions involving James J.
    Unger&#151; Industrial revenue bonds&#148; for more
    details.</FONT></I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I><FONT style="font-size: 9pt">(4)</FONT></I></TD>
    <TD align="left">
    <I><FONT style="font-size: 9pt">We intend to redeem all of the
    outstanding shares of our preferred stock and pay all
    accumulated and unpaid dividends on that stock immediately
    following the completion of this offering. As of June&nbsp;30,
    2005, there was one share of our mandatorily redeemable
    preferred stock outstanding and $743 of accumulated and unpaid
    dividends on that share. As of June&nbsp;30, 2005, there were
    73,171&nbsp;shares of our new preferred stock outstanding and
    $7.2&nbsp;million of accumulated and unpaid dividends on those
    shares. All of our outstanding preferred stock is held by
    Mr.&nbsp;Icahn and his affiliates. See &#147;Certain
    relationships and related party transactions&#151; Redemption of
    new preferred stock&#148; and &#147;Description of capital
    stock.&#148;</FONT></I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I><FONT style="font-size: 9pt">(5)</FONT></I></TD>
    <TD align="left">
    <I><FONT style="font-size: 9pt">Represents the underwriting
    discounts and commissions and other fees and expenses related to
    the offering and the transactions.</FONT></I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 36</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='105'></A>
</DIV>

<!-- link1 "Dividend policy and restrictions" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dividend policy and restrictions
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our board of directors has never declared or paid any cash
dividends on our common stock. Following this offering, we
intend to pay cash dividends on our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The declaration and payment of dividends will be at the
discretion of our board of directors and will depend upon our
operating results, strategic plans, capital requirements,
financial condition, covenants under our borrowing arrangement
and other factors our board of directors considers relevant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our existing revolving credit facility restricts the payment of
dividends unless we satisfy certain financial covenants and
provide our lenders under that facility with advance notice of
the dividend. Although we expect to amend our revolving credit
facility concurrently with the completion of this offering, our
revolving credit facility following such amendments will
continue to contain covenants that will only permit us to pay
cash dividends on our common stock if we satisfy certain
financial covenants. In addition, Missouri law imposes
restrictions on our ability to pay dividends. For example, we
may not declare or pay a dividend when our net assets are less
than our stated capital, or when payment of a dividend would
reduce our net assets below our stated capital. Stated capital
means the product of the par value of our common stock
multiplied by the number of our shares of common stock
outstanding. Although we currently believe that our net assets
exceed our stated capital, our board of directors will
periodically reevaluate the amount of our net assets.
Accordingly, we may not be able to pay dividends in any given
amount in the future, or at all.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 37</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='106'></A>
</DIV>

<!-- link1 "Capitalization" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Capitalization
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table sets forth our cash and cash equivalents and
capitalization as of June&nbsp;30, 2005, on an actual basis and
on an adjusted basis to give effect to the Transactions,
including our sale of
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock, assuming an initial offering price of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share, which represents the midpoint of the range on the cover
of this prospectus, and our application of the net proceeds of
this offering as described in &#147;Use of proceeds.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
You should read this table together with &#147;Prospectus
summary&#151; The transactions,&#148; &#147;Use of
proceeds,&#148; &#147;Management&#146;s discussion and analysis
of financial condition and results of operations&#148; and the
consolidated financial statements and the related notes thereto
included elsewhere in this prospectus.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>As of June&nbsp;30, 2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>As</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Actual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>adjusted</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(in thousands, except</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>share information)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short term debt:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revolving credit facility(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable to affiliates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total short-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Industrial revenue bonds (including current portion)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mandatorily redeemable preferred stock, $0.01&nbsp;par value,
    99,000&nbsp;shares authorized, 1&nbsp;share issued and
    outstanding, actual; no shares authorized, issued or
    outstanding, as adjusted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New preferred stock, par value $0.01&nbsp;per share;
    500,000&nbsp;shares authorized; 73,171&nbsp;shares issued and
    outstanding, actual; no shares authorized, issued or
    outstanding, as adjusted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred stock, $0.01&nbsp;par value, no shares authorized,
    issued or outstanding, actual;
    [&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]&nbsp;shares
    authorized and no shares issued or outstanding; as adjusted(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common Stock, par value $0.01&nbsp;per share; 12,000&nbsp;shares
    authorized, 1,195 issued and outstanding, actual;
    [&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]&nbsp;shares
    authorized,
    [&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]&nbsp;shares issued
    and outstanding, as adjusted(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retained earnings(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,100</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,102</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total capitalization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>156,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>Following completion of this offering and the amendment to
    our revolving credit facility, we expect to have $[&#151;
    ]&nbsp;million in available borrowings under our revolving
    credit facility.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(2)</I></TD>
    <TD align="left">
    <I>To be authorized immediately prior to the completion of the
    offering.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(3)</I></TD>
    <TD align="left">
    <I>As adjusted, reflects the write-off of deferred financing
    costs of $0.6&nbsp;million relating to the redemption of the
    industrial revenue bonds.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 38</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='107'></A>
</DIV>

<!-- link1 "Dilution" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dilution
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Purchasers of the common stock in the offering will suffer an
immediate and substantial dilution in net tangible book value
per share. Dilution is the amount by which the initial public
offering price paid by purchasers of shares of our common stock
exceeds the net tangible book value per share of our common
stock immediately following the completion of the offering. Net
tangible book value represents the amount of our total tangible
assets reduced by our total liabilities. Tangible assets
represents our total assets less intangible assets. Net tangible
book value per share represents our net tangible book value
divided by the number of shares of common stock outstanding. As
of June&nbsp;30, 2005, prior to giving effect to the offering
and the Transactions, our net tangible book value was
$240,974&nbsp;million and our net tangible book value per share
was
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;].
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
After giving effect to the sale of shares of common stock
offered by this prospectus at the assumed initial public
offering price of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share, which represents the midpoint of the range on the cover
of this prospectus, and after deducting the underwriting
discount and estimated offering fees and expenses payable by us,
and after giving effect to the Transactions, our net tangible
book value would have been approximately
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;million,
or
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share. This represents an immediate increase in net tangible
book value of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share to existing stockholders and an immediate dilution in net
tangible book value of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share to new investors purchasing shares of our common stock in
this offering. Dilution per share represents the difference
between the price per share paid by new investors for shares
issued in this offering and the net tangible book value per
share immediately after the completion of this offering. The
following table illustrates this dilution:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assumed initial public offering price per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net tangible book value per share as of June&nbsp;30, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in net tangible book value per share attributable to
    new investors</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjusted net tangible book value per share after this offering</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilution per share to new investors</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table presents, on an adjusted basis, after giving
effect to this offering and the Transactions, as of
June&nbsp;30, 2005, the total number of shares of common stock
purchased from us, the total consideration paid and the average
price per share paid by the existing stockholders and by new
investors purchasing shares of our common stock in this
offering, assuming an initial public offering price of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share, which represents the midpoint of the range on the cover
of this prospectus, before deducting the underwriting discount
and estimated offering fees and expenses payable by us:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Shares purchased</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Total consideration</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Average price</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Percent</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Percent</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>per share</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="21" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Existing stockholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New investors</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
If the underwriters exercise their over-allotment option in
full, the number of shares of common stock held by our existing
stockholders will further decrease to approximately
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of the total number of shares of our common stock outstanding,
and the number of shares of our common stock held by new
investors will further increase to
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares,
or approximately
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of the total number of shares of our common stock outstanding.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 39</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='108'></A>
</DIV>

<!-- link1 "Selected consolidated financial data" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Selected consolidated financial data
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table sets forth our summary consolidated
financial data for the periods presented. The consolidated
statements of operations and cash flow data for the years ended
December&nbsp;31, 2002, 2003 and 2004 and the consolidated
balance sheet data as of December&nbsp;31, 2003 and 2004 are
derived from our audited consolidated financial statements and
related notes included elsewhere in this prospectus. The
consolidated statements of operations and cash flow data for the
years ended December&nbsp;31, 2000 and 2001 and the consolidated
balance sheet data as of December&nbsp;31, 2000, 2001 and 2002
are derived from our audited consolidated financial statements
not included in this prospectus. The consolidated statements of
operations and cash flow data for the six months ended
June&nbsp;30, 2004 and 2005 and the consolidated balance sheet
data as of December&nbsp;31, 2004 and June&nbsp;30, 2005 have
been derived from unaudited consolidated financial statements
and related notes included elsewhere in this prospectus and
reflect all adjustments (consisting only of normal, recurring
adjustments) which are, in the opinion of management, necessary
for a fair presentation of our financial position, the results
of operations and cash flows for the periods presented.
Operating results for the six months ended June&nbsp;30, 2005
are not necessarily indicative of the results that may be
expected for the year ended December&nbsp;31, 2005 or any other
future period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
You should read this information together with
&#147;Capitalization,&#148; &#147;Management&#146;s discussion
and analysis of financial condition and results of
operations&#148; and our consolidated financial statements and
the related notes thereto included elsewhere in this prospectus.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 40</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Selected consolidated financial data</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2000</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(unaudited)</B></TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(in thousands, except per share data and railcar amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated Statement of Operations Data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Manufacturing operations(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>200,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>181,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>138,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>188,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>316,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>140,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>269,978</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar services(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,665</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>238,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>214,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>217,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>291,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of manufacturing operations(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>187,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>174,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>305,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>251,060</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar services(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,575</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>224,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>203,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>340,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>269,635</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, administrative and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,651</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,573</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,357</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(604</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(609</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,159</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>924</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before income tax (benefit) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,305</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,040</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,807</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,953</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax (benefit) expense)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,074</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,894</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,745</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income (loss)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,966</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,208</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less preferred dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,090</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss available to common shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,036</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,052</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,921</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,406</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted average shares outstanding (actual shares)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,195</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss) per common share (actual dollars)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,036</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,052</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,047</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,406</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated balance sheet data (at period end):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,804</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net working capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,545</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>194,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>356,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,974</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,423</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mandatorily redeemable preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,057</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>77,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>89,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>95,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>135,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>94,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>106,551</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated cash flow data</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,638</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16,618</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11,274</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,782</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,189</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(535</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,251</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,037</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(606</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,704</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(12,111</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,369</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,290</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>Includes revenues from transactions with affiliates of
    $52.8&nbsp;million, $64.8&nbsp;million, $63.6&nbsp;million,
    $64.8&nbsp;million and $64.4&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $$26.4&nbsp;million and
    $28.1&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 41</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Selected consolidated financial data</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(2)</I></TD>
    <TD align="left">
    <I>Includes revenues from transactions with affiliates of
    $16.1&nbsp;million, $8.6&nbsp;million, $12.8&nbsp;million,
    $9.1&nbsp;million and $19.4&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $7.7&nbsp;million and
    $11.2&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(3)</I></TD>
    <TD align="left">
    <I>Including costs from transactions with affiliates of
    $46.6&nbsp;million, $57.6&nbsp;million, $59.1&nbsp;million,
    $58.6&nbsp;million and $59.9&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $24.4&nbsp;million and
    $25.9&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(4)</I></TD>
    <TD align="left">
    <I>Includes costs from transactions with affiliates of
    $12.8&nbsp;million, $7.2&nbsp;million, $12.3&nbsp;million,
    $8.8&nbsp;million and $17.0&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $5.9&nbsp;million and
    $9.1&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(5)</I></TD>
    <TD align="left">
    <I>Includes interest income from affiliates of
    $5.6&nbsp;million, $4.3&nbsp;million, $3.4&nbsp;million,
    $3.0&nbsp;million and $3.9&nbsp;million in 2000, 2001, 2002,
    2003 and 2004, respectively and $1.2&nbsp;million and
    $0.8&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(6)</I></TD>
    <TD align="left">
    <I>Includes interest expense to affiliates of $0.2&nbsp;million
    in 2001, and $1.5&nbsp;million in 2004 and $0.2&nbsp;million and
    $1.2&nbsp;million for the six months ended June&nbsp;30, 2004
    and 2005, respectively.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(7)</I></TD>
    <TD align="left">
    <I>Share and per share data have not been restated to give
    effect to the stock split.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 42</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='109'></A>
</DIV>

<!-- link1 "Management&#146;s discussion and analysis of financial condition and results of operations" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Management&#146;s discussion and analysis of financial condition
and results of operations
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>You should read the following discussion in conjunction with
&#147;Selected consolidated financial data&#148; and our
consolidated financial statements and related notes included
elsewhere in this prospectus. This discussion contains
forward-looking statements that are based on management&#146;s
current expectations, estimates and projections about our
business and operations. Our actual results may differ
materially from those currently anticipated and expressed in
such forward-looking statements and as a result of the factors
we describe under &#147;Risk factors&#148; and elsewhere in this
prospectus. See &#147;Special note regarding forward-looking
statements&#148; and &#147;Risk factors.&#148;</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OVERVIEW</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are a leading North American manufacturer of covered hopper
and tank railcars. We also repair and refurbish railcars,
provide fleet management services and design and manufacture
certain railcar and industrial components used in the production
of our railcars as well as railcars and non-railcar industrial
products produced by others. We provide our railcar customers
with integrated solutions through a comprehensive set of high
quality products and related services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We operate in two segments:&nbsp;manufacturing operations and
railcar services. Manufacturing operations consists of railcar
manufacturing and railcar and industrial component
manufacturing. Railcar services consists of railcar repair and
refurbishment services and fleet management services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have experienced significant growth in the last three years
with revenues growing to $355.1&nbsp;million in 2004, from
$218.0 in 2003 and $168.8&nbsp;million in 2002. Our revenues in
the first six months of 2005 were $291.6&nbsp;million, compared
to $159.0&nbsp;million in the first six months of 2004. Our
revenues in 2004 included $316.5&nbsp;million from manufacturing
operations and $38.6&nbsp;million from the sale of railcar
services. Our revenues in the first six months of 2005 included
$270.0&nbsp;million from manufacturing operations and
$21.7&nbsp;million from the sale of railcar services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Manufacturing operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We manufacture all of our railcars in modern facilities located
in Paragould and Marmaduke, Arkansas, which were built in 1995
and 1999, respectively. We strategically located these
facilities in close proximity to our main shipper and railroad
customers, as well as our main suppliers of railcar components.
As of the date of this prospectus none of our over 1,100
employees at our Paragould and Marmaduke facilities are
represented by a union. We manufacture components in four other
manufacturing facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Railcar manufacturing.</I> Our Paragould facility was
designed primarily to produce covered hopper railcars, but is
also capable of producing other railcar types. For example, in
2004 and the first six months of 2005, we produced centerbeam
platform railcars at our Paragould facility. This facility
originally consisted of two production tracks with an initial
production capacity of approximately six railcars per day.
Changes in plant design and manufacturing processes since 1995,
along with the addition of painting and lining capabilities in
1999 and a third production track in December 2004, increased
our production capacity. Based on our current backlog, we plan
to produce an average of approximately 24 covered hopper
railcars per working day, dependent upon product mix and the
availability of raw materials and components. The production
lines at our Paragould facility are designed to provide maximum
flexibility for efficient and rapid changeover in product mix
between various types and sizes of railcars. Currently, we are
expanding our Paragould facility through the
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 43</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
construction of additional painting and lining capabilities,
which are scheduled to be completed by the end of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We delivered the following quantities and types of railcars in
2002, 2003 and 2004, and the first six months of 2004 and 2005,
manufactured at our Paragould facility:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six Months</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Ended June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Center Flow covered hoppers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,608</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pressureaide covered hoppers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Centerbeam platform</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>785</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Paragould railcar deliveries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,437</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our Marmaduke facility was built in 1999 to manufacture tank
railcars. Based on our current backlog, we plan to produce an
average of approximately 7.5 tank railcars per working day at
this facility, dependent upon product mix of tank railcar types
and the availability of raw materials and components. The
facility is designed to produce both pressure and non-pressure
tank railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We delivered the following quantities and types of tank railcars
in 2002, 2003 and 2004, and the first six months of 2004 and
2005, manufactured at our Marmaduke facility:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six Months Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pressure tanks</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-pressure tanks</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>819</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total tank railcar deliveries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>908</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Railcar and industrial components manufacturing.</I></B>
Our railcar and industrial components operations provide
components for our railcar manufacturing operations as well as
for other railcar manufacturers and other industries. Components
manufactured by us include aluminum and steel fabricated and
machined parts and carbon steel, aluminum, high alloy and
stainless steel castings, primarily for the trucking and
construction equipment and oil and gas exploration markets. Our
revenues from the sales of components exclude the components we
manufacture for use in our railcar manufacturing business. In
2004, our revenues from sales of components increased by 52% to
$50.7&nbsp;million from $33.4&nbsp;million in 2003. In the first
six months of 2005, our revenues from sales of components
increased to $34.8&nbsp;million from $24.7&nbsp;million in the
first six months of 2004. We attribute the increase in these
revenues primarily to an overall increase in demand for
commercial railcar components as well as the demand for steel
castings and machine components in the non-railcar industrial
sectors that we serve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Railcar services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar services division provides railcar services,
including railcar repair and refurbishment and fleet management
and engineering services. Our railcar repair and refurbishment
services are provided through our network of six full service
maintenance and repair facilities and four mobile repair units.
Our railcar service facilities are located in strategic areas
near major customers. We have established long-term business
relationships with a customer base that includes railcar leasing
companies, shippers and railroads. In 2004, our railcar services
revenues increased by 29% to $38.6&nbsp;million, from
$29.9&nbsp;million in 2003. In 2002 our railcar services
revenues were $30.4&nbsp;million. In the first six months
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 44</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
of 2005, our railcar services revenues increased to
$21.7&nbsp;million from $18.6&nbsp;million in the first six
months of 2004. We believe the growth in these revenues reflects
the overall trend in the United States toward increased railcar
utilization, the increase in our customer base, the increase in
our service offerings and the increase in the number of railcars
under fleet management by us. Our fleet management business
complements both our railcar repair and refurbishment and
railcar manufacturing operations. As of June&nbsp;30, 2005, we
managed approximately 57,000 railcars for various customers,
including approximately 22,000 railcars for ARL, an affiliate of
Carl C. Icahn, the chairman of our board of directors and our
principal controlling stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AMERICAN RAILCAR LEASING LLC FORMATION AND EXCHANGE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We formed ARL, a company that buys and leases railcars, as our
wholly owned subsidiary in July 2004. As part of the formation
of ARL and its further capitalization, ACF and certain of its
subsidiaries transferred to us and ARL their railcars and
related leases, as well as equity in certain of ACF&#146;s
subsidiaries that supported its leasing business, in exchange
for shares of our new preferred stock and preferred interests of
ARL. We, in turn, contributed the assets we received to ARL in
return for common equity interests in ARL. ACF is a company
beneficially owned and controlled by Mr.&nbsp;Icahn. On
June&nbsp;30, 2005, we transferred all of our interest in ARL to
the holders of our new preferred stock, all of which are
beneficially owned and controlled by Mr.&nbsp;Icahn, in exchange
for the redemption of 116,116&nbsp;shares of our new preferred
stock held by them plus accrued dividends. The description of
our operations and the presentation of our financial information
and consolidated financial statements has been prepared on a
standalone basis, excluding ARL&#146;s operations for all
periods, and all transactions giving effect to ARL&#146;s
formation and subsequent transfer have been eliminated from the
financial statements, with the exception of deferred tax assets
retained by us. Any differences related to the amounts
originally capitalized and the amount paid for ARL or our
subsequent transfer of ARL have been recorded through
adjustments to shareholder&#146;s equity, including certain tax
benefits that we received as a result of using ARL&#146;s
previously incurred tax losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For further information relating to the formation of ARL, the
subsequent ARL transfer and our prior and continuing agreements
with ARL and with other affiliates of Mr.&nbsp;Icahn, see
&#147;Certain relationships and related party transactions&#151;
Certain transactions involving American Railcar Leasing
LLC.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FACTORS AFFECTING OPERATING RESULTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following is a discussion of some of the key factors that
have in the past and are likely in the future to affect our
operating results. These factors include, but are not limited
to, the cyclical nature of the North American railcar market,
our reliance on a few customers for most of our revenues, our
historical reliance on revenues from our affiliates for a
significant portion of our revenue, our reliance on large
orders, the variable purchasing patterns of our customers and
fluctuation in supplies and prices of raw materials and
components used in railcar manufacturing. See &#147;Risk
factors&#148; for a more comprehensive list of factors that
could affect our operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Cyclicality of the railcar industry.</I></B> Historically,
the North American railcar market has been highly cyclical and
we expect it to continue to be highly cyclical. During the most
recent industry cycle, industry-wide railcar deliveries declined
from a peak of 75,704 in 1998 to a low of 17,714 railcars in
2002. During this downturn, our revenues dropped from
$238.8&nbsp;million in 2000 to $168.8&nbsp;million in 2002 and
we incurred losses of $1.6&nbsp;million, $2.0&nbsp;million and
$3.9&nbsp;million in 2000, 2001 and 2002, respectively. We
believe that downturns in the railcar manufacturing industry
will occur in the future and will result in decreased demand for
our products and services. The cycles in our industry result
from many factors that are beyond our control, including
economic conditions in the United States. Although railcar
production has increased since 2002, it may not persist if
favorable economic and other conditions are not sustained. Even
if a sustained economic recovery occurs in the United States,
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 45</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
demand for our railcars may not match or exceed expected levels.
An economic downturn may result in increased cancellations of
railcar orders which could have a material adverse effect on our
ability to convert our railcar backlog into revenues. In
addition, an economic downturn in the United States could result
in lower sales volumes, lower prices for railcars and a loss of
profits for us. Furthermore, a substantial number of the end
users of our railcars acquire railcars through leasing
arrangements with our leasing company customers. Economic
conditions that result in higher interest rates would increase
the cost of new leasing arrangements, which could cause our
leasing company customers to purchase fewer railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Customer concentration.</I></B> Railcars are typically
sold pursuant to large, periodic orders, and a limited number of
customers typically represent a significant percentage of our
railcar sales in any given year. In 2004, sales to our top three
customers accounted for approximately 23%, 20% and 16%,
respectively, of our total revenues. In the six months ended
June&nbsp;30, 2005, sales to our top three customers accounted
for approximately 26%, 21% and 14%, respectively, of our total
revenues. The loss of any significant portion of our sales to
any major customer, the loss of a single major customer or a
material adverse change in the financial condition of any one of
our major customers could have a material adverse effect on our
business and financial results. Most of our individual railcar
customers do not make railcar purchases every year, because they
do not need to replace or replenish their railcar fleets on a
yearly basis. Many of our customers place orders for railcars on
an as-needed basis, sometimes only once every few years. As a
result, the order levels for railcars, the mix of railcar types
ordered and the railcars ordered by any particular customer have
varied significantly from quarterly period to quarterly period
in the past and may continue to vary significantly in the
future. As railcar sales comprised 75% of our total revenue in
2004 and 80.7% of our total revenue in the six months ended
June&nbsp;30,2005, our results of operations in any particular
quarterly period may be significantly affected by the number of
railcars and the product mix of railcars we deliver in any given
quarterly period. Additionally, because we record the sale of a
railcar at the time we complete production, the railcar is
accepted by the customer following inspection, the risk for any
damage or loss with respect to the railcar passes to the
customer and title to the railcar transfers to the customer, and
not when the order is taken, the timing of completion, delivery
and acceptance of significant customer orders will have a
considerable effect on fluctuations in our quarterly results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Revenues from affiliates.</I></B> In 2002, 2003, 2004 and
the first six months of 2005, our revenues from affiliates
accounted for 45%, 34%, 24% and 14% of our total revenues,
respectively. These affiliates consisted of entities
beneficially owned and controlled by Carl&nbsp;C. Icahn, the
chairman of our board of directors and our principal controlling
stockholder. The decline in our percentage of revenues from
affiliates is primarily attributable to the growth in our
revenues from third parties. We anticipate that our percentage
of revenues from affiliates will continue to decline if we are
successful in growing our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Nevertheless we believe that revenues from affiliates will
continue to constitute an important portion of our business. A
significant reduction in sales to affiliates could have a
material adverse effect on our business and financial results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Raw material costs.</I></B> The price for steel, the
primary raw material used in the manufacture of our railcars,
increased sharply in 2004 as a result of strong worldwide
demand, limited availability of production inputs for steel,
including scrap metal, industry consolidation and import trade
barriers. These factors have caused a corresponding increase in
the cost and decrease in the availability of castings and other
railcar components constructed with steel. Costs for other
railcar manufacturers have been similarly affected by the
availability and pricing of steel and castings and other
components. The costs for raw steel, based on a Semi Finished
Steel Mill Product Index, have almost doubled during the period
from October 2003 through December 2004. The availability of
scrap metal has been limited by exports of scrap metal to China
and, as a result, steel producers have charged steel
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 46</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
and scrap metal surcharges in excess of agreed-upon prices.
Price levels for steel have increased again in 2005 and we
expect worldwide demand for steel to increase, supplies to
continue to be limited and prices to continue to increase in
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2004, we were unable to pass on an estimated
$7.9&nbsp;million in increased raw material and component costs
to our customers under existing customer contracts. In the first
six months of 2005, we estimate that we were unable to pass
through to our customers an estimated $2.4&nbsp;million of such
increased costs. In response to the increasing cost of raw
materials and railcar components, we are working with suppliers
to reduce surcharges that they charge us, and we have entered
into variable pricing contracts with most of our railcar
customers that allow us to pass along changes in costs of
certain raw materials and components to our customers to protect
us against future changes in these costs. By June&nbsp;30, 2005,
we completed most of the deliveries of railcars under contracts
that did not allow us to pass through these increased costs.
Most of our current deliveries and backlog for railcars include
variable pricing to protect us against further volatility in the
price of certain raw materials and railcar components.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Component supply constraints.</I></B> Our business depends
on the adequate supply of numerous specialty components, such as
railcar wheels, brakes, sideframes, axles, bearings, yokes,
bolsters and other heavy castings, and specialized raw
materials, such as normalized steel plate used in the production
of railcars. Over the last few years many suppliers have been
acquired or have ceased operations, which has caused the number
of alternative suppliers of specialty components and raw
materials to decline. The combination of industry consolidation
and high demand has caused recent railcar industry-wide
shortages of many critical components as many reliable suppliers
are frequently at or near production capacity. In certain cases,
such as for railcar wheels, only two significant suppliers
continue to produce the type of component we use in our
railcars. With the recent increased demand for railcars, our
remaining suppliers are facing significant challenges in
providing components and materials on a timely basis to us and
other railcar manufacturers. If our suppliers of railcar
components and raw materials were to stop or reduce the
production of railcar components and raw materials that we use,
go out of business, refuse to continue their business
relationships with us, reduce the amounts they are willing to
sell to us or become subject to work stoppages, our business
would be disrupted. Our inability to obtain components and raw
materials in required quantities or of acceptable quality could
result in significant delays or reductions in railcar shipments.
This would materially and adversely affect our operating
results. Furthermore, our ability to increase our railcar
production to expand our business depends on our ability to
obtain an adequate supply of these railcar components and raw
materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our participation in the Ohio Castings joint venture has
facilitated our ability to meet some of our requirements for
heavy castings such as bolsters and sideframes. In 2005, Ohio
Castings expanded its castings production and added couplers and
yokes to its products. We believe that this expanded production
capability should help to reduce our risk of encountering supply
shortages. In 2004, we purchased $25.3&nbsp;million of railcar
components produced by Ohio Castings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUTLOOK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that the outlook for railcar demand is positive due
to generally positive economic conditions, the current United
States economic recovery, strong industry-wide backlog for
railcars, increased rail traffic, the projected replacement of
aging railcar fleets and an increasing demand for products that
are hauled and stored in railcars. We believe that we are
strategically positioned to capitalize on the current strong
demand for railcars, and that we have growth opportunities
across our broad array of product and service offerings.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 47</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>BACKLOG</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our backlog consists of orders for railcars. We define backlog
as the number and sales value of railcars that our customers
have committed in writing to purchase from us that have not been
recognized as revenues. Customer orders, however, may be subject
to cancellation, customer requests for delays in railcar
deliveries, inspection rights and other customary industry terms
and conditions. Although we generally have one to three year
contracts with most of our fleet management customers, neither
orders for our railcar repair and refurbishment services
business nor our fleet management business are included in our
backlog because we generally deliver our services in the same
period in which orders are received. Similarly, orders for our
component manufacturing business are not included in our backlog
because we generally deliver components to our customers in the
same period in which orders for the components are received. Due
to the large size of railcar orders and variations in the number
and mix of railcars ordered in any given period, the size of our
reported backlog at the end of any such period may fluctuate
significantly. See &#147;Risk factors&#151; Risks related to our
business&#151; The variable purchase patterns of our customers
and the timing of completion, delivery and acceptance of
customer orders may cause our revenues and income from
operations to vary substantially each quarter, which could
result in significant fluctuations in our quarterly
results.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our backlog has increased from 412 railcars at the end of 2002
to 7,084 railcars at June&nbsp;30, 2005. We believe this
increase is due to the current strength of the economy, the
replacement of aging railcar fleets, increasing demand for
consumer and industrial products and an increasing demand for
covered hopper and tank railcars. Our backlog as of
June&nbsp;30, 2005 excludes the 9,000 to 12,000 railcars CIT has
agreed to purchase from us during the 2006 and 2008 period,
subject to conditions, under an agreement we entered into with
CIT on July&nbsp;29, 2005. See &#147;Prospectus summary&#151;
Recent developments.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table shows our reported railcar backlog, in
number of railcars and estimated future value attributable to
such backlog, for the periods shown.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Year ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar backlog at start of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,747</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcars delivered</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,766</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,557</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,384</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,090</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,345</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcar orders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,682</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar backlog at end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,084</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Estimated backlog value at end of period (in thousands of
    dollars)(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>129,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>507,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>203,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>505,385</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>Estimated backlog value reflects the total revenues expected
    to be attributable to the backlog reported at the end of the
    particular period as if such backlog were converted to actual
    revenues. Estimated backlog does not reflect potential price
    increases and decreases under certain customer contracts that
    provide for variable pricing based on changes in the cost of
    certain raw materials and railcar components, or the
    cancellation or delay of railcar orders that may occur.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We anticipate that approximately 45% of our reported backlog as
of June&nbsp;30, 2005 will be converted to revenues by the end
of 2005. Historically, we have experienced little variation
between the number of railcars ordered and the number of
railcars actually delivered. However, our backlog is not
necessarily indicative of our future results of operations as
orders may be canceled or delivery dates extended. We cannot
assure that our reported backlog will convert to revenues in any
particular period, if at all, that the actual revenues from
these contracts will equal our reported backlog estimates or
that our future revenue collection efforts will be successful.
See &#147;Risk factors&#151; Risks related to our
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 48</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
business&#151; The level of our reported railcar backlog may not
necessarily indicate what our future revenues will be and our
actual revenues may fall short of the estimated revenue value
attributed to our railcar backlog.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We rely on supplies from third-party providers and our Ohio
Castings joint venture for steel, heavy castings, wheels and
other components for our railcars. In the event that our
suppliers were to stop or reduce their supply of steel, heavy
castings, wheels or the other railcar components that we depend
upon, our business would be disrupted and the actual sales from
our customer contracts may fall significantly short of our
reported backlog. See &#147;Risk factors&#151; Risks related to
our business&#151; Fluctuations in the supply of components and
raw materials we use in manufacturing railcars could cause
production delays or reductions in the number of railcars we
manufacture, which could adversely affect our business and
operating results.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CHARGES AND COSTS ASSOCIATED WITH OUR PUBLIC OFFERING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We expect to incur significant additional selling,
administrative and other fees and expenses in connection with
the preparation for this offering and becoming a public company.
We also expect to incur a non-cash selling, administrative and
other expense in connection with an option by our chief
executive officer to purchase
<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;</B>
shares of our common stock granted at
$<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</B>
per share, that vests upon the completion of this offering.
Based on an initial public offering price of
$<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</B>,
which represents the midpoint of the range on the cover of this
prospectus, we expect this expense to be approximately
$<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;</B>
million and to be recognized in the quarter that we complete
this offering. The actual expense will depend upon our initial
public offering price as the expense will be based upon the
difference between the option exercise price and the initial
public offering price. See &#147;Management&#151; Executive
compensation&#151; [Employment and noncompetition
agreements]&#148; and &#147;Certain relationships and related
party transactions&#151; Certain transactions including James J.
Unger&#151; Option to purchase common stock.&#148; Other
additional expenses that we expect to incur in connection with
this offering includes the write-off of the remaining
$0.6&nbsp;million of deferred financing costs that we incurred
in connection with our industrial revenue bond financings we
plan to use a portion of the net proceeds of this offering to
repay the industrial revenue bonds in full. We had previously
been amortizing these expenses over the remaining terms of the
industrial revenue bonds.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 49</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RESULTS OF OPERATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table summarizes our historical operations as a
percentage of revenues for the periods shown. Our historical
results are not necessarily indicative of operating results that
may be expected in the future.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal years ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="22" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Manufacturing Operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of manufacturing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, administrative and other expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.3</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.2</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before income tax expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax expense (benefit)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Comparison of the six months ended June&nbsp;30, 2005 to the
six months ended June&nbsp;30, 2004</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our net income for the six months ended June&nbsp;30, 2005 was
$9.2&nbsp;million, compared to $2.2&nbsp;million for the six
months ended June&nbsp;30, 2004, representing an increase of
$7.0&nbsp;million. In the first six months of 2005, our first
two full quarters of operating our new third production line at
our Paragould facility, we sold 3,345 railcars, which is 1,255
more than the 2,090 railcars we sold in the first six months of
2004. Most of our revenues for the first six months of 2005
included sales under contracts that allowed us to adjust our
sale prices to pass on to our customers the impact of increases
in the costs of certain raw materials, particularly steel, and
components. This improvement was partially offset by increased
costs associated with outsourcing our railcar painting and
lining for our new production line at our Paragould facility and
the start-up costs for that new production line.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenues</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our revenues for the six months ended June&nbsp;30, 2005
increased 83% to $291.6&nbsp;million from $159.0&nbsp;million in
the six months ended June&nbsp;30, 2004. This increase was
primarily attributable to an increase in our revenues from sales
of railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our manufacturing operations revenues increased 92% to
270.0&nbsp;million in the first six months of 2005 from
$140.4&nbsp;million in the first six months of 2004. This
increase was primarily attributable to the delivery of an
additional 1,255 railcars in the first six months of 2005,
increased prices resulting from our ability to pass through a
portion of our increased raw material and components costs, and
increases in the base unit price for some of our railcars. Our
revenues from sales of railcars increased
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 50</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
$119.5&nbsp;million to $235.2&nbsp;million in the first six
months of 2005 from $115.7&nbsp;million in the first six months
of 2004. The additional deliveries of railcars in the first six
months of 2005 reflect increased sales of covered hopper
railcars and a continuation of deliveries of centerbeam platform
railcars ordered in 2004. These increased sales reflected our
increased capacity supported by the continued strong backlog of
orders for our railcars. Tank railcar deliveries increased by
146 railcars. Our manufacturing operations revenues attributable
to sales of railcar and industrial components increased by
$10.1&nbsp;million in the first six months of 2005 to
$34.8&nbsp;million from $24.7&nbsp;million in the first six
months of 2004. This increase was primarily attributable to
increased unit sales reflecting increased railcar manufacturing
and industrial activity. For the first six months of 2005, our
manufacturing operations revenues included $28.1&nbsp;million,
or 9.6% of our total revenues, from transactions with
affiliates, compared to $26.4&nbsp;million, or 16.6% of our
total revenues, in the first six months of 2004. These revenues
were attributable to sales of railcars to companies controlled
by Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar services revenues increased by $3.1&nbsp;million to
$21.7&nbsp;million in the first six months of 2005, from
$18.6&nbsp;million in the first six months of 2004. This
increase was primarily attributable to a $2.0&nbsp;million
increase in leasing and other fleet management service revenue
from two subsidiaries of our affiliate, ARL, a company
controlled by Mr.&nbsp;Icahn, that was partially offset by
decreased railcar services revenues from other customers. The
increase in railcar services revenues from ARL was fully offset
by $2.0&nbsp;million of pass through costs paid to ACF, also a
company controlled by Mr.&nbsp;Icahn, that was included in our
cost of railcar services. Our management agreements with the two
ARL subsidiaries were terminated on June&nbsp;30, 2005. However,
we continue to provide repair, maintenance and fleet management
services for those fleets. For the first six months of 2005, our
railcar services revenues included $11.3&nbsp;million, or 3.9%
of our total revenues, from transactions with affiliates,
compared to $7.7&nbsp;million, or 4.8% of our total revenues, in
the first six months of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Gross profit</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit increased to $22.0&nbsp;million in the first
six months of 2005 from $11.2&nbsp;million in the first six
months of 2004. Our gross profit margin increased to 7.5% in the
first six months of 2005 from 7.1% in the first six months of
2004, primarily reflecting improved margins in our manufacturing
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit margin for our manufacturing operations
increased to 7.0% in the first six months of 2005 from 6.5% in
the first six months of 2004. Our gross profit margin in the
first six months of 2005 was adversely affected by an increase
in the cost of raw materials and components, consisting
primarily of steel and steel components, which resulted in
approximately $13.8&nbsp;million of increased costs. We estimate
that we were unable to pass through approximately
$2.4&nbsp;million of this increase. Most of our railcar
manufacturing contracts providing for deliveries after the first
six months of 2005 have variable cost provisions that adjust the
delivery price for changes in certain raw material and component
costs. As a result, changes in steel prices and other raw
material and component prices should have little impact on our
gross profits for the remainder of the year. However, increases
in raw material and component costs would have an adverse effect
on our gross profit margin as a percent to revenues, because we
do not earn any additional net profit margin on our price
adjustments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit margin in 2005 was also adversely affected by a
contract to manufacture centerbeam platform railcars, a new
product line for us in 2004, which resulted in lower railcar
margins. This was the first time we manufactured centerbeam
platform railcars and, as a result of start-up and increased
production costs, we did not realize a profit on this contract.
Our centerbeam platform railcar contracts were completed at our
Paragould facility in July 2005 and we have since converted the
manufacturing line at that facility to manufacturing covered
hopper railcars. In the first six months of 2005, we also
incurred additional costs in connection with the completion of
our new third production line at our Paragould facility,
including costs associated with the outsourcing our railcar
painting and
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 51</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
lining for the increased railcar production from that new
production line and costs of the initial training and supplies
for that production line. We are currently constructing
additional painting and lining capabilities at our Paragould
facility, which we expect to be completed by the end of 2005.
This new painting and lining capacity should allow us to improve
margins as we reduce or eliminate outsourcing of this function.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit margin for our railcar services increased to
14.3% in the first six months of 2005 from 11.1% in the first
six months of 2004. This increase was primarily attributable to
our service facilities operating at a higher volume level, which
resulted in efficiencies in labor and overhead.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selling, administrative and other expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our selling, administrative and other expenses increased by
$0.5&nbsp;million in the first six months of 2005 to
$6.6&nbsp;million from $6.1&nbsp;million in the first six months
of 2004. Selling, administrative and other expenses were 2.2% of
total revenues in the first six months of 2005 as compared to
3.8% of total revenues in the first six months of 2004. Our
increase in the amount of our selling, administrative and other
expenses was primarily attributable to an increase in
information technology costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interest expense and interest income</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our interest expense in the six months ended June&nbsp;30, 2005
was $2.3&nbsp;million as compared to $1.5&nbsp;million for the
six months ended June&nbsp;30, 2004, representing an increase of
$0.8&nbsp;million. The increase in interest expense was
primarily attributable to a $130.0&nbsp;million loan from ARL in
October 2004 that we satisfied in January 2005. Our interest
income in the six months ended June&nbsp;30, 2005 was
$1.0&nbsp;million as compared to $1.5&nbsp;million for the six
months ended June&nbsp;30, 2004, representing a decrease of
$0.5&nbsp;million. The decrease in interest income was primarily
attributable to a $165.0&nbsp;million loan we made to
Mr.&nbsp;Icahn. In January 2005, we transferred our entire
interest in this loan to ARL in exchange for additional common
interests in ARL and in satisfaction of our $130.0&nbsp;million
loan from ARL. The decrease was also due to a $57.2&nbsp;million
loan to an affiliate that was repaid in 2004. See &#147;Certain
relationships and related party transactions&#151; Certain
transactions with Mr.&nbsp;Icahn and other related
entities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Income tax expense</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our income tax expense for the six months ended June&nbsp;30,
2005 was $6.0&nbsp;million, or 39.9% of our income before income
taxes, as compared to $1.7&nbsp;million for the six months ended
June&nbsp;30, 2004, or 43.6% of our income before income taxes.
Our effective tax rate is impacted by expenses included in
pre-tax income for which we do not receive a deduction for tax
purposes. These expenses result from the liabilities and
obligations retained by ACF as part of its transfer of assets to
us in 1994. See &#147;Certain relationships and related party
transactions&#151; Certain transactions with ACF Industries
LLC.&#148; Although ACF is responsible for any costs associated
with these liabilities, we are required to recognize these costs
as expenses in order to reflect the full cost of doing business.
The entire amount of such permanently nondeductible expenses is
treated as contribution of capital resulting in an increase to
our effective tax rate. The expenses included in pre-tax income
were $0.5&nbsp;million and $0.4&nbsp;million for the six months
ended June&nbsp;30, 2005 and June&nbsp;30, 2004, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Comparison of the year ended December&nbsp;31, 2004 to the
year ended December&nbsp;31, 2003</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our net income for the year ended December&nbsp;31, 2004 was
$2.3&nbsp;million as compared to $1.3&nbsp;million for the year
ended December&nbsp;31, 2003, representing an increase of
$1.0&nbsp;million. In 2004 we sold 4,384 railcars, 1,827 more
than the 2,557 railcars we sold in 2003. Despite the increase in
railcar
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 52</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
deliveries in 2004, our net income for 2004 was negatively
affected by dramatic increases in raw materials, particularly
steel, and railcar component prices, particularly for components
manufactured from steel. Our railcar manufacturing contracts
precluded us from passing most of these increased costs on to
our customers. Our gross margins in 2004 were also adversely
affected by the losses we incurred from our introduction and
sale of centerbeam platform railcars manufactured at our
Paragould facility. Net income for 2003 reflected a
$1.4&nbsp;million write-down of the carrying value of inventory,
buildings and improvements, and equipment at our Milton,
Pennsylvania railcar repair facility, which we idled in 2003. We
incurred no such write-downs in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenues</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our revenues in 2004 increased 63% to $355.1&nbsp;million from
$218.0&nbsp;million in 2003. This increase was attributable to
an increase in revenues from both manufacturing operations and
railcar services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our manufacturing operations revenues increased 68% to
$316.4&nbsp;million in 2004 from $188.1&nbsp;million in 2003.
This increase was primarily attributable to our delivery of an
additional 1,827 railcars in 2004 and, to a lesser extent, an
increase in pricing based upon our ability to pass through some
of our increased costs as well as an increase in the base price
of our railcars. Our revenues from railcar sales increased
$111.1&nbsp;million to $265.8&nbsp;million in 2004 from
$154.7&nbsp;million in 2003. The additional deliveries of
railcars in 2004 reflected increased sales of covered hopper and
tank railcars and sales of centerbeam platform railcars. We
believe that the increases were primarily attributable to the
continuing recovery of the railcar industry which resulted in a
strong backlog of orders for delivery in 2004. In 2004,
deliveries increased by 428 tank railcars and 323 covered hopper
railcars from 2003, and our centerbeam platform railcar
deliveries totaled 1,240. We did not deliver any centerbeam
platform railcars in 2003. Our increase in manufacturing
operations revenues also reflected a $17.3&nbsp;million increase
in our sales of railcar and industrial components. This increase
was primarily attributable to an increase in demand for castings
and components in the oil refinery and transportation markets.
In 2004, our manufacturing operations revenues included
$64.4&nbsp;million, or 18.1% of our total revenues, from
transactions with affiliates, compared to $62.9&nbsp;million, or
28.8% of our total revenues, in 2003. These revenues were
primarily attributable to sales of railcars to companies
controlled by Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar services revenues increased 29% to
$38.6&nbsp;million in 2004 from $29.9&nbsp;million in 2003. This
increase was primarily attributable to increased sales,
primarily related to repair and maintenance services provided to
affiliates, including ACF and ARL and their subsidiaries. In
2004, our railcar services revenues included $19.4&nbsp;million,
or 5.5% of our total revenues, from transactions with
affiliates, as compared to $11.0&nbsp;million, or 5.1%, in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Gross profit</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit increased to $14.9&nbsp;million in 2004 from
$13.9&nbsp;million in 2003. Our gross profit margin decreased to
4.2% in 2004 from 6.4% in 2003. The decrease in our gross profit
margin was primarily attributable to a decrease in our gross
profit margin for our manufacturing operations that was
partially offset by an increase in our gross profit margin for
our railcar services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit margin for our manufacturing operations
decreased to 3.4% in 2004 from 7.3% in 2003. This decrease was
primarily attributable to an increase in the cost of raw
materials and components, consisting primarily of steel and
steel-based components, that we were not able to pass through to
our customers primarily due to fixed price contracts. Our cost
of sales increased by approximately $11.3&nbsp;million in 2004
based upon these increased raw material and component costs. We
estimate that we were able to pass through $3.4&nbsp;million of
these costs to our customers. Our margins were also adversely
affected by the losses we incurred resulting from our
introduction and sale
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 53</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
of centerbeam platform railcars in 2004. We completed deliveries
under our centerbeam platform railcar contract by in July 2005
and have converted the manufacturing line we used to manufacture
these railcars to manufacture covered hopper railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit margin for railcar services increased to 10.7%
in 2004 from 0.4% in 2003. This increase was primarily
attributable to increased sales that resulted in increased
efficiencies of labor and overhead. Our gross profit margin for
railcar services in 2003 was adversely affected by a
$1.4&nbsp;million write-down of the carrying value of inventory,
buildings and improvements and equipment at our Milton,
Pennsylvania railcar maintenance facility, which we idled during
2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selling, administrative and other expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our selling, administrative and other expenses did not increase
in 2004 from the $10.3&nbsp;million expense in 2003. Selling,
administrative and other expenses were 2.9% of sales in 2004 as
compared to 4.7% of sales in the 2003. In 2004, we were able to
use the infrastructure we put in place in 2003 to grow our
revenues without increasing our selling, administrative and
other expenses. Our expenses in 2004 reflected an increase in
engineering and purchasing personnel, but these expenses were
offset by reduced spending in insurance, retirement, legal fees
and engineering consulting services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interest expense and interest income</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our interest expense was $3.6&nbsp;million in both 2004 and
2003. Our interest income increased to $4.4&nbsp;million in 2004
from $3.2&nbsp;million in 2003. The increase in interest income
and interest expense was primarily attributable to our
$165.0&nbsp;million loan to Mr.&nbsp;Icahn and our
$130.0&nbsp;million loan from ARL, respectively, both of which
are no longer outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Income tax expense</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our income tax expense for 2004 was $2.4&nbsp;million, or 51.2%
of our income before income taxes, as compared to
$1.3&nbsp;million for 2003, or 50.1% of our income before income
taxes. Our income tax rates were higher than the statutory rates
in both periods because of the effect of expenses included in
pre-tax income for which we do not receive a deduction for tax
purposes. These expenses primarily relate to the liabilities and
obligations retained by ACF as part of its transfer of assets to
us in 1994.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Comparison of the year ended December&nbsp;31, 2003 to the
year ended December&nbsp;31, 2002</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our net income for the year ended December&nbsp;31, 2003 was
$1.3&nbsp;million as compared to a $3.9&nbsp;million net loss
for the year ended December&nbsp;31, 2002, representing an
increase of $5.2&nbsp;million. In 2003 we sold 2,557 railcars,
791 more than the 1,766 railcars we sold in 2002. The increase
in our earnings was primarily attributable to increased gross
profit from the delivery of these additional railcars, which was
partially offset by an increase in selling, administrative and
other expenses of $0.8&nbsp;million, as increased engineering
and purchasing support were added to support railcar
manufacturing. Net income was reduced in 2003 because we wrote
down the carrying value of inventory, buildings and improvements
and equipment for one of our railcar maintenance facilities by
$1.2&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenues</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our revenues increased by 29.1% to $218.0&nbsp;million in 2003
from $168.8&nbsp;million in 2002. This increase was attributable
to an increase in our manufacturing operations revenues that was
partially offset by a decrease in railcar services revenues.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 54</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our manufacturing operations revenues increased 36% to
$188.1&nbsp;million in 2003 from $138.4&nbsp;million in 2002.
This increase was primarily attributable to our delivery of an
additional 791 railcars in 2003 and, to a lesser extent, an
increase in the base unit price of our railcars. In 2003, we
delivered 496 additional tank railcars and 250 additional
covered hopper railcars as compared to 2002. We attribute these
increased sales to the recovery of the railcar manufacturing
industry. Our revenues from railcar and industrial components
manufacturing increased $3.2&nbsp;million to $33.5&nbsp;million
in 2003 from $30.3&nbsp;million in 2002. This increase reflected
increased demand for our railcar component products and an
increase in demand for our steel castings products in the oil,
gas and transportation markets. In 2003, our manufacturing
operations revenues included $62.9&nbsp;million, or 28.8% of our
total revenues, from transactions with affiliates, compared to
$63.6&nbsp;million, or 37.6% of our total revenues, in 2002.
These revenues were primarily attributable to sales of railcars
to companies controlled by Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our revenues from railcar services decreased by
$0.5&nbsp;million to $29.9&nbsp;million in 2003 from
$30.4&nbsp;million in 2002. This decrease is primarily
attributable to the idling of our Milton, Pennsylvania repair
facility and a corresponding loss of repair and maintenance
revenues that had historically been performed at that facility.
In 2003, our railcar services revenues included
$11.0&nbsp;million, or 5.1% of our total revenues, from
transactions with affiliates, as compared to $12.8&nbsp;million,
or 7.6% of our total revenues, in 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Gross profit</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our gross profit increased by $9.0&nbsp;million to
$13.9&nbsp;million in 2003 from $4.9&nbsp;million in 2002. Our
gross profit margin increased to 6.4% in 2003 from 2.9% in 2002.
The improvement in our gross profit margin was attributable to
an improved gross profit margin for our manufacturing operations
that was partially offset by a decrease in our gross profit
margin for our railcar services. Our gross profit margin for our
manufacturing operations increased to 7.3% in 2003 from 2.9% in
2002. This increase was primarily attributable to the
contribution from increased overhead absorption as plant work
volume increased. Our gross profit margin for our railcar
services was 0.4% in 2003 compared to 2.8% in 2002. This
decrease in gross profit margin was primarily attributable to
the $1.4&nbsp;million write-down in 2003 in connection with the
idling of our Milton, Pennsylvania repair and maintenance
facility and lower revenues, which resulted in inefficiencies of
labor and overhead.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selling, administrative and other expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our selling, administrative and other expenses increased 8.9% to
$10.3&nbsp;million in 2003 from $9.5&nbsp;million in 2002. The
increase in our selling, administrative and other expenses in
2003 was primarily attributable to increased information
technology, infrastructure, engineering and purchasing services
to support our growing operations. Selling, administrative and
other expenses decreased to 4.7% of revenues in the year ended
December&nbsp;31, 2003 from 5.6% in the year ended
December&nbsp;31, 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interest expense and interest income</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our interest expense was $3.6&nbsp;million and $4.9&nbsp;million
for the years ended December&nbsp;31, 2003 and 2002,
respectively. Our interest income was $3.2&nbsp;million and
$3.6&nbsp;million for the years ended December&nbsp;31, 2003 and
2002, respectively. The interest income was primarily from a
$57.2&nbsp;million loan to an affiliate that was repaid in 2004.
The interest expense reduction was primarily due to reduction of
the average outstanding borrowings under our revolving credit
facility.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 55</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Income tax expense/benefit</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our income tax expense in the year ended December&nbsp;31, 2003
was $1.3&nbsp;million, or 50.1% of income before income taxes,
as compared to a $1.9&nbsp;million tax benefit in the year ended
December&nbsp;31, 2002, or 32.6% of loss before income taxes.
Our income tax rate was higher than the statutory rates in 2003,
because of the effect of expenses included in pre-tax income for
which we do not receive a deduction for tax purposes. These
expenses primarily relate to the liabilities and obligations
retained by ACF as part of its transfer of assets to us in 1994.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LIQUIDITY AND CAPITAL RESOURCES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our primary sources of liquidity have historically been the cash
generated from our operations, the sale of securities and funds
generated from borrowings. Upon completion of this offering, we
intend to use substantially all of the net proceeds of this
offering to repay amounts outstanding under our revolving credit
facility, to pay the notes due to affiliates of Mr.&nbsp;Icahn,
to redeem all our industrial revenue bonds and to redeem all of
the outstanding shares of our preferred stock, all of which is
held by Mr.&nbsp;Icahn and his affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Outstanding debt</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>Revolving credit facility. </I>On March&nbsp;10, 2005, we
entered into a revolving credit facility with North Fork
Business Capital Corporation, as administrative agent for
various lenders. As of June&nbsp;30, 2005, we had
$30.8&nbsp;million in principal and interest outstanding under
this facility. We intend to repay all or a substantial portion
of this credit facility with the proceeds of this offering. We
are also in discussions with our lenders to amend our revolving
credit facility in conjunction with the closing of this offering
to extend the term of the facility, increase our maximum
borrowing amount and modify certain covenants, including
covenants that restrict our payment of dividends and that
require Mr.&nbsp;Icahn to retain a majority interest in us. We
cannot assure that the lenders will agree to any modifications
to this facility.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <I><FONT style="font-size: 10pt">Maximum
    borrowing.</FONT></I><FONT style="font-size: 10pt"> The
    revolving credit facility provides for a maximum borrowing of
    the lesser of (a)&nbsp;$50.0&nbsp;million or (b)&nbsp;85% of the
    eligible receivables plus 65% of the eligible inventory, which
    inventory may include at the most $40.0&nbsp;million, less any
    reserves established by the agent in accordance with the
    agreement. As of June&nbsp;30, 2005, the maximum borrowing
    amount we were eligible to borrow under this facility was
    $50.0&nbsp;million.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <I><FONT style="font-size: 10pt">Term.</FONT></I><FONT style="font-size: 10pt">
    The revolving credit facility expires March&nbsp;10, 2006.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <I><FONT style="font-size: 10pt">Interest rate and
    fees.</FONT></I><FONT style="font-size: 10pt"> Borrowings bear
    an interest rate of a base rate less 0.25%, where the base rate
    is the highest prime, base or equivalent rate of interest
    published by the administrative agent, or the published
    annualized rate for 90-day dealer commercial paper published in
    the Wall Street Journal, or a LIBOR rate plus 2.5%. We are
    required to pay an unused line fee of 0.375%&nbsp;per year on
    the difference, if positive, of $50.0&nbsp;million minus the
    average daily aggregate outstanding amount of the loans. As of
    June&nbsp;30, 2005, the interest rate under the revolving credit
    facility was 6.0%.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <I><FONT style="font-size: 10pt">Collateral.</FONT></I><FONT style="font-size: 10pt">
    Our receivables, inventory and a pledged deposit account serve
    as collateral under the revolving credit facility. In addition,
    we are required to maintain one or more blocked accounts to
    which all our collections are remitted, upon notice from the
    administrative agent, if the difference between the lesser of
    $50.0&nbsp;million or the borrowing base and the outstanding
    amount of our loans is less than $5.0&nbsp;million, or if an
    event of default is ongoing.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <I><FONT style="font-size: 10pt">Financial
    covenants.</FONT></I><FONT style="font-size: 10pt"> Our
    revolving credit facility requires us to meet a fixed charge
    coverage ratio of not less that 1.2 to 1.0 for each of the
    following periods: January&nbsp;1, 2005 through
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 56</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    June&nbsp;30, 2005; January&nbsp;1, 2005 through
    September&nbsp;30, 2005; January&nbsp;1, 2005 through
    December&nbsp;31, 2005; and each 12&nbsp;month period ending on
    the last day of each calendar quarter thereafter; and a leverage
    ratio calculated based on the outstanding amount of indebtedness
    to EBITDA of not greater than 4.0 to 1.0 for each of the above
    mentioned periods. As of June&nbsp;30, 2005, we were in
    compliance with these financial covenants.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Negative
    covenants.</FONT></I></B><FONT style="font-size: 10pt"> Our
    revolving credit facility includes certain limitations on, among
    other things, our ability to incur additional indebtedness,
    modify our current governing documents, sell or dispose of
    collateral, grant credit and declare or pay dividends or make
    distributions on common stock or other equity securities. In
    addition, our existing revolving credit facility provides that
    Mr.&nbsp;Icahn shall maintain a direct or indirect ownership of
    at least 50.1% of our voting equity interest.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Industrial revenue bonds.</I></B> As of June&nbsp;30,
2005, we had $8.5&nbsp;million in principal amount and
$0.2&nbsp;million in accrued interest on the industrial revenue
bonds outstanding. As of that date, these bonds had effective
interest rates ranging from 7.75% to 8.5%, with principal
amounts due through 2011. We intend to use a portion of the net
proceeds of this offering to repay all amounts due under these
bonds. The industrial revenue bonds are guaranteed by affiliates
of Mr.&nbsp;Icahn, and these affiliates will be released from
such guarantees upon repayment of the industrial revenue bonds.
In addition, James J. Unger, our president and chief executive
officer, and his wife own $0.4&nbsp;million of the industrial
revenue bonds issued by Paragould, Arkansas. Mr.&nbsp;Unger and
his wife will receive approximately $0.4&nbsp;million upon our
repayment of the amounts due under the industrial revenue bonds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Outstanding notes to affiliates.</I></B> In December 2004,
we borrowed $7.0&nbsp;million from Arnos Corp., a company
controlled by Mr.&nbsp;Icahn, to provide us with additional
working capital. The loan bears interest at the prime rate plus
1.75% (8.0% at June&nbsp;30, 2005) and is payable on demand.
Additionally, in connection with our purchase of Castings LLC,
effective January&nbsp;1, 2005, from an affiliate of
Mr.&nbsp;Icahn, we issued that affiliate a note payable in the
principal amount of $12.0&nbsp;million. The note bears interest
at the prime rate plus 0.5% (6.75% at June&nbsp;30, 2005) and is
payable on demand. We intend to use a portion of the net
proceeds of this offering to repay all amounts due under these
obligations. As of June&nbsp;30, 2005, $19.6&nbsp;million was
outstanding under these obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Cash flows</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table summarizes our net cash provided by or used
in operating activities, investing activities and financing
activities and our capital expenditures for the periods
presented (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Six Months Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Cash flows</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31, 2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30, 2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(17,039</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>49,777</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,178</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,644</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital expenditures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,651</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,560</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Operating activities.</I></B> Our net cash provided by or
used in operating activities reflects net income or loss,
adjusted for non-cash charges and changes in net working
capital, including non-current assets and liabilities. Cash
flows from operations are affected by several factors, including
fluctuations in business volume, contract terms for billings and
collections, the timing of collections on our accounts
receivables, processing of payroll and associated taxes and
payments to our suppliers. We do not typically experience
business credit losses, although a payment may be delayed
pending completion of
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 57</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
closing documentation, and a typical order of railcars may not
yield cash proceeds until after the end of a reporting period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our net cash provided by operating activities was
$9.8&nbsp;million for the six months ended June&nbsp;30, 2005,
which included net income of $9.2&nbsp;million increased by
non-cash charges for depreciation and amortization of
$3.2&nbsp;million and a provision for deferred income taxes of
$1.3&nbsp;million. Cash provided by operations attributable to
changes in our current assets and liabilities included an
increase in accounts payable of $26.8&nbsp;million and an
increase in accrued expenses and taxes of $7.1&nbsp;million.
These sources of cash were partially offset by an increase in
accounts receivable of $5.1&nbsp;million, an increase in
inventory of $6.8&nbsp;million and an increase in prepaid
expenses of $4.2&nbsp;million. The increase in inventory was
primarily attributable to the build-up of inventory for our new
third production line at our Paragould facility. The increase in
accounts payable and accrued expenses was primarily due to this
inventory buildup and a change in the processing and accounting
of accounts payable that had previously been processed through
affiliates. The increase in accounts receivable was primarily
attributable to the increased volume of sales attributed to
railcars manufactured at our Paragould facility. The increase in
prepaid expenses was primarily attributable to payments for
workers&#146; compensation and general insurance coverages that
benefit future periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For the year ended December&nbsp;31, 2004, cash used by
operating activities was $17.0&nbsp;million. Our sources of cash
included net income of $1.2&nbsp;million increased by non-cash
charges for depreciation and amortization of $6.4&nbsp;million
and a provision for deferred income taxes of $0.4&nbsp;million.
Cash used in operations attributable to changes in our current
assets and liabilities included an increase in inventories of
$27.3&nbsp;million and an increase in accounts receivable of
$11.6&nbsp;million. These uses of cash were partially offset by
an increase in accounts payable of $12.8&nbsp;million. The
increase in our inventories and accounts receivable were
primarily attributable to our increased sales and the increased
cost or raw materials and components. The increase in accounts
payable was primarily attributable to our buildup of inventory
to support our increased sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Investing activities.</I></B> Net cash used in investing
activities for the six months ended June&nbsp;30, 2005 was
$18.6&nbsp;million. This use of cash consisted of
$6.6&nbsp;million in capital expenditures, including
$5.4&nbsp;million for construction of additional painting and
lining capabilities at our Paragould facility and
$12.0&nbsp;million for the purchase of Castings LLC from ACF
Industries Holding Corp. Net cash used in investing activities
for the year ended December&nbsp;31, 2004 was
$36.8&nbsp;million. This use of cash consisted of
$11.7&nbsp;million in capital expenditures, including
$9.4&nbsp;million to construct an additional production line at
our Paragould facility and $25.0&nbsp;million for the purchase
of an interest in ARL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Financing activities.</I></B> Net cash provided by
financing activities was $29.6&nbsp;million for the six months
ended June&nbsp;30, 2005. During the period, we repaid
$22.6&nbsp;million due to affiliates and borrowed
$30.8&nbsp;million under our revolving credit facility. The
amounts due to affiliates consisted of cash advances and
affiliate transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Net cash provided by financing activities was $60.7&nbsp;million
for the year ended December&nbsp;31, 2004. During the year, we
received $110.0&nbsp;million in additional capital contributions
of which $25.0&nbsp;million related to our contribution in the
initial capitalization of ARL,<B> </B>$137.0&nbsp;million from
the proceeds of notes due to affiliates and $19.7&nbsp;million
from an increase in amounts due to affiliates. The
$137.0&nbsp;million of proceeds from notes due to affiliates
primarily related to our $130.0&nbsp;million loan from ARL. The
increase in amounts due to affiliates consisted of cash advances
and affiliate transactions. These sources of cash were partially
offset by a $165.0&nbsp;million loan we made to Mr.&nbsp;Icahn
and a $40.2&nbsp;million repayment of our term loan in July 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Capital expenditures.</I></B> Our capital expenditures
were $6.6&nbsp;million in the six months ended June&nbsp;30,
2005 and $11.7&nbsp;million in the year ended December&nbsp;31,
2004. The capital expenditures for the six months ended
June&nbsp;30, 2005 consisted primarily of $5.4&nbsp;million at
our Paragould facility for
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 58</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
construction of additional painting and lining capabilities at
that facility. The capital expenditures for the year ended
December&nbsp;31, 2004 included $9.4&nbsp;million to construct
an additional production line at our Paragould facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We continuously evaluate facility requirements based on our
strategic plans, production requirements and market demand and
may elect to make capital investments at higher or lower levels
in the future. These investments are all based on an analysis of
the potential for these additions to improve profitability and
future rates of return. In response to the current demand for
our railcars, we are exploring opportunities to increase our
production capacity and reduce our costs through continued
vertical integration of our production capacity. From time to
time, we may expand our business by acquiring other businesses
or pursuing other strategic growth opportunities. We presently
have not entered into any agreements related to any material
acquisitions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In December 2004, we began construction of additional painting
and lining capabilities at our Paragould, Arkansas covered
hopper manufacturing facility. This will complement our
additional production line that was completed in November 2004.
We expect our capital expenditures in connection with the new
painting and lining capabilities to be approximately
$13.2&nbsp;million, with completion by the end of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On March&nbsp;31, 2005 we purchased for $2.8&nbsp;million the
manufacturing equipment and leasehold improvements that we had
previously been leasing from ACF, a company controlled by
Mr.&nbsp;Icahn, at our St. Charles, Missouri manufacturing
facilities. This amount was included in our amounts due to
affiliates. See &#147;Certain relationships and related party
transactions&#151;Certain transactions with ACF Industries
LLC&#151;Corbitt Equipment Lease and Purchase.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have an equipment lease expiring on October&nbsp;31, 2005,
the terms of which include an option to either renew the lease
or purchase the equipment at a specified amount. Our intent is
to purchase the equipment upon expiration of the lease. The
buyout amount is estimated at $6.5&nbsp;million. We expect to
fund these capital expenditures through cash provided by
operating activities and our revolving credit facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We anticipate that any future expansion of the business will be
financed through cash flow from operations, our revolving credit
facility or term debt associated directly with that expansion.
Moreover, we believe that following the completion of this
offering, these sources of funds will provide sufficient
liquidity to meet our expected operating requirements over the
next twelve months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Contractual obligations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table summarizes our contractual obligations as of
December&nbsp;31, 2004, and the effect that these obligations
and commitments would be expected to have on our liquidity and
cash flow in future periods, assuming that our existing debt
remains outstanding during such periods:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Payments due by period</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2-3</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>4-5</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>After</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Contractual obligations</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>1&nbsp;year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>5 years</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="21" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,150</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating leases</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,216</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The operating lease commitment above includes the future minimum
rental payments required under non-cancelable operating leases
for property and equipment leased by us.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 59</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As of July&nbsp;31, 2005, we had $143.2&nbsp;million of purchase
orders outstanding, all of which is scheduled to be delivered
within one year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We entered into two supply agreements, in January 2005 and June
2005, with a steel supplier for the purchase of regular and
normalized steel plate. The agreements each have terms of five
years and may be terminated by either party at any time after
two years, upon twelve months prior notice. Each agreement
requires us to purchase the lesser of a fixed volume or 75% of
our requirements for the steel covered by that agreement at
prices that fluctuate with the market. We have no commitment
under these arrangements to buy a minimum amount of steel, other
than the minimum percentages, if our overall steel purchases
decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have entered into supply agreements with an affiliate of
Amsted Industries, Inc., an affiliate of one of our Ohio
Castings joint venture partners, to purchase up to 25% and 33%
of the car sets, consisting of sideframes and bolsters, produced
at each of two foundries, respectively, being operated by
subsidiaries of Ohio Castings. Our purchase commitments under
these supply agreements are dependent upon the number of car
sets manufactured by these foundries, which are jointly
controlled by us and the other two members of Ohio Castings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table summarizes our contractual obligations as of
December&nbsp;31, 2004, and the effect that these obligations
and commitments are expected to have on our liquidity and cash
flow in future periods, after giving effect to this offering and
the application of the net proceeds of this offering as
described in &#147;Use of proceeds&#148;:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Payments due by period</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2-3</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>4-5</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>After</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Contractual obligations</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>1&nbsp;year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>5&nbsp;years</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="21" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating leases</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>We anticipate that our revolving credit facility, following
    the amendment we intend to enter into concurrently with this
    offering, will permit us to borrow
    $[&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]&nbsp;million and
    that this facility will have a three year maturity.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are exposed to price risks associated with the purchase of
raw materials, especially steel and heavy castings. The cost of
steel, heavy castings and all other materials used in the
production of our railcars represent approximately 80-85% of our
direct manufacturing costs. Given the significant increases in
the price of raw materials since November 2003, this exposure
can affect our costs of production. We believe that the risk to
our margins and profitability has been greatly reduced by the
variable pricing contracts we now have in place. We have
negotiated most of our railcar manufacturing contracts with our
customers to adjust the purchase prices of our railcars to
reflect increases or decreases in the cost of certain raw
materials and components and, as a result, we are able to pass
on to our customers substantially all of the increased raw
material and component costs with respect to the railcars that
we will produce and deliver after the first six months of 2005.
We believe that we currently have excellent supplier
relationships and do not anticipate that material constraints
will limit our production capacity. Such constraints may exist
if railcar production were to increase beyond current levels, or
other economic changes occur that affect the availability of our
raw materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are not exposed to any significant foreign currency exchange
risks.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 60</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CRITICAL ACCOUNTING POLICIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We prepare our consolidated financial statements in accordance
with U.S.&nbsp;GAAP. The preparation of our financial statements
requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during
the reporting period. Our significant accounting policies are
described in the notes to our consolidated financial statements
included elsewhere in this prospectus. Some of these policies
involve a high degree of judgment in their application. The
critical accounting policies, in management&#146;s judgment, are
those described below. If different assumptions or conditions
prevail, or if our estimates and assumptions prove to be
incorrect, actual results could be materially different from
those reported.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenue recognition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Revenues from railcar sales are recognized following completion
of manufacturing, inspection, customer acceptance and shipment,
which is when title and risk for any damage or loss with respect
to the railcars passes to the customer. In some cases, painting
and lining work may be outsourced to an independent contractor
and, as a result, the sale will not be recorded until the
railcars are shipped from the independent contractor&#146;s
facilities to our customer. Revenues from railcar and industrial
components are recorded at the time of product shipment, in
accordance with our contractual terms. Revenue for railcar
maintenance services are recognized upon completion and shipment
of railcars from our plants. Revenue for fleet management
services are recognized as performed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We record amounts billed to customers for shipping and handling
as part of sales in accordance with Emerging Issues Task Force
(EITF)&nbsp;00-10, <I>Accounting for Shipping and Handling Fees
and Costs</I>, and we record related costs in our cost of sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Accounts receivable</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We carry our accounts receivable at cost less an allowance for
doubtful accounts. On a quarterly basis, we evaluate our
accounts receivable and establish an allowance for doubtful
accounts, based on a history of past write-offs and collections
and current credit conditions. Accounts are placed for
collection on a limited basis once all other methods of
collection have been exhausted. Once it has been determined that
the customer is no longer in business and/or refuses to pay, the
accounts are written off. Our bad debt experience has been
minimal. Write-offs could be materially different than reserves
if economic conditions change or actual results deviate from
historical trends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Product warranties</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We record a liability for an estimate of costs that we expect to
incur under our basic limited warranty when manufacturing
revenue is recognized. Warranty terms are based on the
negotiated railcar sales contracts and typically are for periods
of up to five years. Factors affecting our warranty liability
include the number of units sold and historical and anticipated
rates of claims and costs per claim. We assess quarterly the
adequacy of our warranty liability based on changes in these
factors. We have generally experienced low warranty claims. Our
warranty claims were $0.5&nbsp;million in 2003 and
$0.1&nbsp;million in 2004. Actual results differing from
estimates could have a material effect on results from
operations in the event that unforeseen warranty issues were to
occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Inventory</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Inventories are stated at the lower of average cost or market,
and include the cost of materials, direct labor and
manufacturing overhead. We evaluate our ability to realize the
value of our inventory based on a combination of factors
including historical usage rates, forecasted sales or usage,
product end of
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 61</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
life dates, estimated current and future market values and new
product introductions. Assumptions used in determining our
estimates of future product demand may prove to be incorrect, in
which case the provision required for excess and obsolete
inventory would have to be adjusted in the future. If inventory
is determined to be overvalued, we would be required to
recognize such costs as cost of goods sold at the time of such
determination. Any significant unanticipated changes in demand
could have a significant negative impact on the value of our
inventory and our reported operating results. Additionally,
purchasing requirements and alternative usage avenues are
explored within these processes to mitigate inventory exposure.
When recorded, our reserves are intended to reduce the carrying
value of our inventory to its net realizable value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Long-lived assets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We evaluate long-lived assets, including property, plant and
equipment, under the provisions of Statement of Financial
Accounting Standards (SFAS)&nbsp;No.&nbsp;144, <I>Accounting for
the Impairment or Disposal of Long-Lived Assets</I>, which
addresses financial accounting and reporting for the impairment
of long-lived assets and for long-lived assets to be disposed
of. Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of assets may not be recoverable. The criteria for
determining impairment or such long-lived assets to be held and
used is determined by comparing the carrying value of these
long-lived assets to be held and used to management&#146;s best
estimate of future undiscounted cash flows expected to result
from the use of the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets. The estimated fair value of the assets
is measured by estimating the present value of the future
discounted cash flows to be generated. We incurred an impairment
loss in the year ended December&nbsp;31, 2003, and reduced the
carrying value of inventory, buildings and improvements and
equipment by $1.4&nbsp;million at one of our railcar maintenance
facilities. No such impairment losses were incurred for the
years ended December&nbsp;31, 2002 and 2004. Any future
determination requiring write-off of a significant portion of
long-lived assets recorded on our balance sheet could have an
adverse effect on our financial condition and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Income taxes</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For financial reporting purposes, income tax expense is
estimated based on planned tax return filings. The amounts
anticipated to be reported in those filings may change between
the time the financial statements are prepared and the time the
tax returns are filed. Further, because tax filings are subject
to review by taxing authorities, there is also the risk that a
position on a tax return may be challenged by a taxing
authority. If the taxing authority is successful in asserting a
position different than that taken by us, differences in a tax
expense or between current and deferred tax items may arise in
future periods. Any such differences which could have a material
impact on our financial statements, would be reflected in the
financial statements when management considers them probable of
occurring and the amount reasonably estimable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Valuation allowances reduce deferred tax assets to an amount
that will more likely than not be realized. Management&#146;s
estimates of the realization of deferred tax assets is based on
the information available at the time the financial statements
are prepared and may include estimates of future income and
other assumptions that are inherently uncertain. No valuation
allowance is currently recorded, as we expect to realize our
deferred tax assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Accounting for expenses paid by affiliate</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In October 1994, we acquired railcar components manufacturing,
railcar maintenance and certain other assets from ACF, a company
beneficially owned and controlled by Carl C. Icahn, our principal
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 62</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
beneficial stockholder and the chairman of our board of
directors. In connection with that transaction, ACF retained,
and agreed to indemnify and hold us harmless for, certain
liabilities and obligations relating to the conduct of business
and ownership of the assets prior to the transfer, including
liabilities relating to employee benefit plans subject to
certain exceptions for transferred employees, workers&#146;
compensation, environmental contamination and third-party
litigation. See &#147;Certain relationships and related party
transactions&#151; Transactions with ACF Industries LLC.&#148;
At December&nbsp;31, 2004, the total liability retained by ACF
was $10.8&nbsp;million, which is related primarily to pension
benefit obligations. Although ACF is responsible for any costs
associated with the retained liabilities, we have continued to
reflect the costs associated with those retained liabilities in
our financial statements as an expense in order to reflect the
full cost of doing business, and the payment by ACF of these
expenses is reflected as additional paid-in capital, as required
by Staff Accounting Bulletin&nbsp;Topic 5T.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Fair value of financial instruments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The carrying amounts of cash and cash equivalents, accounts
receivable, amounts due to/from affiliates and accounts payable
approximate fair values because of the short-term maturity of
these instruments. The fair value of long-term debt is
calculated by discounting cash flows through maturity using our
current rate of borrowing for similar liabilities. The fair
value of the note receivable from ACF, which was carried at face
amount plus accrued interest, could not reasonably be estimated
due to the lack of market for similar instruments. Fair value
estimates are made at a specific point in time, based on
relevant market information about the financial instrument.
These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Contingencies and litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We periodically record the estimated impacts of various
uncertain outcomes. These events are called contingencies and
our accounting for these events is prescribed by
SFAS&nbsp;No.&nbsp;5, <I>Accounting for Contingencies</I>.
SFAS&nbsp;No.&nbsp;5 defines a contingency as &#147;an existing
condition, situation, or set of circumstances involving
uncertainty as to possible gain or loss to an enterprise that
will ultimately be resolved when one or more future events occur
or fail to occur.&#148; Contingent losses must be accrued if:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">available information indicates it
    is probable that the loss has been or will be incurred, given
    the likelihood of the uncertain future events;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the amount of the loss can be
    reasonably estimated.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The accrual of a contingency involves considerable judgment on
the part of management. Legal proceedings have elements of
uncertainty, and in order to determine the amount of any
reserves required, we assess the likelihood of any adverse
judgments or outcomes to pending and threatened legal matters,
as well as potential ranges of probable losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
[In connection with Trans World Airlines, Inc.&#146;s
(TWA)&nbsp;1992 bankruptcy proceedings under Chapter&nbsp;11 of
the Bankruptcy Code and in response to a petition of another
member of the Icahn control group, the Pension benefit Guarantee
Corporation (PBGC)&nbsp;terminated the TWA pension plan and
obligated Highcrest Investors Corp. (Highcrest) to make eight
annual payments of $30.0&nbsp;million each commencing on
July&nbsp;1, 2002 and totaling $240.0&nbsp;million (termination
payments). As of December&nbsp;31, 2004, Highcrest had made
termination payments totaling $135.0&nbsp;million and still owed
$105.0&nbsp;million on this obligation. The obligation to make
termination payments is non-recourse except to the common stock
of ACF Industries Holding Corp. (another member of the Icahn
control group). Management believes this obligation will have no
adverse effect on our future liquidity, results of operations or
financial position.]
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 63</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are subject to comprehensive federal, state, local and
international environmental laws and regulations relating to the
release or discharge of materials into the environment, the
management, use, processing, handling, storage, transport or
disposal of hazardous materials and wastes, or otherwise
relating to the protection of human health and the environment.
These laws and regulations not only expose us to liability for
the environmental condition of our current or formerly owned or
operated facilities, and our own negligent acts, but also may
expose us to liability for the conduct of others or for our
actions that were in compliance with all applicable laws at the
time these actions were taken. In addition, these laws may
require significant expenditures to achieve compliance, and are
frequently modified or revised to impose new obligations. Civil
and criminal fines and penalties and other sanctions may be
imposed for non-compliance with these environmental laws and
regulations. Our operations that involve hazardous materials
also raise potential risks of liability under common law. We are
involved in investigation and remediation activities at
properties that we now own or lease to address historical
contamination and potential contamination by third parties. We
are also involved with state agencies in the cleanup of two
sites under these laws. These investigations are at a
preliminary stage, and it is impossible to estimate, with any
certainty, the timing and extent of remedial actions that may be
required, and the costs that would be involved in such
remediation. Substantially all of the issues identified relate
to the use of the properties prior to their transfer to us in
1994 by ACF and for which ACF has retained liability for
environmental contamination that may have existed at the time of
transfer to us. ACF has also agreed to indemnify us for any cost
that might be incurred with those existing issues. However, if
ACF fails to honor its obligations to us, we would be
responsible for the cost of such remediation. We have been
advised that, for the remainder of 2005, ACF estimates that it
will spend approximately $150,000 on environmental investigation
and, in each of 2006 and 2007, it will spend approximately
$200,000 on environmental investigation, relating to
contamination that existed at properties prior to their transfer
to us and for which ACF has retained liability and agreed to
indemnify us. We believe that our operations and facilities are
in substantial compliance with applicable laws and regulations
and that any noncompliance is not likely to have a material
adverse effect on our operations or financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Future events, such as new environmental regulations or changes
in or modified interpretations of existing laws and regulations
or enforcement policies, or further investigation or evaluation
of the potential health hazards of products or business
activities, may give rise to additional compliance and other
costs that could have a material adverse effect on our financial
conditions and operations. In addition, ACF has in the past
conducted investigation and remediation activities at properties
that we now own to address historic contamination. Although we
believe that ACF has satisfactorily addressed all known material
contamination, there can be no assurance that ACF has addressed
all historical contamination. The discovery of historical
contamination or the release of hazardous substances into the
environment at our current or formerly owned or operated
facilities could require ACF or us in the future to incur
investigative or remedial costs or other liabilities that could
be material or that could interfere with the operation of our
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
[We have received a letter of determination for the State of
Arkansas that we owe approximately $1.1&nbsp;million related to
past unemployment taxes. We are appealing the assessment and
expect to prevail and believe that we have meritorious defenses.
We believe that we were and did act in accordance with
applicable law. It is not possible to estimate the expected
settlement, if any, at this time as our discussions with the
State of Arkansas are in their early stages.]
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
[We have been named a party to a products liability suit in
which the plaintiff alleges we were responsible for the
malfunction of a valve which was remanufactured in
200&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by a third party. We believe we
have no responsibility for this malfunction and have a
meritorious defense against any liability in this case. In any
event, it is not possible to estimate the expected settlement,
if any, that any party might be held accountable for at this
time as the case is in its early stages.]
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 64</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REPORT ON INTERNAL CONTROLS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our management and auditors have identified three significant
deficiencies in our internal controls as of December&nbsp;31,
2004, which, if not properly remediated could result in
misstatements in our financial statements in future periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our independent auditors, Grant Thornton LLP, issued a letter to
our board of directors in which they identified three
significant deficiencies in the design and operation of our
internal controls as of December&nbsp;31, 2004. A significant
deficiency is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that
a misstatement of the financial statements that is more than
inconsequential will not be prevented or detected. A control
deficiency exists when the design or operation of a control does
not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect
misstatements on a timely basis. Specifically, the significant
deficiencies noted were:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Inventory
    cut-off.</FONT></I></B><FONT style="font-size: 10pt"> Our
    manufacturing locations recorded inventory shipped by our
    vendors to us on the date we received the inventory in our
    facility, rather than on the date of shipment.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Construction in
    process.</FONT></I></B><FONT style="font-size: 10pt"> We
    transferred assets from construction in process to fixed assets
    on a quarterly basis rather than at the time assets are actually
    <I>placed </I>into service. There was insufficient documentation
    authorizing the movement of assets from construction in process
    to fixed assets. Certain assets were still being classified as
    construction in process even though the asset was in service.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Fixed asset recording and
    reconciliation.</FONT></I></B><FONT style="font-size: 10pt"> Our
    fixed asset subsidiary ledgers were not updated in a timely
    manner. Supporting ledgers for depreciation schedules were
    tracked using Microsoft Excel. The schedules were not reconciled
    on a timely basis. The procedures surrounding the compilation of
    the data was manual and subject to error.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In light of the noted significant deficiencies, we have
instituted control improvements that we believe will reduce the
likelihood of similar errors to less than remote or to an
inconsequential amount in the specific areas that are judged to
be most vulnerable. See &#147;Risk factors&#151; Our management
and auditors have identified three significant deficiencies in
our internal controls as of December&nbsp;31, 2004, which, if
not properly remediated could result in misstatements in our
financial statements in future periods.&#148; These control
improvements include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Inventory
    cut-off.</FONT></I></B><FONT style="font-size: 10pt"> Effective
    March&nbsp;31, 2005, we implemented procedures to track the
    receipts in transit and record them properly in our general
    ledger. We now follow this procedure monthly.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Construction in
    process.</FONT></I></B><FONT style="font-size: 10pt"> We are
    developing a process for plant and corporate management approval
    to authorize assets to be placed in service. This procedure will
    entail a threshold dollar amount requiring corporate controller
    approval that will include a review of the asset clarification
    and depreciation rate. Under this plan, assets will be moved
    from construction in process in the month the asset is placed in
    service.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Fixed asset recording and
    reconciliation.</FONT></I></B><FONT style="font-size: 10pt"> We
    expect to implement a new fixed asset tracking system before the
    end of 2005.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We do not expect to incur material incremental staffing costs
associated with these corrective actions. However, in connection
with becoming a public company, we expect to incur significant
additional staffing and infrastructure costs.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 65</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Management&#146;s discussion and analysis of financial
condition and results of operations</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RECENT ACCOUNTING PRONOUNCEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In January 2003, the Financial Accounting Standards Board
(FASB)&nbsp;issued Interpretation No. (FIN)&nbsp;46,
<I>Consolidation of Variable Interest Entities</I>, which was
later amended on December&nbsp;24, 2003 (FIN&nbsp;46R).
FIN&nbsp;46R explains how to identify variable interest entities
and how an enterprise assesses its interest in a variable
interest entity to decide whether to consolidate that entity.
FIN&nbsp;46R requires unconsolidated variable interest entities
to be consolidated by their primary beneficiaries if their
entities do not effectively disperse the risks and rewards of
ownership among their owners and other parties involved. The
provisions of FIN&nbsp;46R are generally effective for periods
after December&nbsp;31, 2003. The adoption of this pronouncement
has not had a material effect on us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In May 2003, the FASB issued Statement of Financial Accounting
Standards No.&nbsp;150, <I>Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity
</I>(SFAS&nbsp;150), which establishes standards for how
companies classify and measure certain financial instruments
with characteristics of both liabilities and equity. It requires
companies to classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). We
classified our mandatorily redeemable payment-in-kind preferred
stock as a liability in accordance with SFAS&nbsp;150 in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In November 2004, the FASB issued SFAS&nbsp;No.&nbsp;151,
<I>Inventory Costs-An Amendment of ARB No.&nbsp;43</I>,
<I>Chapter&nbsp;4</I>, which requires the recognition of costs
of idle facilities, excessive spoilage, double freight, and
rehandling costs as a component of current-period expenses. The
provisions of SFAS&nbsp;No.&nbsp;151 are effective for inventory
costs incurred during fiscal years beginning after June&nbsp;15,
2005. Since we produce railcars based upon specific customer
orders, management does not expect the provisions of
SFAS&nbsp;No.&nbsp;151 to have a material impact on our
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In December 2004, the FASB issued SFAS&nbsp;123R, <I>Share-Based
Payments.</I> SFAS&nbsp;123R is a revision of SFAS&nbsp;123,
<I>Accounting for Stock Based Compensation</I>, and supersedes
APB&nbsp;25. Among other items, SFAS&nbsp;123R eliminates the
use of APB&nbsp;25 and the intrinsic value method of accounting,
and requires companies to recognize the cost of employee
services received in exchange for awards of equity instruments,
based on the grant date fair value of those awards, in the
financial statements. The effective date of SFAS&nbsp;123R is
currently the beginning of the next fiscal year that begins
after June&nbsp;15, 2005, which is the first quarter of our year
ending December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In March 2005, the FASB issued FIN&nbsp;47 as an interpretation
of FASB Statement&nbsp;143, <I>Accounting for Asset Retirement
Obligations </I>(FASB 143). This interpretation clarifies that
the term conditional asset retirement obligation as used in FASB
143 and refers to a legal obligation to perform an asset
retirement activity in which the timing and/or method of
settlement are conditional on a future event that may or may not
be within the control of the entity. The obligation to perform
the asset retirement activity is unconditional even through
uncertainly exists about the timing and/or method of settlement.
Accordingly, an entity is required to recognize a liability for
the fair value of a conditional asset retirement obligation if
the fair value of the liability can be reasonably estimated.
This interpretation also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. FIN&nbsp;47 is effective no
later than the end of fiscal years ending after
December&nbsp;15, 2005. We are currently assessing the impact of
the adoption of FIN&nbsp;47.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On June&nbsp;1, 2005, the FASB issued Statement No.&nbsp;154,
<I>Accounting Changes and Error Corrections, a replacement of
APB Opinion No.&nbsp;20 and FASB Statement No.&nbsp;3
(SFAS&nbsp;154)</I>. The Statement applies to all voluntary
changes in accounting principle, and changes the requirements
for accounting for and reporting of a change in accounting
principle. We will adopt SFAS&nbsp;154 at December&nbsp;31, 2005
and do not anticipate any material change to our operating
results as a result of this adoption.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 66</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='110'></A>
</DIV>

<!-- link1 "Industry" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Industry
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OVERVIEW OF NORTH AMERICAN RAILCAR MANUFACTURING INDUSTRY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Many diverse industries depend on the railroad system to
transport items such as plastic pellets, chemicals and related
products, non-metallic minerals, grains and other farm products,
food products, metals and ores, coal, lumber and other building
products, petroleum products, oils, ethanol related products,
paper products, vehicles, equipment and associated parts. Demand
for railcars reflects their importance for the North American
economy in moving goods and raw materials. In periods of rising
economic activity, fleet utilization typically increases,
driving an increase in demand for new railcars, which also
increases backlog for new railcars. Conversely, during economic
slowdowns, fleet utilization typically declines, resulting in
reduced demand, deliveries and backlog for new railcars.
According to Global Insight, orders for new railcars are
expected to be strong with deliveries projected to average
59,100&nbsp;railcars per year from 2005 through 2010. This
compares to deliveries of 17,714&nbsp;railcars in 2002,
32,184&nbsp;railcars in 2003 and 46,871&nbsp;railcars in 2004,
as reported by the Railway Supply Institute, or RSI. RSI
reported that at the end of 2004, the total backlog for the
railcar manufacturing industry reached 58,677&nbsp;railcars.
This growth trend has continued through the first six months of
2005, with 36,695&nbsp;new railcars ordered and
33,695&nbsp;railcars delivered, with total backlog increasing to
60,544&nbsp;railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The primary purchasers of railcars in North America are leasing
companies, shippers and railroads. Leasing companies are
financial institutions that buy railcars from manufacturers like
us and lease these railcars to end users that include railroads
and shippers. Shippers include a variety of industrial companies
that purchase railcars for freight transport. Railroads purchase
railcars to transport goods for industrial companies and others
on their lines. The primary source of railcar orders has shifted
over time as leasing companies and shippers replace railroads as
the largest purchasers of new railcars. From 1990 to 2003,
leasing companies and shippers have increased their collective
share of the total North American railcar fleet from 37% to 53%,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The major railcar types and primary uses of these railcars in
North America are summarized below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Railcar Type</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Primary Use</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Covered Hopper Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of cargo in the plastics, chemical, oil and food
    industries</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tank Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of liquids and gaseous materials, including chemicals,
    petroleum products and fertilizers</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intermodal Flat Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of cargo in containers and trailers that may also be
    used by trucks or ships</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gondola Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of coal and other commodities including steel products
    and scrap metals</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Open-Top Hopper Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of coal</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Box&nbsp;Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of auto parts, food products, wood products and paper
    products</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Flat Railcar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Transport of bulky items including machinery, automobiles and
    forest products</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Although a railcar can be used for up to 50&nbsp;years under
existing regulations in North America, we believe that the
average life of a railcar is approximately 30 to 35&nbsp;years.
After that point, most railcars must either be refurbished or
replaced. Railcar designs change over time, incorporating
technical and quality improvements while adapting to the
functions required by customers. As the industry advances,
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 67</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>Industry</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
we generally expect that railcars will become more efficient and
capable of carrying larger loads with better ride quality and
lower repair and operating costs. We believe that as customers
replace aging fleets and expand the number of railcars in use to
meet higher shipping demand, they make new railcar purchasing
decisions based not only on price and delivery time, but also on
key performance characteristics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following chart identifies the composition, by percentage,
of the U.S.&nbsp;railcar fleet in 2003, and indicates that among
all the different railcar types, covered hopper railcars and
tank railcars represented the two largest categories of the
U.S.&nbsp;railcar fleet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Composition of 2003 U.S.&nbsp;Railcar Fleet</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084800.gif" alt="(PIE CHART)">
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><I>Source:</I>&nbsp;</TD>
    <TD align="left">
    Association of American Railroads.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NORTH AMERICAN RAILCAR COMPONENTS AND SERVICES INDUSTRIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Manufacturers of railcar components are primarily comprised of
railcar manufacturers, some of which produce components solely
for internal use, while others produce railcar components for
sale to outside customers, as well as non-railcar manufacturers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Railcar support services are an important part of the railcar
industry. Railcar services include maintenance and repair,
cleaning, painting and lining, engineering services and the
management of customers&#146; railcar fleets. Maintenance and
repair facilities may be fixed locations near railroad lines or
operate as mobile units designed to service railcars at customer
locations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NORTH AMERICAN RAILCAR INDUSTRY DYNAMICS AND TRENDS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The 1980 Staggers Rail Act ended more than 100&nbsp;years of
government rail industry regulation and dramatically transformed
the railcar industry in North America. The deregulation enabled
railroads to regain market share lost to the trucking industry
over the years and resulted in a wave of industry consolidation.
The number of Class&nbsp;I railroads, the grouping of the
largest railroads based on operating revenue, dropped from 22 in
1980 to seven today while the volume of goods transported on the
U.S.&nbsp;rail system increased from 1.5&nbsp;billion tons in
1980 to 1.8&nbsp;billion tons in 2003, according to the
Association of American Railroads.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 68</B>
</DIV>

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<B>Industry</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Railroad industry deregulation also prompted a series of
consolidations among railcar manufacturers which we believe is
the result of consolidation and more efficient fleet management,
According to the Association of American Railroads, the total
U.S.&nbsp;railcar fleet size was reduced from 1.7&nbsp;million
railcars in 1980 to 1.2&nbsp;million railcars in 1995.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following chart reflects the size of the railcar fleet in
the United States, which represents the majority of the North
American railcar fleet, over the last ten years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Historical U.S.&nbsp;Railcar Fleet</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084801.gif" alt="(GRAPH CHART)">
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><I>Source:&nbsp;</I></TD>
    <TD align="left">
    <I>Association of American Railroads.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Cyclical nature of the North American railcar market and
outlook for North American railcar demand</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The North American railcar market is highly cyclical and trends
in the railcar manufacturing industry are directly affected by
the level of activity in the North American economy. When the
economy is in a period of sustained growth, railcar users
generally tend to increase the size of their fleets and replace
older railcars with newer railcars or railcars with greater
capacity and durability. Conversely, when the economy slows
down, these companies generally delay investment in new railcars
and increase the utilization rates of railcars already in use,
keeping them in service for longer periods. The North American
railcar market is also affected by the level of international
trade activity, as railroads are also used to transport imported
and exported goods to and from ports. In addition, supplies of
materials, such as steel, as well as key railcar components,
such as heavy castings and wheels, are constrained from time to
time, which limits the production capacity of companies in the
railcar manufacturing industry and results in further cyclical
fluctuations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As illustrated by the chart below, railcar demand was at a high
in the late 1970s due, in particular, to the preferential tax
treatment attributed to railcars under then-existing tax laws.
The Tax Reform Act of 1981, which eliminated the preferential
tax treatment of railcars beginning in 1983, as well as the
economic recession in the early 1980s, led to low levels of
railcar production through most of the 1980s. However, during
most of the 1990s, increased general economic activity and
higher import levels led to an increase in railcar deliveries.
In addition, after a period of consolidation in the railroad
industry, railroads suffered from integration difficulties, poor
railcar utilization and aging fleets. We believe that railroads
responded by ordering additional railcars, which led to a
significant increase in railcar deliveries in 1998 and 1999.
This period of peaking orders ended in 2000 and 2001 as slowing
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 69</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Industry</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
economic growth, a recovery in railroad operating efficiency and
transportation disruption related to the
September&nbsp;11<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>
terrorist attacks pushed 2002 deliveries of new railcars down to
17,714&nbsp;railcars, according to the Railway Supply Institute.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2003, the industry began to recover from the downturn and
demand for new railcars started to increase. A total of 46,871
railcars were delivered in 2004 and industry backlog stood at
58,677 railcars at December&nbsp;31, 2004. A total of
33,695&nbsp;railcars have been delivered during the first six
months of 2005 and industry backlog stands at 60,544 railcars as
of June&nbsp;30, 2005. The following chart illustrates annual
North American deliveries of railcars since 1978 and projected
annual North American railcar deliveries through 2010, according
to the Railway Supply Institute and Global Insight, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Railcar Annual Deliveries</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084802.gif" alt="(GRAPH CHART)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Strong near term demand for railcars</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Following a period of economic weakness from 2001 to 2003, we
believe leasing companies, shippers and railroads that have
deferred new railcar purchases and equipment maintenance are
poised to expand and service their fleets in response to growing
demand for railroad shipping. Global Insight anticipates
delivery of 65,558 new railcars in 2005 and average annual
deliveries of 59,100 railcars per year from 2005 through 2010.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 70</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Industry</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following chart sets forth the historical backlog for the
North American railcar industry:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Historical North American Railcar Backlog by Quarter</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084803.gif" alt="(GRAPH CHART)">
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><I>Source:&nbsp;</I></TD>
    <TD align="left">
    <I>Railway Supply Institute.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Positive long term demand fundamentals</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Over the long term, we expect increased U.S.&nbsp;economic
activity to drive growth in railroad shipment and new railcar
purchases. Global Insight forecasts continued gains in rail
freight usage, with 1.8% growth in railcar loads during 2005,
2.1% growth in railcar loads in 2006 and 1.0% to 1.3% annual
growth in railcar loads from 2007 to 2010. Under normal
circumstances, railcars generally need to be refurbished or
replaced after 30 to 35&nbsp;years of use. We believe that,
historically, the useful life of tank railcars has been shorter,
ranging from 25 to 30&nbsp;years of use. Railcars used at a
higher than average rate may require replacement in a shorter
period of time. In some cases, advances in technology and
efficiency or new regulations may require railcars with
remaining useful life to be replaced. We believe demand for
replacement railcars will be strong over the long term as
approximately 50% of all railcars in use are over 20&nbsp;years
old.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Trends impacting covered hopper railcars</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Covered hopper railcars constitute the largest of all railcar
segments in terms of numbers of railcars in use. Covered hopper
railcars are used primarily to transport cargo such as cement,
plastic pellets, grain and dry fertilizer. Demand for covered
hopper railcars has shown renewed strength due to increased
shipments of a variety of products including plastics, chemicals
and foods. According to the Railway Supply Institute, 5,602
covered hopper railcars were delivered in 2004. We believe
manufacturing activity across a variety of sectors will continue
to drive demand for covered hopper railcars through 2005 and
2006. In addition, we believe increasing ethanol production will
continue to drive the volume of corn shipments transported in
covered hopper railcars. The U.S.&nbsp;Department of Agriculture
forecasts a 9% increase in corn production from 2005 to 2010,
largely attributable to demand for corn in ethanol production.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Over the long term, Global Insight forecast strong demand for
covered hopper railcars driven by continued growth of the
U.S.&nbsp;economy, higher production for a number of consumer
and business durable goods, increasing domestic and
international demand for U.S.&nbsp;agricultural products,
increasing ethanol production and replacement of aging railcars.
As shown by the chart below, Global Insight
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 71</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Industry</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
forecasts deliveries of covered hopper railcars will reach
13,924 in 2005 and 16,779 in 2006, and will average more than
15,750 deliveries per year from 2007 through 2010. These
forecasts illustrate a significant projected increase from the
5,602 covered hopper railcars delivered in 2004 and the 3,801
covered hopper railcars delivered in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Historical and Projected Covered Hopper Railcar Deliveries</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084804.gif" alt="(GRAPH CHART)">
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><I>Source:&nbsp;</I></TD>
    <TD align="left">
    <I>Railway Supply Institute; Global Insight.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Trends impacting tank railcars</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Orders of tank railcars are being driven in part by the advanced
age of the current North American tank railcar fleet. In 2004,
8,939&nbsp;tank railcars were delivered, according to Global
Insight. Tank railcars primarily are used to transport liquid
and gaseous products, such as chemicals, liquid fertilizers and
petroleum products. Tank railcars, like covered hopper railcars,
are also in higher demand in North America as manufacturing
activity, and the need for liquids and gases used in
manufacturing, increases. We believe expansion of the ethanol
sector as well as strong consumer demand for petrochemicals,
edible oils, lubricating oils, liquid propane and liquid food
products also positively impact tank railcar shipments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Based on Global Insight projections, tank railcar deliveries are
expected to increase to 10,803&nbsp;railcars in 2005 and
11,058&nbsp;railcars in 2006 and will average approximately
9,900&nbsp;deliveries per year from 2007 through 2010. In
comparison, the number of tank railcars delivered in North
America was 8,939 in 2004 and 8,176 in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The tank railcar market is a more difficult market to enter
compared to other railcar types. The manufacturing of tank
railcars is highly regulated and their production requires a
specially trained workforce and dedicated manufacturing
facilities. As a result, competition in the tank railcar market
is concentrated. Production of tank railcars is also very labor
intensive compared to production of other railcars. Due to
domestic supply constraints, tank railcar manufacturers have
experienced difficulties in obtaining normalized steel plate,
which is an essential specialty material used in the production
of many types of tank railcars.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 72</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Industry</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following chart shows historical tank railcar deliveries in
2003 and 2004 and projected tank railcar deliveries through 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Historical and Projected Tank Railcar Deliveries</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084805.gif" alt="(GRAPH CHART)">
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><I>Source:&nbsp;</I></TD>
    <TD align="left">
    <I>Railway Supply Institute; Global Insight.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 73</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<A name='111'></A>
</DIV>

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<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Business
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OVERVIEW</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are a leading North American manufacturer of covered hopper
and tank railcars. We also repair and refurbish railcars,
provide fleet management services and design and manufacture
certain railcar and industrial components used in the production
of our railcars as well as railcars and non-railcar industrial
products produced by others. We provide our railcar customers
with integrated solutions through a comprehensive set of high
quality products and related services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For the years ended December&nbsp;31, 2003 and 2004, we
generated total revenues of $218.0&nbsp;million and
$355.1&nbsp;million and net income of $1.3&nbsp;million and
$2.3&nbsp;million, respectively. For the six months ended
June&nbsp;30, 2004 and 2005, we generated revenues of
$159.0&nbsp;million and $291.6&nbsp;million and net income of
$2.2&nbsp;million and $9.0&nbsp;million, respectively. As of
June&nbsp;30, 2005, our total railcar backlog was
7,084&nbsp;railcars, compared to a total railcar backlog of
3,182&nbsp;railcars as of June&nbsp;30, 2004. This amount
excludes the 9,000 to 12,000&nbsp;railcars that CIT has agreed
to purchase from us during the 2006 to 2008 period, subject to
conditions, under an agreement we entered into with CIT on
July&nbsp;29, 2005. See &#147;Prospectus summary&#151; Recent
developments&#148; and &#147;&#151;Backlog.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our primary customers include companies that purchase railcars
for lease by third parties, or leasing companies, industrial
companies that use railcars for freight transport, or shippers,
and Class&nbsp;I railroads. Over the past five years, our
largest leasing company customers included ACF&nbsp;Industries
LLC, ARL, CIT, GATX Rail Corporation, GE&nbsp;Capital
Corporation, The Greenbrier Companies and Union Tank Car Company
and our largest shipper customers included Dow Chemical Company,
Engelhard Corporation, Exxon Mobil Corporation, Lyondell
Chemical Company and Solvay America, Inc. Our major railroad
customers over the past five years included TTX and Union
Pacific. In servicing this customer base, we believe our
integrated railcar repair and refurbishment and fleet management
services and our railcar components manufacturing business help
us further penetrate the general railcar manufacturing market.
These products and services provide us with significant
cross-selling opportunities and insights into our
customers&#146; railcar needs that we use to improve our
products and services and enhance our reputation for high
quality. Although we build, service and manage railcars through
an integrated, complementary set of products and services, we
have chosen not to offer railcar leasing service so that we do
not compete with our leasing company customers, which represent
a significant portion of our revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR HISTORY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Since our formation in 1988, we have grown our business from
being a small provider of railcar components and maintenance
services to one of North America&#146;s leading integrated
providers of railcars, railcar components, railcar maintenance
services and fleet management services. In October 1994 we
acquired railcar components manufacturing and railcar
maintenance assets from ACF&nbsp;Industries, Incorporated (now
known as ACF&nbsp;Industries, LLC), or ACF, a company controlled
by Carl C. Icahn, our principal beneficial stockholder and the
chairman of our board of directors. Through this acquisition, we
also hired members of ACF&#146;s management, many of whom,
including our president, remain a significant part of our
current management team. These executives brought with them
established relationships with important customers and suppliers
and extensive industry knowledge, as ACF and its predecessor
companies have roots in the railcar manufacturing industry that
trace back to 1873. Led by this management team, we entered the
railcar manufacturing business through the construction of new
manufacturing facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In August 1995 we produced our first railcar at our Paragould,
Arkansas manufacturing facility. We primarily manufacture
covered hopper railcars at our Paragould facility, but we have
the ability to
</DIV>

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<B> 74</B>
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<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
manufacture many other types of railcars at this facility. The
Paragould facility initially had two railcar manufacturing
lines. We added to this facility painting and lining
capabilities in 1999 and a third manufacturing line in December
2004. We are currently constructing additional painting and
lining capabilities at our Paragould facility to increase
efficiency, which we expect to open at the end of 2005. Our
Paragould facility also features component manufacturing
capabilities. We have manufactured 19,348&nbsp;railcars at our
Paragould facility, mostly covered hopper railcars, through
June&nbsp;30, 2005. We can manufacture up to 30 railcars a
working day at this facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In January 2000 we produced our first railcar at our Marmaduke,
Arkansas manufacturing facility. We manufacture tank railcars at
this facility. The design of this facility enables us to
manufacture many different types of tank railcars at the same
time. We have manufactured 5,845&nbsp;tank railcars at our
Marmaduke facility through June&nbsp;30, 2005. We can
manufacture up to 10 railcars a working day at this facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Since 1994 we have significantly expanded our components
manufacturing and railcar services operations. Our operations
now include three railcar assembly, sub-assembly and fabrication
facilities, three railcar and industrial component manufacturing
facilities, six railcar repair plants and four mobile repair
units. Our services business has grown to include online access
by customers, remote fleet management, expanded painting, lining
and cleaning offerings, regulatory consulting and engineering
support. Additionally, members of our management team helped
found and develop, and continue to operate, a joint venture,
Ohio Castings Company, LLC, which we refer to as Ohio Castings,
in which we own a one-third interest and that manufactures and
sells sideframes, bolsters, couplers and yokes for distribution
to third parties and to us. We believe that our involvement in
this joint venture helps us maintain our levels of production at
competitive prices, despite industry-wide shortages of these
potentially capacity constraining components. See
&#147;&#151;Certain relationships and related party
transactions.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR BUSINESS STRENGTHS AND COMPETITIVE ADVANTAGES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that the following key business strengths and
competitive advantages will contribute to our growth:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Leading North American railcar manufacturer with focus on the
covered hopper and tank railcar markets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are a leading North American manufacturer of covered hopper
and tank railcars. Over the last three years we believe we have
produced an estimated 33% of the covered hopper railcars and an
estimated 16% of the tank railcars delivered in North America.
Based on a report by the Association of American Railroads,
these represent the two largest segments of the North American
railcar industry, with covered hopper railcars representing
approximately 30% and tank railcars representing approximately
19% of the total North American railcar fleet based on the
number of railcars in service. We believe our railcars are
differentiated by their superior quality, innovation and
reliability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Modern non-union, low cost railcar manufacturing facilities
in strategic locations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Unlike many of our competitors, we manufacture all of our
railcars in modern facilities built in the last ten years. We
believe our Paragould and Marmaduke, Arkansas railcar production
facilities to be the newest covered hopper and tank railcar
production plants in North America. We designed these facilities
to provide manufacturing flexibility and allow for the
production of a variety of railcar sizes and types. We
strategically located these facilities in close proximity to our
main customers and suppliers. This reduces freight time and
costs for the components we purchase and the time for delivery
of completed railcars. Over the past several years, we have
increased our production capacity
</DIV>

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<DIV align="right" style="font-size: 8pt;">
<B> 75</B>
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<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
and efficiency and reduced our fixed costs per railcar through a
number of targeted operational improvements, such as design
changes that reduce the amount of raw materials necessary for
production of railcars. Currently none of our over 1,100
employees at our Paragould and Marmaduke facilities are
represented by a union. We emphasize flexibility in our
employees&#146; training and, consequently, our employees
frequently move both between locations on production lines and
among our different manufacturing facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Preferred access to components through in-house production, a
joint venture and strategic sourcing arrangements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We produce many of the components necessary to our railcar
manufacturing business ourselves and we own a one-third interest
in, and our management team operates, our Ohio Castings joint
venture from which we obtain certain other components. We
believe our in-house production capabilities and our involvement
in this joint venture help us maintain access to components at
competitive prices, despite industry-wide shortages of these
potentially capacity constraining components. We also have
developed and actively maintain strategic sourcing arrangements
and strong relationships with our suppliers. These arrangements
and relationships help ensure our continued access to critical
components and raw materials we use to produce railcars,
including steel, wheels and heavy castings. We also have
recently entered into an agreement to diversify our supply of
steel. We believe our attention to strengthening our supply
chain helps us maintain operational continuity and high
production levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Integrated railcar repair and refurbishment and fleet
management services complement railcar manufacturing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We provide a wide array of complementary products and services
to the railcar industry. Unlike some other railcar
manufacturers, we also repair, maintain and provide fleet
management services for existing railcars, including railcars
built by others, and manufacture railcar components for third
parties and us. We believe this diverse product and service
offering provides us with a competitive advantage relative to
other railcar manufacturers, primarily in the form of
cross-selling opportunities with respect to our repair and fleet
management services. For example, customers of our repair
business that have experienced problems with our
competitors&#146; railcars have transferred railcar orders to us
after our repair workers were able to identify the benefits of
our railcars compared to our competitors&#146;. We also believe
that our ability to address the needs of our customers
throughout the lifecycle of a railcar enhances our customer
relationships and provides us with additional growth
opportunities and unique insights into industry trends. As of
June&nbsp;30, 2005, we have approximately 57,000&nbsp;railcars
under management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Strong relationships with a long-term and diverse customer
base</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that our customers value our products and services.
Many of our major customers have been doing business with us for
a number of years, including CIT, Dow Chemical Company,
GE&nbsp;Capital Corporation and Solvay America, Inc. Many of our
customers have demonstrated a willingness to purchase several
different types of our products and services over time. For
example, GE&nbsp;Capital Corporation purchases pressure and
non-pressure tank railcars, covered hopper railcars and fleet
management services from us and The CIT&nbsp;Group, Inc.
purchases our tank railcars as well as cement, grain, sugar and
plastic pellet covered hopper railcars. We believe we deliver
high quality products and services to our customers with low
operating and maintenance costs, while maintaining what we
believe are low levels of warranty claims.
</DIV>

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<DIV align="left" style="font-size: 8pt;">
<B> 76</B>
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<B>Business</B>
</DIV>

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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Strong management team with long-standing industry
experience</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have an experienced senior operations management team that
has an average of over 25&nbsp;years of experience in the
railcar and related manufacturing industries. Our senior
operations management team, including our president, James J.
Unger, has have been with us since we began manufacturing
railcars. This team conceived and built our Paragould and
Marmaduke railcar manufacturing facilities and has been
responsible for growing our revenues from $84.7&nbsp;million in
1994 to $355.1&nbsp;million in 2004. We believe our management
successfully managed our business during the most recent
cyclical downturn in the railcar manufacturing industry while
positioning us to capitalize on the current upturn in our
industry. Members of our management, in particular our
president, Mr.&nbsp;Unger, have risen to leadership roles on a
number of prominent industry committees and associations, which
provide us with insight into the railcar industry, trends and
customer needs. We believe our active participation in industry
committees and associations strengthens our relationships with
our customers and suppliers and increases our profile and
reputation in the North American railcar market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR STRATEGY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The key elements of our business strategy are as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Maintain and expand presence in covered hopper and tank
railcar markets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to maintain and expand our presence in the covered
hopper and tank railcar markets by continuing to deliver high
quality, and innovative products. We believe our excellent
customer relationships have enabled us to identify market
demands that we then target through our product development and
marketing efforts. We intend to continue the close collaboration
between our customers and our engineering, marketing, operations
and management personnel to meet demand and, where appropriate,
to selectively expand production capacity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Continue to improve operating efficiencies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to build on the success of our production initiatives
at our Paragould and Marmaduke railcar manufacturing facilities
and plan to continue to identify opportunities to enhance
operating efficiencies across these and our other manufacturing
facilities. These opportunities include our continued
streamlining of our manufacturing processes and our quality
control initiatives. For example, we believe the additional
painting and lining capabilities we are currently constructing
at our Paragould facility will reduce costs and further increase
our manufacturing efficiency and will speed delivery of our
products to our customers. We also intend to continue the
efforts of our design cost reduction team, formed in 2003, which
has already significantly reduced our railcar production costs
through standardization of components used in our railcars,
design changes to reduce the amount of raw material required for
our railcars and improved manufacturing techniques that reduce
our labor requirements. These efforts should allow us to reduce
our costs and maintain competitive prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Continue to grow railcar service and fleet management
businesses and increase sales of railcar and industrial
components</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As the existing North American railcar fleet continues to age,
we anticipate increased demand for maintenance and repair
services and railcar components used in the maintenance and
repair of railcars. Additionally, we expect growing demand for
our fleet management services as ownership of railcars continues
to shift away from the railroads and toward the shippers and
leasing companies, which often outsource their fleet management
activities to third-party service providers such as us. We
intend to capitalize on these trends and we believe we are well
positioned to provide increased services through our
strategically located network of railcar repair and service
facilities.
</DIV>

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<DIV align="right" style="font-size: 8pt;">
<B> 77</B>
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<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Leverage manufacturing expertise to selectively expand
product portfolio</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We may seek to expand our product portfolio to other selected
types of railcars. Our management designed and constructed our
Paragould manufacturing facility to be able to produce most
railcar types, and we believe our adaptive production lines and
flexible employees are able to shift production among various
railcar types with minimal interruption to our operations. For
example, we have in the past produced centerbeam platform
railcars and may in the future produce other types of railcars,
including various intermodal railcars, such as the innovative
platform railcar. In addition, as the existing fleet of North
American railcars is aging, expansion of our product portfolio
into new railcar types will allow us to grow our business by
capturing a portion of the natural replacement demand for
existing railcar types. Our ability to produce other types of
railcars positions us to respond to customer requests for
production outside of our traditional markets and provides us
additional manufacturing flexibility in the event the covered
hopper or tank railcar markets weaken.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selectively pursue strategic external growth opportunities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
By significantly reducing our debt through this offering and
with the establishment of a public market for our common stock,
we believe we will have increased financial flexibility to
supplement internal growth with select acquisitions and
alliances. We also believe our in-house fabrication of railcar
components and our Ohio Castings joint venture provide us with
competitive advantages and we intend to enhance these advantages
by selectively acquiring or establishing strategic relationships
with railcar components manufacturers and suppliers of critical
raw materials. Successful acquisitions of or collaborations with
these manufacturers and suppliers should help mitigate the risk
of supply shortages of key components and raw materials we need
for our business. We may also seek to expand our railcar
components business into international markets on an
opportunistic basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OUR PRODUCTS AND SERVICES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We design and manufacture special, customized and general
purpose railcars and a wide range of components primarily for
the North American railcar and industrial markets. We also
support the railcar industry through a variety of integrated
railcar services, including repair, maintenance, consulting,
engineering and fleet management services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Railcar manufacturing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We manufacture two primary types of railcars, covered hopper
railcars and tank railcars. Our revenues attributable to our
railcar manufacturing operations were approximately
$108.3&nbsp;million, $154.7&nbsp;million and $265.8&nbsp;million
in 2002, 2003 and 2004, respectively, and were approximately
$235.2&nbsp;million for the six months ended June&nbsp;30, 2005.
These revenues represented 64%, 71% and 75% of our total
revenues in 2002, 2003 and 2004, respectively, and represented
81% of our total revenues for the six months ended June&nbsp;30,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Covered hopper railcars</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe we are a leading manufacturer of covered hopper
railcars in North America. We manufacture both general service
and specialty covered hopper railcars. Our general service
covered hopper railcars have capacities ranging from 3,200 to
6,500&nbsp;cubic feet and primarily carry plastic pellets,
cement, grain and other food products, soda ash and other dry
granular products. Our specialty covered hopper railcars, which
include our Pressureaide covered hopper railcar, have capacities
ranging from 3,300 to 5,750&nbsp;cubic feet and use air pressure
to assist unloading. Our specialty covered hopper railcars
primarily carry flour, clays, food and industrial grade corn
starches. Revenues attributable to sales of our covered hopper
railcars were approximately $61.9&nbsp;million,
</DIV>

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<DIV align="left" style="font-size: 8pt;">
<B> 78</B>
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<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
$82.1&nbsp;million and $79.4&nbsp;million in 2002, 2003 and
2004, respectively, and were approximately $166.6&nbsp;million
for the six months ended June&nbsp;30, 2005. These revenues
represented 37%, 38% and 24% of our total revenues in 2002, 2003
and 2004, respectively, and represented 57% of our total
revenues for the six months ended June&nbsp;30, 2005. We sold
868, 1,118 and 1,441&nbsp;covered hopper railcars in 2002, 2003
and 2004, respectively, and 1,608&nbsp;covered hopper railcars
in the six months ended June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
All of our covered hopper railcars may be equipped with varying
combinations of hatches, discharge outlets and protective
coatings to provide our customers with a railcar designed to
perform in precise operating environments. The flexible nature
of our covered hopper railcar design allows it to be quickly
modified to suit changing customer needs. This flexibility can
continue to provide value after the initial purchase because our
railcars may be converted for reassignment to other services or
customers. We provide a range of coatings to protect the railcar
and the shipper&#146;s product against corrosion and product
contamination. We build carbon steel and stainless steel covered
hopper railcars.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Center Flow
    Railcars.</FONT></I></B><FONT style="font-size: 10pt"> Our
    Center Flow line of covered hopper railcars are specifically
    designed for shipping a variety of dry bulk products, from light
    density products, such as plastics, to high density products,
    such as cement. Our Center Flow covered hopper railcar has a
    three curve cross section. Depending upon the equipment on the
    railcars, they can operate in either a gravity or vacuum
    pneumatic unloading environment. Since its introduction, we have
    improved our Center Flow railcars to provide protection for a
    wide range of dry bulk products and to enhance the associated
    loading, unloading and cleaning processes. Examples of these
    improvements include new and better design of the shape of the
    railcars, joint designs, outlet mounting frames and loading
    hatches and discharge outlets, which enhance the cargo loading
    and unloading processes.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have several versions of our Center Flow railcar that target
specific customers and specific loads, including:
</DIV>

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<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Plastic Pellet
    Railcars.</FONT></I></B><FONT style="font-size: 10pt"> These
    railcars are designed to transport, load and unload plastic
    pellets under precise specifications to preserve the purity of
    the load. Slight imperfections in the railcars transporting such
    goods or in the components that load and unload them can ruin an
    entire load. If plastic pellets within a load become tainted,
    the imperfection will likely persist during the conversion of
    the plastic pellets into end-products. An example of such cargo
    would be food grade plastic pellets used in the production of
    milk bottles and other food containers.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Cement
    Railcars.</FONT></I></B><FONT style="font-size: 10pt"> Cement
    loads are heavier than many other loads of comparable volume,
    and therefore cement railcars are smaller in size to compensate
    for the weight. As a consequence, we can build more cement
    covered hopper railcars per day than we can any other railcar we
    manufacture. Our cement railcars typically have capacities of
    3,250&nbsp;cubic feet and are built with two lading
    compartments, compared to, for example, our plastic pellet
    railcars, which typically have capacities of up to
    6,500&nbsp;cubic feet and are built with four lading
    compartments.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Pressureaide
    Railcars.</FONT></I></B><FONT style="font-size: 10pt"> Our
    Pressureaide railcar is targeted towards the bulk powder
    markets. Pressureaide railcars typically handle products such as
    clays, industrial and food grade starches and flours. We build
    our Pressureaide railcars in capacities ranging from
    3,300&nbsp;cubic feet to as large as 5,750&nbsp;cubic feet. They
    operate with internal pressures up to 14.5&nbsp;pounds per
    square inch, which expedites unloading, and are equipped with
    several safety devices, such as pressure relief valves, a
    rupture disc and a vacuum relief valve.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Tank railcars</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We manufacture non-pressure and high pressure tank railcars. Our
non-pressure tank railcars have capacities ranging from 14,000
to 30,000&nbsp;gallons and are flexibly designed to enable the
handling of a
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 79</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
variety of commodities including petroleum products, ethanol,
asphalt, vegetable oil, corn syrup and other food products. Our
high pressure tank railcars have capacities ranging from 13,500
to 33,600&nbsp;gallons and transport products that require a
pressurized state due to their liquid, semi-gaseous or gaseous
nature, including chlorine, anhydrous ammonia, liquid propane
and butane. Most of our pressure tank railcars feature a thicker
pressure retaining inner shell that is separated from a jacketed
outer shell by layers of insulation, thermal protection or both.
Our pressure tank railcars are made from specific grades of
normalized steel that are selected for toughness and ease of
welding. Most of our tank railcars feature a sloped bottom tank
that improves the flow rate of the shipped product and provides
improved drainage. Many of our tank railcars feature coils that
are steam-heated to decrease cargo viscosity, which improves the
transported product&#146;s flow rate and speeds unloading. We
can alter the design of our tank railcars to address specific
customer requirements. Revenues attributable to sales of our
tank railcars were approximately $46.2&nbsp;million,
$72.2&nbsp;million and $111.3&nbsp;million in 2002, 2003 and
2004, respectively, and were $68.4&nbsp;million for the six
months ended June&nbsp;30, 2005. These revenues represented 27%,
33% and 31% of our total revenues in 2002, 2003 and 2004,
respectively, and represented 23% of our total revenues for the
six months ended June&nbsp;30, 2005. We sold 713, 1,209 and
1,637&nbsp;tank railcars in 2002, 2003 and 2004, respectively,
and 908 tank railcars in the six months ended June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Component manufacturing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe we are an industry leader in the design and
manufacture of custom and standard railcar components. We
manufacture over 300&nbsp;different components for the North
American railcar industry. Our products include hitches for the
intermodal market, tank railcar components and valves, discharge
outlets for covered hopper railcars, manway covers and valve
body castings, and outlet components and running boards for
industrial and railroad customers. We manufacture a variety of
outlet types for our covered hopper railcars that we also sell
to other railcar manufacturers. We use these components in our
own railcar manufacturing and also sell them to third parties,
including our competitors. Sales of our railcar components to
third parties were approximately $9.2&nbsp;million,
$9.8&nbsp;million and $15.0&nbsp;million in 2002, 2003 and 2004,
respectively, and were approximately $14.5&nbsp;million for the
six months ended June&nbsp;30, 2005. Revenues attributable to
these sales represented 5%, 4% and 4% of our total revenues in
2002, 2003 and 2004, respectively, and represented 5% of our
total revenues for the six months ended June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our other industrial products consist primarily of aluminum and
special alloy steel castings that we sell primarily to
industrial customers. These products include castings for the
trucking, construction, mining and oil and gas exploration
markets, as well as finished, machined aluminum castings, other
custom machined products and commercial mixing bowls. Sales of
our industrial components were approximately $21.1&nbsp;million,
$23.7&nbsp;million and $35.6&nbsp;million in 2002, 2003 and
2004, respectively and were approximately $20.2&nbsp;million for
the six months ended June&nbsp;30, 2005. Revenues attributable
to these sales represented 13%, 11% and 10% of our total
revenues in 2002, 2003 and 2004, respectively, and represented
7% of our total revenues for the six months ended June&nbsp;30,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Railcar services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our primary railcar services are railcar repair and
refurbishment and railcar fleet management services. Our primary
customers for these services are leasing companies and shippers.
We can service the entire railcar fleets of our customers,
including railcars manufactured by other companies. We offer our
railcar services in both bundled and unbundled arrangements.
Some of our customers use both our railcar repair and
refurbishment business and our fleet management services. We
often provide these preferred customers with expedited repair
services to strengthen our overall customer relationships. Our
railcar services provide us insights into our customers&#146;
railcar needs that we can use to improve
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 80</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
our products. These services create new customer relationships
and enhance relationships with our existing customers. Our
revenues from our railcar services operations were approximately
$30.4&nbsp;million, $28.0&nbsp;million and $38.6&nbsp;million in
2002, 2003 and 2004, respectively, and were approximately
$21.7&nbsp;million for the six months ended June&nbsp;30, 2005.
These revenues represented 18%, 13% and 11% of our total
revenues in 2002, 2003 and 2004, respectively, and represented
7% of our total revenues for the six months ended June&nbsp;30,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Railcar repair and refurbishment</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar repair and refurbishment services include light and
heavy railcar repairs, exterior painting, interior lining
application and cleaning, tank and safety valve testing, railcar
inspections, wheel replacement and conversion or reassignment of
railcars from one purpose to another. We support our railcar
repair and refurbishment services customers through a
combination of full service repair shops, mobile repair units
and mini-shop locations. Our repair shops, like our
manufacturing facilities, are strategically located near major
rail lines used by our customers and suppliers and close to some
of the major industries we serve. Revenues attributable to our
railcar repair and refurbishment service operations were
approximately $26.2&nbsp;million, $23.2&nbsp;million and
$32.0&nbsp;million in 2002, 2003 and 2004, respectively, and
were approximately $17.5&nbsp;million for the six months ended
June&nbsp;30, 2005. These revenues represented 16%, 11% and 9%
of our total revenues in 2002, 2003 and 2004, respectively, and
represented 6% of our total revenues for the six months ended
June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Railcar fleet management</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As of June&nbsp;30, 2005, we manage approximately
57,000&nbsp;railcars for various customers, including
approximately 22,000 for ARL, a leasing company controlled by
affiliates of Carl C. Icahn. Revenues attributable to our fleet
management services were approximately $4.1&nbsp;million,
$4.8&nbsp;million and $5.5&nbsp;million in 2002, 2003 and 2004,
respectively, and were approximately $4.2&nbsp;million for the
six months ended June&nbsp;30, 2005. These revenues represented
2% of our total revenues in each of 2002, 2003 and 2004,
respectively, and represented 1% of our total revenues for the
six months ended June&nbsp;30, 2005. Some of the principal
features of our railcar fleet management services business
include:
</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

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    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Mileage
    accounting.</FONT></I></B><FONT style="font-size: 10pt"> Some
    customers elect to receive mileage payments to offset freight
    charges. Mileage is paid for loaded miles moved and calculated
    based on published rates. We collect and audit the
    railroads&#146; mileage calculations to ensure our customers
    receive the funds they are due.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Rolling stock
    taxes.</FONT></I></B><FONT style="font-size: 10pt"> States and
    localities impose taxes on railcars calculated based upon
    mileage reporting. We file the required tax forms with the state
    and local taxing authorities. We audit the tax invoices received
    to determine whether the assessments are accurate.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Regulatory
    compliance.</FONT></I></B><FONT style="font-size: 10pt"> Our
    regulatory compliance support services help customers maintain
    their railcar fleets in compliance with applicable regulations.
    As regulations change, we help our customers manage the
    associated requirements and costs. We analyze new fleets for
    which we provide fleet management services to identify areas of
    noncompliance with applicable U.S.&nbsp;rail regulations and
    determine corrective actions.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Engineering
    services.</FONT></I></B><FONT style="font-size: 10pt"> Our
    engineering support services help customers manage their
    regulatory compliance and documentation. We provide procedures
    and consultation for railcar repairs to address integrity and
    compliance.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Field engineering
    services.</FONT></I></B><FONT style="font-size: 10pt"> We
    provide on-site evaluation and implementation of significant
    engineering design changes for our customers.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 81</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Online service
    access.</FONT></I></B><FONT style="font-size: 10pt"> Our
    web-based systems allow our customers to view information on
    their railcar fleet online. The data we maintain includes
    mechanical and regulatory information, historical costs and
    repair detail and the status of repairs.
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <B><I><FONT style="font-size: 10pt">Maintenance
    planning.</FONT></I></B><FONT style="font-size: 10pt"> We
    forecast our customers&#146; railcar maintenance needs and
    suggest schedules for repair service and refurbishment. This
    helps to ensure better fleet utilization and more effective
    maintenance cycles.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MANUFACTURING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our principal railcar manufacturing facilities are located in
Paragould and Marmaduke, Arkansas. We built these facilities in
1995 and 1999, respectively on previously undeveloped sites.
These facilities employ non-unionized work forces and are
strategically located in close proximity to our major customers
and suppliers, which decreases our freight costs and railcar
delivery times. These facilities provide us the flexibility to
produce a variety of railcars and enable us to quickly shift
production from one railcar type to another railcar type.
Through June&nbsp;30, 2005 we have manufactured
19,348&nbsp;railcars at our Paragould facility and
5,845&nbsp;railcars at our Marmaduke facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We manufacture all of our covered hopper railcars at our
Paragould facility. We successfully launched a third
manufacturing line at Paragould in December 2004. Based on our
current backlog, we plan to produce an average of approximately
24&nbsp;railcars a working day at this facility. We manufacture
all of our tank railcars at our Marmaduke, Arkansas facility.
Based on our current backlog, we plan to produce an average of
approximately 7.5&nbsp;railcars a working day at this facility.
Our actual daily production at both of these facilities will
depend on the mix of railcar types being manufactured and the
availability of raw materials and components. In 2004, we
manufactured 2,747&nbsp;railcars at our Paragould facility and
1,637&nbsp;railcars at our Marmaduke facility. We also have the
manufacturing ability and technical know-how to produce other
types of railcars. For example, in the past we have manufactured
centerbeam platform railcars used to transport building products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that we increase product quality throughout each
railcar manufacturing facility by employing uniform, quality
tools and equipment. Our production lines are able to produce a
variety of railcars to satisfy changing customer preferences and
our tooling and plant layouts were constructed to enable quick
changeover. We currently can manufacture up to three different
types of railcars simultaneously at our Paragould facilities and
many different types of tank railcars simultaneously at our
Marmaduke facility. We believe our quality products and modern
manufacturing processes contribute to our low incidence of
warranty claims. Our warranty claims for railcars produced at
our Paragould and Marmaduke facilities were approximately
$0.3&nbsp;million, $0.4&nbsp;million and $0.1&nbsp;million in
2002, 2003 and 2004, respectively, and were approximately
$0.5&nbsp;million for the six months ended June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We designed our Paragould and Marmaduke facilities to provide
manufacturing flexibility and allow for the production of a
variety of railcar sizes and types. Examples of our production
flexibility include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our ability to manufacture several
    types of railcars at our Paragould facility; for example, the
    Paragould facility recently finished an order of centerbeam
    platform railcars, and quickly converted to covered hopper
    railcar production upon completion of that order;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our two parallel,
    vertically-tiered manufacturing tracks at Paragould allow
    workers on these two tracks to share tools and equipment and
    allow multiple components of the same railcar to be produced
    simultaneously;
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 82</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our welding machines, which are
    purposefully smaller than many other industrial welding
    machines, allow our welders greater freedom of movement, which,
    in turn, we believe increases production speed;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our automated painting lance helps
    ensure proper interior coating in a single application and we
    believe is faster and produces greater consistency than manual
    coating;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our grit-blasting is conducted by
    automated, oscillating machinery, which we believe is superior
    to and more efficient than alternative techniques, including
    static manual blasting;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our ability to rotate railcars
    360&nbsp;degrees eases and speeds specific steps in the
    production line, such as complicated welding steps that would
    otherwise need to be performed from difficult and possibly
    dangerous angles;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our horizontal manufacturing lines
    at our Marmaduke facility allow individual tank railcars to be
    taken in and out of the production line for additional
    attention, without the need to stop the plant&#146;s entire
    production process;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our proprietary outer-jacket
    coiling process allows us to insulate our tank railcars at our
    facility;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our force curing technique helps
    eliminate impurities, smell and residue remaining in railcars
    following the painting and lining steps, which we use primarily
    for railcars designed to transport food products;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our tracked loading and unloading
    points decrease the indirect labor required to move raw
    materials and components into our facilities and finished
    products out of our facilities;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our integrated painting, railcar
    truck assembly and fabrication shops eliminate downtime in our
    production process.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition, we believe our management and operation of these
facilities help reduce our operating costs, some examples of
which include:
</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our decentralized management,
    including a salaried-to-hourly employee ratio of one to 14;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our proactive safety program,
    which features weekly meetings of safety sub-committees on which
    our hourly and salaried employees participate and voluntarily
    establish safety rules that frequently exceed regulatory and
    industry minimum requirements; our safety program has helped
    contribute to low incidences of accidents requiring lost
    production time at our facilities;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our flexible workforce allows our
    employees to frequently move both between locations on
    production lines, such as welding and small components
    fabricating positions, and among our different manufacturing
    facilities.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CUSTOMERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have strong long-term relationships with many large
purchasers of railcars. Long-term customers are particularly
important in the railcar industry given the limited number of
buyers and sellers of railcars, and railcar manufacturers&#146;
desire constantly to maintain adequate backlog and manufacture
at full capacity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our railcar customer base consists mostly of U.S.&nbsp;shippers,
leasing companies and railroads. Over the past five years, our
largest leasing company customers included
ACF&nbsp;Industries&nbsp;LLC, The CIT&nbsp;Group, Inc., GATX
Rail Corporation, GE&nbsp;Capital Corporation, The Greenbrier
Companies and Union Tank Car Company and our largest shipper
customers included Solvay America, Inc., Dow Chemical Company,
Engelhard Corporation, Exxon Mobil Corporation and Lyondell
Chemical Company. Our major railroad customers over the past
five years included TTX and Union Pacific. Over the last five
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 83</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
years, our largest customers of railcar repair and refurbishment
services included ACF and ARL, affiliates of Carl C. Icahn, and
The CIT&nbsp;Group, Inc., Lyondell Chemical Company and
PPG&nbsp;Industries, Inc. Over the last five years, our largest
fleet management services customers included ACF, ARL and
PLM&nbsp;Transportation. Over the last five years, our largest
customers for railcar components included ACF, GE&nbsp;Capital
Railcar, Olin Corporation, Trinity Industries, Inc. and
TTX&nbsp;Company. Over the last five years, our largest
customers for industrial parts included ABB&nbsp;Vetco Gray,
Dresser Industries, Inc., KF&nbsp;Industries, Inc., McKissick
Products and Steam&nbsp;Flo Industries, Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2004, The CIT&nbsp;Group, Inc. accounted for approximately
16% of our revenues, The Greenbrier Companies accounted for
approximately 20% of our revenues and ACF and ARL collectively
accounted for approximately 24% of our revenues. In 2004, sales
to our top ten customers accounted for approximately 82% of our
revenues. Sales to The Greenbrier Companies, another railcar
manufacturer, were under a contract for centerbeam platform
railcars that is now complete. We do not anticipate significant
sales to The Greenbrier Companies in the future. ARL and ACF are
affiliates of Carl C. Icahn, our principal beneficial
stockholder and the chairman of our board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
While we maintain strong relationships with our customers, many
customers do not purchase railcars from us every year because
railcar fleets are not necessarily replenished or augmented
every year. The size and frequency of railcar orders often
results in a small number of customers representing a
significant portion of our sales in a given year. See &#147;Risk
factors&#151; Risks related to our business&#151; We depend upon
a small number of customers that represent a large percentage of
our revenues&#151; The loss of any single customer, or a
reduction in sales to any such customer, could have a material
adverse effect on our business, financial condition and results
of operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SALES AND MARKETING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We sell and market our products in North America through our
sales and marketing staff, including sales representatives who
sell directly to customers, catalogs through which our customers
have access to our railcar components, and our web site, through
which customers can order specialty components. We have seven
employees devoted to sales and marketing efforts for our railcar
manufacturing, components manufacturing and fleet management
services who operate from our corporate headquarters in
St.&nbsp;Charles, Missouri and, for our railcar repair business,
from a service office located in Houston, Texas. In addition,
lease agents of ARL and ACF, affiliates of Carl C. Icahn, in
connection with their own leasing sales activities have, from
time to time, referred their customers and contacts to us that
prefer to purchase, rather than lease, railcars. At this time,
there is no formal arrangement with, or compensation of, ARL,
ACF or their lease agents for any referrals that result in sales
of railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The sales process for our products and services is often
multi-level, involving a team comprised of individuals from
sales, marketing, engineering, operations and senior management.
Each significant customer is assigned a team that engages the
customer at different organizational levels to provide planning
and product customization and to assure open communications and
support. Our marketing activities also include participation in
trade shows, publication of articles in trade journals,
participation in industry forums and distribution of sales
literature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
There is significant overlap between our railcar manufacturing,
railcar components and fleet services customers. Our presence in
each market increases our opportunities to gain market share in
each of the other markets. Our access to competitors&#146;
railcars through our components and railcar repair and
maintenance businesses further increases our opportunities to
identify and address customer needs.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 84</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PRODUCT DEVELOPMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our engineering, marketing, operations and management personnel
have developed collaborative relationships with many of their
customer counterparts and have used these relationships to
identify market demands and target our product development to
meet those demands. Our product development costs are reflected
in our general, selling and administrative expenses. From time
to time, we hire additional engineers or contract projects to
outside firms to work on specific product development projects.
Our current product development efforts focus on the development
of railcars equipped with outlets specifically designed to
target certain industries, including a through sill general
service covered hopper railcar designed for the sugar industry
and the grain and cement markets. We also have developed a
bulkheadless covered hopper railcar to address the needs of
customers that are more focused on loading, rather than
unloading, efficiency. We have built prototypes of some of these
railcars, which are currently being field tested by target
customers. With input from our customers, we continually monitor
product performance following delivery. Observation of our
products and our competitors&#146; products at various stages of
a railcar&#146;s lifecycle and feedback from our repair shops,
has led to product innovations, including proprietary bulkhead
reinforcements and changes to our basic design platform. We
cannot guarantee that we will be able to develop new products
effectively, to enhance our existing products, or to respond
effectively to technological changes or new industry standards
or developments on a timely basis if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>BACKLOG</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our total backlog as of June&nbsp;30, 2004 was
$203.1&nbsp;million and as of June&nbsp;30, 2005 was
$505.4&nbsp;million. This amount excludes the 9,000 to 12,000
railcars CIT has agreed to purchase from us under an agreement
we entered into with CIT on July&nbsp;29, 2005. See &#147;Recent
Developments.&#148; We estimate that approximately 45% of our
June&nbsp;30, 2005 backlog will be converted to revenues in the
year ended December&nbsp;31, 2005. Although we believe these
orders to be firm, customer orders may be subject to
cancellation, customer requests for delays in railcar delivery,
inspection rights and other customary industry terms and
conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our backlog consists of orders for railcars. We define backlog
as the number and sales value of railcars that our customers
have committed in writing to purchase from us that have not been
recognized as revenues. Although we generally have one to three
year contracts with most of our fleet management customers,
neither orders for our railcar repair and refurbishment services
business nor our fleet management business are included in our
backlog because we generally deliver our services in the same
period in which orders are received. Similarly, orders for our
component manufacturing business are not included in our backlog
because we generally deliver components to our customers in the
same period in which orders for the components are received.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Due to the large size of railcar orders and variations in the
number and mix of railcars ordered in any given period, the size
of our reported backlog at the end of any such period may
fluctuate significantly. See &#147;Risk factors&#151; Risks
related to our business&#151; The variable purchase patterns of
our railcar customers and the timing of completion, delivery and
acceptance of customer orders may cause our revenues and income
from operations to vary substantially each quarter, which could
result in significant fluctuations in our quarterly
results.&#148;
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 85</B>
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table shows our reported railcar backlog, and
estimated future revenue value attributable to such backlog, at
the end of the periods shown:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Year ended December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar backlog at start of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,747</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcars delivered</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,766</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,557</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,384</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,090</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,345</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New railcar orders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,682</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar backlog at end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,084</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Estimated railcar backlog value at end of period (in
    thousands)(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>129,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>507,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>203,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>505,385</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>Estimated backlog value reflects the total revenues expected
    to be attributable to the backlog reported at the end of the
    particular period as if such backlog were converted to actual
    revenues. Estimated backlog does not reflect potential price
    increases and decreases under certain customer contracts that
    provide for variable pricing based on changes in the cost of
    certain raw materials and railcar components or the cancellation
    or delay of railcar orders that may occur.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Historically, we have experienced little variation between the
number of railcars ordered and the number of railcars actually
delivered, however, our backlog is not necessarily indicative of
our future results of operations. As orders may be canceled or
delivery dates extended, we cannot guarantee that our reported
railcar backlog will convert to revenue in any particular
period, if at all, nor can we guarantee that the actual revenue
from these contracts will equal our reported backlog estimates
or that our future revenue efforts will be successful. See
&#147;Risk factors&#151; Risks related to our business&#151; The
level of our reported railcar backlog may not necessarily
indicate what our future revenues will be and our actual
revenues may fall short of the estimated revenue value
attributed to our railcar backlog.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SUPPLIERS AND MATERIALS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We employ a just-in-time supply strategy for our manufacturing.
We believe this strategy improves working capital efficiency,
reduces operating costs and improves our flexibility to adjust
rapidly to production capacity. Our business depends on the
adequate supply of numerous railcar components, such as railcar
wheels, brakes, sideframes, axles, bearings, yokes, tank railcar
heads, bolsters and other heavy castings, and raw materials,
such as steel and normalized steel plate, used in the production
of railcars. Over the last few years many components and raw
materials suppliers have been acquired or ceased operations,
which has caused the number of alternative suppliers of railcar
components and raw materials to decline. The combination of
industry consolidation and high demand has caused recent
industry-wide shortages of many critical components and raw
materials as reliable suppliers are frequently at or near
production capacity. In some cases, such as those described
below, as few as one significant supplier produces the type of
component or raw material we use in our railcars. See &#147;Risk
factors&#151; Risks related to our business&#151; Fluctuations
in the supply of components and raw materials we use in
manufacturing railcars could cause production delays or
reductions in the number of railcars we manufacture, which could
materially adversely affect our business and results of
operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The cost of raw materials and railcar components represents
approximately 80% to 85% of the direct manufacturing costs of
most of our railcar product lines. Prices for steel, the primary
component in railcars and railcar components, rose sharply in
2004 as a result of strong demand, limited availability of scrap
metal for steel processing, reduced capacity and import trade
barriers. As of June&nbsp;30, 2005, most of our railcar
manufacturing contracts contain price variability provisions
that track fluctuations in the prices of certain raw materials
and railcar components, including steel, so that increases in our
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 86</B>
</DIV>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
manufacturing costs caused by increases in the prices of these
raw materials and components are passed directly on to our
customers. Conversely, if the price of those materials or
components decreases, a discount is applied to reflect the
decrease in cost. In our component manufacturing business, we
add a surcharge to every product to account for increases in
steel costs. Though we do not have similar contractual
protections in connection with the aluminum we use in our
manufacturing processes, we believe the risks are much less
significant primarily due to the overall lower amounts of
aluminum we use in our manufacturing, the relative price of
aluminum to steel and the historical range of aluminum prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our customers often specify particular railcar components and
the suppliers of such components. We continually monitor
inventory levels to ensure adequate support of production. We
periodically make advance purchases to avoid possible shortages
of material due to capacity limitations of railcar component
suppliers and possible price increases. We do not typically
enter into binding long-term contracts with suppliers because we
rely on established relationships with major suppliers to ensure
the availability of raw materials and specialty items.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2004, no single supplier accounted for more than 12% of our
total purchases and our top ten suppliers accounted for 47% of
our total purchases. See &#147;Risk factors&#151; Risks related
to our business&#151; Increases in the cost of the raw materials
that we use to manufacture railcars, particularly steel, or
delivery delays of these raw materials may materially adversely
affect our business, financial condition and results of
operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Steel.</I></B> We use both regular and normalized steel
plate to manufacture railcars. Currently, there is only one
domestic supplier of the form and size of normalized steel plate
that we need for our manufacturing operations, and that supplier
is our only source of this product. We believe we can acquire
regular steel from other suppliers. Normalized steel plate is a
special form of heat treated steel that is stronger and can
withstand puncture better than regular steel. Normalized steel
plate is required by Federal regulations to be used in tank
railcars carrying certain types of hazardous cargo, including
liquefied petroleum gas. We use normalized steel plate in the
production of many of our tank railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In June 2005, we entered into an agreement with another supplier
that is constructing a facility to manufacture normalized steel
plate, including normalized steel plate of the form and size we
need for our manufacturing operations to supply us with a
portion of our normalized steel plate requirements. We believe
construction of this normalized steel production facility is
scheduled for completion by early 2006. Although our
arrangements with this supplier will not satisfy all of our
normalized steel requirements, we expect this facility will
provide us an alternative source of normalized steel plate and
decrease our reliance on the current sole supplier of this
critical raw material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We also have entered into a supply agreement with this supplier
for the purchase of regular steel plate. Both agreements have a
term of five years and may be terminated by either party at any
time after two years, upon twelve months prior notice. Each
agreement requires us to purchase the lesser of a fixed volume
or 75% of our requirements for the steel plate covered by that
agreement at prices that fluctuate with the market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Tank heads and floor sheet reinforcements.</I></B> ACF
supplies us with tank railcar heads, head blocks, head pads,
floor sheet reinforcements, wheel sets, mounting frames and
sheared panels. ACF is our sole supplier of tank railcar heads
and floor sheet reinforcements. See &#147;Risk Factors&#151;
Risks related to our business&#151; After this offering,
companies affiliated with Carl C. Icahn will continue to be
important suppliers and customers.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Castings.</I></B> Heavy castings we use in our railcar
manufacturing primarily include bolsters, sideframes, couplers
and yokes. These castings form part of the truck assemblies upon
which railcars must be placed. The companies that supply the
railcar industry with heavy castings are unable to meet current
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 87</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
demands of all the railcar manufacturers and, as such, the
production capacity of many railcar manufacturers is limited by
the restricted availability of these components. In 2003, our
management team helped found and develop, and continues to
operate Ohio Castings, a joint venture, in which we own a
one-third interest. The joint venture leased a foundry in
Cicero, Illinois and acquired a foundry in Alliance, Ohio and
produces sideframes, bolsters, couplers and yokes. We also have
entered into supply agreements with an affiliate of one of our
Ohio Castings joint venture partners to purchase up to 25% and
33%, respectively, of the car sets, consisting of sideframes and
bolsters, produced at each of these foundries. Our purchase
commitments under these supply agreements are dependent upon the
number of car sets manufactured by these foundries, which are
jointly controlled by us and the other two members of Ohio
Castings. We believe that our involvement in this joint venture
helps us maintain our levels of production at competitive
prices, despite industry-wide shortages of these potentially
capacity constraining components. See &#147;Risk factors&#151;
Risks related to our business&#151; Our relationships with our
partners in our Ohio Castings Company, LLC joint venture may not
be successful, which could materially adversely affect our
business,&#148; and &#147;&#151;Certain relationships and
related party transactions.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Wheels and brakes.</I></B> There also have been supply
constraints and shortages of wheels and brakes used in railcars.
Currently, there are only two domestic suppliers of each of
these components. For both wheels and brakes, we primarily rely
on one supplier. We also obtain limited quantities of
refurbished wheels from scrapped railcars. If necessary, we
believe we can also obtain railcar wheels from a Chinese
supplier at a significantly higher cost.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPETITION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The railcar manufacturing business is extremely competitive. We
compete primarily with Trinity Industries and National Steel Car
Limited in the covered hopper railcar market and with Trinity
Industries and, to a lesser degree, Union Tank Car Company in
the tank railcar market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Some of our competitors have greater financial and technological
resources than we do. They may increase their participation in
the railcar markets in which we compete and other railcar
manufacturers that currently do not manufacture covered hopper
railcars or tank railcars may choose to compete directly with
us. Railcar purchasers&#146; sensitivity to price and strong
price competition within the industry have historically limited
our ability to increase prices to obtain better margins on our
railcars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We face intense competition in our other markets as well. Our
competition for the sale of railcar components includes our
competitors in the railcar manufacturing market as well as a
concentrated group of companies whose primary business focus is
the production of one or more specialty components. In addition,
new competitors, or alliances among existing competitors, may
emerge and rapidly gain market share. We compete with numerous
companies in our railcar services and fleet management
businesses, ranging from companies with greater resources than
we have to small, local companies. Our principal competitors in
these businesses include Rescar and Millennium Rail.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition to price, competition in all our markets is based on
quality, reputation, reliability of delivery, customer service
and other factors. Any of these factors as well as technological
innovation by any of our existing competitors, or new
competitors entering any of the markets in which we do business,
could put us at a competitive disadvantage. We may be unable to
compete successfully or retain our market share in our
established markets. Increased competition for the sales of our
railcar products and services could result in price reductions,
reduced margins and loss of market share, which could negatively
affect our prospects, business, financial condition and results
of operations.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 88</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INTELLECTUAL PROPERTY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We rely on a combination of investments, copyrights and patents
to protect our intellectual property. Due to the change that has
historically characterized the railcar manufacturing industry,
we believe that the improvement of existing technology and the
development of new products may be more important than patent
protection in establishing and maintaining a competitive
advantage. Nevertheless, we have obtained patents and will
continue to make efforts to obtain patents, when available, in
connection with product developments and designs. We cannot
guarantee that any patent obtained will provide protection or be
of commercial benefit to us, or that its validity will not be
challenged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have ten U.S. and two non-U.S.&nbsp;patents, two pending
non-U.S.&nbsp;patent application, seven registered trademarks,
and numerous unregistered copyrights and trade names. Our
patents expire at various times from 2005 to 2021.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EMPLOYEES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As of June&nbsp;30, 2005, we had 2,372 full and part-time
employees in various locations throughout the United States and
Canada, including 2,252 engaged in our manufacturing, railcar
repair and railcar fleet management operations and 120 in
various corporate support functions. At our Longview, Texas and
North Kansas City, Missouri repair facilities, and at our
Longview, Texas steel foundry and components manufacturing
facility, 44, 50 and 290 employees, respectively, are covered by
collective bargaining agreements. These agreements expire in
January 2008, September 2007 and April 2008, respectively. We
are also party to a collective bargaining agreement at our
Milton, Pennsylvania repair facility, which is currently idle.
Employees at our other locations are not covered by collective
bargaining agreements. We believe that our relations with our
employees are generally good.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REGULATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Federal Railroad Administration, or FRA, administers and
enforces U.S.&nbsp;federal laws and regulations relating to
railroad safety. These regulations govern equipment and safety
compliance standards for railcars and other rail equipment used
in interstate commerce. The Association of American Railroads,
or AAR, promulgates a wide variety of rules and regulations
governing safety and design of equipment, relationships among
railroads with respect to railcars in interchange and other
matters. The AAR also certifies railcar manufacturers and
component manufacturers that provide equipment for use on
railroads in the United States. New products must generally
undergo AAR testing and approval processes. As a result of these
regulations, we must maintain certifications with the AAR as a
railcar manufacturer, and products that we sell must meet AAR
and FRA standards. We must comply with the rules of the
U.S.&nbsp;Department of Transportation, or DOT, and we are also
subject to oversight by Transport Canada. To the extent that we
expand our business internationally, we will increasingly be
subject to the regulations of other non-U.S.&nbsp;jurisdictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Due to the health and safety risks posed by several types of
hazardous cargo transported by pressure tank railcars, including
liquefied petroleum gas, chlorine and anhydrous ammonia,
pressure tank railcars are subject to regulations to which many
other types of railcars are not subject. For example, in
response to general safety and homeland security concerns, there
are currently proposals pending by governmental and
non-governmental railcar authorities that address, among other
things, the impact resistance of the steel used in the
manufacture of pressure tank railcars. These proposals may
result in additional regulation concerning the required use of
normalized steel, and the testing of its impact resistance, in
pressure tank railcars. Prior to 1989, normalized steel was not
typically used in the manufacture of pressure tank railcars and,
according to AAR and DOT data, approximately 28,000 pressure
tank railcars currently in the U.S.&nbsp;railcar fleet were not
manufactured with normalized steel.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 89</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Because normalized steel is used to form railcars&#146; shells,
it is generally not feasible to retrofit railcars with
normalized steel. We believe we are well positioned to take
advantage of any increased demand for new pressure tank railcars
that could result from regulations requiring the increased use
of normalized steel in pressure tank railcars or the removal of
any pre-1989 pressure tank railcars from the U.S.&nbsp;railcar
fleet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ENVIRONMENTAL MATTERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are subject to comprehensive federal, state, local and
international environmental laws and regulations relating to the
release or discharge of materials into the environment, the
management, use, processing, handling, storage, transport or
disposal of hazardous materials and wastes, or otherwise
relating to the protection of human health and the environment.
These laws and regulations expose us to liability for the
environmental condition of our current or formerly owned or
operated facilities and our own negligent acts, and also may
expose us to liability for the conduct of others or for our
actions that were in compliance with all applicable laws at the
time these actions were taken. In addition, these laws may
require significant expenditures to achieve compliance, and are
frequently modified or revised to impose new obligations. Civil
and criminal fines and penalties and other sanctions may be
imposed for non-compliance with these environmental laws and
regulations. Our operations that involve hazardous materials
also raise potential risks of liability under the common law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
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 permits, laws and regulations.
Despite these compliance efforts, risk of environmental
liability is inherent in the operation of our businesses, as it
is with other companies engaged in similar businesses. Many of
our properties were transferred to us by ACF in 1994. We are
involved in investigation and remediation activities at
properties that we now own or lease to address historic
contamination and potential contamination by third parties. We
are also involved with state agencies in the cleanup of two
sites under these laws. These investigations are at a
preliminary stage, and it is impossible to estimate, with any
certainty, the timing and extent of remedial actions that may be
required, and the costs that would be involved in such
remediation. Substantially all of the issues identified relate
to the use of the properties prior to their transfer to us in
1994 by ACF and for which ACF has retained liability for
environmental problems that may have existed at the time of
their transfer to us and ACF has also agreed to indemnify us for
any cost that might be incurred with those existing problems.
However, if ACF fails to honor its obligations to us, we would
be responsible for the cost of such remediation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with its ongoing obligations, ACF, in consultation
with us, is investigating and, as appropriate, remediating those
sites that it transferred to us. We have been advised that, for
the remainder of 2005, ACF estimates that it will spend
approximately $150,000 on environmental investigation and, in
each of 2006 and 2007, it will spend approximately $200,000 on
environmental investigation, relating to contamination that
existed at properties prior to their transfer to us and for
which ACF has retained liability and agreed to indemnify us. We
believe that our operations and facilities are in substantial
compliance with applicable laws and regulations and that any
noncompliance is not likely to have a material adverse effect on
our operations or financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Future events, such as new environmental regulations or changes
in or modified interpretations of existing laws and regulations
or enforcement policies, or further investigation or evaluation
of the potential health hazards of products or business
activities, may give rise to additional compliance and other
costs that could have a material adverse effect on our financial
conditions and operations. In addition, we have in the past
conducted investigation and remediation activities at properties
that we own to address historic contamination. To date such
costs have not been material. Although we believe we have
satisfactorily addressed all known material contamination
through our remediation activities,
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 90</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
there can be no assurance that these activities have addressed
all historic contamination. The discovery of historic
contamination or the release of hazardous substances into the
environment at our current or formerly owned or operated
facilities could require us in the future to incur investigative
or remedial costs or other liabilities that could be material or
that could interfere with the operation of our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition to environmental laws, the transportation of
commodities by railcar raises potential risks in the event of a
derailment or other accident. Generally, liability under
existing law in the United States for a derailment or other
accident depends on the negligence of the party, such as the
railroad, the shipper or the manufacturer of the railcar or its
components. However, for certain hazardous commodities being
shipped, strict liability concepts may apply.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPERTY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our headquarters are located in St. Charles, Missouri. ARL, an
affiliate of Carl C. Icahn, leases this facility and permits us
to occupy it for a fee pursuant to a service agreement. Either
party may terminate this agreement on six months notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table presents information about our railcar
manufacturing and components manufacturing facilities as of
June&nbsp;30, 2005:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Leased or</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Lease</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Use</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Size</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Expiration Date</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Paragould, Arkansas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Covered hopper railcar manufacturing</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    530,000&nbsp;square feet on 53&nbsp;acres</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Owned(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    &#151;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Marmaduke, Arkansas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Tank railcar manufacturing</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    440,000&nbsp;square feet on 55&nbsp;acres</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Owned</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    &#151;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    St. Charles, Missouri</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Aluminum foundry and machining</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    128,626&nbsp;square feet on 3&nbsp;acres</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Leased</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    February&nbsp;28, 2006</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jackson, Missouri</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Railcar components manufacturing</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    125,000&nbsp;square feet on 7&nbsp;acres</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Owned(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    &#151;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kennett, Missouri</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Covered hopper and tank railcar subassembly and small components
    manufacturing</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    80,000&nbsp;square feet on 9&nbsp;acres</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Owned(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    &#151;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Longview, Texas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Steel foundry and machining</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    155,030&nbsp;square feet on 31&nbsp;acres</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Owned</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    &#151;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp; <I>(1)</I></TD>
    <TD align="left">
    <I>Our manufacturing facility located in Paragould, Arkansas is
    subject to a mortgage that secures the $9,500,000 industrial
    revenue bonds issued on April&nbsp;27, 1995 by Paragould,
    Arkansas. As of June&nbsp;30, 2005, approximately
    $4.5&nbsp;million of these bonds remain outstanding. Our
    manufacturing facility located in Jackson, Missouri is subject
    to a mortgage that secures the approximately $2.5&nbsp;million
    industrial development revenue bonds issued on July&nbsp;1, 1996
    by Jackson, Missouri. As of June&nbsp;30, 2005, approximately
    $1.5&nbsp;million of these bonds remain outstanding. Our
    manufacturing facility located in Kennett, Missouri is subject
    to a mortgage that secures the approximately $5.5&nbsp;million
    industrial development revenue bonds issued on June&nbsp;22,
    1995 by Kennett, Missouri. As of June&nbsp;30, 2005,
    approximately $2.6&nbsp;million of these bonds remain
    outstanding. We occupy the real property at these facilities
    through lease-back arrangements. We intend to repay all of these
    bonds in full with the proceeds of this offering. Each of these
    properties will be re-conveyed to us when the bonds secured by
    the properties are paid in full. The industrial revenue bonds
    are guaranteed by affiliates of Mr.&nbsp;Icahn, and these
    affiliates will be released from such guarantees upon repayment
    of the industrial revenue bonds. In addition, James J. Unger,
    our president and chief executive officer, and his wife own
    $405,000 of the industrial revenue bonds</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 91</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>Business</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <I><FONT style="font-size: 9pt">issued by Paragould, Arkansas.
    Mr.&nbsp;Unger and his wife will receive approximately
    $0.4&nbsp;million upon our repayment in full of the amounts due
    under the industrial revenue bonds. See &#147;Use of
    proceeds,&#148; &#147;Certain relationships and related party
    transactions&#151; Guarantees of indebtedness by ACF and other
    related parties&#151; Industrial revenue bonds&#148; and
    &#147;Certain relationships and related party transactions&#151;
    Certain transactions involving James J. Unger&#151; Industrial
    revenue bonds&#148; for more details.</FONT></I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We also provide railcar repair, cleaning, maintenance and other
services at facilities we lease in Gonzales, Louisiana; Green
River, Wyoming; Longview, Deer Park and Goodrich, Texas; North
Kansas City, Missouri; Bude, Mississippi; Tennille, Georgia;
Pace Florida; and Sarnia, Ontario. We also own a repair facility
in Milton, Pennsylvania that has been idle since 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INSURANCE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We maintain insurance on terms typical of our industry. Our
policies cover standard industry risks, including general and
products liability, workers compensation, automobile liability
and other casualty and property risks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LEGAL PROCEEDINGS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are from time to time party to various legal proceedings
arising out of our business. Such proceedings, even if not
meritorious, could result in the expenditure of significant
financial and managerial resources. We believe that there are no
proceedings pending against us which, if determined adversely,
would have a material adverse effect on our business, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 92</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='112'></A>
</DIV>

<!-- link1 "Management" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Management
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DIRECTORS AND EXECUTIVE OFFICERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Set forth below is information concerning our current directors
and executive officers, including their ages as of June&nbsp;30,
2005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name*</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="left" nowrap><B>Position</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Carl C. Icahn</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>[68</TD>
    <TD align="left" valign="top" nowrap>]</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    James J. Unger</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President, Chief Executive Officer and Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William P. Benac</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President and Chief Financial Officer</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan C. Lullman</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President Sales, Marketing and Services</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vincent J. Intrieri</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>[47</TD>
    <TD align="left" valign="top" nowrap>]</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jon F. Weber</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Keith Meister</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>[31</TD>
    <TD align="left" valign="top" nowrap>]</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>*</I></TD>
    <TD align="left">
    <I>We intend to appoint two additional persons to serve as
    independent directors upon the completion of this offering.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Carl C. Icahn, chairman of the board</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Icahn has been our principal beneficial stockholder and
has served as our chairman of the board and as a director since
1994. Mr.&nbsp;Icahn has served as chairman of the board and a
director of Starfire Holding Corporation, or Starfire, (formerly
Icahn Holding Corporation), a privately-held holding company,
and chairman of the board and a director of various subsidiaries
of Starfire, since 1984. Mr.&nbsp;Icahn has also been chairman
of the board and president of Icahn&nbsp;&#38; Co., Inc., a
registered broker-dealer and a member of the National
Association of Securities Dealers, since 1968. Since November
1990, Mr.&nbsp;Icahn has been chairman of the board of American
Property Investors, Inc., the general partner of American Real
Estate Partners, L.P., a public limited partnership that invests
in real estate and holds various other interests, including the
interests in its subsidiaries that are engaged, among other
things, in the oil and gas business and casino entertainment
business. Mr.&nbsp;Icahn has been a director of Cadus
Pharmaceutical Corporation, a firm that holds various
biotechnology patents, since 1993. From August 1998 to August
2002, Mr.&nbsp;Icahn served as chairman of the board of
Maupintour Holding LLC (f/k/a/&nbsp;Lowestfare.com, LLC), an
Internet travel reservations company. From October 1998 through
May 2004, Mr.&nbsp;Icahn was the president and a director of
Stratosphere Corporation, which operates the Stratosphere Hotel
and Casino. Since September&nbsp;29, 2000, Mr.&nbsp;Icahn has
served as the chairman of the board of GB&nbsp;Holdings, Inc.,
which owns all of the outstanding stock of Atlantic Coast
Entertainment Holdings, Inc., which through its wholly owned
subsidiary owns and operates The Sands Hotel and Casino in
Atlantic City, New Jersey. Mr.&nbsp;Icahn also serves in the
same capacity with Atlantic Coast Entertainment Holdings, Inc.
In January 2003, Mr.&nbsp;Icahn became chairman of the board and
a director of XO&nbsp;Communications, Inc., a telecommunications
company. In May 2005, Mr.&nbsp;Icahn became a director of
Blockbuster Inc., a provider of in-home movie rental and game
entertainment. Mr.&nbsp;Icahn received his B.A. from Princeton
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>James J. Unger, president, chief executive officer and
director</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Unger has served as our president and chief executive
officer since March 1995. Prior to joining us, he served ACF as
its president from 1988 to 1995, as its senior vice president
and chief financial officer from 1984 to 1988 and on its board
of directors from August 1993 to March 2005. After he joined us
in 1995, Mr.&nbsp;Unger simultaneously continued to serve as the
vice chairman of ACF until
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 93</B>
</DIV>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
March 2005. ACF is controlled by Mr.&nbsp;Icahn. Mr.&nbsp;Unger
has served as president of Ohio Castings, the joint venture in
which we have a one-third interest, since June 2003.
Mr.&nbsp;Unger has been on the board of directors of Aspen
Resources Group, an oil and gas exploration company since May
2002. Mr.&nbsp;Unger participates in several industry
organizations, including as an executive committee member and
board member for the Railway Supply Institute, Inc., or
&#147;RSI&#148;. He also is a board member of the American
Railway Car Institute, a member of the project review committee
for the RSI-AAR Railroad Tank Car Safety Research Test Project,
a steering committee member of the RSI Committee on Tank
Railcars, and a member of the National Freight and
Transportation Association. Mr.&nbsp;Unger served as a member of
the board of directors of Ranken Technical College from 1990 to
2002. Mr.&nbsp;Unger received a B.S. in accounting from the
University of Missouri, Columbia and is a certified public
accountant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>William P. Benac, senior vice president and chief financial
officer</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Benac has served as our senior vice president and chief
financial officer since January 2005. Prior to joining us, he
spent the last 32&nbsp;years in various corporate finance,
turnaround and value creation positions. Mr.&nbsp;Benac
co-founded bpmx, a financial services and consulting
restructuring company, where he served as senior managing
director and chief financial officer from December 2003 to
January 2005. From August 2002 to February 2003, Mr.&nbsp;Benac
served Kinko&#146;s Inc., a print services company, as senior
vice president and chief financial officer. From November 2000
to November 2001, Mr.&nbsp;Benac was the executive vice
president and chief financial officer of Grass Valley Group, a
manufacturer of digital broadcast technology. Mr.&nbsp;Benac
served simultaneously as an executive vice president and chief
financial officer of UICI, a diversified financial services
company, and as chief executive officer of United Credit
National Bank, a subsidiary of UICI and a credit card bank, from
May 1999 to November 2000. Mr.&nbsp;Benac has held a variety of
other financial management positions, including serving
Electronic Data Systems Corporation from February 1992 to
October 1997 as global vice president and treasurer, and
numerous positions with Verizon Corporation and its predecessor
companies from 1973 to 1990, including as president of GTE
Finance Corp. from 1986 to 1990. Mr.&nbsp;Benac is a certified
public accountant and a certified management accountant. He has
served on the National Advisory Council of the Marriott School
of Management&#151;Brigham Young University since 1997.
Mr.&nbsp;Benac received his B.A. and his M.B.A from Brigham
Young University and his J.D. from Pace University School of Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Alan C. Lullman, senior vice president sales, marketing and
services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Lullman has served as our senior vice president sales,
marketing and services since October 2004. From August 1998 to
September 2004, he served as our vice president sales and
marketing. Prior to joining us, he served as a regional sales
manager at the Houston office of ACF from March 1989 to July
1998, where he was responsible for sales across 22&nbsp;states.
From August 1987 to February 1989, Mr.&nbsp;Lullman was a
district sales manager at ACF. He held numerous other sales
positions at ACF sales offices in the Southwest, Midwest and
Northeast from October 1978 to July 1987. Mr.&nbsp;Lullman is a
member of the Transportation and Logistics Committee of the
American Plastics Council. He received a B.A. from Westminster
College. He also served in the U.S.&nbsp;Marine Corps Reserve
from 1973 to 1976, when he received an honorable discharge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Vincent J. Intrieri, director</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Intrieri has served on our board of directors since
August 2005. Mr.&nbsp;Intrieri is a senior managing director of
Icahn Partners LP and Icahn Partners Master Fund&nbsp;LP,
private investment funds controlled by Mr.&nbsp;Icahn. Since
January&nbsp;1, 2005, Mr.&nbsp;Intrieri has been senior managing
director of Icahn Associates Corp., whose principal business is
to hold a lease to premises at 767 Fifth Avenue, New York New
York, and High River Limited Partnership, which is primarily
engaged in the business of
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 94</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
holding and investing in securities. From March 2003 to December
2004, Mr.&nbsp;Intrieri served as a managing director and from
1998 to March 2003, he served as a portfolio manager of Icahn
Associates Corp. and High River. Each of Icahn Associates Corp.
and High River are under the control of Mr.&nbsp;Icahn. From
1995 to 1998, Mr.&nbsp;Intrieri served as portfolio manager for
distressed investments with Elliott Associates L.P., a New York
investment fund. Prior to 1995, Mr.&nbsp;Intrieri was a partner
at the Arthur Andersen accounting firm. Mr.&nbsp;Intrieri is a
certified public accountant. Mr.&nbsp;Intrieri is chairman of
the board of directors and a director of Viskase Companies,
Inc., a publicly owned producer of cellulose and plastic casings
used in preparing and packaging meat products, in which
Mr.&nbsp;Icahn has an interest through the ownership of
securities. In addition, Mr.&nbsp;Intrieri has served on the
board of directors of XO Communications, Inc., a
telecommunications services company controlled by
Mr.&nbsp;Icahn, since January 2003. Mr.&nbsp;Intrieri received a
B.S. in Accounting from The Pennsylvania State University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Jon F. Weber, director</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Weber has served on our board of directors since August
2005. Since April 2005, Mr.&nbsp;Weber has served as the
president of American Property Investors, Inc., which is the
general partner of American Real Estate Partners, L.P., a public
limited partnership controlled by Mr.&nbsp;Icahn that invests in
real estate and holds various other interests, including the
interests in its subsidiaries that are engaged, among other
things, in the oil and gas business and casino entertainment
business. Mr.&nbsp;Weber has, since April 2003, been head of
portfolio company operations and chief financial officer at
Icahn Associates Corp., an entity controlled by Mr.&nbsp;Icahn.
Since May 2003, Mr.&nbsp;Weber has been a director of Viskase
Companies, Inc. and was the chief executive officer of Viskase
Companies, Inc. from May 2003 to October 2004. Since March 2003,
he has served as chief executive officer and a director of
Philip Services Corporation, a metal recycling and industrial
services company affiliated with Mr.&nbsp;Icahn. He served as
chief financial officer of venture-backed companies QuantumShift
Inc. and Alchemedia Ltd. from October 2001 to July 2002 and
November 2000 to October 2001, respectively. From May 1998 to
November 2000, Mr.&nbsp;Weber served as managing
director&#151;investment banking for JP Morgan Chase and its
predecessor, Chase Manhattan Bank, in S&#227;o Paulo, Brazil. He
has served as a director of XO Communications, Inc., since May,
2005. Previously, Mr.&nbsp;Weber was an investment banker at
Morgan Stanley and Salomon Brothers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Keith Meister, director</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Meister has served on our board of directors since
August 2005. Since June 2002 Mr.&nbsp;Meister has been a senior
investment analyst of High River, a company owned and controlled
by Mr.&nbsp;Icahn that is primarily engaged in the business of
holding and investing in securities. Mr.&nbsp;Meister is also a
senior investment analyst of Icahn Partners LP and Icahn
Partners Master Fund&nbsp;LP. He is also a director of Icahn
Fund&nbsp;Ltd., which is the feeder fund of Icahn Partners
Master Fund&nbsp;LP. Icahn Partners LP and Icahn Partners Master
Fund&nbsp;L.P. are private investment funds controlled by
Mr.&nbsp;Icahn. Since August 2003, Mr.&nbsp;Meister has served
as the chief executive officer of American Property Investors,
Inc., or API, which is the general partner of American Real
Estate Partners, L.P., a public limited partnership controlled
by Mr.&nbsp;Icahn that invests in real estate and holds various
other interests, including the interests in its subsidiaries
that are engaged, among other things, in the oil and gas
business and casino entertainment business. Mr.&nbsp;Meister
served API as its president from August 2003 to April 2005. From
March 2000 through the end of 2001, Mr.&nbsp;Meister co-founded
and served as co-president of J Net Ventures, a venture capital
fund focused on investments in information technology and
enterprise software businesses. From 1997 through 1999,
Mr.&nbsp;Meister served as an investment professional at
Northstar Capital Partners, an opportunistic real estate
investment partnership. Prior to his work at Northstar,
Mr.&nbsp;Meister served as an investment analyst in the
investment banking group at Lazard Freres. Mr.&nbsp;Meister is a
director of XO Communications, Inc., a telecommunications
services company
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 95</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
controlled by Mr.&nbsp;Icahn. Mr.&nbsp;Meister also is a
director of American Entertainment Properties Corp. and American
Casino&nbsp;&#38; Entertainment Properties Finance Corp., which
are gaming companies, [and Scientia Corporation, a private
health care venture company,] all of which are companies
controlled by American Real Estate Partners, L.P., which is
controlled by Mr.&nbsp;Icahn. Mr.&nbsp;Meister received his A.B.
in Government cum laude from Harvard College.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>KEY EMPLOYEES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Set forth below is information concerning our key employees,
including their ages as of June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Jackie R. Pipkin, 55, director of railcar manufacturing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Pipkin has served as our director of railcar
manufacturing since July 1995 and as plant manager of our
Kennett manufacturing facility since March 1994. Prior to
joining us, Mr.&nbsp;Pipkin served Thrall Car Manufacturing, a
railcar manufacturer, as manufacturing manager from January 1992
to March 1994 and as general superintendent from December 1989
to December 1992. He served ACF in various roles from February
1969 to December 1989. Mr.&nbsp;Pipkin has supervised or helped
supervise the launch of several new railcar manufacturing
facilities during his employment with ACF and with us, including
the original construction of our Paragould and Marmaduke
facilities and the addition of the third manufacturing line at
our Paragould facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Michael R. Williams, 44, vice president engineering and
manufacturing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Williams has served as our vice president engineering
and manufacturing since October 2004 and in various product and
account management roles since April 1997. Prior to joining us,
Mr.&nbsp;Williams served ACF as a strength analyst of covered
hopper and tank railcars from January 1991 to March 1997.
Mr.&nbsp;Williams served as an airframe designer and analyst at
McDonnell Douglas Corporation from May 1983 to December 1990.
Mr.&nbsp;Williams received his B.S. in mechanical engineering
from the University of Illinois and a M.S. in Mechanical
Engineering and a M.B.A. from Washington University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>BOARD OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our board of directors presently consists of five members. Upon
the completion of this offering we expect to expand the size of
our board of directors to seven members with the addition of two
new independent directors. Our directors are expected to serve
until the next annual meeting of our stockholders and until
their respective successors have been duly elected and
qualified. We believe that, within the one-year transition
period available to us following the completion of this
offering, we will comply with all applicable requirements of the
SEC and the Nasdaq National Market relating to director
independence and the composition of the committees of our board
of directors, including the designation of an &#147;audit
committee financial expert.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Affiliates of Carl C. Icahn, our principal beneficial
stockholder and the chairman of our board of directors, are
currently negotiating with our other principal stockholder to
acquire all of our common stock held by that stockholder prior
to consummation of this offering. If that purchase occurs, we
expect that Mr.&nbsp;Icahn will control approximately
[&nbsp;<FONT face="wingdings">l</FONT>&nbsp;]% of the voting
power of our outstanding common stock following the offering.
Consequently, we would be a &#147;controlled company&#148;
within the meaning of the listing standards governing companies
with stock quoted on the Nasdaq National Market. Under these
rules, a &#147;controlled company&#148; may elect not to comply
with certain Nasdaq National Market corporate governance
requirements, including requirements that (1)&nbsp;a majority of
the board of directors consist of independent directors,
(2)&nbsp;compensation of officers be determined or recommended
to the board of directors by a majority of its independent
directors or by a compensation committee that is composed
entirely of independent directors and (3)&nbsp;director nominees
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 96</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
be selected or recommended for selection by a majority of the
independent directors or by a nominating committee composed
solely of independent directors. If, at the time of this
offering, we are a &#147;controlled company&#148; under the
listing standards of the Nasdaq National Market, we intend to
avail ourselves of those exemptions and will not have a majority
of independent directors on our board. See &#147;Risk
factors&#151;Risks related to the purchase of our common stock
in this offering&#151;Upon the closing of this offering we may
be a &#147;controlled company&#148; within the meaning of the
Nasdaq National Market rules and you will not have the same
protections afforded to shareholders of companies that are not
&#147;controlled companies&#148; and, therefore, are subject to
all of the Nasdaq National Market corporate governance
requirements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMMITTEES OF OUR BOARD OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
If we are a &#147;controlled company&#148; following this
offering, we intend to use exemptions available to us under the
corporate governance listing standards of the Nasdaq National
Market. In that circumstance, we expect that we would not have a
compensation committee and we would not have a nominating
committee. If we are not a &#147;controlled company&#148;
following this offering, we intend to comply with all applicable
corporate governance requirements of the Nasdaq National Market
within the transition periods allowed companies following their
initial public offering of common stock. Accordingly, if we are
not a &#147;controlled company&#148; at the time this offering
is completed, the standing committees of our board of directors
will consist of an audit committee, a compensation committee and
a nominating committee. See &#147;Risk factors&#151;Risks
related to the purchase of our common stock in this
offering&#151;Upon the closing of this offering we may be a
&#147;controlled company&#148; within the meaning of the Nasdaq
National Market rules and you will not have the same protections
afforded to shareholders of companies that are not
&#147;controlled companies&#148; and, therefore, are subject to
all of the Nasdaq National Market corporate governance
requirements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In any event, we may establish special committees under the
direction of the board of directors when necessary to address
specific issues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Audit committee</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our Audit Committee will be responsible for oversight of the
qualifications, independence, appointment, retention,
compensation and performance of the Company&#146;s independent
registered public accounting firm and for assisting the board of
directors in monitoring the Company&#146;s financial reporting
process, accounting functions and internal controls. It also
will be responsible for oversight of &#147;whistle-blowing&#148;
procedures and certain other compliance matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The composition of the Audit Committee following the completion
of this offering will comply with applicable SEC and Nasdaq
National Market requirements, including the requirement that at
least one member of the Audit Committee qualify as a
&#147;financial expert&#148; under SEC rules and the stricter
definition of independence for audit committee members under the
rules of the Nasdaq National Market. Our board of directors will
adopt a written charter for our Audit Committee. That charter
will conform to recently adopted rules and regulations of the
SEC and the Nasdaq National Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Corporate governance</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that shortly after completion of this offering, we
will comply with all applicable Nasdaq National Market corporate
governance and listing requirements. In the interim, we will
rely on transition periods available to companies following
their initial public offering of common stock. See &#147;Risk
factors&#151;Risks related to the purchase of our common stock
in this offering&#151;Upon the closing of this offering we may
be a &#147;controlled company&#148; within the meaning of the
Nasdaq National Market rules and you will not have the same
protections afforded to shareholders of companies that
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 97</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
are not &#147;controlled companies&#148; and, therefore, are
subject to all of the Nasdaq National Market corporate
governance requirements,&#148; &#147;Management&#151;Board of
directors&#148; and &#147;Management&#151;Committees of our
board of directors.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Codes of conduct and ethics</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Upon completion of this offering, we will have adopted written
codes of conduct and ethics applicable to all of our directors,
executive officers and employees including, without limitation,
all of our senior financial officers, that will be designed to
deter wrongdoing and to promote:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">honest and ethical conduct;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">full, fair, accurate, timely and
    understandable disclosure in reports and documents that we file
    with the SEC and in our other public communications;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">compliance with applicable laws,
    rules and regulations, including insider trading
    compliance;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">accountability for adherence to
    the code and prompt internal report of violations of the code,
    including illegal or unethical behavior regarding accounting or
    auditing practices.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our codes of conduct and ethics will also comply with applicable
requirements of the Nasdaq National Market. The Audit Committee
of our board of directors will review our codes of conduct and
ethics on a regular basis and will propose or adopt additions or
amendments as it considers required or appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Director compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Each director is entitled to reimbursement for out-of-pocket
expenses incurred for each meeting of the full board or a
committee of the board attended. The annual compensation for our
independent directors is
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;].
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 98</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXECUTIVE COMPENSATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table sets forth the compensation of our chief
executive officer and each of our other most highly compensated
executive officers during the year ended December&nbsp;31, 2004.
We refer to these officers as the named executive officers. We
did not maintain any option plans through December&nbsp;31,
2004, and no options were granted to or exercised by any of our
named executive officers during the year ended December&nbsp;31,
2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Annual compensation</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Other annual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>All other</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>compensation</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Name and principal position</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Salary ($)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Bonus ($)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>($)(3)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>($)(4)</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="17" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    James J. Unger</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,268</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William P. Benac(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President and Chief<BR>
    Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan C. Lullman</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President Sales,<BR>
    Marketing and Services</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>574</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William L. Finn(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President Operations</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>172,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,218</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>Mr.&nbsp;Benac started his employment with us on
    January&nbsp;31, 2005.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(2)</I></TD>
    <TD align="left">
    <I>Mr.&nbsp;Finn retired effective May&nbsp;1, 2005.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(3)</I></TD>
    <TD align="left">
    <I>Includes the following payments we made on behalf of
    Messrs.&nbsp;Unger, Lullman and Finn:</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>Car</I></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>Country</I></B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>allowances</I></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>club dues</I></B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="8" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Mr. Unger</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>39,651</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>8,881</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Mr. Lullman</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>8,820</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>611</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Mr. Finn</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>19,576</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>5,711</I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>(4)</I></TD>
    <TD align="left">
    <I>Includes the following payments we made on behalf of
    Messrs.&nbsp;Unger, Lullman and Finn.</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>Life insurance</I></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>401(k) matching</I></B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>premiums</I></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B><I>contributions</I></B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="8" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I>Mr. Unger</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>7,768</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><I>$</I></TD>
    <TD align="right" valign="bottom" nowrap><I>10,500</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Mr. Lullman</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>574</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>3,030</I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Mr. Finn</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>0</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><I>5,188</I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Employment and noncompetition agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>James J. Unger.</I></B> We are presently negotiating an
employment agreement with Mr.&nbsp;Unger and expect to enter
into such an agreement prior to the consummation of this
offering. [Option information to be added.]
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>William P. Benac.</I></B> In July 2005 we entered into an
employment agreement with William P. Benac to serve as our chief
financial officer for a period of one year. The agreement is
effective as of April&nbsp;22, 2005 and automatically renews for
successive one-year terms unless terminated by either party at
least 180&nbsp;days before the expiration of the then applicable
term.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Under the terms of the agreement, Mr.&nbsp;Benac will receive a
minimum annual base salary of $250,000. Mr.&nbsp;Benac is also
entitled to a non-prorated cash bonus of at least $150,000 for
the 2005 fiscal year.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 99</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Criteria for cash bonuses that may be awarded for each year the
agreement is extended are subject to negotiation and will be
determined during the first quarter of each calendar year the
agreement is renewed. It is expected that the target bonus
amounts during such years will not be less than $150,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition to the salary and bonus compensation described
above, Mr.&nbsp;Benac will receive a one-time special cash bonus
of $500,000 on April&nbsp;22, 2007 if, prior to that date, we
issue common stock to the public in an offering registered with
the SEC or Mr.&nbsp;Icahn sells his controlling interest in us
to a third party in a private transaction. If at any time on or
before April&nbsp;22, 2007, we terminate Mr.&nbsp;Benac&#146;s
employment without cause, he resigns for good reason or a change
in control occurs, he will be entitled to receive the special
cash bonus upon the occurrence of such event. In addition, if we
terminate Mr.&nbsp;Benac&#146;s employment other than for cause,
death or disability, or if he terminates his employment for good
reason, he is entitled to receive a lump sum severance payment
of $200,000. Mr.&nbsp;Benac&#146;s right to the special cash
bonus and any severance immediately terminates if his employment
is terminated for cause or he resigns without good reason.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Benac will be reimbursed for reasonable and necessary
business related expenses, including those expenses associated
with commuting from Dallas to our headquarters in St. Charles,
Missouri, such as air and car travel and reasonable living
expenses. He is eligible to participate in all health, medical,
retirement and other employee benefit plans we generally provide
to our senior executives. Mr.&nbsp;Benac&#146;s employment
agreement also contains provisions requiring him to protect our
confidential information during his employment and at all times
thereafter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Benac may terminate his employment for good reason upon
at least 30&nbsp;days prior written notice to us, or without
good reason upon at least 60&nbsp;days prior written notice to
us. We may terminate Mr.&nbsp;Benac&#146;s employment without
cause upon 30&nbsp;days written notice or immediately for cause
or upon his death or disability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equity incentive plan</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>2005 Equity Incentive Plan.</I></B> We adopted a 2005
equity incentive plan to provide long-term incentives and
rewards to our employees, officers, directors, consultants and
advisors. The 2005 plan permits us to issue stock and grant
stock options, restricted stock, stock units and other equity
interests to purchase or acquire up to
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock. Awards covering no more than
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
may be granted to any person during any fiscal year. If any
award expires, or is terminated, surrendered or forfeited, then
shares of common stock covered by the award will again be
available for grant under the 2005 plan. The 2005 plan is
administered by our board of directors or a committee of the
board. The board or committee has broad discretion to determine
the terms of an award granted under the 2005 plan, including, to
the extent applicable, the vesting schedule, purchase or grant
price, option exercise price, or the term of the option or other
award; provided that the exercise price of any options granted
under the 2005 plan may not be less than the fair market value
of the common stock on the date of grant. The terms and
conditions of stock options or other awards granted under the
2005 plan will be set forth in a separate agreement between us
and the recipient of the award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Retirement plans</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Supplemental Executive Retirement Plan.</I></B>
Mr.&nbsp;Unger is entitled to benefits from a supplemental
executive retirement plan, or SERP. The SERP benefit is
generally equal to the benefit that would be provided under the
Employees&#146; Retirement Plan of ACF&nbsp;Industries, LLC, if
certain Internal Revenue Service limits and exclusions from
compensation under that plan did not apply, less the actual
benefit payable under the ACF retirement plan. The SERP benefits
were frozen effective as of March&nbsp;31,
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 100</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Management</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
2004. As a result, no further benefits are accruing under the
SERP. These benefits are generally paid at the same time and in
the same form as the participant&#146;s benefit under the
retirement plan. No funds have been set aside for the benefits
payable under the SERP. The estimated annual SERP benefit for
Mr.&nbsp;Unger is $117,799. No other named executive officer is
entitled to receive a benefit under the SERP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Pension Plan.</I></B> We provide pension benefits to
certain of our salaried employees, including Mr.&nbsp;Unger,
Mr.&nbsp;Finn and Mr.&nbsp;Lullman, under the Employees&#146;
Retirement Plan of ACF Industries, LLC. Each executive&#146;s
benefit under the retirement plan is based on 2.25% of average
annual compensation for each year of service after
April&nbsp;30, 1981; plus the highest of the executive&#146;s
annual compensation for five consecutive years of employment
prior to May&nbsp;1, 1981 that results in the highest such
average multiplied by number of years of service completed prior
to May&nbsp;1, 1981; plus a fixed dollar amount. This fixed
dollar amount is $12,800 for Mr.&nbsp;Unger, $15,600 for
Mr.&nbsp;Finn and $6,108 for Mr.&nbsp;Lullman. For purposes of
this plan, years of service include years of service with both
ACF and us. This total is then reduced by an amount equal to
0.5% of the executive&#146;s final average compensation
multiplied by the number of years of service up to 35. The
benefits under this plan were frozen effective as of
March&nbsp;31, 2004. As a result, no additional benefits are
accruing under this plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The benefits under the ACF retirement plan are generally paid
monthly for the life of the executive, following retirement in
the form of a joint and survivor annuity. As most recently
determined by the actuaries for the retirement plan, based on
current years of service with us and ACF, the estimated annual
pension commencing at age&nbsp;65 for each of the named
executives is as follows: Mr.&nbsp;Unger: $99,633;
Mr.&nbsp;Finn: $72,966; and Mr.&nbsp;Lullman: $49,752. These
named executives are fully vested in their retirement plan
benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Postretirement Obligations.</I></B> We also provide
postretirement health and life insurance benefits for certain of
our salaried employees. Our named executive officers may become
eligible for these benefits if they retire after attaining
specified age and service requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Executive Survivor Insurance Plan.</I></B> We provide an
executive survivor insurance plan for certain of our salaried
employees including the named executive officers. This plan
provides life insurance benefits to the qualified spouse of a
named executive officer upon his death during his employment or
following retirement at or after age&nbsp;55. We have purchased
a group term life insurance policy to off-set the cost of
providing this benefit. Benefits payable under this plan are
separate from any benefit payable under our retirement plans. If
the named executive officer retires and dies after attaining
age&nbsp;55, then his qualified spouse is entitled to a monthly
benefit equal to what would have been payable under our
retirement plan if the named executive officer had retired with
a 50% joint and survivor benefit. If the named executive officer
dies while actively employed and after attaining age&nbsp;55,
then his qualified spouse is entitled to a monthly benefit equal
to 20% of the named executive&#146;s officer&#146;s salary
reduced by any amount payable under the survivor provisions of
our retirement plan. In no event may the amounts paid under this
plan exceed $6,500&nbsp;per month. We have reserved the right to
amend, modify or terminate this plan.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 101</B>
</DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='113'></A>
</DIV>

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<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Certain relationships and related party transactions
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Other than the transactions described below, for the last three
full fiscal years there has not been, nor is there currently
proposed, any transaction or series of similar transactions to
which we are or will be a party:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">in which the amount involved
    exceeded or will exceed $60,000;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">in which any director, executive
    officer, holder of more than 5% of our common stock on an
    as-converted basis or any member of their immediate family has
    or will have a direct or indirect material interest.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We believe that each of the transactions described below that is
to remain in effect following the completion of this offering is
on terms no less favorable to us than could have been obtained
from unaffiliated third parties. Although we do not have a
separate conflicts policy, we intend to comply with Missouri law
with respect to transactions involving potential conflicts.
Missouri law requires that all transactions between us and any
director or executive officer are subject to full disclosure and
approval of the majority of the disinterested members of our
board of directors, approval of the majority of our stockholders
or the determination that the contract or transaction is
intrinsically fair to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TRANSACTIONS WITH CARL C. ICAHN AND ENTITIES AFFILIATED WITH
CARL C. ICAHN</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our company was formed in 1988 as a company beneficially owned
by Carl C. Icahn. Mr.&nbsp;Icahn is our principal beneficial
stockholder and is the chairman of our board of directors. We
grew our company through the transfer of certain assets to us
from ACF, a company also beneficially owned by Mr.&nbsp;Icahn.
Since our formation, we have entered into agreements relating to
the acquisition of assets from and disposition of assets to
entities controlled by Mr.&nbsp;Icahn, the provision of goods
and services to us by entities controlled by Mr.&nbsp;Icahn, the
provision of goods and services by us to entities affiliated
with Mr.&nbsp;Icahn and other matters involving entities
controlled by Mr.&nbsp;Icahn. We receive substantial benefit
from these agreements and we expect that in the future we will
continue to conduct business with entities affiliated with or
controlled by Mr.&nbsp;Icahn. In addition, we receive other
benefits from our affiliation with Mr.&nbsp;Icahn and companies
controlled by Mr.&nbsp;Icahn, such as financial and advisory
support, sales support and our participation in buying groups
and other arrangements with entities controlled by
Mr.&nbsp;Icahn. For example, lease sales agents of ARL, a
company beneficially owned by Mr.&nbsp;Icahn, and ACF, in
connection with their own leasing sales activities, have, from
time to time, referred their customers or contacts to us that
prefer to purchase rather than lease railcars, which has, in
some cases, led to us selling railcars to these customers or
contacts. At this time there is no formal arrangement under
which these referrals are provided and we do not compensate ARL,
ACF or any of their leasing sales agents for any railcar sales
that we make as a result of these referrals. As an accommodation
to some of their customers and contacts that they referred to
us, ARL and ACF from time to time accepted orders to purchase
our railcars and then assigned those orders to us. ARL and ACF
have discontinued accepting orders to sell railcars on our
behalf. See &#147;Risk factors&#151; Risks related to our
business&#151; After this offering, companies affiliated with
Carl C. Icahn will continue to be important suppliers and
customers,&#148; &#147;Risk factors&#151; Risks related to our
business&#151; Services being provided to us by ARL, an entity
controlled by Carl C. Icahn, may not be sufficient to meet our
needs, which may require us to incur additional costs,&#148;
&#147;Risk factors&#151; Risks related to our business&#151;
After this offering, we may have reduced access to resources of,
and benefits provided by, entities affiliated with Carl C.
Icahn&#148; and &#147;Risk factors&#151; Risks related to our
business&#151; We could be liable for liabilities
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 102</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
associated with pension plans sponsored by companies controlled
by Carl C. Icahn&#148; for a description of certain risks
associated with our affiliation with Mr.&nbsp;Icahn and entities
affiliated with Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We describe below the material arrangements and other
relationships that we are, or have been, a party to with
Mr.&nbsp;Icahn and entities affiliated with Mr.&nbsp;Icahn since
January&nbsp;1, 2002. As noted below, some of these arrangements
and relationships have been terminated or otherwise will no
longer be in effect following the completion, and the
application of the net proceeds of, this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Application of the net proceeds of this offering</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to use the net proceeds of this offering to, among
other things, repay certain indebtedness that we owe to entities
controlled by Mr.&nbsp;Icahn and to redeem all of the
outstanding shares of our preferred stock, all of which are held
by Mr.&nbsp;Icahn and his affiliates. As of June&nbsp;30, 2005,
the total amount of this indebtedness outstanding was
approximately $108.9&nbsp;million. As a result, entities
controlled by Mr.&nbsp;Icahn will receive approximately
$108.9&nbsp;million of the net proceeds of this offering. We
also intend to use the net proceeds of this offering to repay in
full amounts due under our industrial revenue bonds. As of June
30, 2005, the total amount of this indebtedness outstanding was
approximately $8.5&nbsp;million. The industrial revenue bonds
are guaranteed by affiliates of Mr.&nbsp;Icahn and these
affiliates will be released from such guarantees upon the
repayment of the bonds. In addition James J. Unger, our
president and chief executive officer, and his wife own
$0.4&nbsp;million of the industrial revenue bonds issued by
Paragould, Arkansas and, as a result, will receive approximately
$0.4&nbsp;million upon the repayment of the bonds. See &#147;Use
of proceeds,&#148; &#147;&#151;Guarantees of indebtedness by ACF
and other related parties&#151; Industrial revenue bonds&#148;
and &#147;Certain transactions involving James J. Unger&#151;
Industrial revenue bonds&#148; and the transactions described
below for more information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REDEMPTION OF NEW PREFERRED STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Concurrently with the closing of this offering, we intend to use
approximately $89.2&nbsp;million of the net proceeds of this
offering to redeem our new preferred stock, including all
accumulated and unpaid dividends due on our new preferred stock.
See &#147;&#151;Certain Transactions Involving American Railcar
Leasing LLC&#151; The ARL exchange&#148; for more information.
We will redeem each outstanding share of new preferred stock for
an amount equal to the liquidation preference of each share of
new preferred stock, which is $1,000&nbsp;per share, plus all
accumulated and unpaid dividends on each share of new preferred
stock through the date of the redemption. Assuming the
redemption occurred on June&nbsp;30, 2005, the aggregate amount
required to redeem all of the outstanding shares of our new
preferred stock, including accumulated and unpaid dividends,
would have been $89.2&nbsp;million. All of our new preferred
stock is held by entities beneficially owned and controlled by
Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REDEMPTION OF MANDATORILY REDEEMABLE PREFERRED STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On or before the closing of this offering, we intend to redeem
our one outstanding share of mandatorily redeemable preferred
stock, which is held by Mr.&nbsp;Icahn. As of June&nbsp;30,
2005, there was $743 of accumulated and unpaid dividends on that
stock. This share became mandatorily redeemable for $1,000 on
February&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC AND AMERICAN
RAILCAR LEASING LLC</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have entered into a variety of agreements and transactions
with ACF Industries LLC (which we refer to, along with its
predecessor ACF Industries, Inc., as ACF), American Railcar
Leasing LLC (which we refer to as ARL) and certain other parties
related to these companies. These transactions and agreements
are described in further detail below. During the periods
discussed, ACF and ARL
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 103</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
were beneficially owned and controlled by Mr.&nbsp;Icahn, and
they continue to be so owned and controlled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 1994, ACF transferred to us its railcar repair and
maintenance assets for its railcar parts and manufacturing
business conducted at specified locations, including
intellectual property rights associated with the transferred
assets, all of ACF&#146;s rights to the property, plant and
equipment at those locations, as well as specified assets used
in the manufacture and sale of industrial size mixing bowls. We
refer to this transaction as the 1994 ACF asset transfer. In
2004, ACF and its subsidiaries, through a series of
transactions, transferred some of the railcar fleets that they
then owned and held primarily for lease to third parties to ARL
and its subsidiaries. At the time, we owned all the common
interests of ARL. As of June&nbsp;30, 2005, we transferred our
entire interest in ARL in exchange for the redemption of shares
of our new preferred stock, in a transaction we refer to as the
ARL exchange. All of our shares of new preferred stock were and
continue to be owned by entities beneficially owned and
controlled by Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Manufacturing Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prior to the transfer of ACF&#146;s and its subsidiaries&#146;
railcar fleets to ARL and its subsidiaries in 2004, we sold
railcars and railcar components to ACF and its subsidiaries for
use in their railcar fleets. Since the transfer of these fleets
to ARL, we sell railcars to ARL. We believe that since
ARL&#146;s formation in 2004, we have been the only supplier of
railcars to ARL, although ARL is not precluded from purchasing
railcars from others. In 2002, 2003 and 2004, our revenues from
manufacturing operations included $63.6&nbsp;million,
$64.8&nbsp;million and $64.4&nbsp;million, respectively, from
transactions with affiliates. In the six months ended
June&nbsp;30, 2005, our revenues from manufacturing operations
included
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
from transactions with affiliates. Most of these revenues were
attributable to railcars and railcar components that we sold to
ACF, ARL and their respective subsidiaries. As of June&nbsp;30,
2005 our backlog included $44.1&nbsp;million for railcar orders
by ARL. These orders are on substantially the same terms as we
provide to our other customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ACF has also been a significant supplier of components for our
business. Components supplied to us by ACF include tank railcar
heads, wheel sets and various structural components. In 2002,
2003 and 2004, we purchased inventory of $15.7&nbsp;million,
$19.0&nbsp;million, and $31.3&nbsp;million, respectively, of
components from ACF. In the six months ended June&nbsp;30, 2005,
we purchased inventory of $35.4&nbsp;million from ACF. As of
[July&nbsp;31, 2005], we had outstanding purchase orders for
$[21.4]&nbsp;million of inventory from ACF.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
During 2003 and 2004, Castings LLC, a joint venture partner in
Ohio Castings, was a wholly owned subsidiary of ACF Industries
Holding Corp., an indirect parent of ACF that is beneficially
owned and controlled by Mr.&nbsp;Icahn. Effective
January&nbsp;1, 2005, we acquired Castings LLC from ACF
Industries Holding Corp. as described under &#147;Certain
relationships and related party transactions&#151; Certain
Transactions Involving Ohio Castings.&#148; Our cost of railcar
manufacturing for the years ended December&nbsp;31, 2003 and
2004 included $3.9&nbsp;million and $25.3&nbsp;million,
respectively, in railcar components produced by Ohio Castings.
Expenses of $0.4&nbsp;million and $3.2&nbsp;million paid to
Castings LLC under a supply agreement are also included in the
cost of railcar manufacturing for the years ended
December&nbsp;31, 2003 and 2004, respectively. We also have been
charged $0.2&nbsp;million in the year ended December&nbsp;31,
2003 relating to certain costs incurred by Castings LLC in the
establishment of Ohio Castings. Our cost of railcar
manufacturing for the six months ended June&nbsp;30, 2005
purchased
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;million
in railcar components produced by Ohio Castings. Inventory at
December&nbsp;31, 2003, 2004 and June&nbsp;30, 2005 includes
approximately $0.3&nbsp;million, $6.3&nbsp;million and
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;million,
respectively, of purchases from Ohio Castings. In June 2003
Castings LLC loaned Ohio Castings $3.0&nbsp;million under a
promissory note. The note bears interest at 4.0% and, as of
August&nbsp;31, 2005,
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 104</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
payments are made in quarterly installments with the last
payment due in November 2008. As of June&nbsp;30, 2005
$2.3&nbsp;million was outstanding under this note.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Railcar services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have provided railcar repair and maintenance services and
fleet management services to ACF and ARL and we continue to
provide these services to ARL. As of June&nbsp;30, 2005, we
managed approximately [22,000] railcars for ARL, and we also
provide repair and maintenance services for these railcars. In
2002, 2003 and 2004, our revenues from railcar repair and
refurbishment and fleet management services included
$12.8&nbsp;million, $9.1&nbsp;million and $19.4&nbsp;million,
respectively, from transactions with affiliates. In the six
months ended June&nbsp;30, 2005, our revenues from railcar
repair and refurbishment and fleet management services included
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;million
from transactions with affiliates. Almost all of these revenues
were attributable to services we provided to ACF, ARL and their
subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Cost of railcar services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Through June&nbsp;30, 2005, ACF and ARL have provided certain
leasing and other fleet management services that we were
required to provide to ARI First LLC and ARI Third LLC,
subsidiaries of ARL, under management agreements we entered into
with those companies in July and October 2004. Through
March&nbsp;31, 2005 we paid to ACF and, from March&nbsp;31, 2005
through June&nbsp;30, 2005 we paid to ARL, the leasing and
management fees we received from ARI First LLC and ARI Third LLC
under those management agreements. In 2004 and the six months
ended June&nbsp;30, 2005, we incurred $1.0&nbsp;million and
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]1.1&nbsp;million,
respectively, of cost of railcar services in connection with
these arrangements. These arrangements were terminated on
June&nbsp;30, 2005, when we assigned our management agreements
for ARI First LLC and ARI Third LLC to ARL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Administrative and other support expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
During the current and last three fiscal years, ACF and ARL have
provided us outsourced services related to our information
technology needs as well as other administrative and support
services. We incurred $0.5&nbsp;million of expenses in each of
2002, 2003 and 2004 in connection with these arrangements, and
in the first six months of 2005 we incurred $0.9&nbsp;million of
such expenses. The increased expenses in 2005 reflect additional
information technology services not provided in previous years.
Until October 2004, ACF received the majority of our cash
receipts and disbursed our cash on our behalf and maintained an
intercompany receivable/payable which bore interest at
ACF&#146;s internal cost of funds in accordance with an
administration agreement between ACF and us, which is described
below. We have also subleased or leased our Corbitt
manufacturing facility and our headquarters facility, both of
which are located in St. Charles, Missouri, from affiliates. The
underlying properties are owned by an affiliate of James Unger,
our chief executive officer. In each of 2002, 2003 and 2004, our
expenses included $0.4&nbsp;million of payments required to be
made to affiliates associated with our use of the Corbitt
manufacturing facility and St. Charles headquarters facility. In
the six months ended June&nbsp;30, 2005, our expenses included
$0.2&nbsp;million of rental and related expense for these
facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amounts due to affiliates</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As of June&nbsp;30, 2005, net amounts due to affiliates were
$21.6&nbsp;million relating to the above referenced transactions
and included:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">an amount payable to ACF of
    $1.3&nbsp;million;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">an amount payable to ARL of
    $0.6&nbsp;million;
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 105</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">an amount payable of
    $7.3&nbsp;million to Arnos Corp., a company beneficially owned
    and controlled by Mr.&nbsp;Icahn, representing the principal and
    interest due under a demand note in the principal amount of
    $7.0&nbsp;million that we issued in connection with a working
    capital loan from Arnos Corp.;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">An amount payable of
    $12.4&nbsp;million to ACF Industries Holding Corp., a company
    beneficially owned and controlled by Mr.&nbsp;Icahn,
    representing the principal and interest due under a demand note
    in the principal amount of $12.0&nbsp;million that we issued in
    connection with our purchase of Castings LLC from ACF Industries
    Holding Corp.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to use a portion of the net proceeds of this offering
to repay in full the notes to Arnos Corp. and ACF Industries
Holding Corp.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>1994 ACF asset transfer</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On October&nbsp;1, 1994, under an asset transfer agreement with
ACF, we acquired from ACF properties and assets used in its
railcar components and equipment manufacturing business and its
railcar servicing business at specified locations and certain
intellectual property rights associated with the transferred
assets and businesses, as well as specified assets used in the
manufacture and sale of industrial size mixing bowls. We refer
to this transaction as the 1994 ACF asset transfer. The
properties covered by this agreement included the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Components manufacturing</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Repair plants</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>plant and warehouse</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Mobile units</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    Bude, Mississippi</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Jackson, Missouri</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Addis, Louisiana</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Milton, Pennsylvania</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Convent, Louisiana</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tennille, Georgia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Ingleside, Texas</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    North Kansas City, Missouri</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Deer Park, Texas</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Longview, Texas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Taft, Louisiana</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Pursuant to the 1994 ACF asset transfer, ACF retained and agreed
to indemnify us for certain liabilities and obligations relating
to ACF&#146;s conduct of business and ownership of the assets at
these locations prior to their transfer to us, including
liabilities relating to employee benefit plans, subject to
exceptions for transferred employees described below, workers
compensation, environmental contamination and third-party
litigation. As part of the 1994 ACF asset transfer, we agreed
that the ACF employees transferred to us would continue to be
permitted to participate in ACF&#146;s employee benefit plans
for so long as we remained a part of ACF&#146;s controlled
group, and we further agreed to assume the ongoing expense for
such employees&#146; continued participation in those plans. In
the event that we cease to be a member of ACF&#146;s controlled
group, ACF is required to terminate the further accrual of
benefits by our transferred employees under its benefit plans,
and we and ACF are required to cooperate to achieve an
allocation of the assets and liabilities of the benefits plans
accrued after the 1994 ACF asset transfer with respect to each
of our and ACF&#146;s employees as we and ACF deem appropriate.
Upon completion of the offering we will no longer be a part of
ACF&#146;s controlled group. We are currently reviewing with ACF
alternatives to address the allocation of assets and liabilities
once we are no longer a part of ACF&#146;s controlled group,
including the continuation of benefits for our employees under
ACF&#146;s plans, as well as the division of assets and
liabilities under those plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As of December&nbsp;31, 2004, we estimate that the total
retained liabilities of ACF under the asset transfer agreement
were $11.1&nbsp;million, primarily relating to employee benefit
plan obligations. In 2002, 2003 and 2004, ACF paid
$0.7&nbsp;million, $0.6&nbsp;million and $1.4&nbsp;million,
respectively, relating to the retained
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 106</B>
</DIV>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
liabilities. In the six months ended June&nbsp;30, 2005, ACF
paid $0.3&nbsp;million relating to the retained liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with the 1994 ACF asset transfer, we entered into
the following administrative and operating agreements with ACF,
effective as of October&nbsp;1, 1994:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">manufacturing services agreement;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">license agreement from ACF;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">license agreement to ACF;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">administration agreement;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">railcar servicing
    agreement;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">supply agreement.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Only the manufacturing services agreement and the two license
agreements remain in effect. The other agreements were all
terminated as of April&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Manufacturing Services Agreement.</I></B> Under the
manufacturing services agreement, ACF has agreed to manufacture
and, upon our instruction, to distribute various railcar
components and industrial size mixing bowls using assets that we
acquired pursuant to the 1994 ACF asset transfer but were
retained by ACF at its Milton, Pennsylvania and Huntington, West
Virginia manufacturing facilities. This equipment included
presses and related equipment that were impracticable to move to
our premises. ACF transferred its Milton, Pennsylvania repair
facility, but not its Milton, Pennsylvania manufacturing
facility, to us under the 1994 asset transfer. Under our
manufacturing services agreement, ACF is required to maintain
and insure the equipment during the term of the manufacturing
services agreement and is permitted to use the equipment for its
own purposes in the ordinary course of business, provided that
it does not interfere with ACF&#146;s timely performance of the
manufacturing services under this agreement. Upon termination of
the agreement, ACF is required, at our expense, to remove and
deliver the equipment to any site designated by us in the
continental U.S.&nbsp;As payment for these services, we agreed
to pay ACF its direct costs, including the cost of all raw
materials not supplied by us, and a reasonable allocation of
overhead expenses attributable to the services, including the
cost of maintaining employees to provide the services. We
believe that payments to ACF under this arrangement are
comparable to the cost we would have paid to an independent
third party to manufacture such components. This agreement
remains in effect and automatically renews on an annual basis
unless we provide six months prior written notice of
termination. There is no right of termination for ACF under this
agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>License Agreement from ACF.</I></B> Under a license
agreement with ACF, ACF granted us a non-exclusive, perpetual,
royalty-free license to the patents and other intellectual
property owned by it, which could be used by us in the conduct
of our business, but did not exclusively relate to our business,
including the 12 patents and one patent application, now issued
as a patent, listed in that agreement. Of these patents, ten
patents have expired and the remaining three patents have
expiration dates ranging from 2012 to 2013. These remaining
patents primarily relate to pneumatic outlets and railcar hopper
gaskets. Under this agreement, we could not use the licensed
patents for the production of railcar components for third
parties without the consent of ACF. In 1997, ACF transferred the
patents covered by this license to us. This license is not
assignable by either party, without the prior consent of the
other, except in connection with the sale of substantially all
of either party&#146;s business. This agreement remains in
effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>License Agreement to ACF.</I></B> Under a license
agreement with ACF, we granted ACF a non-exclusive, perpetual,
royalty-free license to the intellectual property exclusively
relating to our business that was
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 107</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
transferred to us in the 1994 asset transfer. There are no
restrictions on ACF&#146;s use of the information licensed under
this agreement. This license is not assignable by either party,
without the prior consent of the other, except in connection
with the sale of substantially all of either party&#146;s
business. This agreement remains in effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Administration Agreement.</I></B> Under an administration
agreement with ACF, ACF agreed to provide us information
technology services and other administrative services. We agreed
to pay ACF its direct costs, including a reasonable allocation
of overhead expenses attributable to providing the services,
including the cost of maintaining employees to provide the
services. This agreement was terminated on April&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Railcar Servicing Agreement.</I></B> Under a railcar
servicing agreement with ACF, we agreed to provide railcar
repair and maintenance services for railcars owned or managed by
ACF and leased or held for lease by ACF, to provide ACF with
fleet management services and to provide ACF with consulting
services on safety and environmental matters. For maintenance
services, ACF paid us for components at our actual costs plus
15% and for our labor at a fixed rate that has been adjusted
from time to time to reflect market conditions. Painting, lining
and cleaning services were billed at current market rates and
fleet management services were billed at a monthly fee per
railcar serviced. Other services were billed at our direct costs
plus 5.0%. Our direct costs included a reasonable allocation of
overhead expenses attributable to providing the services,
including the cost of maintaining employees to provide the
services. This agreement was terminated on April&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Supply Agreement.</I></B> Under a supply agreement with
ACF, we agreed to manufacture and sell to ACF specified
components. In addition, under this agreement, we agreed to sell
ACF other components manufactured by us on terms not less
favorable than the terms on which we sell those products to
third parties. We sold specified components under the agreement
for a price equal to the then current market price or our cost
plus a gross profit percentage. This gross profit percentage has
been revised annually and has ranged from 5.0% to 25.0%,
depending upon the component and which one of our facilities
manufactured the product. This agreement was terminated on
April&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2005 Consulting agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On April&nbsp;1, 2005 we entered into two business consultation
agreements with ACF, whereby each of us has agreed to provide
services to the other. ACF has agreed to assist us in labor
litigation, labor relations support and consultation, and labor
contract interpretation and negotiation. In 2005, we anticipate
that we will require the services of at least one ACF employee
for no more than 20&nbsp;hours a week under this agreement. We
pay $150&nbsp;per hour for these services. We have agreed to
provide ACF with engineering consultation and advice. In 2005,
we anticipate that ACF will require the services of at least one
of our employees for no more than 20&nbsp;hours a week under
this agreement. ACF is required to pay $150&nbsp;per hour for
these services. We do not believe that either party will be
required to pay more than $60,000&nbsp;per year under either of
these agreements. These agreements remain in effect through
March 2015, subject to the right of either party to terminate
the agreement on 30&nbsp;days notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>1998 Loan to ACF</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In October 1998, we loaned $57.2&nbsp;million to ACF. This loan
accrued interest at a variable rate, adjusted quarterly, equal
to LIBOR plus 3.0% or the base rate of the Industrial Bank of
Japan plus 1.5%, as elected by ACF. This loan was repaid in full
in 2004 in connection with the formation of ARL. See
&#147;Certain Transactions Involving American Railcar Leasing
LLC&#151; Formation of ARL and Related Contributions.&#148; In
2002, 2003 and 2004, we recorded interest income relating to
this loan of $2.8&nbsp;million, $2.5&nbsp;million and
$1.8&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 108</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Guarantees of indebtedness by ACF and other related
parties</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Industrial Revenue Bonds.</I></B> ACF and ACF Industries
Holding Corp., an indirect parent of ACF, have guaranteed our
obligations under our industrial revenue bonds. As of
June&nbsp;30, 2005, $8.5&nbsp;million was outstanding under
these bonds. These bonds are payable through 2011 and, as of
June&nbsp;30, 2005, bear interest at rates ranging from [7.75%
to 8.5]%. We intend to use a portion of the net proceeds of this
offering to repay these bonds in full. ACF and ACF Industries
Holding Corp. will be released from their guarantees upon the
repayment of the bonds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Senior Secured Credit Facility.</I></B> In 1998, we
obtained a senior secured credit facility from the Industrial
Bank of Japan, as administrative agent, with a total
availability of $150&nbsp;million. This facility was guaranteed
by ACF, ACF Industries Holding Corp., an indirect parent of ACF,
and NMI Holding Corp., a wholly owned subsidiary of ACF
Industries Holding Corp. This facility was repaid in full in
July 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Subordinated Note.</I></B> In 1998, we obtained a
$10.0&nbsp;million loan from Boeing Financial under a promissory
note. This note was guaranteed by ACF and ACF Industries Holding
Corp. and was repaid in full in July 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>CIT Equipment Lease.</I></B> In 1999, we entered into a
master equipment lease agreement with CIT that was guaranteed by
ACF. This lease relates to equipment that we use to manufacture
railcars and railcar components at our Paragould, Marmaduke,
Jackson and Kennett facilities. The interest rate on the lease
is LIBOR plus 2.75% (6.1% at June&nbsp;30, 2005). As of
June&nbsp;30, 2005, a balance of $8.2&nbsp;million was
outstanding under this lease, including amounts subject to our
purchase option at the expiration of the lease term. The lease
expires in November 2005. While we are not committed to do so,
we currently intend to exercise our purchase option under this
lease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Interest rate swap contract</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2001, we entered into a derivative instrument in the form of
an interest rate swap contract with an underlying notional
amount of $49.0&nbsp;million. We assigned this contract to ACF,
effective as of the date of its execution, and all rights and
obligations of this contract were passed through to ACF. This
contract expired on February&nbsp;28, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Raw material and other product purchase agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We, together with ACF, have entered into agreements for the
purchase of products by each of us, including steel and gas.
Under these agreements, we and ACF are entitled to favorable
pricing based upon the aggregate amount of our purchases. We
allocate the benefits under these purchase agreements
proportionally based upon the amount of products that each of us
purchases during the applicable period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Corbitt equipment lease and purchase</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We leased from ACF leasehold improvements and equipment that we
placed in service at our Corbitt manufacturing facility in St.
Charles, Missouri from July&nbsp;1, 2001 through June&nbsp;1,
2003. During 2002, 2003 and 2004, we paid ACF $0.3&nbsp;million,
$0.3&nbsp;million and $0.4&nbsp;million, respectively, for the
use of these leasehold improvements and equipment. We did not
pay any rent for these assets in 2005. Rather, on March&nbsp;31,
2005, we purchased these assets from ACF for $2.8&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 109</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TRANSACTIONS INVOLVING AMERICAN RAILCAR LEASING
LLC</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Formation of ARL and related contributions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We formed ARL as our wholly owned subsidiary in July 2004. As
part of the formation of ARL and its further capitalization, ACF
and certain of its subsidiaries transferred to us and ARL
railcars and related leases, as well as equity in certain of
ACF&#146;s subsidiaries that supported ACF&#146;s leasing
business, in exchange for shares of our new preferred stock and
preferred interests of ARL. We, in turn, contributed the assets
we so received to ARL and made a cash investment in ARL of
$25.0&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with these transactions, all of which occurred in
2004:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">we were issued all the common
    interests in ARL;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">ACF and its subsidiaries were
    issued all of ARL&#146;s B-1 preferred interests;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">Vegas Financial Subsidiary Corp.,
    a company beneficially owned and controlled by Mr.&nbsp;Icahn,
    was issued all of ARL&#146;s B-2 preferred interests in exchange
    for an investment of $40&nbsp;million;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">we issued 34,500&nbsp;shares of
    our new preferred stock to ACF and its subsidiaries;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our $57.2&nbsp;million loan to ACF
    was repaid in full.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The B-1 and B-2 preferred interests of ARL were convertible into
shares of our new preferred stock. On June&nbsp;30, 2005, the
terms of these interests were modified, among other things, to
eliminate this conversion feature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The ARL exchange</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On June&nbsp;30, 2005, we transferred all our interest in ARL,
consisting of all its outstanding common A units, pro rata, to
the holders of our new preferred stock in exchange for the
redemption of 116,116&nbsp;shares of our new preferred stock
held by them, including all dividends accumulated on those
shares. The value of the total liquidation preference and
accumulated dividends on the shares of new preferred stock
redeemed in this transaction was $125.0&nbsp;million. All of the
shares of our new preferred stock are held by companies
beneficially owned and controlled by Mr.&nbsp;Icahn. We refer to
this transaction as the ARL exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Agreements relating to ARL and its subsidiaries</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2004 and 2005 we entered into the following agreements
relating to ARL and its subsidiaries:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">railcar management agreements with
    ARI First LLC and ARI Third LLC;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">ACF administration agreement;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">ARL railcar services agreement;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">ARL railcar servicing agreement;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">ARL services agreement;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">guarantee of ARI Second LLC loan
    agreement.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The ARL railcar servicing agreement and the ARL services
agreement remain in effect. All other agreements were terminated
or assigned to ARL at various times during 2005, as described
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Railcar Management Agreements with ARI First LLC and ARI
Third LLC.</I></B> On July&nbsp;20, 2004, we entered into a
railcar management agreement with ARI First LLC and on
October&nbsp;7, 2004 we entered into a railcar management
agreement with ARI Third LLC. ARI First LLC and ARI Third LLC
are wholly owned subsidiaries of ARL that hold railcars forming
a portion of the railcar lease fleet owned
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 110</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
by ARL and its subsidiaries. Under these railcar management
agreements, we provided ARI First and ARI Third with marketing,
leasing, administration, maintenance, recordkeeping and
insurance services for the railcars owned by ARI First and ARI
Third. ARI First and ARI Third paid us a monthly management fee,
based upon the number of railcars covered, and reimbursed us for
all costs incurred in performing these services. We assigned
this agreement to ARL effective June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>ACF Administration Agreement.</I></B> On July&nbsp;20,
2004, we entered into an ACF administration agreement with ACF
and ARL. Under this agreement, ACF agreed to provide us with
railcar management services which we were required to provide
under the management agreements with ARI First LLC and ARI Third
LLC described above (except maintenance, insurance and risk
management services). In addition, ACF provided us with lease
administration services for the railcars owned by ARI First LLC
and ARI Third LLC, respectively. Under this agreement, we were
required to pay ACF a per railcar monthly fee equal to the per
railcar fee that we were receiving under our railcar management
agreements with ARI First LLC and ARI Third LLC. This Agreement
terminated on March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>ARL Railcar Services Agreement.</I></B> On April&nbsp;1,
2005, we entered into a railcar services agreement with ARL.
Under this agreement, ARL provided us with railcar services
which we were required to provide to ARI First and ARI Third
under our railcar management agreements with ARI First LLC and
ARI Third LLC. Under this agreement, we were required to pay ARL
all compensation that we received from ARI First and ARI Third
under our railcar management agreements with them. This
agreement was terminated July&nbsp;1, 2005 when we assigned our
railcar management agreements with ARI First LLC and ARI Third
LLC to ARL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>ARL Railcar Servicing Agreement.</I></B> On April&nbsp;1,
2005, we entered into a railcar servicing agreement with ARL.
Under this agreement, we provide ARL with substantially the same
services that we had previously provided to ACF under our 1994
railcar servicing agreement with ACF described above under
&#147;Certain Transactions with ACF Industries, LLC&#151; 1994
ACF Asset Transfer&#151; Railcar Servicing Agreement,&#148; for
railcars that ARL or its affiliates own or manage. Under the
agreement with ARL, ARL is required to pay us a monthly fee,
based upon the number of railcars covered, plus a charge for
labor, components and materials. For materials and components we
manufacture, ARL pays us our current market price, and for
materials and components we purchase, ARL pays us our purchasing
costs plus 15%. For painting, lining and cleaning services, ARL
pays the then current market rate. For other labor costs, ARL
pays us a fixed hourly fee. We have further agreed that the
charges for our services will be on at least as favorable terms
as our terms with any other party for similar purposes. The per
railcar fees paid to us through June&nbsp;30, 2005 under the
railcar management agreements for ARI First LLC and ARI Third
LLC are credited against the amounts due us under the ARL
railcar servicing agreement. This agreement extends through
June&nbsp;30, 2006, and is automatically renewable for
additional one year periods unless either party gives at least
six months prior notice of termination. If we elect to terminate
this agreement, we must pay a termination fee of
$0.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>ARL Services Agreement.</I></B> On April&nbsp;1, 2005, we
entered into a services agreement with ARL. Under this
agreement, ARL has agreed to provide us certain information
technology services, rent and building services and limited
administrative services. The rent and building services includes
our use of our headquarters space which is leased by ARL from an
affiliate of James J. Unger, our President and Chief Executive
Officer. See &#147;Certain Transactions Involving James J.
Unger.&#148; Also under this agreement, we have agreed to
provide purchasing and engineering services to ARL. Each party
is required to pay the other a fixed annual fee for each of the
listed services under this agreement. The total annual fees that
we are required to pay ARL for all services that ARL is
providing us, under this agreement is $2.2&nbsp;million, and the
total annual fees that ARL is required to pay us for all
services that we are providing ARL under this agreement is
$210,000. Either party may terminate any of these
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 111</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
services, and the associated costs for those services, on at
least six months prior notice at any time prior to the
termination of the agreement on December&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Guarantee of ARI Second LLC Loan Agreement.</I></B> On
July&nbsp;20, 2004, ARI Second LLC, a subsidiary of ARL, entered
into a loan agreement with HSH Nordbank AG, under which ARI
Second borrowed $64.3&nbsp;million. We guaranteed ARI Second
LLC&#146;s obligations under this loan agreement. This loan was
repaid in full in October 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Health and welfare benefit plans</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Employees of ARL participate in our 401(k) plan and certain of
our health and welfare benefit plans. ARL is responsible for the
costs and benefits for its employees under these plans. As part
of the ARL Exchange, ARL is in the process of establishing its
own 401(k) and health and welfare benefit plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TRANSACTIONS INVOLVING OHIO CASTINGS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In February 2003, Castings LLC, a wholly owned subsidiary of ACF
Industries Holding Corp., a company beneficially owned and
controlled by Mr.&nbsp;Icahn, acquired a one-third ownership
interest in Ohio Castings Company, LLC, a joint venture with
affiliates of two established railcar industry companies, Amsted
Industries, Inc. and The Greenbrier Companies, Inc. Ohio
Castings operates two foundries that produce heavy castings.
Effective as of January&nbsp;1, 2005, ACF Industries Holding
Corp. transferred its interest in Castings LLC to us for total
consideration of $12.0&nbsp;million, represented by a promissory
note bearing an interest rate equal to the prime rate plus 0.5%,
payable on demand. In connection with this transfer, we agreed
to assume all future liabilities related to and arising from ACF
Industries Holding Corp.&#146;s investment in Castings LLC,
including the guarantee of Castings LLC&#146;s obligations to
Ohio Castings, the guarantee of bonds in the amount of
$10.0&nbsp;million issued by the State of Ohio to one of Ohio
Castings&#146; subsidiaries, of which $8.1&nbsp;million was
outstanding as of June&nbsp;30, 2005, and the guarantee of a
$2.0&nbsp;million state loan that provides for purchases of
capital equipment, of which $1.0&nbsp;million was outstanding as
of June&nbsp;30, 2005. The two other partners of Ohio Castings
have made similar guarantees of these obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have entered into supply agreements with an affiliate of
Amsted Industries, Inc., an affiliate of one of our Ohio
Castings joint venture partners, to purchase up to 25% and 33%,
respectively, of the products produced at each of two foundries
being operated by Ohio Castings. We pay Castings LLC a fee in
connection with those purchases. Our purchases and payments
relating to these purchases and fees are set forth above under
&#147;&#151;Certain Transactions with ACF Industries LLC and
American Railcar Leasing LLC&#151; Manufacturing
Operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TRANSACTIONS WITH MR. ICAHN AND OTHER RELATED
ENTITIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Carl C. Icahn and ARL loans</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In October 2004, we advanced Mr.&nbsp;Icahn $165.0&nbsp;million
under a promissory note due in 2007 and bearing interest at the
prime plus 1.75% (8.0% at June&nbsp;30, 2005). At the same time,
we borrowed $130.0&nbsp;million from ARL represented by a
promissory note due in 2007 and bearing interest at the prime
rate plus 1.5%. In January 2005, we transferred our entire
interest in the Icahn note to ARL in exchange for additional
common interests in ARL and in satisfaction of our obligations
under the ARL note. In 2004 and the six months ended
June&nbsp;30, 2005, we recorded interest income of
$4.4&nbsp;million and $0.8&nbsp;million, respectively, and
interest expense of $3.7&nbsp;million and $0.6&nbsp;million,
respectively, relating to these notes.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 112</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Arnos Corp. note&nbsp;payable</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In December 2004, we borrowed $7.0&nbsp;million from Arnos
Corp., a company beneficially owned and controlled
Mr.&nbsp;Icahn, under a promissory note. The note bears interest
at the prime rate plus 1.75% (8.0% at June&nbsp;30, 2005) and is
payable on demand. We intend to use a portion of the net
proceeds of this offering to repay this loan in full.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Transactions with Vegas financial corp.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Purchase of Mandatorily Redeemable Payment-in-Kind
Preferred Stock.</I></B> We issued to Vegas Financial Corp., a
company beneficially owned and controlled by Mr.&nbsp;Icahn,
15,000&nbsp;shares of our mandatorily redeemable payment-in-kind
preferred stock, known as PIK preferred stock, for
$15.0&nbsp;million in June 2002, and 10,000&nbsp;shares of PIK
preferred stock for $10.0&nbsp;million in June 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Conversion into and Purchase of New Preferred
Stock.</I></B> In July 2004, Vegas Financial Corp. converted all
of its PIK preferred stock, consisting of 95,517.04&nbsp;shares
of PIK preferred stock, representing all of the shares of PIK
preferred stock outstanding, into 96,171&nbsp;shares of our new
preferred stock. In addition, Vegas Financial Corp.
simultaneously purchased an additional 67,500&nbsp;shares of new
preferred stock for $67.5&nbsp;million. We intend to use the net
proceeds of this offering to, among other things, redeem all of
the outstanding shares and pay all accrued dividends on our new
preferred stock, including those held by Vegas Financial Corp.
As a result, Vegas Financial Corp, will receive
$89.2&nbsp;million of the net proceeds of this offering. See
&#147;Redemption of New Preferred Stock.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Transactions with Hopper investments LLC</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2004, Hopper Investments LLC, a company beneficially owned
and controlled by Mr.&nbsp;Icahn, paid $42.5&nbsp;million for
195&nbsp;shares of our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Transactions with Philip environmental services corp.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We engaged Philip Environmental Services Corp., an environmental
consulting company beneficially owned and controlled by
Mr.&nbsp;Icahn, to provide environmental consulting services to
us. In the six months ended June&nbsp;30, 2005 we incurred
$158,153 of expenses associated with that engagement. We have
continued to use Philip Environmental Services Corp. to assist
us in our environmental compliance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN TRANSACTIONS INVOLVING JAMES J. UNGER</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Facilities leasing arrangements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our headquarters facilities and our Corbitt manufacturing
facilities in St. Charles, Missouri are owned by St. Charles
Properties, an entity controlled by James J. Unger, our
President and Chief Executive Officer. Under two leases dated
May&nbsp;1, 1995 and March&nbsp;1, 2001, St. Charles Properties
leased these facilities to ACF. We reimbursed ACF for our
proportionate share of the cost of renting these facilities
through April&nbsp;1, 2005. On that date, ACF assigned the
March&nbsp;1, 2001 lease, covering our Corbitt manufacturing
facilities, to us and the May&nbsp;1, 1995 lease, covering our
and ARL&#146;s headquarters facility, to ARL. We continue to
maintain our headquarters in the space that has been leased to
ARL. Under our services agreement with ARL, we pay ARL
$459,804&nbsp;per year, which represents the estimate of our
proportionate share of ARL&#146;s costs for the space that we
use under the lease, including rent and building services. The
terms of the underlying leases are as follows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Under the terms of the lease agreement assigned to ARL, ARL has
leased approximately 78,000&nbsp;square feet of office space.
The lease expires on December&nbsp;31, 2005 with an option to
renew the lease for one
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 113</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
additional five-year term. Rent is payable monthly in the amount
of $20,833. If ARL exercises its option to renew the lease, the
monthly rent will be $25,000. Under the terms of the lease, ARL
pays one-tenth of the property tax and insurance expenses levied
upon the property. In addition, ARL must pay 17% and 54% of any
increase in taxes and property insurances costs, respectively.
ARL is also required to repair and maintain the facility at its
costs and expense. We use approximately 46% of the office space
leased by ARL under this agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Under the terms of the lease agreement assigned to us, we occupy
approximately 128,000&nbsp;square feet of space which we use for
our Corbitt manufacturing facility. The lease expires on
February&nbsp;28, 2006 with an option to renew the lease for two
successive five-year terms. Rent is payable monthly in the
amount of $27,083. The maximum monthly rent for the first and
second renewal periods is $29,763 and $32,442&nbsp;per month,
respectively. We are required to pay 27% of all tax increases
assessed or levied upon the property and the cost of the
utilities we use, as well as repair and maintain the facility at
our expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2002, 2003 and 2004, we incurred $0.4&nbsp;million of costs
to affiliates in each of 2002, 2003 and 2004, under these two
leasing arrangements, and in the six months ended June&nbsp;30,
2005, we incurred $0.2&nbsp;million of such costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Option to purchase common stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with this offering, Mr.&nbsp;Unger has advised us
that he will exercise an option granted to him to purchase
<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;</B>shares
of our common stock, after giving effect to the stock split, at
a price of
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share. See &#147;Management&#151; Executive compensation&#151;
Employment and noncompetition agreements&#148; for more
information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Industrial revenue bonds</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Mr.&nbsp;Unger and his wife own $405,000 of the industrial
revenue bonds issued by Paragould, Arkansas. [Mr.&nbsp;Unger and
his wife purchased these bonds at the time of their original
issuance on the same terms that all non-affiliated entities
purchased the bonds.] We intend to use the net proceeds of this
offering to repay in full the amounts due under all of our
industrial revenue bonds. Mr.&nbsp;Unger and his wife will
receive approximately $0.4 upon our repayment of the amounts due
under the industrial revenue bonds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REGISTRATION RIGHTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to enter into a new registration rights agreement,
which will become effective upon the completion of this
offering, with each of our existing stockholders as of
immediately prior to the completion of this offering. The
stockholders that are party to the new registration rights
agreement will have the right to require us, subject to certain
terms and conditions, to register their shares of our common
stock under the Securities Act of 1933, as amended, at any time.
The stockholders collectively will have an aggregate of two
demand registration rights. In addition, if we propose to
register any additional shares of our capital stock under the
Securities Act, these stockholders will be entitled to customary
&#147;piggyback&#148; registration rights, which will entitle
them to include their shares of common stock in a registration
of our securities for sale by us or by other security holders.
The registration rights granted under the new registration
rights agreement will be subject to customary exceptions and
qualifications and compliance with certain registration
procedures. Following completion of this offering,
<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</B>shares
of common stock, representing
<B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</B>%
of our outstanding shares of common stock following completion
of this offering, will be entitled to the benefits of these
registration rights.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 114</B>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Certain relationships and related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FUTURE TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
All future transactions, if any, between us and any of our
officers, directors and principal stockholders and their
affiliates, as well as any transactions between us and any
entity with which our officers, directors or principal
stockholders are affiliated, will be approved in accordance with
the then-current SEC rules and regulations, Nasdaq stock market
rules and applicable law governing the approval of the
transactions.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 115</B>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Principal stockholders
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table sets forth information known to us regarding
the beneficial ownership of our common stock calculated as of
June&nbsp;30, 2005, and as adjusted to reflect the Transactions
and the sale of the common stock offered hereby, by:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">each stockholder who is known by
    us to own beneficially more than 5% of our common stock;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our chief executive officer and
    our other most highly compensated executive officers;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">each of our directors;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">all of our executive officers and
    directors as a group.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The number of shares beneficially owned by each stockholder,
director or officer is determined according to the rules of the
SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. The number of shares
and the percentage ownership of each stockholder prior to this
offering is calculated based on
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock outstanding immediately after the stock
split. The percentage ownership of each stockholder after the
offering is calculated based on
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock outstanding, which is derived from the
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock outstanding after the stock split and prior
to this offering, plus the
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock that we intend to issue in this offering,
but without giving effect to the underwriters&#146; exercise of
the over-allotment option, and the
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock that we expect to issue to James J. Unger,
our president and chief executive officer, upon the exercise of
his option to purchase our common stock. See
&#147;Management&#151; Executive compensation&#151; Employment
and noncompetition agreements.&#148; To the extent that the
over-allotment is exercised, we will sell up to an aggregate of
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;additional
shares of our common stock.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Shares of Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Shares of Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Percentage of Common</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Stock Beneficially</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Stock Beneficially</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Stock Beneficially Owned</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Owned Prior to this</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Owned After this</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>After this Offering</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Offering</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Offering</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Assuming Full Exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>of the Over-Allotment</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name of beneficial owner</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Percent</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Percent</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Option</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Carl C.
    Icahn<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(3)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.5%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foundation for a Greater
    Opportunity<SUP style="font-size: 85%; vertical-align: text-top">(1)(3)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.5%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    James J.
    Unger<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William P.
    Benac<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan C.
    Lullman<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Vincent J.
    Intrieri<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jon F.
    Weber<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Keith
    Meister<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William L.
    Finn<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All directors and executive officers as a group (7 persons)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;<I>*</I></TD>
    <TD align="left">
    <I>Represents beneficial ownership of less than 1%.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>(1)</I></TD>
    <TD align="left">
    <I>The address of such person is c/o&nbsp;Icahn Associates Corp.
    and Affiliated Companies, 767 Fifth Avenue, 47th&nbsp;Floor, New
    York, New York 10153</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 116</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>Principal stockholders</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>(2)</I></TD>
    <TD align="left">
    <I>Mr.&nbsp;Icahn beneficially owns 540 of these shares
    directly. The remaining 195 of these shares are owned by Hopper
    Investments, LLC, which is a Delaware limited liability company
    that is wholly owned by Barberry Corp., which is a Delaware
    corporation that is wholly owned by Mr.&nbsp;Icahn.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(3)</I></TD>
    <TD align="left">
    <I>We have been advised that affiliates of Carl C. Icahn, our
    principal beneficial stockholder and the chairman of our board
    of directors, are currently negotiating with the Foundation for
    a Greater Opportunity to acquire all of our common stock held by
    the Foundation prior to consummation of this offering. If that
    purchase occurs, we expect that Mr.&nbsp;Icahn will beneficially
    own 1,195&nbsp;shares, or 100%, of our common stock prior to
    this offering,
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares,
    or
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]%,
    of our common stock after this offering, and
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares,
    or
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]%,
    of our common stock after this offering, assuming full exercise
    of the over-allotment option. See &#147;Risk Factors&#151; Risks
    related to the purchase of our common stock in the
    offering&#151; Upon the closing of this offering we may be a
    &#147;controlled company&#148; within the meaning of the Nasdaq
    National Market rules and you will not have the same protections
    afforded to shareholders of other companies that are subject to
    all of the Nasdaq National Market corporate governance
    requirements.&#148;</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(4)</I></TD>
    <TD align="left">
    <I>The address of such person is c/o&nbsp;American Railcar
    Industries, Inc., 100 Clark Street, St. Charles, Missouri
    63301.</I></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><I>(5)</I></TD>
    <TD align="left">
    <I>Mr.&nbsp;Finn retired effective May&nbsp;1, 2005.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 117</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='114'></A>
</DIV>

<!-- link1 "Description of capital stock" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Description of capital stock
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following description of our capital stock is subject to The
General and Business Corporation Law of Missouri and to
provisions contained in our restated articles of incorporation
and restated bylaws that will be in effect upon the closing of
this offering, copies of which are exhibits to our registration
statement on Form&nbsp;S-1 of which this prospectus forms a
part. Please refer to such exhibits for a detailed description
of the provisions thereof summarized below. See &#147;Where you
can find more information.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AUTHORIZED AND OUTSTANDING CAPITAL STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our authorized capital stock as of June&nbsp;30, 2005 consisted
of 12,000&nbsp;shares of common stock, 99,000&nbsp;shares of
preferred stock, with a par value of $0.01&nbsp;per share, which
we refer to as our mandatorily redeemable preferred stock,
150,000&nbsp;shares of payment-in-kind preferred stock, with a
par value of $0.01&nbsp;per share, which we refer to as our PIK
preferred stock, and 500,000&nbsp;shares of new preferred stock,
with a par value of $0.01&nbsp;per share. As of June&nbsp;30,
2005, there were 1,195&nbsp;shares of our common stock
outstanding, one share of our mandatorily redeemable preferred
stock outstanding, no shares of our PIK preferred stock
outstanding and 73,171&nbsp;shares of our new preferred stock
outstanding. As of June&nbsp;30, 2005, our shares of common
stock were held of record by a total of three stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prior to the closing of this offering, we will amend our
articles of incorporation to authorize us to issue up to
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock, with a par value of $0.01&nbsp;per share, and
up to
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of preferred stock, with a par value of $0.01&nbsp;per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Immediately prior to the closing of this offering we will effect
a
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]-for-one
split of our common stock. Following this stock split, and prior
to our issuance of shares of common stock in this offering,
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of our common stock will be outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
After giving effect to our issuance of
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock in this offering, we will have
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock outstanding and
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock outstanding if the underwriters exercise their
over-allotment option in full.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to use the net proceeds of this offering to, among
other things, redeem all of the outstanding shares of our
preferred stock. Our amended articles of incorporation will not
authorize the issuance of shares of mandatorily redeemable
preferred stock, PIK preferred stock or new preferred stock.
Although there will be
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of preferred stock authorized for issuance, there will be no
shares of any series of preferred stock outstanding following
the completion of this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Common stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The holders of our common stock are entitled to one vote for
each share held of record on the applicable record date on all
matters voted on by our shareholders. Except as otherwise
required by law or provided in any resolution adopted by our
board of directors with respect to any series of preferred
stock, the holders of our common stock exclusively possess all
voting power. All holders of our common stock have the same
voting rights and vote together as a single class. Our restated
articles of incorporation do not provide for cumulative voting
in the election of directors or any preemptive rights to
purchase or subscribe for any stock or other securities, and
there are no conversion rights or sinking fund or redemption
provisions with respect to our common stock. Consequently,
holders of more than 50% of the shares of our common stock are
able to elect all directors eligible for election each year.
Holders of our common stock are entitled to dividends and other
distributions out of assets legally available if and when
declared by our board of directors. Upon our liquidation,
dissolution or
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 118</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Description of capital stock</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
winding up, the holders of our common stock are entitled to
share pro rata in the distribution of all of our assets
remaining available for distribution after satisfaction of all
liabilities, including any prior rights of any preferred stock
which may be outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Preferred stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Upon completion of this offering, our board of directors,
subject to limitations prescribed by law, will be permitted to
establish one or more series or preferred stock and to
determine, with respect to any series of preferred stock, the
terms and rights of that series, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the designation of the series;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the number of shares of the
    series, which our board may, except where otherwise provided in
    the preferred stock designation, increase and decrease, but not
    below the number of shares then outstanding;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">whether dividends, if any, will be
    cumulative or non-cumulative and the dividend rate of the series;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the dates at which dividends, if
    any, will be payable;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the redemption rights and price or
    prices, if any, for shares of the series;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the terms and amounts of any
    sinking fund provided for the purchase or redemption of shares
    of the series;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the amounts payable on shares of
    the series in the event of any voluntary or involuntary
    liquidation, dissolution or winding-up of the affairs of our
    company;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">whether the shares of the series
    will be convertible into shares of any other class or series, or
    any other security, of our company or any other corporation,
    and, if so, the specification of the other class or series or
    other security, the conversion price or prices or rate or rates,
    any rate adjustments, the date or dates as of which the shares
    will be convertible and all other terms and conditions upon
    which the conversion may be made;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">restrictions on the issuance of
    shares of the same series or of any other class or
    series;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the voting rights, if any, of the
    holders of the series.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisition and other
corporate purposes, could have the effect of making it more
difficult for a third party to acquire, or discourage a third
party from acquiring, a majority of our outstanding voting
stock. Our board of directors may issue preferred stock with
voting and conversion rights that could adversely affect the
voting power of the holders of our common stock. There are no
current agreements or understandings for the issuance of
preferred stock, and our board of directors has no present
intention to issue any shares of preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Registration rights</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to enter into a new registration rights agreement,
which will become effective upon the completion of this
offering, with each of our existing stockholders as of
immediately prior to the completion of this offering. The
stockholders that are party to the new registration rights
agreement will have the right to require us, subject to certain
terms and conditions, to register their shares of our common
stock under the Securities Act of 1933, as amended, at any time.
The stockholders collectively will have an aggregate of two
demand registration rights. In addition, if we propose to
register any of our capital stock under the Securities Act, our
stockholders will be entitled to customary &#147;piggyback&#148;
registration rights which will entitle our stockholders to
include their shares of common stock in a
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 119</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Description of capital stock</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
registration of our securities for sale by us or by other
security holders. The registration rights granted under the new
registration rights agreement are subject to customary
exceptions and qualifications and compliance with certain
registration procedures. Following the completion of this
offering,
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock, representing
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]%
of our outstanding shares of common stock following completion
of this offering, will be entitled to the benefits of these
registration rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Corporate opportunities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our restated articles of incorporation will provide that none of
Mr.&nbsp;Icahn or entities controlled by him (referred to as the
Founding Stockholders), or any director, officer, member,
partner, stockholder or employee of a Founding Stockholder (each
referred to as a Specified Party), will have any duty to refrain
from engaging directly or indirectly in the same or similar
business activities or lines of business as we do. In the event
that any Founding Stockholder or Specified Party acquires
knowledge of a potential transaction or matter that may be a
corporate opportunity for any Founding Stockholder or Specified
Party, as applicable, and us, none of the Founding Stockholders
or Specified Parties has any duty to communicate or offer such
corporate opportunity to us, and any Founding Stockholder or
Specified Party is entitled to pursue or acquire such corporate
opportunity for itself or to direct such corporate opportunity
to another person or entity and we have no right in or to such
corporate opportunity or to any income or proceeds derived
therefrom.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In the event that one of our directors, officers or employees
who is also a Founding Stockholder or a Specified Party acquires
knowledge of a potential transaction or matter which may be a
corporate opportunity or otherwise is then exploiting any
corporate opportunity, subject to the following paragraph, we
will have no interest in such corporate opportunity and no
expectation that such corporate opportunity be offered to us, so
that such Specified Party will have no duty to communicate or
present such corporate opportunity to us, will have the right to
hold such corporate opportunity for its own account or to
recommend, sell, assign or transfer such corporate opportunity
to persons other than us and will not breach any fiduciary duty
to us by reason of the fact that such Specified Party pursues or
acquires such corporate opportunity for itself, directs, sells,
assigns or transfers such corporate opportunity to another
person or does not communicate information regarding such
corporate opportunity to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Notwithstanding the foregoing, our restated articles of
incorporation will provide that we do not renounce any interest
or expectation we may have in any corporate opportunity that is
offered to any Founding Stockholder or Specified Party, if such
opportunity is expressly offered to such Founding Stockholder or
Specified Party solely in, and as a direct result of, his or her
capacity as our director, officer or employee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND
DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our restated bylaws will require us to indemnify each of our
directors and officers to the fullest extent permitted by law.
Our restated bylaws will also provide that an amendment to the
indemnification provisions of our bylaws will not affect the
liability of any director or officer for any act or omission
occurring prior to the effective time of such amendment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OTHER PROVISIONS OF OUR RESTATED ARTICLES OF INCORPORATION
AND BYLAWS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Board of directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our restated articles of incorporation will provide that the
number of directors shall be determined in the manner specified
by our restated bylaws, and may be increased or decreased from
time to time in the manner prescribed by our restated bylaws.
Currently, our Board of Directors consists of five directors.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 120</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Description of capital stock</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amendment of bylaws</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our Board of Directors and stockholders will be authorized and
empowered to adopt, amend and repeal our bylaws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Inapplicability of Missouri&#146;s antitakeover statute</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our restated articles of incorporation will make the
anti-takeover protection of Section&nbsp;351.459 of The General
and Business Corporation Law of Missouri, which we refer to as
the GBCLM, inapplicable to us. Generally, Section&nbsp;351.459
of the GBCLM provides that any person who acquires direct or
indirect beneficial ownership of 20% or more of the outstanding
voting stock of a Missouri corporation becomes an
&#147;interested shareholder.&#148; Section&nbsp;351.459
prohibits a corporation from engaging in any &#147;business
combination&#148; with an interested shareholder for a period of
five years following the date that such interested shareholder
becomes an interested shareholder, unless certain conditions are
satisfied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The GBCLM defines &#147;business combination&#148; broadly to
include, among other things, any merger or consolidation with
the interested shareholder, any merger or consolidation with any
other corporation that is, or after such merger or consolidation
would be, an affiliate or associate of such interested
shareholder, any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with the interested
shareholder of any assets of the corporation having an aggregate
market value equal to 10% or more of the aggregate market value
of all the assets of the corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The listing requirements of the Nasdaq National Market, which
will apply to us while our common stock is listed on the Nasdaq
National Market, require stockholder approval of certain
issuances equal to or in excess of 20% of the voting power or
the number of shares of common stock. These additional shares
may be used for a variety of corporate purposes, including
future public offerings, to raise additional capital or to
facilitate acquisitions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
One of the effects of the existence of unissued and unreserved
common stock or preferred stock may be to enable our board of
directors to issue shares to persons friendly to current
management, which issuance could render more difficult or
discourage an attempt to obtain control of our company by means
of a merger, tender offer, proxy contest or otherwise, and
thereby protect the continuity of our management and possibly
deprive the stockholders of opportunities to sell their shares
of common stock at prices higher than prevailing market prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUOTATION OF OUR COMMON STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We expect to have our common stock approved for quotation on the
Nasdaq National Market under the trading symbol &#147;ARII.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TRANSFER AGENT AND REGISTRAR</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The transfer agent and registrar for our common stock is
American Stock Transfer&nbsp;&#38; Trust Company.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 121</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='115'></A>
</DIV>

<!-- link1 "Shares eligible for future sale" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Shares eligible for future sale
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prior to this offering, there has not been a public market for
our common stock. Future sales of substantial amounts of our
common stock in the public market, or the possibility of these
sales, could adversely affect the trading price of the common
stock and could impair our future ability to raise capital
through the sale of our equity at a time and price we deem
appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Upon completion of this offering and the stock split, we will
have outstanding
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock. Of these shares, the
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
sold in this offering, or
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
if the underwriters&#146; over-allotment option is exercised in
full, will be freely tradable without restriction or further
registration under the Securities Act, except for any shares
purchased by our &#147;affiliates,&#148; as defined in
Rule&nbsp;144 under the Securities Act, which would be subject
to the limitations and restrictions described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The remaining
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
of common stock outstanding upon completion of this offering
will be &#147;restricted securities&#148; as defined in
Rule&nbsp;144. Restricted securities may be sold in the public
market only if they are registered or if they qualify for an
exemption from registration such as the exemption provided by
Rule&nbsp;144.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration
under Rules&nbsp;144 and 144(k) promulgated under the Securities
Act, which rules are summarized below. Subject to the lock-up
agreements described below and the provisions of Rules&nbsp;144
and 144(k), additional shares will be available for sale in the
public market as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="11%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="left" nowrap><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" nowrap><B>Date</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    After the date of this prospectus.</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    After 180&nbsp;days from the date of this prospectus.</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
All of these restricted securities will be eligible for sale in
the public market, subject in all cases to the volume
limitations and other restrictions of Rule&nbsp;144, beginning
upon expiration of the lock-up agreements described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RULE&nbsp;144</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In general, under Rule&nbsp;144 as currently in effect,
beginning 90&nbsp;days after this offering, a person (or persons
whose shares are required to be aggregated), including an
affiliate, who has beneficially owned shares of our common stock
for at least one year is entitled to sell in any three-month
period a number of shares that does not exceed the greater of:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">1% of then-outstanding shares of
    our common stock, which is approximately
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares
    of our common stock immediately after the completion of this
    offering;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the average weekly reported
    trading volume of our common stock on the Nasdaq National Market
    during the four calendar weeks preceding the filing of a
    Form&nbsp;144 with respect to the sale, subject to certain
    restrictions.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Sales under Rule&nbsp;144 are also subject to manner of sale
provisions and notice requirements and to the availability of
current public information about us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RULE&nbsp;144(K)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In addition, a person who is not deemed to have been an
affiliate of ours at any time during the 90&nbsp;days preceding
a sale and who has beneficially owned the shares proposed to be
sold for at least
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 122</B>
</DIV>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Shares eligible for future sale</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
two years, would be entitled to sell those shares under
Rule&nbsp;144(k) without regard to the manner of sale, public
information, volume limitation or notice requirements of
Rule&nbsp;144.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LOCK-UP AGREEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have agreed that we will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file
with the SEC a registration statement under the Securities Act
relating to any shares of our common stock or securities
convertible into or exchangeable or exercisable for any shares
of our common stock, or publicly disclose the intention to make
any offer, sale, pledge, disposition or filing, without the
prior written consent of UBS Securities LLC for a period of
180&nbsp;days after the date of this prospectus. Our officers,
directors and all of our stockholders have also agreed that they
will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any shares of our common
stock (other than shares they may sell in this offering) or
securities convertible into or exchangeable or exercisable for
any shares of our common stock, enter into a transaction that
would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of our common stock,
whether any of these transactions are to be settled by delivery
of our common stock or other securities, in cash or otherwise,
or publicly disclose the intention to make any offer, sale,
pledge or disposition, or to enter into any transaction, swap,
hedge or other arrangement, without, in each case, the prior
written consent of UBS Securities LLC until 180&nbsp;days after
the date of this prospectus. UBS Securities LLC may, in its sole
discretion at any time without notice, release all or any
portion of the shares of our common stock held by our officers,
directors and stockholders, subject to these lock-up agreements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 123</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='116'></A>
</DIV>

<!-- link1 "Material U.S. income tax considerations for non-U.S. holders" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Material U.S.&nbsp;income tax considerations for
non-U.S.&nbsp;holders
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following summary describes material United States federal
income tax consequences of the ownership and disposition of
common stock by a Non-U.S.&nbsp;Holder (as defined below) as of
the date of this prospectus. This discussion does not address
all aspects of United States federal income taxation and does
not deal with estate, gift, foreign, state and local tax
consequences that may be relevant to such Non-U.S.&nbsp;Holders
in light of their personal circumstances. Special U.S.&nbsp;tax
rules may apply to certain Non-U.S.&nbsp;Holders, such as
&#147;controlled foreign corporations,&#148; &#147;passive
foreign investment companies,&#148; corporations that accumulate
earnings to avoid U.S.&nbsp;federal income tax, investors in
partnerships or other pass-through entities for
U.S.&nbsp;federal income tax purposes, dealers in securities,
holders of securities held as part of a &#147;straddle,&#148;
&#147;hedge,&#148; &#147;conversion transaction&#148; or other
risk reduction transaction, and certain former citizens or
long-term residents of the United States that are subject to
special treatment under the Internal Revenue Code of 1986, as
amended (which we also refer to as the Code). Such entities and
persons should consult their own tax advisors to determine the
U.S.&nbsp;federal, state, local and other tax consequences that
may be relevant to them. Furthermore, the discussion below is
based upon the provisions of the Code, and regulations,
administrative pronouncements of the Internal Revenue Service
(which we also refer to as the IRS) and judicial decisions
thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified with or without retroactive effect
so as to result in United States federal income tax consequences
different from those discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
If a partnership (or an entity treated as a partnership for
U.S.&nbsp;federal income tax purposes) holds the common stock,
the tax treatment of a partner will generally depend on the
status of the partner and the activities of the partnership.
Persons who are partners in partnerships holding the common
stock should consult their tax advisors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The authorities on which this summary is based are subject to
various interpretations, and any views expressed within this
summary are not binding on the IRS or the courts. No assurance
can be given that the IRS or the courts will agree with the tax
consequences described in this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As used herein, a &#147;Non-U.S.&nbsp;Holder&#148; means a
beneficial owner of our common stock that is not any of the
following for U.S.&nbsp;federal income tax purposes:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">a citizen or resident of the
    United States,
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">a corporation, or other entity
    treated as a corporation for United States federal income tax
    purposes, created or organized in or under the laws of the
    United States, any state thereof or the District of Columbia,
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">an estate the income of which is
    subject to United States federal income taxation regardless of
    its source,&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">a trust (i)&nbsp;which is subject
    to primary supervision by a court situated within the United
    States and as to which one or more United States persons have
    the authority to control all substantial decisions of the trust,
    or (ii)&nbsp;that has a valid election in effect under
    applicable U.S.&nbsp;Treasury regulations to be treated as a
    United States person.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 124</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Material U.S.&nbsp;income tax considerations for
non-U.S.&nbsp;holders</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Prospective purchasers are urged to consult their own tax
advisors regarding the U.S.&nbsp;federal income tax
consequences, as well as other U.S.&nbsp;federal, state, and
local income and estate tax consequences, and non-U.S.&nbsp;tax
consequences, to them of acquiring, owning, and disposing of our
common stock.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DIVIDENDS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
If we make distributions on our common stock, such distributions
paid to a Non-U.S.&nbsp;Holder will generally constitute
dividends for U.S.&nbsp;federal income tax purposes to the
extent such distributions are paid from our current or
accumulated earnings and profits, as determined under
U.S.&nbsp;federal income tax principles. If a distribution
exceeds our current and accumulated earnings and profits, the
excess will be treated as a tax-free return of the
Non-U.S.&nbsp;Holder&#146;s investment to the extent of the
Non-U.S.&nbsp;Holder&#146;s adjusted tax basis in our common
stock. Any remaining excess will be treated as capital gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dividends paid to a Non-U.S.&nbsp;Holder generally will be
subject to withholding of United States federal income tax at a
30% rate or such lower rate as may be specified by an applicable
income tax treaty. A Non-U.S.&nbsp;Holder of common stock who
wishes to claim the benefit of an applicable treaty rate for
dividends will be required to (a)&nbsp;properly complete IRS
Form&nbsp;W-8BEN (or appropriate substitute form) and certify,
under penalties of perjury, that such holder is not a
U.S.&nbsp;person and is eligible for the benefits with respect
to dividends allowed by such treaty or (b)&nbsp;hold common
stock through certain foreign intermediaries and satisfy the
certification requirements for treaty benefits of applicable
Treasury regulations. A Non-U.S.&nbsp;Holder eligible for a
reduced rate of United States withholding tax pursuant to an
income tax treaty may obtain a refund of any excess amounts
withheld by timely filing an appropriate claim for refund with
the IRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
This United States withholding tax generally will not apply to
dividends that are effectively connected with the conduct of a
trade or business by the Non-U.S.&nbsp;Holder within the United
States, and, if a treaty applies, attributable to a United
States permanent establishment or fixed base of the
Non-U.S.&nbsp;Holder. Dividends effectively connected with the
conduct of a trade or business, as well as those attributable to
a United States permanent establishment or fixed base of the
Non-U.S.&nbsp;Holder under an applicable treaty, are subject to
United States federal income tax generally in the same manner as
if the Non-U.S.&nbsp;Holder were a U.S.&nbsp;person, as defined
under the Code. Certain IRS certification and disclosure
requirements must be complied with in order for effectively
connected income to be exempt from withholding. Any such
effectively connected dividends received by a
Non-U.S.&nbsp;Holder that is a foreign corporation may, under
certain circumstances, be subject to an additional &#147;branch
profits tax&#148; at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>GAIN ON DISPOSITION OF COMMON STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
A Non-U.S.&nbsp;Holder generally will not be subject to United
States federal income tax (or any withholding thereof) with
respect to gain recognized on a sale or other disposition of
common stock unless:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">The Non-U.S.&nbsp;Holder is an
    individual who is present in the United States for 183 or more
    days in the taxable year of the disposition and certain other
    conditions are met,
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the gain is effectively connected
    with a trade or business of the Non-U.S.&nbsp;Holder in the
    United States and, where a tax treaty applies, is attributable
    to a United States permanent establishment or fixed base of the
    Non-U.S.&nbsp;Holder,&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">we are or have been a
    &#147;U.S.&nbsp;real property holding corporation&#148; within
    the meaning of Section&nbsp;897(c)(2) of the Code, also referred
    to as a USRPHC, for United States federal income tax
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 125</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Material U.S.&nbsp;income tax considerations for
non-U.S.&nbsp;holders</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    purposes at any time within the five-year period preceding the
    disposition (or, if shorter, the Non-U.S.&nbsp;Holder&#146;s
    holding period for the common stock).</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Gain recognized on the sale or other disposition of common stock
and effectively connected with a United States trade or
business, or attributable to a United States permanent
establishment or fixed base of the Non-U.S.&nbsp;Holder under an
applicable treaty, is subject to United States federal income
tax on a net income basis generally in the same manner as if the
Non-U.S.&nbsp;Holder were a U.S.&nbsp;person, as defined under
the Code. Any such effectively connected gain from the sale or
disposition of common stock received by a Non-U.S.&nbsp;Holder
that is a foreign corporation may, under certain circumstances,
be subject to an additional &#147;branch profits tax&#148; at a
30% rate or such lower rate as may be specified by an applicable
income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In general, a corporation is a USRPHC if the fair market value
of its &#147;U.S.&nbsp;real property interests&#148; equals or
exceeds 50% of the sum of the fair market value of its worldwide
(domestic and foreign) real property interests and its other
assets used or held for use in a trade or business. For this
purpose, real property interests include land, improvements, and
associated personal property. We believe that we currently are
not a USRPHC. In addition, based on these financial statements
and current expectations regarding the value and nature of our
assets and other relevant data, we do not anticipate becoming a
USRPHC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
If we become a USRPHC, a Non-U.S.&nbsp;Holder nevertheless will
not be subject to United States federal income tax if our common
stock is regularly traded on an established securities market,
within the meaning of applicable Treasury regulations, and the
Non-U.S.&nbsp;Holder holds no more than five percent of our
outstanding common stock, directly or indirectly, during the
five-year testing period identified in the third bullet point
immediately above. We expect that our common stock will be
quoted on the Nasdaq National Market and may be regularly traded
on an established securities market in the United States so long
as it is so quoted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION REPORTING AND BACKUP WITHHOLDING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We must report annually to the IRS and to each
Non-U.S.&nbsp;Holder the amount of dividends paid to such holder
and the tax withheld with respect to such dividends, regardless
of whether withholding was required. Copies of the information
returns reporting such dividends and withholding may also be
made available to the tax authorities in the country in which
the Non-U.S.&nbsp;Holder resides under the provisions of an
applicable income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The United States imposes a backup withholding tax on dividends
and certain other types of payments to United States persons
(currently at a rate of 28%) of the gross amount. Dividends paid
to a Non-U.S.&nbsp;Holder will not be subject to backup
withholding if proper certification of foreign status (usually
on an IRS Form&nbsp;W-8BEN) is provided, and the payor does not
have actual knowledge or reason to know that the beneficial
owner is a United States person, or the holder is a corporation
or one of several types of entities and organizations that
qualify for exemption, also referred to as an exempt recipient.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Information reporting and backup withholding generally are not
required with respect to the amount of any proceeds from the
sale or other disposition of shares of common stock by a
Non-U.S.&nbsp;Holder outside the United States through a foreign
office of a foreign broker that does not have certain specified
connections to the United States. However, if a
Non-U.S.&nbsp;Holder sells or otherwise disposes of shares of
common stock through the U.S.&nbsp;office of a United States or
foreign broker, the broker will be required to report the amount
of proceeds paid to such holder to the IRS and to apply the
backup withholding tax (currently at a rate of 28%) to the
amount of such proceeds unless appropriate certification
(usually on an IRS Form&nbsp;W-8BEN) is provided to the broker
of the holder&#146;s status as either an exempt recipient or a
non-U.S.&nbsp;person, and the payor does not have actual
knowledge or
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 126</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Material U.S.&nbsp;income tax considerations for
non-U.S.&nbsp;holders</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
reason to know that the beneficial owner is a United States
person. Information reporting also applies if a
Non-U.S.&nbsp;Holder sells or otherwise disposes of its shares
of common stock through the foreign office of a broker deriving
more than a specified percentage of its income from United
States sources or having certain other connections to the United
States and the foreign broker does not have certain documentary
evidence in its files of the Non-U.S.&nbsp;Holder&#146;s foreign
status.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Any amounts withheld under the backup withholding rules may be
allowed as a refund or a credit against such holder&#146;s
U.S.&nbsp;federal income tax liability provided the required
information is timely furnished to the IRS.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 127</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='117'></A>
</DIV>

<!-- link1 "Underwriting" -->

<DIV align="left" style="font-size: 16pt;">
Underwriting
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We are offering the shares of our common stock described in this
prospectus through the underwriters named below. UBS Securities
LLC and Bear, Stearns&nbsp;&#38; Co. Inc. are the
representatives of the underwriters and joint book-running
managers of this offering. We have entered into an underwriting
agreement with the underwriters. Subject to the terms and
conditions of the underwriting agreement, each of the
underwriters has severally agreed to purchase the number of
shares of common stock from us listed next to its name in the
following table:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Number of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Underwriters</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>shares</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    UBS Securities LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bear, Stearns&nbsp;&#38; Co. Inc.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The underwriting agreement provides that the underwriters must
buy all of the shares if they buy any of them. However, the
underwriters are not required to take or pay for the shares
covered by the underwriters&#146; over-allotment option
described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our common stock is offered subject to a number of conditions,
including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">receipt and acceptance of our
    common stock by the underwriters;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the underwriters&#146; right to
    reject orders in whole or in part.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have been advised by the representatives that the
underwriters intend to make a market in our common stock but
that they are not obligated to do so and may discontinue making
a market at any time without notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with this offering, certain of the underwriters or
securities dealers may distribute prospectuses electronically.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OVER-ALLOTMENT OPTION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have granted the underwriters an option to buy up to an
aggregate of
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;additional
shares of our common stock. The underwriters may exercise this
option solely for the purpose of covering over-allotments, if
any, made in connection with this offering. The underwriters
have 30&nbsp;days from the date of this prospectus to exercise
this option. If the underwriters exercise this option, they will
each purchase additional shares on a pro rata basis in
approximately the same proportion to the amounts specified in
the table above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMMISSIONS AND DISCOUNTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Shares sold by the underwriters to the public will initially be
offered at the initial offering price set forth on the cover of
this prospectus. Any shares sold by the underwriters to
securities dealers may be sold at a discount of up to
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share from the initial public offering price. Any of these
securities dealers may resell any shares purchased from the
underwriters to other brokers or dealers at a discount of up to
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;per
share from the initial public offering price. If all the shares
are not sold at the initial public offering price, the
representatives may change the offering price and the other
selling terms. Sales of shares made outside of the United States
may be made by affiliates of the underwriters. Upon execution of
the underwriting agreement, the underwriters will be obligated
to purchase the shares at the prices and upon the terms stated
in the underwriting agreement and, as a
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 128</B>
</DIV>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Underwriting</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
result, will thereafter bear any risk associated with changing
the offering price to the public or other selling terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table shows the per share and total underwriting
discounts and commissions we will pay to the underwriters
assuming both no exercise and full exercise of the
underwriters&#146; option to purchase up to an additional
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;shares.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>No exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Full exercise</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We estimate that the total expenses of this offering payable by
us, not including the underwriting discounts and commissions,
will be approximately
$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;].
The underwriting agreement provides that the underwriters will
reimburse us for certain out-of-pocket expenses in connection
with this offering in an amount of $750,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NO SALES OF SIMILAR SECURITIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We, our executive officers and directors and all of our existing
stockholders have entered into lock-up agreements with the
underwriters. Under these agreements, subject to certain
exceptions, we and each of these persons may not, without the
prior written approval of UBS Securities LLC, offer, sell,
contract to sell or otherwise dispose of, directly or
indirectly, or hedge our common stock or securities convertible
into or exchangeable for our common stock. These restrictions
will be in effect for a period of 180&nbsp;days after the date
of this prospectus. At any time and without public notice, UBS
Securities LLC may, in its sole discretion, release all or some
of the securities from these lock-up agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INDEMNIFICATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have agreed to indemnify the underwriters against certain
liabilities, including certain liabilities under the Securities
Act. If we are unable to provide this indemnification, we have
agreed to contribute to payments the underwriters may be
required to make in respect of those liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LISTING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We expect to apply to have our common stock approved for
quotation on the Nasdaq National Market under the trading symbol
&#147;ARII.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TRANSFER AGENT AND REGISTRAR</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The transfer agent and registrar for our common stock is
American Stock Transfer&nbsp;&#38; Trust Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PRICE STABILIZATION, SHORT POSITIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with this offering, the underwriters may engage in
activities that stabilize, maintain or otherwise affect the
price of our common stock, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">stabilizing transactions;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">short sales;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">purchases to cover positions
    created by short sales;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">imposition of penalty
    bids;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">syndicate covering transactions.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 129</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>Underwriting</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Stabilizing transactions consist of bids or purchases made for
the purpose of preventing or retarding a decline in the market
price of our common stock while this offering is in progress.
These transactions may also include making short sales of our
common stock, which involve the sale by the underwriters of a
greater number of shares of common stock than they are required
to purchase in this offering and purchasing shares of common
stock in the open market to cover positions created by short
sales. Short sales may be &#147;covered short sales,&#148; which
are short positions in an amount not greater than the
underwriters&#146; over-allotment option referred to above, or
may be &#147;naked short sales,&#148; which are short positions
in excess of that amount.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The underwriters may close out any covered short position by
either exercising their over-allotment option, in whole or in
part, or by purchasing shares in the open market. In making this
determination, the underwriters will consider, among other
things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase
shares through the over-allotment option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Naked short sales are sales made in excess of the over-allotment
option. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position
is more likely to be created if the underwriters are concerned
that there may be downward pressure on the price of the common
stock in the open market that could adversely affect investors
who purchased in this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The underwriters also may impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representatives have repurchased shares sold by or for the
account of that underwriter in stabilizing or short covering
transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As a result of these activities, the price of our common stock
may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be
discontinued by the underwriters at any time. The underwriters
may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DETERMINATION OF OFFERING PRICE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prior to this offering, there has been no public market for our
common stock. The initial public offering price was determined
by negotiation by us and the representatives of the
underwriters. The principal factors considered in determining
the initial public offering price include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the information set forth in this
    prospectus and otherwise available to representatives;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our history and prospects and the
    history and prospects for the industry in which we compete;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our past and present financial
    performance and an assessment of our management;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">our prospects for future earnings
    and the present state of our development;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the general condition of the
    securities markets at the time of this offering;
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">the recent market prices of, and
    demand for, publicly traded common stock of generally comparable
    companies;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&#149;</TD>
    <TD align="left">
    <FONT style="font-size: 10pt">other factors deemed relevant by
    the underwriters and us.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 130</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<B>Underwriting</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AFFILIATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Certain of the underwriters and their affiliates have provided
in the past and may provide from time to time in the future
certain commercial banking, financial advisory, investment
banking and other services for us for which they will be
entitled to receive customary fees.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 131</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='118'></A>
</DIV>

<!-- link1 "Legal matters" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Legal matters
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
An opinion regarding the legality of the shares of common stock
being offered in this offering is being provided by Brown
Rudnick Berlack Israels LLP, New York, New York. The
underwriters have been represented by Shearman&nbsp;&#38;
Sterling LLP, New York, New York.
</DIV>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='119'></A>
</DIV>

<!-- link1 "Experts" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Experts
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Our consolidated financial statements as of December&nbsp;31,
2004 and for the year ended December&nbsp;31, 2004 included in
this prospectus were audited by Grant Thornton LLP (&#147;Grant
Thornton&#148;), our independent accountants, as stated in their
report appearing therein. Our consolidated financial statements
as of December&nbsp;31, 2002 and 2003 and for the years ended
December&nbsp;31, 2002 and 2003 included in this prospectus were
audited by KPMG LLP (&#147;KPMG&#148;), our former independent
accountants, as stated in their report appearing herein.
KPMG&#146;s reports on our financial statements for the years
ended December&nbsp;31, 2002 and 2003 contained no adverse
opinion or disclaimer of opinion and were not otherwise
qualified or modified as to uncertainty, audit scope or
accounting principle.
On &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004, we terminated KPMG. In connection with its audits of our
financial statements as of December&nbsp;31, 2002 and 2003, and
for the years ended December&nbsp;31, 2002 and 2003, and
through &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004, there were no disagreements with KPMG on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of KPMG, would have caused
KPMG to make reference thereto in its report on such statements
for such periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Following KPMG&#146;s termination, we engaged Grant Thornton as
our independent certified public accountants effective
November&nbsp;3, 2004. [The decision to hire Grant Thornton was
unanimously approved by our board of directors.] We did not
consult with Grant Thornton with respect to the application of
accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might
be rendered on our financial statements, or a disagreement with
KPMG and there were no &#147;reportable events&#148; as defined
in Item&nbsp;304(a)(1)(v) of Regulation&nbsp;S-K promulgated
under the Exchange Act during this time frame. Grant Thornton
has been given access to prior years work papers by KPMG without
limitation in accordance with Statement on Auditing Standard
No.&nbsp;84, Communications Between Predecessor and Successor
Auditors.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> 132</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='120'></A>
</DIV>

<!-- link1 "Where you can find more information" -->

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Where you can find more information
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We have filed with the SEC a registration statement on
Form&nbsp;S-1 under the Securities Act with respect to the
shares to be sold in this offering. This prospectus, which
constitutes a part of the registration statement, does not
contain all of the information set forth in the registration
statement and the exhibits, schedules and amendments to the
registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For
further information about us and the shares to be sold in this
offering, please refer to the registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Statements contained in this prospectus as to the contents of
any contract, agreement or other document that we make reference
to, are not necessarily complete, and in each instance, where
applicable, please refer to the copy of the contract, agreement
or other document filed as an exhibit to the registration
statement, each statement being qualified in all respects by
this reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Upon completion of this offering, we will become subject to the
reporting and information requirements of the Exchange Act and,
as a result, we will file periodic and current reports, proxy
statements and other information with the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
You may read and copy all or any portion of the registration
statement or any reports, statements or other information we
file with the SEC following the completion of this offering at
the public reference room maintained by the SEC at 100 F Street,
N.E., Washington,&nbsp;D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information on the public reference
rooms. Copies of such material are also available by mail from
the SEC at prescribed rates. You can also find our SEC filings
at the SEC&#146;s website at www.sec.gov.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
We intend to provide our stockholders with annual reports
containing consolidated financial statements that have been
examined and reported on, with an opinion expressed by, an
independent registered public accounting firm.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> 133</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONSOLIDATED BALANCE SHEETS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>December&nbsp;31, 2003 and 2004</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(amounts in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="11" align="left" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,183</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,925</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amounts due from affiliates&#151; current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>244</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,699</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107,994</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Buildings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,350</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Machinery and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,816</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction in process</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,686</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>124,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,829</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less accumulated depreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,878</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,951</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable from affiliates and interest thereon</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,250</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>664</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt issuance costs and other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>615</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amounts due from affiliates&#151; non-current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>271</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investment in subsidiary</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investment in joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,912</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>195,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>356,657</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-2</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONSOLIDATED BALANCE SHEETS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>December&nbsp;31, 2003 and 2004</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(amounts in thousands,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>except share and</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>per share values)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current portion of long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,334</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,800</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued expenses and taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,663</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Note payable to affiliate&#151; current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(404</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other amounts due to affiliates&#151; current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,137</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,934</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,517</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Note payable to affiliate&#151; noncurrent</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>130,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other amounts due to affiliates&#151; noncurrent</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,381</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,345</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,177</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Commitments and contingencies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mandatorily redeemable payment-in-kind preferred stock,
    $.01&nbsp;par value, 150,000&nbsp;shares authorized,
    89,899&nbsp;shares issued and outstanding at December&nbsp;31,
    2003, $1,000 liquidation price per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mandatorily redeemable preferred stock, stated value $1,000,
    99,000&nbsp;shares authorized, 1&nbsp;share issued and
    outstanding at December&nbsp;31, 2003 and 2004, respectively</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Shareholders&#146; equity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New Preferred Stock, $.01&nbsp;par value per share, stated value
    $1,000 per share, 500,000&nbsp;shares authorized,
    116,685&nbsp;shares issued and outstanding at December&nbsp;31,
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,685</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock, $.01&nbsp;par value, 12,000&nbsp;shares
    authorized, 1,000 and 1,195 issued and outstanding at
    December&nbsp;31, 2003 and 2004, respectively</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,360</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retained earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,701</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,464</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(909</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,102</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,479</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities and shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>195,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>356,657</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-3</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF OPERATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Years ended December&nbsp;31, 2002, 2003 and 2004</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="15" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(amounts in thousands,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>except share and per share values)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Manufacturing operations (including revenues from affiliates of
    $63,561, $62,882 and $64,372 in 2002, 2003 and 2004,
    respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>138,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>188,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>316,432</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar services (including revenues from affiliates of $12,838,
    $11,012 and $19,429 in 2002, 2003 and 2004, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,624</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>217,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar manufacturing operations (including costs
    related to affiliates of $55,679, $54,394 and $59,902 in 2002,
    2003 and 2004, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>174,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>305,726</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar services (including costs related to sales to
    affiliates of $12,152, $10,136 and $15,539 in 2002, 2003 and
    2004, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,473</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total costs of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>340,199</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, administrative and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,334</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating (loss) income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,573</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,523</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income (includes interest income from affiliates of
    $3,379, $2,998 and $3,885 in 2002, 2003 and 2004, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,422</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense including interest expense to affiliates of
    $1,524 in 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,578</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss from joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(604</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(609</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Loss) earnings before income tax (benefit) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,807</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,758</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax (benefit) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,894</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,438</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net (loss) earnings</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,320</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less preferred dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,139</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,690</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,241</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss available to common shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,052</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,921</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted average shares outstanding (actual shares)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,087</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net (loss) earnings per common share (actual dollars)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,052</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(8,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(10,047</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes to financial statements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-4</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Years ended December&nbsp;31, 2002, 2003 and 2004</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(amounts in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net (loss) earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,320</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments to reconcile net (loss) earnings to net cash
    provided by (used in) operating activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,247</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expenses relating to pre-recapitalization liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,430</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Curtailment gain</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(59</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in deferred tax assets related to spin off of ARL</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustment to recognize interest in Castings, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision for deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,349</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,422</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision for losses on accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>209</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-lived asset impairment and other charges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Gain) loss on the disposition of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in operating assets and liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,509</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,983</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(469</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,290</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29,563</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(366</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(417</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,244</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued expenses and taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>807</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,169</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,326</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,638</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,618</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investing activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,816</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,301</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,441</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of interest in AR Leasing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from the disposition of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in note and interest receivable from ACF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>404</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(535</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,251</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,037</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financing activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital contributions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of ARL spin off (note&nbsp;1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Advance to affiliate under notes receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(165,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from issuance of notes payable from affiliates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>137,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Increase) decrease in amounts due from affiliates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,634</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in amounts due to affiliates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(893</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,755</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,842</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,890</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40,222</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash (used in) provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,369</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,533</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Decrease) increase in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,293</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,878</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes to financial statements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-5</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Years ended December&nbsp;31, 2002, 2003 and 2004</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>New</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Retained</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>paid-in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>shareholders&#146;</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>loss</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>earnings</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>loss</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>equity</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="28" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(amounts in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance December&nbsp;31, 2001</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>$&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(441</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,913</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment, net of tax effect of $163</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(260</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(260</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4,173</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital contribution for expenses relating to pre-
    recapitalization liabilities retained by ACF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends on mandatorily redeemable payment-in-kind preferred
    stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,139</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance December&nbsp;31, 2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(701</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment, net of tax effect of $128</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(208</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(208</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital contribution for expenses relating to pre-
    recapitalization liabilities retained by ACF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Excess of purchase price over book value related to transfer of
    Castings from ACF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,874</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends on mandatorily redeemable payment-in-kind preferred
    stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,690</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance December&nbsp;31, 2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,701</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(909</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment, net of taxes of $116</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(193</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(193</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends on preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,241</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transfer mandatorily redeemable PIK preferred to New Preferred
    Stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital contributions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net adjustments relating to spin off of ARL (note&nbsp;1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(86,486</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,148</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deemed distribution related to decrease in castings book value</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(842</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital contribution for expenses relating to pre-
    capitalization liabilities retained by ACF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance December&nbsp;31, 2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16,464</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>$111,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>41,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,102</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying notes to financial statements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-6</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONDENSED BALANCE SHEETS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>December&nbsp;31, 2004 and June&nbsp;30, 2005</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>(unaudited)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>(audited)</B></TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(dollars in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>ASSETS</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,804</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,041</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,722</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amounts due from affiliates&#151; current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,896</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,421</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred Tax Asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,822</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,706</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Buildings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,479</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Machinery and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,812</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction in process</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,938</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>145,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less accumulated depreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,985</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable from affiliates and interest thereon</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,250</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt issuance costs and other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>724</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amounts due from affiliates&#151; non-current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investment in subsidiary</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investment in joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,836</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>356,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>249,737</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying selected notes to condensed consolidated
financial statements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-7</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONDENSED BALANCE SHEETS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>December&nbsp;31, 2004 and June&nbsp;30, 2005</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>(unaudited)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>(audited)</B></TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(dollars in thousands, except</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>share and per share values)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current portion of long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>32,198</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,218</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued expenses and taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,747</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable to affiliate&#151;current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other amounts due to affiliates&#151;current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,163</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,297</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,587</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Note payable to affiliate&#151;noncurrent</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other amounts due to affiliates&#151;noncurrent</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,139</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>143,186</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Commitments and contingencies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mandatorily redeemable preferred stock, stated value $1,000,
    99,000&nbsp;shares authorized, 1&nbsp;share issued and
    outstanding at December&nbsp;31, 2004 and June&nbsp;30, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Shareholders&#146; equity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New Preferred Stock, $.01&nbsp;par value per share, stated value
    $1,000&nbsp;per share, 500,000&nbsp;shares authorized, 111,685
    and 82,055&nbsp;shares issued and outstanding at
    December&nbsp;31, 2004 and June&nbsp;30, 2005, respectively</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,055</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock, $.01&nbsp;par value, 12,000&nbsp;shares
    authorized, 1,195&nbsp;shares issued and outstanding at
    December&nbsp;31, 2004 and June&nbsp;30, 2005, respectively</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,697</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retained earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,464</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,100</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,102</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,102</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,551</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities and shareholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>356,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>249,737</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying selected notes to condensed consolidated
financial statements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-8</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Six months ended June&nbsp;30, 2004 and 2005</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(dollars in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Manufacturing operations (including revenues from transactions
    with affiliates of $26,403 and $28,148 in 2004 and 2005,
    respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>140,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>269,978</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Railcar services (including revenues from affiliates of $7,664
    and $11,280 in 2004 and 2005, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,665</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>291,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs of goods sold:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar manufacturing operations (including costs from
    transactions with affiliates of $24,374 and $25,943 in 2004 and
    2005, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>251,060</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of railcar services (including costs from transactions with
    affiliates of $5,852 and $9,106 in 2004 and 2005, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,575</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total costs of goods sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>269,635</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, administrative and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,651</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,357</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income (includes interest income from affiliates of
    $1,201 and $823 in 2004 and 2005, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense (including interest expense to affiliates of
    $174 and $1,174 in 2004 and 2005, respectively)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Loss) income from joint venture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,159</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>924</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before income tax expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,953</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net earnings</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,982</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less preferred dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,241</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,090</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss available to common shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,028</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(108</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted average shares outstanding (actual shares)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,095</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss per common share (actual dollars)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic and diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(10,145</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(99</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net earnings per common share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-9</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc.</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Six months ended June&nbsp;30, 2004 and 2005</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(dollars in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,982</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments to reconcile net earnings to net cash provided by
    operating activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,155</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in joint venture investment as a result of earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(924</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expenses relating to pre-capitalization liabilities retained by
    ACF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision for deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(412</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,631</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision for losses on accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Curtailment gain</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(59</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in operating assets and liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,130</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,895</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,307</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,676</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,177</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,418</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued expenses and taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,878</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(408</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(207</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash (used in) provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,608</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,752</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investing activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,895</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,392</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from dispositions of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,778</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,392</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financing activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in amounts due from affiliates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,625</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (decrease) in amounts due to affiliates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,518</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from debt issuance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,770</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,298</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,499</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,861</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,804</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See accompanying selected notes to condensed consolidated
financial statements.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-10</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The condensed consolidated financial statements included herein
have been prepared by American Railcar Industries, Inc. and
Subsidiary (collectively the &#147;Company&#148; or
&#147;ARI&#148;), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the
&#147;SEC&#148;). Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United
States of America have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading.
The Condensed Balance Sheet as of December&nbsp;31, 2004 has
been derived from the audited consolidated balance sheets as of
that date. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company&#146;s
latest annual report attached on form&nbsp;S-1 for the year
ended December&nbsp;31, 2004. In the opinion of management, the
information contained herein reflects all adjustments necessary
to make the results of operations for the interim periods a fair
statement of such operations. Due to the seasonality of the
Company&#146;s business, the results of operations of any
interim period are not necessarily indicative of the results
that may be expected for a fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;1&#151;Description of the business</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The condensed consolidated financial statements of the Company
include the accounts of American Railcar Industries, Inc. and
it&#146;s wholly owned subsidiary Castings, LLC (Castings).
Castings has a one-third ownership interest in Ohio Castings
Company, LLC (Ohio Castings), a limited liability company formed
to run two foundries which cast railcar sideframes and bolsters
for use or sale by the ownership group. All significant
intercompany transactions and balances have been eliminated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI manufactures railcars, custom designed railcar parts for
industrial companies, railroads, and other industrial products,
primarily aluminum and special alloy steel castings, for
non-rail customers. ARI also provides railcar maintenance
services for railcar fleets, including that of its affiliate,
American Railcar Leasing, LLC (ARL). In addition, ARI provides
fleet management and maintenance services for railcars owned by
selected customers. Such services include inspecting and
supervising the maintenance and repair of such railcars. The
Company&#146;s operations are located in North America,
primarily in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI was recapitalized on October&nbsp;1, 1994 when ACF
Industries LLC (ACF), the former holder of ARI&#146;s common
stock, transferred to ARI the old common stock of ARI along with
the assets and liabilities of ACF&#146;s railcar maintenance and
railcar parts manufacturing businesses. In exchange, ACF
received 57,306&nbsp;shares of ARI&#146;s newly issued
mandatorily redeemable preferred stock. New shares of ARI&#146;s
common stock were issued to Carl C. Icahn (Mr.&nbsp;Icahn),
Chairman of the Board of ACF, in exchange for cash of
$6.4&nbsp;million. In October 1998, ARI redeemed
57,305&nbsp;shares of the preferred stock and the remaining
share of preferred stock was transferred to Mr.&nbsp;Icahn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In 2003, ACF Industries Holding Corp. (ACF Holding), an
affiliate of ARI, formed a wholly-owned subsidiary, Castings,
LLC (Castings). In June, 2005, ARI completed the purchase of
Castings from ACF Holdings. The transaction was effective
January&nbsp;1, 2005. The cost of the acquisition totaled
$12.0&nbsp;million, which represents the fair value of Castings
equity interest in Ohio Castings. The purchase price will be
paid in 2005. However as Castings was owned by an entity with
ownership common to ARI, the investment in subsidiary is
recorded at the date of Castings inception, June, 2003 at book
value. The purchase price is recorded at full value as a payable
to the affiliate and the excess of fair value over cost is
presented as a distribution from equity. Interest is accrued on
the note payable to the affiliate as of January&nbsp;1, 2005 as
that is the date the purchase was agreed to.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-11</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On July&nbsp;20, 2004, ARI formed American Railcar Leasing
(ARL), a wholly owned subsidiary. ARL&#146;s primary business is
the leasing of railcars. The subsidiary was capitalized through
the issuance of common and preferred stock. ARI&#146;s
investment in ARL was $116,670 and $151,670&nbsp;million at
December&nbsp;31, 2004 and June&nbsp;30, 2005, respectively.
Preferred stock of ARL was issued to affiliated companies in
exchange for contributions of cash or railcars totaling
$102,654. On June&nbsp;30, 2005, in anticipation of its public
offering, ARI sold its common interest in ARL for $125,000 to
affiliated companies in return for the preferred stock
investment including accrued dividends that those affiliates
held ARI. ARI retained no liabilities or other interests in ARL
as a result of this sale. The presentation of ARI&#146;s
operations has been prepared on a standalone basis excluding
ARL&#146;s operations for all periods, and all transactions
giving effect to ARL&#146;s formation have been eliminated from
the financial statements. Any differences related to the amounts
originally capitalized and the amount paid for ARL in the sale
have been recorded through adjustments to shareholder&#146;s
equity, including certain tax benefits that ARI received as a
result of utilizing ARL&#146;s previously incurred tax losses.
ARI recorded a related deferred tax asset for those net
operating loss carry forwards as ARI has the legal right to
utilize them for tax purposes. The following table discloses the
preferred stock transactions and the effect on additional paid
in capital for the year ended December&nbsp;31, 2004 and six
months ended June&nbsp;30, 2005 to include all of the
transactions including the effect of the spin off of ARL.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>New preferred</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Additional</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>paid in capital</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="right" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January&nbsp;1, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11,577</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New preferred issued for mandatorily redeemable preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>95,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital contribution</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,931</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exchange of common interest in ARL for new preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(86,486</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,670</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    ARL tax benefit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,522</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,360</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exchange of common interest in ARL for new preferred stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29,630</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustment to recognize interest in Castings, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,750</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    ARL tax benefit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,656</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>241</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    June&nbsp;30, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>82,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>[to be completed]</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;2&#151;Summary of significant accounting
policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Significant accounting policies are described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revenue recognition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Revenues from railcar sales are recognized following completion
of manufacturing, inspection, customer acceptance and shipment,
which is when title and risk for any damage or loss with respect
to the railcars passes to the customer. In some cases, paint and
lining work may be outsourced and, as a result, the sale will
not be recorded until the railcars are shipped from the
independent contractor. Revenues from railcar and industrial
parts and components are recorded at the time of product
shipment, in accordance with our contractual terms. Revenue for
railcar maintenance services are recognized upon completion and
shipment of railcars from our plants. The Company does not
bundle railcar service contracts with new car sales. Revenue for
fleet management services are recognized as performed.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-12</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company records amounts billed to customers for shipping and
handling as part of sales in accordance with EITF&nbsp;00-10,
<I>Accounting for Shipping and Handling Fees and Costs</I>, and
records related costs in cost of sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Debt issuance costs</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Debt issuance costs were incurred in connection with ARI&#146;s
issuance of long-term debt, and are amortized over the term of
the related debt, utilizing the effective interest method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Inventories</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Inventories are stated at the lower of average cost or market on
a first in, first out basis, and include the cost of materials,
direct labor and manufacturing overhead.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Accounts receivable</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company carries its accounts receivable at cost less an
allowance for doubtful accounts. On a periodic basis, the
Company evaluates its account receivable and establishes an
allowance for doubtful accounts, based on a history of past
write-offs and collections and current credit conditions.
Accounts are placed for collection on a limited basis once all
other methods of collection have been exhausted. Once it has
been determined that the customer is no longer in business
and/or refuses to pay, the accounts are written off.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Property, plant and equipment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Land, buildings, machinery and equipment are carried at cost,
including interest on funds borrowed to finance construction.
Maintenance and repair costs are charged directly to earnings.
Tooling is generally capitalized and amortized over a period of
two to five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Buildings are depreciated over estimated useful lives that range
from 14 to 50&nbsp;years. The estimated useful lives of other
depreciable assets, including equipment, vary from 3 to
25&nbsp;years. Depreciation is calculated on the straight-line
method for financial reporting purposes and on accelerated
methods for tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Ohio Castings joint venture</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company uses the equity method to account for its investment
in Ohio Castings owned by its subsidiary, Castings, LLC. Under
the equity method, the Company recognizes its share of the
earnings and losses of the joint venture as they accrue instead
of when they are realized. Advances and distributions are
charged and credited directly to the investment account. Ohio
Castings produces railcar parts that are sold to one of the
joint venture partners. The joint venture partner sells these
parts to outside 3rd&nbsp;parties at current market prices and
to the Company and the other joint venture partner in Ohio
Castings at cost plus a licensing fee. The risk of loss to
Castings, LLC and the Company is limited to its investment in
Ohio Castings and its one third share of its guarantee of Ohio
Castings debt which was approximately $.03&nbsp;million at
June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Impairment of long-lived assets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of
assets may not be recoverable. The criteria for determining
impairment for such long-lived assets to be held and used is
determined by comparing the carrying value of these long-
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-13</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
lived assets to be held and used to management&#146;s best
estimate of future undiscounted cash flows expected to result
from the use of the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the
fair value of the assets. The estimated fair value of the assets
is measured by estimating the present value of the future
discounted cash flows to be generated. There were no events or
changes in circumstances that indicate that the carrying value
of assets may not be recoverable, as such, no impairment losses
have been recorded in the year ended December&nbsp;31, 2004 or
for the six month period ended June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Pension plans and other postretirement benefits</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Certain ARI employees participate in noncontributory, defined
benefit pension plans sponsored by a related party. Benefits for
the salaried employees are based on salary and years of service,
while those for hourly employees are based on negotiated rates
and years of service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI also participates in defined contribution retirement plans,
health care and life insurance plans sponsored by a related
party covering certain employees. Benefit costs are accrued
during the years the employees render service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Income taxes</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI accounts for income taxes under the asset and liability
method. Under this method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial reporting basis and the tax
basis of ARI&#146;s assets and liabilities at enacted tax rates
expected to be in effect when such amounts are recovered or
settled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Statement of cash flows</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
For the purpose of the consolidated statement of cash flows, ARI
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash
equivalents. Until October 2004, ACF received the majority of
ARI&#146;s cash receipts and disbursed ARI&#146;s cash on behalf
of ARI, and maintained an intercompany receivable/payable which
bore interest at ACF&#146;s internal cost of funds in accordance
with an administration agreement between ARI and ACF, which is
described in Note&nbsp;10. Since October 2004, ARI maintains its
own cash balances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Earnings per share</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Basic earnings per share are calculated as net income
attributable to common shareholders divided by the
weighted-average number of common shares outstanding during the
respective period. Diluted earnings per share are calculated by
dividing net income attributable to common shareholders by the
weighted-average number of shares outstanding plus dilutive
potential common shares outstanding during the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Fair value of financial instruments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The carrying amounts of cash and cash equivalents, accounts
receivable, amounts due to/from affiliates and accounts payable
approximate fair values because of the short-term maturity of
these instruments. The fair value of long-term debt is discussed
in Note&nbsp;6. The fair value of the note receivable from Ohio
Castings and Mr.&nbsp;Icahn, which is carried at face amount
plus accrued interest, could not reasonably be estimated due to
the lack of market for similar instruments. Fair value estimates
are made at a specific point in time, based on relevant market
information about the financial instrument.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-14</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Comprehensive income (loss)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Comprehensive income (loss) is defined as the change in equity
of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources.
Comprehensive income (loss) consists of net income (loss) and
the Company&#146;s minimum pension liability adjustment, which
is shown net of tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Use of estimates</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Management of ARI has made a number of estimates and assumptions
relating to the reporting of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with
accounting principles generally accepted in the United States of
America. Significant items subject to estimates and assumptions
include, deferred taxes, pension obligations, workers
compensation, valuation allowances for accounts receivable and
inventory obsolescence and the reserve for warranty claims.
Actual results could differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recent accounting pronouncements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In March 2005, the FASB issued FIN&nbsp;47 as an interpretation
of FASB Statement No.&nbsp;143, &#147;Accounting for Asset
Retirement Obligations&#148; (FASB No.&nbsp;143). This
interpretation clarifies that the term conditional asset
retirement obligation as used in FASB No.&nbsp;143, refers to a
legal obligation to perform an asset retirement activity in
which the timing and/or method of settlement are conditional on
a future event that may or may not be within the control of the
entity. The obligation to perform the asset retirement activity
is unconditional even through uncertainly exists about the
timing and/or method of settlement. Accordingly, an entity is
required to recognize a liability for the fair value of a
conditional asset retirement obligation if the fair value of the
liability can be reasonably estimated. This interpretation also
clarifies when an entity would have sufficient information to
reasonably estimate the fair value of an asset retirement
obligation. FIN&nbsp;47 is effective no later than the end of
fiscal years ending after December&nbsp;15, 2005. The Company is
currently assessing the impact of the adoption of FIN&nbsp;47.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On June&nbsp;1, 2005, the FASB issued Statement No.&nbsp;154,
&#147;Accounting Changes and Error Corrections, a replacement of
APB Opinion No.&nbsp;20 and FASB Statement No.&nbsp;3&#148;. The
Statement applies to all voluntary changes in accounting
principle, and changes the requirements for accounting for and
reporting of a change in accounting principle. The Company will
adopt FAS&nbsp;154 at December&nbsp;31, 2005 and does not
anticipate any material change to its operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Carryover basis adjustment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As ARI and ACF are entities under common control, accounting
principles generally accepted in the United States of America
require that ARI&#146;s initial carrying value of assets
transferred to it from ACF and the sale of Castings LLC be equal
to ACF&#146;s historical net book value at the time of transfer.
The excess of the fair value paid over the net book value of
assets and liabilities transferred to ARI is reflected as a
distribution of retained earnings due to common control and has
the effect of reducing shareholders&#146; equity by
$24.2&nbsp;million at December&nbsp;31, 2004 and June&nbsp;30,
2005, respectively.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-15</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;3&#151;Accounts receivable</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The allowance for doubtful accounts consists of the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Beginning balance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>510</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bad debt expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts written off</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(271</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Recoveries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ending balance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>554</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;4&#151;Inventories</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Inventories consist of the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June 30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Raw materials</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>39,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>44,711</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Work-in-process</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,203</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Finished products</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,759</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>76,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>83,673</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less reserves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,951</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total inventories, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>73,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80,722</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;5&#151;Property, plant and equipment</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Buildings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,479</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Machinery and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,928</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction in process</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,822</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>135,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>145,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less accumulated depreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,985</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net, property plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>76,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>83,221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-16</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;6&#151;Long-term debt</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Long-term debt consists of:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revolving line of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,770</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Industrial revenue bonds guaranteed by ACF and ACF Holding, with
    effective interest rates ranging from 6.75% to 8.5%, principal
    amounts due through the year 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,510</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,495</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less current portion of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,198</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total long-term debt, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,297</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
On March&nbsp;10, 2005, ARI entered into a $50.0&nbsp;million
revolving credit facility secured by receivables and inventory.
The note bears interest at various rates based on LIBOR or
prime. As of June&nbsp;30, 2005, the interest rate on the
borrowings under the revolving credit facility was 6.0% and was
based on the U.S.&nbsp;prime rate at that time. The term of the
credit facility is one year. Debt covenants require ARI to
maintain certain debt-to-earnings and coverage ratios with which
ARI was in compliance at June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The fair value of long-term debt was approximately
$9.9&nbsp;million and $39.5&nbsp;million at December&nbsp;31,
2004 and June&nbsp;30, 2005, respectively, as calculated by
discounting cash flows through maturity using ARI&#146;s current
rate of borrowing for similar liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;7&#151;Warranties</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company records a liability for an estimate of costs that it
expects to incur under its basic limited warranty when
manufacturing revenue is recognized. Factors affecting the
Company&#146;s warranty liability include the number of units
sold and historical and anticipated rates of claims and costs
per claim. The Company periodically assesses the adequacy of its
warranty liability based on changes in these factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Changes in the Company&#146;s warranty reserve are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Six months ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>2005</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="9" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(in thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liability, beginning of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,630</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expense for new warranties issued</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Warranty claims</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(59</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(433</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liability, end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,422</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;8&#151;Stock options</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI has entered into an agreement with its Chief Executive
Officer of the Company. The number of shares that will be
granted are 24.388&nbsp;shares at a price of $5,221.42&nbsp;per
share. The option is
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-17</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
exercisable at the time of an initial public offering and
expires after such offering. As these options are contingent
upon an initial public offering or sale transaction, no dilutive
effect is reflected in earnings per share. Compensation expense
will be recognized when the contingency is met at the effective
date of the public offering. In the event that there is no
public offering and the company is sold, the officer is entitled
to 2% of the excess of the sale price over the book value of the
common equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;9&#151;Related party transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
As part of the 1994 recapitalization described in Note&nbsp;1,
ACF has retained certain liabilities existing as of the
recapitalization date, including employee benefits, workers
compensation, litigation, environmental and others. If ACF were
unable to honor or meet these obligations, ARI would be
responsible for such liabilities. In the opinion of management,
ACF has the present ability to meet these obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI and ACF entered into various administrative and operating
agreements as part of the recapitalization. Under an
administration agreement, ACF charges ARI for providing a
variety of services, primarily data processing. Charges for
these services represent a portion of actual direct and overhead
expenses incurred by ACF, with direct expenses being charged
based on relative time commitments of managerial personnel and
overhead based on relative numbers of employees. Management
believes that these allocation methods are reasonable for the
relevant costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Included in amounts due to affiliates was a payable to ACF of
$11.4&nbsp;million and $1.6&nbsp;million as of December&nbsp;31,
2004 and June&nbsp;30, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI&#146;s employees participate in ACF&#146;s noncontributory,
defined benefit pension plans and other postretirement health
care and life insurance plans. As part of ARI&#146;s
recapitalization, ACF retained the liabilities for unfunded
pension and other postretirement liabilities and workers
compensation liabilities as of October&nbsp;1, 1994 for
employees who transferred from ACF to ARI at that date and for
environmental liabilities as of that date. Although ACF is
responsible for any costs associated with the liabilities at the
recapitalization date, related expenses which have accrued since
the recapitalization have been reflected in ARI&#146;s financial
statements in order to reflect the full cost of doing business.
Expenses that ACF pays relating to pre-recapitalization
liabilities are recorded as capital contributions and appear as
additional paid-in capital on ARI&#146;s balance sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
During 2004, ARI advanced $165.0&nbsp;million to Mr.&nbsp;Icahn
under a note due in 2007 and bearing interest at prime plus
1.75%. On January&nbsp;26, 2005, an assignment and assumption
agreement was executed whereby ARI transferred its interest in a
$165.0&nbsp;million note receivable from Mr.&nbsp;Icahn dated
October&nbsp;28, 2004 to ARL in exchange for 35,000 Units of
common ownership and in satisfaction of a $130.0&nbsp;million
note issued to ARL, as discussed in Note&nbsp;1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company leases certain facilities and equipment from an
entity owned by an officer of the Company, certain affiliates of
ARI and third parties. Total rent expense on these leases were
approximately $3.2&nbsp;million and $3.4&nbsp;million for the
six month period ended June&nbsp;30, 2004 and 2005,
respectively. Expenses to related parties included in the
amounts above were $.2&nbsp;million for the six month period
ended June&nbsp;30, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Castings has a note receivable of $2,250 from Ohio Castings due
July, 2008. The note bears interest at 4%. Principle and
interest is payable quarterly beginning April&nbsp;1, 2005 in
the amount of $165&nbsp;per quarter.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-18</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI entered into a note payable with ACF Holding effective
January&nbsp;1, 2005 in connection with the purchase of Castings
(Note&nbsp;1). The note bears interest at prime (6.75% at
June&nbsp;30, 2005) plus 1/2% and is due on demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;10&#151;Commitments and contingencies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In connection with Trans World Airlines, Inc.&#146;s
(TWA)&nbsp;1992 bankruptcy proceedings under Chapter&nbsp;11 of
the Bankruptcy Code and in response to a petition of another
member of the Icahn control group, the Pension Benefit Guarantee
Corporation (PBGC)&nbsp;terminated the TWA pension plan and
obligated Highcrest Investors Corp. (Highcrest) to make eight
annual payments of $30&nbsp;million each commencing on
July&nbsp;1, 2002 and totaling $240&nbsp;million (termination
payments). As of December&nbsp;31, 2004, Highcrest had made
termination payments totaling $135&nbsp;million and still owed
$105&nbsp;million on this obligation. The obligation to make
termination payments is non-recourse except to the common stock
of ACF Industries Holding Corp. (another member of the Icahn
control group). Management believes this obligation will have no
adverse effect on the future liquidity, results of operations,
or financial position of ARI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI, as well as other manufacturing companies, is subject to
Federal, state and local laws and regulations concerning the
environment. ARI has and continues to be involved with state
agencies in the cleanup of a number of sites under these laws.
Many of these proceedings are at a preliminary stage, and it is
impossible to estimate, with any certainty, the total cost of
remediation, the timing and extent of remedial actions which may
be required by governmental authorities, and the amount of the
liability, if any, of ARI alone or in relation to that of any
other responsible parties. When it is possible to make a
reasonable estimate of the liability with respect to such a
matter, a provision will be made as appropriate. Actual cost to
be incurred in future periods may vary from these estimates.
Based on facts presently known, ARI does not believe that the
outcome of these proceedings will have a material adverse effect
on its future liquidity, results of operations or financial
position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Certain claims, suits and complaints arising in the ordinary
course of business have been filed or are pending against ARI.
In the opinion of management, all such claims, suits, and
complaints arising in the ordinary course of business are
without merit or would not have a significant effect on the
future liquidity, results of operations or financial position of
ARI if disposed of unfavorably.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI entered two supply agreements on January&nbsp;28, 2005 and
on June&nbsp;8, 2005 with a supplier for two types of steel
plates. The agreement is for five years and is cancelable by
either party, with proper notice after two years. The agreement
commits ARI to buy 75% of its production needs from this
supplier at prices that fluctuate with market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;12&#151;New preferred stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The New Preferred Stock is entitled to cumulative dividends at
the rate of 9.25%&nbsp;per annum, payable solely in cash on a
semi annual basis. Holders of the New Preferred Stock are
entitled to vote on matters submitted to the holders of shares
of common stock based on a percentage of the combined number of
shares of common stock and New Preferred Stock. Dividends
declared on the New Preferred Stock for the six months ended
June&nbsp;30, 2005 were $9,090.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;13&#151;Operating segment and sales/ credit
concentrations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company&#146;s operations consist of two reporting segments.
The Company&#146;s revenues consist of manufacturing operations,
and railcar services. Manufacturing revenues amounted to
$269,978 and
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-19</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
$140,434 for the six months ended June&nbsp;30, 2004 and 2005,
respectively. Railcar service revenues amounted to $21,665 and
$18,560 for the six months ended June&nbsp;30, 2004 and 2005,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Revenues from an affiliate were 21% and 14% of total revenues
for the six months ended June&nbsp;30, 2004 and 2005,
respectively. Revenues from two significant customers were 23%
and 19% of total revenues for the six months ended June&nbsp;30,
2004. Revenues from two significant customers were 26%, 21%, of
total revenues for the six month period ended June&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies in
the Consolidated Financial Statements. Performance is evaluated
based on revenue and operating profit. Intersegment sales and
transfers are accounted for as if sales or transfers were to
third parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The information in the following table is derived from the
segments&#146; internal financial reports used for corporate
management purposes.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Manufacturing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Railcar</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Corporate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Six months ended June&nbsp;30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>services</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>&#38; all other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Eliminations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Totals</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues from external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>271,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>291,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,355</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of sales to external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>255,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>275,361</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of intersegment sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,882</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,906</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(473</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,282</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,974</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital expenditures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,560</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation&nbsp;&#38; amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,155</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Manufacturing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Railcar</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Corporate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Six months ended June&nbsp;30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>services</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>&#38; all other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Eliminations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" nowrap><B>Totals</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="20" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenues from external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,994</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,491</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of sales to external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>155,043</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of intersegment sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,102</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,219</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(389</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,951</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>124,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>214,770</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital expenditures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,895</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation&nbsp;&#38; amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,053</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;14&#151;Supplemental cash flow information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company received interest income (included in interest
income) of approximately $1.5&nbsp;million and $1.0&nbsp;million
for the six months ended June&nbsp;30, 2004 and 2005,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI paid interest expense of $1.1&nbsp;million and
$1.9&nbsp;million for the six months ended June&nbsp;30, 2004
and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARI paid taxes of $1.1&nbsp;million and $1.8&nbsp;million for
the six months ended June&nbsp;30, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Depreciation expense amounted to approximately $2.9&nbsp;million
and $3.1&nbsp;million for the six months ended June&nbsp;30,
2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> F-20</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">
<B>American Railcar Industries, Inc. and Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Note&nbsp;15&#151;Subsequent events</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
In April, 2005 construction began on a new paint shop at the
Paragould facility. The project is expected to be completed by
November 2005 at an estimated cost of $13.2&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> F-21</B>
</DIV>
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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="y10848y1084806.gif" alt="(ARI LOGO)">
</DIV>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>
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<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Part&nbsp;II
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION NOT REQUIRED IN PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;13.</B></TD>
    <TD>
    <B>Other expenses of issuance and distribution.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following are the estimated expenses to be incurred in
connection with the issuance and distribution of the securities
registered under this Registration Statement, other than
underwriting discounts and commissions. All amounts shown are
estimates except the Securities and Exchange Commission
registration fee, the National Association of Securities
Dealers, Inc. filing fee and the Nasdaq National Market listing
fee. The following expenses will be borne solely by the
registrant.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SEC Registration Fee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>17,655</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NASD Filing Fee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Nasdaq Listing Fee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transfer Agent Fees and Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs of Printing and Engraving</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Legal Fees and Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounting Fees and Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Blue Sky Fees and Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Miscellaneous</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>*</I></TD>
    <TD align="left">
    <I>To be provided by amendment.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;14.</B></TD>
    <TD>
    <B>Indemnification of directors and officers.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Sections&nbsp;351.355(1) and (2)&nbsp;of The General and
Business Corporation Law of the State of Missouri, or the GBCLM,
provide that a corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including
attorneys&#146; fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, except that, in the case of an
action or suit by or in the right of the corporation, the
corporation may not indemnify such persons against judgments and
fines and no person shall be indemnified as to any claim, issue
or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his
duty to the corporation, unless and only to the extent that the
court in which the action or suit was brought determines upon
application that, despite the adjudication of liability and in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses that the
court deems proper.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Section&nbsp;351.355(3) of the GBCLM provides that, except as
otherwise provided in the corporation&#146;s articles of
incorporation or bylaws, to the extent a director, officer,
employee or agent of the corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to in Section&nbsp;351.355(1) and (2)&nbsp;of the
GBCLM, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses, including attorney&#146;s
fees, actually and reasonably incurred by him in connection with
the action, suit or proceeding.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> II-1</B>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Part&nbsp;II</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Registrant&#146;s restated bylaws will generally provide
that the corporation shall indemnify each person (other than a
party plaintiff suing on his or her own behalf or in the right
of the corporation) who at any time is serving or has served as
a director or officer of the corporation against any claim,
liability or expense incurred as a result of such service (or as
a result of any other service on behalf of or at the request of
the corporation) to the maximum extent permitted by law. This
indemnification includes, but is not limited to, indemnification
of any such person (other than a party plaintiff suing on his or
her behalf or in the right of the corporation), who was or is a
party or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding (including, but
not limited to, an action by or in the right of the corporation)
by reason of such service against expenses (including, without
limitation, costs of investigation and attorneys&#146; fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
action, suit or proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Registrant&#146;s restated bylaws will further generally
provide that the corporation may indemnify any person (other
than a party plaintiff suing on his or her own behalf or in the
right of the corporation) who at any time is serving or has
served as an employee or agent of the corporation against any
claim, liability or expense incurred as a result of such service
(or as a result of any other service on behalf of or at the
request of the corporation) to the maximum extent permitted by
law or to such lesser extent as the corporation, in its
discretion, may deem appropriate. Without limiting the
generality of the foregoing, the corporation may indemnify any
such person (other than a party plaintiff suing on his or her
own behalf or in the right of the corporation), who was or is a
party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding (including, but
not limited to, an action by or in the right of the corporation)
by reason of such service, against expenses (including, without
limitation, costs of investigation and attorneys&#146; fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
action, suit or proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The foregoing represents a summary of the general effect of the
indemnification provisions of the GBCLM, the restated articles
of incorporation, the restated bylaws and such agreements.
Additional information regarding indemnification of directors
and officers can be found in Section&nbsp;351.355 of the GBCLM,
the restated articles of incorporation and the restated bylaws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
or persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and
is therefore unenforceable.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;15.</B></TD>
    <TD>
    <B>Recent sales of unregistered securities.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following information is furnished with regard to all
securities issued by us since July&nbsp;15, 2002 that were not
registered under the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prior to the effective date of this registration statement and
in connection with our stock split, we plan to effect a
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">l</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]-for-one
split of our common stock. All references to numbers of shares
and prices of capital stock give effect to the stock split. All
of the securities issued in the following transactions were sold
in reliance upon the exemptions from registration set forth in
Sections&nbsp;3(a)(9) and 4(2) of the Securities Act relating to
sales by an issuer not involving any public offering. There were
no underwriters employed in connection with any of the
transactions set forth in this Item&nbsp;15.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="5%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)</TD>
    <TD align="left">
    In June 2003 Vegas Financial Corp., a company beneficially owned
    and controlled by Carl C. Icahn, our principal beneficial
    stockholder and the chairman of our board of directors,</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> II-2</B>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Part&nbsp;II</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="5%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    invested $10.0&nbsp;million for 10,000&nbsp;shares of our
    payment-in-kind preferred stock, which we refer to as our PIK
    preferred stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)</TD>
    <TD align="left">
    During the period July&nbsp;15, 2002 through December 2003, we
    issued to Vegas Financial Corp., the sole owner of our PIK
    preferred stock, 8,531.65&nbsp;shares of PIK preferred stock as
    a dividend on the PIK preferred stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)</TD>
    <TD align="left">
    In July 2004, Vegas Financial Corp. converted all of its PIK
    preferred stock, consisting of 95,517.04&nbsp;shares of PIK
    preferred stock and representing all of the shares of PIK
    preferred stock then outstanding, into 96,171&nbsp;shares of our
    new preferred stock. At that time Vegas Financial Corp. also
    invested $67.5&nbsp;million for an additional 67,500&nbsp;shares
    of our new preferred stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)</TD>
    <TD align="left">
    In July 2004, Hopper Investments LLC, a company beneficially
    owned and controlled by Mr.&nbsp;Icahn, invested
    $42.5&nbsp;million for 195&nbsp;shares of our common stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)</TD>
    <TD align="left">
    In July 2004, (a)&nbsp;we issued ACF Industries, Incorporated
    2,000&nbsp;shares of our new preferred stock in exchange for ACF
    Industries, Incorporated transferring certain assets to us and
    (b)&nbsp;we issued 32,500&nbsp;shares of our new preferred stock
    to Shippers Second LLC, a subsidiary of ACF Industries,
    Incorporated, in exchange for Shippers Second transferring
    certain assets to us. The assets so transferred to us were
    subsequently transferred to American Railcar Leasing LLC.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)</TD>
    <TD align="left">
    In July 2004, American Railcar Leasing LLC issued 40,000 B-units
    of American Railcar Leasing LLC to ACF Industries, Incorporated
    and its subsidiaries in consideration of the transfer of assets
    to American Railcar Leasing LLC. The B-units of American Railcar
    Leasing LLC were convertible into shares of our new preferred
    stock. On June&nbsp;30, 2005, the terms of the B-Units were
    modified, among other things, to eliminate this conversion
    feature.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16.</B></TD>
    <TD>
    <B>exhibits and financial statement schedules.</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(a)</TD>
    <TD align="left">
    Exhibits</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
See Exhibit&nbsp;Index at the end of this registration statement.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(b)</TD>
    <TD align="left">
    Financial Statement Schedules</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following financial statement schedules of the registrant
are included in Part&nbsp;II of the Registration Statement:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
[ARI/ GT to Supply]
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions, are
inapplicable or not material, or the information called for
thereby is otherwise included in the financial statements and
therefore has been omitted.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;17.</B></TD>
    <TD>
    <B>Undertakings.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
(a)&nbsp;The undersigned registrant hereby undertakes to provide
to the Underwriters at the closing specified in the Underwriting
Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt
delivery to each purchaser.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
(b)&nbsp;Insofar as indemnification by the registrant for
liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item&nbsp;14 of this
Registration Statement or otherwise, the registrant has been
advised
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> II-3</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Part&nbsp;II</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the Securities Act, and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
(c)&nbsp;The undersigned registrant hereby undertakes that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="5%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)</TD>
    <TD align="left">
    For purposes of determining any liability under the Securities
    Act, the information omitted from the form of prospectus filed
    as part of this Registration Statement in reliance upon
    Rule&nbsp;430A and contained in the form of prospectus filed by
    the registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or
    497(h) under the Securities Act shall be deemed to be part of
    this Registration Statement as of the time it was declared
    effective.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)</TD>
    <TD align="left">
    For the purpose of determining any liability under the
    Securities Act, each post-effective amendment that contains a
    form of prospectus shall be deemed to be a new registration
    statement relating to the securities offered therein, and the
    offering of such securities at the time shall be deemed to be
    the initial <I>bona fide </I>offering thereof.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> II-4</B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Signatures
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Pursuant to the requirements of the Securities Act of 1933 (as
amended, the &#147;Securities Act&#148;), American Railcar
Industries, Inc. has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Charles, State of Missouri, on
August&nbsp;[&nbsp;<FONT face="wingdings">l</FONT>&nbsp;], 2005.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B>American Railcar Industries, Inc.</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
     </TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;James J. Unger</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:&nbsp;&nbsp;&nbsp;President and Chief Executive Officer</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Title</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Date</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    Carl C. Icahn</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board and Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    James J. Unger</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer (principal executive
    officer) and Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    William P. Benac</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Financial Officer (principal financial officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    Michael E. Vaughn</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Controller (principal accounting officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    Vincent J. Intrieri</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    Jon F. Weber</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Name:
    Keith Meister</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    August&nbsp;&nbsp;&nbsp;, 2005</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> II-5</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 16pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Exhibit index
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description of Exhibit</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Underwriting Agreement by and among UBS Securities LLC,
    Bear, Stearns&nbsp;&#38; Co. Inc. and American Railcar
    Industries, Inc.*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Articles of Incorporation of American Railcar Industries, Inc.*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Bylaws of American Railcar Industries, Inc.*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Specimen Common Stock Certificate of American Railcar
    Industries, Inc.*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Registration Rights Agreement*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Opinion of Brown Rudnick Berlack Israels LLP*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Asset Transfer Agreement dated as of October&nbsp;1, 1994 by and
    among ACF Industries, Incorporated, American Railcar Industries,
    Inc. and Carl C. Icahn*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    License Agreement dated as of October&nbsp;1, 1994 by and
    between ACF Industries, Incorporated and American Railcar
    Industries, Inc. as Licensee*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    License Agreement dated as of October&nbsp;1, 1994 by and
    between American Railcar Industries, Inc. and ACF Industries,
    Incorporated as Licensee*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Manufacturing Services Agreement dated as of October&nbsp;1,
    1994 between ACF Industries, Incorporated and American Railcar
    Industries, Inc., as ratified and amended on June&nbsp;30, 2005*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Railcar Servicing Agreement dated as of April&nbsp;1, 2005
    between American Railcar Industries, Inc. and American Railcar
    Leasing LLC*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Business Consultation Agreement for Human Resources Consultation
    between ACF Industries LLC and American Railcar Industries, Inc.
    dated April&nbsp;1, 2005*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Business Consultation Agreement for Engineering Services between
    ACF Industries LLC and American Railcar Industries, Inc. dated
    April&nbsp;1, 2005*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guaranty of the Master Lease Agreement dated September&nbsp;30,
    1999 between The CIT Group, Inc./ Equipment Financing, Inc. and
    American Railcar Industries, Inc., as amended by ACF Industries,
    Incorporated for the benefit of American Railcar Industries,
    Inc.*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Loan Agreement dated as of July&nbsp;1, 1996 between The
    Industrial Development Authority of the City of Jackson,
    Missouri and American Railcar Industries, Inc. together with
    that certain Bond Guaranty Agreement dated as of July&nbsp;1,
    1996 by and among American Railcar Industries, Inc., ACF
    Industries, Incorporated and Fleet National Bank, as Trustee and
    that certain Deed of Trust and Security Agreement dated as of
    July&nbsp;1, 1996 from American Railcar Industries, Inc. to E.
    Sid Douglas,&nbsp;III, as Mortgage Trustee and The Industrial
    Development Authority of The City of Jackson, Missouri as Issuer
    and Secured Party*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Loan Agreement dated as of June&nbsp;1, 1995 between The
    Industrial Development Authority of The City of Kennett,
    Missouri and American Railcar Industries, Inc. together with
    that certain Bond Guaranty Agreement dated as of June&nbsp;1,
    1995 by and among American Railcar Industries, Inc., ACF
    Industries, Incorporated and Fleet National Bank, as Trustee and
    that certain Deed of Trust and Security Agreement dated as of
    June&nbsp;1, 1995 from American Railcar Industries, Inc. to E.
    Sid Douglas,&nbsp;III as Mortgage Trustee and The Industrial
    Development Authority of the City of Kennett, Missouri as Issuer
    and Secured Party*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Lease Agreement dated as of April&nbsp;1, 1995 between the City
    of Paragould, Arkansas as Lessor and American Railcar
    Industries, Inc. as Lessee together with that certain Bond
    Guaranty Agreement by and among American Railcar Industries,
    Inc. and ACF Industries, Incorporated and Fleet National Bank,
    as Trustee*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Services Agreement dated as of
    June&nbsp;30, 2005 between American Railcar Leasing LLC and
    American Railcar Industries, Inc.*</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8pt;">
<B> II-6</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<B>Exhibit index</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description of Exhibit</B></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Lease between St. Charles Properties and ACF
    Industries, Incorporated for the property located at Clark and
    Second Streets, St. Charles, MO, dated March&nbsp;1, 2001
    together with the Assignment and Assumption of Lease dated
    April&nbsp;1, 2005 among ACF Industries LLC (as successor to ACF
    Industries, Incorporated), American Railcar Industries, Inc. and
    St. Charles Properties*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Promissory Note by American Railcar Industries, Inc. in favor of
    Arnos Corp. dated as of December&nbsp;17, 2004*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Exchange and Redemption&nbsp;Agreement dated as of June&nbsp;30,
    2005 among American Railcar Industries, Inc., Hopper
    Investments, LLC, Highcrest Investors Corp., Buffalo Investors
    Corp. and American Railcar Leasing, LLC*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.16</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Loan and Security Agreement dated as of March&nbsp;10, 2005
    among American Railcar Industries, Inc. as Borrower, the lenders
    from time to time party thereto, and North Fork Business Capital
    Corporation, as Agent*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.17</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Corbitt Equipment Acquisition Agreement*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Multi-Year Purchase and Sale Agreement dated as of July&nbsp;29,
    2005 between American Railcar Industries, Inc. and The CIT
    Group/ Equipment Financing, Inc.**&#134;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    American Railcar Industries, Inc. 2005 Equity Incentive Plan*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.20</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Unger Employment Agreement*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Benac Employment Agreement*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>21</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Subsidiaries of American Railcar Industries, Inc.**</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Grant Thornton LLP**</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of KPMG LLP**</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Brown Rudnick Berlack Israels LLP (included in
    Exhibit&nbsp;5.1)*</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Powers of Attorney**</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 15%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><I>*</I></TD>
    <TD align="left">
    <I>To be filed by amendment.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>**&nbsp;</I></TD>
    <TD align="left">
    <I>Filed herewith.</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><I>&#134;</I></TD>
    <TD align="left">
    <I>Confidential treatment has been requested for the redacted
    portions of this agreement. A complete copy of this agreement,
    including the redacted portions, has been filed separately with
    the Securities and Exchange Commission.</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="right" style="font-size: 8pt;">
<B> II-7</B>
</DIV>
</BODY>
</HTML>
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{"company-data": {"conformed-name": "American Railcar Industries, Inc.", "cik": "0001336983", "irs-number": "431481791", "state-of-incorporation": "MO", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-128177", "film-number": "051075637"}, "business-address": {"street1": "100 CLARK STREET", "city": "ST. CHARLES", "state": "MO", "zip": "63301", "phone": "636-940-6000"}, "mail-address": {"street1": "100 CLARK STREET", "city": "ST. CHARLES", "state": "MO", "zip": "63301"}}
ORIGINAL FILING ON FORM S-1
Table of Contents
As filed with the Securities and Exchange Commission on
August
[
l
],
2005
Registration
No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
American Railcar Industries, Inc.
(Exact name of Registrant as specified in its charter)
Missouri
3743
43-1481791
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. employer
identification number)
100 Clark Street
St. Charles, MO 63301
(636) 940-6000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
James J. Unger
President and Chief Executive Officer
American Railcar Industries, Inc.
100 Clark Street
St. Charles, MO 63301
(636) 940-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
Philip J. Flink, Esquire
Samuel P. Williams, Esquire
BROWN RUDNICK BERLACK ISRAELS LLP
One Financial Center
Boston, MA 02111
(617) 856-8200
Lisa L. Jacobs, Esquire
SHEARMAN & STERLING LLP
599 Lexington Avenue
New York, NY 10022
(212) 848-4000
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the effectiveness of
this registration statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, please check the
following
box.
o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
o
If this form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following
box.
o
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Title of Each Class of
Aggregate Offering
Amount of
Securities to be Registered
Price(a)(b)
Registration Fee
Common Stock, par value $0.01 per share
$150,000,000
$17,655
(a)
Includes shares of Common Stock to cover over-allotments, if any.
(b)
Estimated solely for the purpose of calculating the registration
    fee in accordance with Rule 457(o) promulgated under the
    Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
Table of Contents
The information
in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This preliminary prospectus is not an offer to sell
these securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
PRELIMINARY PROSPECTUS
Subject to Completion
August [
l
], 2005
[
l
] Shares
American Railcar Industries, Inc.
Common Stock
This is our initial public offering of our common stock. No
public market currently exists for our common stock. We are
offering                      shares
of common stock by this prospectus. We expect the public
offering price to be between
$          and
$           per
share.
We expect to apply to have our common stock approved for
quotation on the Nasdaq National Market under the trading symbol
"ARII."
Investing in our common stock involves a high degree of risk.
Before buying any shares, you should carefully read the
discussion of material risks of investing in our common stock in
"Risk factors" beginning on page 11 of this
prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
Per share
Total
Public offering price
$
$
Underwriting discounts and commissions
$
$
Proceeds, before expenses, to us
$
$
The underwriters may also purchase up to an
additional                      shares
of our common stock at the public offering price, less the
underwriting discounts and commissions, to cover
over-allotments, if any, within 30 days from the date of
this prospectus.
The underwriters are offering the common stock as set forth
under "Underwriting." Delivery of the shares will be
made on or
about                     ,
2005.
Joint Book-Running Managers
UBS Investment Bank
Bear, Stearns & Co. Inc.
The date of this prospectus
is                     ,
2005.
You should rely only on the information contained in this
prospectus. We have not, and the underwriters have not,
authorized anyone to provide you with additional information or
information different from that contained in this prospectus. We
are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of shares
of our common stock.
Table of contents
Prospectus summary
1
Risk factors
12
Special note regarding forward-looking
    statements
33
Use of proceeds
35
Dividend policy and restrictions
37
Capitalization
38
Dilution
39
Selected consolidated financial data
40
Management's discussion and analysis
    of financial condition and results of operations
43
Industry
67
Business
74
Management
93
Certain relationships and related party
    transactions
102
Description of capital stock
118
Shares eligible for future sale
122
Material U.S. income tax
    considerations for non-U.S. holders
124
Underwriting
128
Legal matters
132
Experts
132
Where you can find more information
133
Index to financial statements
F-1
EX-10.18: MULTI-YEAR PURCHASE AND SALE AGREEMENT
EX-21.1: SUBSIDIARIES
EX-23.1: CONSENT OF GRANT THORNTON LLP
EX-23.2: CONSENT OF KPMG LLP
EX-24.1: POWERS OF ATTORNEY
In this prospectus, references to "our company,"
"we," "us" and "our" refer to
American Railcar Industries, Inc. and its subsidiaries, except
where the context otherwise indicates.
ARI®, Pressureaide®, Center Flow® and our railcar
logo are our U.S. registered trademarks. Each trademark,
trade name or service mark of any other company appearing in
this prospectus belongs to its respective holder.
The market and industry data and forecasts included in this
prospectus are based upon independent industry sources,
including the Association of American Railroads, the Railway
Supply Institute, Inc., Global Insight and the
U.S. Department of Agriculture. Although we believe that
these independent sources are reliable, we have not
independently verified the accuracy and completeness of this
information, nor have we independently verified the underlying
economic assumptions relied upon in preparing any forecasts. See
"Risk factors— Risks related to our business— The
market and industry data contained in this prospectus, including
estimates and forecasts relating to the growth of the railcar
market, cannot be verified with certainty and may prove to be
inaccurate."
Until                     ,
2005 (the 25th day after the date of this prospectus), all
dealers that effect transactions in our common stock, whether or
not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
i
Table of Contents
Prospectus summary
This summary highlights information contained elsewhere in
this prospectus. It is not complete and may not contain all the
information that may be important to you. You should read the
entire prospectus carefully before making an investment
decision, especially the information presented under the heading
"Risk factors" and our consolidated financial
statements and the related notes included elsewhere in this
prospectus.
OUR COMPANY
We are a leading North American manufacturer of covered hopper
and tank railcars. We also repair and refurbish railcars,
provide fleet management services and design and manufacture
certain railcar and industrial components used in the production
of our railcars as well as railcars and non-railcar industrial
products produced by others. We provide our railcar customers
with integrated solutions through a comprehensive set of high
quality products and related services.
Our primary customers include companies that purchase railcars
for lease by third parties, or leasing companies, industrial
companies that use railcars for freight transport, or shippers,
and Class I railroads. In servicing this customer base, we
believe our integrated railcar repair and refurbishment and
fleet management services and our railcar components
manufacturing business help us further penetrate the general
railcar manufacturing market. These products and services
provide us with significant cross-selling opportunities and
insights into our customers' railcar needs that we use to
improve our products and services and enhance our reputation for
high quality. Although we build, service and manage railcars
through an integrated, complementary set of products and
services, we have chosen not to offer railcar leasing services
so that we do not compete with our leasing company customers,
which represent a significant source of our revenues.
For the year ended December 31, 2004, we generated total
revenues of $355.1 million and net income of
$2.3 million. For the six months ended June 30, 2005,
we generated total revenues of $291.6 million and net
income of $9.0 million. As of June 30, 2005, our total
railcar backlog was 7,084 railcars. This amount excludes the
9,000 to 12,000 railcars that the CIT Group/ Equipment
Financing, Inc., or CIT, has agreed to purchase from us during
the 2006 to 2008 period, subject to conditions, under an
agreement we entered into with CIT on July 29, 2005,
described below under "Recent Developments."
OUR HISTORY
Since our formation in 1988, we have grown our business from
being a small provider of railcar components and maintenance
services to one of North America's leading integrated
providers of railcars, railcar components, railcar maintenance
services and fleet management services. In October 1994 we
acquired railcar components manufacturing and railcar
maintenance assets from ACF Industries, Incorporated (now known
as ACF Industries, LLC), or ACF, a company controlled by
Carl C. Icahn, our principal beneficial stockholder and the
chairman of our board of directors. Through this acquisition, we
also hired members of ACF's management, many of whom,
including our president, remain a significant part of our
current management team. These executives brought with them
established relationships with important customers and suppliers
and extensive industry knowledge, as ACF and its predecessor
companies have roots in the railcar manufacturing industry that
trace back to 1873. Led by this management team, we entered the
railcar manufacturing business through the construction of new
manufacturing facilities.
In August 1995 we produced our first railcar at our Paragould,
Arkansas manufacturing facility. We primarily manufacture
covered hopper railcars at our Paragould facility, but we have
the ability to manufacture many other types of railcars at this
facility. The Paragould facility initially had two railcar
manufacturing lines. We added to this facility painting and
lining capabilities in 1999 and a third manufacturing line in
December 2004. We are currently constructing additional painting
and lining
1
Table of Contents
capabilities at our Paragould facility to increase efficiency,
which we expect to open at the end of 2005. Our Paragould
facility also features component manufacturing capabilities.
In January 2000 we produced our first railcar at our Marmaduke,
Arkansas manufacturing facility. We manufacture tank railcars at
this facility. The design of this facility enables us to
manufacture many different types of tank railcars at the same
time.
Since 1994 we have significantly expanded our components
manufacturing and railcar services operations. Our operations
now include three railcar assembly, sub-assembly and fabrication
facilities, three railcar and industrial component manufacturing
facilities, six railcar repair plants and four mobile repair
units. Our services business has grown to include online access
by customers, remote fleet management, expanded painting, lining
and cleaning offerings, regulatory consulting and engineering
support. Additionally, members of our management team helped
found and develop, and continue to operate, a joint venture,
Ohio Castings Company, LLC, which we refer to as Ohio Castings,
in which we own a one-third interest and that manufactures and
sells sideframes, bolsters, couplers and yokes for distribution
to third parties and to us. We believe that our involvement in
this joint venture helps us maintain our levels of production at
competitive prices, despite industry-wide shortages of these
potentially capacity constraining components.
OUR INDUSTRY
Overview.
Demand for railcars reflects their importance
to the North American economy in moving goods and raw materials.
In periods of rising economic activity, fleet utilization
typically increases, driving an increase in demand for new
railcars, which also increases backlog for new railcars.
Conversely, during economic slowdowns, fleet utilization
typically declines, resulting in reduced demand, deliveries and
backlog for new railcars. According to Global Insight, orders
for new railcars are expected to be strong with deliveries
projected to average 59,100 railcars per year from 2005
through 2010. This compares to deliveries of 17,714 railcars in
2002, 32,184 railcars in 2003 and 46,871 railcars in 2004, as
reported by Railway Supply Institute, or RSI. RSI reported that
at the end of 2004, the total backlog for the railcar
manufacturing industry reached 58,677 railcars. This growth
trend has continued through the first six months of 2005, with
36,695 new railcars ordered and 33,695 railcars delivered, with
total backlog increasing to 60,544 railcars.
We believe the main characteristics and trends affecting the
North American railcar industry are:
•
the cyclical nature of the railcar
    market;
•
the replacement demand for the
    aging North American railcar fleet;
•
the shift in the customer base
    from railroads to leasing companies and shippers; and
•
the consolidation of railcar
    manufacturers.
Covered hopper railcars.
North American demand for
covered hopper railcars has shown renewed strength due to
increased shipments of a variety of products including plastics,
chemicals and food. We believe there will be strong demand for
covered hopper railcars in the North American market over the
next several years. Global Insight forecasts a significant
increase in deliveries of covered hopper railcars, from 3,801 in
2003 and 5,602 in 2004 to 13,924 in 2005 and 16,779 in 2006,
with deliveries averaging approximately 15,750 railcars per year
from 2007 through 2010. We believe the main characteristics and
trends affecting the North American covered hopper railcar
market are:
•
the health of the
    U.S. economy;
•
increases in production of a
    number of consumer and business durable goods;
•
increases in domestic and
    international demand for U.S. agricultural products;
2
Table of Contents
•
increases in demand for corn used
    in ethanol production; and
•
the need to replace aging covered
    hopper railcars.
Tank railcars.
Tank railcars are in higher demand in
North America as manufacturing activity, and the need for
liquids and gases used in manufacturing, increases. The
manufacturing of tank railcars is highly regulated and their
production requires a specially trained workforce and dedicated
manufacturing facilities. As a result, the tank railcar market
is difficult to enter and competition is concentrated. We
believe the demand for tank railcars in the North American
market will continue to be strong and stable over the next
several years. Global Insight projects an increase in tank
railcar deliveries, from 8,176 in 2003 and 8,939 in 2004, to
10,803 in 2005 and 11,058 in 2006, with deliveries averaging
approximately 9,900 tank railcars per year from 2007 through
2010. We believe the main characteristics and trends affecting
the North American tank railcar market are:
•
increases in manufacturing
    activity and the resulting demand for higher volumes of
    chemicals and gases;
•
increases in demand for
    petrochemicals, ethanol, edible and lubricating oils and liquid
    food products; and
•
the need to replace aging tank
    railcars.
These trends affecting the railcar industry and the covered
hopper and tank railcar markets are discussed in the section
entitled "Industry."
OUR BUSINESS STRENGTHS AND COMPETITIVE ADVANTAGES
We believe that the following key business strengths and
competitive advantages will contribute to our growth:
•
Leading railcar manufacturer
    with focus on the covered hopper and tank railcar
    markets.
We are a
    leading North American manufacturer of covered hopper and tank
    railcars. Over the last three years we believe we have produced
    an estimated 33% of the covered hopper railcars and an estimated
    16% of the tank railcars delivered in North America. Based on a
    report by the Association of American Railroads, these represent
    the two largest segments of the North American railcar industry,
    with covered hopper railcars representing approximately 30% and
    tank railcars representing approximately 19% of the total North
    American railcar fleet, based on the number of railcars in
    service. We believe our railcars are differentiated by their
    superior quality, innovation and reliability.
•
Modern non-union, low cost
    railcar manufacturing facilities in strategic
    locations.
Unlike
    many of our competitors, we manufacture all of our railcars in
    modern facilities built in the last ten years. We designed these
    facilities to provide manufacturing flexibility and allow for
    the production of a variety of railcar sizes and types. We
    strategically located these facilities in close proximity to our
    main customers and suppliers. This reduces freight time and
    costs for the components we purchase and the time for delivery
    of completed railcars. Over the past several years, we have
    increased our production capacity and efficiency and reduced our
    fixed costs per railcar through a number of targeted operational
    improvements, such as design changes that reduce the amount of
    raw materials necessary for production of railcars. Currently
    none of our over 1,100 employees at our Paragould and Marmaduke
    railcar manufacturing facilities are represented by a union.
•
Preferred access to
    components through in-house production, a joint venture and
    strategic sourcing
    arrangements.
We
    produce many of the components necessary to our railcar
    manufacturing business ourselves and we own a one-third interest
    in, and our management team operates, our Ohio Castings joint
    venture, from which we obtain certain other components. We
    believe our in-house production capabilities and our involvement
    in this joint venture help us
3
Table of Contents
maintain access to components at competitive prices, despite
    industry-wide shortages of these potentially capacity
    constraining components. We also have developed and actively
    maintain strategic sourcing arrangements and strong
    relationships with our suppliers. These arrangements and
    relationships help ensure our continued access to critical
    components and raw materials that we use to produce railcars,
    including steel, wheels, and heavy castings. We believe our
    attention to strengthening our supply chain helps us maintain
    operational continuity and high production levels.
•
Integrated railcar repair and refurbishment and fleet
    management services complement railcar manufacturing.
We
    provide a wide array of complementary products and services to
    the railcar industry. Unlike some other railcar manufacturers,
    we also repair, maintain and provide fleet management services
    for existing railcars, including railcars built by others, and
    manufacture railcar components for third parties and us. We
    believe this diverse product and service offering provides us
    with a competitive advantage relative to other railcar
    manufacturers, primarily in the form of cross-selling
    opportunities. We also believe that our ability to address the
    needs of our customers throughout the lifecycle of a railcar
    enhances our customer relationships and provides us with
    additional growth opportunities and unique insights into
    industry trends.
•
Strong relationships with a long-term and diverse customer
    base.
We believe that our customers value our products
    and services. Many of our major customers have been doing
    business with us for a number of years, including CIT, Dow
    Chemical Company, GE Capital Corporation and Solvay America,
    Inc. Many of our customers have demonstrated a willingness to
    purchase several different types of our products and services
    over time. We believe we deliver high quality products and
    services to our customers with low operating and maintenance
    costs, while maintaining what we believe are low levels of
    warranty claims.
•
Strong management team with long-standing industry
    experience.
We have an experienced senior operations
    management team that has an average of over 25 years of
    experience in the railcar and related manufacturing industries.
    Our senior operations management team, including our president,
    James J. Unger, has been with us since we began manufacturing
    railcars. This team conceived and built our Paragould and
    Marmaduke railcar manufacturing facilities and has been
    responsible for growing our revenues from $84.7 million in
    1994 to $355.1 million in 2004.
OUR STRATEGY
The key elements of our business strategy are as follows:
•
Maintain and expand presence
    in covered hopper and tank railcar
    markets.
We intend
    to maintain and expand our presence in the covered hopper and
    tank railcar markets by continuing to deliver high quality and
    innovative products. We believe our excellent customer
    relationships have enabled us to identify market demands that we
    then target through our product development and marketing
    efforts. We intend to continue the close collaboration between
    our customers and our engineering, marketing, operations and
    management personnel to meet demand and, where appropriate, to
    selectively expand production capacity.
•
Continue to improve
    operating
    efficiencies.
We
    intend to build on the success of our production initiatives at
    our Paragould and Marmaduke railcar manufacturing facilities and
    plan to continue to identify opportunities to enhance operating
    efficiencies across these and our other manufacturing
    facilities. These opportunities include our continued
    streamlining of our manufacturing processes and our quality
    control initiatives. We also intend to continue the efforts of
    our design cost reduction team, formed in 2003, which has
    already significantly reduced our railcar production costs
    through standardization of components used in our railcars,
    design changes to reduce the amount of raw material required for
    our railcars and improved manufacturing techniques that reduce
    our labor requirements. These efforts should allow us to reduce
    our costs and maintain competitive prices.
4
Table of Contents
•
Continue to grow railcar
    service and fleet management businesses and increase sales of
    railcar and industrial
    components.
As the
    existing North American railcar fleet continues to age, we
    anticipate increased demand for maintenance and repair services
    and railcar components used in the maintenance and repair of
    railcars. Additionally, we expect growing demand for our fleet
    management services as ownership of railcars continues to shift
    away from the railroads and toward the shippers and leasing
    companies, which often outsource their fleet management
    activities to third-party service providers such as us. We
    intend to capitalize on these trends and we believe we are well
    positioned to provide increased services through our
    strategically located network of railcar repair and service
    facilities.
•
Leverage manufacturing
    expertise to selectively expand product
    portfolio.
We may
    seek to expand our product portfolio to other selected types of
    railcars. Our management designed and constructed our Paragould
    manufacturing facility to be able to produce most railcar types,
    and we believe our adaptive production lines and flexible
    employees are able to shift production among various railcar
    types with minimal interruption to our operations. In addition,
    as the existing fleet of North American railcars is aging,
    expansion of our product portfolio into new railcar types will
    allow us to grow our business by capturing a portion of the
    natural replacement demand for existing railcar types. Our
    ability to produce other types of railcars positions us to
    respond to customer requests for production outside of our
    traditional markets and provides us additional manufacturing
    flexibility in the event the covered hopper or tank railcar
    markets weaken.
•
Selectively pursue strategic
    external growth
    opportunities.
By
    significantly reducing our debt through this offering and with
    the establishment of a public market for our common stock, we
    believe we will have increased financial flexibility to
    supplement internal growth with select acquisitions and
    alliances. We also believe our in-house fabrication of railcar
    components and our Ohio Castings joint venture provide us with
    competitive advantages and we intend to enhance these advantages
    by selectively acquiring or establishing strategic relationships
    with railcar components manufacturers and suppliers of critical
    raw materials. We may also seek to expand our railcar components
    business into international markets on an opportunistic basis.
THE TRANSACTIONS
We intend to use the proceeds of this offering to:
•
repay outstanding borrowings under
    our revolving credit facility;
•
repay the notes payable that we
    issued to ACF Industries Holding Corp. in connection with the
    acquisition of our joint venture interest in Ohio Castings, and
    that we issued to Arnos Corp., both of which are entities
    controlled by Carl C. Icahn, our principal beneficial
    stockholder and the chairman of our board of directors;
•
redeem all of our industrial
    revenue bonds;
•
redeem all of the outstanding
    shares of our preferred stock, all of which are held by Carl C.
    Icahn and his affiliates; and
•
pay fees and expenses related to
    this offering and the transactions identified above.
For more information, see "Use of proceeds."
Our outstanding shares of preferred stock include our
mandatorily redeemable preferred stock and our new preferred
stock. See "Description of capital stock."
Concurrently with this offering, we expect our president and
chief executive officer, James J. Unger, to exercise an
option to purchase
[
l
]
shares
of our common stock for
$
[
l
]
per
share, after giving effect to the stock split described below.
See "Management—Executive compensation—Employment
and noncompetition agreements." Concurrently with this
offering, we also intend to amend provisions of our revolving
credit facility to increase its size, extend its term and modify
certain of its covenants. See
5
Table of Contents
"Management's discussion and analysis of financial
condition and results of operations— Revolving credit
facility" for a description of our existing revolving
credit facility. Immediately prior to the closing of this
offering, we will effect a
[
l
]-for-one
stock split of our common stock, which we refer to as the stock
split. We refer to this offering, the application of the
proceeds of this offering as described above, the exercise of
James J. Unger's option, the amendment of our
revolving credit facility and the stock split collectively as
the "Transactions."
RECENT DEVELOPMENTS
On July 29, 2005 we entered into a multi-year purchase and
sale agreement with The CIT Group/ Equipment Financing, Inc., or
CIT, to manufacture and sell to CIT covered hopper and tank
railcars. Under this agreement, CIT has agreed to buy a minimum
of 3,000 railcars from us in each of 2006, 2007 and 2008 and we
have agreed to offer to sell to CIT up to 1,000 additional
railcars in each of those years. CIT may choose to satisfy its
purchase obligations from among a variety of covered hopper and
tank railcars described in the agreement. CIT may reduce its
future purchase obligations or cancel pending purchase orders,
upon prior written notice to us, under certain conditions. Under
the agreement, purchase prices for railcars are subject to steel
surcharges and certain other material cost increases applicable
at the time of production.
CORPORATE INFORMATION
We were incorporated in Missouri in 1988 as Corbitt Holding
Corporation, Inc. and changed our name to American Railcar
Industries, Inc. in 1995. The address of our principal executive
offices is 100 Clark Street, St. Charles, Missouri, 63301.
Our telephone number is (636) 940-6000. Our website address
is www.americanrailcar.com. Information contained in or
connected to our website is not part of this prospectus.
6
Table of Contents
The offering
Unless otherwise indicated, all of the information in this
prospectus assumes the underwriters do not exercise their
over-allotment option to purchase additional shares of our
common stock. Please see "Description of capital
stock" for a summary of the terms of our common stock.
Common stock offered by us
[
l
]
    shares.
Common stock outstanding after this offering
[
l
]
    shares.
Common stock subject to the over-allotment option
[
l
]
    shares.
Use of proceeds
We expect to receive net proceeds from the offering of
    approximately
    $[
l
]
    million, after deducting underwriting discounts and commissions
    and estimated expenses of this offering payable by us, assuming
    an initial offering price of
    $[
l
]
    per share, which represents the midpoint of the range on the
    cover of this prospectus.
We intend to use the net proceeds from this offering to repay
    amounts outstanding under our revolving credit facility, repay
    notes due to our affiliates, redeem all of our industrial
    revenue bonds, redeem all shares of our outstanding preferred
    stock and pay the fees and expenses related to the Transactions.
    See "Use of proceeds."
Dividend policy
Although our board of directors has never declared or paid any
    cash dividends on our common stock, following this offering we
    intend to pay cash dividends on our common stock. Payment of
    dividends will be at the discretion of our board of directors
    and will depend upon our operating results, strategic plans,
    capital requirements, financial condition, covenants under our
    borrowing arrangements, applicable law and other factors our
    board of directors considers relevant. See "Risk
    factors—Risks related to the purchase of our common stock
    in this offering—Payments of cash dividends on our common
    stock may be made only at the discretion of our board of
    directors and Missouri law may restrict, and the agreements
    governing our revolving credit facility contain various
    covenants that limit, our ability to pay dividends" and
    "Dividend policy and restrictions."
Nasdaq symbol
ARII.
Risk factors
You should carefully read and consider the information set forth
    under the caption "Risk factors" beginning on
    page 11 and all other information set forth in this
    prospectus before investing in our common stock.
Unless otherwise indicated, all of the information in this
prospectus relating to the number of shares of common stock to
be outstanding after this offering gives effect to the
[
l
]-for-one
stock split of our common stock immediately prior to the closing
of this offering and the exercise of the option we granted to
our chief executive officer to purchase
[
l
]
shares of our common stock, after giving effect to the stock
split. See "Management—Executive
compensation—Employment and noncompetition agreements."
7
Table of Contents
Summary consolidated financial data
The following table sets forth our summary consolidated
financial data for the periods presented. The consolidated
statements of operations and cash flow data for the years ended
December 31, 2002, 2003 and 2004 and the consolidated
balance sheet data as of December 31, 2003 and 2004 are
derived from our audited consolidated financial statements and
related notes included elsewhere in this prospectus. The
consolidated statements of operations and cash flow data for the
years ended December 31, 2000 and 2001 and the consolidated
balance sheet data as of December 31, 2000, 2001 and 2002
are derived from our audited consolidated financial statements
not included in this prospectus. The consolidated statements of
operations and cash flow data for the six months ended
June 30, 2004 and 2005 and the consolidated balance sheet
data as of December 31, 2004 and June 30, 2005 have
been derived from unaudited consolidated financial statements
and related notes included elsewhere in this prospectus and
reflect all adjustments (consisting only of normal, recurring
adjustments) which are, in the opinion of management, necessary
for a fair presentation of our financial position, the results
of operations and cash flows for the periods presented.
Operating results for the six months ended June 30, 2005
are not necessarily indicative of the results that may be
expected for the year ended December 31, 2005 or any other
future period.
You should read this information together with
"Capitalization," "Management's discussion
and analysis of financial condition and results of
operations" and our consolidated financial statements and
the related notes thereto included elsewhere in this prospectus.
8
Table of Contents
SUMMARY CONSOLIDATED FINANCIAL DATA
Six months ended
Years ended December 31,
June 30,
June 30,
2000
2001
2002
2003
2004
2004
2005
(unaudited)
(in thousands, except per share data and railcar amounts)
Consolidated Statement of Operations Data:
Revenues
Manufacturing operations(1)
$
200,691
$
181,438
$
138,441
$
188,119
$
316,432
$
140,434
$
269,978
Railcar services(2)
38,093
32,703
30,387
29,875
38,624
18,560
21,665
Total revenues
238,784
214,141
168,828
217,994
355,056
158,994
291,643
Cost of goods sold
Cost of manufacturing operations(3)
187,375
169,952
134,363
174,350
305,726
131,271
251,060
Cost of railcar services(4)
37,111
33,255
29,533
29,761
34,473
16,503
18,575
Total cost of goods sold
224,486
203,207
163,896
204,111
340,199
147,774
269,635
Gross profit
14,298
10,934
4,932
13,883
14,857
11,220
22,008
Selling, administrative and other
8,693
9,219
9,505
10,340
10,334
6,110
6,651
Operating income (loss)
5,605
1,715
(4,573
)
3,543
4,523
5,110
15,357
Income (loss) from joint venture
0
0
0
(604
)
(609
)
(1,159
)
924
Interest income(5)
5,777
4,770
3,619
3,161
4,422
1,482
977
Interest expense(6)
13,687
9,525
4,853
3,591
3,578
1,506
2,305
Income (loss) before income tax (benefit) expense
(2,305
)
(3,040
)
(5,807
)
2,509
4,758
3,927
14,953
Income tax (benefit) expense)
(713
)
(1,074
)
(1,894
)
1,256
2,438
1,714
5,745
Net income (loss)
$
(1,592
)
$
(1,966
)
$
(3,913
)
$
1,253
$
2,320
$
2,213
$
9,208
Less preferred dividends
0
3,070
7,139
9,690
13,241
5,619
9,090
Loss available to common shareholders
(1,592
)
(5,036
)
(11,052
)
(8,437
)
(10,921
)
(3,406
)
118
Weighted average shares outstanding (actual shares)
Basic and diluted(7)
1,000
1,000
1,000
1,000
1,087
1,000
1,195
Net income (loss) per common share (actual dollars)
Basic and diluted
(1,592
)
(5,036
)
(11,052
)
(8,437
)
(10,047
)
(3,406
)
99
Consolidated balance sheet data (at period end):
Cash and cash equivalents
$
2,342
$
1,476
$
183
$
65
$
6,943
$
713
$
27,804
Net working capital
44,702
39,535
36,227
47,864
76,308
61,010
57,545
Net property, plant and equipment
84,897
81,090
75,746
71,230
76,951
70,112
83,221
Total assets
204,096
191,375
188,799
194,569
356,658
215,212
240,974
Total liabilities
169,492
113,757
99,686
98,701
221,177
121,167
134,423
Mandatorily redeemable preferred stock
1
48,071
70,210
89,900
111,685
95,519
82,057
Total shareholders' equity
$
34,604
$
77,619
$
89,113
$
95,868
$
135,481
$
94,045
$
106,551
Consolidated other operating data:
EBITDA(8)
12,202
8,764
1,698
9,123
10,203
5,452
18,117
Items decreasing EBITDA(9)
8,800
1,700
0
1,400
7,900
3,100
2,400
Capital expenditures
8,665
2,617
1,816
2,301
11,441
1,777
6,560
New railcars delivered
2,423
2,312
1,766
2,557
4,384
2,090
3,345
New railcar orders
2,054
1,598
1,861
4,432
9,844
2,985
2,682
New railcar backlog
1,031
317
412
2,287
7,747
3,182
7,084
Estimated backlog value(10)
60,417
19,864
26,906
129,850
507,333
203,116
505,385
Consolidated cash flow data
Net cash provided by (used in) operating activities
$
3,553
$
13,434
$
10,611
$
(1,638
)
$
(18,546
)
$
1,198
$
11,274
Net cash used in investing activities
(8,782
)
(2,189
)
(535
)
(2,251
)
(11,441
)
(606
)
(1,704
)
Net cash provided by (used in) financing activities
$
7,154
$
(12,111
)
$
(11,369
)
$
3,771
$
36,865
$
128
$
6,290
9
Table of Contents
(1)
Includes revenues from transactions with affiliates of
    $52.8 million, $64.8 million, $63.6 million,
    $62.9 million and $64.4 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $26.4 million and
    $28.1 million for the six months ended June 30, 2004
    and 2005, respectively.
(2)
Includes revenues from transactions with affiliates of
    $16.1 million, $8.6 million, $12.8 million,
    $11.0 million and $19.4 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $7.7 million and
    $11.2 million for the six months ended June 30, 2004
    and 2005, respectively.
(3)
Including costs from transactions with affiliates of
    $46.6 million, $57.6 million, $55.7 million,
    $54.4 million and $59.9 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $24.4 million and
    $25.9 million for the six months ended June 30, 2004
    and 2005, respectively.
(4)
Includes costs from transactions with affiliates of
    $12.8 million, $7.2 million, $12.2 million,
    $10.1 million and $15.5 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $5.9 million and
    $9.1 million for the six months ended June 30, 2004
    and 2005, respectively.
(5)
Includes interest income from affiliates of
    $5.6 million, $4.3 million, $3.4 million,
    $3.0 million and $3.9 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $1.2 million and
    $0.8 million for the six months ended June 30, 2004
    and 2005, respectively.
(6)
Includes interest expense to affiliates of $0.2 million
    in 2001, and $1.5 million in 2004 and $0.2 million and
    $1.2 million for the six months ended June 30, 2004
    and 2005, respectively.
(7)
Share and per share data have not been restated to give
    effect to the stock split.
(8)
EBITDA represents net income (loss) before income tax
    expense, interest expense, net and amortization and depreciation
    of property and equipment. We believe EBITDA is useful to
    investors in evaluating our operating performance compared to
    that of other companies in our industry. In addition, our
    management uses EBITDA to evaluate our operating performance.
    The calculation of EBITDA eliminates the effects of financing,
    income taxes and the accounting effects of capital spending.
    These items may vary for different companies for reasons
    unrelated to the overall operating performance of a
    company's business. EBITDA is not a financial measure
    presented in accordance with U.S. generally accepted
    accounting principles, or U.S. GAAP. Accordingly, when
    analyzing our operating performance, investors should not
    consider EBITDA in isolation or as a substitute for net income
    (loss), cash flows from operating activities or other statements
    of operations or statements of cash flow data prepared in
    accordance with U.S. GAAP. Our calculation of EBITDA is not
    necessarily comparable to that of other similarly titled
    measures reported by other companies.
The following is a reconciliation of net income (loss) to
EBITDA:
Six months ended
Years ended December 31,
June 30,
June 30,
2000
2001
2002
2003
2004
2004
2005
(in thousands
Net income (loss)
$
(1,592
)
$
(1,966
)
$
(3,913
)
$
1,253
$
2,320
$
2,213
$
9,208
Income tax (benefit) expense
(713
)
(1,074
)
(1,894
)
1,256
2,438
1,714
5,745
Interest expense
13,687
9,525
4,853
3,591
3,578
1,506
2,305
Interest income
(5,777
)
(4,770
)
(3,619
)
(3,161
)
(4,422
)
(1,482
)
(977
)
Depreciation and amortization
6,597
7,049
6,271
6,184
6,289
1,501
1,836
EBITDA:
$
12,202
$
8,764
$
1,698
$
9,123
$
10,203
$
5,452
$
18,117
(9)
Our net income (loss) and EBITDA decreased in the periods
    specified below as a result of the following items:
(a)
In 2000 and 2001, we incurred start-up expenses totaling
    $8.8 million and $1.7 million, respectively, in
    connection with our Marmaduke tank railcar manufacturing
    facility. The start-up expenses related to costs associated with
    introducing new tank railcar products, learning new
    manufacturing processes and commencing new operating procedures
    to reach normal productive capacity.
(b)
In 2003, we recorded an asset impairment charge of
    $1.2 million to reduce the carrying value of inventory,
    buildings and improvements, and equipment related to our Milton,
    Pennsylvania railcar
10
Table of Contents
repair plant. Due to reduced
    demand for railcar repairs at this location we elected to idle
    this facility until business conditions warrant its
    reopening.
(c)
In 2004 and in the six months ended June 30, 2004 and
    June 30, 2005, we incurred an estimated $7.9 million,
    $3.1 million and $2.4 million, respectively, in
    increased raw materials costs, consisting primarily of costs
    relating to steel, and railcar component costs, which we were
    unable to pass on to our customers under our then existing
    fixed-price customer contracts. Since the first quarter of 2004,
    we have renegotiated most of our railcar manufacturing contracts
    to include provisions that adjust the selling prices of our
    railcars to reflect increases or decreases in the costs of
    certain raw materials and railcar components. As a result of
    this change to our railcar manufacturing contracts, we were able
    to pass on to our customers approximately 32% of the increased
    raw material and railcar component costs with respect to the
    railcars that we produced and delivered in 2004. Most of our
    railcar manufacturing contracts covering railcars to be produced
    after June 30, 2005 allow for variable pricing to protect
    us against future changes in the cost of certain raw materials
    and railcar components.
(10)
Estimated backlog reflects the total sales attributable to
    the backlog reported at the end of the particular period as if
    such backlog were converted to actual sales. Estimated backlog
    does not reflect potential price increases or decreases under
    most of our customer contracts that provide for variable pricing
    based on changes in the cost of certain raw materials and
    railcar components or the possibility that contracts may be
    canceled or railcar delivery dates delayed and does not reflect
    the effects of any cancellation or delay of railcar orders that
    may occur. See "Management's discussion and analysis
    of financial condition and results of
    operations—Backlog."
11
Table of Contents
Risk factors
Investing in our common stock involves a high degree of risk.
Before you invest in our common stock, you should understand and
carefully consider the risks below, as well as all of the other
information contained in this prospectus and our financial
statements and the related notes included elsewhere in this
prospectus. Any of these risks could materially adversely affect
our business, financial condition, results of operations and the
trading price of our common stock, and you may lose all or part
of your investment.
RISKS RELATED TO OUR BUSINESS
Due in part to the highly cyclical nature of the railcar
industry, we have incurred substantial operating losses in the
past and may experience declines in revenue and substantial
operating losses in the future.
Historically, the North American railcar market has been highly
cyclical and we expect it to continue to be highly cyclical.
During the most recent industry cycle, industry-wide railcar
deliveries declined from a peak of 75,704 in 1998 to a low of
17,714 railcars in 2002. During this downturn, our revenues
dropped from $238.8 million in 2000 to $168.8 million
in 2002 and we incurred losses of $1.6 million,
$2.0 million and $3.9 million in 2000, 2001 and 2002,
respectively. We believe that downturns in the railcar
manufacturing industry will occur in the future and will result
in decreased demand for our products and services. The cycles in
our industry result from many factors that are beyond our
control, including economic conditions in the United States.
Although railcar production has increased since 2002, it may not
persist if favorable economic and other conditions are not
sustained. Even if a sustained economic recovery occurs in the
United States, demand for our railcars may not match or exceed
expected levels. An economic downturn may result in increased
cancellations of railcar orders which could have a material
adverse effect on our ability to convert our railcar backlog
into revenues. In addition, an economic downturn in the United
States could result in lower sales volumes, lower prices for
railcars and a loss of profits for us.
A substantial number of the end users of our railcars acquire
railcars through leasing arrangements with our leasing company
customers. Economic conditions that result in higher interest
rates would increase the cost of new leasing arrangements, which
could cause our leasing company customers to purchase fewer
railcars. A reduction in the number of railcars purchased by our
leasing company customers could have a material adverse effect
on our business, financial condition and results of operations.
Increases in the cost of the raw materials that we use to
manufacture railcars, particularly steel, or delivery delays of
these raw materials may materially adversely affect our
business, financial condition and results of operations.
The production of railcars requires substantial amounts of
steel. The cost of steel and all other materials, including
scrap metal, used in the production of our railcars represents
approximately 80% to 85% of our manufacturing costs. Although we
have negotiated variable pricing provisions in most of our
railcar manufacturing contracts that pass certain increases or
decreases in our steel costs on to our customers, our business
remains subject to risks related to price increases and periodic
delays in the delivery of steel and other raw materials, all of
which are beyond our control. The price for steel, the primary
raw material component of our railcars, increased sharply in
2004 as a result of strong worldwide demand and supply
limitations caused, in part, by steel industry consolidation and
import trade barriers. Price levels for steel have increased
again in 2005 and we expect worldwide demand for steel to
increase, supplies to be more limited and prices to continue to
increase in 2006. In addition,
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Risk factors
the price and availability of other railcar components that are
made of steel have been adversely affected by the increased cost
and limited availability of steel. Any fluctuations in the price
or availability of steel, or any other material used in the
production of our railcars, may have a material adverse effect
on our business, financial condition and results of operations.
In addition, if any of our raw material suppliers were unable to
continue its business or were to seek bankruptcy relief, the
availability or price of the materials we use could be adversely
affected. Deliveries of our raw materials, and the components
made from those raw materials, may also fluctuate depending on
supply and demand for the raw material or governmental
regulation relating to the raw material, including regulation
relating to the importation of the raw material.
We have entered into contracts with most of our railcar
customers that allow for variable pricing to protect us against
future increases in the cost of certain raw materials and
components, including steel. However, in 2004 and in the six
months ended June 30, 2005, we were unable to pass on an
estimated $7.9 million and $2.4 million, respectively,
in increases in raw material and components costs. As prices for
steel, other raw materials and components increase, we may not
be able to pass on such price increases to our customers in the
future, which could adversely affect our operating margins and
cash flows. Even if we are able to increase prices, any such
price increases may reduce demand for our railcars. In addition,
our customers may not be willing to accept contractual terms
that provide for variable pricing and our competitors, in an
effort to gain market share or otherwise, have agreed in the
past, and may in the future agree, to railcar supply
arrangements that provide for fixed pricing. As a result, we may
lose railcar orders or we may be required to agree to supply
railcars with fixed pricing provisions or be subject to less
favorable contract terms, any of which could have a material
adverse effect on our business, financial condition and results
of operations.
Fluctuations in the supply of components and raw materials we
use in manufacturing railcars could cause production delays or
reductions in the number of railcars we manufacture, which could
materially adversely affect our business, financial condition
and results of operations.
Our railcar manufacturing business depends on the adequate
supply of numerous components, such as railcar wheels, brakes,
tank railcar heads, sideframes, axles, bearings, yokes, bolsters
and other heavy castings, and raw materials, such as normalized
steel plate. Over the last few years many suppliers have been
acquired or ceased operations, which has caused the number of
alternative suppliers of components and raw materials to
decline. The combination of industry consolidation and high
demand has caused recent industry-wide shortages of many
critical components as reliable suppliers are frequently at or
near production capacity. For example, with respect to railcar
wheels, there are only two significant suppliers that continue
to produce the type of component we use in our products. We rely
on one of these suppliers for most of our railcar wheels. Also,
a small percentage of the railcar wheels we use are refurbished
and are obtained from scrapped railcars. Supply of these
refurbished railcar wheels is available in limited quantities
and is unpredictable because the supply of refurbished railcar
wheels depends on the level and type of railcars being scrapped
in any given period. The supply of steel is similarly limited.
While we receive regular steel from three suppliers, we have
entered agreements this year requiring us to buy the lesser of a
fixed volume or 75% of our steel requirements from one supplier.
In addition, there is currently only one North American supplier
of the types and sizes of normalized steel plate we use in the
production of many of our tank railcars.
Supply constraints are exacerbated in our industry because,
although multiple suppliers may produce certain components,
railcar manufacturing regulations and the physical capabilities
of manufacturing facilities restrict the types and sizes of
components and raw materials that manufacturers may use. In
addition, we do not carry significant inventories of components
and procure many of our components on a just-in-time basis. With
the recent increased demand for railcars, our remaining
suppliers are facing significant challenges in providing
components and materials on a timely basis to all railcar
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Risk factors
manufacturers, including to us. In the event that our suppliers
of railcar components and raw materials were to stop or reduce
the production of railcar components and raw materials that we
use, go out of business, refuse to continue their business
relationships with us or become subject to work stoppages, our
business would be disrupted. Our inability to obtain components
and raw materials in required quantities or of acceptable
quality could result in significant delays or reductions in
railcar shipments. Any of these events would materially and
adversely affect our operating results. Furthermore, our ability
to increase our railcar production to expand our business
depends on our ability to obtain an increased supply of these
railcar components and raw materials.
While we believe that we may, in certain circumstances, secure
alternative sources of these components and materials, we may
incur substantial delays and significant expense in doing so,
the quality and reliability of alternative sources may not be
the same and our operating results may be materially adversely
affected. Alternative suppliers might charge significantly
higher prices for railcar components and materials than we
currently pay. Even if alternative suppliers are available to
us, these suppliers may be unacceptable to our customers because
our customers often specify the components we may use in
railcars manufactured for them. Under such circumstances, the
disruption to our business could have a material adverse impact
on our customer relationships, business, financial condition and
results of operations.
We operate in a highly competitive industry and we may be
unable to compete successfully, which would materially adversely
affect our results of operations.
We face intense competition in all of our markets. In each of
our covered hopper and tank railcar manufacturing businesses we
have two principal competitors. In addition, some of these and
other railcar manufacturers produce railcars primarily for use
in their own railcar leasing operations, competing directly with
leasing companies, some of which are our largest customers. Some
of our competitors have greater financial and technological
resources than we have. Our competitors may increase their
participation in the railcar markets in which we compete and
other railcar manufacturers that currently do not manufacture
covered hopper or tank railcars may choose to compete directly
with us. Railcar purchasers' sensitivity to price and
strong price competition within the industry have historically
limited our ability to increase prices to obtain better margins
on our railcars. Additionally, as we selectively seek to
manufacture different types of railcars we will be competing
against railcar manufacturers with significantly more experience
than we have with regard to such railcar types. Our competition
for the sale of railcar components includes our competitors in
the railcar manufacturing market as well as a concentrated group
of companies whose primary business focus is the production of
one or more specialty components. We compete with numerous
companies in our railcar fleet management and railcar repair
services business, ranging from companies with greater resources
than we have to small, local companies.
In all our markets, in addition to price, competition is based
on quality, reputation, reliability of delivery, product
performance, customer service and other factors. In particular,
technological innovation by any of our existing competitors, or
new competitors entering any of the markets in which we do
business, could put us at a competitive disadvantage. We may be
unable to compete successfully or retain our market share in our
established markets. Increased competition for the sales of our
railcars, our fleet management and repair services and our
railcar components could result in price reductions, reduced
margins and loss of market share, which could materially
adversely affect our prospects, business, financial condition
and results of operations.
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Equipment failures, delays in deliveries or extensive damage
to our facilities, particularly our railcar manufacturing
facilities in Paragould or Marmaduke, Arkansas, could lead to
production or service curtailments or shutdowns.
We manufacture our railcars at manufacturing facilities in
Paragould and Marmaduke, Arkansas. An interruption in
manufacturing capabilities at either of these facilities, as a
result of equipment failure or other reasons, could reduce or
prevent the production of our railcars. A halt of production at
either facility could severely delay scheduled railcar delivery
dates to our customers and affect our production schedule, which
would delay future production. Any significant delay in
deliveries to our customers could result in the termination of
orders, cause us to lose future sales and negatively affect our
reputation among our customers and in the railcar industry, all
of which would materially adversely affect our business and
results of operations. Additionally, production delays or
interruptions at our Jackson, St. Charles or Kennett,
Missouri components manufacturing facilities or at our Ohio
Castings joint venture, all of which provide key components to
our Paragould and Marmaduke railcar manufacturing facilities,
could contribute to delays of railcar deliveries and order
cancellations. Interruptions at our repair, cleaning and
maintenance facilities, including our mobile repair units, may
also have a material adverse effect on our business. All of our
manufacturing and service facilities are also subject to the
risk of catastrophic loss due to unanticipated events, such as
fires, earthquakes, explosions, floods or weather conditions. We
may experience plant shutdowns or periods of reduced production
as a result of equipment failures, loss of power, gray outs,
delays in deliveries or extensive damage to any of our
facilities, which could have a material adverse effect on our
business, results of operations or financial condition.
We depend upon a small number of customers that represent a
large percentage of our revenues. The loss of any single
customer, or a reduction in sales to any such customer, could
have a material adverse effect on our business, financial
condition and results of operations.
Railcars are typically sold pursuant to large, periodic orders
and, therefore, a limited number of customers typically
represents a significant percentage of our railcar sales in any
given year. Our top ten customers based on revenues represented,
in the aggregate, approximately 79%, 79% and 82% in 2002, 2003
and 2004, respectively, of our total revenues. Moreover, our top
three customers based on revenues represented, in the aggregate,
approximately 65%, 70% and 59% in 2002, 2003 and 2004,
respectively, of our total revenues. In 2004, sales to our top
three customers accounted for approximately 24%, 20% and 16%,
respectively, of our total revenues. In the six months ended
June 30, 2005, sales to our top three customers accounted
for approximately 26%, 21% and 14%, respectively, of our total
revenues. The loss of any significant portion of our sales to
any major customer, the loss of a single major customer or a
material adverse change in the financial condition of any one of
our major customers could have a material adverse effect on our
business, financial condition and financial results.
If we lose key personnel, our operations and ability to
manage the day-to-day aspects of our business may be materially
adversely affected.
We believe our success depends to a significant degree upon the
continued contributions of our executive officers and key
employees, both individually and as a group. Our future
performance will substantially depend on our ability to retain
and motivate them. If we lose members of our senior management
team or key employees or are unable to recruit qualified
personnel, our ability to manage the day-to-day aspects of our
business may be materially adversely affected. It would be
difficult to replace members of our senior management team or
key employees without materially adversely affecting our
business operations because members of our senior management
team or key employees have many years of experience with our
company and within the railcar industry and other
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manufacturing industries and strong personal ties with many of
our important customers and suppliers. The loss of the services
of one or more members of our senior management team or key
employees could have a material adverse effect on our business,
financial condition and results of operations. We do not
currently maintain "key person" life insurance.
If we face labor shortages or increased labor costs our
growth and results of operations could be materially adversely
affected.
Due to the cyclical nature of the demand for our products, we
have had to reduce and then rebuild our workforce as our
business has gone through downturns followed by upturns in
business activity. Due to the competitive and rural nature of
the labor markets in which we operate, this type of employment
cycle increases our risk of not being able to retain and recruit
the personnel we require in our railcar manufacturing and other
businesses, particularly in periods of economic expansion. Our
Paragould and Marmaduke facilities are located in sparsely
populated communities and we have experienced a high turnover
rate at these locations among newly-hired employees. The
additional painting and lining capabilities that we are adding
to our Paragould facility, which we expect will be completed by
the end of 2005, will require additional employees to operate.
Our inability to recruit, retain and train adequate numbers of
qualified personnel on a timely basis could materially adversely
affect our ability to operate our businesses, our financial
condition and our results of operations.
The variable purchase patterns of our railcar customers and
the timing of completion, delivery and acceptance of customer
orders may cause our revenues and income from operations to vary
substantially each quarter, which could result in significant
fluctuations in our quarterly results.
Most of our individual railcar customers do not make railcar
purchases every year because they do not need to replace or
replenish their railcar fleets on a yearly basis. Many of our
customers place orders for railcars on an as-needed basis,
sometimes only once every few years. As a result, the order
levels for railcars, the mix of railcar types ordered and the
railcars ordered by any particular customer have varied
significantly from quarterly period to quarterly period in the
past and may continue to vary significantly in the future.
Railcar sales comprised approximately 75% of our total revenue
in 2004 and 80.7% of our total revenue in the six months ended
June 30, 2005, and our results of operations in any
particular quarterly period may be significantly affected by the
number and type of railcars manufactured and delivered in any
given quarterly period. We record the sale of a railcar after
completion of production of the railcar, the railcar is accepted
by the customer following inspection, the risk for any damage or
loss with respect to the railcar passes to the customer and
title to the railcar transfers to the customer. This revenue
recognition policy determines when we record the revenues
associated with our railcar sales and, as a result, will cause
fluctuations in our quarterly results. As a result of these
fluctuations, we believe that comparisons of our sales and
operating results between quarterly periods within the same
fiscal year and between quarterly periods within different
fiscal years may not be meaningful and, as such, these
comparisons should not be relied upon as indicators of our
future performance.
Our relationships with our partners in our Ohio Castings
joint venture may not be successful, which could materially
adversely affect our business.
Effective on January 1, 2005, we acquired from ACF
Industries Holding Corp., an affiliate of Carl C. Icahn, our
principal beneficial stockholder and the chairman of our board
of directors, its one-third ownership interest in Ohio Castings,
our joint venture with affiliates of Amsted Industries Inc., a
railcar components manufacturing company, and The Greenbrier
Companies, a railcar manufacturer and leasing company. We
acquired this joint venture interest in order to increase our
supply
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alternatives for heavy castings, which are critical components
for the manufacture of railcars and the supply of which is
constrained. The companies that supply the railcar industry with
heavy castings have been unable to meet the short-term or
long-term demand of railcar manufacturers and, as such, the
production capacity of many railcar manufacturers, including
ours, is restricted by the limited availability of these
components. Although the allocation of castings that we receive
from Ohio Castings does not provide us with all of our castings
requirements, the joint venture does provide us with a committed
source for a critical portion of the castings that we require
for the successful operation of our business. If Ohio Castings
is unable to provide us with our allocation of castings on a
timely basis or at all, our manufacturing costs could increase
and we may have to delay or cancel the production of ordered
railcars, all of which could materially adversely affect our
business and results of operations.
The level of our reported railcar backlog may not necessarily
indicate what our future revenues will be and our actual
revenues may fall short of the estimated revenue value
attributed to our railcar backlog.
We define backlog as the number of railcars, and the revenue
value in dollars attributed to these railcars, to which our
customers have committed in writing to purchase from us that
have not yet been recognized as revenues. Our competitors may
not define railcar backlog in the same manner as we do, which
could make comparisons of our railcar backlog with theirs
misleading. In this prospectus, we have disclosed our railcar
backlog for various periods and the estimated revenue value in
dollars that would be attributed to this railcar backlog once
the railcar backlog is converted to actual sales. We consider
railcar backlog to be an indicator of future revenues. However,
our reported railcar backlog may not be converted into revenues
in any particular period, if at all, and the actual revenues
from such sales may not equal our reported estimates of railcar
backlog value. For example, if the price for raw materials, such
as steel, and other components used in the production of our
railcars decreases or increases and we have entered into
applicable variable pricing contracts with a customer or we are
otherwise able to pass on these price changes to a customer, our
actual revenues will differ from the estimated revenue value
attributed to our railcar backlog. In addition, our railcar
manufacturing business relies on third-party suppliers for heavy
castings, wheels and other components and raw materials and if
these third parties were to stop or reduce their supply of
components or raw materials, our production would decline and
our actual revenues would fall short of the estimated revenue
value attributed to our railcar backlog. Customer orders may be
subject to cancellation, inspection rights and other customary
industry terms, all of which could affect our recognition of
revenue currently reflected in our backlog. Furthermore,
delivery dates may be subject to deferral, thereby delaying the
date on which we will deliver the associated railcars and
realize revenues attributable to such railcar backlog.
Therefore, our current level of reported railcar backlog may not
necessarily represent the level of revenues that we may generate
in any future period. Furthermore, any contract included in our
reported railcar backlog that actually generates revenues may
not be profitable.
Our management and auditors have identified three significant
deficiencies in our internal controls as of December 31,
2004, which, if not properly remediated could result in
misstatements in our financial statements in future periods.
Our independent auditors, Grant Thornton LLP, issued a letter to
our board of directors in which they identified three
significant deficiencies in the design and operation of our
internal controls as of December 31, 2004. A significant
deficiency is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that
a misstatement of the financial statements that is more than
inconsequential will not be prevented or detected. A control
deficiency exists when the design or operation of a control does
not allow management or employees, in the
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Risk factors
normal course of performing their assigned functions, to prevent
or detect misstatements on a timely basis. The letter
specifically noted the following significant deficiencies:
•
Inventory
    cut-off.
Our
    manufacturing facilities recorded inventory shipped by our
    vendors to us on the date we received the inventory in our
    facilities, rather than on the date of shipment, which is our
    current procedure.
•
Construction in
    process.
We
    transferred assets from construction in process to fixed assets
    on a quarterly basis rather than at the time assets are actually
    placed into service. There was insufficient documentation
    authorizing the movement of assets from construction in process
    to fixed assets. Certain assets were still being classified as
    construction in process even though the asset was in service.
•
Fixed asset recording and
    reconciliation.
Our
    fixed asset subsidiary ledgers were not updated in a timely
    manner. Supporting ledgers for depreciation schedules were
    tracked using Microsoft Excel. The schedules were not reconciled
    on a timely basis. The procedures surrounding the compilation of
    the data was manual and subject to error.
In light of the noted significant deficiencies, we have
instituted control improvements that we believe will reduce the
likelihood of similar errors. If the remedial policies and
procedures we have implemented are insufficient to address the
three significant deficiencies or if additional significant
deficiencies or other conditions relating to our internal
controls are discovered in the future, we may fail to meet our
future reporting obligations, our financial statements may
contain material misstatements and our operating results may be
adversely affected. Any such failure could also adversely affect
the results of the periodic management evaluations and annual
auditor attestation reports regarding the effectiveness of our
internal controls over financial reporting, which will be
required when the SEC's rules under Section 404 of the
Sarbanes-Oxley Act of 2002 become applicable to us beginning
with the filing of our Annual Report on Form 10-K for the
year ended December 31, 2006. Internal control deficiencies
could also cause investors to lose confidence in our reported
financial information. Although we believe we have addressed our
significant deficiencies in internal controls with the remedial
measures we have implemented, we cannot guarantee that the
measures we have taken to date or any future measures will
remediate the significant deficiencies identified or that any
additional significant deficiencies will not arise in the future
due to a failure to implement and maintain adequate internal
controls over financial reporting.
Once we become a public company, we will need to comply with
the reporting obligations of the Exchange Act and
Section 404 of the Sarbanes-Oxley Act. If we fail to comply
with the reporting obligations of the Exchange Act and
Section 404 of the Sarbanes-Oxley Act, or if we fail to
achieve and maintain adequate internal controls over financial
reporting, our business, results of operations and financial
condition, and investors' confidence in us, could be
materially adversely affected.
As a public company, we will be required to comply with the
periodic reporting obligations of the Exchange Act, including
preparing annual reports, quarterly reports and current reports.
Our failure to prepare and disclose this information in a timely
manner could subject us to penalties under federal securities
laws, expose us to lawsuits and restrict our ability to access
financing. In addition, we will be required under applicable law
and regulations to integrate our systems of internal controls
over financial reporting. We plan to evaluate our existing
internal controls with respect to the standards adopted by the
Public Company Accounting Oversight Board. During the course of
our evaluation, we may identify areas requiring improvement and
may be required to design enhanced processes and controls to
address issues identified through this review. This could result
in significant delays and cost to us and require us to divert
substantial resources, including management time, from other
activities.
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For example, during the audit of our 2004 fiscal year, our
independent registered public accounting firm issued a letter to
our board of directors noting certain significant deficiencies,
as described above.
We expect to dedicate significant management, financial and
other resources in connection with our compliance with
Section 404 of the Sarbanes-Oxley Act in the second half of
2005. We expect these efforts to include a review of our
existing internal control structure. As a result of this review,
we may either hire or outsource additional personnel to expand
and strengthen our finance function. There have been no external
costs associated with this effort through June 30, 2005,
and we cannot be certain at this time that we will be able to
comply with all of our reporting obligations and successfully
complete the procedures, certification and attestation
requirements of Section 404 of the Sarbanes-Oxley Act by
the time that we are required to file our Annual Report on
Form 10-K for the year ended December 31, 2006. If we
fail to achieve and maintain the adequacy of our internal
controls and do not address the deficiencies identified in the
letter received by our board of directors from our auditors, we
may not be able to ensure that we can conclude on an ongoing
basis that we have effective internal controls over financial
reporting in accordance with the Sarbanes-Oxley Act. Moreover,
effective internal controls are necessary for us to produce
reliable financial reports and are important to help prevent
fraud. As a result, our failure to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act on a timely basis
could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could
harm our business and negatively impact the trading price of our
common stock.
Rapid growth is straining our operations and requiring us to
incur costs to upgrade our infrastructure.
During the last five quarters, we have experienced extremely
rapid growth in our operations, the number of our employees and
our product offerings. Our growth places a significant strain on
our management, operations and financial systems and also on our
ability to retain employees. Our future operating results will
depend in part on our ability to continue to implement and
improve our operating and financial controls and management
information systems. If we fail to manage our growth
effectively, our business, financial condition and results of
operations could be materially adversely affected.
After this offering, companies affiliated with Carl C. Icahn
will continue to be important suppliers and customers.
We manufacture railcars and railcar components and provide
railcar services for companies affiliated with Carl C. Icahn,
our principal beneficial stockholder and the chairman of our
board of directors. To the extent our relationships with
affiliates of Mr. Icahn change, our results of operations
and financial condition may be materially adversely affected.
Affiliates of Mr. Icahn have accounted for approximately
45%, 34%, 24% and 14% of our revenues in 2002, 2003, 2004 and
the six months ended June 30, 2005, respectively. This
revenue is primarily attributable to our sale of railcars.
American Railcar Leasing LLC, or ARL, a railcar leasing company
owned by affiliates of Mr. Icahn, currently purchases all
of its railcars from us. However, we have no long-term
agreements with ARL or any other affiliates of Mr. Icahn to
purchase our railcars, and we cannot assure you that ARL or
other affiliates of Mr. Icahn will continue to do so. ARL
could, in the future, purchase railcars from one of our
competitors. In addition, we have a railcar servicing agreement
with ARL, under which we provide fleet management services for
the entire railcar fleet of ARL and its subsidiaries. These
railcars represented approximately 39% of the railcars for which
we provided fleet management services as of June 30, 2005.
This agreement is terminable by either party at the end of any
contract year upon six months prior notice and ARL is not
restricted from using the services of our competitors for its
existing fleet of railcars or any other railcars it may
purchase. A
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significant change in the nature of the business relationship
with ARL and other affiliates of Mr. Icahn could have a
material adverse effect on our results of operations.
We also purchase railcar and industrial components from ACF,
another entity affiliated with Mr. Icahn. ACF has been the
supplier of approximately $19.0 million, $31.3 million
and $35.4 million of our inventory purchases in 2003, 2004
and the six months ended June 30, 2005, respectively.
Currently ACF is our sole supplier of tank railcar heads and one
of a limited number of suppliers for other important railcar
components that we use in our manufacturing operations. These
railcar components are manufactured and sold to us under a
supply agreement that is terminable by ACF at the end of any
contract year on six months prior notice. We cannot guarantee
that we would be able to obtain alternative supplies of these
railcar components on a timely basis and on comparable terms if
we were no longer able to purchase these railcar components from
ACF. A failure to obtain component supplies from ACF could
materially adversely affect our results of operations.
For more information on these arrangements, see "Certain
relationships and related party transactions."
Services being provided to us by ARL, an entity controlled by
Carl C. Icahn, may not be sufficient to meet our needs, which
may require us to incur additional costs.
We use certain outsourced information technology and
administrative services from ARL, an entity controlled by
Mr. Icahn. We also sublease our headquarters office space
in St. Charles, Missouri from ARL. We cannot assure you that
these services will be provided at the same level as they are
currently being provided or that we will be able to maintain our
sublease on the same terms as currently in effect. These
arrangements may be terminated by ARL or by us upon six months
notice and, if they were terminated, we would be required to
find a third-party provider of these services or begin to
provide them for ourselves and relocate our office headquarters.
As these agreements were negotiated with ARL, an entity
affiliated with us, the prices and rates charged to us under
these agreements may be lower than the prices and rates that may
be charged by unaffiliated third parties for similar services
and an office sublease or for us to provide these services on
our own. We cannot assure you that, if these agreements are
terminated, we will be able to replace these services and the
sublease in a timely manner or on terms and conditions,
including cost, as favorable as those we are currently
receiving. Additional expenses incurred in replacing these
services and relocation of our office facilities or the failure
to replace these services could materially adversely affect our
results of operations.
After this offering, we may have reduced access to resources
of, and benefits provided by, entities affiliated with Carl C.
Icahn.
We have in the past obtained access to significant management,
financial and other resources from entities affiliated with Carl
C. Icahn. For example, in the past some of our capital needs
have been satisfied by entities affiliated with Mr. Icahn.
Additionally, Mr. Icahn and his affiliated entities have
been key resources for strategic and management advice, which we
have obtained at no cost. We believe access to these resources
has provided us with a competitive advantage. In addition, we
believe that our relationship with entities affiliated with
Mr. Icahn have, in many cases, provided us with a
competitive advantage in identifying opportunities for sales of
our products and identifying and attracting partners for
critical supply arrangements. For example, we participate in
product and service purchasing arrangements with entities
controlled by Mr. Icahn, which we believe may provide us
with favorable pricing as a result of larger aggregate purchases
by the Icahn-affiliated buying group. If we were unable to
participate in these buying group arrangements our manufacturing
costs would increase and our results of operations and financial
condition may be materially adversely affected. Also, lease
sales agents of ARL and ACF, in connection with their own
leasing sales activities have, from time to time, referred their
customers or contacts to us that prefer to purchase rather than
lease railcars, which
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Risk factors
has, in some cases, led to us selling railcars to these
customers or contacts. At this time there is no formal
arrangement under which these services are provided and we do
not compensate ARL, ACF or any of their leasing sales agents for
any railcar sales that we may make as a result of these
referrals. To the extent that ARL or ACF discontinue referring
potential customers to us, or require us to compensate them for
these referrals, our results of operations and financial
condition may be adversely affected.
Lack of acceptance of our new railcar offerings by our
customers could materially adversely affect our business.
Our strategy depends in part on our continued development and
sale of new railcar designs to expand or maintain our market
share in the railcar markets in which we currently compete. The
investment required by us in connection with the development of
new railcar designs is considerable and we usually make
decisions to develop and market new railcars and railcars with
modified designs without firm indications of customer
acceptance. New or modified railcar designs may require
customers to alter their existing business methods or displace
existing equipment in which these customers may have a
substantial capital investment. Additionally, many railcar
purchasers prefer to maintain a standardized fleet of railcars
and railcar purchasers with established railcar fleets are
generally resistant to railcar design changes. Therefore, any
new or modified railcar designs that we develop may not gain
widespread acceptance in the marketplace and any such products
may not be able to compete successfully with existing railcar
designs or new railcar designs that may be introduced by our
competitors.
Our production of new railcar product lines may not be
initially profitable and may result in financial losses.
Our strategy includes developing new railcars and selectively
expanding beyond the covered hopper and tank railcar markets.
When we begin production of a new railcar product line, we
usually experience higher initial costs of production due to
training and labor and operating inefficiencies associated with
new manufacturing processes. Due to pricing pressures in our
industry, the pricing for new railcars in customer contracts
usually does not reflect the initial additional costs, and our
costs of production may exceed the anticipated revenues until we
are able to gain labor efficiencies. For example, in 2004 and
2005, we used a portion of the railcar production capacity at
our Paragould facility, which we primarily use to manufacture
covered hopper railcars, to manufacture centerbeam platform
railcars. This was the first time we manufactured centerbeam
platform railcars and as a result of training and increased
production costs in the early stages of this production run, we
incurred a loss on this product. To the extent that the total
costs of production significantly exceed our anticipated costs
of production, we may incur a loss on our sale of new railcar
product lines.
We may pursue acquisitions or joint ventures that involve
inherent risks, any of which may cause us not to realize
anticipated benefits.
Our business strategy includes the potential acquisition of
businesses and entering into joint ventures and other business
combinations that we expect will complement and expand our
business. We may not be able to successfully identify suitable
acquisition or joint venture opportunities or complete any
particular acquisition, combination, joint venture or other
transaction on acceptable terms. Our identification of suitable
acquisition candidates and joint venture opportunities involves
risks inherent in assessing the values, strengths, weaknesses,
risks and profitability of these opportunities including their
effects on our business, diversion of our management's
attention and risks associated with unanticipated problems or
unforeseen liabilities. If we are successful in pursuing future
acquisitions or joint ventures, we may be required to expend
significant funds, incur additional debt or issue
21
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Risk factors
additional securities, which may materially adversely affect our
results of operations and be dilutive to our stockholders. If we
spend significant funds or incur additional debt, our ability to
obtain financing for working capital or other purposes could
decline and we may be more vulnerable to economic downturns and
competitive pressures. In addition, we cannot guarantee that we
will be able to finance additional acquisitions or that we will
realize any anticipated benefits from acquisitions or joint
ventures that we complete. Should we successfully acquire
another business, the process of integrating acquired operations
into our existing operations may result in unforeseen operating
difficulties and may require significant financial resources
that would otherwise be available for the ongoing development or
expansion of our existing business. Our failure to identify
suitable acquisition or joint venture opportunities may restrict
our ability to grow our business.
If we are unable to protect our intellectual property and
prevent its improper use by third parties, our ability to
compete in the market may be harmed.
We rely on patent protection and a combination of copyright,
trade secret and trademark laws to protect our proprietary
technology and prevent others from duplicating our products.
However, these means afford only limited protection and may not
prevent our competitors from duplicating our products or gaining
access to our proprietary information and technology. These
means also may not permit us to gain or maintain a competitive
advantage.
Any of our patents may be challenged, invalidated, circumvented
or rendered unenforceable. We cannot guarantee that we will be
successful should one or more of our patents be challenged for
any reason. If our patent claims are rendered invalid or
unenforceable, or narrowed in scope, the patent coverage
afforded our products could be impaired, which could
significantly impede our ability to market our products,
negatively affect our competitive position and materially
adversely affect our business and results of operations.
We cannot assure you that any pending or future patent
applications held by us will result in an issued patent, or that
if patents are issued to us, that such patents will provide
meaningful protection against competitors or against competitive
technologies. The issuance of a patent is not conclusive as to
its validity or its enforceability. The United States federal
courts may invalidate our patents or find them unenforceable.
Competitors may also be able to design around our patents. Our
patents and patent applications cover particular aspects of our
products. Other parties may develop and obtain patent protection
for more effective technologies, designs or methods. If these
developments were to occur, it could have an adverse effect on
our sales. If our intellectual property rights are not
adequately protected, we may not be able to commercialize our
technologies, products or services and our competitors could
commercialize our technologies, which could result in a decrease
in our sales and market share and could materially adversely
affect our business and results of operations.
Our products could infringe the intellectual property rights
of others, which may lead to litigation that could itself be
costly, could result in the payment of substantial damages or
royalties, and could prevent us from using technology that is
essential to our products.
We cannot guarantee you that our products, manufacturing
processes or other methods do not infringe the patents or other
intellectual property rights of third parties. Infringement and
other intellectual property claims and proceedings brought
against us, whether successful or not, could result in
substantial costs and harm our reputation. Such claims and
proceedings can also distract and divert management and key
personnel from other tasks important to the success of our
business. In addition, intellectual property litigation or
claims could force us to do one or more of the following:
•
cease selling or using any of our
    products that incorporate the asserted intellectual property,
    which would adversely affect our revenue;
22
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Risk factors
•
pay substantial damages for past
    use of the asserted intellectual property;
•
obtain a license from the holder
    of the asserted intellectual property, which license may not be
    available on reasonable terms, if at all; and
•
redesign or rename, in the case of
    trademark claims, our products to avoid infringing the
    intellectual property rights of third parties, which may not be
    possible and could be costly and time-consuming if it is
    possible to do.
In the event of an adverse determination in an intellectual
property suit or proceeding, or our failure to license essential
technology, our sales could be harmed and our costs could
increase, which could materially adversely affect our financial
condition and results of operations.
We are subject to a variety of environmental laws and
regulations and the cost of complying, or our failure to comply,
with such requirements may have a material adverse effect on our
business, financial condition and results of operations.
We are subject to a variety of federal, state and local
environmental laws and regulations relating to the release or
discharge of materials into the environment, the management,
use, processing, handling, storage, transport or disposal of
hazardous materials, or otherwise relating to the protection of
human health and the environment. These laws and regulations
expose us to liability for the environmental condition of our
current or formerly owned or operated facilities, and also may
expose us to liability for the conduct of others or for our
actions that were in compliance with all applicable laws at the
time these actions were taken. Despite our intention to be in
compliance, we cannot guarantee that we will at all times be in
compliance with all such requirements. The cost of complying
with environmental requirements may also increase substantially
in future years. If we violate or fail to comply with these
regulations, we could be fined or otherwise sanctioned by
regulators. In addition, these requirements are complex, change
frequently and may become more stringent over time, which could
have a material adverse effect on our business. We are also
required to maintain a variety of environmental permits. Our
failure to maintain and comply with these permits could result
in fines or penalties or other sanctions and have a material
adverse effect on our operations or results. Future events, such
as new environmental regulations or changes in or modified
interpretations of existing laws and regulations or enforcement
policies, or further investigation or evaluation of the
potential health hazards of products or business activities, may
give rise to additional compliance and other costs that could
have a material adverse effect on our financial conditions and
operations.
We are involved in investigation and remediation activities at
properties that we now own or lease to address historic
contamination and potential contamination by third parties. We
are also involved with state agencies in the cleanup of two
sites under these laws. These investigations are at a
preliminary stage, and it is impossible to estimate, with any
certainty, the timing and extent of remedial actions that may be
required, and the costs that would be involved in such
remediation. Substantially all of the issues identified relate
to the use of the properties prior to their transfer to us in
1994 by ACF and for which ACF has retained liability and agreed
to indemnify us. However, if ACF fails to honor its obligations
to us, we would be responsible for the cost of such remediation.
We have been advised that ACF estimates that, for the remainder
of 2005, ACF will spend approximately $150,000 on environmental
investigation and, in each of 2006 and 2007, it will spend
approximately $200,000 on environmental investigation, relating
to contamination that existed at properties prior to their
transfer to us in 1994 and for which ACF has retained liability
and agreed to indemnify us. We expense all costs associated with
environmental investigation and remediation relating to our
properties even if we receive indemnification from ACF.
ACF's indemnification is not treated as an offset to that
expense, but rather as an additional capital contribution. The
discovery of historic contamination or the release of substances
into the environment at our current or formerly owned or
operated facilities could
23
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Risk factors
require ACF or us in the future to incur investigative or
remedial costs or other liabilities that could be material or
that could interfere with the operation of our business. Any
environmental liabilities that we may incur that are not covered
by adequate insurance or indemnification from a party other than
ACF will also increase our costs and have a negative impact on
our profitability. See "Business— Environmental
matters" for more information.
Failure of ACF to honor its indemnification obligations to us
may have a material adverse effect on our business and financial
condition.
In connection with our 1994 acquisition from ACF of assets and
certain properties relating to ACF's railcar components
manufacturing and railcar manufacturing and railcar maintenance
businesses, ACF agreed to retain and indemnify us for certain
liabilities relating to its ownership of those assets and
operation of its business prior to the transfer, including
liabilities relating to employee benefit plans, worker's
compensation, environmental contamination and third-party
litigation. The total of such liabilities accrued through
December 31, 2004 is $11.1 million. Additional such
liabilities may accrue in the future. If ACF fails to honor its
indemnification obligations, whether as a result of a dispute
related to the applicability of the indemnification, ACF having
insufficient assets to pay liabilities or otherwise, our
business and financial condition could be materially adversely
affected.
Changes in assumptions or investment performance of pension
and other postretirement benefit plans that we either sponsor or
participate in could materially adversely affect our financial
condition and results of operations.
We either sponsor or participate in several pension plans,
including two plans that were frozen effective April 1,
2004 and in which our employees are therefore no longer accruing
additional benefits. To the extent we continue to sponsor or
participate in these plans, we will be responsible for making
funding contributions to the plans, including the frozen pension
plans, and may be liable for a share of any unfunded liabilities
that may exist at the time we cease to participate in the plans
or the plans are terminated. Our liability and resulting costs
for these plans may increase or decrease based upon a number of
factors, including actuarial assumptions used, the discount rate
used in calculating the present value of future liabilities and
investment performance. An adverse change or result in one or
more of these factors could have a material adverse effect on
our financial condition and results of operations.
We also provide other postretirement benefits to certain of our
employees. Our postretirement benefit obligations and related
expense with respect to these postretirement benefits also
increase or decrease based on several factors, including changes
in health care cost trend rates, and could similarly be
materially adversely affected by adverse changes in these
factors.
We could be liable for liabilities associated with pension
plans sponsored by companies controlled by Carl C. Icahn.
Mr. Icahn, our principal beneficial stockholder and the
chairman of our board of directors, and his affiliates currently
hold over 80% of our outstanding voting securities. Applicable
pension and tax laws make each member of a plan sponsor's
controlled group, generally defined as entities in which there
is at least an 80% common ownership interest, jointly and
severally liable for pension plan obligations sponsored by other
members of the controlled group. These pension obligations
include liability for any unfunded liabilities that may exist at
the time the plans are terminated. We and our subsidiaries are
currently members of a controlled group that includes ACF, an
entity in which Mr. Icahn has an indirect ownership
interest of at least 80%. ACF is the sponsor of several pension
plans that are underfunded, as of December 31, 2004, by a
total of approximately $23.7 million on an ongoing
actuarial basis and $175.4 million if those plans were
terminated, as most recently reported
24
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Risk factors
by the plans' actuaries. These liabilities could increase
or decrease, depending on a number of factors, including future
changes in promised benefits, investment returns and the
assumptions used to calculate the liability. As members of the
controlled group, we would be jointly and severally liable for
any failure of ACF to pay the unfunded liabilities upon a
termination of the ACF pension plans.
Upon completion of this offering, we believe that we should no
longer be a member of the ACF controlled group. As a result, we
should no longer be subject to ACF's pension liabilities,
unless it were determined that we were otherwise a member of the
ACF controlled group or that a principal purpose of the offering
or other transactions that resulted in our ceasing to be a
member of the ACF controlled group was to evade pension
liabilities and the termination date of the underfunded plan was
within five years after the offering or other transactions. If
such a determination were made and upheld by a court, we could
remain jointly and severally liable for pension plan obligations
of ACF, which could have a material adverse effect on our
financial condition and results of operations.
Our manufacturer's warranties expose us to potentially
significant claims.
We warrant the workmanship and materials of many of our products
under express limited warranties. Accordingly, we may be subject
to significant warranty claims in the future such as multiple
claims based on one defect repeated throughout our mass
production process or claims for which the cost of repairing the
defective component is highly disproportionate to the original
cost of the part. These types of warranty claims could result in
costly product recalls, significant repair costs and damage to
our reputation, which could materially adversely affect our
business and results of operations.
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 our manufacture and repair of products that
transport hazardous or volatile materials, such as pressure tank
railcars. We maintain reserves and liability insurance coverage
at levels based upon commercial norms in the industries in which
we operate and our historical claims experience. Over the last
several years, insurance carriers have raised premiums for many
companies operating in our industry. Increased premiums may
further increase our insurance expense as coverages expire or
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 our reserves. An unusually
large liability claim or a series of claims based on a failure
repeated throughout our mass production process may exceed our
insurance coverage or result in direct damages if we were unable
or elected not to insure against certain hazards because of high
premiums or other reasons. In addition, the availability of, and
our ability to collect on, insurance coverage is often subject
to factors beyond our control. Moreover, any accident or
incident involving us, even if we are fully insured 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 materially adversely affect
the cost and availability of insurance in the future.
Covenants in our revolving credit facility currently restrict
and, following amendments to our revolving credit facility that
we expect to enter into concurrently with this offering,
covenants in our revolving credit facility will continue to
restrict our discretion in operating our business and provide
for certain minimum financial requirements.
We expect to amend our revolving credit facility concurrently
with this offering. Following these amendments, our revolving
credit facility will contain various covenants, similar to those
in our
25
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Risk factors
existing revolving credit facility, that, among other things,
will require us to satisfy certain financial covenants and will
limit our management's discretion by restricting our
ability to:
•
incur additional debt;
•
redeem our capital stock;
•
enter into certain transactions
    with affiliates;
•
pay dividends and make other
    distributions;
•
make investments and other
    restricted payments; and
•
create liens.
Our failure to comply with any covenants under the amended
revolving credit facility could lead to an event of default
under the agreements governing our indebtedness that we may have
outstanding at the time, permitting our lenders to accelerate
our borrowings and to foreclose on any collateral.
Some of our railcar services and component manufacturing
employees belong to labor unions and strikes or work stoppages
by them or unions formed by some or all of our other employees
in the future could adversely affect our operations.
We are a party to collective bargaining agreements with labor
unions at our Longview, Texas, North Kansas City, Missouri and
our Milton, Pennsylvania repair facilities and at our Longview,
Texas steel foundry and components manufacturing facility. As of
June 30, 2005, the covered employees at these sites
collectively represent approximately 11% of our entire
workforce. 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 guarantee that our relations with
our railcar services workforce will remain positive. We cannot
guarantee that union organizers will not be successful in future
attempts to organize our railcar manufacturing employees or our
other employees at some of our other 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 layoffs, shutdowns or reductions in the
size and scope of our operations.
The market and industry data contained in this prospectus,
including estimates and forecasts relating to the growth of the
railcar market, cannot be verified with certainty and may prove
to be inaccurate.
This prospectus contains market and industry data obtained
primarily from industry publications of the Association of
American Railroads, the Railway Supply Institute, Global Insight
and information from the U.S. Department of Agriculture.
Industry publications typically indicate that they have derived
the published data from sources believed to be reasonable,
including other railcar manufacturers, but do not guarantee the
accuracy or completeness of the data. While we believe these
publications to be reliable, we have not independently verified
the data or any of the assumptions on which the estimates and
forecasts are based, and the data may prove to be inaccurate.
This data includes estimates and forecasts regarding future
growth in these industries, specifically data related to railcar
production, railcar growth and the historical average age of
active railcars in North America. Forecasts and estimates
regarding future growth of the railcar industry included in
these reports are based on assumptions of the growth and
improvement of the U.S. economy. The growth and improvement
of the U.S. economy during the period of these forecasts
and estimates are not assured.
26
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Risk factors
The failure of the U.S. economy to perform as assumed in
these forecasts and estimates would cause the forecasted
expansion of the railcar industry not to occur or to occur to a
lesser extent than predicted. The failure of the rail industry
or the railcar supply industry to continue to grow as forecasted
by the market and industry data included in this prospectus may
have a material adverse effect on our business and the market
price of our common stock.
Our failure to comply with regulations imposed by federal and
foreign agencies could negatively affect our financial
results.
Our railcar operations are subject to extensive regulation by
governmental regulatory and industry authorities and by federal
and foreign agencies. These organizations establish rules and
regulations for the railcar industry, including construction
specifications and standards for the design and manufacture of
railcars; mechanical, maintenance and related standards; and
railroad safety. New regulatory rulings and regulations from
these federal or foreign agencies may impact our financial
condition and results of operations. If we fail to comply with
the requirements and regulations of these agencies, we may face
sanctions and penalties that could materially adversely affect
our results of operations.
Further consolidation of the railroad industry may materially
adversely affect our business.
Over the past ten years there has been a consolidation of
railroad carriers operating in North America. Railroad carriers
are large purchasers of railcars and represent a significant
portion of our historical customer base. With fewer railroad
carriers, each railroad carrier will have proportionately
greater buying power and operating efficiency. This may
intensify competition among railcar manufacturers to retain
customer relationships with the consolidated railroad carriers
and cause our prices to decline. Future consolidation of
railroad carriers may materially adversely affect our sales and
reduce our income from operations.
Reductions in the availability of energy supplies or an
increase in energy costs may increase our operating costs.
We use electricity and natural gas at our manufacturing
facilities and to operate our equipment. Over the past three
years, prices for electricity and natural gas have fluctuated
significantly. An outbreak or escalation of hostilities between
the United States and any foreign power and, in particular, a
prolonged armed conflict in the Middle East, could result in a
real or perceived shortage of petroleum and/or natural gas,
which could result in an increase in the cost of electricity or
energy generally. Future limitations on the availability or
consumption of petroleum products and/or an increase in energy
costs, particularly electricity for plant operations, could have
a materially adverse effect upon our business and results of
operations.
We may be required to reduce our inventory carrying values,
which could materially adversely affect our financial condition
and results of operations.
We are required to record our inventories at the lower of cost
or market. In assessing the ultimate realization of inventories,
we are required to make judgments as to future demand
requirements and compare them with the current or committed
inventory levels. We have recorded reductions in inventory
carrying values in recent periods due to the discontinuance of
product lines and changes in market conditions due to changes in
demand requirements. We may be required to reduce inventory
carrying values in the future due to a decline in market
conditions in the railcar business, which could have a material
adverse effect on our financial condition and results of
operations.
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Risk factors
We may be required to reduce the value of our long-lived
assets, which could materially adversely affect our financial
condition and results of operations.
We periodically evaluate the carrying values of our long-lived
assets for potential impairment. The carrying value of a
long-lived asset 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
reduced by the estimated cost to dispose of the asset. Any
resulting impairment loss related to reductions in the value of
our long-lived assets could materially adversely affect our
financial condition and results of operations.
RISKS RELATED TO THE PURCHASE OF OUR COMMON STOCK IN THIS
OFFERING
As a new investor, you will experience immediate and
substantial dilution.
You will pay a price for each share of our common stock that
exceeds the per share value attributed from our tangible assets
less our total liabilities. Therefore, if we distributed our
consolidated tangible assets after deducting our consolidated
liabilities to our stockholders following this offering, our
stockholders would receive less per share of common stock than
you paid in this offering. After giving effect to the sale of
our shares of common stock in this offering at the assumed
initial public offering price of
$[
l
] per
share, which represents the midpoint of the range on the cover
of this prospectus, after deducting the underwriting discount
and estimated offering expenses payable by us and after giving
effect to the Transactions, our net tangible book value would
have been approximately
$[
l
] million,
or
$[
l
] per
share. Accordingly, if you purchase shares of our common stock
in this offering you will suffer immediate dilution of
$[
l
] per
share in net tangible book value. Net tangible book value per
share represents the amount of our total consolidated tangible
assets less our total consolidated liabilities, divided by the
total number of shares of common stock outstanding adjusted for
this offering and the expected use of the proceeds of this
offering, based on an assumed initial offering price of
$[
l
] per
share of common stock, which represents the midpoint of the
range on the cover of this prospectus. This dilution is due in
large part to the fact that our earlier investors paid
substantially less than the initial public offering price when
they purchased their shares of our capital stock. You may suffer
additional dilution to the extent outstanding options to
purchase shares of our common stock are exercised. For more
information, see "Dilution."
Our common stock may trade at prices below the initial public
offering price and may be susceptible to declines based on
securities analysts' or industry research and reports.
Prior to this offering, you could not buy or sell our common
stock publicly. We cannot predict the extent to which an active
trading market for our common stock will develop or be sustained
after this offering. The initial public offering price will be
determined by negotiations between us and representatives of the
underwriters based on factors that may not be indicative of
future performance and may not bear any relationship to the
price at which our common stock will trade upon completion of
this offering. You may not be able to resell our common stock at
or above the initial public offering price.
In addition, the trading market for our common stock will be
influenced by the research and reports that industry or
securities analysts publish about us or our business. If one or
more of the analysts who cover us or our industry downgrade our
stock or project a downturn in our industry, our stock price
would likely decline. If one or more of these analysts cease
coverage of our company or fail to regularly publish reports on
us, we could lose visibility in the financial markets, which in
turn could cause our stock price or trading volume to decline.
28
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Risk factors
The price of our common stock is subject to volatility and
you could lose all or part of your investment.
Various factors, such as general economic changes in the
financial markets, announcements or significant developments
with respect to the railcar industry, actual or anticipated
variations in our or our competitors' quarterly or annual
financial results, the introduction of new products or
technologies by us or our competitors, changes in other
conditions or trends in our industry or in the markets of any of
our significant customers, changes in governmental regulation,
our financial results failing to meet expectations of analysts
or investors, or changes in securities analysts' estimates
of our future performance or of that of our competitors or our
industry, could cause the market price of our common stock to
fluctuate substantially. In addition, our customers'
practice of placing large, periodic orders for products on an as
needed basis makes our quarterly sales and operating results
difficult to predict and could cause our operating results in
some quarters to vary from market expectations and also lead to
volatility in our stock price.
Our stock price may decline due to sales of shares by Carl C.
Icahn and other stockholders.
Sales of substantial amounts of our common stock, or the
perception that these sales may occur, may adversely affect the
price of our common stock and impede our ability to raise
capital through the issuance of equity securities in the future.
There will be
[
l
] shares
of our common stock outstanding immediately after this offering.
Of these shares, [
l
]%
will be beneficially owned by our principal beneficial
stockholder and the chairman of our board of directors, Carl C.
Icahn. All shares sold in this offering will be freely
transferable without restriction or further registration under
the Securities Act of 1933. All of our other outstanding shares
of common stock are subject to restrictions applicable to our
"affiliates," as that term is defined in Rule 144
of the Securities Act and subject to 180-day lock-up agreements.
See "Shares eligible for future sale" and
"Underwriting."
We and our executive officers, directors and all our
stockholders have entered into 180-day lock-up agreements with
the underwriters. The lock-up agreements prohibit us and our
executive officers, directors and stockholders from selling or
otherwise disposing of shares of common stock, except in limited
circumstances. The terms of the lock-up agreements can be
waived, at any time, by UBS Securities LLC, at its sole
discretion, without prior notice or announcement, to allow us or
our officers, directors and stockholders to sell shares of our
common stock. If the terms of the lock-up agreements are waived,
shares of our common stock will be available for sale in the
public market, which could reduce the price of our common stock.
See "Shares eligible for future sale— Lock-up
agreements."
Following the expiration of the lock-up period, certain
shareholders under our new registration rights agreement will be
entitled, subject to certain exceptions, to exercise their
demand registration rights to register their shares under the
Securities Act. If this right is exercised, holders of any of
our common stock subject to the registration rights agreement
will be entitled to participate in such registration. By
exercising their registration rights, and selling a large number
of shares, these holders could cause the price of our common
stock to decline. An estimated
[
l
] shares
of common stock will be subject to our registration rights
agreement upon completion of this offering. See "Shares
eligible for future sale," "Certain relationships and
related party transactions— Registration rights" and
"Description of capital stock— Registration
rights."
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Risk factors
We may require additional capital in the future and sales of
our equity securities to provide this capital may dilute your
ownership in us.
We may need to raise additional funds through public or private
equity financings to:
•
expand and grow our business;
•
develop new products and services;
•
respond to competitive
    pressures; or
•
acquire complementary businesses
    or technologies.
Any additional capital raised through the sale of our equity
securities may dilute your percentage ownership interest in us.
Carl C. Icahn will continue to exert significant influence
over us and his interests may conflict with the interests of our
other stockholders.
We have been advised that affiliates of Carl C. Icahn, our
principal beneficial stockholder and the chairman of our board
of directors, are currently negotiating with the Foundation for
a Greater Opportunity, or the Foundation, our other significant
beneficial stockholder, to acquire all of our common stock held
by the Foundation prior to consummation of this offering. If
that purchase occurs, we expect that Mr. Icahn will control
100% of the voting power of our outstanding capital stock prior
to the offering and approximately
[
l
]% of the voting
power of our capital stock following the offering. As a result,
Mr. Icahn is, and will be, able to exert substantial
influence over us, elect our directors and control most matters
requiring board or shareholder approval, including
•
any determination with respect to
    our business strategy and policies;
•
mergers or other business
    combinations involving us;
•
our acquisition or disposition of
    assets;
•
future issuances of common stock
    or other securities by us;
•
our incurrence of debt or
    obtaining other sources of financing; and
•
the payment of dividends on our
    common stock.
Mr. Icahn owns and controls and has an interest in a wide
array of companies, some of which may compete directly or
indirectly with us. As a result, his interests may not always be
consistent with our interests or the interests of our other
stockholders. For example, ARL, a railcar leasing company owned
by Mr. Icahn, competes directly with our other customers
that are in the railcar leasing business and ACF, which supplies
us with critical component products, also provides products to
our competitors. ACF has also previously manufactured railcars
and may do so in the future. Mr. Icahn and entities
controlled by him may also pursue acquisitions or business
opportunities that may be complementary to our business. Our
restated articles of incorporation will allow Mr. Icahn,
entities controlled by him, and any director, officer, member,
partner, stockholder or employee of Mr. Icahn or entities
controlled by him, to take advantage of such corporate
opportunities without first presenting such opportunities to us,
unless such opportunities are expressly offered to any such
party solely in, and as a direct result of, his or her capacity
as our director, officer or employee. As a result, corporate
opportunities that may benefit us may not be available to us in
a timely manner, or at all. See "Description of Capital
Stock— Corporate Opportunities." To the extent that
conflicts of interest may arise between us and Mr. Icahn
and his affiliates, those conflicts may be resolved in a manner
adverse to us or to you or other holders of our securities.
30
Table of Contents
Risk factors
In addition, the existence of a controlling stockholder may have
the effect of making it difficult for a third party to acquire,
or may discourage or delay a third party from seeking to
acquire, a majority of our outstanding common stock, which may
adversely affect the market price of the stock.
Upon the closing of this offering we may be a
"controlled company" within the meaning of the Nasdaq
National Market rules and you will not have the same protections
afforded to shareholders of companies that are not
"controlled companies" and, therefore, are subject to
all of the Nasdaq National Market corporate governance
requirements.
We have been advised that affiliates of Carl C. Icahn may
acquire all of our common stock held by the Foundation prior to
consummation of this offering. If that purchase occurs, we
expect that Mr. Icahn will control approximately
[
l
] % of the
voting power of our outstanding common stock following the
offering. Consequently, after the offering, we will be a
"controlled company" within the meaning of the
corporate governance standards of the Nasdaq National Market.
Under these rules, a "controlled company" may elect
not to comply with certain Nasdaq National Market corporate
governance requirements, including requirements that a majority
of the board of directors consist of independent directors;
compensation of officers be determined or recommended to the
board of directors by a majority of its independent directors or
by a compensation committee that is composed entirely of
independent directors; and director nominees be selected or
recommended for selection by a majority of the independent
directors or by a nominating committee composed solely of
independent directors. If we are a "controlled
company" following this offering, we intend to use these
exemptions. As a result, we expect that we would not have a
majority of independent directors, we would not have a
compensation committee and we would not have a nominating
committee. Accordingly, if we are a "controlled
company" following this offering, you will not have the
same protections afforded to shareholders of other companies
that are not "controlled companies" and, therefore,
are subject to all of the Nasdaq National Market corporate
governance requirements.
Payments of cash dividends on our common stock may be made
only at the discretion of our board of directors and Missouri
law may restrict, and the agreements governing our revolving
credit facility contain various covenants that limit, our
ability to pay dividends.
Our board of directors has never declared or paid any cash
dividends on our common stock. Our board of directors may, in
its discretion, refuse to pay dividends and any payment of
dividends will depend upon our operating results, strategic
plans, capital requirements, financial condition, covenants
under our borrowing arrangements and other factors our board of
directors considers relevant. In addition, the agreements
governing our revolving credit facility restrict our ability to
declare and pay dividends on our capital stock and the amended
revolving credit facility we expect to enter into concurrently
with this offering will also restrict our ability to declare and
pay dividends. Furthermore, Missouri law imposes restrictions on
our ability to pay dividends. For example, we may not declare or
pay a dividend when our net assets are less than our stated
capital, or when payment of a dividend would reduce our net
assets below our stated capital. Accordingly, we may not be able
to pay dividends in any given amount in the future, or at all.
As a result of being a public company, we will incur
increased costs that may place a strain on our resources and our
management's attention may be diverted from other business
concerns.
As a public company, we will incur significant legal, accounting
and other expenses that we did not incur as a private company.
In addition, the Sarbanes-Oxley Act, as well as new rules
subsequently implemented by the Securities and Exchange
Commission, or SEC, and the Nasdaq National Market, have
required changes in corporate governance practices of public
companies. We expect these new rules and regulations to increase
our legal and financial compliance costs and to make some
activities
31
Table of Contents
Risk factors
more time-consuming and costly. These requirements may place a
strain on our systems and resources. The Exchange Act requires
that we file annual, quarterly and current reports with respect
to our business and financial condition. The Sarbanes-Oxley Act
requires that we maintain effective disclosure controls and
procedures and internal controls over financial reporting. We
currently do not have an internal audit group. We will require
significant resources and management oversight to maintain and
improve the effectiveness of our disclosure controls and
procedures and internal controls over financial reporting. This
may divert management's attention from other business
concerns, which could have a material adverse effect on our
business, financial condition, results of operations and cash
flows. In addition, we will need to hire or outsource additional
accounting and financial staff with appropriate public company
experience and technical accounting knowledge.
We are currently evaluating and monitoring developments with
respect to these new rules, and we cannot predict or estimate
the amount of costs we may incur with respect to them or the
timing of such costs.
This offering may cause us to undergo an "ownership
change" for purposes of Section 382 of the Internal
Revenue Code, which may limit our ability to use our net
operating loss carryforwards and certain other tax
attributes.
Our estimated federal net operating loss carryforwards for the
period ending June 30, 2005 were approximately
$7.1 million. Under Section 382 of the Internal
Revenue Code, if a corporation undergoes an "ownership
change," generally defined as a greater than 50% change (by
value) in its equity ownership over a three-year period, the
corporation's ability to use its pre-change of control net
operating loss carryforward and other pre-change tax attributes
against its post-change income may be limited. Although no
definite determination can be made at this time, there is a
possibility that this offering will cause us to undergo an
ownership change under the Internal Revenue Code. These
limitations may have the effect of reducing our after-tax cash
flow. Even if this offering does not cause an ownership change
to occur, we may undergo an ownership change after the offering
due to subsequent changes in ownership of our common stock.
32
Table of Contents
Special note regarding forward-looking statements
This prospectus contains some forward-looking statements
including, in particular, statements about our industry, plans,
strategies and prospects. These statements involve known and
unknown risks, uncertainties and other factors that may cause
our actual results, financial position or performance to be
materially different from any future results, financial
position, or performance expressed or implied by such
forward-looking statements. We have used the words
"may," "will," "expect,"
"anticipate," "believe,"
"forecast," "estimate," "plan,"
"projected," "intend" and similar
expressions in this prospectus to identify forward-looking
statements. We have based these forward-looking statements on
our current views with respect to future events and financial
performance. Our actual results or those of our industry could
differ materially from those projected in the forward-looking
statements.
Our forward-looking statements are subject to risks and
uncertainties, including:
•
the cyclical nature of our
    business;
•
adverse economic and market
    conditions;
•
fluctuating costs of raw
    materials, including steel and railcar components, and delays in
    the delivery of such raw materials and components;
•
our ability to maintain
    relationships with our suppliers of railcar components and raw
    materials;
•
fluctuations in the supply of
    components and raw materials we use in railcar manufacturing;
•
the highly competitive nature of
    our industry;
•
the risk of damage to our primary
    railcar manufacturing facilities or equipment in Paragould or
    Marmaduke, Arkansas;
•
our reliance upon a small number
    of customers that represent a large percentage of our revenues;
•
the variable purchase patterns of
    our railcar customers and the timing of completion, delivery and
    acceptance of customer orders;
•
our dependence on our key
    personnel;
•
the risks of a labor shortage in
    light of our recent growth;
•
risks associated with the
    conversion of our railcar backlog into revenues;
•
the risk of lack of acceptance of
    our new railcar offerings by our customers;
•
the cost of complying with
    environmental laws and regulations;
•
the costs associated with being a
    public company;
•
our relationship with Carl C.
    Icahn, our principal beneficial stockholder and the chairman of
    our board of directors, and his affiliates as a purchaser of our
    products, supplier of components and services to us and as a
    provider of significant capital, financial and managerial
    support;
•
potential failure by ACF to honor
    its indemnification obligations to us;
•
potential risk of increased
    unionization of our workforce;
•
our ability to manage our pension
    costs;
•
potential significant warranty
    claims; and
33
Table of Contents
Special note regarding forward-looking statements
•
covenants in our revolving credit
    facility and other agreements as they presently exist and may be
    amended governing our indebtedness that limit our
    management's discretion in the operation of our businesses.
Our actual results could be different from the results described
in or anticipated by our forward-looking statements due to the
inherent uncertainty of estimates, forecasts and projections and
may be better or worse than anticipated. Given these
uncertainties, you should not rely on forward-looking
statements. Forward-looking statements represent our estimates
and assumptions only as of the date that they were made. We
expressly disclaim any duty to provide updates to
forward-looking statements, and the estimates and assumptions
associated with them, after the date of this prospectus, in
order to reflect changes in circumstances or expectations or the
occurrence of unanticipated events except to the extent required
by applicable securities laws. All of the forward-looking
statements are qualified in their entirety by reference to the
factors discussed above under "Risk factors." We
caution you that these risks may not be exhaustive. We operate
in a continually changing business environment and new risks
emerge from time to time. You should carefully read this
prospectus in its entirety as it contains information you should
consider when making your investment decision.
34
Table of Contents
Use of proceeds
We estimate that we will receive net proceeds from this offering
of approximately $[
l
] million
(or $[
l
] million, if the
underwriters exercise their over-allotment option in full),
after deducting underwriting discounts and other estimated fees
and expenses related to this offering payable by us, assuming an
initial offering price of $[
l
] per
share, which represents the midpoint of the range on the cover
of this prospectus.
The table below shows the application of the net proceeds of
this offering to give effect to the Transactions, as if the
Transactions were completed as of June 30, 2005. Actual
amounts will vary from the amounts shown below.
Amount
Uses of Funds
Repayment of amounts outstanding under revolving credit
    facility(1)
$
30,770
Repayment of notes due to affiliates(2)
19,700
Repayment of all industrial revenue bonds(3)
8,510
Redemption of all outstanding shares of preferred stock(4)
Fees and expenses relating to this offering(5)
Total uses
$
(1)
Borrowings under our revolving credit facility bear interest
    at various rates based on either the LIBOR or the
    U.S. prime rate. As of June 30, 2005, the interest
    rate on the borrowings under the revolving credit facility was
    6.0%, based on the U.S. prime rate at that time. The
    revolving credit facility currently matures in March 2006.
    In conjunction with this offering we intend to amend the
    revolving credit facility to increase its size, extend its term
    and modify certain of its covenants. See "Management's
    discussion and analysis of financial condition and results of
    operations— Liquidity and capital resources— Revolving
    credit facility" for a description of the material terms of
    our revolving credit facility and the proposed amendments.
(2)
Includes indebtedness owed to Arnos Corp. and ACF Industries
    Holding Corp., both of which are beneficially-owned and
    controlled by Carl C. Icahn, our principal beneficial
    stockholder and the chairman of our board of directors. On
    December 17, 2004, we issued a note payable to Arnos Corp.
    in the amount of $7.0 million that bears interest at the
    U.S. prime plus 1.75% and is payable on demand. We refer to
    this note as the Arnos note. We used the proceeds of the Arnos
    note to provide additional working capital. As of June 30,
    2005, the interest rate on the Arnos note was 8.0%. As of
    June 30, 2005, we had $7.0 million in principal amount
    and $0.3 million in accrued interest on the Arnos note
    outstanding. As of January 1, 2005, in connection with our
    purchase of Castings LLC, the entity through which we own our
    interest in the Ohio Castings joint venture, from ACF Industries
    Holding Corp., we issued a note payable to ACF Industries
    Holding Corp. in the principal amount of $12.0 million. We
    refer to this note as the Castings note. The Castings note bears
    interest at the U.S. prime rate plus 0.5% and is due on
    demand. As of June 30, 2005, the interest rate on the
    Castings note was 6.75%. As of June 30, 2005, we had
    $12.0 million in principal amount and $0.4 million in
    accrued interest on the Castings note outstanding. See
    "Certain relationships and related party transactions—
    Certain transactions with ACF Industries LLC and American
    Railcar Leasing LLC— Amounts due to affiliates."
(3)
The industrial revenue bonds are due at varying dates through
    2011 and bear interest at rates ranging from 7.75% to 8.5%, with
    a weighted average interest rate as of June 30, 2005 of
    8.31% per year. See "Management's discussion and
    analysis of financial condition and results of operations—
    Liquidity and capital resources— Industrial revenue
    bonds." The industrial revenue bonds are guaranteed by
    affiliates of Mr. Icahn, and these affiliates will be
    released from such guarantees upon repayment of the industrial
    revenue bonds. In addition, James J. Unger, our president and
    chief executive officer, and his wife own $405,000 of the
    industrial revenue bonds issued by Paragould, Arkansas.
    Mr. Unger and his wife will receive approximately
    $[
l
] upon our repayment in full of
    the amounts due under the industrial revenue bonds. See
35
Table of Contents
Use of proceeds
"Certain relationships and
    related party transactions— Guarantees of indebtedness by
    ACF and other related parties— Industrial revenue
    bonds" and "Certain relationships and related party
    transactions— Certain transactions involving James J.
    Unger— Industrial revenue bonds" for more
    details.
(4)
We intend to redeem all of the
    outstanding shares of our preferred stock and pay all
    accumulated and unpaid dividends on that stock immediately
    following the completion of this offering. As of June 30,
    2005, there was one share of our mandatorily redeemable
    preferred stock outstanding and $743 of accumulated and unpaid
    dividends on that share. As of June 30, 2005, there were
    73,171 shares of our new preferred stock outstanding and
    $7.2 million of accumulated and unpaid dividends on those
    shares. All of our outstanding preferred stock is held by
    Mr. Icahn and his affiliates. See "Certain
    relationships and related party transactions— Redemption of
    new preferred stock" and "Description of capital
    stock."
(5)
Represents the underwriting
    discounts and commissions and other fees and expenses related to
    the offering and the transactions.
36
Table of Contents
Dividend policy and restrictions
Our board of directors has never declared or paid any cash
dividends on our common stock. Following this offering, we
intend to pay cash dividends on our common stock.
The declaration and payment of dividends will be at the
discretion of our board of directors and will depend upon our
operating results, strategic plans, capital requirements,
financial condition, covenants under our borrowing arrangement
and other factors our board of directors considers relevant.
Our existing revolving credit facility restricts the payment of
dividends unless we satisfy certain financial covenants and
provide our lenders under that facility with advance notice of
the dividend. Although we expect to amend our revolving credit
facility concurrently with the completion of this offering, our
revolving credit facility following such amendments will
continue to contain covenants that will only permit us to pay
cash dividends on our common stock if we satisfy certain
financial covenants. In addition, Missouri law imposes
restrictions on our ability to pay dividends. For example, we
may not declare or pay a dividend when our net assets are less
than our stated capital, or when payment of a dividend would
reduce our net assets below our stated capital. Stated capital
means the product of the par value of our common stock
multiplied by the number of our shares of common stock
outstanding. Although we currently believe that our net assets
exceed our stated capital, our board of directors will
periodically reevaluate the amount of our net assets.
Accordingly, we may not be able to pay dividends in any given
amount in the future, or at all.
37
Table of Contents
Capitalization
The following table sets forth our cash and cash equivalents and
capitalization as of June 30, 2005, on an actual basis and
on an adjusted basis to give effect to the Transactions,
including our sale of
[
l
] shares
of our common stock, assuming an initial offering price of
$[
l
] per
share, which represents the midpoint of the range on the cover
of this prospectus, and our application of the net proceeds of
this offering as described in "Use of proceeds."
You should read this table together with "Prospectus
summary— The transactions," "Use of
proceeds," "Management's discussion and analysis
of financial condition and results of operations" and the
consolidated financial statements and the related notes thereto
included elsewhere in this prospectus.
As of June 30, 2005
As
Actual
adjusted
(in thousands, except
share information)
Cash and cash equivalents
$
27,804
Short term debt:
Revolving credit facility(1)
30,770
Notes payable to affiliates
19,000
Total short-term debt
49,770
Long-term debt:
Industrial revenue bonds (including current portion)
8,510
Mandatorily redeemable preferred stock, $0.01 par value,
    99,000 shares authorized, 1 share issued and
    outstanding, actual; no shares authorized, issued or
    outstanding, as adjusted
1
Stockholders' equity:
New preferred stock, par value $0.01 per share;
    500,000 shares authorized; 73,171 shares issued and
    outstanding, actual; no shares authorized, issued or
    outstanding, as adjusted
82,055
Preferred stock, $0.01 par value, no shares authorized,
    issued or outstanding, actual;
    [
l
] shares
    authorized and no shares issued or outstanding; as adjusted(2)
—
Common Stock, par value $0.01 per share; 12,000 shares
    authorized, 1,195 issued and outstanding, actual;
    [
l
] shares
    authorized,
    [
l
] shares issued
    and outstanding, as adjusted(2)
—
Additional paid-in capital
34,697
Retained earnings(3)
(9,100
)
Accumulated other comprehensive loss
(1,102
)
Total shareholders' equity
106,550
Total capitalization
$
156,320
(1)
Following completion of this offering and the amendment to
    our revolving credit facility, we expect to have $[—
    ] million in available borrowings under our revolving
    credit facility.
(2)
To be authorized immediately prior to the completion of the
    offering.
(3)
As adjusted, reflects the write-off of deferred financing
    costs of $0.6 million relating to the redemption of the
    industrial revenue bonds.
38
Table of Contents
Dilution
Purchasers of the common stock in the offering will suffer an
immediate and substantial dilution in net tangible book value
per share. Dilution is the amount by which the initial public
offering price paid by purchasers of shares of our common stock
exceeds the net tangible book value per share of our common
stock immediately following the completion of the offering. Net
tangible book value represents the amount of our total tangible
assets reduced by our total liabilities. Tangible assets
represents our total assets less intangible assets. Net tangible
book value per share represents our net tangible book value
divided by the number of shares of common stock outstanding. As
of June 30, 2005, prior to giving effect to the offering
and the Transactions, our net tangible book value was
$240,974 million and our net tangible book value per share
was
$[
l
].
After giving effect to the sale of shares of common stock
offered by this prospectus at the assumed initial public
offering price of
$[
l
] per
share, which represents the midpoint of the range on the cover
of this prospectus, and after deducting the underwriting
discount and estimated offering fees and expenses payable by us,
and after giving effect to the Transactions, our net tangible
book value would have been approximately
$[
l
] million,
or
$[
l
] per
share. This represents an immediate increase in net tangible
book value of
$[
l
] per
share to existing stockholders and an immediate dilution in net
tangible book value of
$[
l
] per
share to new investors purchasing shares of our common stock in
this offering. Dilution per share represents the difference
between the price per share paid by new investors for shares
issued in this offering and the net tangible book value per
share immediately after the completion of this offering. The
following table illustrates this dilution:
Assumed initial public offering price per share
Net tangible book value per share as of June 30, 2005
Increase in net tangible book value per share attributable to
    new investors
Adjusted net tangible book value per share after this offering
Dilution per share to new investors
The following table presents, on an adjusted basis, after giving
effect to this offering and the Transactions, as of
June 30, 2005, the total number of shares of common stock
purchased from us, the total consideration paid and the average
price per share paid by the existing stockholders and by new
investors purchasing shares of our common stock in this
offering, assuming an initial public offering price of
$[
l
] per
share, which represents the midpoint of the range on the cover
of this prospectus, before deducting the underwriting discount
and estimated offering fees and expenses payable by us:
Shares purchased
Total consideration
Average price
Number
Percent
Amount
Percent
per share
Existing stockholders
New investors
Total
100
%
100
%
If the underwriters exercise their over-allotment option in
full, the number of shares of common stock held by our existing
stockholders will further decrease to approximately
[
l
]      %
of the total number of shares of our common stock outstanding,
and the number of shares of our common stock held by new
investors will further increase to
[
l
] shares,
or approximately
[
l
]      %
of the total number of shares of our common stock outstanding.
39
Table of Contents
Selected consolidated financial data
The following table sets forth our summary consolidated
financial data for the periods presented. The consolidated
statements of operations and cash flow data for the years ended
December 31, 2002, 2003 and 2004 and the consolidated
balance sheet data as of December 31, 2003 and 2004 are
derived from our audited consolidated financial statements and
related notes included elsewhere in this prospectus. The
consolidated statements of operations and cash flow data for the
years ended December 31, 2000 and 2001 and the consolidated
balance sheet data as of December 31, 2000, 2001 and 2002
are derived from our audited consolidated financial statements
not included in this prospectus. The consolidated statements of
operations and cash flow data for the six months ended
June 30, 2004 and 2005 and the consolidated balance sheet
data as of December 31, 2004 and June 30, 2005 have
been derived from unaudited consolidated financial statements
and related notes included elsewhere in this prospectus and
reflect all adjustments (consisting only of normal, recurring
adjustments) which are, in the opinion of management, necessary
for a fair presentation of our financial position, the results
of operations and cash flows for the periods presented.
Operating results for the six months ended June 30, 2005
are not necessarily indicative of the results that may be
expected for the year ended December 31, 2005 or any other
future period.
You should read this information together with
"Capitalization," "Management's discussion
and analysis of financial condition and results of
operations" and our consolidated financial statements and
the related notes thereto included elsewhere in this prospectus.
40
Table of Contents
Selected consolidated financial data
Six months ended
Years ended December 31,
June 30,
June 30,
2000
2001
2002
2003
2004
2004
2005
(unaudited)
(in thousands, except per share data and railcar amounts)
Consolidated Statement of Operations Data:
Revenues
Manufacturing operations(1)
$
200,691
$
181,438
$
138,441
$
188,119
$
316,432
$
140,434
$
269,978
Railcar services(2)
38,093
32,703
30,387
29,875
38,624
18,560
21,665
Total revenues
238,784
214,141
168,828
217,994
355,056
158,994
291,643
Cost of goods sold
Cost of manufacturing operations(3)
187,375
169,952
134,363
174,350
305,726
131,271
251,060
Cost of railcar services(4)
37,111
33,255
29,533
29,761
34,473
16,503
18,575
Total cost of goods sold
224,486
203,207
163,896
204,111
340,199
147,774
269,635
Gross profit
14,298
10,934
4,932
13,883
14,857
11,220
22,008
Selling, administrative and other
8,693
9,219
9,505
10,340
10,334
6,110
6,651
Operating income (loss)
5,605
1,715
(4,573
)
3,543
4,523
5,110
15,357
Income (loss) from joint venture
0
0
0
(604
)
(609
)
(1,159
)
924
Interest income(5)
5,777
4,770
3,619
3,161
4,422
1,482
977
Interest expense(6)
13,687
9,525
4,853
3,591
3,578
1,506
2,305
Income (loss) before income tax (benefit) expense
(2,305
)
(3,040
)
(5,807
)
2,509
4,758
3,927
14,953
Income tax (benefit) expense)
(713
)
(1,074
)
(1,894
)
1,256
2,438
1,714
5,745
Net income (loss)
$
(1,592
)
$
(1,966
)
$
(3,913
)
$
1,253
$
2,320
$
2,213
$
9,208
Less preferred dividends
0
3,070
7,139
9,690
13,241
5,619
9,090
Loss available to common shareholders
(1,592
)
(5,036
)
(11,052
)
(8,437
)
(10,921
)
(3,406
)
118
Weighted average shares outstanding (actual shares)
Basic and diluted(7)
1,000
1,000
1,000
1,000
1,087
1,000
1,195
Net income (loss) per common share (actual dollars)
Basic and diluted
(1,592
)
(5,036
)
(11,052
)
(8,437
)
(10,047
)
(3,406
)
99
Consolidated balance sheet data (at period end):
Cash and cash equivalents
$
2,342
$
1,476
$
183
$
65
$
6,943
$
713
$
27,804
Net working capital
44,702
39,535
36,227
47,864
76,308
61,010
57,545
Net property, plant and equipment
84,897
81,090
75,746
71,230
76,951
70,112
83,221
Total assets
204,096
191,375
188,799
194,569
356,658
215,212
240,974
Total liabilities
169,492
113,757
99,686
98,701
221,177
121,167
134,423
Mandatorily redeemable preferred stock
1
48,071
70,210
89,900
111,685
95,519
82,057
Total shareholders' equity
$
34,604
$
77,619
$
89,113
$
95,868
$
135,481
$
94,045
$
106,551
Consolidated cash flow data
Net cash provided by (used in) operating activities
$
3,533
$
13,434
$
10,611
$
(1,638
)
$
(16,618
)
$
1,198
$
11,274
Net cash used in investing activities
(8,782
)
(2,189
)
(535
)
(2,251
)
(11,037
)
(606
)
(1,704
)
Net cash provided by (used in) financing activities
$
7,154
$
(12,111
)
$
(11,369
)
$
3,771
$
34,533
$
128
$
6,290
(1)
Includes revenues from transactions with affiliates of
    $52.8 million, $64.8 million, $63.6 million,
    $64.8 million and $64.4 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $$26.4 million and
    $28.1 million for the six months ended June 30, 2004
    and 2005, respectively.
41
Table of Contents
Selected consolidated financial data
(2)
Includes revenues from transactions with affiliates of
    $16.1 million, $8.6 million, $12.8 million,
    $9.1 million and $19.4 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $7.7 million and
    $11.2 million for the six months ended June 30, 2004
    and 2005, respectively.
(3)
Including costs from transactions with affiliates of
    $46.6 million, $57.6 million, $59.1 million,
    $58.6 million and $59.9 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $24.4 million and
    $25.9 million for the six months ended June 30, 2004
    and 2005, respectively.
(4)
Includes costs from transactions with affiliates of
    $12.8 million, $7.2 million, $12.3 million,
    $8.8 million and $17.0 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $5.9 million and
    $9.1 million for the six months ended June 30, 2004
    and 2005, respectively.
(5)
Includes interest income from affiliates of
    $5.6 million, $4.3 million, $3.4 million,
    $3.0 million and $3.9 million in 2000, 2001, 2002,
    2003 and 2004, respectively and $1.2 million and
    $0.8 million for the six months ended June 30, 2004
    and 2005, respectively.
(6)
Includes interest expense to affiliates of $0.2 million
    in 2001, and $1.5 million in 2004 and $0.2 million and
    $1.2 million for the six months ended June 30, 2004
    and 2005, respectively.
(7)
Share and per share data have not been restated to give
    effect to the stock split.
42
Table of Contents
Management's discussion and analysis of financial condition
and results of operations
You should read the following discussion in conjunction with
"Selected consolidated financial data" and our
consolidated financial statements and related notes included
elsewhere in this prospectus. This discussion contains
forward-looking statements that are based on management's
current expectations, estimates and projections about our
business and operations. Our actual results may differ
materially from those currently anticipated and expressed in
such forward-looking statements and as a result of the factors
we describe under "Risk factors" and elsewhere in this
prospectus. See "Special note regarding forward-looking
statements" and "Risk factors."
OVERVIEW
We are a leading North American manufacturer of covered hopper
and tank railcars. We also repair and refurbish railcars,
provide fleet management services and design and manufacture
certain railcar and industrial components used in the production
of our railcars as well as railcars and non-railcar industrial
products produced by others. We provide our railcar customers
with integrated solutions through a comprehensive set of high
quality products and related services.
We operate in two segments: manufacturing operations and
railcar services. Manufacturing operations consists of railcar
manufacturing and railcar and industrial component
manufacturing. Railcar services consists of railcar repair and
refurbishment services and fleet management services.
We have experienced significant growth in the last three years
with revenues growing to $355.1 million in 2004, from
$218.0 in 2003 and $168.8 million in 2002. Our revenues in
the first six months of 2005 were $291.6 million, compared
to $159.0 million in the first six months of 2004. Our
revenues in 2004 included $316.5 million from manufacturing
operations and $38.6 million from the sale of railcar
services. Our revenues in the first six months of 2005 included
$270.0 million from manufacturing operations and
$21.7 million from the sale of railcar services.
Manufacturing operations
We manufacture all of our railcars in modern facilities located
in Paragould and Marmaduke, Arkansas, which were built in 1995
and 1999, respectively. We strategically located these
facilities in close proximity to our main shipper and railroad
customers, as well as our main suppliers of railcar components.
As of the date of this prospectus none of our over 1,100
employees at our Paragould and Marmaduke facilities are
represented by a union. We manufacture components in four other
manufacturing facilities.
Railcar manufacturing.
Our Paragould facility was
designed primarily to produce covered hopper railcars, but is
also capable of producing other railcar types. For example, in
2004 and the first six months of 2005, we produced centerbeam
platform railcars at our Paragould facility. This facility
originally consisted of two production tracks with an initial
production capacity of approximately six railcars per day.
Changes in plant design and manufacturing processes since 1995,
along with the addition of painting and lining capabilities in
1999 and a third production track in December 2004, increased
our production capacity. Based on our current backlog, we plan
to produce an average of approximately 24 covered hopper
railcars per working day, dependent upon product mix and the
availability of raw materials and components. The production
lines at our Paragould facility are designed to provide maximum
flexibility for efficient and rapid changeover in product mix
between various types and sizes of railcars. Currently, we are
expanding our Paragould facility through the
43
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Management's discussion and analysis of financial
condition and results of operations
construction of additional painting and lining capabilities,
which are scheduled to be completed by the end of 2005.
We delivered the following quantities and types of railcars in
2002, 2003 and 2004, and the first six months of 2004 and 2005,
manufactured at our Paragould facility:
Six Months
Year Ended December 31,
Ended June 30,
2002
2003
2004
2004
2005
Center Flow covered hoppers
868
1,118
1,441
733
1,608
Pressureaide covered hoppers
185
225
66
16
44
Centerbeam platform
—
5
1,240
579
785
Total Paragould railcar deliveries
1,053
1,348
2,747
1,328
2,437
Our Marmaduke facility was built in 1999 to manufacture tank
railcars. Based on our current backlog, we plan to produce an
average of approximately 7.5 tank railcars per working day at
this facility, dependent upon product mix of tank railcar types
and the availability of raw materials and components. The
facility is designed to produce both pressure and non-pressure
tank railcars.
We delivered the following quantities and types of tank railcars
in 2002, 2003 and 2004, and the first six months of 2004 and
2005, manufactured at our Marmaduke facility:
Six Months Ended
Year Ended December 31,
June 30,
2002
2003
2004
2004
2005
Pressure tanks
76
277
322
76
89
Non-pressure tanks
637
932
1,315
686
819
Total tank railcar deliveries
713
1,209
1,637
762
908
Railcar and industrial components manufacturing.
Our railcar and industrial components operations provide
components for our railcar manufacturing operations as well as
for other railcar manufacturers and other industries. Components
manufactured by us include aluminum and steel fabricated and
machined parts and carbon steel, aluminum, high alloy and
stainless steel castings, primarily for the trucking and
construction equipment and oil and gas exploration markets. Our
revenues from the sales of components exclude the components we
manufacture for use in our railcar manufacturing business. In
2004, our revenues from sales of components increased by 52% to
$50.7 million from $33.4 million in 2003. In the first
six months of 2005, our revenues from sales of components
increased to $34.8 million from $24.7 million in the
first six months of 2004. We attribute the increase in these
revenues primarily to an overall increase in demand for
commercial railcar components as well as the demand for steel
castings and machine components in the non-railcar industrial
sectors that we serve.
Railcar services
Our railcar services division provides railcar services,
including railcar repair and refurbishment and fleet management
and engineering services. Our railcar repair and refurbishment
services are provided through our network of six full service
maintenance and repair facilities and four mobile repair units.
Our railcar service facilities are located in strategic areas
near major customers. We have established long-term business
relationships with a customer base that includes railcar leasing
companies, shippers and railroads. In 2004, our railcar services
revenues increased by 29% to $38.6 million, from
$29.9 million in 2003. In 2002 our railcar services
revenues were $30.4 million. In the first six months
44
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Management's discussion and analysis of financial
condition and results of operations
of 2005, our railcar services revenues increased to
$21.7 million from $18.6 million in the first six
months of 2004. We believe the growth in these revenues reflects
the overall trend in the United States toward increased railcar
utilization, the increase in our customer base, the increase in
our service offerings and the increase in the number of railcars
under fleet management by us. Our fleet management business
complements both our railcar repair and refurbishment and
railcar manufacturing operations. As of June 30, 2005, we
managed approximately 57,000 railcars for various customers,
including approximately 22,000 railcars for ARL, an affiliate of
Carl C. Icahn, the chairman of our board of directors and our
principal controlling stockholder.
AMERICAN RAILCAR LEASING LLC FORMATION AND EXCHANGE
We formed ARL, a company that buys and leases railcars, as our
wholly owned subsidiary in July 2004. As part of the formation
of ARL and its further capitalization, ACF and certain of its
subsidiaries transferred to us and ARL their railcars and
related leases, as well as equity in certain of ACF's
subsidiaries that supported its leasing business, in exchange
for shares of our new preferred stock and preferred interests of
ARL. We, in turn, contributed the assets we received to ARL in
return for common equity interests in ARL. ACF is a company
beneficially owned and controlled by Mr. Icahn. On
June 30, 2005, we transferred all of our interest in ARL to
the holders of our new preferred stock, all of which are
beneficially owned and controlled by Mr. Icahn, in exchange
for the redemption of 116,116 shares of our new preferred
stock held by them plus accrued dividends. The description of
our operations and the presentation of our financial information
and consolidated financial statements has been prepared on a
standalone basis, excluding ARL's operations for all
periods, and all transactions giving effect to ARL's
formation and subsequent transfer have been eliminated from the
financial statements, with the exception of deferred tax assets
retained by us. Any differences related to the amounts
originally capitalized and the amount paid for ARL or our
subsequent transfer of ARL have been recorded through
adjustments to shareholder's equity, including certain tax
benefits that we received as a result of using ARL's
previously incurred tax losses.
For further information relating to the formation of ARL, the
subsequent ARL transfer and our prior and continuing agreements
with ARL and with other affiliates of Mr. Icahn, see
"Certain relationships and related party transactions—
Certain transactions involving American Railcar Leasing
LLC."
FACTORS AFFECTING OPERATING RESULTS
The following is a discussion of some of the key factors that
have in the past and are likely in the future to affect our
operating results. These factors include, but are not limited
to, the cyclical nature of the North American railcar market,
our reliance on a few customers for most of our revenues, our
historical reliance on revenues from our affiliates for a
significant portion of our revenue, our reliance on large
orders, the variable purchasing patterns of our customers and
fluctuation in supplies and prices of raw materials and
components used in railcar manufacturing. See "Risk
factors" for a more comprehensive list of factors that
could affect our operating results.
Cyclicality of the railcar industry.
Historically,
the North American railcar market has been highly cyclical and
we expect it to continue to be highly cyclical. During the most
recent industry cycle, industry-wide railcar deliveries declined
from a peak of 75,704 in 1998 to a low of 17,714 railcars in
2002. During this downturn, our revenues dropped from
$238.8 million in 2000 to $168.8 million in 2002 and
we incurred losses of $1.6 million, $2.0 million and
$3.9 million in 2000, 2001 and 2002, respectively. We
believe that downturns in the railcar manufacturing industry
will occur in the future and will result in decreased demand for
our products and services. The cycles in our industry result
from many factors that are beyond our control, including
economic conditions in the United States. Although railcar
production has increased since 2002, it may not persist if
favorable economic and other conditions are not sustained. Even
if a sustained economic recovery occurs in the United States,
45
Table of Contents
Management's discussion and analysis of financial
condition and results of operations
demand for our railcars may not match or exceed expected levels.
An economic downturn may result in increased cancellations of
railcar orders which could have a material adverse effect on our
ability to convert our railcar backlog into revenues. In
addition, an economic downturn in the United States could result
in lower sales volumes, lower prices for railcars and a loss of
profits for us. Furthermore, a substantial number of the end
users of our railcars acquire railcars through leasing
arrangements with our leasing company customers. Economic
conditions that result in higher interest rates would increase
the cost of new leasing arrangements, which could cause our
leasing company customers to purchase fewer railcars.
Customer concentration.
Railcars are typically
sold pursuant to large, periodic orders, and a limited number of
customers typically represent a significant percentage of our
railcar sales in any given year. In 2004, sales to our top three
customers accounted for approximately 23%, 20% and 16%,
respectively, of our total revenues. In the six months ended
June 30, 2005, sales to our top three customers accounted
for approximately 26%, 21% and 14%, respectively, of our total
revenues. The loss of any significant portion of our sales to
any major customer, the loss of a single major customer or a
material adverse change in the financial condition of any one of
our major customers could have a material adverse effect on our
business and financial results. Most of our individual railcar
customers do not make railcar purchases every year, because they
do not need to replace or replenish their railcar fleets on a
yearly basis. Many of our customers place orders for railcars on
an as-needed basis, sometimes only once every few years. As a
result, the order levels for railcars, the mix of railcar types
ordered and the railcars ordered by any particular customer have
varied significantly from quarterly period to quarterly period
in the past and may continue to vary significantly in the
future. As railcar sales comprised 75% of our total revenue in
2004 and 80.7% of our total revenue in the six months ended
June 30,2005, our results of operations in any particular
quarterly period may be significantly affected by the number of
railcars and the product mix of railcars we deliver in any given
quarterly period. Additionally, because we record the sale of a
railcar at the time we complete production, the railcar is
accepted by the customer following inspection, the risk for any
damage or loss with respect to the railcar passes to the
customer and title to the railcar transfers to the customer, and
not when the order is taken, the timing of completion, delivery
and acceptance of significant customer orders will have a
considerable effect on fluctuations in our quarterly results.
Revenues from affiliates.
In 2002, 2003, 2004 and
the first six months of 2005, our revenues from affiliates
accounted for 45%, 34%, 24% and 14% of our total revenues,
respectively. These affiliates consisted of entities
beneficially owned and controlled by Carl C. Icahn, the
chairman of our board of directors and our principal controlling
stockholder. The decline in our percentage of revenues from
affiliates is primarily attributable to the growth in our
revenues from third parties. We anticipate that our percentage
of revenues from affiliates will continue to decline if we are
successful in growing our business.
Nevertheless we believe that revenues from affiliates will
continue to constitute an important portion of our business. A
significant reduction in sales to affiliates could have a
material adverse effect on our business and financial results.
Raw material costs.
The price for steel, the
primary raw material used in the manufacture of our railcars,
increased sharply in 2004 as a result of strong worldwide
demand, limited availability of production inputs for steel,
including scrap metal, industry consolidation and import trade
barriers. These factors have caused a corresponding increase in
the cost and decrease in the availability of castings and other
railcar components constructed with steel. Costs for other
railcar manufacturers have been similarly affected by the
availability and pricing of steel and castings and other
components. The costs for raw steel, based on a Semi Finished
Steel Mill Product Index, have almost doubled during the period
from October 2003 through December 2004. The availability of
scrap metal has been limited by exports of scrap metal to China
and, as a result, steel producers have charged steel
46
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Management's discussion and analysis of financial
condition and results of operations
and scrap metal surcharges in excess of agreed-upon prices.
Price levels for steel have increased again in 2005 and we
expect worldwide demand for steel to increase, supplies to
continue to be limited and prices to continue to increase in
2006.
In 2004, we were unable to pass on an estimated
$7.9 million in increased raw material and component costs
to our customers under existing customer contracts. In the first
six months of 2005, we estimate that we were unable to pass
through to our customers an estimated $2.4 million of such
increased costs. In response to the increasing cost of raw
materials and railcar components, we are working with suppliers
to reduce surcharges that they charge us, and we have entered
into variable pricing contracts with most of our railcar
customers that allow us to pass along changes in costs of
certain raw materials and components to our customers to protect
us against future changes in these costs. By June 30, 2005,
we completed most of the deliveries of railcars under contracts
that did not allow us to pass through these increased costs.
Most of our current deliveries and backlog for railcars include
variable pricing to protect us against further volatility in the
price of certain raw materials and railcar components.
Component supply constraints.
Our business depends
on the adequate supply of numerous specialty components, such as
railcar wheels, brakes, sideframes, axles, bearings, yokes,
bolsters and other heavy castings, and specialized raw
materials, such as normalized steel plate used in the production
of railcars. Over the last few years many suppliers have been
acquired or have ceased operations, which has caused the number
of alternative suppliers of specialty components and raw
materials to decline. The combination of industry consolidation
and high demand has caused recent railcar industry-wide
shortages of many critical components as many reliable suppliers
are frequently at or near production capacity. In certain cases,
such as for railcar wheels, only two significant suppliers
continue to produce the type of component we use in our
railcars. With the recent increased demand for railcars, our
remaining suppliers are facing significant challenges in
providing components and materials on a timely basis to us and
other railcar manufacturers. If our suppliers of railcar
components and raw materials were to stop or reduce the
production of railcar components and raw materials that we use,
go out of business, refuse to continue their business
relationships with us, reduce the amounts they are willing to
sell to us or become subject to work stoppages, our business
would be disrupted. Our inability to obtain components and raw
materials in required quantities or of acceptable quality could
result in significant delays or reductions in railcar shipments.
This would materially and adversely affect our operating
results. Furthermore, our ability to increase our railcar
production to expand our business depends on our ability to
obtain an adequate supply of these railcar components and raw
materials.
Our participation in the Ohio Castings joint venture has
facilitated our ability to meet some of our requirements for
heavy castings such as bolsters and sideframes. In 2005, Ohio
Castings expanded its castings production and added couplers and
yokes to its products. We believe that this expanded production
capability should help to reduce our risk of encountering supply
shortages. In 2004, we purchased $25.3 million of railcar
components produced by Ohio Castings.
OUTLOOK
We believe that the outlook for railcar demand is positive due
to generally positive economic conditions, the current United
States economic recovery, strong industry-wide backlog for
railcars, increased rail traffic, the projected replacement of
aging railcar fleets and an increasing demand for products that
are hauled and stored in railcars. We believe that we are
strategically positioned to capitalize on the current strong
demand for railcars, and that we have growth opportunities
across our broad array of product and service offerings.
47
Table of Contents
Management's discussion and analysis of financial
condition and results of operations
BACKLOG
Our backlog consists of orders for railcars. We define backlog
as the number and sales value of railcars that our customers
have committed in writing to purchase from us that have not been
recognized as revenues. Customer orders, however, may be subject
to cancellation, customer requests for delays in railcar
deliveries, inspection rights and other customary industry terms
and conditions. Although we generally have one to three year
contracts with most of our fleet management customers, neither
orders for our railcar repair and refurbishment services
business nor our fleet management business are included in our
backlog because we generally deliver our services in the same
period in which orders are received. Similarly, orders for our
component manufacturing business are not included in our backlog
because we generally deliver components to our customers in the
same period in which orders for the components are received. Due
to the large size of railcar orders and variations in the number
and mix of railcars ordered in any given period, the size of our
reported backlog at the end of any such period may fluctuate
significantly. See "Risk factors— Risks related to our
business— The variable purchase patterns of our customers
and the timing of completion, delivery and acceptance of
customer orders may cause our revenues and income from
operations to vary substantially each quarter, which could
result in significant fluctuations in our quarterly
results."
Our backlog has increased from 412 railcars at the end of 2002
to 7,084 railcars at June 30, 2005. We believe this
increase is due to the current strength of the economy, the
replacement of aging railcar fleets, increasing demand for
consumer and industrial products and an increasing demand for
covered hopper and tank railcars. Our backlog as of
June 30, 2005 excludes the 9,000 to 12,000 railcars CIT has
agreed to purchase from us during the 2006 and 2008 period,
subject to conditions, under an agreement we entered into with
CIT on July 29, 2005. See "Prospectus summary—
Recent developments."
The following table shows our reported railcar backlog, in
number of railcars and estimated future value attributable to
such backlog, for the periods shown.
Six months ended
Year ended December 31,
June 30,
2002
2003
2004
2004
2005
Railcar backlog at start of period
317
412
2,287
2,287
7,747
New railcars delivered
(1,766
)
(2,557
)
(4,384
)
(2,090
)
(3,345
)
New railcar orders
1,861
4,432
9,844
2,985
2,682
Railcar backlog at end of period
412
2,287
7,747
3,182
7,084
Estimated backlog value at end of period (in thousands of
    dollars)(1)
$
26,906
$
129,850
$
507,333
$
203,116
$
505,385
(1)
Estimated backlog value reflects the total revenues expected
    to be attributable to the backlog reported at the end of the
    particular period as if such backlog were converted to actual
    revenues. Estimated backlog does not reflect potential price
    increases and decreases under certain customer contracts that
    provide for variable pricing based on changes in the cost of
    certain raw materials and railcar components, or the
    cancellation or delay of railcar orders that may occur.
We anticipate that approximately 45% of our reported backlog as
of June 30, 2005 will be converted to revenues by the end
of 2005. Historically, we have experienced little variation
between the number of railcars ordered and the number of
railcars actually delivered. However, our backlog is not
necessarily indicative of our future results of operations as
orders may be canceled or delivery dates extended. We cannot
assure that our reported backlog will convert to revenues in any
particular period, if at all, that the actual revenues from
these contracts will equal our reported backlog estimates or
that our future revenue collection efforts will be successful.
See "Risk factors— Risks related to our
48
Table of Contents
Management's discussion and analysis of financial
condition and results of operations
business— The level of our reported railcar backlog may not
necessarily indicate what our future revenues will be and our
actual revenues may fall short of the estimated revenue value
attributed to our railcar backlog."
We rely on supplies from third-party providers and our Ohio
Castings joint venture for steel, heavy castings, wheels and
other components for our railcars. In the event that our
suppliers were to stop or reduce their supply of steel, heavy
castings, wheels or the other railcar components that we depend
upon, our business would be disrupted and the actual sales from
our customer contracts may fall significantly short of our
reported backlog. See "Risk factors— Risks related to
our business— Fluctuations in the supply of components and
raw materials we use in manufacturing railcars could cause
production delays or reductions in the number of railcars we
manufacture, which could adversely affect our business and
operating results."
CHARGES AND COSTS ASSOCIATED WITH OUR PUBLIC OFFERING
We expect to incur significant additional selling,
administrative and other fees and expenses in connection with
the preparation for this offering and becoming a public company.
We also expect to incur a non-cash selling, administrative and
other expense in connection with an option by our chief
executive officer to purchase
[
l
]
shares of our common stock granted at
$
[
l
]
per share, that vests upon the completion of this offering.
Based on an initial public offering price of
$
[
l
]
,
which represents the midpoint of the range on the cover of this
prospectus, we expect this expense to be approximately
$
[
l
]
million and to be recognized in the quarter that we complete
this offering. The actual expense will depend upon our initial
public offering price as the expense will be based upon the
difference between the option exercise price and the initial
public offering price. See "Management— Executive
compensation— [Employment and noncompetition
agreements]" and "Certain relationships and related
party transactions— Certain transactions including James J.
Unger— Option to purchase common stock." Other
additional expenses that we expect to incur in connection with
this offering includes the write-off of the remaining
$0.6 million of deferred financing costs that we incurred
in connection with our industrial revenue bond financings we
plan to use a portion of the net proceeds of this offering to
repay the industrial revenue bonds in full. We had previously
been amortizing these expenses over the remaining terms of the
industrial revenue bonds.
49
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Management's discussion and analysis of financial
condition and results of operations
RESULTS OF OPERATIONS
The following table summarizes our historical operations as a
percentage of revenues for the periods shown. Our historical
results are not necessarily indicative of operating results that
may be expected in the future.
Fiscal years ended
Six months ended
December 31,
December 31,
December 31,
June 30,
June 30,
2002
2003
2004
2004
2005
Revenues
Manufacturing Operations
82.0
%
86.3
%
89.1
%
88.3
%
92.6
%
Railcar Services
18.0
%
13.7
%
10.9
%
11.7
%
7.4
%
Total revenues
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Cost of goods sold
Cost of manufacturing
79.6
%
80.0
%
86.1
%
82.5
%
86.1
%
Cost of railcar services
17.5
%
13.6
%
9.7
%
10.4
%
6.4
%
Total cost of goods sold
97.1
%
93.6
%
95.8
%
92.9
%
92.5
%
Gross profit
2.9
%
6.4
%
4.2
%
7.1
%
7.5
%
Selling, administrative and other expenses
5.6
%
4.7
%
2.9
%
3.8
%
2.2
%
Operating income (loss)
(2.7
)%
1.7
%
1.3
%
3.3
%
5.3
%
Interest income
2.1
%
1.5
%
1.2
%
0.9
%
0.3
%
Interest expense
2.9
%
1.6
%
1.0
%
0.9
%
0.8
%
Income (loss) from joint venture
0.0
%
(0.3
)%
(0.2
)%
(0.7
)%
0.3
%
Income (loss) before income tax expense
(3.5
)%
1.3
%
1.3
%
2.6
%
5.1
%
Income tax expense (benefit)
(1.1
)%
0.6
%
0.7
%
1.1
%
2.0
%
Net income (loss)
(2.4
)%
0.7
%
0.6
%
1.5
%
3.1
%
Comparison of the six months ended June 30, 2005 to the
six months ended June 30, 2004
Our net income for the six months ended June 30, 2005 was
$9.2 million, compared to $2.2 million for the six
months ended June 30, 2004, representing an increase of
$7.0 million. In the first six months of 2005, our first
two full quarters of operating our new third production line at
our Paragould facility, we sold 3,345 railcars, which is 1,255
more than the 2,090 railcars we sold in the first six months of
2004. Most of our revenues for the first six months of 2005
included sales under contracts that allowed us to adjust our
sale prices to pass on to our customers the impact of increases
in the costs of certain raw materials, particularly steel, and
components. This improvement was partially offset by increased
costs associated with outsourcing our railcar painting and
lining for our new production line at our Paragould facility and
the start-up costs for that new production line.
Revenues
Our revenues for the six months ended June 30, 2005
increased 83% to $291.6 million from $159.0 million in
the six months ended June 30, 2004. This increase was
primarily attributable to an increase in our revenues from sales
of railcars.
Our manufacturing operations revenues increased 92% to
270.0 million in the first six months of 2005 from
$140.4 million in the first six months of 2004. This
increase was primarily attributable to the delivery of an
additional 1,255 railcars in the first six months of 2005,
increased prices resulting from our ability to pass through a
portion of our increased raw material and components costs, and
increases in the base unit price for some of our railcars. Our
revenues from sales of railcars increased
50
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Management's discussion and analysis of financial
condition and results of operations
$119.5 million to $235.2 million in the first six
months of 2005 from $115.7 million in the first six months
of 2004. The additional deliveries of railcars in the first six
months of 2005 reflect increased sales of covered hopper
railcars and a continuation of deliveries of centerbeam platform
railcars ordered in 2004. These increased sales reflected our
increased capacity supported by the continued strong backlog of
orders for our railcars. Tank railcar deliveries increased by
146 railcars. Our manufacturing operations revenues attributable
to sales of railcar and industrial components increased by
$10.1 million in the first six months of 2005 to
$34.8 million from $24.7 million in the first six
months of 2004. This increase was primarily attributable to
increased unit sales reflecting increased railcar manufacturing
and industrial activity. For the first six months of 2005, our
manufacturing operations revenues included $28.1 million,
or 9.6% of our total revenues, from transactions with
affiliates, compared to $26.4 million, or 16.6% of our
total revenues, in the first six months of 2004. These revenues
were attributable to sales of railcars to companies controlled
by Mr. Icahn.
Our railcar services revenues increased by $3.1 million to
$21.7 million in the first six months of 2005, from
$18.6 million in the first six months of 2004. This
increase was primarily attributable to a $2.0 million
increase in leasing and other fleet management service revenue
from two subsidiaries of our affiliate, ARL, a company
controlled by Mr. Icahn, that was partially offset by
decreased railcar services revenues from other customers. The
increase in railcar services revenues from ARL was fully offset
by $2.0 million of pass through costs paid to ACF, also a
company controlled by Mr. Icahn, that was included in our
cost of railcar services. Our management agreements with the two
ARL subsidiaries were terminated on June 30, 2005. However,
we continue to provide repair, maintenance and fleet management
services for those fleets. For the first six months of 2005, our
railcar services revenues included $11.3 million, or 3.9%
of our total revenues, from transactions with affiliates,
compared to $7.7 million, or 4.8% of our total revenues, in
the first six months of 2004.
Gross profit
Our gross profit increased to $22.0 million in the first
six months of 2005 from $11.2 million in the first six
months of 2004. Our gross profit margin increased to 7.5% in the
first six months of 2005 from 7.1% in the first six months of
2004, primarily reflecting improved margins in our manufacturing
operations.
Our gross profit margin for our manufacturing operations
increased to 7.0% in the first six months of 2005 from 6.5% in
the first six months of 2004. Our gross profit margin in the
first six months of 2005 was adversely affected by an increase
in the cost of raw materials and components, consisting
primarily of steel and steel components, which resulted in
approximately $13.8 million of increased costs. We estimate
that we were unable to pass through approximately
$2.4 million of this increase. Most of our railcar
manufacturing contracts providing for deliveries after the first
six months of 2005 have variable cost provisions that adjust the
delivery price for changes in certain raw material and component
costs. As a result, changes in steel prices and other raw
material and component prices should have little impact on our
gross profits for the remainder of the year. However, increases
in raw material and component costs would have an adverse effect
on our gross profit margin as a percent to revenues, because we
do not earn any additional net profit margin on our price
adjustments.
Our gross profit margin in 2005 was also adversely affected by a
contract to manufacture centerbeam platform railcars, a new
product line for us in 2004, which resulted in lower railcar
margins. This was the first time we manufactured centerbeam
platform railcars and, as a result of start-up and increased
production costs, we did not realize a profit on this contract.
Our centerbeam platform railcar contracts were completed at our
Paragould facility in July 2005 and we have since converted the
manufacturing line at that facility to manufacturing covered
hopper railcars. In the first six months of 2005, we also
incurred additional costs in connection with the completion of
our new third production line at our Paragould facility,
including costs associated with the outsourcing our railcar
painting and
51
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Management's discussion and analysis of financial
condition and results of operations
lining for the increased railcar production from that new
production line and costs of the initial training and supplies
for that production line. We are currently constructing
additional painting and lining capabilities at our Paragould
facility, which we expect to be completed by the end of 2005.
This new painting and lining capacity should allow us to improve
margins as we reduce or eliminate outsourcing of this function.
Our gross profit margin for our railcar services increased to
14.3% in the first six months of 2005 from 11.1% in the first
six months of 2004. This increase was primarily attributable to
our service facilities operating at a higher volume level, which
resulted in efficiencies in labor and overhead.
Selling, administrative and other expenses
Our selling, administrative and other expenses increased by
$0.5 million in the first six months of 2005 to
$6.6 million from $6.1 million in the first six months
of 2004. Selling, administrative and other expenses were 2.2% of
total revenues in the first six months of 2005 as compared to
3.8% of total revenues in the first six months of 2004. Our
increase in the amount of our selling, administrative and other
expenses was primarily attributable to an increase in
information technology costs.
Interest expense and interest income
Our interest expense in the six months ended June 30, 2005
was $2.3 million as compared to $1.5 million for the
six months ended June 30, 2004, representing an increase of
$0.8 million. The increase in interest expense was
primarily attributable to a $130.0 million loan from ARL in
October 2004 that we satisfied in January 2005. Our interest
income in the six months ended June 30, 2005 was
$1.0 million as compared to $1.5 million for the six
months ended June 30, 2004, representing a decrease of
$0.5 million. The decrease in interest income was primarily
attributable to a $165.0 million loan we made to
Mr. Icahn. In January 2005, we transferred our entire
interest in this loan to ARL in exchange for additional common
interests in ARL and in satisfaction of our $130.0 million
loan from ARL. The decrease was also due to a $57.2 million
loan to an affiliate that was repaid in 2004. See "Certain
relationships and related party transactions— Certain
transactions with Mr. Icahn and other related
entities."
Income tax expense
Our income tax expense for the six months ended June 30,
2005 was $6.0 million, or 39.9% of our income before income
taxes, as compared to $1.7 million for the six months ended
June 30, 2004, or 43.6% of our income before income taxes.
Our effective tax rate is impacted by expenses included in
pre-tax income for which we do not receive a deduction for tax
purposes. These expenses result from the liabilities and
obligations retained by ACF as part of its transfer of assets to
us in 1994. See "Certain relationships and related party
transactions— Certain transactions with ACF Industries
LLC." Although ACF is responsible for any costs associated
with these liabilities, we are required to recognize these costs
as expenses in order to reflect the full cost of doing business.
The entire amount of such permanently nondeductible expenses is
treated as contribution of capital resulting in an increase to
our effective tax rate. The expenses included in pre-tax income
were $0.5 million and $0.4 million for the six months
ended June 30, 2005 and June 30, 2004, respectively.
Comparison of the year ended December 31, 2004 to the
year ended December 31, 2003
Our net income for the year ended December 31, 2004 was
$2.3 million as compared to $1.3 million for the year
ended December 31, 2003, representing an increase of
$1.0 million. In 2004 we sold 4,384 railcars, 1,827 more
than the 2,557 railcars we sold in 2003. Despite the increase in
railcar
52
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Management's discussion and analysis of financial
condition and results of operations
deliveries in 2004, our net income for 2004 was negatively
affected by dramatic increases in raw materials, particularly
steel, and railcar component prices, particularly for components
manufactured from steel. Our railcar manufacturing contracts
precluded us from passing most of these increased costs on to
our customers. Our gross margins in 2004 were also adversely
affected by the losses we incurred from our introduction and
sale of centerbeam platform railcars manufactured at our
Paragould facility. Net income for 2003 reflected a
$1.4 million write-down of the carrying value of inventory,
buildings and improvements, and equipment at our Milton,
Pennsylvania railcar repair facility, which we idled in 2003. We
incurred no such write-downs in 2004.
Revenues
Our revenues in 2004 increased 63% to $355.1 million from
$218.0 million in 2003. This increase was attributable to
an increase in revenues from both manufacturing operations and
railcar services.
Our manufacturing operations revenues increased 68% to
$316.4 million in 2004 from $188.1 million in 2003.
This increase was primarily attributable to our delivery of an
additional 1,827 railcars in 2004 and, to a lesser extent, an
increase in pricing based upon our ability to pass through some
of our increased costs as well as an increase in the base price
of our railcars. Our revenues from railcar sales increased
$111.1 million to $265.8 million in 2004 from
$154.7 million in 2003. The additional deliveries of
railcars in 2004 reflected increased sales of covered hopper and
tank railcars and sales of centerbeam platform railcars. We
believe that the increases were primarily attributable to the
continuing recovery of the railcar industry which resulted in a
strong backlog of orders for delivery in 2004. In 2004,
deliveries increased by 428 tank railcars and 323 covered hopper
railcars from 2003, and our centerbeam platform railcar
deliveries totaled 1,240. We did not deliver any centerbeam
platform railcars in 2003. Our increase in manufacturing
operations revenues also reflected a $17.3 million increase
in our sales of railcar and industrial components. This increase
was primarily attributable to an increase in demand for castings
and components in the oil refinery and transportation markets.
In 2004, our manufacturing operations revenues included
$64.4 million, or 18.1% of our total revenues, from
transactions with affiliates, compared to $62.9 million, or
28.8% of our total revenues, in 2003. These revenues were
primarily attributable to sales of railcars to companies
controlled by Mr. Icahn.
Our railcar services revenues increased 29% to
$38.6 million in 2004 from $29.9 million in 2003. This
increase was primarily attributable to increased sales,
primarily related to repair and maintenance services provided to
affiliates, including ACF and ARL and their subsidiaries. In
2004, our railcar services revenues included $19.4 million,
or 5.5% of our total revenues, from transactions with
affiliates, as compared to $11.0 million, or 5.1%, in 2003.
Gross profit
Our gross profit increased to $14.9 million in 2004 from
$13.9 million in 2003. Our gross profit margin decreased to
4.2% in 2004 from 6.4% in 2003. The decrease in our gross profit
margin was primarily attributable to a decrease in our gross
profit margin for our manufacturing operations that was
partially offset by an increase in our gross profit margin for
our railcar services.
Our gross profit margin for our manufacturing operations
decreased to 3.4% in 2004 from 7.3% in 2003. This decrease was
primarily attributable to an increase in the cost of raw
materials and components, consisting primarily of steel and
steel-based components, that we were not able to pass through to
our customers primarily due to fixed price contracts. Our cost
of sales increased by approximately $11.3 million in 2004
based upon these increased raw material and component costs. We
estimate that we were able to pass through $3.4 million of
these costs to our customers. Our margins were also adversely
affected by the losses we incurred resulting from our
introduction and sale
53
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Management's discussion and analysis of financial
condition and results of operations
of centerbeam platform railcars in 2004. We completed deliveries
under our centerbeam platform railcar contract by in July 2005
and have converted the manufacturing line we used to manufacture
these railcars to manufacture covered hopper railcars.
Our gross profit margin for railcar services increased to 10.7%
in 2004 from 0.4% in 2003. This increase was primarily
attributable to increased sales that resulted in increased
efficiencies of labor and overhead. Our gross profit margin for
railcar services in 2003 was adversely affected by a
$1.4 million write-down of the carrying value of inventory,
buildings and improvements and equipment at our Milton,
Pennsylvania railcar maintenance facility, which we idled during
2003.
Selling, administrative and other expenses
Our selling, administrative and other expenses did not increase
in 2004 from the $10.3 million expense in 2003. Selling,
administrative and other expenses were 2.9% of sales in 2004 as
compared to 4.7% of sales in the 2003. In 2004, we were able to
use the infrastructure we put in place in 2003 to grow our
revenues without increasing our selling, administrative and
other expenses. Our expenses in 2004 reflected an increase in
engineering and purchasing personnel, but these expenses were
offset by reduced spending in insurance, retirement, legal fees
and engineering consulting services.
Interest expense and interest income
Our interest expense was $3.6 million in both 2004 and
2003. Our interest income increased to $4.4 million in 2004
from $3.2 million in 2003. The increase in interest income
and interest expense was primarily attributable to our
$165.0 million loan to Mr. Icahn and our
$130.0 million loan from ARL, respectively, both of which
are no longer outstanding.
Income tax expense
Our income tax expense for 2004 was $2.4 million, or 51.2%
of our income before income taxes, as compared to
$1.3 million for 2003, or 50.1% of our income before income
taxes. Our income tax rates were higher than the statutory rates
in both periods because of the effect of expenses included in
pre-tax income for which we do not receive a deduction for tax
purposes. These expenses primarily relate to the liabilities and
obligations retained by ACF as part of its transfer of assets to
us in 1994.
Comparison of the year ended December 31, 2003 to the
year ended December 31, 2002
Our net income for the year ended December 31, 2003 was
$1.3 million as compared to a $3.9 million net loss
for the year ended December 31, 2002, representing an
increase of $5.2 million. In 2003 we sold 2,557 railcars,
791 more than the 1,766 railcars we sold in 2002. The increase
in our earnings was primarily attributable to increased gross
profit from the delivery of these additional railcars, which was
partially offset by an increase in selling, administrative and
other expenses of $0.8 million, as increased engineering
and purchasing support were added to support railcar
manufacturing. Net income was reduced in 2003 because we wrote
down the carrying value of inventory, buildings and improvements
and equipment for one of our railcar maintenance facilities by
$1.2 million.
Revenues
Our revenues increased by 29.1% to $218.0 million in 2003
from $168.8 million in 2002. This increase was attributable
to an increase in our manufacturing operations revenues that was
partially offset by a decrease in railcar services revenues.
54
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Management's discussion and analysis of financial
condition and results of operations
Our manufacturing operations revenues increased 36% to
$188.1 million in 2003 from $138.4 million in 2002.
This increase was primarily attributable to our delivery of an
additional 791 railcars in 2003 and, to a lesser extent, an
increase in the base unit price of our railcars. In 2003, we
delivered 496 additional tank railcars and 250 additional
covered hopper railcars as compared to 2002. We attribute these
increased sales to the recovery of the railcar manufacturing
industry. Our revenues from railcar and industrial components
manufacturing increased $3.2 million to $33.5 million
in 2003 from $30.3 million in 2002. This increase reflected
increased demand for our railcar component products and an
increase in demand for our steel castings products in the oil,
gas and transportation markets. In 2003, our manufacturing
operations revenues included $62.9 million, or 28.8% of our
total revenues, from transactions with affiliates, compared to
$63.6 million, or 37.6% of our total revenues, in 2002.
These revenues were primarily attributable to sales of railcars
to companies controlled by Mr. Icahn.
Our revenues from railcar services decreased by
$0.5 million to $29.9 million in 2003 from
$30.4 million in 2002. This decrease is primarily
attributable to the idling of our Milton, Pennsylvania repair
facility and a corresponding loss of repair and maintenance
revenues that had historically been performed at that facility.
In 2003, our railcar services revenues included
$11.0 million, or 5.1% of our total revenues, from
transactions with affiliates, as compared to $12.8 million,
or 7.6% of our total revenues, in 2002.
Gross profit
Our gross profit increased by $9.0 million to
$13.9 million in 2003 from $4.9 million in 2002. Our
gross profit margin increased to 6.4% in 2003 from 2.9% in 2002.
The improvement in our gross profit margin was attributable to
an improved gross profit margin for our manufacturing operations
that was partially offset by a decrease in our gross profit
margin for our railcar services. Our gross profit margin for our
manufacturing operations increased to 7.3% in 2003 from 2.9% in
2002. This increase was primarily attributable to the
contribution from increased overhead absorption as plant work
volume increased. Our gross profit margin for our railcar
services was 0.4% in 2003 compared to 2.8% in 2002. This
decrease in gross profit margin was primarily attributable to
the $1.4 million write-down in 2003 in connection with the
idling of our Milton, Pennsylvania repair and maintenance
facility and lower revenues, which resulted in inefficiencies of
labor and overhead.
Selling, administrative and other expenses
Our selling, administrative and other expenses increased 8.9% to
$10.3 million in 2003 from $9.5 million in 2002. The
increase in our selling, administrative and other expenses in
2003 was primarily attributable to increased information
technology, infrastructure, engineering and purchasing services
to support our growing operations. Selling, administrative and
other expenses decreased to 4.7% of revenues in the year ended
December 31, 2003 from 5.6% in the year ended
December 31, 2002.
Interest expense and interest income
Our interest expense was $3.6 million and $4.9 million
for the years ended December 31, 2003 and 2002,
respectively. Our interest income was $3.2 million and
$3.6 million for the years ended December 31, 2003 and
2002, respectively. The interest income was primarily from a
$57.2 million loan to an affiliate that was repaid in 2004.
The interest expense reduction was primarily due to reduction of
the average outstanding borrowings under our revolving credit
facility.
55
Table of Contents
Management's discussion and analysis of financial
condition and results of operations
Income tax expense/benefit
Our income tax expense in the year ended December 31, 2003
was $1.3 million, or 50.1% of income before income taxes,
as compared to a $1.9 million tax benefit in the year ended
December 31, 2002, or 32.6% of loss before income taxes.
Our income tax rate was higher than the statutory rates in 2003,
because of the effect of expenses included in pre-tax income for
which we do not receive a deduction for tax purposes. These
expenses primarily relate to the liabilities and obligations
retained by ACF as part of its transfer of assets to us in 1994.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity have historically been the cash
generated from our operations, the sale of securities and funds
generated from borrowings. Upon completion of this offering, we
intend to use substantially all of the net proceeds of this
offering to repay amounts outstanding under our revolving credit
facility, to pay the notes due to affiliates of Mr. Icahn,
to redeem all our industrial revenue bonds and to redeem all of
the outstanding shares of our preferred stock, all of which is
held by Mr. Icahn and his affiliates.
Outstanding debt
Revolving credit facility.
On March 10, 2005, we
entered into a revolving credit facility with North Fork
Business Capital Corporation, as administrative agent for
various lenders. As of June 30, 2005, we had
$30.8 million in principal and interest outstanding under
this facility. We intend to repay all or a substantial portion
of this credit facility with the proceeds of this offering. We
are also in discussions with our lenders to amend our revolving
credit facility in conjunction with the closing of this offering
to extend the term of the facility, increase our maximum
borrowing amount and modify certain covenants, including
covenants that restrict our payment of dividends and that
require Mr. Icahn to retain a majority interest in us. We
cannot assure that the lenders will agree to any modifications
to this facility.
•
Maximum
    borrowing.
The
    revolving credit facility provides for a maximum borrowing of
    the lesser of (a) $50.0 million or (b) 85% of the
    eligible receivables plus 65% of the eligible inventory, which
    inventory may include at the most $40.0 million, less any
    reserves established by the agent in accordance with the
    agreement. As of June 30, 2005, the maximum borrowing
    amount we were eligible to borrow under this facility was
    $50.0 million.
•
Term.
The revolving credit facility expires March 10, 2006.
•
Interest rate and
    fees.
Borrowings bear
    an interest rate of a base rate less 0.25%, where the base rate
    is the highest prime, base or equivalent rate of interest
    published by the administrative agent, or the published
    annualized rate for 90-day dealer commercial paper published in
    the Wall Street Journal, or a LIBOR rate plus 2.5%. We are
    required to pay an unused line fee of 0.375% per year on
    the difference, if positive, of $50.0 million minus the
    average daily aggregate outstanding amount of the loans. As of
    June 30, 2005, the interest rate under the revolving credit
    facility was 6.0%.
•
Collateral.
Our receivables, inventory and a pledged deposit account serve
    as collateral under the revolving credit facility. In addition,
    we are required to maintain one or more blocked accounts to
    which all our collections are remitted, upon notice from the
    administrative agent, if the difference between the lesser of
    $50.0 million or the borrowing base and the outstanding
    amount of our loans is less than $5.0 million, or if an
    event of default is ongoing.
•
Financial
    covenants.
Our
    revolving credit facility requires us to meet a fixed charge
    coverage ratio of not less that 1.2 to 1.0 for each of the
    following periods: January 1, 2005 through
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Management's discussion and analysis of financial
condition and results of operations
June 30, 2005; January 1, 2005 through
    September 30, 2005; January 1, 2005 through
    December 31, 2005; and each 12 month period ending on
    the last day of each calendar quarter thereafter; and a leverage
    ratio calculated based on the outstanding amount of indebtedness
    to EBITDA of not greater than 4.0 to 1.0 for each of the above
    mentioned periods. As of June 30, 2005, we were in
    compliance with these financial covenants.
•
Negative
    covenants.
Our
    revolving credit facility includes certain limitations on, among
    other things, our ability to incur additional indebtedness,
    modify our current governing documents, sell or dispose of
    collateral, grant credit and declare or pay dividends or make
    distributions on common stock or other equity securities. In
    addition, our existing revolving credit facility provides that
    Mr. Icahn shall maintain a direct or indirect ownership of
    at least 50.1% of our voting equity interest.
Industrial revenue bonds.
As of June 30,
2005, we had $8.5 million in principal amount and
$0.2 million in accrued interest on the industrial revenue
bonds outstanding. As of that date, these bonds had effective
interest rates ranging from 7.75% to 8.5%, with principal
amounts due through 2011. We intend to use a portion of the net
proceeds of this offering to repay all amounts due under these
bonds. The industrial revenue bonds are guaranteed by affiliates
of Mr. Icahn, and these affiliates will be released from
such guarantees upon repayment of the industrial revenue bonds.
In addition, James J. Unger, our president and chief executive
officer, and his wife own $0.4 million of the industrial
revenue bonds issued by Paragould, Arkansas. Mr. Unger and
his wife will receive approximately $0.4 million upon our
repayment of the amounts due under the industrial revenue bonds.
Outstanding notes to affiliates.
In December 2004,
we borrowed $7.0 million from Arnos Corp., a company
controlled by Mr. Icahn, to provide us with additional
working capital. The loan bears interest at the prime rate plus
1.75% (8.0% at June 30, 2005) and is payable on demand.
Additionally, in connection with our purchase of Castings LLC,
effective January 1, 2005, from an affiliate of
Mr. Icahn, we issued that affiliate a note payable in the
principal amount of $12.0 million. The note bears interest
at the prime rate plus 0.5% (6.75% at June 30, 2005) and is
payable on demand. We intend to use a portion of the net
proceeds of this offering to repay all amounts due under these
obligations. As of June 30, 2005, $19.6 million was
outstanding under these obligations.
Cash flows
The following table summarizes our net cash provided by or used
in operating activities, investing activities and financing
activities and our capital expenditures for the periods
presented (in thousands):
Year Ended
Six Months Ended
Cash flows
December 31, 2004
June 30, 2005
Net cash provided by (used in):
Operating activities
$
(17,039
)
$
49,777
Investing activities
(25,178
)
(12,000
)
Financing activities
60,746
29,644
Capital expenditures
(11,651
)
(6,560
)
Operating activities.
Our net cash provided by or
used in operating activities reflects net income or loss,
adjusted for non-cash charges and changes in net working
capital, including non-current assets and liabilities. Cash
flows from operations are affected by several factors, including
fluctuations in business volume, contract terms for billings and
collections, the timing of collections on our accounts
receivables, processing of payroll and associated taxes and
payments to our suppliers. We do not typically experience
business credit losses, although a payment may be delayed
pending completion of
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Management's discussion and analysis of financial
condition and results of operations
closing documentation, and a typical order of railcars may not
yield cash proceeds until after the end of a reporting period.
Our net cash provided by operating activities was
$9.8 million for the six months ended June 30, 2005,
which included net income of $9.2 million increased by
non-cash charges for depreciation and amortization of
$3.2 million and a provision for deferred income taxes of
$1.3 million. Cash provided by operations attributable to
changes in our current assets and liabilities included an
increase in accounts payable of $26.8 million and an
increase in accrued expenses and taxes of $7.1 million.
These sources of cash were partially offset by an increase in
accounts receivable of $5.1 million, an increase in
inventory of $6.8 million and an increase in prepaid
expenses of $4.2 million. The increase in inventory was
primarily attributable to the build-up of inventory for our new
third production line at our Paragould facility. The increase in
accounts payable and accrued expenses was primarily due to this
inventory buildup and a change in the processing and accounting
of accounts payable that had previously been processed through
affiliates. The increase in accounts receivable was primarily
attributable to the increased volume of sales attributed to
railcars manufactured at our Paragould facility. The increase in
prepaid expenses was primarily attributable to payments for
workers' compensation and general insurance coverages that
benefit future periods.
For the year ended December 31, 2004, cash used by
operating activities was $17.0 million. Our sources of cash
included net income of $1.2 million increased by non-cash
charges for depreciation and amortization of $6.4 million
and a provision for deferred income taxes of $0.4 million.
Cash used in operations attributable to changes in our current
assets and liabilities included an increase in inventories of
$27.3 million and an increase in accounts receivable of
$11.6 million. These uses of cash were partially offset by
an increase in accounts payable of $12.8 million. The
increase in our inventories and accounts receivable were
primarily attributable to our increased sales and the increased
cost or raw materials and components. The increase in accounts
payable was primarily attributable to our buildup of inventory
to support our increased sales.
Investing activities.
Net cash used in investing
activities for the six months ended June 30, 2005 was
$18.6 million. This use of cash consisted of
$6.6 million in capital expenditures, including
$5.4 million for construction of additional painting and
lining capabilities at our Paragould facility and
$12.0 million for the purchase of Castings LLC from ACF
Industries Holding Corp. Net cash used in investing activities
for the year ended December 31, 2004 was
$36.8 million. This use of cash consisted of
$11.7 million in capital expenditures, including
$9.4 million to construct an additional production line at
our Paragould facility and $25.0 million for the purchase
of an interest in ARL.
Financing activities.
Net cash provided by
financing activities was $29.6 million for the six months
ended June 30, 2005. During the period, we repaid
$22.6 million due to affiliates and borrowed
$30.8 million under our revolving credit facility. The
amounts due to affiliates consisted of cash advances and
affiliate transactions.
Net cash provided by financing activities was $60.7 million
for the year ended December 31, 2004. During the year, we
received $110.0 million in additional capital contributions
of which $25.0 million related to our contribution in the
initial capitalization of ARL,
$137.0 million from
the proceeds of notes due to affiliates and $19.7 million
from an increase in amounts due to affiliates. The
$137.0 million of proceeds from notes due to affiliates
primarily related to our $130.0 million loan from ARL. The
increase in amounts due to affiliates consisted of cash advances
and affiliate transactions. These sources of cash were partially
offset by a $165.0 million loan we made to Mr. Icahn
and a $40.2 million repayment of our term loan in July 2004.
Capital expenditures.
Our capital expenditures
were $6.6 million in the six months ended June 30,
2005 and $11.7 million in the year ended December 31,
2004. The capital expenditures for the six months ended
June 30, 2005 consisted primarily of $5.4 million at
our Paragould facility for
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construction of additional painting and lining capabilities at
that facility. The capital expenditures for the year ended
December 31, 2004 included $9.4 million to construct
an additional production line at our Paragould facility.
We continuously evaluate facility requirements based on our
strategic plans, production requirements and market demand and
may elect to make capital investments at higher or lower levels
in the future. These investments are all based on an analysis of
the potential for these additions to improve profitability and
future rates of return. In response to the current demand for
our railcars, we are exploring opportunities to increase our
production capacity and reduce our costs through continued
vertical integration of our production capacity. From time to
time, we may expand our business by acquiring other businesses
or pursuing other strategic growth opportunities. We presently
have not entered into any agreements related to any material
acquisitions.
In December 2004, we began construction of additional painting
and lining capabilities at our Paragould, Arkansas covered
hopper manufacturing facility. This will complement our
additional production line that was completed in November 2004.
We expect our capital expenditures in connection with the new
painting and lining capabilities to be approximately
$13.2 million, with completion by the end of 2005.
On March 31, 2005 we purchased for $2.8 million the
manufacturing equipment and leasehold improvements that we had
previously been leasing from ACF, a company controlled by
Mr. Icahn, at our St. Charles, Missouri manufacturing
facilities. This amount was included in our amounts due to
affiliates. See "Certain relationships and related party
transactions—Certain transactions with ACF Industries
LLC—Corbitt Equipment Lease and Purchase."
We have an equipment lease expiring on October 31, 2005,
the terms of which include an option to either renew the lease
or purchase the equipment at a specified amount. Our intent is
to purchase the equipment upon expiration of the lease. The
buyout amount is estimated at $6.5 million. We expect to
fund these capital expenditures through cash provided by
operating activities and our revolving credit facility.
We anticipate that any future expansion of the business will be
financed through cash flow from operations, our revolving credit
facility or term debt associated directly with that expansion.
Moreover, we believe that following the completion of this
offering, these sources of funds will provide sufficient
liquidity to meet our expected operating requirements over the
next twelve months.
Contractual obligations
The following table summarizes our contractual obligations as of
December 31, 2004, and the effect that these obligations
and commitments would be expected to have on our liquidity and
cash flow in future periods, assuming that our existing debt
remains outstanding during such periods:
Payments due by period
2-3
4-5
After
Contractual obligations
Total
1 year
years
years
5 years
(in thousands)
Long-term debt
$
9,851
$
1,334
$
3,014
$
3,353
$
2,150
Operating leases
9,132
5,411
3,352
303
66
Total
$
18,983
$
6,745
$
6,366
$
3,656
$
2,216
The operating lease commitment above includes the future minimum
rental payments required under non-cancelable operating leases
for property and equipment leased by us.
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As of July 31, 2005, we had $143.2 million of purchase
orders outstanding, all of which is scheduled to be delivered
within one year.
We entered into two supply agreements, in January 2005 and June
2005, with a steel supplier for the purchase of regular and
normalized steel plate. The agreements each have terms of five
years and may be terminated by either party at any time after
two years, upon twelve months prior notice. Each agreement
requires us to purchase the lesser of a fixed volume or 75% of
our requirements for the steel covered by that agreement at
prices that fluctuate with the market. We have no commitment
under these arrangements to buy a minimum amount of steel, other
than the minimum percentages, if our overall steel purchases
decline.
We have entered into supply agreements with an affiliate of
Amsted Industries, Inc., an affiliate of one of our Ohio
Castings joint venture partners, to purchase up to 25% and 33%
of the car sets, consisting of sideframes and bolsters, produced
at each of two foundries, respectively, being operated by
subsidiaries of Ohio Castings. Our purchase commitments under
these supply agreements are dependent upon the number of car
sets manufactured by these foundries, which are jointly
controlled by us and the other two members of Ohio Castings.
The following table summarizes our contractual obligations as of
December 31, 2004, and the effect that these obligations
and commitments are expected to have on our liquidity and cash
flow in future periods, after giving effect to this offering and
the application of the net proceeds of this offering as
described in "Use of proceeds":
Payments due by period
2-3
4-5
After
Contractual obligations
Total
1 year
years
years
5 years
(in thousands)
Long-term debt(1)
$
—
$
—
$
—
$
—
$
—
Operating leases
9,132
5,411
3,352
303
66
Total
$
9,132
$
5,411
$
3,352
$
303
$
66
(1)
We anticipate that our revolving credit facility, following
    the amendment we intend to enter into concurrently with this
    offering, will permit us to borrow
    $[
l
] million and
    that this facility will have a three year maturity.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to price risks associated with the purchase of
raw materials, especially steel and heavy castings. The cost of
steel, heavy castings and all other materials used in the
production of our railcars represent approximately 80-85% of our
direct manufacturing costs. Given the significant increases in
the price of raw materials since November 2003, this exposure
can affect our costs of production. We believe that the risk to
our margins and profitability has been greatly reduced by the
variable pricing contracts we now have in place. We have
negotiated most of our railcar manufacturing contracts with our
customers to adjust the purchase prices of our railcars to
reflect increases or decreases in the cost of certain raw
materials and components and, as a result, we are able to pass
on to our customers substantially all of the increased raw
material and component costs with respect to the railcars that
we will produce and deliver after the first six months of 2005.
We believe that we currently have excellent supplier
relationships and do not anticipate that material constraints
will limit our production capacity. Such constraints may exist
if railcar production were to increase beyond current levels, or
other economic changes occur that affect the availability of our
raw materials.
We are not exposed to any significant foreign currency exchange
risks.
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CRITICAL ACCOUNTING POLICIES
We prepare our consolidated financial statements in accordance
with U.S. GAAP. The preparation of our financial statements
requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during
the reporting period. Our significant accounting policies are
described in the notes to our consolidated financial statements
included elsewhere in this prospectus. Some of these policies
involve a high degree of judgment in their application. The
critical accounting policies, in management's judgment, are
those described below. If different assumptions or conditions
prevail, or if our estimates and assumptions prove to be
incorrect, actual results could be materially different from
those reported.
Revenue recognition
Revenues from railcar sales are recognized following completion
of manufacturing, inspection, customer acceptance and shipment,
which is when title and risk for any damage or loss with respect
to the railcars passes to the customer. In some cases, painting
and lining work may be outsourced to an independent contractor
and, as a result, the sale will not be recorded until the
railcars are shipped from the independent contractor's
facilities to our customer. Revenues from railcar and industrial
components are recorded at the time of product shipment, in
accordance with our contractual terms. Revenue for railcar
maintenance services are recognized upon completion and shipment
of railcars from our plants. Revenue for fleet management
services are recognized as performed.
We record amounts billed to customers for shipping and handling
as part of sales in accordance with Emerging Issues Task Force
(EITF) 00-10,
Accounting for Shipping and Handling Fees
and Costs
, and we record related costs in our cost of sales.
Accounts receivable
We carry our accounts receivable at cost less an allowance for
doubtful accounts. On a quarterly basis, we evaluate our
accounts receivable and establish an allowance for doubtful
accounts, based on a history of past write-offs and collections
and current credit conditions. Accounts are placed for
collection on a limited basis once all other methods of
collection have been exhausted. Once it has been determined that
the customer is no longer in business and/or refuses to pay, the
accounts are written off. Our bad debt experience has been
minimal. Write-offs could be materially different than reserves
if economic conditions change or actual results deviate from
historical trends.
Product warranties
We record a liability for an estimate of costs that we expect to
incur under our basic limited warranty when manufacturing
revenue is recognized. Warranty terms are based on the
negotiated railcar sales contracts and typically are for periods
of up to five years. Factors affecting our warranty liability
include the number of units sold and historical and anticipated
rates of claims and costs per claim. We assess quarterly the
adequacy of our warranty liability based on changes in these
factors. We have generally experienced low warranty claims. Our
warranty claims were $0.5 million in 2003 and
$0.1 million in 2004. Actual results differing from
estimates could have a material effect on results from
operations in the event that unforeseen warranty issues were to
occur.
Inventory
Inventories are stated at the lower of average cost or market,
and include the cost of materials, direct labor and
manufacturing overhead. We evaluate our ability to realize the
value of our inventory based on a combination of factors
including historical usage rates, forecasted sales or usage,
product end of
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life dates, estimated current and future market values and new
product introductions. Assumptions used in determining our
estimates of future product demand may prove to be incorrect, in
which case the provision required for excess and obsolete
inventory would have to be adjusted in the future. If inventory
is determined to be overvalued, we would be required to
recognize such costs as cost of goods sold at the time of such
determination. Any significant unanticipated changes in demand
could have a significant negative impact on the value of our
inventory and our reported operating results. Additionally,
purchasing requirements and alternative usage avenues are
explored within these processes to mitigate inventory exposure.
When recorded, our reserves are intended to reduce the carrying
value of our inventory to its net realizable value.
Long-lived assets
We evaluate long-lived assets, including property, plant and
equipment, under the provisions of Statement of Financial
Accounting Standards (SFAS) No. 144,
Accounting for
the Impairment or Disposal of Long-Lived Assets
, which
addresses financial accounting and reporting for the impairment
of long-lived assets and for long-lived assets to be disposed
of. Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of assets may not be recoverable. The criteria for
determining impairment or such long-lived assets to be held and
used is determined by comparing the carrying value of these
long-lived assets to be held and used to management's best
estimate of future undiscounted cash flows expected to result
from the use of the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets. The estimated fair value of the assets
is measured by estimating the present value of the future
discounted cash flows to be generated. We incurred an impairment
loss in the year ended December 31, 2003, and reduced the
carrying value of inventory, buildings and improvements and
equipment by $1.4 million at one of our railcar maintenance
facilities. No such impairment losses were incurred for the
years ended December 31, 2002 and 2004. Any future
determination requiring write-off of a significant portion of
long-lived assets recorded on our balance sheet could have an
adverse effect on our financial condition and results of
operations.
Income taxes
For financial reporting purposes, income tax expense is
estimated based on planned tax return filings. The amounts
anticipated to be reported in those filings may change between
the time the financial statements are prepared and the time the
tax returns are filed. Further, because tax filings are subject
to review by taxing authorities, there is also the risk that a
position on a tax return may be challenged by a taxing
authority. If the taxing authority is successful in asserting a
position different than that taken by us, differences in a tax
expense or between current and deferred tax items may arise in
future periods. Any such differences which could have a material
impact on our financial statements, would be reflected in the
financial statements when management considers them probable of
occurring and the amount reasonably estimable.
Valuation allowances reduce deferred tax assets to an amount
that will more likely than not be realized. Management's
estimates of the realization of deferred tax assets is based on
the information available at the time the financial statements
are prepared and may include estimates of future income and
other assumptions that are inherently uncertain. No valuation
allowance is currently recorded, as we expect to realize our
deferred tax assets.
Accounting for expenses paid by affiliate
In October 1994, we acquired railcar components manufacturing,
railcar maintenance and certain other assets from ACF, a company
beneficially owned and controlled by Carl C. Icahn, our principal
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condition and results of operations
beneficial stockholder and the chairman of our board of
directors. In connection with that transaction, ACF retained,
and agreed to indemnify and hold us harmless for, certain
liabilities and obligations relating to the conduct of business
and ownership of the assets prior to the transfer, including
liabilities relating to employee benefit plans subject to
certain exceptions for transferred employees, workers'
compensation, environmental contamination and third-party
litigation. See "Certain relationships and related party
transactions— Transactions with ACF Industries LLC."
At December 31, 2004, the total liability retained by ACF
was $10.8 million, which is related primarily to pension
benefit obligations. Although ACF is responsible for any costs
associated with the retained liabilities, we have continued to
reflect the costs associated with those retained liabilities in
our financial statements as an expense in order to reflect the
full cost of doing business, and the payment by ACF of these
expenses is reflected as additional paid-in capital, as required
by Staff Accounting Bulletin Topic 5T.
Fair value of financial instruments
The carrying amounts of cash and cash equivalents, accounts
receivable, amounts due to/from affiliates and accounts payable
approximate fair values because of the short-term maturity of
these instruments. The fair value of long-term debt is
calculated by discounting cash flows through maturity using our
current rate of borrowing for similar liabilities. The fair
value of the note receivable from ACF, which was carried at face
amount plus accrued interest, could not reasonably be estimated
due to the lack of market for similar instruments. Fair value
estimates are made at a specific point in time, based on
relevant market information about the financial instrument.
These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision.
Contingencies and litigation
We periodically record the estimated impacts of various
uncertain outcomes. These events are called contingencies and
our accounting for these events is prescribed by
SFAS No. 5,
Accounting for Contingencies
.
SFAS No. 5 defines a contingency as "an existing
condition, situation, or set of circumstances involving
uncertainty as to possible gain or loss to an enterprise that
will ultimately be resolved when one or more future events occur
or fail to occur." Contingent losses must be accrued if:
•
available information indicates it
    is probable that the loss has been or will be incurred, given
    the likelihood of the uncertain future events; and
•
the amount of the loss can be
    reasonably estimated.
The accrual of a contingency involves considerable judgment on
the part of management. Legal proceedings have elements of
uncertainty, and in order to determine the amount of any
reserves required, we assess the likelihood of any adverse
judgments or outcomes to pending and threatened legal matters,
as well as potential ranges of probable losses.
[In connection with Trans World Airlines, Inc.'s
(TWA) 1992 bankruptcy proceedings under Chapter 11 of
the Bankruptcy Code and in response to a petition of another
member of the Icahn control group, the Pension benefit Guarantee
Corporation (PBGC) terminated the TWA pension plan and
obligated Highcrest Investors Corp. (Highcrest) to make eight
annual payments of $30.0 million each commencing on
July 1, 2002 and totaling $240.0 million (termination
payments). As of December 31, 2004, Highcrest had made
termination payments totaling $135.0 million and still owed
$105.0 million on this obligation. The obligation to make
termination payments is non-recourse except to the common stock
of ACF Industries Holding Corp. (another member of the Icahn
control group). Management believes this obligation will have no
adverse effect on our future liquidity, results of operations or
financial position.]
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We are subject to comprehensive federal, state, local and
international environmental laws and regulations relating to the
release or discharge of materials into the environment, the
management, use, processing, handling, storage, transport or
disposal of hazardous materials and wastes, or otherwise
relating to the protection of human health and the environment.
These laws and regulations not only expose us to liability for
the environmental condition of our current or formerly owned or
operated facilities, and our own negligent acts, but also may
expose us to liability for the conduct of others or for our
actions that were in compliance with all applicable laws at the
time these actions were taken. In addition, these laws may
require significant expenditures to achieve compliance, and are
frequently modified or revised to impose new obligations. Civil
and criminal fines and penalties and other sanctions may be
imposed for non-compliance with these environmental laws and
regulations. Our operations that involve hazardous materials
also raise potential risks of liability under common law. We are
involved in investigation and remediation activities at
properties that we now own or lease to address historical
contamination and potential contamination by third parties. We
are also involved with state agencies in the cleanup of two
sites under these laws. These investigations are at a
preliminary stage, and it is impossible to estimate, with any
certainty, the timing and extent of remedial actions that may be
required, and the costs that would be involved in such
remediation. Substantially all of the issues identified relate
to the use of the properties prior to their transfer to us in
1994 by ACF and for which ACF has retained liability for
environmental contamination that may have existed at the time of
transfer to us. ACF has also agreed to indemnify us for any cost
that might be incurred with those existing issues. However, if
ACF fails to honor its obligations to us, we would be
responsible for the cost of such remediation. We have been
advised that, for the remainder of 2005, ACF estimates that it
will spend approximately $150,000 on environmental investigation
and, in each of 2006 and 2007, it will spend approximately
$200,000 on environmental investigation, relating to
contamination that existed at properties prior to their transfer
to us and for which ACF has retained liability and agreed to
indemnify us. We believe that our operations and facilities are
in substantial compliance with applicable laws and regulations
and that any noncompliance is not likely to have a material
adverse effect on our operations or financial condition.
Future events, such as new environmental regulations or changes
in or modified interpretations of existing laws and regulations
or enforcement policies, or further investigation or evaluation
of the potential health hazards of products or business
activities, may give rise to additional compliance and other
costs that could have a material adverse effect on our financial
conditions and operations. In addition, ACF has in the past
conducted investigation and remediation activities at properties
that we now own to address historic contamination. Although we
believe that ACF has satisfactorily addressed all known material
contamination, there can be no assurance that ACF has addressed
all historical contamination. The discovery of historical
contamination or the release of hazardous substances into the
environment at our current or formerly owned or operated
facilities could require ACF or us in the future to incur
investigative or remedial costs or other liabilities that could
be material or that could interfere with the operation of our
business.
[We have received a letter of determination for the State of
Arkansas that we owe approximately $1.1 million related to
past unemployment taxes. We are appealing the assessment and
expect to prevail and believe that we have meritorious defenses.
We believe that we were and did act in accordance with
applicable law. It is not possible to estimate the expected
settlement, if any, at this time as our discussions with the
State of Arkansas are in their early stages.]
[We have been named a party to a products liability suit in
which the plaintiff alleges we were responsible for the
malfunction of a valve which was remanufactured in
200     by a third party. We believe we
have no responsibility for this malfunction and have a
meritorious defense against any liability in this case. In any
event, it is not possible to estimate the expected settlement,
if any, that any party might be held accountable for at this
time as the case is in its early stages.]
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REPORT ON INTERNAL CONTROLS
Our management and auditors have identified three significant
deficiencies in our internal controls as of December 31,
2004, which, if not properly remediated could result in
misstatements in our financial statements in future periods.
Our independent auditors, Grant Thornton LLP, issued a letter to
our board of directors in which they identified three
significant deficiencies in the design and operation of our
internal controls as of December 31, 2004. A significant
deficiency is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that
a misstatement of the financial statements that is more than
inconsequential will not be prevented or detected. A control
deficiency exists when the design or operation of a control does
not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect
misstatements on a timely basis. Specifically, the significant
deficiencies noted were:
•
Inventory
    cut-off.
Our
    manufacturing locations recorded inventory shipped by our
    vendors to us on the date we received the inventory in our
    facility, rather than on the date of shipment.
•
Construction in
    process.
We
    transferred assets from construction in process to fixed assets
    on a quarterly basis rather than at the time assets are actually
placed
into service. There was insufficient documentation
    authorizing the movement of assets from construction in process
    to fixed assets. Certain assets were still being classified as
    construction in process even though the asset was in service.
•
Fixed asset recording and
    reconciliation.
Our
    fixed asset subsidiary ledgers were not updated in a timely
    manner. Supporting ledgers for depreciation schedules were
    tracked using Microsoft Excel. The schedules were not reconciled
    on a timely basis. The procedures surrounding the compilation of
    the data was manual and subject to error.
In light of the noted significant deficiencies, we have
instituted control improvements that we believe will reduce the
likelihood of similar errors to less than remote or to an
inconsequential amount in the specific areas that are judged to
be most vulnerable. See "Risk factors— Our management
and auditors have identified three significant deficiencies in
our internal controls as of December 31, 2004, which, if
not properly remediated could result in misstatements in our
financial statements in future periods." These control
improvements include:
•
Inventory
    cut-off.
Effective
    March 31, 2005, we implemented procedures to track the
    receipts in transit and record them properly in our general
    ledger. We now follow this procedure monthly.
•
Construction in
    process.
We are
    developing a process for plant and corporate management approval
    to authorize assets to be placed in service. This procedure will
    entail a threshold dollar amount requiring corporate controller
    approval that will include a review of the asset clarification
    and depreciation rate. Under this plan, assets will be moved
    from construction in process in the month the asset is placed in
    service.
•
Fixed asset recording and
    reconciliation.
We
    expect to implement a new fixed asset tracking system before the
    end of 2005.
We do not expect to incur material incremental staffing costs
associated with these corrective actions. However, in connection
with becoming a public company, we expect to incur significant
additional staffing and infrastructure costs.
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RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board
(FASB) issued Interpretation No. (FIN) 46,
Consolidation of Variable Interest Entities
, which was
later amended on December 24, 2003 (FIN 46R).
FIN 46R explains how to identify variable interest entities
and how an enterprise assesses its interest in a variable
interest entity to decide whether to consolidate that entity.
FIN 46R requires unconsolidated variable interest entities
to be consolidated by their primary beneficiaries if their
entities do not effectively disperse the risks and rewards of
ownership among their owners and other parties involved. The
provisions of FIN 46R are generally effective for periods
after December 31, 2003. The adoption of this pronouncement
has not had a material effect on us.
In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150,
Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity
(SFAS 150), which establishes standards for how
companies classify and measure certain financial instruments
with characteristics of both liabilities and equity. It requires
companies to classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). We
classified our mandatorily redeemable payment-in-kind preferred
stock as a liability in accordance with SFAS 150 in 2003.
In November 2004, the FASB issued SFAS No. 151,
Inventory Costs-An Amendment of ARB No. 43
,
Chapter 4
, which requires the recognition of costs
of idle facilities, excessive spoilage, double freight, and
rehandling costs as a component of current-period expenses. The
provisions of SFAS No. 151 are effective for inventory
costs incurred during fiscal years beginning after June 15,
2005. Since we produce railcars based upon specific customer
orders, management does not expect the provisions of
SFAS No. 151 to have a material impact on our
financial statements.
In December 2004, the FASB issued SFAS 123R,
Share-Based
Payments.
SFAS 123R is a revision of SFAS 123,
Accounting for Stock Based Compensation
, and supersedes
APB 25. Among other items, SFAS 123R eliminates the
use of APB 25 and the intrinsic value method of accounting,
and requires companies to recognize the cost of employee
services received in exchange for awards of equity instruments,
based on the grant date fair value of those awards, in the
financial statements. The effective date of SFAS 123R is
currently the beginning of the next fiscal year that begins
after June 15, 2005, which is the first quarter of our year
ending December 31, 2006.
In March 2005, the FASB issued FIN 47 as an interpretation
of FASB Statement 143,
Accounting for Asset Retirement
Obligations
(FASB 143). This interpretation clarifies that
the term conditional asset retirement obligation as used in FASB
143 and refers to a legal obligation to perform an asset
retirement activity in which the timing and/or method of
settlement are conditional on a future event that may or may not
be within the control of the entity. The obligation to perform
the asset retirement activity is unconditional even through
uncertainly exists about the timing and/or method of settlement.
Accordingly, an entity is required to recognize a liability for
the fair value of a conditional asset retirement obligation if
the fair value of the liability can be reasonably estimated.
This interpretation also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. FIN 47 is effective no
later than the end of fiscal years ending after
December 15, 2005. We are currently assessing the impact of
the adoption of FIN 47.
On June 1, 2005, the FASB issued Statement No. 154,
Accounting Changes and Error Corrections, a replacement of
APB Opinion No. 20 and FASB Statement No. 3
(SFAS 154)
. The Statement applies to all voluntary
changes in accounting principle, and changes the requirements
for accounting for and reporting of a change in accounting
principle. We will adopt SFAS 154 at December 31, 2005
and do not anticipate any material change to our operating
results as a result of this adoption.
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OVERVIEW OF NORTH AMERICAN RAILCAR MANUFACTURING INDUSTRY
Many diverse industries depend on the railroad system to
transport items such as plastic pellets, chemicals and related
products, non-metallic minerals, grains and other farm products,
food products, metals and ores, coal, lumber and other building
products, petroleum products, oils, ethanol related products,
paper products, vehicles, equipment and associated parts. Demand
for railcars reflects their importance for the North American
economy in moving goods and raw materials. In periods of rising
economic activity, fleet utilization typically increases,
driving an increase in demand for new railcars, which also
increases backlog for new railcars. Conversely, during economic
slowdowns, fleet utilization typically declines, resulting in
reduced demand, deliveries and backlog for new railcars.
According to Global Insight, orders for new railcars are
expected to be strong with deliveries projected to average
59,100 railcars per year from 2005 through 2010. This
compares to deliveries of 17,714 railcars in 2002,
32,184 railcars in 2003 and 46,871 railcars in 2004,
as reported by the Railway Supply Institute, or RSI. RSI
reported that at the end of 2004, the total backlog for the
railcar manufacturing industry reached 58,677 railcars.
This growth trend has continued through the first six months of
2005, with 36,695 new railcars ordered and
33,695 railcars delivered, with total backlog increasing to
60,544 railcars.
The primary purchasers of railcars in North America are leasing
companies, shippers and railroads. Leasing companies are
financial institutions that buy railcars from manufacturers like
us and lease these railcars to end users that include railroads
and shippers. Shippers include a variety of industrial companies
that purchase railcars for freight transport. Railroads purchase
railcars to transport goods for industrial companies and others
on their lines. The primary source of railcar orders has shifted
over time as leasing companies and shippers replace railroads as
the largest purchasers of new railcars. From 1990 to 2003,
leasing companies and shippers have increased their collective
share of the total North American railcar fleet from 37% to 53%,
respectively.
The major railcar types and primary uses of these railcars in
North America are summarized below.
Railcar Type
Primary Use
Covered Hopper Railcar
Transport of cargo in the plastics, chemical, oil and food
    industries
Tank Railcar
Transport of liquids and gaseous materials, including chemicals,
    petroleum products and fertilizers
Intermodal Flat Railcar
Transport of cargo in containers and trailers that may also be
    used by trucks or ships
Gondola Railcar
Transport of coal and other commodities including steel products
    and scrap metals
Open-Top Hopper Railcar
Transport of coal
Box Railcar
Transport of auto parts, food products, wood products and paper
    products
Flat Railcar
Transport of bulky items including machinery, automobiles and
    forest products
Although a railcar can be used for up to 50 years under
existing regulations in North America, we believe that the
average life of a railcar is approximately 30 to 35 years.
After that point, most railcars must either be refurbished or
replaced. Railcar designs change over time, incorporating
technical and quality improvements while adapting to the
functions required by customers. As the industry advances,
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we generally expect that railcars will become more efficient and
capable of carrying larger loads with better ride quality and
lower repair and operating costs. We believe that as customers
replace aging fleets and expand the number of railcars in use to
meet higher shipping demand, they make new railcar purchasing
decisions based not only on price and delivery time, but also on
key performance characteristics.
The following chart identifies the composition, by percentage,
of the U.S. railcar fleet in 2003, and indicates that among
all the different railcar types, covered hopper railcars and
tank railcars represented the two largest categories of the
U.S. railcar fleet.
Composition of 2003 U.S. Railcar Fleet
Source:
Association of American Railroads.
NORTH AMERICAN RAILCAR COMPONENTS AND SERVICES INDUSTRIES
Manufacturers of railcar components are primarily comprised of
railcar manufacturers, some of which produce components solely
for internal use, while others produce railcar components for
sale to outside customers, as well as non-railcar manufacturers.
Railcar support services are an important part of the railcar
industry. Railcar services include maintenance and repair,
cleaning, painting and lining, engineering services and the
management of customers' railcar fleets. Maintenance and
repair facilities may be fixed locations near railroad lines or
operate as mobile units designed to service railcars at customer
locations.
NORTH AMERICAN RAILCAR INDUSTRY DYNAMICS AND TRENDS
The 1980 Staggers Rail Act ended more than 100 years of
government rail industry regulation and dramatically transformed
the railcar industry in North America. The deregulation enabled
railroads to regain market share lost to the trucking industry
over the years and resulted in a wave of industry consolidation.
The number of Class I railroads, the grouping of the
largest railroads based on operating revenue, dropped from 22 in
1980 to seven today while the volume of goods transported on the
U.S. rail system increased from 1.5 billion tons in
1980 to 1.8 billion tons in 2003, according to the
Association of American Railroads.
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Railroad industry deregulation also prompted a series of
consolidations among railcar manufacturers which we believe is
the result of consolidation and more efficient fleet management,
According to the Association of American Railroads, the total
U.S. railcar fleet size was reduced from 1.7 million
railcars in 1980 to 1.2 million railcars in 1995.
The following chart reflects the size of the railcar fleet in
the United States, which represents the majority of the North
American railcar fleet, over the last ten years.
Historical U.S. Railcar Fleet
Source:
Association of American Railroads.
Cyclical nature of the North American railcar market and
outlook for North American railcar demand
The North American railcar market is highly cyclical and trends
in the railcar manufacturing industry are directly affected by
the level of activity in the North American economy. When the
economy is in a period of sustained growth, railcar users
generally tend to increase the size of their fleets and replace
older railcars with newer railcars or railcars with greater
capacity and durability. Conversely, when the economy slows
down, these companies generally delay investment in new railcars
and increase the utilization rates of railcars already in use,
keeping them in service for longer periods. The North American
railcar market is also affected by the level of international
trade activity, as railroads are also used to transport imported
and exported goods to and from ports. In addition, supplies of
materials, such as steel, as well as key railcar components,
such as heavy castings and wheels, are constrained from time to
time, which limits the production capacity of companies in the
railcar manufacturing industry and results in further cyclical
fluctuations.
As illustrated by the chart below, railcar demand was at a high
in the late 1970s due, in particular, to the preferential tax
treatment attributed to railcars under then-existing tax laws.
The Tax Reform Act of 1981, which eliminated the preferential
tax treatment of railcars beginning in 1983, as well as the
economic recession in the early 1980s, led to low levels of
railcar production through most of the 1980s. However, during
most of the 1990s, increased general economic activity and
higher import levels led to an increase in railcar deliveries.
In addition, after a period of consolidation in the railroad
industry, railroads suffered from integration difficulties, poor
railcar utilization and aging fleets. We believe that railroads
responded by ordering additional railcars, which led to a
significant increase in railcar deliveries in 1998 and 1999.
This period of peaking orders ended in 2000 and 2001 as slowing
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economic growth, a recovery in railroad operating efficiency and
transportation disruption related to the
September 11
th
terrorist attacks pushed 2002 deliveries of new railcars down to
17,714 railcars, according to the Railway Supply Institute.
In 2003, the industry began to recover from the downturn and
demand for new railcars started to increase. A total of 46,871
railcars were delivered in 2004 and industry backlog stood at
58,677 railcars at December 31, 2004. A total of
33,695 railcars have been delivered during the first six
months of 2005 and industry backlog stands at 60,544 railcars as
of June 30, 2005. The following chart illustrates annual
North American deliveries of railcars since 1978 and projected
annual North American railcar deliveries through 2010, according
to the Railway Supply Institute and Global Insight, respectively.
Railcar Annual Deliveries
Strong near term demand for railcars
Following a period of economic weakness from 2001 to 2003, we
believe leasing companies, shippers and railroads that have
deferred new railcar purchases and equipment maintenance are
poised to expand and service their fleets in response to growing
demand for railroad shipping. Global Insight anticipates
delivery of 65,558 new railcars in 2005 and average annual
deliveries of 59,100 railcars per year from 2005 through 2010.
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The following chart sets forth the historical backlog for the
North American railcar industry:
Historical North American Railcar Backlog by Quarter
Source:
Railway Supply Institute.
Positive long term demand fundamentals
Over the long term, we expect increased U.S. economic
activity to drive growth in railroad shipment and new railcar
purchases. Global Insight forecasts continued gains in rail
freight usage, with 1.8% growth in railcar loads during 2005,
2.1% growth in railcar loads in 2006 and 1.0% to 1.3% annual
growth in railcar loads from 2007 to 2010. Under normal
circumstances, railcars generally need to be refurbished or
replaced after 30 to 35 years of use. We believe that,
historically, the useful life of tank railcars has been shorter,
ranging from 25 to 30 years of use. Railcars used at a
higher than average rate may require replacement in a shorter
period of time. In some cases, advances in technology and
efficiency or new regulations may require railcars with
remaining useful life to be replaced. We believe demand for
replacement railcars will be strong over the long term as
approximately 50% of all railcars in use are over 20 years
old.
Trends impacting covered hopper railcars
Covered hopper railcars constitute the largest of all railcar
segments in terms of numbers of railcars in use. Covered hopper
railcars are used primarily to transport cargo such as cement,
plastic pellets, grain and dry fertilizer. Demand for covered
hopper railcars has shown renewed strength due to increased
shipments of a variety of products including plastics, chemicals
and foods. According to the Railway Supply Institute, 5,602
covered hopper railcars were delivered in 2004. We believe
manufacturing activity across a variety of sectors will continue
to drive demand for covered hopper railcars through 2005 and
2006. In addition, we believe increasing ethanol production will
continue to drive the volume of corn shipments transported in
covered hopper railcars. The U.S. Department of Agriculture
forecasts a 9% increase in corn production from 2005 to 2010,
largely attributable to demand for corn in ethanol production.
Over the long term, Global Insight forecast strong demand for
covered hopper railcars driven by continued growth of the
U.S. economy, higher production for a number of consumer
and business durable goods, increasing domestic and
international demand for U.S. agricultural products,
increasing ethanol production and replacement of aging railcars.
As shown by the chart below, Global Insight
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forecasts deliveries of covered hopper railcars will reach
13,924 in 2005 and 16,779 in 2006, and will average more than
15,750 deliveries per year from 2007 through 2010. These
forecasts illustrate a significant projected increase from the
5,602 covered hopper railcars delivered in 2004 and the 3,801
covered hopper railcars delivered in 2003.
Historical and Projected Covered Hopper Railcar Deliveries
Source:
Railway Supply Institute; Global Insight.
Trends impacting tank railcars
Orders of tank railcars are being driven in part by the advanced
age of the current North American tank railcar fleet. In 2004,
8,939 tank railcars were delivered, according to Global
Insight. Tank railcars primarily are used to transport liquid
and gaseous products, such as chemicals, liquid fertilizers and
petroleum products. Tank railcars, like covered hopper railcars,
are also in higher demand in North America as manufacturing
activity, and the need for liquids and gases used in
manufacturing, increases. We believe expansion of the ethanol
sector as well as strong consumer demand for petrochemicals,
edible oils, lubricating oils, liquid propane and liquid food
products also positively impact tank railcar shipments.
Based on Global Insight projections, tank railcar deliveries are
expected to increase to 10,803 railcars in 2005 and
11,058 railcars in 2006 and will average approximately
9,900 deliveries per year from 2007 through 2010. In
comparison, the number of tank railcars delivered in North
America was 8,939 in 2004 and 8,176 in 2003.
The tank railcar market is a more difficult market to enter
compared to other railcar types. The manufacturing of tank
railcars is highly regulated and their production requires a
specially trained workforce and dedicated manufacturing
facilities. As a result, competition in the tank railcar market
is concentrated. Production of tank railcars is also very labor
intensive compared to production of other railcars. Due to
domestic supply constraints, tank railcar manufacturers have
experienced difficulties in obtaining normalized steel plate,
which is an essential specialty material used in the production
of many types of tank railcars.
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The following chart shows historical tank railcar deliveries in
2003 and 2004 and projected tank railcar deliveries through 2010.
Historical and Projected Tank Railcar Deliveries
Source:
Railway Supply Institute; Global Insight.
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OVERVIEW
We are a leading North American manufacturer of covered hopper
and tank railcars. We also repair and refurbish railcars,
provide fleet management services and design and manufacture
certain railcar and industrial components used in the production
of our railcars as well as railcars and non-railcar industrial
products produced by others. We provide our railcar customers
with integrated solutions through a comprehensive set of high
quality products and related services.
For the years ended December 31, 2003 and 2004, we
generated total revenues of $218.0 million and
$355.1 million and net income of $1.3 million and
$2.3 million, respectively. For the six months ended
June 30, 2004 and 2005, we generated revenues of
$159.0 million and $291.6 million and net income of
$2.2 million and $9.0 million, respectively. As of
June 30, 2005, our total railcar backlog was
7,084 railcars, compared to a total railcar backlog of
3,182 railcars as of June 30, 2004. This amount
excludes the 9,000 to 12,000 railcars that CIT has agreed
to purchase from us during the 2006 to 2008 period, subject to
conditions, under an agreement we entered into with CIT on
July 29, 2005. See "Prospectus summary— Recent
developments" and "—Backlog."
Our primary customers include companies that purchase railcars
for lease by third parties, or leasing companies, industrial
companies that use railcars for freight transport, or shippers,
and Class I railroads. Over the past five years, our
largest leasing company customers included ACF Industries
LLC, ARL, CIT, GATX Rail Corporation, GE Capital
Corporation, The Greenbrier Companies and Union Tank Car Company
and our largest shipper customers included Dow Chemical Company,
Engelhard Corporation, Exxon Mobil Corporation, Lyondell
Chemical Company and Solvay America, Inc. Our major railroad
customers over the past five years included TTX and Union
Pacific. In servicing this customer base, we believe our
integrated railcar repair and refurbishment and fleet management
services and our railcar components manufacturing business help
us further penetrate the general railcar manufacturing market.
These products and services provide us with significant
cross-selling opportunities and insights into our
customers' railcar needs that we use to improve our
products and services and enhance our reputation for high
quality. Although we build, service and manage railcars through
an integrated, complementary set of products and services, we
have chosen not to offer railcar leasing service so that we do
not compete with our leasing company customers, which represent
a significant portion of our revenues.
OUR HISTORY
Since our formation in 1988, we have grown our business from
being a small provider of railcar components and maintenance
services to one of North America's leading integrated
providers of railcars, railcar components, railcar maintenance
services and fleet management services. In October 1994 we
acquired railcar components manufacturing and railcar
maintenance assets from ACF Industries, Incorporated (now
known as ACF Industries, LLC), or ACF, a company controlled
by Carl C. Icahn, our principal beneficial stockholder and the
chairman of our board of directors. Through this acquisition, we
also hired members of ACF's management, many of whom,
including our president, remain a significant part of our
current management team. These executives brought with them
established relationships with important customers and suppliers
and extensive industry knowledge, as ACF and its predecessor
companies have roots in the railcar manufacturing industry that
trace back to 1873. Led by this management team, we entered the
railcar manufacturing business through the construction of new
manufacturing facilities.
In August 1995 we produced our first railcar at our Paragould,
Arkansas manufacturing facility. We primarily manufacture
covered hopper railcars at our Paragould facility, but we have
the ability to
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manufacture many other types of railcars at this facility. The
Paragould facility initially had two railcar manufacturing
lines. We added to this facility painting and lining
capabilities in 1999 and a third manufacturing line in December
2004. We are currently constructing additional painting and
lining capabilities at our Paragould facility to increase
efficiency, which we expect to open at the end of 2005. Our
Paragould facility also features component manufacturing
capabilities. We have manufactured 19,348 railcars at our
Paragould facility, mostly covered hopper railcars, through
June 30, 2005. We can manufacture up to 30 railcars a
working day at this facility.
In January 2000 we produced our first railcar at our Marmaduke,
Arkansas manufacturing facility. We manufacture tank railcars at
this facility. The design of this facility enables us to
manufacture many different types of tank railcars at the same
time. We have manufactured 5,845 tank railcars at our
Marmaduke facility through June 30, 2005. We can
manufacture up to 10 railcars a working day at this facility.
Since 1994 we have significantly expanded our components
manufacturing and railcar services operations. Our operations
now include three railcar assembly, sub-assembly and fabrication
facilities, three railcar and industrial component manufacturing
facilities, six railcar repair plants and four mobile repair
units. Our services business has grown to include online access
by customers, remote fleet management, expanded painting, lining
and cleaning offerings, regulatory consulting and engineering
support. Additionally, members of our management team helped
found and develop, and continue to operate, a joint venture,
Ohio Castings Company, LLC, which we refer to as Ohio Castings,
in which we own a one-third interest and that manufactures and
sells sideframes, bolsters, couplers and yokes for distribution
to third parties and to us. We believe that our involvement in
this joint venture helps us maintain our levels of production at
competitive prices, despite industry-wide shortages of these
potentially capacity constraining components. See
"—Certain relationships and related party
transactions."
OUR BUSINESS STRENGTHS AND COMPETITIVE ADVANTAGES
We believe that the following key business strengths and
competitive advantages will contribute to our growth:
Leading North American railcar manufacturer with focus on the
covered hopper and tank railcar markets
We are a leading North American manufacturer of covered hopper
and tank railcars. Over the last three years we believe we have
produced an estimated 33% of the covered hopper railcars and an
estimated 16% of the tank railcars delivered in North America.
Based on a report by the Association of American Railroads,
these represent the two largest segments of the North American
railcar industry, with covered hopper railcars representing
approximately 30% and tank railcars representing approximately
19% of the total North American railcar fleet based on the
number of railcars in service. We believe our railcars are
differentiated by their superior quality, innovation and
reliability.
Modern non-union, low cost railcar manufacturing facilities
in strategic locations
Unlike many of our competitors, we manufacture all of our
railcars in modern facilities built in the last ten years. We
believe our Paragould and Marmaduke, Arkansas railcar production
facilities to be the newest covered hopper and tank railcar
production plants in North America. We designed these facilities
to provide manufacturing flexibility and allow for the
production of a variety of railcar sizes and types. We
strategically located these facilities in close proximity to our
main customers and suppliers. This reduces freight time and
costs for the components we purchase and the time for delivery
of completed railcars. Over the past several years, we have
increased our production capacity
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and efficiency and reduced our fixed costs per railcar through a
number of targeted operational improvements, such as design
changes that reduce the amount of raw materials necessary for
production of railcars. Currently none of our over 1,100
employees at our Paragould and Marmaduke facilities are
represented by a union. We emphasize flexibility in our
employees' training and, consequently, our employees
frequently move both between locations on production lines and
among our different manufacturing facilities.
Preferred access to components through in-house production, a
joint venture and strategic sourcing arrangements
We produce many of the components necessary to our railcar
manufacturing business ourselves and we own a one-third interest
in, and our management team operates, our Ohio Castings joint
venture from which we obtain certain other components. We
believe our in-house production capabilities and our involvement
in this joint venture help us maintain access to components at
competitive prices, despite industry-wide shortages of these
potentially capacity constraining components. We also have
developed and actively maintain strategic sourcing arrangements
and strong relationships with our suppliers. These arrangements
and relationships help ensure our continued access to critical
components and raw materials we use to produce railcars,
including steel, wheels and heavy castings. We also have
recently entered into an agreement to diversify our supply of
steel. We believe our attention to strengthening our supply
chain helps us maintain operational continuity and high
production levels.
Integrated railcar repair and refurbishment and fleet
management services complement railcar manufacturing
We provide a wide array of complementary products and services
to the railcar industry. Unlike some other railcar
manufacturers, we also repair, maintain and provide fleet
management services for existing railcars, including railcars
built by others, and manufacture railcar components for third
parties and us. We believe this diverse product and service
offering provides us with a competitive advantage relative to
other railcar manufacturers, primarily in the form of
cross-selling opportunities with respect to our repair and fleet
management services. For example, customers of our repair
business that have experienced problems with our
competitors' railcars have transferred railcar orders to us
after our repair workers were able to identify the benefits of
our railcars compared to our competitors'. We also believe
that our ability to address the needs of our customers
throughout the lifecycle of a railcar enhances our customer
relationships and provides us with additional growth
opportunities and unique insights into industry trends. As of
June 30, 2005, we have approximately 57,000 railcars
under management.
Strong relationships with a long-term and diverse customer
base
We believe that our customers value our products and services.
Many of our major customers have been doing business with us for
a number of years, including CIT, Dow Chemical Company,
GE Capital Corporation and Solvay America, Inc. Many of our
customers have demonstrated a willingness to purchase several
different types of our products and services over time. For
example, GE Capital Corporation purchases pressure and
non-pressure tank railcars, covered hopper railcars and fleet
management services from us and The CIT Group, Inc.
purchases our tank railcars as well as cement, grain, sugar and
plastic pellet covered hopper railcars. We believe we deliver
high quality products and services to our customers with low
operating and maintenance costs, while maintaining what we
believe are low levels of warranty claims.
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Strong management team with long-standing industry
experience
We have an experienced senior operations management team that
has an average of over 25 years of experience in the
railcar and related manufacturing industries. Our senior
operations management team, including our president, James J.
Unger, has have been with us since we began manufacturing
railcars. This team conceived and built our Paragould and
Marmaduke railcar manufacturing facilities and has been
responsible for growing our revenues from $84.7 million in
1994 to $355.1 million in 2004. We believe our management
successfully managed our business during the most recent
cyclical downturn in the railcar manufacturing industry while
positioning us to capitalize on the current upturn in our
industry. Members of our management, in particular our
president, Mr. Unger, have risen to leadership roles on a
number of prominent industry committees and associations, which
provide us with insight into the railcar industry, trends and
customer needs. We believe our active participation in industry
committees and associations strengthens our relationships with
our customers and suppliers and increases our profile and
reputation in the North American railcar market.
OUR STRATEGY
The key elements of our business strategy are as follows:
Maintain and expand presence in covered hopper and tank
railcar markets
We intend to maintain and expand our presence in the covered
hopper and tank railcar markets by continuing to deliver high
quality, and innovative products. We believe our excellent
customer relationships have enabled us to identify market
demands that we then target through our product development and
marketing efforts. We intend to continue the close collaboration
between our customers and our engineering, marketing, operations
and management personnel to meet demand and, where appropriate,
to selectively expand production capacity.
Continue to improve operating efficiencies
We intend to build on the success of our production initiatives
at our Paragould and Marmaduke railcar manufacturing facilities
and plan to continue to identify opportunities to enhance
operating efficiencies across these and our other manufacturing
facilities. These opportunities include our continued
streamlining of our manufacturing processes and our quality
control initiatives. For example, we believe the additional
painting and lining capabilities we are currently constructing
at our Paragould facility will reduce costs and further increase
our manufacturing efficiency and will speed delivery of our
products to our customers. We also intend to continue the
efforts of our design cost reduction team, formed in 2003, which
has already significantly reduced our railcar production costs
through standardization of components used in our railcars,
design changes to reduce the amount of raw material required for
our railcars and improved manufacturing techniques that reduce
our labor requirements. These efforts should allow us to reduce
our costs and maintain competitive prices.
Continue to grow railcar service and fleet management
businesses and increase sales of railcar and industrial
components
As the existing North American railcar fleet continues to age,
we anticipate increased demand for maintenance and repair
services and railcar components used in the maintenance and
repair of railcars. Additionally, we expect growing demand for
our fleet management services as ownership of railcars continues
to shift away from the railroads and toward the shippers and
leasing companies, which often outsource their fleet management
activities to third-party service providers such as us. We
intend to capitalize on these trends and we believe we are well
positioned to provide increased services through our
strategically located network of railcar repair and service
facilities.
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Leverage manufacturing expertise to selectively expand
product portfolio
We may seek to expand our product portfolio to other selected
types of railcars. Our management designed and constructed our
Paragould manufacturing facility to be able to produce most
railcar types, and we believe our adaptive production lines and
flexible employees are able to shift production among various
railcar types with minimal interruption to our operations. For
example, we have in the past produced centerbeam platform
railcars and may in the future produce other types of railcars,
including various intermodal railcars, such as the innovative
platform railcar. In addition, as the existing fleet of North
American railcars is aging, expansion of our product portfolio
into new railcar types will allow us to grow our business by
capturing a portion of the natural replacement demand for
existing railcar types. Our ability to produce other types of
railcars positions us to respond to customer requests for
production outside of our traditional markets and provides us
additional manufacturing flexibility in the event the covered
hopper or tank railcar markets weaken.
Selectively pursue strategic external growth opportunities
By significantly reducing our debt through this offering and
with the establishment of a public market for our common stock,
we believe we will have increased financial flexibility to
supplement internal growth with select acquisitions and
alliances. We also believe our in-house fabrication of railcar
components and our Ohio Castings joint venture provide us with
competitive advantages and we intend to enhance these advantages
by selectively acquiring or establishing strategic relationships
with railcar components manufacturers and suppliers of critical
raw materials. Successful acquisitions of or collaborations with
these manufacturers and suppliers should help mitigate the risk
of supply shortages of key components and raw materials we need
for our business. We may also seek to expand our railcar
components business into international markets on an
opportunistic basis.
OUR PRODUCTS AND SERVICES
We design and manufacture special, customized and general
purpose railcars and a wide range of components primarily for
the North American railcar and industrial markets. We also
support the railcar industry through a variety of integrated
railcar services, including repair, maintenance, consulting,
engineering and fleet management services.
Railcar manufacturing
We manufacture two primary types of railcars, covered hopper
railcars and tank railcars. Our revenues attributable to our
railcar manufacturing operations were approximately
$108.3 million, $154.7 million and $265.8 million
in 2002, 2003 and 2004, respectively, and were approximately
$235.2 million for the six months ended June 30, 2005.
These revenues represented 64%, 71% and 75% of our total
revenues in 2002, 2003 and 2004, respectively, and represented
81% of our total revenues for the six months ended June 30,
2005.
Covered hopper railcars
We believe we are a leading manufacturer of covered hopper
railcars in North America. We manufacture both general service
and specialty covered hopper railcars. Our general service
covered hopper railcars have capacities ranging from 3,200 to
6,500 cubic feet and primarily carry plastic pellets,
cement, grain and other food products, soda ash and other dry
granular products. Our specialty covered hopper railcars, which
include our Pressureaide covered hopper railcar, have capacities
ranging from 3,300 to 5,750 cubic feet and use air pressure
to assist unloading. Our specialty covered hopper railcars
primarily carry flour, clays, food and industrial grade corn
starches. Revenues attributable to sales of our covered hopper
railcars were approximately $61.9 million,
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$82.1 million and $79.4 million in 2002, 2003 and
2004, respectively, and were approximately $166.6 million
for the six months ended June 30, 2005. These revenues
represented 37%, 38% and 24% of our total revenues in 2002, 2003
and 2004, respectively, and represented 57% of our total
revenues for the six months ended June 30, 2005. We sold
868, 1,118 and 1,441 covered hopper railcars in 2002, 2003
and 2004, respectively, and 1,608 covered hopper railcars
in the six months ended June 30, 2005.
All of our covered hopper railcars may be equipped with varying
combinations of hatches, discharge outlets and protective
coatings to provide our customers with a railcar designed to
perform in precise operating environments. The flexible nature
of our covered hopper railcar design allows it to be quickly
modified to suit changing customer needs. This flexibility can
continue to provide value after the initial purchase because our
railcars may be converted for reassignment to other services or
customers. We provide a range of coatings to protect the railcar
and the shipper's product against corrosion and product
contamination. We build carbon steel and stainless steel covered
hopper railcars.
•
Center Flow
    Railcars.
Our
    Center Flow line of covered hopper railcars are specifically
    designed for shipping a variety of dry bulk products, from light
    density products, such as plastics, to high density products,
    such as cement. Our Center Flow covered hopper railcar has a
    three curve cross section. Depending upon the equipment on the
    railcars, they can operate in either a gravity or vacuum
    pneumatic unloading environment. Since its introduction, we have
    improved our Center Flow railcars to provide protection for a
    wide range of dry bulk products and to enhance the associated
    loading, unloading and cleaning processes. Examples of these
    improvements include new and better design of the shape of the
    railcars, joint designs, outlet mounting frames and loading
    hatches and discharge outlets, which enhance the cargo loading
    and unloading processes.
We have several versions of our Center Flow railcar that target
specific customers and specific loads, including:
•
Plastic Pellet
    Railcars.
These
    railcars are designed to transport, load and unload plastic
    pellets under precise specifications to preserve the purity of
    the load. Slight imperfections in the railcars transporting such
    goods or in the components that load and unload them can ruin an
    entire load. If plastic pellets within a load become tainted,
    the imperfection will likely persist during the conversion of
    the plastic pellets into end-products. An example of such cargo
    would be food grade plastic pellets used in the production of
    milk bottles and other food containers.
•
Cement
    Railcars.
Cement
    loads are heavier than many other loads of comparable volume,
    and therefore cement railcars are smaller in size to compensate
    for the weight. As a consequence, we can build more cement
    covered hopper railcars per day than we can any other railcar we
    manufacture. Our cement railcars typically have capacities of
    3,250 cubic feet and are built with two lading
    compartments, compared to, for example, our plastic pellet
    railcars, which typically have capacities of up to
    6,500 cubic feet and are built with four lading
    compartments.
•
Pressureaide
    Railcars.
Our
    Pressureaide railcar is targeted towards the bulk powder
    markets. Pressureaide railcars typically handle products such as
    clays, industrial and food grade starches and flours. We build
    our Pressureaide railcars in capacities ranging from
    3,300 cubic feet to as large as 5,750 cubic feet. They
    operate with internal pressures up to 14.5 pounds per
    square inch, which expedites unloading, and are equipped with
    several safety devices, such as pressure relief valves, a
    rupture disc and a vacuum relief valve.
Tank railcars
We manufacture non-pressure and high pressure tank railcars. Our
non-pressure tank railcars have capacities ranging from 14,000
to 30,000 gallons and are flexibly designed to enable the
handling of a
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variety of commodities including petroleum products, ethanol,
asphalt, vegetable oil, corn syrup and other food products. Our
high pressure tank railcars have capacities ranging from 13,500
to 33,600 gallons and transport products that require a
pressurized state due to their liquid, semi-gaseous or gaseous
nature, including chlorine, anhydrous ammonia, liquid propane
and butane. Most of our pressure tank railcars feature a thicker
pressure retaining inner shell that is separated from a jacketed
outer shell by layers of insulation, thermal protection or both.
Our pressure tank railcars are made from specific grades of
normalized steel that are selected for toughness and ease of
welding. Most of our tank railcars feature a sloped bottom tank
that improves the flow rate of the shipped product and provides
improved drainage. Many of our tank railcars feature coils that
are steam-heated to decrease cargo viscosity, which improves the
transported product's flow rate and speeds unloading. We
can alter the design of our tank railcars to address specific
customer requirements. Revenues attributable to sales of our
tank railcars were approximately $46.2 million,
$72.2 million and $111.3 million in 2002, 2003 and
2004, respectively, and were $68.4 million for the six
months ended June 30, 2005. These revenues represented 27%,
33% and 31% of our total revenues in 2002, 2003 and 2004,
respectively, and represented 23% of our total revenues for the
six months ended June 30, 2005. We sold 713, 1,209 and
1,637 tank railcars in 2002, 2003 and 2004, respectively,
and 908 tank railcars in the six months ended June 30, 2005.
Component manufacturing
We believe we are an industry leader in the design and
manufacture of custom and standard railcar components. We
manufacture over 300 different components for the North
American railcar industry. Our products include hitches for the
intermodal market, tank railcar components and valves, discharge
outlets for covered hopper railcars, manway covers and valve
body castings, and outlet components and running boards for
industrial and railroad customers. We manufacture a variety of
outlet types for our covered hopper railcars that we also sell
to other railcar manufacturers. We use these components in our
own railcar manufacturing and also sell them to third parties,
including our competitors. Sales of our railcar components to
third parties were approximately $9.2 million,
$9.8 million and $15.0 million in 2002, 2003 and 2004,
respectively, and were approximately $14.5 million for the
six months ended June 30, 2005. Revenues attributable to
these sales represented 5%, 4% and 4% of our total revenues in
2002, 2003 and 2004, respectively, and represented 5% of our
total revenues for the six months ended June 30, 2005.
Our other industrial products consist primarily of aluminum and
special alloy steel castings that we sell primarily to
industrial customers. These products include castings for the
trucking, construction, mining and oil and gas exploration
markets, as well as finished, machined aluminum castings, other
custom machined products and commercial mixing bowls. Sales of
our industrial components were approximately $21.1 million,
$23.7 million and $35.6 million in 2002, 2003 and
2004, respectively and were approximately $20.2 million for
the six months ended June 30, 2005. Revenues attributable
to these sales represented 13%, 11% and 10% of our total
revenues in 2002, 2003 and 2004, respectively, and represented
7% of our total revenues for the six months ended June 30,
2005.
Railcar services
Our primary railcar services are railcar repair and
refurbishment and railcar fleet management services. Our primary
customers for these services are leasing companies and shippers.
We can service the entire railcar fleets of our customers,
including railcars manufactured by other companies. We offer our
railcar services in both bundled and unbundled arrangements.
Some of our customers use both our railcar repair and
refurbishment business and our fleet management services. We
often provide these preferred customers with expedited repair
services to strengthen our overall customer relationships. Our
railcar services provide us insights into our customers'
railcar needs that we can use to improve
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our products. These services create new customer relationships
and enhance relationships with our existing customers. Our
revenues from our railcar services operations were approximately
$30.4 million, $28.0 million and $38.6 million in
2002, 2003 and 2004, respectively, and were approximately
$21.7 million for the six months ended June 30, 2005.
These revenues represented 18%, 13% and 11% of our total
revenues in 2002, 2003 and 2004, respectively, and represented
7% of our total revenues for the six months ended June 30,
2005.
Railcar repair and refurbishment
Our railcar repair and refurbishment services include light and
heavy railcar repairs, exterior painting, interior lining
application and cleaning, tank and safety valve testing, railcar
inspections, wheel replacement and conversion or reassignment of
railcars from one purpose to another. We support our railcar
repair and refurbishment services customers through a
combination of full service repair shops, mobile repair units
and mini-shop locations. Our repair shops, like our
manufacturing facilities, are strategically located near major
rail lines used by our customers and suppliers and close to some
of the major industries we serve. Revenues attributable to our
railcar repair and refurbishment service operations were
approximately $26.2 million, $23.2 million and
$32.0 million in 2002, 2003 and 2004, respectively, and
were approximately $17.5 million for the six months ended
June 30, 2005. These revenues represented 16%, 11% and 9%
of our total revenues in 2002, 2003 and 2004, respectively, and
represented 6% of our total revenues for the six months ended
June 30, 2005.
Railcar fleet management
As of June 30, 2005, we manage approximately
57,000 railcars for various customers, including
approximately 22,000 for ARL, a leasing company controlled by
affiliates of Carl C. Icahn. Revenues attributable to our fleet
management services were approximately $4.1 million,
$4.8 million and $5.5 million in 2002, 2003 and 2004,
respectively, and were approximately $4.2 million for the
six months ended June 30, 2005. These revenues represented
2% of our total revenues in each of 2002, 2003 and 2004,
respectively, and represented 1% of our total revenues for the
six months ended June 30, 2005. Some of the principal
features of our railcar fleet management services business
include:
•
Mileage
    accounting.
Some
    customers elect to receive mileage payments to offset freight
    charges. Mileage is paid for loaded miles moved and calculated
    based on published rates. We collect and audit the
    railroads' mileage calculations to ensure our customers
    receive the funds they are due.
•
Rolling stock
    taxes.
States and
    localities impose taxes on railcars calculated based upon
    mileage reporting. We file the required tax forms with the state
    and local taxing authorities. We audit the tax invoices received
    to determine whether the assessments are accurate.
•
Regulatory
    compliance.
Our
    regulatory compliance support services help customers maintain
    their railcar fleets in compliance with applicable regulations.
    As regulations change, we help our customers manage the
    associated requirements and costs. We analyze new fleets for
    which we provide fleet management services to identify areas of
    noncompliance with applicable U.S. rail regulations and
    determine corrective actions.
•
Engineering
    services.
Our
    engineering support services help customers manage their
    regulatory compliance and documentation. We provide procedures
    and consultation for railcar repairs to address integrity and
    compliance.
•
Field engineering
    services.
We
    provide on-site evaluation and implementation of significant
    engineering design changes for our customers.
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•
Online service
    access.
Our
    web-based systems allow our customers to view information on
    their railcar fleet online. The data we maintain includes
    mechanical and regulatory information, historical costs and
    repair detail and the status of repairs.
•
Maintenance
    planning.
We
    forecast our customers' railcar maintenance needs and
    suggest schedules for repair service and refurbishment. This
    helps to ensure better fleet utilization and more effective
    maintenance cycles.
MANUFACTURING
Our principal railcar manufacturing facilities are located in
Paragould and Marmaduke, Arkansas. We built these facilities in
1995 and 1999, respectively on previously undeveloped sites.
These facilities employ non-unionized work forces and are
strategically located in close proximity to our major customers
and suppliers, which decreases our freight costs and railcar
delivery times. These facilities provide us the flexibility to
produce a variety of railcars and enable us to quickly shift
production from one railcar type to another railcar type.
Through June 30, 2005 we have manufactured
19,348 railcars at our Paragould facility and
5,845 railcars at our Marmaduke facility.
We manufacture all of our covered hopper railcars at our
Paragould facility. We successfully launched a third
manufacturing line at Paragould in December 2004. Based on our
current backlog, we plan to produce an average of approximately
24 railcars a working day at this facility. We manufacture
all of our tank railcars at our Marmaduke, Arkansas facility.
Based on our current backlog, we plan to produce an average of
approximately 7.5 railcars a working day at this facility.
Our actual daily production at both of these facilities will
depend on the mix of railcar types being manufactured and the
availability of raw materials and components. In 2004, we
manufactured 2,747 railcars at our Paragould facility and
1,637 railcars at our Marmaduke facility. We also have the
manufacturing ability and technical know-how to produce other
types of railcars. For example, in the past we have manufactured
centerbeam platform railcars used to transport building products.
We believe that we increase product quality throughout each
railcar manufacturing facility by employing uniform, quality
tools and equipment. Our production lines are able to produce a
variety of railcars to satisfy changing customer preferences and
our tooling and plant layouts were constructed to enable quick
changeover. We currently can manufacture up to three different
types of railcars simultaneously at our Paragould facilities and
many different types of tank railcars simultaneously at our
Marmaduke facility. We believe our quality products and modern
manufacturing processes contribute to our low incidence of
warranty claims. Our warranty claims for railcars produced at
our Paragould and Marmaduke facilities were approximately
$0.3 million, $0.4 million and $0.1 million in
2002, 2003 and 2004, respectively, and were approximately
$0.5 million for the six months ended June 30, 2005.
We designed our Paragould and Marmaduke facilities to provide
manufacturing flexibility and allow for the production of a
variety of railcar sizes and types. Examples of our production
flexibility include:
•
our ability to manufacture several
    types of railcars at our Paragould facility; for example, the
    Paragould facility recently finished an order of centerbeam
    platform railcars, and quickly converted to covered hopper
    railcar production upon completion of that order;
•
our two parallel,
    vertically-tiered manufacturing tracks at Paragould allow
    workers on these two tracks to share tools and equipment and
    allow multiple components of the same railcar to be produced
    simultaneously;
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•
our welding machines, which are
    purposefully smaller than many other industrial welding
    machines, allow our welders greater freedom of movement, which,
    in turn, we believe increases production speed;
•
our automated painting lance helps
    ensure proper interior coating in a single application and we
    believe is faster and produces greater consistency than manual
    coating;
•
our grit-blasting is conducted by
    automated, oscillating machinery, which we believe is superior
    to and more efficient than alternative techniques, including
    static manual blasting;
•
our ability to rotate railcars
    360 degrees eases and speeds specific steps in the
    production line, such as complicated welding steps that would
    otherwise need to be performed from difficult and possibly
    dangerous angles;
•
our horizontal manufacturing lines
    at our Marmaduke facility allow individual tank railcars to be
    taken in and out of the production line for additional
    attention, without the need to stop the plant's entire
    production process;
•
our proprietary outer-jacket
    coiling process allows us to insulate our tank railcars at our
    facility;
•
our force curing technique helps
    eliminate impurities, smell and residue remaining in railcars
    following the painting and lining steps, which we use primarily
    for railcars designed to transport food products;
•
our tracked loading and unloading
    points decrease the indirect labor required to move raw
    materials and components into our facilities and finished
    products out of our facilities; and
•
our integrated painting, railcar
    truck assembly and fabrication shops eliminate downtime in our
    production process.
In addition, we believe our management and operation of these
facilities help reduce our operating costs, some examples of
which include:
•
our decentralized management,
    including a salaried-to-hourly employee ratio of one to 14;
•
our proactive safety program,
    which features weekly meetings of safety sub-committees on which
    our hourly and salaried employees participate and voluntarily
    establish safety rules that frequently exceed regulatory and
    industry minimum requirements; our safety program has helped
    contribute to low incidences of accidents requiring lost
    production time at our facilities;
•
our flexible workforce allows our
    employees to frequently move both between locations on
    production lines, such as welding and small components
    fabricating positions, and among our different manufacturing
    facilities.
CUSTOMERS
We have strong long-term relationships with many large
purchasers of railcars. Long-term customers are particularly
important in the railcar industry given the limited number of
buyers and sellers of railcars, and railcar manufacturers'
desire constantly to maintain adequate backlog and manufacture
at full capacity.
Our railcar customer base consists mostly of U.S. shippers,
leasing companies and railroads. Over the past five years, our
largest leasing company customers included
ACF Industries LLC, The CIT Group, Inc., GATX
Rail Corporation, GE Capital Corporation, The Greenbrier
Companies and Union Tank Car Company and our largest shipper
customers included Solvay America, Inc., Dow Chemical Company,
Engelhard Corporation, Exxon Mobil Corporation and Lyondell
Chemical Company. Our major railroad customers over the past
five years included TTX and Union Pacific. Over the last five
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years, our largest customers of railcar repair and refurbishment
services included ACF and ARL, affiliates of Carl C. Icahn, and
The CIT Group, Inc., Lyondell Chemical Company and
PPG Industries, Inc. Over the last five years, our largest
fleet management services customers included ACF, ARL and
PLM Transportation. Over the last five years, our largest
customers for railcar components included ACF, GE Capital
Railcar, Olin Corporation, Trinity Industries, Inc. and
TTX Company. Over the last five years, our largest
customers for industrial parts included ABB Vetco Gray,
Dresser Industries, Inc., KF Industries, Inc., McKissick
Products and Steam Flo Industries, Ltd.
In 2004, The CIT Group, Inc. accounted for approximately
16% of our revenues, The Greenbrier Companies accounted for
approximately 20% of our revenues and ACF and ARL collectively
accounted for approximately 24% of our revenues. In 2004, sales
to our top ten customers accounted for approximately 82% of our
revenues. Sales to The Greenbrier Companies, another railcar
manufacturer, were under a contract for centerbeam platform
railcars that is now complete. We do not anticipate significant
sales to The Greenbrier Companies in the future. ARL and ACF are
affiliates of Carl C. Icahn, our principal beneficial
stockholder and the chairman of our board of directors.
While we maintain strong relationships with our customers, many
customers do not purchase railcars from us every year because
railcar fleets are not necessarily replenished or augmented
every year. The size and frequency of railcar orders often
results in a small number of customers representing a
significant portion of our sales in a given year. See "Risk
factors— Risks related to our business— We depend upon
a small number of customers that represent a large percentage of
our revenues— The loss of any single customer, or a
reduction in sales to any such customer, could have a material
adverse effect on our business, financial condition and results
of operations."
SALES AND MARKETING
We sell and market our products in North America through our
sales and marketing staff, including sales representatives who
sell directly to customers, catalogs through which our customers
have access to our railcar components, and our web site, through
which customers can order specialty components. We have seven
employees devoted to sales and marketing efforts for our railcar
manufacturing, components manufacturing and fleet management
services who operate from our corporate headquarters in
St. Charles, Missouri and, for our railcar repair business,
from a service office located in Houston, Texas. In addition,
lease agents of ARL and ACF, affiliates of Carl C. Icahn, in
connection with their own leasing sales activities have, from
time to time, referred their customers and contacts to us that
prefer to purchase, rather than lease, railcars. At this time,
there is no formal arrangement with, or compensation of, ARL,
ACF or their lease agents for any referrals that result in sales
of railcars.
The sales process for our products and services is often
multi-level, involving a team comprised of individuals from
sales, marketing, engineering, operations and senior management.
Each significant customer is assigned a team that engages the
customer at different organizational levels to provide planning
and product customization and to assure open communications and
support. Our marketing activities also include participation in
trade shows, publication of articles in trade journals,
participation in industry forums and distribution of sales
literature.
There is significant overlap between our railcar manufacturing,
railcar components and fleet services customers. Our presence in
each market increases our opportunities to gain market share in
each of the other markets. Our access to competitors'
railcars through our components and railcar repair and
maintenance businesses further increases our opportunities to
identify and address customer needs.
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PRODUCT DEVELOPMENT
Our engineering, marketing, operations and management personnel
have developed collaborative relationships with many of their
customer counterparts and have used these relationships to
identify market demands and target our product development to
meet those demands. Our product development costs are reflected
in our general, selling and administrative expenses. From time
to time, we hire additional engineers or contract projects to
outside firms to work on specific product development projects.
Our current product development efforts focus on the development
of railcars equipped with outlets specifically designed to
target certain industries, including a through sill general
service covered hopper railcar designed for the sugar industry
and the grain and cement markets. We also have developed a
bulkheadless covered hopper railcar to address the needs of
customers that are more focused on loading, rather than
unloading, efficiency. We have built prototypes of some of these
railcars, which are currently being field tested by target
customers. With input from our customers, we continually monitor
product performance following delivery. Observation of our
products and our competitors' products at various stages of
a railcar's lifecycle and feedback from our repair shops,
has led to product innovations, including proprietary bulkhead
reinforcements and changes to our basic design platform. We
cannot guarantee that we will be able to develop new products
effectively, to enhance our existing products, or to respond
effectively to technological changes or new industry standards
or developments on a timely basis if at all.
BACKLOG
Our total backlog as of June 30, 2004 was
$203.1 million and as of June 30, 2005 was
$505.4 million. This amount excludes the 9,000 to 12,000
railcars CIT has agreed to purchase from us under an agreement
we entered into with CIT on July 29, 2005. See "Recent
Developments." We estimate that approximately 45% of our
June 30, 2005 backlog will be converted to revenues in the
year ended December 31, 2005. Although we believe these
orders to be firm, customer orders may be subject to
cancellation, customer requests for delays in railcar delivery,
inspection rights and other customary industry terms and
conditions.
Our backlog consists of orders for railcars. We define backlog
as the number and sales value of railcars that our customers
have committed in writing to purchase from us that have not been
recognized as revenues. Although we generally have one to three
year contracts with most of our fleet management customers,
neither orders for our railcar repair and refurbishment services
business nor our fleet management business are included in our
backlog because we generally deliver our services in the same
period in which orders are received. Similarly, orders for our
component manufacturing business are not included in our backlog
because we generally deliver components to our customers in the
same period in which orders for the components are received.
Due to the large size of railcar orders and variations in the
number and mix of railcars ordered in any given period, the size
of our reported backlog at the end of any such period may
fluctuate significantly. See "Risk factors— Risks
related to our business— The variable purchase patterns of
our railcar customers and the timing of completion, delivery and
acceptance of customer orders may cause our revenues and income
from operations to vary substantially each quarter, which could
result in significant fluctuations in our quarterly
results."
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The following table shows our reported railcar backlog, and
estimated future revenue value attributable to such backlog, at
the end of the periods shown:
Year ended December 31,
Six months ended June 30,
2002
2003
2004
2004
2005
Railcar backlog at start of period
317
412
2,287
2,287
7,747
New railcars delivered
(1,766
)
(2,557
)
(4,384
)
(2,090
)
(3,345
)
New railcar orders
1,861
4,432
9,844
2,985
2,682
Railcar backlog at end of period
412
2,287
7,747
3,182
7,084
Estimated railcar backlog value at end of period (in
    thousands)(1)
$
26,906
$
129,850
$
507,333
$
203,116
$
505,385
(1)
Estimated backlog value reflects the total revenues expected
    to be attributable to the backlog reported at the end of the
    particular period as if such backlog were converted to actual
    revenues. Estimated backlog does not reflect potential price
    increases and decreases under certain customer contracts that
    provide for variable pricing based on changes in the cost of
    certain raw materials and railcar components or the cancellation
    or delay of railcar orders that may occur.
Historically, we have experienced little variation between the
number of railcars ordered and the number of railcars actually
delivered, however, our backlog is not necessarily indicative of
our future results of operations. As orders may be canceled or
delivery dates extended, we cannot guarantee that our reported
railcar backlog will convert to revenue in any particular
period, if at all, nor can we guarantee that the actual revenue
from these contracts will equal our reported backlog estimates
or that our future revenue efforts will be successful. See
"Risk factors— Risks related to our business— The
level of our reported railcar backlog may not necessarily
indicate what our future revenues will be and our actual
revenues may fall short of the estimated revenue value
attributed to our railcar backlog."
SUPPLIERS AND MATERIALS
We employ a just-in-time supply strategy for our manufacturing.
We believe this strategy improves working capital efficiency,
reduces operating costs and improves our flexibility to adjust
rapidly to production capacity. Our business depends on the
adequate supply of numerous railcar components, such as railcar
wheels, brakes, sideframes, axles, bearings, yokes, tank railcar
heads, bolsters and other heavy castings, and raw materials,
such as steel and normalized steel plate, used in the production
of railcars. Over the last few years many components and raw
materials suppliers have been acquired or ceased operations,
which has caused the number of alternative suppliers of railcar
components and raw materials to decline. The combination of
industry consolidation and high demand has caused recent
industry-wide shortages of many critical components and raw
materials as reliable suppliers are frequently at or near
production capacity. In some cases, such as those described
below, as few as one significant supplier produces the type of
component or raw material we use in our railcars. See "Risk
factors— Risks related to our business— Fluctuations
in the supply of components and raw materials we use in
manufacturing railcars could cause production delays or
reductions in the number of railcars we manufacture, which could
materially adversely affect our business and results of
operations."
The cost of raw materials and railcar components represents
approximately 80% to 85% of the direct manufacturing costs of
most of our railcar product lines. Prices for steel, the primary
component in railcars and railcar components, rose sharply in
2004 as a result of strong demand, limited availability of scrap
metal for steel processing, reduced capacity and import trade
barriers. As of June 30, 2005, most of our railcar
manufacturing contracts contain price variability provisions
that track fluctuations in the prices of certain raw materials
and railcar components, including steel, so that increases in our
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manufacturing costs caused by increases in the prices of these
raw materials and components are passed directly on to our
customers. Conversely, if the price of those materials or
components decreases, a discount is applied to reflect the
decrease in cost. In our component manufacturing business, we
add a surcharge to every product to account for increases in
steel costs. Though we do not have similar contractual
protections in connection with the aluminum we use in our
manufacturing processes, we believe the risks are much less
significant primarily due to the overall lower amounts of
aluminum we use in our manufacturing, the relative price of
aluminum to steel and the historical range of aluminum prices.
Our customers often specify particular railcar components and
the suppliers of such components. We continually monitor
inventory levels to ensure adequate support of production. We
periodically make advance purchases to avoid possible shortages
of material due to capacity limitations of railcar component
suppliers and possible price increases. We do not typically
enter into binding long-term contracts with suppliers because we
rely on established relationships with major suppliers to ensure
the availability of raw materials and specialty items.
In 2004, no single supplier accounted for more than 12% of our
total purchases and our top ten suppliers accounted for 47% of
our total purchases. See "Risk factors— Risks related
to our business— Increases in the cost of the raw materials
that we use to manufacture railcars, particularly steel, or
delivery delays of these raw materials may materially adversely
affect our business, financial condition and results of
operations."
Steel.
We use both regular and normalized steel
plate to manufacture railcars. Currently, there is only one
domestic supplier of the form and size of normalized steel plate
that we need for our manufacturing operations, and that supplier
is our only source of this product. We believe we can acquire
regular steel from other suppliers. Normalized steel plate is a
special form of heat treated steel that is stronger and can
withstand puncture better than regular steel. Normalized steel
plate is required by Federal regulations to be used in tank
railcars carrying certain types of hazardous cargo, including
liquefied petroleum gas. We use normalized steel plate in the
production of many of our tank railcars.
In June 2005, we entered into an agreement with another supplier
that is constructing a facility to manufacture normalized steel
plate, including normalized steel plate of the form and size we
need for our manufacturing operations to supply us with a
portion of our normalized steel plate requirements. We believe
construction of this normalized steel production facility is
scheduled for completion by early 2006. Although our
arrangements with this supplier will not satisfy all of our
normalized steel requirements, we expect this facility will
provide us an alternative source of normalized steel plate and
decrease our reliance on the current sole supplier of this
critical raw material.
We also have entered into a supply agreement with this supplier
for the purchase of regular steel plate. Both agreements have a
term of five years and may be terminated by either party at any
time after two years, upon twelve months prior notice. Each
agreement requires us to purchase the lesser of a fixed volume
or 75% of our requirements for the steel plate covered by that
agreement at prices that fluctuate with the market.
Tank heads and floor sheet reinforcements.
ACF
supplies us with tank railcar heads, head blocks, head pads,
floor sheet reinforcements, wheel sets, mounting frames and
sheared panels. ACF is our sole supplier of tank railcar heads
and floor sheet reinforcements. See "Risk Factors—
Risks related to our business— After this offering,
companies affiliated with Carl C. Icahn will continue to be
important suppliers and customers."
Castings.
Heavy castings we use in our railcar
manufacturing primarily include bolsters, sideframes, couplers
and yokes. These castings form part of the truck assemblies upon
which railcars must be placed. The companies that supply the
railcar industry with heavy castings are unable to meet current
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demands of all the railcar manufacturers and, as such, the
production capacity of many railcar manufacturers is limited by
the restricted availability of these components. In 2003, our
management team helped found and develop, and continues to
operate Ohio Castings, a joint venture, in which we own a
one-third interest. The joint venture leased a foundry in
Cicero, Illinois and acquired a foundry in Alliance, Ohio and
produces sideframes, bolsters, couplers and yokes. We also have
entered into supply agreements with an affiliate of one of our
Ohio Castings joint venture partners to purchase up to 25% and
33%, respectively, of the car sets, consisting of sideframes and
bolsters, produced at each of these foundries. Our purchase
commitments under these supply agreements are dependent upon the
number of car sets manufactured by these foundries, which are
jointly controlled by us and the other two members of Ohio
Castings. We believe that our involvement in this joint venture
helps us maintain our levels of production at competitive
prices, despite industry-wide shortages of these potentially
capacity constraining components. See "Risk factors—
Risks related to our business— Our relationships with our
partners in our Ohio Castings Company, LLC joint venture may not
be successful, which could materially adversely affect our
business," and "—Certain relationships and
related party transactions."
Wheels and brakes.
There also have been supply
constraints and shortages of wheels and brakes used in railcars.
Currently, there are only two domestic suppliers of each of
these components. For both wheels and brakes, we primarily rely
on one supplier. We also obtain limited quantities of
refurbished wheels from scrapped railcars. If necessary, we
believe we can also obtain railcar wheels from a Chinese
supplier at a significantly higher cost.
COMPETITION
The railcar manufacturing business is extremely competitive. We
compete primarily with Trinity Industries and National Steel Car
Limited in the covered hopper railcar market and with Trinity
Industries and, to a lesser degree, Union Tank Car Company in
the tank railcar market.
Some of our competitors have greater financial and technological
resources than we do. They may increase their participation in
the railcar markets in which we compete and other railcar
manufacturers that currently do not manufacture covered hopper
railcars or tank railcars may choose to compete directly with
us. Railcar purchasers' sensitivity to price and strong
price competition within the industry have historically limited
our ability to increase prices to obtain better margins on our
railcars.
We face intense competition in our other markets as well. Our
competition for the sale of railcar components includes our
competitors in the railcar manufacturing market as well as a
concentrated group of companies whose primary business focus is
the production of one or more specialty components. In addition,
new competitors, or alliances among existing competitors, may
emerge and rapidly gain market share. We compete with numerous
companies in our railcar services and fleet management
businesses, ranging from companies with greater resources than
we have to small, local companies. Our principal competitors in
these businesses include Rescar and Millennium Rail.
In addition to price, competition in all our markets is based on
quality, reputation, reliability of delivery, customer service
and other factors. Any of these factors as well as technological
innovation by any of our existing competitors, or new
competitors entering any of the markets in which we do business,
could put us at a competitive disadvantage. We may be unable to
compete successfully or retain our market share in our
established markets. Increased competition for the sales of our
railcar products and services could result in price reductions,
reduced margins and loss of market share, which could negatively
affect our prospects, business, financial condition and results
of operations.
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INTELLECTUAL PROPERTY
We rely on a combination of investments, copyrights and patents
to protect our intellectual property. Due to the change that has
historically characterized the railcar manufacturing industry,
we believe that the improvement of existing technology and the
development of new products may be more important than patent
protection in establishing and maintaining a competitive
advantage. Nevertheless, we have obtained patents and will
continue to make efforts to obtain patents, when available, in
connection with product developments and designs. We cannot
guarantee that any patent obtained will provide protection or be
of commercial benefit to us, or that its validity will not be
challenged.
We have ten U.S. and two non-U.S. patents, two pending
non-U.S. patent application, seven registered trademarks,
and numerous unregistered copyrights and trade names. Our
patents expire at various times from 2005 to 2021.
EMPLOYEES
As of June 30, 2005, we had 2,372 full and part-time
employees in various locations throughout the United States and
Canada, including 2,252 engaged in our manufacturing, railcar
repair and railcar fleet management operations and 120 in
various corporate support functions. At our Longview, Texas and
North Kansas City, Missouri repair facilities, and at our
Longview, Texas steel foundry and components manufacturing
facility, 44, 50 and 290 employees, respectively, are covered by
collective bargaining agreements. These agreements expire in
January 2008, September 2007 and April 2008, respectively. We
are also party to a collective bargaining agreement at our
Milton, Pennsylvania repair facility, which is currently idle.
Employees at our other locations are not covered by collective
bargaining agreements. We believe that our relations with our
employees are generally good.
REGULATION
The Federal Railroad Administration, or FRA, administers and
enforces U.S. federal laws and regulations relating to
railroad safety. These regulations govern equipment and safety
compliance standards for railcars and other rail equipment used
in interstate commerce. The Association of American Railroads,
or AAR, promulgates a wide variety of rules and regulations
governing safety and design of equipment, relationships among
railroads with respect to railcars in interchange and other
matters. The AAR also certifies railcar manufacturers and
component manufacturers that provide equipment for use on
railroads in the United States. New products must generally
undergo AAR testing and approval processes. As a result of these
regulations, we must maintain certifications with the AAR as a
railcar manufacturer, and products that we sell must meet AAR
and FRA standards. We must comply with the rules of the
U.S. Department of Transportation, or DOT, and we are also
subject to oversight by Transport Canada. To the extent that we
expand our business internationally, we will increasingly be
subject to the regulations of other non-U.S. jurisdictions.
Due to the health and safety risks posed by several types of
hazardous cargo transported by pressure tank railcars, including
liquefied petroleum gas, chlorine and anhydrous ammonia,
pressure tank railcars are subject to regulations to which many
other types of railcars are not subject. For example, in
response to general safety and homeland security concerns, there
are currently proposals pending by governmental and
non-governmental railcar authorities that address, among other
things, the impact resistance of the steel used in the
manufacture of pressure tank railcars. These proposals may
result in additional regulation concerning the required use of
normalized steel, and the testing of its impact resistance, in
pressure tank railcars. Prior to 1989, normalized steel was not
typically used in the manufacture of pressure tank railcars and,
according to AAR and DOT data, approximately 28,000 pressure
tank railcars currently in the U.S. railcar fleet were not
manufactured with normalized steel.
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Because normalized steel is used to form railcars' shells,
it is generally not feasible to retrofit railcars with
normalized steel. We believe we are well positioned to take
advantage of any increased demand for new pressure tank railcars
that could result from regulations requiring the increased use
of normalized steel in pressure tank railcars or the removal of
any pre-1989 pressure tank railcars from the U.S. railcar
fleet.
ENVIRONMENTAL MATTERS
We are subject to comprehensive federal, state, local and
international environmental laws and regulations relating to the
release or discharge of materials into the environment, the
management, use, processing, handling, storage, transport or
disposal of hazardous materials and wastes, or otherwise
relating to the protection of human health and the environment.
These laws and regulations expose us to liability for the
environmental condition of our current or formerly owned or
operated facilities and our own negligent acts, and also may
expose us to liability for the conduct of others or for our
actions that were in compliance with all applicable laws at the
time these actions were taken. In addition, these laws may
require significant expenditures to achieve compliance, and are
frequently modified or revised to impose new obligations. Civil
and criminal fines and penalties and other sanctions may be
imposed for non-compliance with these environmental laws and
regulations. Our operations that involve hazardous materials
also raise potential risks of liability under the 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. We
regularly monitor and review our operations, procedures and
policies for compliance with permits, laws and regulations.
Despite these compliance efforts, risk of environmental
liability is inherent in the operation of our businesses, as it
is with other companies engaged in similar businesses. Many of
our properties were transferred to us by ACF in 1994. We are
involved in investigation and remediation activities at
properties that we now own or lease to address historic
contamination and potential contamination by third parties. We
are also involved with state agencies in the cleanup of two
sites under these laws. These investigations are at a
preliminary stage, and it is impossible to estimate, with any
certainty, the timing and extent of remedial actions that may be
required, and the costs that would be involved in such
remediation. Substantially all of the issues identified relate
to the use of the properties prior to their transfer to us in
1994 by ACF and for which ACF has retained liability for
environmental problems that may have existed at the time of
their transfer to us and ACF has also agreed to indemnify us for
any cost that might be incurred with those existing problems.
However, if ACF fails to honor its obligations to us, we would
be responsible for the cost of such remediation.
In connection with its ongoing obligations, ACF, in consultation
with us, is investigating and, as appropriate, remediating those
sites that it transferred to us. We have been advised that, for
the remainder of 2005, ACF estimates that it will spend
approximately $150,000 on environmental investigation and, in
each of 2006 and 2007, it will spend approximately $200,000 on
environmental investigation, relating to contamination that
existed at properties prior to their transfer to us and for
which ACF has retained liability and agreed to indemnify us. We
believe that our operations and facilities are in substantial
compliance with applicable laws and regulations and that any
noncompliance is not likely to have a material adverse effect on
our operations or financial condition.
Future events, such as new environmental regulations or changes
in or modified interpretations of existing laws and regulations
or enforcement policies, or further investigation or evaluation
of the potential health hazards of products or business
activities, may give rise to additional compliance and other
costs that could have a material adverse effect on our financial
conditions and operations. In addition, we have in the past
conducted investigation and remediation activities at properties
that we own to address historic contamination. To date such
costs have not been material. Although we believe we have
satisfactorily addressed all known material contamination
through our remediation activities,
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there can be no assurance that these activities have addressed
all historic contamination. The discovery of historic
contamination or the release of hazardous substances into the
environment at our current or formerly owned or operated
facilities could require us in the future to incur investigative
or remedial costs or other liabilities that could be material or
that could interfere with the operation of our business.
In addition to environmental laws, the transportation of
commodities by railcar raises potential risks in the event of a
derailment or other accident. Generally, liability under
existing law in the United States for a derailment or other
accident depends on the negligence of the party, such as the
railroad, the shipper or the manufacturer of the railcar or its
components. However, for certain hazardous commodities being
shipped, strict liability concepts may apply.
PROPERTY
Our headquarters are located in St. Charles, Missouri. ARL, an
affiliate of Carl C. Icahn, leases this facility and permits us
to occupy it for a fee pursuant to a service agreement. Either
party may terminate this agreement on six months notice.
The following table presents information about our railcar
manufacturing and components manufacturing facilities as of
June 30, 2005:
Leased or
Lease
Location
Use
Size
Owned
Expiration Date
Paragould, Arkansas
Covered hopper railcar manufacturing
530,000 square feet on 53 acres
Owned(1)
—
Marmaduke, Arkansas
Tank railcar manufacturing
440,000 square feet on 55 acres
Owned
—
St. Charles, Missouri
Aluminum foundry and machining
128,626 square feet on 3 acres
Leased
February 28, 2006
Jackson, Missouri
Railcar components manufacturing
125,000 square feet on 7 acres
Owned(1)
—
Kennett, Missouri
Covered hopper and tank railcar subassembly and small components
    manufacturing
80,000 square feet on 9 acres
Owned(1)
—
Longview, Texas
Steel foundry and machining
155,030 square feet on 31 acres
Owned
—
(1)
Our manufacturing facility located in Paragould, Arkansas is
    subject to a mortgage that secures the $9,500,000 industrial
    revenue bonds issued on April 27, 1995 by Paragould,
    Arkansas. As of June 30, 2005, approximately
    $4.5 million of these bonds remain outstanding. Our
    manufacturing facility located in Jackson, Missouri is subject
    to a mortgage that secures the approximately $2.5 million
    industrial development revenue bonds issued on July 1, 1996
    by Jackson, Missouri. As of June 30, 2005, approximately
    $1.5 million of these bonds remain outstanding. Our
    manufacturing facility located in Kennett, Missouri is subject
    to a mortgage that secures the approximately $5.5 million
    industrial development revenue bonds issued on June 22,
    1995 by Kennett, Missouri. As of June 30, 2005,
    approximately $2.6 million of these bonds remain
    outstanding. We occupy the real property at these facilities
    through lease-back arrangements. We intend to repay all of these
    bonds in full with the proceeds of this offering. Each of these
    properties will be re-conveyed to us when the bonds secured by
    the properties are paid in full. The industrial revenue bonds
    are guaranteed by affiliates of Mr. Icahn, and these
    affiliates will be released from such guarantees upon repayment
    of the industrial revenue bonds. In addition, James J. Unger,
    our president and chief executive officer, and his wife own
    $405,000 of the industrial revenue bonds
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issued by Paragould, Arkansas.
    Mr. Unger and his wife will receive approximately
    $0.4 million upon our repayment in full of the amounts due
    under the industrial revenue bonds. See "Use of
    proceeds," "Certain relationships and related party
    transactions— Guarantees of indebtedness by ACF and other
    related parties— Industrial revenue bonds" and
    "Certain relationships and related party transactions—
    Certain transactions involving James J. Unger— Industrial
    revenue bonds" for more details.
We also provide railcar repair, cleaning, maintenance and other
services at facilities we lease in Gonzales, Louisiana; Green
River, Wyoming; Longview, Deer Park and Goodrich, Texas; North
Kansas City, Missouri; Bude, Mississippi; Tennille, Georgia;
Pace Florida; and Sarnia, Ontario. We also own a repair facility
in Milton, Pennsylvania that has been idle since 2003.
INSURANCE
We maintain insurance on terms typical of our industry. Our
policies cover standard industry risks, including general and
products liability, workers compensation, automobile liability
and other casualty and property risks.
LEGAL PROCEEDINGS
We are from time to time party to various legal proceedings
arising out of our business. Such proceedings, even if not
meritorious, could result in the expenditure of significant
financial and managerial resources. We believe that there are no
proceedings pending against us which, if determined adversely,
would have a material adverse effect on our business, financial
condition and results of operations.
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DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information concerning our current directors
and executive officers, including their ages as of June 30,
2005.
Name*
Age
Position
Carl C. Icahn
[68
]
Chairman of the Board
James J. Unger
57
President, Chief Executive Officer and Director
William P. Benac
58
Senior Vice President and Chief Financial Officer
Alan C. Lullman
50
Senior Vice President Sales, Marketing and Services
Vincent J. Intrieri
[47
]
Director
Jon F. Weber
46
Director
Keith Meister
[31
]
Director
*
We intend to appoint two additional persons to serve as
    independent directors upon the completion of this offering.
Carl C. Icahn, chairman of the board
Mr. Icahn has been our principal beneficial stockholder and
has served as our chairman of the board and as a director since
1994. Mr. Icahn has served as chairman of the board and a
director of Starfire Holding Corporation, or Starfire, (formerly
Icahn Holding Corporation), a privately-held holding company,
and chairman of the board and a director of various subsidiaries
of Starfire, since 1984. Mr. Icahn has also been chairman
of the board and president of Icahn & Co., Inc., a
registered broker-dealer and a member of the National
Association of Securities Dealers, since 1968. Since November
1990, Mr. Icahn has been chairman of the board of American
Property Investors, Inc., the general partner of American Real
Estate Partners, L.P., a public limited partnership that invests
in real estate and holds various other interests, including the
interests in its subsidiaries that are engaged, among other
things, in the oil and gas business and casino entertainment
business. Mr. Icahn has been a director of Cadus
Pharmaceutical Corporation, a firm that holds various
biotechnology patents, since 1993. From August 1998 to August
2002, Mr. Icahn served as chairman of the board of
Maupintour Holding LLC (f/k/a/ Lowestfare.com, LLC), an
Internet travel reservations company. From October 1998 through
May 2004, Mr. Icahn was the president and a director of
Stratosphere Corporation, which operates the Stratosphere Hotel
and Casino. Since September 29, 2000, Mr. Icahn has
served as the chairman of the board of GB Holdings, Inc.,
which owns all of the outstanding stock of Atlantic Coast
Entertainment Holdings, Inc., which through its wholly owned
subsidiary owns and operates The Sands Hotel and Casino in
Atlantic City, New Jersey. Mr. Icahn also serves in the
same capacity with Atlantic Coast Entertainment Holdings, Inc.
In January 2003, Mr. Icahn became chairman of the board and
a director of XO Communications, Inc., a telecommunications
company. In May 2005, Mr. Icahn became a director of
Blockbuster Inc., a provider of in-home movie rental and game
entertainment. Mr. Icahn received his B.A. from Princeton
University.
James J. Unger, president, chief executive officer and
director
Mr. Unger has served as our president and chief executive
officer since March 1995. Prior to joining us, he served ACF as
its president from 1988 to 1995, as its senior vice president
and chief financial officer from 1984 to 1988 and on its board
of directors from August 1993 to March 2005. After he joined us
in 1995, Mr. Unger simultaneously continued to serve as the
vice chairman of ACF until
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March 2005. ACF is controlled by Mr. Icahn. Mr. Unger
has served as president of Ohio Castings, the joint venture in
which we have a one-third interest, since June 2003.
Mr. Unger has been on the board of directors of Aspen
Resources Group, an oil and gas exploration company since May
2002. Mr. Unger participates in several industry
organizations, including as an executive committee member and
board member for the Railway Supply Institute, Inc., or
"RSI". He also is a board member of the American
Railway Car Institute, a member of the project review committee
for the RSI-AAR Railroad Tank Car Safety Research Test Project,
a steering committee member of the RSI Committee on Tank
Railcars, and a member of the National Freight and
Transportation Association. Mr. Unger served as a member of
the board of directors of Ranken Technical College from 1990 to
2002. Mr. Unger received a B.S. in accounting from the
University of Missouri, Columbia and is a certified public
accountant.
William P. Benac, senior vice president and chief financial
officer
Mr. Benac has served as our senior vice president and chief
financial officer since January 2005. Prior to joining us, he
spent the last 32 years in various corporate finance,
turnaround and value creation positions. Mr. Benac
co-founded bpmx, a financial services and consulting
restructuring company, where he served as senior managing
director and chief financial officer from December 2003 to
January 2005. From August 2002 to February 2003, Mr. Benac
served Kinko's Inc., a print services company, as senior
vice president and chief financial officer. From November 2000
to November 2001, Mr. Benac was the executive vice
president and chief financial officer of Grass Valley Group, a
manufacturer of digital broadcast technology. Mr. Benac
served simultaneously as an executive vice president and chief
financial officer of UICI, a diversified financial services
company, and as chief executive officer of United Credit
National Bank, a subsidiary of UICI and a credit card bank, from
May 1999 to November 2000. Mr. Benac has held a variety of
other financial management positions, including serving
Electronic Data Systems Corporation from February 1992 to
October 1997 as global vice president and treasurer, and
numerous positions with Verizon Corporation and its predecessor
companies from 1973 to 1990, including as president of GTE
Finance Corp. from 1986 to 1990. Mr. Benac is a certified
public accountant and a certified management accountant. He has
served on the National Advisory Council of the Marriott School
of Management—Brigham Young University since 1997.
Mr. Benac received his B.A. and his M.B.A from Brigham
Young University and his J.D. from Pace University School of Law.
Alan C. Lullman, senior vice president sales, marketing and
services
Mr. Lullman has served as our senior vice president sales,
marketing and services since October 2004. From August 1998 to
September 2004, he served as our vice president sales and
marketing. Prior to joining us, he served as a regional sales
manager at the Houston office of ACF from March 1989 to July
1998, where he was responsible for sales across 22 states.
From August 1987 to February 1989, Mr. Lullman was a
district sales manager at ACF. He held numerous other sales
positions at ACF sales offices in the Southwest, Midwest and
Northeast from October 1978 to July 1987. Mr. Lullman is a
member of the Transportation and Logistics Committee of the
American Plastics Council. He received a B.A. from Westminster
College. He also served in the U.S. Marine Corps Reserve
from 1973 to 1976, when he received an honorable discharge.
Vincent J. Intrieri, director
Mr. Intrieri has served on our board of directors since
August 2005. Mr. Intrieri is a senior managing director of
Icahn Partners LP and Icahn Partners Master Fund LP,
private investment funds controlled by Mr. Icahn. Since
January 1, 2005, Mr. Intrieri has been senior managing
director of Icahn Associates Corp., whose principal business is
to hold a lease to premises at 767 Fifth Avenue, New York New
York, and High River Limited Partnership, which is primarily
engaged in the business of
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holding and investing in securities. From March 2003 to December
2004, Mr. Intrieri served as a managing director and from
1998 to March 2003, he served as a portfolio manager of Icahn
Associates Corp. and High River. Each of Icahn Associates Corp.
and High River are under the control of Mr. Icahn. From
1995 to 1998, Mr. Intrieri served as portfolio manager for
distressed investments with Elliott Associates L.P., a New York
investment fund. Prior to 1995, Mr. Intrieri was a partner
at the Arthur Andersen accounting firm. Mr. Intrieri is a
certified public accountant. Mr. Intrieri is chairman of
the board of directors and a director of Viskase Companies,
Inc., a publicly owned producer of cellulose and plastic casings
used in preparing and packaging meat products, in which
Mr. Icahn has an interest through the ownership of
securities. In addition, Mr. Intrieri has served on the
board of directors of XO Communications, Inc., a
telecommunications services company controlled by
Mr. Icahn, since January 2003. Mr. Intrieri received a
B.S. in Accounting from The Pennsylvania State University.
Jon F. Weber, director
Mr. Weber has served on our board of directors since August
2005. Since April 2005, Mr. Weber has served as the
president of American Property Investors, Inc., which is the
general partner of American Real Estate Partners, L.P., a public
limited partnership controlled by Mr. Icahn that invests in
real estate and holds various other interests, including the
interests in its subsidiaries that are engaged, among other
things, in the oil and gas business and casino entertainment
business. Mr. Weber has, since April 2003, been head of
portfolio company operations and chief financial officer at
Icahn Associates Corp., an entity controlled by Mr. Icahn.
Since May 2003, Mr. Weber has been a director of Viskase
Companies, Inc. and was the chief executive officer of Viskase
Companies, Inc. from May 2003 to October 2004. Since March 2003,
he has served as chief executive officer and a director of
Philip Services Corporation, a metal recycling and industrial
services company affiliated with Mr. Icahn. He served as
chief financial officer of venture-backed companies QuantumShift
Inc. and Alchemedia Ltd. from October 2001 to July 2002 and
November 2000 to October 2001, respectively. From May 1998 to
November 2000, Mr. Weber served as managing
director—investment banking for JP Morgan Chase and its
predecessor, Chase Manhattan Bank, in São Paulo, Brazil. He
has served as a director of XO Communications, Inc., since May,
2005. Previously, Mr. Weber was an investment banker at
Morgan Stanley and Salomon Brothers.
Keith Meister, director
Mr. Meister has served on our board of directors since
August 2005. Since June 2002 Mr. Meister has been a senior
investment analyst of High River, a company owned and controlled
by Mr. Icahn that is primarily engaged in the business of
holding and investing in securities. Mr. Meister is also a
senior investment analyst of Icahn Partners LP and Icahn
Partners Master Fund LP. He is also a director of Icahn
Fund Ltd., which is the feeder fund of Icahn Partners
Master Fund LP. Icahn Partners LP and Icahn Partners Master
Fund L.P. are private investment funds controlled by
Mr. Icahn. Since August 2003, Mr. Meister has served
as the chief executive officer of American Property Investors,
Inc., or API, which is the general partner of American Real
Estate Partners, L.P., a public limited partnership controlled
by Mr. Icahn that invests in real estate and holds various
other interests, including the interests in its subsidiaries
that are engaged, among other things, in the oil and gas
business and casino entertainment business. Mr. Meister
served API as its president from August 2003 to April 2005. From
March 2000 through the end of 2001, Mr. Meister co-founded
and served as co-president of J Net Ventures, a venture capital
fund focused on investments in information technology and
enterprise software businesses. From 1997 through 1999,
Mr. Meister served as an investment professional at
Northstar Capital Partners, an opportunistic real estate
investment partnership. Prior to his work at Northstar,
Mr. Meister served as an investment analyst in the
investment banking group at Lazard Freres. Mr. Meister is a
director of XO Communications, Inc., a telecommunications
services company
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controlled by Mr. Icahn. Mr. Meister also is a
director of American Entertainment Properties Corp. and American
Casino & Entertainment Properties Finance Corp., which
are gaming companies, [and Scientia Corporation, a private
health care venture company,] all of which are companies
controlled by American Real Estate Partners, L.P., which is
controlled by Mr. Icahn. Mr. Meister received his A.B.
in Government cum laude from Harvard College.
KEY EMPLOYEES
Set forth below is information concerning our key employees,
including their ages as of June 30, 2005.
Jackie R. Pipkin, 55, director of railcar manufacturing
Mr. Pipkin has served as our director of railcar
manufacturing since July 1995 and as plant manager of our
Kennett manufacturing facility since March 1994. Prior to
joining us, Mr. Pipkin served Thrall Car Manufacturing, a
railcar manufacturer, as manufacturing manager from January 1992
to March 1994 and as general superintendent from December 1989
to December 1992. He served ACF in various roles from February
1969 to December 1989. Mr. Pipkin has supervised or helped
supervise the launch of several new railcar manufacturing
facilities during his employment with ACF and with us, including
the original construction of our Paragould and Marmaduke
facilities and the addition of the third manufacturing line at
our Paragould facility.
Michael R. Williams, 44, vice president engineering and
manufacturing
Mr. Williams has served as our vice president engineering
and manufacturing since October 2004 and in various product and
account management roles since April 1997. Prior to joining us,
Mr. Williams served ACF as a strength analyst of covered
hopper and tank railcars from January 1991 to March 1997.
Mr. Williams served as an airframe designer and analyst at
McDonnell Douglas Corporation from May 1983 to December 1990.
Mr. Williams received his B.S. in mechanical engineering
from the University of Illinois and a M.S. in Mechanical
Engineering and a M.B.A. from Washington University.
BOARD OF DIRECTORS
Our board of directors presently consists of five members. Upon
the completion of this offering we expect to expand the size of
our board of directors to seven members with the addition of two
new independent directors. Our directors are expected to serve
until the next annual meeting of our stockholders and until
their respective successors have been duly elected and
qualified. We believe that, within the one-year transition
period available to us following the completion of this
offering, we will comply with all applicable requirements of the
SEC and the Nasdaq National Market relating to director
independence and the composition of the committees of our board
of directors, including the designation of an "audit
committee financial expert."
Affiliates of Carl C. Icahn, our principal beneficial
stockholder and the chairman of our board of directors, are
currently negotiating with our other principal stockholder to
acquire all of our common stock held by that stockholder prior
to consummation of this offering. If that purchase occurs, we
expect that Mr. Icahn will control approximately
[
l
]% of the voting
power of our outstanding common stock following the offering.
Consequently, we would be a "controlled company"
within the meaning of the listing standards governing companies
with stock quoted on the Nasdaq National Market. Under these
rules, a "controlled company" may elect not to comply
with certain Nasdaq National Market corporate governance
requirements, including requirements that (1) a majority of
the board of directors consist of independent directors,
(2) compensation of officers be determined or recommended
to the board of directors by a majority of its independent
directors or by a compensation committee that is composed
entirely of independent directors and (3) director nominees
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Management
be selected or recommended for selection by a majority of the
independent directors or by a nominating committee composed
solely of independent directors. If, at the time of this
offering, we are a "controlled company" under the
listing standards of the Nasdaq National Market, we intend to
avail ourselves of those exemptions and will not have a majority
of independent directors on our board. See "Risk
factors—Risks related to the purchase of our common stock
in this offering—Upon the closing of this offering we may
be a "controlled company" within the meaning of the
Nasdaq National Market rules and you will not have the same
protections afforded to shareholders of companies that are not
"controlled companies" and, therefore, are subject to
all of the Nasdaq National Market corporate governance
requirements."
COMMITTEES OF OUR BOARD OF DIRECTORS
If we are a "controlled company" following this
offering, we intend to use exemptions available to us under the
corporate governance listing standards of the Nasdaq National
Market. In that circumstance, we expect that we would not have a
compensation committee and we would not have a nominating
committee. If we are not a "controlled company"
following this offering, we intend to comply with all applicable
corporate governance requirements of the Nasdaq National Market
within the transition periods allowed companies following their
initial public offering of common stock. Accordingly, if we are
not a "controlled company" at the time this offering
is completed, the standing committees of our board of directors
will consist of an audit committee, a compensation committee and
a nominating committee. See "Risk factors—Risks
related to the purchase of our common stock in this
offering—Upon the closing of this offering we may be a
"controlled company" within the meaning of the Nasdaq
National Market rules and you will not have the same protections
afforded to shareholders of companies that are not
"controlled companies" and, therefore, are subject to
all of the Nasdaq National Market corporate governance
requirements."
In any event, we may establish special committees under the
direction of the board of directors when necessary to address
specific issues.
Audit committee
Our Audit Committee will be responsible for oversight of the
qualifications, independence, appointment, retention,
compensation and performance of the Company's independent
registered public accounting firm and for assisting the board of
directors in monitoring the Company's financial reporting
process, accounting functions and internal controls. It also
will be responsible for oversight of "whistle-blowing"
procedures and certain other compliance matters.
The composition of the Audit Committee following the completion
of this offering will comply with applicable SEC and Nasdaq
National Market requirements, including the requirement that at
least one member of the Audit Committee qualify as a
"financial expert" under SEC rules and the stricter
definition of independence for audit committee members under the
rules of the Nasdaq National Market. Our board of directors will
adopt a written charter for our Audit Committee. That charter
will conform to recently adopted rules and regulations of the
SEC and the Nasdaq National Market.
Corporate governance
We believe that shortly after completion of this offering, we
will comply with all applicable Nasdaq National Market corporate
governance and listing requirements. In the interim, we will
rely on transition periods available to companies following
their initial public offering of common stock. See "Risk
factors—Risks related to the purchase of our common stock
in this offering—Upon the closing of this offering we may
be a "controlled company" within the meaning of the
Nasdaq National Market rules and you will not have the same
protections afforded to shareholders of companies that
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Management
are not "controlled companies" and, therefore, are
subject to all of the Nasdaq National Market corporate
governance requirements," "Management—Board of
directors" and "Management—Committees of our
board of directors."
Codes of conduct and ethics
Upon completion of this offering, we will have adopted written
codes of conduct and ethics applicable to all of our directors,
executive officers and employees including, without limitation,
all of our senior financial officers, that will be designed to
deter wrongdoing and to promote:
•
honest and ethical conduct;
•
full, fair, accurate, timely and
    understandable disclosure in reports and documents that we file
    with the SEC and in our other public communications;
•
compliance with applicable laws,
    rules and regulations, including insider trading
    compliance; and
•
accountability for adherence to
    the code and prompt internal report of violations of the code,
    including illegal or unethical behavior regarding accounting or
    auditing practices.
Our codes of conduct and ethics will also comply with applicable
requirements of the Nasdaq National Market. The Audit Committee
of our board of directors will review our codes of conduct and
ethics on a regular basis and will propose or adopt additions or
amendments as it considers required or appropriate.
Director compensation
Each director is entitled to reimbursement for out-of-pocket
expenses incurred for each meeting of the full board or a
committee of the board attended. The annual compensation for our
independent directors is
$[
l
].
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Management
EXECUTIVE COMPENSATION
The following table sets forth the compensation of our chief
executive officer and each of our other most highly compensated
executive officers during the year ended December 31, 2004.
We refer to these officers as the named executive officers. We
did not maintain any option plans through December 31,
2004, and no options were granted to or exercised by any of our
named executive officers during the year ended December 31,
2004.
Annual compensation
Other annual
All other
compensation
compensation
Name and principal position
Salary ($)
Bonus ($)
($)(3)
($)(4)
James J. Unger
President and Chief Executive Officer
350,000
—
48,532
18,268
William P. Benac(1)
Senior Vice President and Chief
Financial Officer
—
—
—
—
Alan C. Lullman
Senior Vice President Sales,
Marketing and Services
140,000
20,000
9,431
574
William L. Finn(2)
Senior Vice President Operations
172,917
—
25,287
8,218
(1)
Mr. Benac started his employment with us on
    January 31, 2005.
(2)
Mr. Finn retired effective May 1, 2005.
(3)
Includes the following payments we made on behalf of
    Messrs. Unger, Lullman and Finn:
Car
Country
allowances
club dues
Mr. Unger
$
39,651
$
8,881
Mr. Lullman
8,820
611
Mr. Finn
19,576
5,711
(4)
Includes the following payments we made on behalf of
    Messrs. Unger, Lullman and Finn.
Life insurance
401(k) matching
premiums
contributions
Mr. Unger
$
7,768
$
10,500
Mr. Lullman
574
3,030
Mr. Finn
0
5,188
Employment and noncompetition agreements
James J. Unger.
We are presently negotiating an
employment agreement with Mr. Unger and expect to enter
into such an agreement prior to the consummation of this
offering. [Option information to be added.]
William P. Benac.
In July 2005 we entered into an
employment agreement with William P. Benac to serve as our chief
financial officer for a period of one year. The agreement is
effective as of April 22, 2005 and automatically renews for
successive one-year terms unless terminated by either party at
least 180 days before the expiration of the then applicable
term.
Under the terms of the agreement, Mr. Benac will receive a
minimum annual base salary of $250,000. Mr. Benac is also
entitled to a non-prorated cash bonus of at least $150,000 for
the 2005 fiscal year.
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Management
Criteria for cash bonuses that may be awarded for each year the
agreement is extended are subject to negotiation and will be
determined during the first quarter of each calendar year the
agreement is renewed. It is expected that the target bonus
amounts during such years will not be less than $150,000.
In addition to the salary and bonus compensation described
above, Mr. Benac will receive a one-time special cash bonus
of $500,000 on April 22, 2007 if, prior to that date, we
issue common stock to the public in an offering registered with
the SEC or Mr. Icahn sells his controlling interest in us
to a third party in a private transaction. If at any time on or
before April 22, 2007, we terminate Mr. Benac's
employment without cause, he resigns for good reason or a change
in control occurs, he will be entitled to receive the special
cash bonus upon the occurrence of such event. In addition, if we
terminate Mr. Benac's employment other than for cause,
death or disability, or if he terminates his employment for good
reason, he is entitled to receive a lump sum severance payment
of $200,000. Mr. Benac's right to the special cash
bonus and any severance immediately terminates if his employment
is terminated for cause or he resigns without good reason.
Mr. Benac will be reimbursed for reasonable and necessary
business related expenses, including those expenses associated
with commuting from Dallas to our headquarters in St. Charles,
Missouri, such as air and car travel and reasonable living
expenses. He is eligible to participate in all health, medical,
retirement and other employee benefit plans we generally provide
to our senior executives. Mr. Benac's employment
agreement also contains provisions requiring him to protect our
confidential information during his employment and at all times
thereafter.
Mr. Benac may terminate his employment for good reason upon
at least 30 days prior written notice to us, or without
good reason upon at least 60 days prior written notice to
us. We may terminate Mr. Benac's employment without
cause upon 30 days written notice or immediately for cause
or upon his death or disability.
Equity incentive plan
2005 Equity Incentive Plan.
We adopted a 2005
equity incentive plan to provide long-term incentives and
rewards to our employees, officers, directors, consultants and
advisors. The 2005 plan permits us to issue stock and grant
stock options, restricted stock, stock units and other equity
interests to purchase or acquire up to
[
l
] shares
of our common stock. Awards covering no more than
[
l
] shares
may be granted to any person during any fiscal year. If any
award expires, or is terminated, surrendered or forfeited, then
shares of common stock covered by the award will again be
available for grant under the 2005 plan. The 2005 plan is
administered by our board of directors or a committee of the
board. The board or committee has broad discretion to determine
the terms of an award granted under the 2005 plan, including, to
the extent applicable, the vesting schedule, purchase or grant
price, option exercise price, or the term of the option or other
award; provided that the exercise price of any options granted
under the 2005 plan may not be less than the fair market value
of the common stock on the date of grant. The terms and
conditions of stock options or other awards granted under the
2005 plan will be set forth in a separate agreement between us
and the recipient of the award.
Retirement plans
Supplemental Executive Retirement Plan.
Mr. Unger is entitled to benefits from a supplemental
executive retirement plan, or SERP. The SERP benefit is
generally equal to the benefit that would be provided under the
Employees' Retirement Plan of ACF Industries, LLC, if
certain Internal Revenue Service limits and exclusions from
compensation under that plan did not apply, less the actual
benefit payable under the ACF retirement plan. The SERP benefits
were frozen effective as of March 31,
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Management
2004. As a result, no further benefits are accruing under the
SERP. These benefits are generally paid at the same time and in
the same form as the participant's benefit under the
retirement plan. No funds have been set aside for the benefits
payable under the SERP. The estimated annual SERP benefit for
Mr. Unger is $117,799. No other named executive officer is
entitled to receive a benefit under the SERP.
Pension Plan.
We provide pension benefits to
certain of our salaried employees, including Mr. Unger,
Mr. Finn and Mr. Lullman, under the Employees'
Retirement Plan of ACF Industries, LLC. Each executive's
benefit under the retirement plan is based on 2.25% of average
annual compensation for each year of service after
April 30, 1981; plus the highest of the executive's
annual compensation for five consecutive years of employment
prior to May 1, 1981 that results in the highest such
average multiplied by number of years of service completed prior
to May 1, 1981; plus a fixed dollar amount. This fixed
dollar amount is $12,800 for Mr. Unger, $15,600 for
Mr. Finn and $6,108 for Mr. Lullman. For purposes of
this plan, years of service include years of service with both
ACF and us. This total is then reduced by an amount equal to
0.5% of the executive's final average compensation
multiplied by the number of years of service up to 35. The
benefits under this plan were frozen effective as of
March 31, 2004. As a result, no additional benefits are
accruing under this plan.
The benefits under the ACF retirement plan are generally paid
monthly for the life of the executive, following retirement in
the form of a joint and survivor annuity. As most recently
determined by the actuaries for the retirement plan, based on
current years of service with us and ACF, the estimated annual
pension commencing at age 65 for each of the named
executives is as follows: Mr. Unger: $99,633;
Mr. Finn: $72,966; and Mr. Lullman: $49,752. These
named executives are fully vested in their retirement plan
benefits.
Postretirement Obligations.
We also provide
postretirement health and life insurance benefits for certain of
our salaried employees. Our named executive officers may become
eligible for these benefits if they retire after attaining
specified age and service requirements.
Executive Survivor Insurance Plan.
We provide an
executive survivor insurance plan for certain of our salaried
employees including the named executive officers. This plan
provides life insurance benefits to the qualified spouse of a
named executive officer upon his death during his employment or
following retirement at or after age 55. We have purchased
a group term life insurance policy to off-set the cost of
providing this benefit. Benefits payable under this plan are
separate from any benefit payable under our retirement plans. If
the named executive officer retires and dies after attaining
age 55, then his qualified spouse is entitled to a monthly
benefit equal to what would have been payable under our
retirement plan if the named executive officer had retired with
a 50% joint and survivor benefit. If the named executive officer
dies while actively employed and after attaining age 55,
then his qualified spouse is entitled to a monthly benefit equal
to 20% of the named executive's officer's salary
reduced by any amount payable under the survivor provisions of
our retirement plan. In no event may the amounts paid under this
plan exceed $6,500 per month. We have reserved the right to
amend, modify or terminate this plan.
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Certain relationships and related party transactions
Other than the transactions described below, for the last three
full fiscal years there has not been, nor is there currently
proposed, any transaction or series of similar transactions to
which we are or will be a party:
•
in which the amount involved
    exceeded or will exceed $60,000; and
•
in which any director, executive
    officer, holder of more than 5% of our common stock on an
    as-converted basis or any member of their immediate family has
    or will have a direct or indirect material interest.
We believe that each of the transactions described below that is
to remain in effect following the completion of this offering is
on terms no less favorable to us than could have been obtained
from unaffiliated third parties. Although we do not have a
separate conflicts policy, we intend to comply with Missouri law
with respect to transactions involving potential conflicts.
Missouri law requires that all transactions between us and any
director or executive officer are subject to full disclosure and
approval of the majority of the disinterested members of our
board of directors, approval of the majority of our stockholders
or the determination that the contract or transaction is
intrinsically fair to us.
TRANSACTIONS WITH CARL C. ICAHN AND ENTITIES AFFILIATED WITH
CARL C. ICAHN
Overview
Our company was formed in 1988 as a company beneficially owned
by Carl C. Icahn. Mr. Icahn is our principal beneficial
stockholder and is the chairman of our board of directors. We
grew our company through the transfer of certain assets to us
from ACF, a company also beneficially owned by Mr. Icahn.
Since our formation, we have entered into agreements relating to
the acquisition of assets from and disposition of assets to
entities controlled by Mr. Icahn, the provision of goods
and services to us by entities controlled by Mr. Icahn, the
provision of goods and services by us to entities affiliated
with Mr. Icahn and other matters involving entities
controlled by Mr. Icahn. We receive substantial benefit
from these agreements and we expect that in the future we will
continue to conduct business with entities affiliated with or
controlled by Mr. Icahn. In addition, we receive other
benefits from our affiliation with Mr. Icahn and companies
controlled by Mr. Icahn, such as financial and advisory
support, sales support and our participation in buying groups
and other arrangements with entities controlled by
Mr. Icahn. For example, lease sales agents of ARL, a
company beneficially owned by Mr. Icahn, and ACF, in
connection with their own leasing sales activities, have, from
time to time, referred their customers or contacts to us that
prefer to purchase rather than lease railcars, which has, in
some cases, led to us selling railcars to these customers or
contacts. At this time there is no formal arrangement under
which these referrals are provided and we do not compensate ARL,
ACF or any of their leasing sales agents for any railcar sales
that we make as a result of these referrals. As an accommodation
to some of their customers and contacts that they referred to
us, ARL and ACF from time to time accepted orders to purchase
our railcars and then assigned those orders to us. ARL and ACF
have discontinued accepting orders to sell railcars on our
behalf. See "Risk factors— Risks related to our
business— After this offering, companies affiliated with
Carl C. Icahn will continue to be important suppliers and
customers," "Risk factors— Risks related to our
business— Services being provided to us by ARL, an entity
controlled by Carl C. Icahn, may not be sufficient to meet our
needs, which may require us to incur additional costs,"
"Risk factors— Risks related to our business—
After this offering, we may have reduced access to resources of,
and benefits provided by, entities affiliated with Carl C.
Icahn" and "Risk factors— Risks related to our
business— We could be liable for liabilities
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Certain relationships and related party transactions
associated with pension plans sponsored by companies controlled
by Carl C. Icahn" for a description of certain risks
associated with our affiliation with Mr. Icahn and entities
affiliated with Mr. Icahn.
We describe below the material arrangements and other
relationships that we are, or have been, a party to with
Mr. Icahn and entities affiliated with Mr. Icahn since
January 1, 2002. As noted below, some of these arrangements
and relationships have been terminated or otherwise will no
longer be in effect following the completion, and the
application of the net proceeds of, this offering.
Application of the net proceeds of this offering
We intend to use the net proceeds of this offering to, among
other things, repay certain indebtedness that we owe to entities
controlled by Mr. Icahn and to redeem all of the
outstanding shares of our preferred stock, all of which are held
by Mr. Icahn and his affiliates. As of June 30, 2005,
the total amount of this indebtedness outstanding was
approximately $108.9 million. As a result, entities
controlled by Mr. Icahn will receive approximately
$108.9 million of the net proceeds of this offering. We
also intend to use the net proceeds of this offering to repay in
full amounts due under our industrial revenue bonds. As of June
30, 2005, the total amount of this indebtedness outstanding was
approximately $8.5 million. The industrial revenue bonds
are guaranteed by affiliates of Mr. Icahn and these
affiliates will be released from such guarantees upon the
repayment of the bonds. In addition James J. Unger, our
president and chief executive officer, and his wife own
$0.4 million of the industrial revenue bonds issued by
Paragould, Arkansas and, as a result, will receive approximately
$0.4 million upon the repayment of the bonds. See "Use
of proceeds," "—Guarantees of indebtedness by ACF
and other related parties— Industrial revenue bonds"
and "Certain transactions involving James J. Unger—
Industrial revenue bonds" and the transactions described
below for more information.
REDEMPTION OF NEW PREFERRED STOCK
Concurrently with the closing of this offering, we intend to use
approximately $89.2 million of the net proceeds of this
offering to redeem our new preferred stock, including all
accumulated and unpaid dividends due on our new preferred stock.
See "—Certain Transactions Involving American Railcar
Leasing LLC— The ARL exchange" for more information.
We will redeem each outstanding share of new preferred stock for
an amount equal to the liquidation preference of each share of
new preferred stock, which is $1,000 per share, plus all
accumulated and unpaid dividends on each share of new preferred
stock through the date of the redemption. Assuming the
redemption occurred on June 30, 2005, the aggregate amount
required to redeem all of the outstanding shares of our new
preferred stock, including accumulated and unpaid dividends,
would have been $89.2 million. All of our new preferred
stock is held by entities beneficially owned and controlled by
Mr. Icahn.
REDEMPTION OF MANDATORILY REDEEMABLE PREFERRED STOCK
On or before the closing of this offering, we intend to redeem
our one outstanding share of mandatorily redeemable preferred
stock, which is held by Mr. Icahn. As of June 30,
2005, there was $743 of accumulated and unpaid dividends on that
stock. This share became mandatorily redeemable for $1,000 on
February 1, 2005.
CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC AND AMERICAN
RAILCAR LEASING LLC
Overview
We have entered into a variety of agreements and transactions
with ACF Industries LLC (which we refer to, along with its
predecessor ACF Industries, Inc., as ACF), American Railcar
Leasing LLC (which we refer to as ARL) and certain other parties
related to these companies. These transactions and agreements
are described in further detail below. During the periods
discussed, ACF and ARL
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Certain relationships and related party transactions
were beneficially owned and controlled by Mr. Icahn, and
they continue to be so owned and controlled.
In 1994, ACF transferred to us its railcar repair and
maintenance assets for its railcar parts and manufacturing
business conducted at specified locations, including
intellectual property rights associated with the transferred
assets, all of ACF's rights to the property, plant and
equipment at those locations, as well as specified assets used
in the manufacture and sale of industrial size mixing bowls. We
refer to this transaction as the 1994 ACF asset transfer. In
2004, ACF and its subsidiaries, through a series of
transactions, transferred some of the railcar fleets that they
then owned and held primarily for lease to third parties to ARL
and its subsidiaries. At the time, we owned all the common
interests of ARL. As of June 30, 2005, we transferred our
entire interest in ARL in exchange for the redemption of shares
of our new preferred stock, in a transaction we refer to as the
ARL exchange. All of our shares of new preferred stock were and
continue to be owned by entities beneficially owned and
controlled by Mr. Icahn.
Manufacturing Operations
Prior to the transfer of ACF's and its subsidiaries'
railcar fleets to ARL and its subsidiaries in 2004, we sold
railcars and railcar components to ACF and its subsidiaries for
use in their railcar fleets. Since the transfer of these fleets
to ARL, we sell railcars to ARL. We believe that since
ARL's formation in 2004, we have been the only supplier of
railcars to ARL, although ARL is not precluded from purchasing
railcars from others. In 2002, 2003 and 2004, our revenues from
manufacturing operations included $63.6 million,
$64.8 million and $64.4 million, respectively, from
transactions with affiliates. In the six months ended
June 30, 2005, our revenues from manufacturing operations
included
$           million
from transactions with affiliates. Most of these revenues were
attributable to railcars and railcar components that we sold to
ACF, ARL and their respective subsidiaries. As of June 30,
2005 our backlog included $44.1 million for railcar orders
by ARL. These orders are on substantially the same terms as we
provide to our other customers.
ACF has also been a significant supplier of components for our
business. Components supplied to us by ACF include tank railcar
heads, wheel sets and various structural components. In 2002,
2003 and 2004, we purchased inventory of $15.7 million,
$19.0 million, and $31.3 million, respectively, of
components from ACF. In the six months ended June 30, 2005,
we purchased inventory of $35.4 million from ACF. As of
[July 31, 2005], we had outstanding purchase orders for
$[21.4] million of inventory from ACF.
During 2003 and 2004, Castings LLC, a joint venture partner in
Ohio Castings, was a wholly owned subsidiary of ACF Industries
Holding Corp., an indirect parent of ACF that is beneficially
owned and controlled by Mr. Icahn. Effective
January 1, 2005, we acquired Castings LLC from ACF
Industries Holding Corp. as described under "Certain
relationships and related party transactions— Certain
Transactions Involving Ohio Castings." Our cost of railcar
manufacturing for the years ended December 31, 2003 and
2004 included $3.9 million and $25.3 million,
respectively, in railcar components produced by Ohio Castings.
Expenses of $0.4 million and $3.2 million paid to
Castings LLC under a supply agreement are also included in the
cost of railcar manufacturing for the years ended
December 31, 2003 and 2004, respectively. We also have been
charged $0.2 million in the year ended December 31,
2003 relating to certain costs incurred by Castings LLC in the
establishment of Ohio Castings. Our cost of railcar
manufacturing for the six months ended June 30, 2005
purchased
$[
l
] million
in railcar components produced by Ohio Castings. Inventory at
December 31, 2003, 2004 and June 30, 2005 includes
approximately $0.3 million, $6.3 million and
$[
l
] million,
respectively, of purchases from Ohio Castings. In June 2003
Castings LLC loaned Ohio Castings $3.0 million under a
promissory note. The note bears interest at 4.0% and, as of
August 31, 2005,
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Certain relationships and related party transactions
payments are made in quarterly installments with the last
payment due in November 2008. As of June 30, 2005
$2.3 million was outstanding under this note.
Railcar services
We have provided railcar repair and maintenance services and
fleet management services to ACF and ARL and we continue to
provide these services to ARL. As of June 30, 2005, we
managed approximately [22,000] railcars for ARL, and we also
provide repair and maintenance services for these railcars. In
2002, 2003 and 2004, our revenues from railcar repair and
refurbishment and fleet management services included
$12.8 million, $9.1 million and $19.4 million,
respectively, from transactions with affiliates. In the six
months ended June 30, 2005, our revenues from railcar
repair and refurbishment and fleet management services included
$[
l
] million
from transactions with affiliates. Almost all of these revenues
were attributable to services we provided to ACF, ARL and their
subsidiaries.
Cost of railcar services
Through June 30, 2005, ACF and ARL have provided certain
leasing and other fleet management services that we were
required to provide to ARI First LLC and ARI Third LLC,
subsidiaries of ARL, under management agreements we entered into
with those companies in July and October 2004. Through
March 31, 2005 we paid to ACF and, from March 31, 2005
through June 30, 2005 we paid to ARL, the leasing and
management fees we received from ARI First LLC and ARI Third LLC
under those management agreements. In 2004 and the six months
ended June 30, 2005, we incurred $1.0 million and
$[
l
]1.1 million,
respectively, of cost of railcar services in connection with
these arrangements. These arrangements were terminated on
June 30, 2005, when we assigned our management agreements
for ARI First LLC and ARI Third LLC to ARL.
Administrative and other support expenses
During the current and last three fiscal years, ACF and ARL have
provided us outsourced services related to our information
technology needs as well as other administrative and support
services. We incurred $0.5 million of expenses in each of
2002, 2003 and 2004 in connection with these arrangements, and
in the first six months of 2005 we incurred $0.9 million of
such expenses. The increased expenses in 2005 reflect additional
information technology services not provided in previous years.
Until October 2004, ACF received the majority of our cash
receipts and disbursed our cash on our behalf and maintained an
intercompany receivable/payable which bore interest at
ACF's internal cost of funds in accordance with an
administration agreement between ACF and us, which is described
below. We have also subleased or leased our Corbitt
manufacturing facility and our headquarters facility, both of
which are located in St. Charles, Missouri, from affiliates. The
underlying properties are owned by an affiliate of James Unger,
our chief executive officer. In each of 2002, 2003 and 2004, our
expenses included $0.4 million of payments required to be
made to affiliates associated with our use of the Corbitt
manufacturing facility and St. Charles headquarters facility. In
the six months ended June 30, 2005, our expenses included
$0.2 million of rental and related expense for these
facilities.
Amounts due to affiliates
As of June 30, 2005, net amounts due to affiliates were
$21.6 million relating to the above referenced transactions
and included:
•
an amount payable to ACF of
    $1.3 million;
•
an amount payable to ARL of
    $0.6 million;
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•
an amount payable of
    $7.3 million to Arnos Corp., a company beneficially owned
    and controlled by Mr. Icahn, representing the principal and
    interest due under a demand note in the principal amount of
    $7.0 million that we issued in connection with a working
    capital loan from Arnos Corp.; and
•
An amount payable of
    $12.4 million to ACF Industries Holding Corp., a company
    beneficially owned and controlled by Mr. Icahn,
    representing the principal and interest due under a demand note
    in the principal amount of $12.0 million that we issued in
    connection with our purchase of Castings LLC from ACF Industries
    Holding Corp.
We intend to use a portion of the net proceeds of this offering
to repay in full the notes to Arnos Corp. and ACF Industries
Holding Corp.
CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC
1994 ACF asset transfer
On October 1, 1994, under an asset transfer agreement with
ACF, we acquired from ACF properties and assets used in its
railcar components and equipment manufacturing business and its
railcar servicing business at specified locations and certain
intellectual property rights associated with the transferred
assets and businesses, as well as specified assets used in the
manufacture and sale of industrial size mixing bowls. We refer
to this transaction as the 1994 ACF asset transfer. The
properties covered by this agreement included the following:
Components manufacturing
Repair plants
plant and warehouse
Mobile units
Bude, Mississippi
Jackson, Missouri
Addis, Louisiana
Milton, Pennsylvania
Convent, Louisiana
Tennille, Georgia
Ingleside, Texas
North Kansas City, Missouri
Deer Park, Texas
Longview, Texas
Taft, Louisiana
Pursuant to the 1994 ACF asset transfer, ACF retained and agreed
to indemnify us for certain liabilities and obligations relating
to ACF's conduct of business and ownership of the assets at
these locations prior to their transfer to us, including
liabilities relating to employee benefit plans, subject to
exceptions for transferred employees described below, workers
compensation, environmental contamination and third-party
litigation. As part of the 1994 ACF asset transfer, we agreed
that the ACF employees transferred to us would continue to be
permitted to participate in ACF's employee benefit plans
for so long as we remained a part of ACF's controlled
group, and we further agreed to assume the ongoing expense for
such employees' continued participation in those plans. In
the event that we cease to be a member of ACF's controlled
group, ACF is required to terminate the further accrual of
benefits by our transferred employees under its benefit plans,
and we and ACF are required to cooperate to achieve an
allocation of the assets and liabilities of the benefits plans
accrued after the 1994 ACF asset transfer with respect to each
of our and ACF's employees as we and ACF deem appropriate.
Upon completion of the offering we will no longer be a part of
ACF's controlled group. We are currently reviewing with ACF
alternatives to address the allocation of assets and liabilities
once we are no longer a part of ACF's controlled group,
including the continuation of benefits for our employees under
ACF's plans, as well as the division of assets and
liabilities under those plans.
As of December 31, 2004, we estimate that the total
retained liabilities of ACF under the asset transfer agreement
were $11.1 million, primarily relating to employee benefit
plan obligations. In 2002, 2003 and 2004, ACF paid
$0.7 million, $0.6 million and $1.4 million,
respectively, relating to the retained
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liabilities. In the six months ended June 30, 2005, ACF
paid $0.3 million relating to the retained liabilities.
In connection with the 1994 ACF asset transfer, we entered into
the following administrative and operating agreements with ACF,
effective as of October 1, 1994:
•
manufacturing services agreement;
•
license agreement from ACF;
•
license agreement to ACF;
•
administration agreement;
•
railcar servicing
    agreement; and
•
supply agreement.
Only the manufacturing services agreement and the two license
agreements remain in effect. The other agreements were all
terminated as of April 1, 2005.
Manufacturing Services Agreement.
Under the
manufacturing services agreement, ACF has agreed to manufacture
and, upon our instruction, to distribute various railcar
components and industrial size mixing bowls using assets that we
acquired pursuant to the 1994 ACF asset transfer but were
retained by ACF at its Milton, Pennsylvania and Huntington, West
Virginia manufacturing facilities. This equipment included
presses and related equipment that were impracticable to move to
our premises. ACF transferred its Milton, Pennsylvania repair
facility, but not its Milton, Pennsylvania manufacturing
facility, to us under the 1994 asset transfer. Under our
manufacturing services agreement, ACF is required to maintain
and insure the equipment during the term of the manufacturing
services agreement and is permitted to use the equipment for its
own purposes in the ordinary course of business, provided that
it does not interfere with ACF's timely performance of the
manufacturing services under this agreement. Upon termination of
the agreement, ACF is required, at our expense, to remove and
deliver the equipment to any site designated by us in the
continental U.S. As payment for these services, we agreed
to pay ACF its direct costs, including the cost of all raw
materials not supplied by us, and a reasonable allocation of
overhead expenses attributable to the services, including the
cost of maintaining employees to provide the services. We
believe that payments to ACF under this arrangement are
comparable to the cost we would have paid to an independent
third party to manufacture such components. This agreement
remains in effect and automatically renews on an annual basis
unless we provide six months prior written notice of
termination. There is no right of termination for ACF under this
agreement.
License Agreement from ACF.
Under a license
agreement with ACF, ACF granted us a non-exclusive, perpetual,
royalty-free license to the patents and other intellectual
property owned by it, which could be used by us in the conduct
of our business, but did not exclusively relate to our business,
including the 12 patents and one patent application, now issued
as a patent, listed in that agreement. Of these patents, ten
patents have expired and the remaining three patents have
expiration dates ranging from 2012 to 2013. These remaining
patents primarily relate to pneumatic outlets and railcar hopper
gaskets. Under this agreement, we could not use the licensed
patents for the production of railcar components for third
parties without the consent of ACF. In 1997, ACF transferred the
patents covered by this license to us. This license is not
assignable by either party, without the prior consent of the
other, except in connection with the sale of substantially all
of either party's business. This agreement remains in
effect.
License Agreement to ACF.
Under a license
agreement with ACF, we granted ACF a non-exclusive, perpetual,
royalty-free license to the intellectual property exclusively
relating to our business that was
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transferred to us in the 1994 asset transfer. There are no
restrictions on ACF's use of the information licensed under
this agreement. This license is not assignable by either party,
without the prior consent of the other, except in connection
with the sale of substantially all of either party's
business. This agreement remains in effect.
Administration Agreement.
Under an administration
agreement with ACF, ACF agreed to provide us information
technology services and other administrative services. We agreed
to pay ACF its direct costs, including a reasonable allocation
of overhead expenses attributable to providing the services,
including the cost of maintaining employees to provide the
services. This agreement was terminated on April 1, 2005.
Railcar Servicing Agreement.
Under a railcar
servicing agreement with ACF, we agreed to provide railcar
repair and maintenance services for railcars owned or managed by
ACF and leased or held for lease by ACF, to provide ACF with
fleet management services and to provide ACF with consulting
services on safety and environmental matters. For maintenance
services, ACF paid us for components at our actual costs plus
15% and for our labor at a fixed rate that has been adjusted
from time to time to reflect market conditions. Painting, lining
and cleaning services were billed at current market rates and
fleet management services were billed at a monthly fee per
railcar serviced. Other services were billed at our direct costs
plus 5.0%. Our direct costs included a reasonable allocation of
overhead expenses attributable to providing the services,
including the cost of maintaining employees to provide the
services. This agreement was terminated on April 1, 2005.
Supply Agreement.
Under a supply agreement with
ACF, we agreed to manufacture and sell to ACF specified
components. In addition, under this agreement, we agreed to sell
ACF other components manufactured by us on terms not less
favorable than the terms on which we sell those products to
third parties. We sold specified components under the agreement
for a price equal to the then current market price or our cost
plus a gross profit percentage. This gross profit percentage has
been revised annually and has ranged from 5.0% to 25.0%,
depending upon the component and which one of our facilities
manufactured the product. This agreement was terminated on
April 1, 2005.
2005 Consulting agreements
On April 1, 2005 we entered into two business consultation
agreements with ACF, whereby each of us has agreed to provide
services to the other. ACF has agreed to assist us in labor
litigation, labor relations support and consultation, and labor
contract interpretation and negotiation. In 2005, we anticipate
that we will require the services of at least one ACF employee
for no more than 20 hours a week under this agreement. We
pay $150 per hour for these services. We have agreed to
provide ACF with engineering consultation and advice. In 2005,
we anticipate that ACF will require the services of at least one
of our employees for no more than 20 hours a week under
this agreement. ACF is required to pay $150 per hour for
these services. We do not believe that either party will be
required to pay more than $60,000 per year under either of
these agreements. These agreements remain in effect through
March 2015, subject to the right of either party to terminate
the agreement on 30 days notice.
1998 Loan to ACF
In October 1998, we loaned $57.2 million to ACF. This loan
accrued interest at a variable rate, adjusted quarterly, equal
to LIBOR plus 3.0% or the base rate of the Industrial Bank of
Japan plus 1.5%, as elected by ACF. This loan was repaid in full
in 2004 in connection with the formation of ARL. See
"Certain Transactions Involving American Railcar Leasing
LLC— Formation of ARL and Related Contributions." In
2002, 2003 and 2004, we recorded interest income relating to
this loan of $2.8 million, $2.5 million and
$1.8 million, respectively.
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Guarantees of indebtedness by ACF and other related
parties
Industrial Revenue Bonds.
ACF and ACF Industries
Holding Corp., an indirect parent of ACF, have guaranteed our
obligations under our industrial revenue bonds. As of
June 30, 2005, $8.5 million was outstanding under
these bonds. These bonds are payable through 2011 and, as of
June 30, 2005, bear interest at rates ranging from [7.75%
to 8.5]%. We intend to use a portion of the net proceeds of this
offering to repay these bonds in full. ACF and ACF Industries
Holding Corp. will be released from their guarantees upon the
repayment of the bonds.
Senior Secured Credit Facility.
In 1998, we
obtained a senior secured credit facility from the Industrial
Bank of Japan, as administrative agent, with a total
availability of $150 million. This facility was guaranteed
by ACF, ACF Industries Holding Corp., an indirect parent of ACF,
and NMI Holding Corp., a wholly owned subsidiary of ACF
Industries Holding Corp. This facility was repaid in full in
July 2004.
Subordinated Note.
In 1998, we obtained a
$10.0 million loan from Boeing Financial under a promissory
note. This note was guaranteed by ACF and ACF Industries Holding
Corp. and was repaid in full in July 2004.
CIT Equipment Lease.
In 1999, we entered into a
master equipment lease agreement with CIT that was guaranteed by
ACF. This lease relates to equipment that we use to manufacture
railcars and railcar components at our Paragould, Marmaduke,
Jackson and Kennett facilities. The interest rate on the lease
is LIBOR plus 2.75% (6.1% at June 30, 2005). As of
June 30, 2005, a balance of $8.2 million was
outstanding under this lease, including amounts subject to our
purchase option at the expiration of the lease term. The lease
expires in November 2005. While we are not committed to do so,
we currently intend to exercise our purchase option under this
lease.
Interest rate swap contract
In 2001, we entered into a derivative instrument in the form of
an interest rate swap contract with an underlying notional
amount of $49.0 million. We assigned this contract to ACF,
effective as of the date of its execution, and all rights and
obligations of this contract were passed through to ACF. This
contract expired on February 28, 2005.
Raw material and other product purchase agreements
We, together with ACF, have entered into agreements for the
purchase of products by each of us, including steel and gas.
Under these agreements, we and ACF are entitled to favorable
pricing based upon the aggregate amount of our purchases. We
allocate the benefits under these purchase agreements
proportionally based upon the amount of products that each of us
purchases during the applicable period.
Corbitt equipment lease and purchase
We leased from ACF leasehold improvements and equipment that we
placed in service at our Corbitt manufacturing facility in St.
Charles, Missouri from July 1, 2001 through June 1,
2003. During 2002, 2003 and 2004, we paid ACF $0.3 million,
$0.3 million and $0.4 million, respectively, for the
use of these leasehold improvements and equipment. We did not
pay any rent for these assets in 2005. Rather, on March 31,
2005, we purchased these assets from ACF for $2.8 million.
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CERTAIN TRANSACTIONS INVOLVING AMERICAN RAILCAR LEASING
LLC
Formation of ARL and related contributions
We formed ARL as our wholly owned subsidiary in July 2004. As
part of the formation of ARL and its further capitalization, ACF
and certain of its subsidiaries transferred to us and ARL
railcars and related leases, as well as equity in certain of
ACF's subsidiaries that supported ACF's leasing
business, in exchange for shares of our new preferred stock and
preferred interests of ARL. We, in turn, contributed the assets
we so received to ARL and made a cash investment in ARL of
$25.0 million.
In connection with these transactions, all of which occurred in
2004:
•
we were issued all the common
    interests in ARL;
•
ACF and its subsidiaries were
    issued all of ARL's B-1 preferred interests;
•
Vegas Financial Subsidiary Corp.,
    a company beneficially owned and controlled by Mr. Icahn,
    was issued all of ARL's B-2 preferred interests in exchange
    for an investment of $40 million;
•
we issued 34,500 shares of
    our new preferred stock to ACF and its subsidiaries; and
•
our $57.2 million loan to ACF
    was repaid in full.
The B-1 and B-2 preferred interests of ARL were convertible into
shares of our new preferred stock. On June 30, 2005, the
terms of these interests were modified, among other things, to
eliminate this conversion feature.
The ARL exchange
On June 30, 2005, we transferred all our interest in ARL,
consisting of all its outstanding common A units, pro rata, to
the holders of our new preferred stock in exchange for the
redemption of 116,116 shares of our new preferred stock
held by them, including all dividends accumulated on those
shares. The value of the total liquidation preference and
accumulated dividends on the shares of new preferred stock
redeemed in this transaction was $125.0 million. All of the
shares of our new preferred stock are held by companies
beneficially owned and controlled by Mr. Icahn. We refer to
this transaction as the ARL exchange.
Agreements relating to ARL and its subsidiaries
In 2004 and 2005 we entered into the following agreements
relating to ARL and its subsidiaries:
•
railcar management agreements with
    ARI First LLC and ARI Third LLC;
•
ACF administration agreement;
•
ARL railcar services agreement;
•
ARL railcar servicing agreement;
•
ARL services agreement; and
•
guarantee of ARI Second LLC loan
    agreement.
The ARL railcar servicing agreement and the ARL services
agreement remain in effect. All other agreements were terminated
or assigned to ARL at various times during 2005, as described
below.
Railcar Management Agreements with ARI First LLC and ARI
Third LLC.
On July 20, 2004, we entered into a
railcar management agreement with ARI First LLC and on
October 7, 2004 we entered into a railcar management
agreement with ARI Third LLC. ARI First LLC and ARI Third LLC
are wholly owned subsidiaries of ARL that hold railcars forming
a portion of the railcar lease fleet owned
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by ARL and its subsidiaries. Under these railcar management
agreements, we provided ARI First and ARI Third with marketing,
leasing, administration, maintenance, recordkeeping and
insurance services for the railcars owned by ARI First and ARI
Third. ARI First and ARI Third paid us a monthly management fee,
based upon the number of railcars covered, and reimbursed us for
all costs incurred in performing these services. We assigned
this agreement to ARL effective June 30, 2005.
ACF Administration Agreement.
On July 20,
2004, we entered into an ACF administration agreement with ACF
and ARL. Under this agreement, ACF agreed to provide us with
railcar management services which we were required to provide
under the management agreements with ARI First LLC and ARI Third
LLC described above (except maintenance, insurance and risk
management services). In addition, ACF provided us with lease
administration services for the railcars owned by ARI First LLC
and ARI Third LLC, respectively. Under this agreement, we were
required to pay ACF a per railcar monthly fee equal to the per
railcar fee that we were receiving under our railcar management
agreements with ARI First LLC and ARI Third LLC. This Agreement
terminated on March 31, 2005.
ARL Railcar Services Agreement.
On April 1,
2005, we entered into a railcar services agreement with ARL.
Under this agreement, ARL provided us with railcar services
which we were required to provide to ARI First and ARI Third
under our railcar management agreements with ARI First LLC and
ARI Third LLC. Under this agreement, we were required to pay ARL
all compensation that we received from ARI First and ARI Third
under our railcar management agreements with them. This
agreement was terminated July 1, 2005 when we assigned our
railcar management agreements with ARI First LLC and ARI Third
LLC to ARL.
ARL Railcar Servicing Agreement.
On April 1,
2005, we entered into a railcar servicing agreement with ARL.
Under this agreement, we provide ARL with substantially the same
services that we had previously provided to ACF under our 1994
railcar servicing agreement with ACF described above under
"Certain Transactions with ACF Industries, LLC— 1994
ACF Asset Transfer— Railcar Servicing Agreement," for
railcars that ARL or its affiliates own or manage. Under the
agreement with ARL, ARL is required to pay us a monthly fee,
based upon the number of railcars covered, plus a charge for
labor, components and materials. For materials and components we
manufacture, ARL pays us our current market price, and for
materials and components we purchase, ARL pays us our purchasing
costs plus 15%. For painting, lining and cleaning services, ARL
pays the then current market rate. For other labor costs, ARL
pays us a fixed hourly fee. We have further agreed that the
charges for our services will be on at least as favorable terms
as our terms with any other party for similar purposes. The per
railcar fees paid to us through June 30, 2005 under the
railcar management agreements for ARI First LLC and ARI Third
LLC are credited against the amounts due us under the ARL
railcar servicing agreement. This agreement extends through
June 30, 2006, and is automatically renewable for
additional one year periods unless either party gives at least
six months prior notice of termination. If we elect to terminate
this agreement, we must pay a termination fee of
$0.5 million.
ARL Services Agreement.
On April 1, 2005, we
entered into a services agreement with ARL. Under this
agreement, ARL has agreed to provide us certain information
technology services, rent and building services and limited
administrative services. The rent and building services includes
our use of our headquarters space which is leased by ARL from an
affiliate of James J. Unger, our President and Chief Executive
Officer. See "Certain Transactions Involving James J.
Unger." Also under this agreement, we have agreed to
provide purchasing and engineering services to ARL. Each party
is required to pay the other a fixed annual fee for each of the
listed services under this agreement. The total annual fees that
we are required to pay ARL for all services that ARL is
providing us, under this agreement is $2.2 million, and the
total annual fees that ARL is required to pay us for all
services that we are providing ARL under this agreement is
$210,000. Either party may terminate any of these
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services, and the associated costs for those services, on at
least six months prior notice at any time prior to the
termination of the agreement on December 31, 2007.
Guarantee of ARI Second LLC Loan Agreement.
On
July 20, 2004, ARI Second LLC, a subsidiary of ARL, entered
into a loan agreement with HSH Nordbank AG, under which ARI
Second borrowed $64.3 million. We guaranteed ARI Second
LLC's obligations under this loan agreement. This loan was
repaid in full in October 2004.
Health and welfare benefit plans
Employees of ARL participate in our 401(k) plan and certain of
our health and welfare benefit plans. ARL is responsible for the
costs and benefits for its employees under these plans. As part
of the ARL Exchange, ARL is in the process of establishing its
own 401(k) and health and welfare benefit plans.
CERTAIN TRANSACTIONS INVOLVING OHIO CASTINGS
In February 2003, Castings LLC, a wholly owned subsidiary of ACF
Industries Holding Corp., a company beneficially owned and
controlled by Mr. Icahn, acquired a one-third ownership
interest in Ohio Castings Company, LLC, a joint venture with
affiliates of two established railcar industry companies, Amsted
Industries, Inc. and The Greenbrier Companies, Inc. Ohio
Castings operates two foundries that produce heavy castings.
Effective as of January 1, 2005, ACF Industries Holding
Corp. transferred its interest in Castings LLC to us for total
consideration of $12.0 million, represented by a promissory
note bearing an interest rate equal to the prime rate plus 0.5%,
payable on demand. In connection with this transfer, we agreed
to assume all future liabilities related to and arising from ACF
Industries Holding Corp.'s investment in Castings LLC,
including the guarantee of Castings LLC's obligations to
Ohio Castings, the guarantee of bonds in the amount of
$10.0 million issued by the State of Ohio to one of Ohio
Castings' subsidiaries, of which $8.1 million was
outstanding as of June 30, 2005, and the guarantee of a
$2.0 million state loan that provides for purchases of
capital equipment, of which $1.0 million was outstanding as
of June 30, 2005. The two other partners of Ohio Castings
have made similar guarantees of these obligations.
We have entered into supply agreements with an affiliate of
Amsted Industries, Inc., an affiliate of one of our Ohio
Castings joint venture partners, to purchase up to 25% and 33%,
respectively, of the products produced at each of two foundries
being operated by Ohio Castings. We pay Castings LLC a fee in
connection with those purchases. Our purchases and payments
relating to these purchases and fees are set forth above under
"—Certain Transactions with ACF Industries LLC and
American Railcar Leasing LLC— Manufacturing
Operations."
CERTAIN TRANSACTIONS WITH MR. ICAHN AND OTHER RELATED
ENTITIES
Carl C. Icahn and ARL loans
In October 2004, we advanced Mr. Icahn $165.0 million
under a promissory note due in 2007 and bearing interest at the
prime plus 1.75% (8.0% at June 30, 2005). At the same time,
we borrowed $130.0 million from ARL represented by a
promissory note due in 2007 and bearing interest at the prime
rate plus 1.5%. In January 2005, we transferred our entire
interest in the Icahn note to ARL in exchange for additional
common interests in ARL and in satisfaction of our obligations
under the ARL note. In 2004 and the six months ended
June 30, 2005, we recorded interest income of
$4.4 million and $0.8 million, respectively, and
interest expense of $3.7 million and $0.6 million,
respectively, relating to these notes.
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Arnos Corp. note payable
In December 2004, we borrowed $7.0 million from Arnos
Corp., a company beneficially owned and controlled
Mr. Icahn, under a promissory note. The note bears interest
at the prime rate plus 1.75% (8.0% at June 30, 2005) and is
payable on demand. We intend to use a portion of the net
proceeds of this offering to repay this loan in full.
Transactions with Vegas financial corp.
Purchase of Mandatorily Redeemable Payment-in-Kind
Preferred Stock.
We issued to Vegas Financial Corp., a
company beneficially owned and controlled by Mr. Icahn,
15,000 shares of our mandatorily redeemable payment-in-kind
preferred stock, known as PIK preferred stock, for
$15.0 million in June 2002, and 10,000 shares of PIK
preferred stock for $10.0 million in June 2003.
Conversion into and Purchase of New Preferred
Stock.
In July 2004, Vegas Financial Corp. converted all
of its PIK preferred stock, consisting of 95,517.04 shares
of PIK preferred stock, representing all of the shares of PIK
preferred stock outstanding, into 96,171 shares of our new
preferred stock. In addition, Vegas Financial Corp.
simultaneously purchased an additional 67,500 shares of new
preferred stock for $67.5 million. We intend to use the net
proceeds of this offering to, among other things, redeem all of
the outstanding shares and pay all accrued dividends on our new
preferred stock, including those held by Vegas Financial Corp.
As a result, Vegas Financial Corp, will receive
$89.2 million of the net proceeds of this offering. See
"Redemption of New Preferred Stock."
Transactions with Hopper investments LLC
In 2004, Hopper Investments LLC, a company beneficially owned
and controlled by Mr. Icahn, paid $42.5 million for
195 shares of our common stock.
Transactions with Philip environmental services corp.
We engaged Philip Environmental Services Corp., an environmental
consulting company beneficially owned and controlled by
Mr. Icahn, to provide environmental consulting services to
us. In the six months ended June 30, 2005 we incurred
$158,153 of expenses associated with that engagement. We have
continued to use Philip Environmental Services Corp. to assist
us in our environmental compliance.
CERTAIN TRANSACTIONS INVOLVING JAMES J. UNGER
Facilities leasing arrangements
Our headquarters facilities and our Corbitt manufacturing
facilities in St. Charles, Missouri are owned by St. Charles
Properties, an entity controlled by James J. Unger, our
President and Chief Executive Officer. Under two leases dated
May 1, 1995 and March 1, 2001, St. Charles Properties
leased these facilities to ACF. We reimbursed ACF for our
proportionate share of the cost of renting these facilities
through April 1, 2005. On that date, ACF assigned the
March 1, 2001 lease, covering our Corbitt manufacturing
facilities, to us and the May 1, 1995 lease, covering our
and ARL's headquarters facility, to ARL. We continue to
maintain our headquarters in the space that has been leased to
ARL. Under our services agreement with ARL, we pay ARL
$459,804 per year, which represents the estimate of our
proportionate share of ARL's costs for the space that we
use under the lease, including rent and building services. The
terms of the underlying leases are as follows.
Under the terms of the lease agreement assigned to ARL, ARL has
leased approximately 78,000 square feet of office space.
The lease expires on December 31, 2005 with an option to
renew the lease for one
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additional five-year term. Rent is payable monthly in the amount
of $20,833. If ARL exercises its option to renew the lease, the
monthly rent will be $25,000. Under the terms of the lease, ARL
pays one-tenth of the property tax and insurance expenses levied
upon the property. In addition, ARL must pay 17% and 54% of any
increase in taxes and property insurances costs, respectively.
ARL is also required to repair and maintain the facility at its
costs and expense. We use approximately 46% of the office space
leased by ARL under this agreement.
Under the terms of the lease agreement assigned to us, we occupy
approximately 128,000 square feet of space which we use for
our Corbitt manufacturing facility. The lease expires on
February 28, 2006 with an option to renew the lease for two
successive five-year terms. Rent is payable monthly in the
amount of $27,083. The maximum monthly rent for the first and
second renewal periods is $29,763 and $32,442 per month,
respectively. We are required to pay 27% of all tax increases
assessed or levied upon the property and the cost of the
utilities we use, as well as repair and maintain the facility at
our expense.
In 2002, 2003 and 2004, we incurred $0.4 million of costs
to affiliates in each of 2002, 2003 and 2004, under these two
leasing arrangements, and in the six months ended June 30,
2005, we incurred $0.2 million of such costs.
Option to purchase common stock
In connection with this offering, Mr. Unger has advised us
that he will exercise an option granted to him to purchase
[
l
]
shares
of our common stock, after giving effect to the stock split, at
a price of
$[
l
] per
share. See "Management— Executive compensation—
Employment and noncompetition agreements" for more
information.
Industrial revenue bonds
Mr. Unger and his wife own $405,000 of the industrial
revenue bonds issued by Paragould, Arkansas. [Mr. Unger and
his wife purchased these bonds at the time of their original
issuance on the same terms that all non-affiliated entities
purchased the bonds.] We intend to use the net proceeds of this
offering to repay in full the amounts due under all of our
industrial revenue bonds. Mr. Unger and his wife will
receive approximately $0.4 upon our repayment of the amounts due
under the industrial revenue bonds.
REGISTRATION RIGHTS
We intend to enter into a new registration rights agreement,
which will become effective upon the completion of this
offering, with each of our existing stockholders as of
immediately prior to the completion of this offering. The
stockholders that are party to the new registration rights
agreement will have the right to require us, subject to certain
terms and conditions, to register their shares of our common
stock under the Securities Act of 1933, as amended, at any time.
The stockholders collectively will have an aggregate of two
demand registration rights. In addition, if we propose to
register any additional shares of our capital stock under the
Securities Act, these stockholders will be entitled to customary
"piggyback" registration rights, which will entitle
them to include their shares of common stock in a registration
of our securities for sale by us or by other security holders.
The registration rights granted under the new registration
rights agreement will be subject to customary exceptions and
qualifications and compliance with certain registration
procedures. Following completion of this offering,
[
l
]
shares
of common stock, representing
[
l
]
%
of our outstanding shares of common stock following completion
of this offering, will be entitled to the benefits of these
registration rights.
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Certain relationships and related party transactions
FUTURE TRANSACTIONS
All future transactions, if any, between us and any of our
officers, directors and principal stockholders and their
affiliates, as well as any transactions between us and any
entity with which our officers, directors or principal
stockholders are affiliated, will be approved in accordance with
the then-current SEC rules and regulations, Nasdaq stock market
rules and applicable law governing the approval of the
transactions.
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Principal stockholders
The following table sets forth information known to us regarding
the beneficial ownership of our common stock calculated as of
June 30, 2005, and as adjusted to reflect the Transactions
and the sale of the common stock offered hereby, by:
•
each stockholder who is known by
    us to own beneficially more than 5% of our common stock;
•
our chief executive officer and
    our other most highly compensated executive officers;
•
each of our directors; and
•
all of our executive officers and
    directors as a group.
The number of shares beneficially owned by each stockholder,
director or officer is determined according to the rules of the
SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. The number of shares
and the percentage ownership of each stockholder prior to this
offering is calculated based on
[
l
] shares
of our common stock outstanding immediately after the stock
split. The percentage ownership of each stockholder after the
offering is calculated based on
[
l
] shares
of our common stock outstanding, which is derived from the
[
l
] shares
of our common stock outstanding after the stock split and prior
to this offering, plus the
[
l
] shares
of our common stock that we intend to issue in this offering,
but without giving effect to the underwriters' exercise of
the over-allotment option, and the
[
l
] shares
of our common stock that we expect to issue to James J. Unger,
our president and chief executive officer, upon the exercise of
his option to purchase our common stock. See
"Management— Executive compensation— Employment
and noncompetition agreements." To the extent that the
over-allotment is exercised, we will sell up to an aggregate of
[
l
] additional
shares of our common stock.
Shares of Common
Shares of Common
Percentage of Common
Stock Beneficially
Stock Beneficially
Stock Beneficially Owned
Owned Prior to this
Owned After this
After this Offering
Offering
Offering
Assuming Full Exercise
of the Over-Allotment
Name of beneficial owner
Number
Percent
Number
Percent
Option
Carl C.
    Icahn
(1)(2)(3)
735
61.5%
Foundation for a Greater
    Opportunity
(1)(3)
460
38.5%
James J.
    Unger
(4)
William P.
    Benac
(4)
Alan C.
    Lullman
(4)
Vincent J.
    Intrieri
(1)
Jon F.
    Weber
(1)
Keith
    Meister
(1)
William L.
    Finn
(5)
All directors and executive officers as a group (7 persons)
*
Represents beneficial ownership of less than 1%.
(1)
The address of such person is c/o Icahn Associates Corp.
    and Affiliated Companies, 767 Fifth Avenue, 47th Floor, New
    York, New York 10153
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Principal stockholders
(2)
Mr. Icahn beneficially owns 540 of these shares
    directly. The remaining 195 of these shares are owned by Hopper
    Investments, LLC, which is a Delaware limited liability company
    that is wholly owned by Barberry Corp., which is a Delaware
    corporation that is wholly owned by Mr. Icahn.
(3)
We have been advised that affiliates of Carl C. Icahn, our
    principal beneficial stockholder and the chairman of our board
    of directors, are currently negotiating with the Foundation for
    a Greater Opportunity to acquire all of our common stock held by
    the Foundation prior to consummation of this offering. If that
    purchase occurs, we expect that Mr. Icahn will beneficially
    own 1,195 shares, or 100%, of our common stock prior to
    this offering,
    [
l
] shares,
    or
    [
l
]%,
    of our common stock after this offering, and
    [
l
] shares,
    or
    [
l
]%,
    of our common stock after this offering, assuming full exercise
    of the over-allotment option. See "Risk Factors— Risks
    related to the purchase of our common stock in the
    offering— Upon the closing of this offering we may be a
    "controlled company" within the meaning of the Nasdaq
    National Market rules and you will not have the same protections
    afforded to shareholders of other companies that are subject to
    all of the Nasdaq National Market corporate governance
    requirements."
(4)
The address of such person is c/o American Railcar
    Industries, Inc., 100 Clark Street, St. Charles, Missouri
    63301.
(5)
Mr. Finn retired effective May 1, 2005.
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Table of Contents
Description of capital stock
The following description of our capital stock is subject to The
General and Business Corporation Law of Missouri and to
provisions contained in our restated articles of incorporation
and restated bylaws that will be in effect upon the closing of
this offering, copies of which are exhibits to our registration
statement on Form S-1 of which this prospectus forms a
part. Please refer to such exhibits for a detailed description
of the provisions thereof summarized below. See "Where you
can find more information."
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
Our authorized capital stock as of June 30, 2005 consisted
of 12,000 shares of common stock, 99,000 shares of
preferred stock, with a par value of $0.01 per share, which
we refer to as our mandatorily redeemable preferred stock,
150,000 shares of payment-in-kind preferred stock, with a
par value of $0.01 per share, which we refer to as our PIK
preferred stock, and 500,000 shares of new preferred stock,
with a par value of $0.01 per share. As of June 30,
2005, there were 1,195 shares of our common stock
outstanding, one share of our mandatorily redeemable preferred
stock outstanding, no shares of our PIK preferred stock
outstanding and 73,171 shares of our new preferred stock
outstanding. As of June 30, 2005, our shares of common
stock were held of record by a total of three stockholders.
Prior to the closing of this offering, we will amend our
articles of incorporation to authorize us to issue up to
[
l
] shares
of common stock, with a par value of $0.01 per share, and
up to
[
l
] shares
of preferred stock, with a par value of $0.01 per share.
Immediately prior to the closing of this offering we will effect
a
[
l
]-for-one
split of our common stock. Following this stock split, and prior
to our issuance of shares of common stock in this offering,
[
l
] shares
of our common stock will be outstanding.
After giving effect to our issuance of
[
l
] shares
of common stock in this offering, we will have
[
l
] shares
of common stock outstanding and
[
l
] shares
of common stock outstanding if the underwriters exercise their
over-allotment option in full.
We intend to use the net proceeds of this offering to, among
other things, redeem all of the outstanding shares of our
preferred stock. Our amended articles of incorporation will not
authorize the issuance of shares of mandatorily redeemable
preferred stock, PIK preferred stock or new preferred stock.
Although there will be
[
l
] shares
of preferred stock authorized for issuance, there will be no
shares of any series of preferred stock outstanding following
the completion of this offering.
Common stock
The holders of our common stock are entitled to one vote for
each share held of record on the applicable record date on all
matters voted on by our shareholders. Except as otherwise
required by law or provided in any resolution adopted by our
board of directors with respect to any series of preferred
stock, the holders of our common stock exclusively possess all
voting power. All holders of our common stock have the same
voting rights and vote together as a single class. Our restated
articles of incorporation do not provide for cumulative voting
in the election of directors or any preemptive rights to
purchase or subscribe for any stock or other securities, and
there are no conversion rights or sinking fund or redemption
provisions with respect to our common stock. Consequently,
holders of more than 50% of the shares of our common stock are
able to elect all directors eligible for election each year.
Holders of our common stock are entitled to dividends and other
distributions out of assets legally available if and when
declared by our board of directors. Upon our liquidation,
dissolution or
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Description of capital stock
winding up, the holders of our common stock are entitled to
share pro rata in the distribution of all of our assets
remaining available for distribution after satisfaction of all
liabilities, including any prior rights of any preferred stock
which may be outstanding.
Preferred stock
Upon completion of this offering, our board of directors,
subject to limitations prescribed by law, will be permitted to
establish one or more series or preferred stock and to
determine, with respect to any series of preferred stock, the
terms and rights of that series, including:
•
the designation of the series;
•
the number of shares of the
    series, which our board may, except where otherwise provided in
    the preferred stock designation, increase and decrease, but not
    below the number of shares then outstanding;
•
whether dividends, if any, will be
    cumulative or non-cumulative and the dividend rate of the series;
•
the dates at which dividends, if
    any, will be payable;
•
the redemption rights and price or
    prices, if any, for shares of the series;
•
the terms and amounts of any
    sinking fund provided for the purchase or redemption of shares
    of the series;
•
the amounts payable on shares of
    the series in the event of any voluntary or involuntary
    liquidation, dissolution or winding-up of the affairs of our
    company;
•
whether the shares of the series
    will be convertible into shares of any other class or series, or
    any other security, of our company or any other corporation,
    and, if so, the specification of the other class or series or
    other security, the conversion price or prices or rate or rates,
    any rate adjustments, the date or dates as of which the shares
    will be convertible and all other terms and conditions upon
    which the conversion may be made;
•
restrictions on the issuance of
    shares of the same series or of any other class or
    series; and
•
the voting rights, if any, of the
    holders of the series.
The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisition and other
corporate purposes, could have the effect of making it more
difficult for a third party to acquire, or discourage a third
party from acquiring, a majority of our outstanding voting
stock. Our board of directors may issue preferred stock with
voting and conversion rights that could adversely affect the
voting power of the holders of our common stock. There are no
current agreements or understandings for the issuance of
preferred stock, and our board of directors has no present
intention to issue any shares of preferred stock.
Registration rights
We intend to enter into a new registration rights agreement,
which will become effective upon the completion of this
offering, with each of our existing stockholders as of
immediately prior to the completion of this offering. The
stockholders that are party to the new registration rights
agreement will have the right to require us, subject to certain
terms and conditions, to register their shares of our common
stock under the Securities Act of 1933, as amended, at any time.
The stockholders collectively will have an aggregate of two
demand registration rights. In addition, if we propose to
register any of our capital stock under the Securities Act, our
stockholders will be entitled to customary "piggyback"
registration rights which will entitle our stockholders to
include their shares of common stock in a
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Description of capital stock
registration of our securities for sale by us or by other
security holders. The registration rights granted under the new
registration rights agreement are subject to customary
exceptions and qualifications and compliance with certain
registration procedures. Following the completion of this
offering,
[
l
] shares
of common stock, representing
[
l
]%
of our outstanding shares of common stock following completion
of this offering, will be entitled to the benefits of these
registration rights.
Corporate opportunities
Our restated articles of incorporation will provide that none of
Mr. Icahn or entities controlled by him (referred to as the
Founding Stockholders), or any director, officer, member,
partner, stockholder or employee of a Founding Stockholder (each
referred to as a Specified Party), will have any duty to refrain
from engaging directly or indirectly in the same or similar
business activities or lines of business as we do. In the event
that any Founding Stockholder or Specified Party acquires
knowledge of a potential transaction or matter that may be a
corporate opportunity for any Founding Stockholder or Specified
Party, as applicable, and us, none of the Founding Stockholders
or Specified Parties has any duty to communicate or offer such
corporate opportunity to us, and any Founding Stockholder or
Specified Party is entitled to pursue or acquire such corporate
opportunity for itself or to direct such corporate opportunity
to another person or entity and we have no right in or to such
corporate opportunity or to any income or proceeds derived
therefrom.
In the event that one of our directors, officers or employees
who is also a Founding Stockholder or a Specified Party acquires
knowledge of a potential transaction or matter which may be a
corporate opportunity or otherwise is then exploiting any
corporate opportunity, subject to the following paragraph, we
will have no interest in such corporate opportunity and no
expectation that such corporate opportunity be offered to us, so
that such Specified Party will have no duty to communicate or
present such corporate opportunity to us, will have the right to
hold such corporate opportunity for its own account or to
recommend, sell, assign or transfer such corporate opportunity
to persons other than us and will not breach any fiduciary duty
to us by reason of the fact that such Specified Party pursues or
acquires such corporate opportunity for itself, directs, sells,
assigns or transfers such corporate opportunity to another
person or does not communicate information regarding such
corporate opportunity to us.
Notwithstanding the foregoing, our restated articles of
incorporation will provide that we do not renounce any interest
or expectation we may have in any corporate opportunity that is
offered to any Founding Stockholder or Specified Party, if such
opportunity is expressly offered to such Founding Stockholder or
Specified Party solely in, and as a direct result of, his or her
capacity as our director, officer or employee.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND
DIRECTORS
Our restated bylaws will require us to indemnify each of our
directors and officers to the fullest extent permitted by law.
Our restated bylaws will also provide that an amendment to the
indemnification provisions of our bylaws will not affect the
liability of any director or officer for any act or omission
occurring prior to the effective time of such amendment.
OTHER PROVISIONS OF OUR RESTATED ARTICLES OF INCORPORATION
AND BYLAWS
Board of directors
Our restated articles of incorporation will provide that the
number of directors shall be determined in the manner specified
by our restated bylaws, and may be increased or decreased from
time to time in the manner prescribed by our restated bylaws.
Currently, our Board of Directors consists of five directors.
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Description of capital stock
Amendment of bylaws
Our Board of Directors and stockholders will be authorized and
empowered to adopt, amend and repeal our bylaws.
Inapplicability of Missouri's antitakeover statute
Our restated articles of incorporation will make the
anti-takeover protection of Section 351.459 of The General
and Business Corporation Law of Missouri, which we refer to as
the GBCLM, inapplicable to us. Generally, Section 351.459
of the GBCLM provides that any person who acquires direct or
indirect beneficial ownership of 20% or more of the outstanding
voting stock of a Missouri corporation becomes an
"interested shareholder." Section 351.459
prohibits a corporation from engaging in any "business
combination" with an interested shareholder for a period of
five years following the date that such interested shareholder
becomes an interested shareholder, unless certain conditions are
satisfied.
The GBCLM defines "business combination" broadly to
include, among other things, any merger or consolidation with
the interested shareholder, any merger or consolidation with any
other corporation that is, or after such merger or consolidation
would be, an affiliate or associate of such interested
shareholder, any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with the interested
shareholder of any assets of the corporation having an aggregate
market value equal to 10% or more of the aggregate market value
of all the assets of the corporation.
The listing requirements of the Nasdaq National Market, which
will apply to us while our common stock is listed on the Nasdaq
National Market, require stockholder approval of certain
issuances equal to or in excess of 20% of the voting power or
the number of shares of common stock. These additional shares
may be used for a variety of corporate purposes, including
future public offerings, to raise additional capital or to
facilitate acquisitions.
One of the effects of the existence of unissued and unreserved
common stock or preferred stock may be to enable our board of
directors to issue shares to persons friendly to current
management, which issuance could render more difficult or
discourage an attempt to obtain control of our company by means
of a merger, tender offer, proxy contest or otherwise, and
thereby protect the continuity of our management and possibly
deprive the stockholders of opportunities to sell their shares
of common stock at prices higher than prevailing market prices.
QUOTATION OF OUR COMMON STOCK
We expect to have our common stock approved for quotation on the
Nasdaq National Market under the trading symbol "ARII."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company.
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Shares eligible for future sale
Prior to this offering, there has not been a public market for
our common stock. Future sales of substantial amounts of our
common stock in the public market, or the possibility of these
sales, could adversely affect the trading price of the common
stock and could impair our future ability to raise capital
through the sale of our equity at a time and price we deem
appropriate.
Upon completion of this offering and the stock split, we will
have outstanding
[
l
] shares
of common stock. Of these shares, the
[
l
] shares
sold in this offering, or
[
l
] shares
if the underwriters' over-allotment option is exercised in
full, will be freely tradable without restriction or further
registration under the Securities Act, except for any shares
purchased by our "affiliates," as defined in
Rule 144 under the Securities Act, which would be subject
to the limitations and restrictions described below.
The remaining
[
l
] shares
of common stock outstanding upon completion of this offering
will be "restricted securities" as defined in
Rule 144. Restricted securities may be sold in the public
market only if they are registered or if they qualify for an
exemption from registration such as the exemption provided by
Rule 144.
Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration
under Rules 144 and 144(k) promulgated under the Securities
Act, which rules are summarized below. Subject to the lock-up
agreements described below and the provisions of Rules 144
and 144(k), additional shares will be available for sale in the
public market as follows:
Number of Shares
Date
0
After the date of this prospectus.
After 180 days from the date of this prospectus.
All of these restricted securities will be eligible for sale in
the public market, subject in all cases to the volume
limitations and other restrictions of Rule 144, beginning
upon expiration of the lock-up agreements described below.
RULE 144
In general, under Rule 144 as currently in effect,
beginning 90 days after this offering, a person (or persons
whose shares are required to be aggregated), including an
affiliate, who has beneficially owned shares of our common stock
for at least one year is entitled to sell in any three-month
period a number of shares that does not exceed the greater of:
•
1% of then-outstanding shares of
    our common stock, which is approximately
    [
l
] shares
    of our common stock immediately after the completion of this
    offering; or
•
the average weekly reported
    trading volume of our common stock on the Nasdaq National Market
    during the four calendar weeks preceding the filing of a
    Form 144 with respect to the sale, subject to certain
    restrictions.
Sales under Rule 144 are also subject to manner of sale
provisions and notice requirements and to the availability of
current public information about us.
RULE 144(K)
In addition, a person who is not deemed to have been an
affiliate of ours at any time during the 90 days preceding
a sale and who has beneficially owned the shares proposed to be
sold for at least
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Shares eligible for future sale
two years, would be entitled to sell those shares under
Rule 144(k) without regard to the manner of sale, public
information, volume limitation or notice requirements of
Rule 144.
LOCK-UP AGREEMENTS
We have agreed that we will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file
with the SEC a registration statement under the Securities Act
relating to any shares of our common stock or securities
convertible into or exchangeable or exercisable for any shares
of our common stock, or publicly disclose the intention to make
any offer, sale, pledge, disposition or filing, without the
prior written consent of UBS Securities LLC for a period of
180 days after the date of this prospectus. Our officers,
directors and all of our stockholders have also agreed that they
will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any shares of our common
stock (other than shares they may sell in this offering) or
securities convertible into or exchangeable or exercisable for
any shares of our common stock, enter into a transaction that
would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of our common stock,
whether any of these transactions are to be settled by delivery
of our common stock or other securities, in cash or otherwise,
or publicly disclose the intention to make any offer, sale,
pledge or disposition, or to enter into any transaction, swap,
hedge or other arrangement, without, in each case, the prior
written consent of UBS Securities LLC until 180 days after
the date of this prospectus. UBS Securities LLC may, in its sole
discretion at any time without notice, release all or any
portion of the shares of our common stock held by our officers,
directors and stockholders, subject to these lock-up agreements.
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Table of Contents
Material U.S. income tax considerations for
non-U.S. holders
The following summary describes material United States federal
income tax consequences of the ownership and disposition of
common stock by a Non-U.S. Holder (as defined below) as of
the date of this prospectus. This discussion does not address
all aspects of United States federal income taxation and does
not deal with estate, gift, foreign, state and local tax
consequences that may be relevant to such Non-U.S. Holders
in light of their personal circumstances. Special U.S. tax
rules may apply to certain Non-U.S. Holders, such as
"controlled foreign corporations," "passive
foreign investment companies," corporations that accumulate
earnings to avoid U.S. federal income tax, investors in
partnerships or other pass-through entities for
U.S. federal income tax purposes, dealers in securities,
holders of securities held as part of a "straddle,"
"hedge," "conversion transaction" or other
risk reduction transaction, and certain former citizens or
long-term residents of the United States that are subject to
special treatment under the Internal Revenue Code of 1986, as
amended (which we also refer to as the Code). Such entities and
persons should consult their own tax advisors to determine the
U.S. federal, state, local and other tax consequences that
may be relevant to them. Furthermore, the discussion below is
based upon the provisions of the Code, and regulations,
administrative pronouncements of the Internal Revenue Service
(which we also refer to as the IRS) and judicial decisions
thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified with or without retroactive effect
so as to result in United States federal income tax consequences
different from those discussed below.
If a partnership (or an entity treated as a partnership for
U.S. federal income tax purposes) holds the common stock,
the tax treatment of a partner will generally depend on the
status of the partner and the activities of the partnership.
Persons who are partners in partnerships holding the common
stock should consult their tax advisors.
The authorities on which this summary is based are subject to
various interpretations, and any views expressed within this
summary are not binding on the IRS or the courts. No assurance
can be given that the IRS or the courts will agree with the tax
consequences described in this prospectus.
As used herein, a "Non-U.S. Holder" means a
beneficial owner of our common stock that is not any of the
following for U.S. federal income tax purposes:
•
a citizen or resident of the
    United States,
•
a corporation, or other entity
    treated as a corporation for United States federal income tax
    purposes, created or organized in or under the laws of the
    United States, any state thereof or the District of Columbia,
•
an estate the income of which is
    subject to United States federal income taxation regardless of
    its source, or
•
a trust (i) which is subject
    to primary supervision by a court situated within the United
    States and as to which one or more United States persons have
    the authority to control all substantial decisions of the trust,
    or (ii) that has a valid election in effect under
    applicable U.S. Treasury regulations to be treated as a
    United States person.
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Material U.S. income tax considerations for
non-U.S. holders
Prospective purchasers are urged to consult their own tax
advisors regarding the U.S. federal income tax
consequences, as well as other U.S. federal, state, and
local income and estate tax consequences, and non-U.S. tax
consequences, to them of acquiring, owning, and disposing of our
common stock.
DIVIDENDS
If we make distributions on our common stock, such distributions
paid to a Non-U.S. Holder will generally constitute
dividends for U.S. federal income tax purposes to the
extent such distributions are paid from our current or
accumulated earnings and profits, as determined under
U.S. federal income tax principles. If a distribution
exceeds our current and accumulated earnings and profits, the
excess will be treated as a tax-free return of the
Non-U.S. Holder's investment to the extent of the
Non-U.S. Holder's adjusted tax basis in our common
stock. Any remaining excess will be treated as capital gain.
Dividends paid to a Non-U.S. Holder generally will be
subject to withholding of United States federal income tax at a
30% rate or such lower rate as may be specified by an applicable
income tax treaty. A Non-U.S. Holder of common stock who
wishes to claim the benefit of an applicable treaty rate for
dividends will be required to (a) properly complete IRS
Form W-8BEN (or appropriate substitute form) and certify,
under penalties of perjury, that such holder is not a
U.S. person and is eligible for the benefits with respect
to dividends allowed by such treaty or (b) hold common
stock through certain foreign intermediaries and satisfy the
certification requirements for treaty benefits of applicable
Treasury regulations. A Non-U.S. Holder eligible for a
reduced rate of United States withholding tax pursuant to an
income tax treaty may obtain a refund of any excess amounts
withheld by timely filing an appropriate claim for refund with
the IRS.
This United States withholding tax generally will not apply to
dividends that are effectively connected with the conduct of a
trade or business by the Non-U.S. Holder within the United
States, and, if a treaty applies, attributable to a United
States permanent establishment or fixed base of the
Non-U.S. Holder. Dividends effectively connected with the
conduct of a trade or business, as well as those attributable to
a United States permanent establishment or fixed base of the
Non-U.S. Holder under an applicable treaty, are subject to
United States federal income tax generally in the same manner as
if the Non-U.S. Holder were a U.S. person, as defined
under the Code. Certain IRS certification and disclosure
requirements must be complied with in order for effectively
connected income to be exempt from withholding. Any such
effectively connected dividends received by a
Non-U.S. Holder that is a foreign corporation may, under
certain circumstances, be subject to an additional "branch
profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to United
States federal income tax (or any withholding thereof) with
respect to gain recognized on a sale or other disposition of
common stock unless:
•
The Non-U.S. Holder is an
    individual who is present in the United States for 183 or more
    days in the taxable year of the disposition and certain other
    conditions are met,
•
the gain is effectively connected
    with a trade or business of the Non-U.S. Holder in the
    United States and, where a tax treaty applies, is attributable
    to a United States permanent establishment or fixed base of the
    Non-U.S. Holder, or
•
we are or have been a
    "U.S. real property holding corporation" within
    the meaning of Section 897(c)(2) of the Code, also referred
    to as a USRPHC, for United States federal income tax
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Material U.S. income tax considerations for
non-U.S. holders
purposes at any time within the five-year period preceding the
    disposition (or, if shorter, the Non-U.S. Holder's
    holding period for the common stock).
Gain recognized on the sale or other disposition of common stock
and effectively connected with a United States trade or
business, or attributable to a United States permanent
establishment or fixed base of the Non-U.S. Holder under an
applicable treaty, is subject to United States federal income
tax on a net income basis generally in the same manner as if the
Non-U.S. Holder were a U.S. person, as defined under
the Code. Any such effectively connected gain from the sale or
disposition of common stock received by a Non-U.S. Holder
that is a foreign corporation may, under certain circumstances,
be subject to an additional "branch profits tax" at a
30% rate or such lower rate as may be specified by an applicable
income tax treaty.
In general, a corporation is a USRPHC if the fair market value
of its "U.S. real property interests" equals or
exceeds 50% of the sum of the fair market value of its worldwide
(domestic and foreign) real property interests and its other
assets used or held for use in a trade or business. For this
purpose, real property interests include land, improvements, and
associated personal property. We believe that we currently are
not a USRPHC. In addition, based on these financial statements
and current expectations regarding the value and nature of our
assets and other relevant data, we do not anticipate becoming a
USRPHC.
If we become a USRPHC, a Non-U.S. Holder nevertheless will
not be subject to United States federal income tax if our common
stock is regularly traded on an established securities market,
within the meaning of applicable Treasury regulations, and the
Non-U.S. Holder holds no more than five percent of our
outstanding common stock, directly or indirectly, during the
five-year testing period identified in the third bullet point
immediately above. We expect that our common stock will be
quoted on the Nasdaq National Market and may be regularly traded
on an established securities market in the United States so long
as it is so quoted.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We must report annually to the IRS and to each
Non-U.S. Holder the amount of dividends paid to such holder
and the tax withheld with respect to such dividends, regardless
of whether withholding was required. Copies of the information
returns reporting such dividends and withholding may also be
made available to the tax authorities in the country in which
the Non-U.S. Holder resides under the provisions of an
applicable income tax treaty.
The United States imposes a backup withholding tax on dividends
and certain other types of payments to United States persons
(currently at a rate of 28%) of the gross amount. Dividends paid
to a Non-U.S. Holder will not be subject to backup
withholding if proper certification of foreign status (usually
on an IRS Form W-8BEN) is provided, and the payor does not
have actual knowledge or reason to know that the beneficial
owner is a United States person, or the holder is a corporation
or one of several types of entities and organizations that
qualify for exemption, also referred to as an exempt recipient.
Information reporting and backup withholding generally are not
required with respect to the amount of any proceeds from the
sale or other disposition of shares of common stock by a
Non-U.S. Holder outside the United States through a foreign
office of a foreign broker that does not have certain specified
connections to the United States. However, if a
Non-U.S. Holder sells or otherwise disposes of shares of
common stock through the U.S. office of a United States or
foreign broker, the broker will be required to report the amount
of proceeds paid to such holder to the IRS and to apply the
backup withholding tax (currently at a rate of 28%) to the
amount of such proceeds unless appropriate certification
(usually on an IRS Form W-8BEN) is provided to the broker
of the holder's status as either an exempt recipient or a
non-U.S. person, and the payor does not have actual
knowledge or
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Material U.S. income tax considerations for
non-U.S. holders
reason to know that the beneficial owner is a United States
person. Information reporting also applies if a
Non-U.S. Holder sells or otherwise disposes of its shares
of common stock through the foreign office of a broker deriving
more than a specified percentage of its income from United
States sources or having certain other connections to the United
States and the foreign broker does not have certain documentary
evidence in its files of the Non-U.S. Holder's foreign
status.
Any amounts withheld under the backup withholding rules may be
allowed as a refund or a credit against such holder's
U.S. federal income tax liability provided the required
information is timely furnished to the IRS.
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Underwriting
We are offering the shares of our common stock described in this
prospectus through the underwriters named below. UBS Securities
LLC and Bear, Stearns & Co. Inc. are the
representatives of the underwriters and joint book-running
managers of this offering. We have entered into an underwriting
agreement with the underwriters. Subject to the terms and
conditions of the underwriting agreement, each of the
underwriters has severally agreed to purchase the number of
shares of common stock from us listed next to its name in the
following table:
Number of
Underwriters
shares
UBS Securities LLC
Bear, Stearns & Co. Inc.
Total
The underwriting agreement provides that the underwriters must
buy all of the shares if they buy any of them. However, the
underwriters are not required to take or pay for the shares
covered by the underwriters' over-allotment option
described below.
Our common stock is offered subject to a number of conditions,
including:
•
receipt and acceptance of our
    common stock by the underwriters; and
•
the underwriters' right to
    reject orders in whole or in part.
We have been advised by the representatives that the
underwriters intend to make a market in our common stock but
that they are not obligated to do so and may discontinue making
a market at any time without notice.
In connection with this offering, certain of the underwriters or
securities dealers may distribute prospectuses electronically.
OVER-ALLOTMENT OPTION
We have granted the underwriters an option to buy up to an
aggregate of
[
l
] additional
shares of our common stock. The underwriters may exercise this
option solely for the purpose of covering over-allotments, if
any, made in connection with this offering. The underwriters
have 30 days from the date of this prospectus to exercise
this option. If the underwriters exercise this option, they will
each purchase additional shares on a pro rata basis in
approximately the same proportion to the amounts specified in
the table above.
COMMISSIONS AND DISCOUNTS
Shares sold by the underwriters to the public will initially be
offered at the initial offering price set forth on the cover of
this prospectus. Any shares sold by the underwriters to
securities dealers may be sold at a discount of up to
$[
l
] per
share from the initial public offering price. Any of these
securities dealers may resell any shares purchased from the
underwriters to other brokers or dealers at a discount of up to
$[
l
] per
share from the initial public offering price. If all the shares
are not sold at the initial public offering price, the
representatives may change the offering price and the other
selling terms. Sales of shares made outside of the United States
may be made by affiliates of the underwriters. Upon execution of
the underwriting agreement, the underwriters will be obligated
to purchase the shares at the prices and upon the terms stated
in the underwriting agreement and, as a
128
Table of Contents
Underwriting
result, will thereafter bear any risk associated with changing
the offering price to the public or other selling terms.
The following table shows the per share and total underwriting
discounts and commissions we will pay to the underwriters
assuming both no exercise and full exercise of the
underwriters' option to purchase up to an additional
[
l
] shares.
No exercise
Full exercise
Per share
$
$
Total
$
$
We estimate that the total expenses of this offering payable by
us, not including the underwriting discounts and commissions,
will be approximately
$[
l
].
The underwriting agreement provides that the underwriters will
reimburse us for certain out-of-pocket expenses in connection
with this offering in an amount of $750,000.
NO SALES OF SIMILAR SECURITIES
We, our executive officers and directors and all of our existing
stockholders have entered into lock-up agreements with the
underwriters. Under these agreements, subject to certain
exceptions, we and each of these persons may not, without the
prior written approval of UBS Securities LLC, offer, sell,
contract to sell or otherwise dispose of, directly or
indirectly, or hedge our common stock or securities convertible
into or exchangeable for our common stock. These restrictions
will be in effect for a period of 180 days after the date
of this prospectus. At any time and without public notice, UBS
Securities LLC may, in its sole discretion, release all or some
of the securities from these lock-up agreements.
INDEMNIFICATION
We have agreed to indemnify the underwriters against certain
liabilities, including certain liabilities under the Securities
Act. If we are unable to provide this indemnification, we have
agreed to contribute to payments the underwriters may be
required to make in respect of those liabilities.
LISTING
We expect to apply to have our common stock approved for
quotation on the Nasdaq National Market under the trading symbol
"ARII."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company.
PRICE STABILIZATION, SHORT POSITIONS
In connection with this offering, the underwriters may engage in
activities that stabilize, maintain or otherwise affect the
price of our common stock, including:
•
stabilizing transactions;
•
short sales;
•
purchases to cover positions
    created by short sales;
•
imposition of penalty
    bids; and
•
syndicate covering transactions.
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Underwriting
Stabilizing transactions consist of bids or purchases made for
the purpose of preventing or retarding a decline in the market
price of our common stock while this offering is in progress.
These transactions may also include making short sales of our
common stock, which involve the sale by the underwriters of a
greater number of shares of common stock than they are required
to purchase in this offering and purchasing shares of common
stock in the open market to cover positions created by short
sales. Short sales may be "covered short sales," which
are short positions in an amount not greater than the
underwriters' over-allotment option referred to above, or
may be "naked short sales," which are short positions
in excess of that amount.
The underwriters may close out any covered short position by
either exercising their over-allotment option, in whole or in
part, or by purchasing shares in the open market. In making this
determination, the underwriters will consider, among other
things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase
shares through the over-allotment option.
Naked short sales are sales made in excess of the over-allotment
option. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position
is more likely to be created if the underwriters are concerned
that there may be downward pressure on the price of the common
stock in the open market that could adversely affect investors
who purchased in this offering.
The underwriters also may impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representatives have repurchased shares sold by or for the
account of that underwriter in stabilizing or short covering
transactions.
As a result of these activities, the price of our common stock
may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be
discontinued by the underwriters at any time. The underwriters
may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no public market for our
common stock. The initial public offering price was determined
by negotiation by us and the representatives of the
underwriters. The principal factors considered in determining
the initial public offering price include:
•
the information set forth in this
    prospectus and otherwise available to representatives;
•
our history and prospects and the
    history and prospects for the industry in which we compete;
•
our past and present financial
    performance and an assessment of our management;
•
our prospects for future earnings
    and the present state of our development;
•
the general condition of the
    securities markets at the time of this offering;
•
the recent market prices of, and
    demand for, publicly traded common stock of generally comparable
    companies; and
•
other factors deemed relevant by
    the underwriters and us.
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Underwriting
AFFILIATIONS
Certain of the underwriters and their affiliates have provided
in the past and may provide from time to time in the future
certain commercial banking, financial advisory, investment
banking and other services for us for which they will be
entitled to receive customary fees.
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Table of Contents
Legal matters
An opinion regarding the legality of the shares of common stock
being offered in this offering is being provided by Brown
Rudnick Berlack Israels LLP, New York, New York. The
underwriters have been represented by Shearman &
Sterling LLP, New York, New York.
Experts
Our consolidated financial statements as of December 31,
2004 and for the year ended December 31, 2004 included in
this prospectus were audited by Grant Thornton LLP ("Grant
Thornton"), our independent accountants, as stated in their
report appearing therein. Our consolidated financial statements
as of December 31, 2002 and 2003 and for the years ended
December 31, 2002 and 2003 included in this prospectus were
audited by KPMG LLP ("KPMG"), our former independent
accountants, as stated in their report appearing herein.
KPMG's reports on our financial statements for the years
ended December 31, 2002 and 2003 contained no adverse
opinion or disclaimer of opinion and were not otherwise
qualified or modified as to uncertainty, audit scope or
accounting principle.
On                     ,
2004, we terminated KPMG. In connection with its audits of our
financial statements as of December 31, 2002 and 2003, and
for the years ended December 31, 2002 and 2003, and
through                     ,
2004, there were no disagreements with KPMG on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of KPMG, would have caused
KPMG to make reference thereto in its report on such statements
for such periods.
Following KPMG's termination, we engaged Grant Thornton as
our independent certified public accountants effective
November 3, 2004. [The decision to hire Grant Thornton was
unanimously approved by our board of directors.] We did not
consult with Grant Thornton with respect to the application of
accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might
be rendered on our financial statements, or a disagreement with
KPMG and there were no "reportable events" as defined
in Item 304(a)(1)(v) of Regulation S-K promulgated
under the Exchange Act during this time frame. Grant Thornton
has been given access to prior years work papers by KPMG without
limitation in accordance with Statement on Auditing Standard
No. 84, Communications Between Predecessor and Successor
Auditors.
132
Table of Contents
Where you can find more information
We have filed with the SEC a registration statement on
Form S-1 under the Securities Act with respect to the
shares to be sold in this offering. This prospectus, which
constitutes a part of the registration statement, does not
contain all of the information set forth in the registration
statement and the exhibits, schedules and amendments to the
registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For
further information about us and the shares to be sold in this
offering, please refer to the registration statement.
Statements contained in this prospectus as to the contents of
any contract, agreement or other document that we make reference
to, are not necessarily complete, and in each instance, where
applicable, please refer to the copy of the contract, agreement
or other document filed as an exhibit to the registration
statement, each statement being qualified in all respects by
this reference.
Upon completion of this offering, we will become subject to the
reporting and information requirements of the Exchange Act and,
as a result, we will file periodic and current reports, proxy
statements and other information with the SEC.
You may read and copy all or any portion of the registration
statement or any reports, statements or other information we
file with the SEC following the completion of this offering at
the public reference room maintained by the SEC at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information on the public reference
rooms. Copies of such material are also available by mail from
the SEC at prescribed rates. You can also find our SEC filings
at the SEC's website at www.sec.gov.
We intend to provide our stockholders with annual reports
containing consolidated financial statements that have been
examined and reported on, with an opinion expressed by, an
independent registered public accounting firm.
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Table of Contents
American Railcar Industries, Inc.
CONSOLIDATED BALANCE SHEETS
December 31, 2003 and 2004
December 31,
2003
2004
(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
65
$
6,943
Accounts receivable, net
13,409
25,183
Inventories, net
45,207
73,925
Amounts due from affiliates— current
—
—
Prepaid expenses
62
244
Deferred tax asset
1,423
1,699
Total current assets
60,166
107,994
Property, plant and equipment:
Land
1,977
1,977
Buildings
66,199
66,350
Machinery and equipment
56,152
58,816
Construction in process
—
8,686
124,328
135,829
Less accumulated depreciation
53,098
58,878
Net property, plant and equipment
71,230
76,951
Notes receivable from affiliates and interest thereon
60,170
167,250
Deferred tax asset
—
664
Debt issuance costs and other assets
905
615
Amounts due from affiliates— non-current
—
271
Investment in subsidiary
—
—
Investment in joint venture
3,521
2,912
Total assets
$
195,992
$
356,657
F-2
Table of Contents
American Railcar Industries, Inc.
CONSOLIDATED BALANCE SHEETS
December 31, 2003 and 2004
December 31,
2003
2004
(amounts in thousands,
except share and
per share values)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
14,738
$
1,334
Accounts payable
10,752
22,800
Accrued expenses and taxes
7,691
12,663
Note payable to affiliate— current
(404
)
7,000
Other amounts due to affiliates— current
12,000
17,137
Total current liabilities
44,777
60,934
Long-term debt, net of current portion
35,335
8,517
Deferred tax liability
9,701
—
Note payable to affiliate— noncurrent
—
130,000
Other amounts due to affiliates— noncurrent
4,028
17,381
Other liabilities
6,284
4,345
Total liabilities
100,125
221,177
Commitments and contingencies
Mandatorily redeemable payment-in-kind preferred stock,
    $.01 par value, 150,000 shares authorized,
    89,899 shares issued and outstanding at December 31,
    2003, $1,000 liquidation price per share
89,899
—
Mandatorily redeemable preferred stock, stated value $1,000,
    99,000 shares authorized, 1 share issued and
    outstanding at December 31, 2003 and 2004, respectively
1
1
Shareholders' equity:
New Preferred Stock, $.01 par value per share, stated value
    $1,000 per share, 500,000 shares authorized,
    116,685 shares issued and outstanding at December 31,
    2004
—
111,685
Common stock, $.01 par value, 12,000 shares
    authorized, 1,000 and 1,195 issued and outstanding at
    December 31, 2003 and 2004, respectively
—
—
Additional paid-in capital
11,577
41,360
Retained earnings
(4,701
)
(16,464
)
Accumulated other comprehensive loss
(909
)
(1,102
)
Total shareholders' equity
5,967
135,479
Total liabilities and shareholders' equity
$
195,992
$
356,657
F-3
Table of Contents
American Railcar Industries, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2002, 2003 and 2004
2002
2003
2004
(amounts in thousands,
except share and per share values)
Revenues:
Manufacturing operations (including revenues from affiliates of
    $63,561, $62,882 and $64,372 in 2002, 2003 and 2004,
    respectively)
$
138,441
$
188,119
$
316,432
Railcar services (including revenues from affiliates of $12,838,
    $11,012 and $19,429 in 2002, 2003 and 2004, respectively)
30,387
29,875
38,624
Total revenues
168,828
217,994
355,056
Costs of goods sold
Cost of railcar manufacturing operations (including costs
    related to affiliates of $55,679, $54,394 and $59,902 in 2002,
    2003 and 2004, respectively)
134,363
174,350
305,726
Cost of railcar services (including costs related to sales to
    affiliates of $12,152, $10,136 and $15,539 in 2002, 2003 and
    2004, respectively)
29,533
29,761
34,473
Total costs of goods sold
163,896
204,111
340,199
Gross profit
4,932
13,883
14,857
Selling, administrative and other
9,505
10,340
10,334
Operating (loss) income
(4,573
)
3,543
4,523
Interest income (includes interest income from affiliates of
    $3,379, $2,998 and $3,885 in 2002, 2003 and 2004, respectively)
3,619
3,161
4,422
Interest expense including interest expense to affiliates of
    $1,524 in 2004
4,853
3,591
3,578
Loss from joint venture
—
(604
)
(609
)
(Loss) earnings before income tax (benefit) expense
(5,807
)
2,509
4,758
Income tax (benefit) expense
(1,894
)
1,256
2,438
Net (loss) earnings
$
(3,913
)
$
1,253
$
2,320
Less preferred dividends
(7,139
)
(9,690
)
(13,241
)
Loss available to common shareholders
(11,052
)
(8,437
)
(10,921
)
Weighted average shares outstanding (actual shares)
Basic and diluted
1,000
1,000
1,087
Net (loss) earnings per common share (actual dollars)
Basic and diluted
$
(11,052
)
$
(8,437
)
$
(10,047
)
See accompanying notes to financial statements.
F-4
Table of Contents
American Railcar Industries, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2002, 2003 and 2004
2002
2003
2004
(amounts in thousands)
Operating activities:
Net (loss) earnings
$
(3,913
)
$
1,253
$
2,320
Adjustments to reconcile net (loss) earnings to net cash
    provided by (used in) operating activities:
Depreciation and amortization
6,464
6,215
6,247
Expenses relating to pre-recapitalization liabilities
668
583
1,430
Curtailment gain
—
—
(59
)
Increase in deferred tax assets related to spin off of ARL
—
—
Adjustment to recognize interest in Castings, LLC
—
Provision for deferred income taxes
(2,349
)
1,082
1,422
Provision for losses on accounts receivable
159
254
209
Long-lived asset impairment and other charges
—
1,449
—
(Gain) loss on the disposition of property, plant and equipment
(19
)
73
—
Changes in operating assets and liabilities:
Accounts receivable
4,489
(4,509
)
(11,983
)
Inventories
(469
)
(12,290
)
(29,563
)
Prepaid expenses
2,257
88
(366
)
Accounts payable
(417
)
4,416
15,244
Accrued expenses and taxes
808
917
807
Other
2,933
(1,169
)
(2,326
)
Net cash provided by (used in) operating activities
10,611
(1,638
)
(16,618
)
Investing activities:
Purchases of property, plant and equipment
(1,816
)
(2,301
)
(11,441
)
Purchase of interest in AR Leasing
Proceeds from the disposition of property, plant and equipment
822
—
—
Change in note and interest receivable from ACF
50
50
404
Other
409
—
—
Net cash used in investing activities
(535
)
(2,251
)
(11,037
)
Financing activities:
Capital contributions
—
—
110,000
Effect of ARL spin off (note 1)
(25,000
)
Advance to affiliate under notes receivable
—
—
(165,000
)
Proceeds from issuance of notes payable from affiliates
—
—
137,000
(Increase) decrease in amounts due from affiliates
(8,634
)
8,634
—
Increase in amounts due to affiliates
(893
)
4,027
17,755
Repayment of debt
(16,842
)
(18,890
)
(40,222
)
Issuance of preferred stock
15,000
10,000
—
Net cash (used in) provided by financing activities
(11,369
)
3,771
34,533
(Decrease) increase in cash and cash equivalents
(1,293
)
(118
)
6,878
Cash and cash equivalents at beginning of year
1,476
183
65
Cash and cash equivalents at end of year
$
183
$
65
$
6,943
See accompanying notes to financial statements.
F-5
Table of Contents
American Railcar Industries, Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended December 31, 2002, 2003 and 2004
Accumulated
New
Additional
other
Total
Comprehensive
Retained
preferred
Common
paid-in
comprehensive
shareholders'
loss
earnings
stock
stock
capital
loss
equity
(amounts in thousands)
Balance December 31, 2001
$
19,662
$—
$
—
$
10,326
$
(441
)
$
Net loss
$
(3,913
)
(3,913
)
Minimum pension liability adjustment, net of tax effect of $163
(260
)
(260
)
Comprehensive loss
$
(4,173
)
Capital contribution for expenses relating to pre-
    recapitalization liabilities retained by ACF
668
Dividends on mandatorily redeemable payment-in-kind preferred
    stock
(7,139
)
Balance December 31, 2002
8,610
—
—
10,994
(701
)
Net income
$
1,253
1,253
Minimum pension liability adjustment, net of tax effect of $128
(208
)
(208
)
Comprehensive income
$
1,045
Capital contribution for expenses relating to pre-
    recapitalization liabilities retained by ACF
583
Excess of purchase price over book value related to transfer of
    Castings from ACF
(4,874
)
Dividends on mandatorily redeemable payment-in-kind preferred
    stock
(9,690
)
Balance December 31, 2003
(4,701
)
—
—
11,577
(909
)
Net income
$
2,320
2,320
Minimum pension liability adjustment, net of taxes of $116
(193
)
(193
)
Comprehensive income
$
2,127
Dividends on preferred stock
(13,241
)
Transfer mandatorily redeemable PIK preferred to New Preferred
    Stock
95,517
Capital contributions
102,654
42,500
Net adjustments relating to spin off of ARL (note 1)
(86,486
)
(14,148
)
Deemed distribution related to decrease in castings book value
(842
)
Capital contribution for expenses relating to pre-
    capitalization liabilities retained by ACF
1,431
Balance December 31, 2004
$
(16,464
)
$111,685
$
—
$
41,360
$
(1,102
)
$
See accompanying notes to financial statements.
F-6
Table of Contents
American Railcar Industries, Inc.
CONDENSED BALANCE SHEETS
December 31, 2004 and June 30, 2005
December 31,
June 30,
2004
2005
(unaudited)
(audited)
(dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
6,943
$
27,804
Accounts receivable, net
25,183
30,041
Inventories, net
73,925
80,722
Amounts due from affiliates— current
—
14,896
Prepaid expenses
244
4,421
Deferred Tax Asset
1,699
1,822
Total current assets
107,994
159,706
Property, plant and equipment
Land
1,977
1,977
Buildings
66,350
75,479
Machinery and equipment
58,816
60,812
Construction in process
8,686
6,938
135,829
145,206
Less accumulated depreciation
58,878
61,985
Net property, plant and equipment
76,951
83,221
Notes receivable from affiliates and interest thereon
167,250
2,250
Deferred tax asset
664
Debt issuance costs and other assets
615
724
Amounts due from affiliates— non-current
271
Investment in subsidiary
0
Investment in joint venture
2,912
3,836
Total assets
$
356,657
$
249,737
See accompanying selected notes to condensed consolidated
financial statements.
F-7
Table of Contents
American Railcar Industries, Inc.
CONDENSED BALANCE SHEETS
December 31, 2004 and June 30, 2005
December 31,
June 30,
2004
2005
(unaudited)
(audited)
(dollars in thousands, except
share and per share values)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
1,334
$
32,198
Accounts payable
22,800
53,218
Accrued expenses and taxes
12,663
20,747
Notes payable to affiliate—current
7,000
19,000
Other amounts due to affiliates—current
17,137
—
Total current liabilities
60,934
125,163
Long-term debt, net of current portion
8,517
7,297
Deferred tax liability
—
6,587
Note payable to affiliate—noncurrent
130,000
—
Other amounts due to affiliates—noncurrent
17,381
—
Other liabilities
4,345
4,139
Total liabilities
221,177
143,186
Commitments and contingencies
Mandatorily redeemable preferred stock, stated value $1,000,
    99,000 shares authorized, 1 share issued and
    outstanding at December 31, 2004 and June 30, 2005
1
1
Shareholders' equity:
New Preferred Stock, $.01 par value per share, stated value
    $1,000 per share, 500,000 shares authorized, 111,685
    and 82,055 shares issued and outstanding at
    December 31, 2004 and June 30, 2005, respectively
111,685
82,055
Common stock, $.01 par value, 12,000 shares
    authorized, 1,195 shares issued and outstanding at
    December 31, 2004 and June 30, 2005, respectively
—
—
Additional paid-in capital
41,360
34,697
Retained earnings
(16,464
)
(9,100
)
Accumulated other comprehensive income
(1,102
)
(1,102
)
Total shareholders' equity
135,480
106,551
Total liabilities and shareholders' equity
$
356,657
$
249,737
See accompanying selected notes to condensed consolidated
financial statements.
F-8
Table of Contents
American Railcar Industries, Inc.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Six months ended June 30, 2004 and 2005
2004
2005
(dollars in thousands)
Revenues:
Manufacturing operations (including revenues from transactions
    with affiliates of $26,403 and $28,148 in 2004 and 2005,
    respectively)
$
140,434
$
269,978
Railcar services (including revenues from affiliates of $7,664
    and $11,280 in 2004 and 2005, respectively)
18,560
21,665
Total revenues
158,994
291,643
Costs of goods sold:
Cost of railcar manufacturing operations (including costs from
    transactions with affiliates of $24,374 and $25,943 in 2004 and
    2005, respectively)
131,271
251,060
Cost of railcar services (including costs from transactions with
    affiliates of $5,852 and $9,106 in 2004 and 2005, respectively)
16,503
18,575
Total costs of goods sold
147,774
269,635
Gross profit
11,220
22,008
Selling, administrative and other
6,110
6,651
Operating income
5,110
15,357
Interest income (includes interest income from affiliates of
    $1,201 and $823 in 2004 and 2005, respectively)
1,482
977
Interest expense (including interest expense to affiliates of
    $174 and $1,174 in 2004 and 2005, respectively)
1,506
2,305
(Loss) income from joint venture
(1,159
)
924
Income before income tax expense
3,927
14,953
Income tax expense
1,714
5,971
Net earnings
$
2,213
$
8,982
Less preferred dividends
(13,241
)
(9,090
)
Loss available to common shareholders
(11,028
)
(108
)
Weighted average shares outstanding (actual shares)
Basic and diluted
1,087
1,095
Net loss per common share (actual dollars)
Basic and diluted
$
(10,145
)
$
(99
)
Net earnings per common share
F-9
Table of Contents
American Railcar Industries, Inc.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended June 30, 2004 and 2005
Six months ended
June 30,
2004
2005
(dollars in thousands)
Operating activities:
Net earnings
$
2,213
$
8,982
Adjustments to reconcile net earnings to net cash provided by
    operating activities:
Depreciation and amortization
2,829
3,155
Change in joint venture investment as a result of earnings
1,159
(924
)
Expenses relating to pre-capitalization liabilities retained by
    ACF
439
530
Provision for deferred income taxes
(412
)
4,631
Provision for losses on accounts receivable
61
37
Curtailment gain
(59
)
—
Changes in operating assets and liabilities:
Accounts receivable
(9,130
)
(4,895
)
Inventories
(13,307
)
(7,676
)
Prepaid expenses
(22
)
(4,177
)
Notes receivable
—
Accounts payable
9,331
30,418
Accrued expenses and taxes
5,698
7,878
Other
(408
)
(207
)
Net cash (used in) provided by operating activities
(1,608
)
37,752
Investing activities:
Purchases of property, plant and equipment
(1,895
)
(9,392
)
Proceeds from dispositions of property, plant and equipment
118
Other
(1
)
—
Net cash used in investing activities
(1,778
)
(9,392
)
Financing activities:
Increase in amounts due from affiliates
—
(14,625
)
Increase (decrease) in amounts due to affiliates
16,332
(22,518
)
Proceeds from debt issuance
—
30,770
Repayment of debt
(12,298
)
(1,126
)
Net cash provided by (used in) financing activities
4,034
(7,499
)
Increase in cash and cash equivalents
648
20,861
Cash and cash equivalents at beginning of year
65
6,943
Cash and cash equivalents at end of period
$
713
$
27,804
See accompanying selected notes to condensed consolidated
financial statements.
F-10
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein
have been prepared by American Railcar Industries, Inc. and
Subsidiary (collectively the "Company" or
"ARI"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the
"SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United
States of America have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading.
The Condensed Balance Sheet as of December 31, 2004 has
been derived from the audited consolidated balance sheets as of
that date. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's
latest annual report attached on form S-1 for the year
ended December 31, 2004. In the opinion of management, the
information contained herein reflects all adjustments necessary
to make the results of operations for the interim periods a fair
statement of such operations. Due to the seasonality of the
Company's business, the results of operations of any
interim period are not necessarily indicative of the results
that may be expected for a fiscal year.
Note 1—Description of the business
The condensed consolidated financial statements of the Company
include the accounts of American Railcar Industries, Inc. and
it's wholly owned subsidiary Castings, LLC (Castings).
Castings has a one-third ownership interest in Ohio Castings
Company, LLC (Ohio Castings), a limited liability company formed
to run two foundries which cast railcar sideframes and bolsters
for use or sale by the ownership group. All significant
intercompany transactions and balances have been eliminated.
ARI manufactures railcars, custom designed railcar parts for
industrial companies, railroads, and other industrial products,
primarily aluminum and special alloy steel castings, for
non-rail customers. ARI also provides railcar maintenance
services for railcar fleets, including that of its affiliate,
American Railcar Leasing, LLC (ARL). In addition, ARI provides
fleet management and maintenance services for railcars owned by
selected customers. Such services include inspecting and
supervising the maintenance and repair of such railcars. The
Company's operations are located in North America,
primarily in the United States.
ARI was recapitalized on October 1, 1994 when ACF
Industries LLC (ACF), the former holder of ARI's common
stock, transferred to ARI the old common stock of ARI along with
the assets and liabilities of ACF's railcar maintenance and
railcar parts manufacturing businesses. In exchange, ACF
received 57,306 shares of ARI's newly issued
mandatorily redeemable preferred stock. New shares of ARI's
common stock were issued to Carl C. Icahn (Mr. Icahn),
Chairman of the Board of ACF, in exchange for cash of
$6.4 million. In October 1998, ARI redeemed
57,305 shares of the preferred stock and the remaining
share of preferred stock was transferred to Mr. Icahn.
In 2003, ACF Industries Holding Corp. (ACF Holding), an
affiliate of ARI, formed a wholly-owned subsidiary, Castings,
LLC (Castings). In June, 2005, ARI completed the purchase of
Castings from ACF Holdings. The transaction was effective
January 1, 2005. The cost of the acquisition totaled
$12.0 million, which represents the fair value of Castings
equity interest in Ohio Castings. The purchase price will be
paid in 2005. However as Castings was owned by an entity with
ownership common to ARI, the investment in subsidiary is
recorded at the date of Castings inception, June, 2003 at book
value. The purchase price is recorded at full value as a payable
to the affiliate and the excess of fair value over cost is
presented as a distribution from equity. Interest is accrued on
the note payable to the affiliate as of January 1, 2005 as
that is the date the purchase was agreed to.
F-11
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
On July 20, 2004, ARI formed American Railcar Leasing
(ARL), a wholly owned subsidiary. ARL's primary business is
the leasing of railcars. The subsidiary was capitalized through
the issuance of common and preferred stock. ARI's
investment in ARL was $116,670 and $151,670 million at
December 31, 2004 and June 30, 2005, respectively.
Preferred stock of ARL was issued to affiliated companies in
exchange for contributions of cash or railcars totaling
$102,654. On June 30, 2005, in anticipation of its public
offering, ARI sold its common interest in ARL for $125,000 to
affiliated companies in return for the preferred stock
investment including accrued dividends that those affiliates
held ARI. ARI retained no liabilities or other interests in ARL
as a result of this sale. The presentation of ARI's
operations has been prepared on a standalone basis excluding
ARL's operations for all periods, and all transactions
giving effect to ARL's formation have been eliminated from
the financial statements. Any differences related to the amounts
originally capitalized and the amount paid for ARL in the sale
have been recorded through adjustments to shareholder's
equity, including certain tax benefits that ARI received as a
result of utilizing ARL's previously incurred tax losses.
ARI recorded a related deferred tax asset for those net
operating loss carry forwards as ARI has the legal right to
utilize them for tax purposes. The following table discloses the
preferred stock transactions and the effect on additional paid
in capital for the year ended December 31, 2004 and six
months ended June 30, 2005 to include all of the
transactions including the effect of the spin off of ARL.
New preferred
Additional
stock
paid in capital
January 1, 2004
—
$
11,577
New preferred issued for mandatorily redeemable preferred stock
$
95,517
—
Capital contribution
102,654
43,931
Exchange of common interest in ARL for new preferred stock
(86,486
)
(26,670
)
ARL tax benefit
—
12,522
December 31, 2004
111,685
41,360
Exchange of common interest in ARL for new preferred stock
(29,630
)
—
Adjustment to recognize interest in Castings, LLC
—
(7,750
)
ARL tax benefit
—
2,656
Other
—
241
June 30, 2005
$
82,055
$
[to be completed]
Note 2—Summary of significant accounting
policies
Significant accounting policies are described below.
Revenue recognition
Revenues from railcar sales are recognized following completion
of manufacturing, inspection, customer acceptance and shipment,
which is when title and risk for any damage or loss with respect
to the railcars passes to the customer. In some cases, paint and
lining work may be outsourced and, as a result, the sale will
not be recorded until the railcars are shipped from the
independent contractor. Revenues from railcar and industrial
parts and components are recorded at the time of product
shipment, in accordance with our contractual terms. Revenue for
railcar maintenance services are recognized upon completion and
shipment of railcars from our plants. The Company does not
bundle railcar service contracts with new car sales. Revenue for
fleet management services are recognized as performed.
F-12
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company records amounts billed to customers for shipping and
handling as part of sales in accordance with EITF 00-10,
Accounting for Shipping and Handling Fees and Costs
, and
records related costs in cost of sales.
Debt issuance costs
Debt issuance costs were incurred in connection with ARI's
issuance of long-term debt, and are amortized over the term of
the related debt, utilizing the effective interest method.
Inventories
Inventories are stated at the lower of average cost or market on
a first in, first out basis, and include the cost of materials,
direct labor and manufacturing overhead.
Accounts receivable
The Company carries its accounts receivable at cost less an
allowance for doubtful accounts. On a periodic basis, the
Company evaluates its account receivable and establishes an
allowance for doubtful accounts, based on a history of past
write-offs and collections and current credit conditions.
Accounts are placed for collection on a limited basis once all
other methods of collection have been exhausted. Once it has
been determined that the customer is no longer in business
and/or refuses to pay, the accounts are written off.
Property, plant and equipment
Land, buildings, machinery and equipment are carried at cost,
including interest on funds borrowed to finance construction.
Maintenance and repair costs are charged directly to earnings.
Tooling is generally capitalized and amortized over a period of
two to five years.
Buildings are depreciated over estimated useful lives that range
from 14 to 50 years. The estimated useful lives of other
depreciable assets, including equipment, vary from 3 to
25 years. Depreciation is calculated on the straight-line
method for financial reporting purposes and on accelerated
methods for tax purposes.
Ohio Castings joint venture
The Company uses the equity method to account for its investment
in Ohio Castings owned by its subsidiary, Castings, LLC. Under
the equity method, the Company recognizes its share of the
earnings and losses of the joint venture as they accrue instead
of when they are realized. Advances and distributions are
charged and credited directly to the investment account. Ohio
Castings produces railcar parts that are sold to one of the
joint venture partners. The joint venture partner sells these
parts to outside 3rd parties at current market prices and
to the Company and the other joint venture partner in Ohio
Castings at cost plus a licensing fee. The risk of loss to
Castings, LLC and the Company is limited to its investment in
Ohio Castings and its one third share of its guarantee of Ohio
Castings debt which was approximately $.03 million at
June 30, 2005.
Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of
assets may not be recoverable. The criteria for determining
impairment for such long-lived assets to be held and used is
determined by comparing the carrying value of these long-
F-13
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
lived assets to be held and used to management's best
estimate of future undiscounted cash flows expected to result
from the use of the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the
fair value of the assets. The estimated fair value of the assets
is measured by estimating the present value of the future
discounted cash flows to be generated. There were no events or
changes in circumstances that indicate that the carrying value
of assets may not be recoverable, as such, no impairment losses
have been recorded in the year ended December 31, 2004 or
for the six month period ended June 30, 2005.
Pension plans and other postretirement benefits
Certain ARI employees participate in noncontributory, defined
benefit pension plans sponsored by a related party. Benefits for
the salaried employees are based on salary and years of service,
while those for hourly employees are based on negotiated rates
and years of service.
ARI also participates in defined contribution retirement plans,
health care and life insurance plans sponsored by a related
party covering certain employees. Benefit costs are accrued
during the years the employees render service.
Income taxes
ARI accounts for income taxes under the asset and liability
method. Under this method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial reporting basis and the tax
basis of ARI's assets and liabilities at enacted tax rates
expected to be in effect when such amounts are recovered or
settled.
Statement of cash flows
For the purpose of the consolidated statement of cash flows, ARI
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash
equivalents. Until October 2004, ACF received the majority of
ARI's cash receipts and disbursed ARI's cash on behalf
of ARI, and maintained an intercompany receivable/payable which
bore interest at ACF's internal cost of funds in accordance
with an administration agreement between ARI and ACF, which is
described in Note 10. Since October 2004, ARI maintains its
own cash balances.
Earnings per share
Basic earnings per share are calculated as net income
attributable to common shareholders divided by the
weighted-average number of common shares outstanding during the
respective period. Diluted earnings per share are calculated by
dividing net income attributable to common shareholders by the
weighted-average number of shares outstanding plus dilutive
potential common shares outstanding during the year.
Fair value of financial instruments
The carrying amounts of cash and cash equivalents, accounts
receivable, amounts due to/from affiliates and accounts payable
approximate fair values because of the short-term maturity of
these instruments. The fair value of long-term debt is discussed
in Note 6. The fair value of the note receivable from Ohio
Castings and Mr. Icahn, which is carried at face amount
plus accrued interest, could not reasonably be estimated due to
the lack of market for similar instruments. Fair value estimates
are made at a specific point in time, based on relevant market
information about the financial instrument.
F-14
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision.
Comprehensive income (loss)
Comprehensive income (loss) is defined as the change in equity
of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources.
Comprehensive income (loss) consists of net income (loss) and
the Company's minimum pension liability adjustment, which
is shown net of tax.
Use of estimates
Management of ARI has made a number of estimates and assumptions
relating to the reporting of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with
accounting principles generally accepted in the United States of
America. Significant items subject to estimates and assumptions
include, deferred taxes, pension obligations, workers
compensation, valuation allowances for accounts receivable and
inventory obsolescence and the reserve for warranty claims.
Actual results could differ from those estimates.
Recent accounting pronouncements
In March 2005, the FASB issued FIN 47 as an interpretation
of FASB Statement No. 143, "Accounting for Asset
Retirement Obligations" (FASB No. 143). This
interpretation clarifies that the term conditional asset
retirement obligation as used in FASB No. 143, refers to a
legal obligation to perform an asset retirement activity in
which the timing and/or method of settlement are conditional on
a future event that may or may not be within the control of the
entity. The obligation to perform the asset retirement activity
is unconditional even through uncertainly exists about the
timing and/or method of settlement. Accordingly, an entity is
required to recognize a liability for the fair value of a
conditional asset retirement obligation if the fair value of the
liability can be reasonably estimated. This interpretation also
clarifies when an entity would have sufficient information to
reasonably estimate the fair value of an asset retirement
obligation. FIN 47 is effective no later than the end of
fiscal years ending after December 15, 2005. The Company is
currently assessing the impact of the adoption of FIN 47.
On June 1, 2005, the FASB issued Statement No. 154,
"Accounting Changes and Error Corrections, a replacement of
APB Opinion No. 20 and FASB Statement No. 3". The
Statement applies to all voluntary changes in accounting
principle, and changes the requirements for accounting for and
reporting of a change in accounting principle. The Company will
adopt FAS 154 at December 31, 2005 and does not
anticipate any material change to its operating results.
Carryover basis adjustment
As ARI and ACF are entities under common control, accounting
principles generally accepted in the United States of America
require that ARI's initial carrying value of assets
transferred to it from ACF and the sale of Castings LLC be equal
to ACF's historical net book value at the time of transfer.
The excess of the fair value paid over the net book value of
assets and liabilities transferred to ARI is reflected as a
distribution of retained earnings due to common control and has
the effect of reducing shareholders' equity by
$24.2 million at December 31, 2004 and June 30,
2005, respectively.
F-15
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 3—Accounts receivable
The allowance for doubtful accounts consists of the following:
December 31,
June 30,
2004
2005
(in thousands)
Beginning balance
$
572
$
510
Bad debt expense
209
37
Accounts written off
(271
)
(2
)
Recoveries
—
9
Ending balance
$
510
$
554
Note 4—Inventories
Inventories consist of the following:
December 31,
June 30,
2004
2005
(in thousands)
Raw materials
$
39,655
$
44,711
Work-in-process
25,515
26,203
Finished products
11,434
12,759
Total inventories
$
76,604
$
83,673
Less reserves
2,679
2,951
Total inventories, net
$
73,925
$
80,722
Note 5—Property, plant and equipment
December 31,
June 30,
2004
2005
(in thousands)
Land
$
1,977
$
1,977
Buildings
66,350
75,479
Machinery and equipment
58,816
60,928
Construction in process
8,686
6,822
$
135,829
$
145,206
Less accumulated depreciation
58,878
61,985
Net, property plant and equipment
$
76,951
$
83,221
F-16
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 6—Long-term debt
Long-term debt consists of:
December 31,
June 30,
2004
2005
(in thousands)
Revolving line of credit
$
—
30,770
Industrial revenue bonds guaranteed by ACF and ACF Holding, with
    effective interest rates ranging from 6.75% to 8.5%, principal
    amounts due through the year 2011
9,600
8,510
Other
251
215
9,851
39,495
Less current portion of debt
1,334
32,198
Total long-term debt, net of current portion
$
8,517
$
7,297
On March 10, 2005, ARI entered into a $50.0 million
revolving credit facility secured by receivables and inventory.
The note bears interest at various rates based on LIBOR or
prime. As of June 30, 2005, the interest rate on the
borrowings under the revolving credit facility was 6.0% and was
based on the U.S. prime rate at that time. The term of the
credit facility is one year. Debt covenants require ARI to
maintain certain debt-to-earnings and coverage ratios with which
ARI was in compliance at June 30, 2005.
The fair value of long-term debt was approximately
$9.9 million and $39.5 million at December 31,
2004 and June 30, 2005, respectively, as calculated by
discounting cash flows through maturity using ARI's current
rate of borrowing for similar liabilities.
Note 7—Warranties
The Company records a liability for an estimate of costs that it
expects to incur under its basic limited warranty when
manufacturing revenue is recognized. Factors affecting the
Company's warranty liability include the number of units
sold and historical and anticipated rates of claims and costs
per claim. The Company periodically assesses the adequacy of its
warranty liability based on changes in these factors.
Changes in the Company's warranty reserve are as follows:
Six months ended
June 30,
2004
2005
(in thousands)
Liability, beginning of period
$
1,436
$
1,630
Expense for new warranties issued
121
225
Warranty claims
(59
)
(433
)
Liability, end of period
$
1,498
$
1,422
Note 8—Stock options
ARI has entered into an agreement with its Chief Executive
Officer of the Company. The number of shares that will be
granted are 24.388 shares at a price of $5,221.42 per
share. The option is
F-17
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
exercisable at the time of an initial public offering and
expires after such offering. As these options are contingent
upon an initial public offering or sale transaction, no dilutive
effect is reflected in earnings per share. Compensation expense
will be recognized when the contingency is met at the effective
date of the public offering. In the event that there is no
public offering and the company is sold, the officer is entitled
to 2% of the excess of the sale price over the book value of the
common equity.
Note 9—Related party transactions
As part of the 1994 recapitalization described in Note 1,
ACF has retained certain liabilities existing as of the
recapitalization date, including employee benefits, workers
compensation, litigation, environmental and others. If ACF were
unable to honor or meet these obligations, ARI would be
responsible for such liabilities. In the opinion of management,
ACF has the present ability to meet these obligations.
ARI and ACF entered into various administrative and operating
agreements as part of the recapitalization. Under an
administration agreement, ACF charges ARI for providing a
variety of services, primarily data processing. Charges for
these services represent a portion of actual direct and overhead
expenses incurred by ACF, with direct expenses being charged
based on relative time commitments of managerial personnel and
overhead based on relative numbers of employees. Management
believes that these allocation methods are reasonable for the
relevant costs.
Included in amounts due to affiliates was a payable to ACF of
$11.4 million and $1.6 million as of December 31,
2004 and June 30, 2005, respectively.
ARI's employees participate in ACF's noncontributory,
defined benefit pension plans and other postretirement health
care and life insurance plans. As part of ARI's
recapitalization, ACF retained the liabilities for unfunded
pension and other postretirement liabilities and workers
compensation liabilities as of October 1, 1994 for
employees who transferred from ACF to ARI at that date and for
environmental liabilities as of that date. Although ACF is
responsible for any costs associated with the liabilities at the
recapitalization date, related expenses which have accrued since
the recapitalization have been reflected in ARI's financial
statements in order to reflect the full cost of doing business.
Expenses that ACF pays relating to pre-recapitalization
liabilities are recorded as capital contributions and appear as
additional paid-in capital on ARI's balance sheet.
During 2004, ARI advanced $165.0 million to Mr. Icahn
under a note due in 2007 and bearing interest at prime plus
1.75%. On January 26, 2005, an assignment and assumption
agreement was executed whereby ARI transferred its interest in a
$165.0 million note receivable from Mr. Icahn dated
October 28, 2004 to ARL in exchange for 35,000 Units of
common ownership and in satisfaction of a $130.0 million
note issued to ARL, as discussed in Note 1.
The Company leases certain facilities and equipment from an
entity owned by an officer of the Company, certain affiliates of
ARI and third parties. Total rent expense on these leases were
approximately $3.2 million and $3.4 million for the
six month period ended June 30, 2004 and 2005,
respectively. Expenses to related parties included in the
amounts above were $.2 million for the six month period
ended June 30, 2004 and 2005, respectively.
Castings has a note receivable of $2,250 from Ohio Castings due
July, 2008. The note bears interest at 4%. Principle and
interest is payable quarterly beginning April 1, 2005 in
the amount of $165 per quarter.
F-18
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
ARI entered into a note payable with ACF Holding effective
January 1, 2005 in connection with the purchase of Castings
(Note 1). The note bears interest at prime (6.75% at
June 30, 2005) plus 1/2% and is due on demand.
Note 10—Commitments and contingencies
In connection with Trans World Airlines, Inc.'s
(TWA) 1992 bankruptcy proceedings under Chapter 11 of
the Bankruptcy Code and in response to a petition of another
member of the Icahn control group, the Pension Benefit Guarantee
Corporation (PBGC) terminated the TWA pension plan and
obligated Highcrest Investors Corp. (Highcrest) to make eight
annual payments of $30 million each commencing on
July 1, 2002 and totaling $240 million (termination
payments). As of December 31, 2004, Highcrest had made
termination payments totaling $135 million and still owed
$105 million on this obligation. The obligation to make
termination payments is non-recourse except to the common stock
of ACF Industries Holding Corp. (another member of the Icahn
control group). Management believes this obligation will have no
adverse effect on the future liquidity, results of operations,
or financial position of ARI.
ARI, as well as other manufacturing companies, is subject to
Federal, state and local laws and regulations concerning the
environment. ARI has and continues to be involved with state
agencies in the cleanup of a number of sites under these laws.
Many of these proceedings are at a preliminary stage, and it is
impossible to estimate, with any certainty, the total cost of
remediation, the timing and extent of remedial actions which may
be required by governmental authorities, and the amount of the
liability, if any, of ARI alone or in relation to that of any
other responsible parties. When it is possible to make a
reasonable estimate of the liability with respect to such a
matter, a provision will be made as appropriate. Actual cost to
be incurred in future periods may vary from these estimates.
Based on facts presently known, ARI does not believe that the
outcome of these proceedings will have a material adverse effect
on its future liquidity, results of operations or financial
position.
Certain claims, suits and complaints arising in the ordinary
course of business have been filed or are pending against ARI.
In the opinion of management, all such claims, suits, and
complaints arising in the ordinary course of business are
without merit or would not have a significant effect on the
future liquidity, results of operations or financial position of
ARI if disposed of unfavorably.
ARI entered two supply agreements on January 28, 2005 and
on June 8, 2005 with a supplier for two types of steel
plates. The agreement is for five years and is cancelable by
either party, with proper notice after two years. The agreement
commits ARI to buy 75% of its production needs from this
supplier at prices that fluctuate with market.
Note 12—New preferred stock
The New Preferred Stock is entitled to cumulative dividends at
the rate of 9.25% per annum, payable solely in cash on a
semi annual basis. Holders of the New Preferred Stock are
entitled to vote on matters submitted to the holders of shares
of common stock based on a percentage of the combined number of
shares of common stock and New Preferred Stock. Dividends
declared on the New Preferred Stock for the six months ended
June 30, 2005 were $9,090.
Note 13—Operating segment and sales/ credit
concentrations
The Company's operations consist of two reporting segments.
The Company's revenues consist of manufacturing operations,
and railcar services. Manufacturing revenues amounted to
$269,978 and
F-19
Table of Contents
American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
$140,434 for the six months ended June 30, 2004 and 2005,
respectively. Railcar service revenues amounted to $21,665 and
$18,560 for the six months ended June 30, 2004 and 2005,
respectively.
Revenues from an affiliate were 21% and 14% of total revenues
for the six months ended June 30, 2004 and 2005,
respectively. Revenues from two significant customers were 23%
and 19% of total revenues for the six months ended June 30,
2004. Revenues from two significant customers were 26%, 21%, of
total revenues for the six month period ended June 30, 2005.
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies in
the Consolidated Financial Statements. Performance is evaluated
based on revenue and operating profit. Intersegment sales and
transfers are accounted for as if sales or transfers were to
third parties.
The information in the following table is derived from the
segments' internal financial reports used for corporate
management purposes.
Manufacturing
Railcar
Corporate
Six months ended June 30, 2005
operations
services
& all other
Eliminations
Totals
Revenues from external customers
271,990
19,653
291,643
Intersegment revenues
490
1,865
(2,355
)
—
Cost of sales to external customers
255,354
17,101
2,906
—
275,361
Cost of intersegment sales
440
1,442
(1,882
)
—
Operating profit
16,686
2,975
(2,906
)
(473
)
16,282
Total assets
158,209
32,610
50,155
—
240,974
Capital expenditures
6,189
277
94
6,560
Depreciation & amortization
2,180
964
11
3,155
Manufacturing
Railcar
Corporate
Six months ended June 30, 2004
operations
services
& all other
Eliminations
Totals
Revenues from external customers
140,434
18,560
158,994
Intersegment revenues
1,989
1,502
(3,491
)
—
Cost of sales to external customers
135,801
17,023
2,219
—
155,043
Cost of intersegment sales
1,774
1,328
(3,102
)
—
Operating profit
4,848
1,711
(2,219
)
(389
)
3,951
Total assets
124,370
32,357
58,143
214,770
Capital expenditures
1,863
32
—
1,895
Depreciation & amortization
1,919
1,009
125
3,053
Note 14—Supplemental cash flow information
The Company received interest income (included in interest
income) of approximately $1.5 million and $1.0 million
for the six months ended June 30, 2004 and 2005,
respectively.
ARI paid interest expense of $1.1 million and
$1.9 million for the six months ended June 30, 2004
and 2005, respectively.
ARI paid taxes of $1.1 million and $1.8 million for
the six months ended June 30, 2004 and 2005, respectively.
Depreciation expense amounted to approximately $2.9 million
and $3.1 million for the six months ended June 30,
2004 and 2005, respectively.
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American Railcar Industries, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 15—Subsequent events
In April, 2005 construction began on a new paint shop at the
Paragould facility. The project is expected to be completed by
November 2005 at an estimated cost of $13.2 million.
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Table of Contents
Table of Contents
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other expenses of issuance and distribution.
The following are the estimated expenses to be incurred in
connection with the issuance and distribution of the securities
registered under this Registration Statement, other than
underwriting discounts and commissions. All amounts shown are
estimates except the Securities and Exchange Commission
registration fee, the National Association of Securities
Dealers, Inc. filing fee and the Nasdaq National Market listing
fee. The following expenses will be borne solely by the
registrant.
SEC Registration Fee
$
17,655
NASD Filing Fee
*
Nasdaq Listing Fee
*
Transfer Agent Fees and Expenses
*
Costs of Printing and Engraving
*
Legal Fees and Expenses
*
Accounting Fees and Expenses
*
Blue Sky Fees and Expenses
*
Miscellaneous
*
Total
$
*
*
To be provided by amendment.
Item 14.
Indemnification of directors and officers.
Sections 351.355(1) and (2) of The General and
Business Corporation Law of the State of Missouri, or the GBCLM,
provide that a corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, except that, in the case of an
action or suit by or in the right of the corporation, the
corporation may not indemnify such persons against judgments and
fines and no person shall be indemnified as to any claim, issue
or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his
duty to the corporation, unless and only to the extent that the
court in which the action or suit was brought determines upon
application that, despite the adjudication of liability and in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses that the
court deems proper.
Section 351.355(3) of the GBCLM provides that, except as
otherwise provided in the corporation's articles of
incorporation or bylaws, to the extent a director, officer,
employee or agent of the corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to in Section 351.355(1) and (2) of the
GBCLM, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses, including attorney's
fees, actually and reasonably incurred by him in connection with
the action, suit or proceeding.
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Part II
The Registrant's restated bylaws will generally provide
that the corporation shall indemnify each person (other than a
party plaintiff suing on his or her own behalf or in the right
of the corporation) who at any time is serving or has served as
a director or officer of the corporation against any claim,
liability or expense incurred as a result of such service (or as
a result of any other service on behalf of or at the request of
the corporation) to the maximum extent permitted by law. This
indemnification includes, but is not limited to, indemnification
of any such person (other than a party plaintiff suing on his or
her behalf or in the right of the corporation), who was or is a
party or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding (including, but
not limited to, an action by or in the right of the corporation)
by reason of such service against expenses (including, without
limitation, costs of investigation and attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
action, suit or proceeding.
The Registrant's restated bylaws will further generally
provide that the corporation may indemnify any person (other
than a party plaintiff suing on his or her own behalf or in the
right of the corporation) who at any time is serving or has
served as an employee or agent of the corporation against any
claim, liability or expense incurred as a result of such service
(or as a result of any other service on behalf of or at the
request of the corporation) to the maximum extent permitted by
law or to such lesser extent as the corporation, in its
discretion, may deem appropriate. Without limiting the
generality of the foregoing, the corporation may indemnify any
such person (other than a party plaintiff suing on his or her
own behalf or in the right of the corporation), who was or is a
party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding (including, but
not limited to, an action by or in the right of the corporation)
by reason of such service, against expenses (including, without
limitation, costs of investigation and attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
action, suit or proceeding.
The foregoing represents a summary of the general effect of the
indemnification provisions of the GBCLM, the restated articles
of incorporation, the restated bylaws and such agreements.
Additional information regarding indemnification of directors
and officers can be found in Section 351.355 of the GBCLM,
the restated articles of incorporation and the restated bylaws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
or persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Item 15.
Recent sales of unregistered securities.
The following information is furnished with regard to all
securities issued by us since July 15, 2002 that were not
registered under the Securities Act.
Prior to the effective date of this registration statement and
in connection with our stock split, we plan to effect a
[
l
]-for-one
split of our common stock. All references to numbers of shares
and prices of capital stock give effect to the stock split. All
of the securities issued in the following transactions were sold
in reliance upon the exemptions from registration set forth in
Sections 3(a)(9) and 4(2) of the Securities Act relating to
sales by an issuer not involving any public offering. There were
no underwriters employed in connection with any of the
transactions set forth in this Item 15.
(1)
In June 2003 Vegas Financial Corp., a company beneficially owned
    and controlled by Carl C. Icahn, our principal beneficial
    stockholder and the chairman of our board of directors,
II-2
Table of Contents
Part II
invested $10.0 million for 10,000 shares of our
    payment-in-kind preferred stock, which we refer to as our PIK
    preferred stock.
(2)
During the period July 15, 2002 through December 2003, we
    issued to Vegas Financial Corp., the sole owner of our PIK
    preferred stock, 8,531.65 shares of PIK preferred stock as
    a dividend on the PIK preferred stock.
(3)
In July 2004, Vegas Financial Corp. converted all of its PIK
    preferred stock, consisting of 95,517.04 shares of PIK
    preferred stock and representing all of the shares of PIK
    preferred stock then outstanding, into 96,171 shares of our
    new preferred stock. At that time Vegas Financial Corp. also
    invested $67.5 million for an additional 67,500 shares
    of our new preferred stock.
(4)
In July 2004, Hopper Investments LLC, a company beneficially
    owned and controlled by Mr. Icahn, invested
    $42.5 million for 195 shares of our common stock.
(5)
In July 2004, (a) we issued ACF Industries, Incorporated
    2,000 shares of our new preferred stock in exchange for ACF
    Industries, Incorporated transferring certain assets to us and
    (b) we issued 32,500 shares of our new preferred stock
    to Shippers Second LLC, a subsidiary of ACF Industries,
    Incorporated, in exchange for Shippers Second transferring
    certain assets to us. The assets so transferred to us were
    subsequently transferred to American Railcar Leasing LLC.
(6)
In July 2004, American Railcar Leasing LLC issued 40,000 B-units
    of American Railcar Leasing LLC to ACF Industries, Incorporated
    and its subsidiaries in consideration of the transfer of assets
    to American Railcar Leasing LLC. The B-units of American Railcar
    Leasing LLC were convertible into shares of our new preferred
    stock. On June 30, 2005, the terms of the B-Units were
    modified, among other things, to eliminate this conversion
    feature.
Item 16.
exhibits and financial statement schedules.
(a)
Exhibits
See Exhibit Index at the end of this registration statement.
(b)
Financial Statement Schedules
The following financial statement schedules of the registrant
are included in Part II of the Registration Statement:
[ARI/ GT to Supply]
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions, are
inapplicable or not material, or the information called for
thereby is otherwise included in the financial statements and
therefore has been omitted.
Item 17.
Undertakings.
(a) The undersigned registrant hereby undertakes to provide
to the Underwriters at the closing specified in the Underwriting
Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt
delivery to each purchaser.
(b) Insofar as indemnification by the registrant for
liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 14 of this
Registration Statement or otherwise, the registrant has been
advised
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Table of Contents
Part II
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the Securities Act, and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities
    Act, the information omitted from the form of prospectus filed
    as part of this Registration Statement in reliance upon
    Rule 430A and contained in the form of prospectus filed by
    the registrant pursuant to Rule 424(b)(1) or (4) or
    497(h) under the Securities Act shall be deemed to be part of
    this Registration Statement as of the time it was declared
    effective.
(2)
For the purpose of determining any liability under the
    Securities Act, each post-effective amendment that contains a
    form of prospectus shall be deemed to be a new registration
    statement relating to the securities offered therein, and the
    offering of such securities at the time shall be deemed to be
    the initial
bona fide
offering thereof.
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Table of Contents
Signatures
Pursuant to the requirements of the Securities Act of 1933 (as
amended, the "Securities Act"), American Railcar
Industries, Inc. has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Charles, State of Missouri, on
August [
l
], 2005.
American Railcar Industries, Inc.
By:
Name: James J. Unger
Title:   President and Chief Executive Officer
Title
Date
Signature
Name:
    Carl C. Icahn
Chairman of the Board and Director
August   , 2005
Name:
    James J. Unger
President and Chief Executive Officer (principal executive
    officer) and Director
August   , 2005
Name:
    William P. Benac
Chief Financial Officer (principal financial officer)
August   , 2005
Name:
    Michael E. Vaughn
Controller (principal accounting officer)
August   , 2005
Name:
    Vincent J. Intrieri
Director
August   , 2005
Name:
    Jon F. Weber
Director
August   , 2005
Name:
    Keith Meister
Director
August   , 2005
II-5
Table of Contents
Exhibit index
Exhibit
No.
Description of Exhibit
1
.1
Form of Underwriting Agreement by and among UBS Securities LLC,
    Bear, Stearns & Co. Inc. and American Railcar
    Industries, Inc.*
3
.1
Articles of Incorporation of American Railcar Industries, Inc.*
3
.2
Bylaws of American Railcar Industries, Inc.*
4
.1
Specimen Common Stock Certificate of American Railcar
    Industries, Inc.*
4
.2
Registration Rights Agreement*
5
.1
Opinion of Brown Rudnick Berlack Israels LLP*
10
.1
Asset Transfer Agreement dated as of October 1, 1994 by and
    among ACF Industries, Incorporated, American Railcar Industries,
    Inc. and Carl C. Icahn*
10
.2
License Agreement dated as of October 1, 1994 by and
    between ACF Industries, Incorporated and American Railcar
    Industries, Inc. as Licensee*
10
.3
License Agreement dated as of October 1, 1994 by and
    between American Railcar Industries, Inc. and ACF Industries,
    Incorporated as Licensee*
10
.4
Manufacturing Services Agreement dated as of October 1,
    1994 between ACF Industries, Incorporated and American Railcar
    Industries, Inc., as ratified and amended on June 30, 2005*
10
.5
Railcar Servicing Agreement dated as of April 1, 2005
    between American Railcar Industries, Inc. and American Railcar
    Leasing LLC*
10
.6
Business Consultation Agreement for Human Resources Consultation
    between ACF Industries LLC and American Railcar Industries, Inc.
    dated April 1, 2005*
10
.7
Business Consultation Agreement for Engineering Services between
    ACF Industries LLC and American Railcar Industries, Inc. dated
    April 1, 2005*
10
.8
Guaranty of the Master Lease Agreement dated September 30,
    1999 between The CIT Group, Inc./ Equipment Financing, Inc. and
    American Railcar Industries, Inc., as amended by ACF Industries,
    Incorporated for the benefit of American Railcar Industries,
    Inc.*
10
.9
Loan Agreement dated as of July 1, 1996 between The
    Industrial Development Authority of the City of Jackson,
    Missouri and American Railcar Industries, Inc. together with
    that certain Bond Guaranty Agreement dated as of July 1,
    1996 by and among American Railcar Industries, Inc., ACF
    Industries, Incorporated and Fleet National Bank, as Trustee and
    that certain Deed of Trust and Security Agreement dated as of
    July 1, 1996 from American Railcar Industries, Inc. to E.
    Sid Douglas, III, as Mortgage Trustee and The Industrial
    Development Authority of The City of Jackson, Missouri as Issuer
    and Secured Party*
10
.10
Loan Agreement dated as of June 1, 1995 between The
    Industrial Development Authority of The City of Kennett,
    Missouri and American Railcar Industries, Inc. together with
    that certain Bond Guaranty Agreement dated as of June 1,
    1995 by and among American Railcar Industries, Inc., ACF
    Industries, Incorporated and Fleet National Bank, as Trustee and
    that certain Deed of Trust and Security Agreement dated as of
    June 1, 1995 from American Railcar Industries, Inc. to E.
    Sid Douglas, III as Mortgage Trustee and The Industrial
    Development Authority of the City of Kennett, Missouri as Issuer
    and Secured Party*
10
.11
Lease Agreement dated as of April 1, 1995 between the City
    of Paragould, Arkansas as Lessor and American Railcar
    Industries, Inc. as Lessee together with that certain Bond
    Guaranty Agreement by and among American Railcar Industries,
    Inc. and ACF Industries, Incorporated and Fleet National Bank,
    as Trustee*
10
.12
Amended and Restated Services Agreement dated as of
    June 30, 2005 between American Railcar Leasing LLC and
    American Railcar Industries, Inc.*
II-6
Table of Contents
Exhibit index
Exhibit
No.
Description of Exhibit
10
.13
Indenture of Lease between St. Charles Properties and ACF
    Industries, Incorporated for the property located at Clark and
    Second Streets, St. Charles, MO, dated March 1, 2001
    together with the Assignment and Assumption of Lease dated
    April 1, 2005 among ACF Industries LLC (as successor to ACF
    Industries, Incorporated), American Railcar Industries, Inc. and
    St. Charles Properties*
10
.14
Promissory Note by American Railcar Industries, Inc. in favor of
    Arnos Corp. dated as of December 17, 2004*
10
.15
Exchange and Redemption Agreement dated as of June 30,
    2005 among American Railcar Industries, Inc., Hopper
    Investments, LLC, Highcrest Investors Corp., Buffalo Investors
    Corp. and American Railcar Leasing, LLC*
10
.16
Loan and Security Agreement dated as of March 10, 2005
    among American Railcar Industries, Inc. as Borrower, the lenders
    from time to time party thereto, and North Fork Business Capital
    Corporation, as Agent*
10
.17
Corbitt Equipment Acquisition Agreement*
10
.18
Multi-Year Purchase and Sale Agreement dated as of July 29,
    2005 between American Railcar Industries, Inc. and The CIT
    Group/ Equipment Financing, Inc.**†
10
.19
American Railcar Industries, Inc. 2005 Equity Incentive Plan*
10
.20
Unger Employment Agreement*
10
.21
Benac Employment Agreement*
21
.1
Subsidiaries of American Railcar Industries, Inc.**
23
.1
Consent of Grant Thornton LLP**
23
.2
Consent of KPMG LLP**
23
.3
Consent of Brown Rudnick Berlack Israels LLP (included in
    Exhibit 5.1)*
24
.1
Powers of Attorney**
*
To be filed by amendment.
**
Filed herewith.
†
Confidential treatment has been requested for the redacted
    portions of this agreement. A complete copy of this agreement,
    including the redacted portions, has been filed separately with
    the Securities and Exchange Commission.
II-7