SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the year ended December 31, 2004

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

For the transition period from to

Commission file number: 1-5666

UNION TANK CAR COMPANY

(Exact name of registrant as specified in its charter)

Delaware

36-3104688

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)


225 W. Washington Street, Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (312) 372-9500

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on

Which Registered

None

—

Securities registered pursuant to Section 12(g) of the Act:


Title of Each Class

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

There is no voting stock held by non-affiliates of the registrant. The registrant is not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. The registrant is a voluntary filer.

UNION TANK CAR COMPANY

FORM 10-K

Year Ended December 31, 2004

CONTENTS


Section		Page
Part I.
Item 1	Business	1
Item 2	Properties	8
Item 3	Legal Proceedings	9
Item 4	Submission of Matters to a Vote of Security Holders	9

Part II.
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6	Selected Financial Data	10
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8	Financial Statements and Supplementary Data	21
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	50
Item 9A	Controls and Procedures	50
Item 9B	Other Information	50

Part III.
Item 10	Directors and Executive Officers of the Registrant	51
Item 11	Executive Compensation	53
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
Item 13	Certain Relationships and Related Transactions	54
Item 14	Principal Accounting Fees and Services	54

Part IV.
Item 15	Exhibits, Financial Statement Schedules	55

Signatures		56

PART I

ITEM 1. BUSINESS

General

UNION TANK CAR COMPANY (with its wholly-owned and majority-owned subsidiaries herein collectively referred to, unless the context otherwise requires, as the “Company”) was organized under the laws of Delaware on September 23, 1980 and is the successor to a business which was originally incorporated in New Jersey in 1891. The Company is a wholly-owned subsidiary of Marmon Holdings, Inc. (“Holdings”). Substantially all of the stock of Holdings is owned, directly or indirectly, by trusts for the benefit of certain members of the Pritzker family. As used herein, “Pritzker family” refers to the lineal descendants of Nicholas J. Pritzker, deceased.

Railcar Leasing, Services and Sales

The principal activity of the Company is leasing of railway tank cars and other railcars to North American manufacturers and other shippers of chemical products, including liquid fertilizers, liquefied petroleum gas and other petroleum products, food products and bulk plastics. The Company owns and operates one of the largest fleets of privately-owned railway tank cars in the world.

As of December 31, 2004, the Company’s railcar fleet comprised 66,893 tank cars and 14,919 railway cars of other types. A total of 28,929 railcars were added to the lease fleet during the ten years ended December 31, 2004. These railcars accounted for approximately 38% of total railcar lease revenues during 2004. Most of the Company’s railcars were built by the Company or to its specifications and the rest were purchased from other sources.

Railway tank cars carrying chemicals and acids account for the greatest portion of total leasing revenues, followed in order by railway tank cars carrying refined petroleum products (such as fuel oils and asphalt), compressed gases (particularly liquefied petroleum gas and anhydrous ammonia), food products and liquid fertilizers.

A significant portion of revenues from the Company’s non-tank railcar fleet derives from leasing of hopper cars for carrying bulk plastics. Remaining non-tank railcar revenues are attributable to leasing of railcars serving the dry bulk chemical and coal industries.

The Company builds railway tank cars primarily for its leasing business, but also builds railway tank cars for sale to others. Generally, manufacturing follows receipt of a firm order for lease or sale of a railway tank car.

Substantially all of the Company’s railcars are leased directly to several hundred manufacturers and other shippers under leases covering from one to several thousand railcars and ranging from one to twenty years. The average term of leases entered into during 2004 for newly manufactured railcars was approximately six years. The average term of leases entered into during 2004 for used railway tank cars and other railcars was approximately four years. Under the terms of most leases, the Company agrees to provide a full range of services, including railcar repair and maintenance. The Company supplies relatively few railcars directly to railroads. The Company markets its railcars through regional sales offices located throughout the United States and Canada and through a sales agent in Mexico. To ensure optimum use of the railcar lease fleet, the Company maintains data processing systems that contain

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information about each railcar, including mechanical specifications, maintenance and repair data, and lease terms.

The Company maintains repair facilities at strategic points throughout North America. In addition to work performed by the Company, certain maintenance and repair work is performed for the Company’s account by railroads when railroad inspection determines the need for such work under the interchange rules of the Association of American Railroads (“AAR”).

The Company is not subject to regulation or supervision as a common carrier. The Company’s railcars are subject to construction, safety and maintenance regulations of the Department of Transportation, various other government agencies and the AAR. These regulations have required, and may in the future require, the Company to make significant modifications to certain of its railcars from time to time.

The Company’s facilities for manufacturing and assembling railway tank cars are located in East Chicago, Indiana and Sheldon, Texas. The Company also operates North America’s largest network of shops for repairing and servicing railcars, as well as a fleet of specially equipped trucks to perform repairs at customer plant sites. Principal shops are located in Valdosta, Georgia; Muscatine, Iowa; Ville Platte, Louisiana; Marion, Ohio; Altoona, Pennsylvania; Cleveland, Texas; Evanston, Wyoming; Edmonton, Alberta; Sarnia and Oakville, Ontario; Regina, Saskatchewan; and Celaya, Mexico. In 2004, the Company began construction of a railcar manufacturing facility in Alexandria, Louisiana.

Other Activities

The Company is engaged in several other activities, as described below.

Metals Distribution

Subsidiaries of the Company are leading distributors of carbon steel, stainless steel and aluminum tubular products; chrome and stainless bar; other carbon steel products, including beams and channels; and aircraft grade tubing and sheets, rolled form shapes and other raw materials.

These subsidiaries serve the agriculture, capital goods, machine tool, construction, transportation, refining, petrochemical, and fluid power industries, as well as aerospace companies, the military, construction trades, steel fabricators, and OEMs.

Intermodal Tank Container Leasing

Subsidiaries of the Company own, manage, lease and maintain intermodal tank containers. Intermodal tank containers are capable of transporting cargo by way of multiple modes of transportation including road, rail or ship. The container fleet consists of a wide range of equipment for the global transportation, distribution and storage of bulk liquids, chemicals and gases, which allows the Company to service the full range of customer requirements. These customers include the international chemical industry and logistics operators specializing in bulk liquid transportation. These subsidiaries also own a fleet of drop frame tank chassis.

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Sulphur Processing

Subsidiaries of the Company provide sulphur producers in Canada with various services, including processing of liquefied sulphur into crystalline slates and granules, and storage and shipping of the product. A subsidiary also designs, manufactures and sells sulphur processing plants worldwide. Other subsidiaries are engaged in manufacturing and distribution of sulphur bentonite products and micronutrients to the agricultural industry.

Other Railway Equipment and Services

A subsidiary of the Company manufactures mobile railcar moving vehicles for in-plant and yard switching. Another subsidiary of the Company manufactures wheels, axles and gear sets for light rail transit. Other subsidiaries provide contract switching services to companies with on-site rail yards.

Containment Vessel Head Manufacturing

A subsidiary of the Company manufactures and distributes metal containment vessel heads, primarily made of steel, to the metal containment vessel construction industry.

Gear Drive Manufacturing

Subsidiaries of the Company manufacture right-angle gear drives for industrial and agricultural applications and wind machines used to protect fruits and vegetables from frost.

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Segment Information

The principal activity of the Company’s primary industry segment is railcar leasing, services and sales. In addition, the Company has two secondary industry segments as shown in the table below. All other activities of the Company, as described previously, plus corporate headquarters items, are shown as All Other in the table:


	Railcar		Metals Distribution			Intermodal Tank Container Leasing		All Other		Consolidated Totals
	(Dollars in Millions)
2004
Services revenue	$	552.5	$	8.5		$	96.5	$	90.4	$	747.9
Net sales revenue		46.4		578.8			—		153.2		778.4
Interest income		—		—			—		13.0		13.0
Interest expense		60.8		0.1			13.8		0.1		74.8
Depreciation and amortization		125.0		3.9			25.9		7.4		162.2
Income before income taxes		127.4		38.5			15.6		42.9		224.4
Segment assets		1,948.1		194.3			347.7		787.7		3,277.8
Expenditures for long-lived assets		261.1		3.5			52.9		13.9		331.4

2003
Services revenue	$	544.9	$	8.1		$	86.5	$	78.9	$	718.4
Net sales revenue		44.6		387.2			—		127.8		559.6
Interest income		—		—			—		10.7		10.7
Interest expense		58.2		0.1			13.4		0.1		71.8
Depreciation and amortization		119.5		3.9			24.2		8.0		155.6
Income (loss) before income taxes*		103.9		(6.1	)		10.0		0.9		108.7
Segment assets		1,921.0		159.0			330.2		540.8		2,951.0
Expenditures for long-lived assets		201.9		6.5			31.0		6.8		246.2

2002
Services revenue	$	539.6	$	8.6		$	80.2	$	63.3	$	691.7
Net sales revenue		32.7		396.4			—		137.6		566.7
Interest income		—		—			—		13.9		13.9
Interest expense		65.0		0.1			13.1		0.1		78.3
Depreciation and amortization		119.0		4.4			22.1		7.6		153.1
Income before income taxes		111.7		11.1			6.4		23.9		153.1
Segment assets		1,853.4		181.8			318.9		582.5		2,936.6
Expenditures for long-lived assets		86.0		6.3			24.8		5.6		122.7

*	Metals Distribution includes goodwill impairment of $16.0 million and All Other includes write-down of investment in direct financing lease of $24.5 million.

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Geographic Information

The following table presents geographic information for the Company. Revenues are attributed to countries based on location of customers.


	Revenues		Long-lived Assets
	(Dollars in Millions)
2004
United States	$	1,258.9	$	1,970.6
Canada		166.5		173.3
Other countries		100.9		218.5

Consolidated total	$	1,526.3	$	2,362.4

2003
United States	$	1,027.0	$	1,844.0
Canada		162.0		165.5
Other countries		89.0		203.7

Consolidated total	$	1,278.0	$	2,213.2

2002
United States	$	1,015.5	$	1,775.7
Canada		146.8		171.0
Other countries		96.1		209.4

Consolidated total	$	1,258.4	$	2,156.1

Major Customers

Revenues from any one customer did not exceed 10% of consolidated or industry segment revenues during the last three years.

Raw Materials

The Company purchases raw materials from a variety of suppliers, with no one supplier being significant. In management’s opinion, the Company will have adequate availability of raw materials in the future.

Increased prices and reduced availability of steel and other metals have not had and are not expected to have a material impact on the Company’s activities. The Company’s exposure is mitigated via a combination of purchase agreements, the ability to increase prices and the discretionary nature of railcar construction.

Foreign Operations

The Company does not believe that there are other than normal business risks attendant to its foreign operations.

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Competition

All activities of the Company compete with similar activities by other companies.

Several competitors are in the business of leasing railcars in the United States and Canada. Principal competitors are GATX Corporation, General Electric Railcar Services Corporation, and ACF Industries, Incorporated. Principal competitive factors are price, service and product design. International cooperation within the Company’s engineering, manufacturing, repair and leasing activities has enhanced its ability to provide competitive products and services to its customers throughout North America.

In the metals distribution business, the Company has numerous competitors, both large and small. The Company is one of the largest participants in the distribution of its class of products. Principal competitive factors include price, availability of product and service.

The Company, the largest lessor of intermodal tank containers in the world, competes with numerous competitors in this industry. Competition is based on a number of factors, including technical expertise, availability of equipment, price, service and reputation.

Supply and Demand

Demand for railway tank cars and bulk plastic hopper cars is generally met with a combination of the industry’s existing fleet and new railcar additions. The industry’s generally high overall utilization of the railway tank car and bulk plastic covered hopper car fleets evidences an appropriate level and mix of equipment to meet existing railcar demands. New railcars are needed to satisfy growth, for specialized requirements, or the desire of certain customers for newer equipment. Since railcars are typically built to customer order, the supply of new railcars generally stays in reasonable balance with demand.

Major underlying factors affecting demand for new railcars are: (a) the rate of growth of the overall economy, (b) growth of certain industry segments, manufacturers, or shippers, particularly involving significant new or expanded production operations, and (c) replacement of aged, obsolete, or worn out railcars.

Demand for products of metals distribution business is primarily related to the level of manufacturing and construction activity in the United States.

Demand for intermodal tank containers is dependent on growth of the global economy and demand for chemicals and other liquid products. Global economic factors impacting demand include overall demand for chemicals, location of production of the products carried and stored in relation to location of demand for these products, import/export tariffs and other trade restrictions.

Manufacturing Backlog

The Company builds railway tank cars primarily for use in its leasing business and the number of railcars added in any one year is a small percentage of the Company’s lease fleet. Additionally, for railway tank cars built for sale to customers, the Company delivers against orders within a relatively brief period. Therefore, backlog is not material to the Company’s business.

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Employees

As of December 31, 2004, the Company had approximately 5,200 employees.

Environmental Matters

The Company believes that all of its facilities are in substantial compliance with applicable laws and regulations relating to environmental protection. Over the past several years, the Company has attempted to identify and remediate potential problem areas. In 2004, the Company spent approximately $4.5 million on remediation and related matters, compared with $3.0 million and $2.5 million in 2003 and 2002, respectively. The Company expects to spend approximately $2.3 million in 2005 on similar activities.

The Company has been designated as a Potentially Responsible Party (“PRP”) by the EPA at the Calumet Containers site in Hammond, Indiana and the Lake Calumet Cluster in Chicago, Illinois. Costs incurred to date have not been material, either individually or in the aggregate. Because of the nature of the Company’s involvement at these sites, management believes that future costs related to these sites will not be material, either individually or in the aggregate. The Company has not entered into any cost sharing arrangements with other PRP’s that make it reasonably possible the Company will incur material costs beyond its pro rata share. Further, management does not believe that any problems or uncertainties as to the financial liabilities of other PRP’s make it reasonably possible the Company will incur material costs beyond its pro rata share at these sites. The Company’s accruals for these sites are based on the amount it reasonably expects to pay with respect to the sites.

Management believes that amounts accrued for remedial activities and environmental liabilities (which in the aggregate are not material) are adequate.

Available Information

The Company files annual reports, quarterly reports, current reports and other information with the Securities and Exchange Commission. Copies of such materials can be read, copied and obtained from the Public Reference Room of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. You can access the Company’s filings electronically by visiting the Securities and Exchange Commission’s website at http://www.sec.gov. In addition, the Company will provide copies of such filings free of charge upon request to Union Tank Car Company, Attention: Secretary, 225 West Washington Street, Suite 1900, Chicago, Illinois 60606.

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ITEM 2. PROPERTIES

In management’s opinion, the Company’s properties are in good condition, substantially utilized and adequate to meet the Company’s current and reasonably anticipated future needs.

The Company estimates that its plant facilities were utilized during the year at an average of approximately 75% of productive capacity for railcar manufacturing, 75% for railcar servicing and repair, 80% for sulphur processing, 65% for railcar moving vehicles manufacturing, 60% for light rail transit product manufacturing, 75% for containment vessel head manufacturing, and 90% for gear drive manufacturing.

Railcars

The Company owns approximately 84% of its total lease fleet of 81,812 railcars, of which 66,893 are tank cars and 14,919 are other railway freight cars. Of the approximately 68,960 owned railcars, 58,130 are free of liens. Railcars which are not owned are leased from others under long-term net leases.

Railcar Manufacturing and Assembling Facilities

Facilities for the manufacturing and assembling of railcars are located at East Chicago, Indiana and Sheldon, Texas, together occupying about 172 acres. In 2004, the Company began construction of a railcar manufacturing facility in Alexandria, Louisiana, which will occupy 229 acres.

Railcar Servicing and Repair Shops

The Company operates a network of shops for repairing and servicing railcars. Principal shops owned by the Company are located at Valdosta, Georgia; Muscatine, Iowa; Ville Platte, Louisiana; Marion, Ohio; Altoona, Pennsylvania; Cleveland, Texas; Evanston, Wyoming; Edmonton, Alberta; Sarnia and Oakville, Ontario; Regina, Saskatchewan; and Celaya, Mexico. Several other repair shops and small repair points are strategically located throughout the United States and Canada.

Metals Distribution

Subsidiaries of the Company maintain numerous distribution warehouses and business offices, which are located throughout North America. There are 34 warehouse and distribution centers from which products are distributed to customers.

Intermodal Tank Container Leasing

Subsidiaries of the Company maintain a fleet of approximately 29,150 owned/managed intermodal tank containers consisting of a wide range of equipment types, specifications and capacities from 7,500 to 35,000 liters. These subsidiaries also own a fleet of 1,493 drop frame tank chassis. Customer service is provided through offices, agents and depots located throughout the world. The Company owns approximately 75% of its intermodal tank container and drop frame tank chassis fleet, of which approximately 42% are free of liens.

Sulphur Processing

A subsidiary of the Company owns facilities in Canada which process liquefied sulphur into crystalline slates and granules and handle the formed product. The Company also owns facilities in North America for the manufacture and distribution of sulphur bentonite products and micronutrients.

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Other Railway Equipment Facilities

A subsidiary of the Company owns a mobile railcar moving vehicle manufacturing facility in LaGrange, Georgia. Another subsidiary of the Company owns gear, wheels and axles manufacturing facilities in Johnstown and Blairsville, Pennsylvania and Twinsburg, Ohio.

Containment Vessel Head Manufacturing Facilities

A subsidiary of the Company owns a metal containment vessel head manufacturing facility in Sheldon, Texas.

Gear Drive Manufacturing Facilities

Subsidiaries of the Company own a gear drive manufacturing facility in Amarillo, Texas and a wind machine manufacturing facility in Exeter, California.

Other Properties

The Company and its subsidiaries maintain numerous other manufacturing facilities, sales and business offices, and warehouses, most of which are leased, throughout North America and Europe.

ITEM 3. LEGAL PROCEEDINGS

The Company and its subsidiaries have been named as defendants in a number of lawsuits and certain claims are pending. The Company has accrued what it reasonably expects to pay to resolve such claims, including legal fees, and, in the opinion of management, the ultimate resolution of these matters will not have a material effect on the Company’s consolidated financial position, results of operations or liquidity. See “Business - Environmental Matters”.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable.

ITEM 6. SELECTED FINANCIAL DATA


	For the Year Ended December 31,
	2004			2003			2002			2001			2000
	(Dollars in Thousands)
Revenues
Services	$	747,915		$	718,436		$	691,707		$	708,006		$	673,818
Net sales		778,371			559,591			566,703			621,786			765,183
Net income		142,646			69,754			96,749			116,651			145,967
Ratio of earnings to fixed charges		3.25	x		2.13	x		2.48	x		2.65	x		3.26	x
At year end:
Total assets	$	3,277,817		$	2,950,966		$	2,936,583		$	3,031,507		$	2,943,775
Long-term obligations		1,133,104			867,238			961,199			1,045,828			1,035,408

Significant items in net income during 2003 included goodwill impairment of ($10,865) after taxes, write-down of investment in direct financing lease of ($15,714) after taxes, adjustment to prior years’ taxes of $19,000 and deferred tax liability adjustment on foreign income previously considered permanently reinvested of ($5,500).

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements contained in this annual report on Form 10-K may include certain forward-looking information statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as “expects”, “anticipates”, “intends”, “plans”, “will”, “believes”, “seeks”, “estimates”, and “should” and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and

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assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, unanticipated changes in the markets served by the Company (such as the railcar leasing, service and sales, intermodal tank container leasing and metal products distribution industries), acts of terrorism, interest rate trends, cost of capital requirements, competition from other companies, changes in operating expenses, governmental and public policy changes, changes in applicable laws, rules and regulations (including changes in tax laws).

Executive Overview

The core business activity of the Company is full service leasing of railway tank cars in North America. Key characteristics of the Company’s core business are: (a) consistent and predictable cash flows, (b) a strong and creditworthy customer base, (c) multi-year leases that tend to bridge the Company over cyclical downturns, (d) long-lived revenue earning assets, and (e) diversification across railway tank car types, customers within the industrial sectors served, and geographically across North America.

The major challenges in the business are: (a) competition from several strong and experienced competitors, and (b) continuing to provide the level of consistent, high quality product and value-added service necessary to distinguish the Company’s products and services from the competition.

The key indicators of performance are revenue growth, lease fleet growth, lease fleet utilization, and profitability.

The most significant opportunities in the business are: (a) general growth in the economy, which relies on the bulk movement of chemicals, petrochemicals, foods and other liquid and gas products, and (b) displacing railway tank cars owned or net leased by shippers with equipment provided through full service leases.

Significant external factors that contribute to the long term financial performance of full service railway tank car lessors are inflation and interest rates. New railcar lease rental rates, which are largely determined by equipment cost, operating costs and interest rates, influence lease rental rates (upon renewal or leasing to a different customer) on the existing lease fleet.

Risk factors in the business of full service leasing of railway tank cars include, but are not limited to, general economic cycles, competitive pricing, regulatory change, asset obsolescence, legal matters, environmental matters, and changes in federal tax policy.

Increased prices and reduced availability of steel and other metals are not expected to have a material impact on the Company’s activities. The Company’s exposure is mitigated via a combination of purchase agreements, the ability to increase prices, and the discretionary nature of railcar construction.

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2004 versus 2003

Results of Operations

Performance of the railcar leasing business improved in all major markets. Demand for existing railcar equipment improved, resulting in higher fleet utilization and improved lease rental rates. Demand for leased intermodal tank containers increased, resulting in fleet growth and higher utilization.

Revenues and gross profit from services were as follows:


	2004		2003		Increase (Decrease)
	(Dollars in Thousands)
Services revenue	$	747,915	$	718,436	$	29,479
Cost of services		465,219		467,157		(1,938	)

Gross profit from services	$	282,696	$	251,279	$	31,417

Services revenue in 2004 increased from 2003 primarily due to a $10.1 million increase in intermodal tank container leasing revenue (improved utilization rates and equipment additions), a $9.7 million increase in revenues related to sulphur processing (higher volume), and a $7.6 million increase in railcar leasing and services revenue (improved utilization rates and equipment additions).

Gross profit on services revenue in 2004 increased from 2003 primarily due to a $24.1 million improvement in railcar leasing (improved utilization rates, higher gains on disposals, and equipment additions), a $5.4 million increase in intermodal tank container leasing business (improved utilization rates and equipment additions) and a $2.5 million increase related to sulphur processing (higher volume).

Average fleet utilization of the Company’s railcar fleet was 96% for 2004, compared with 93% for 2003. Utilization rates of the Company’s existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, petroleum products, food products, and bulk plastics, and suitability of the Company’s fleet to meet such demand. The potential impact of short-term fluctuations in demand is tempered by the longer-term nature of the leases. Over the past five years, the average term of leases entered into for newly manufactured railcars was approximately seven years, and the average term of leases entered into for used railcars was approximately four years. The average term of leases entered into during 2004 for newly manufactured railcars was approximately six years, and the average term of leases entered into for used railcars was approximately four years.

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Sales revenue increased primarily due to increased demand for products of the metals distribution business.

Revenues and gross profit from sales were as follows:


	2004		2003		Increase (Decrease)
	(Dollars in Thousands)
Net sales	$	778,371	$	559,591	$	218,780
Cost of sales		642,813		467,883		174,930

Gross profit from sales	$	135,558	$	91,708	$	43,850

Sales revenue for 2004 increased from 2003 primarily due to $191.6 million higher sales of metals distribution products (higher volume and prices), $8.6 million higher sales of gear drives (higher demand), $7.1 million higher sales of sulphur processing equipment (timing of project completion) and a $5.8 million increase in sales of metal containment vessel heads (higher volume and prices).

Gross profit on sales in 2004 improved from 2003, primarily due to a $30.2 million increase for metals distribution products (higher volume and prices), a $3.7 million increase for metal containment vessel heads (higher volume and prices), a $3.6 million improvement for the gear drive business (higher volume), a $2.7 million increase for sulphur processing equipment (timing of project completion), and a $1.7 million improvement from sales of railcars (higher prices and lower unit costs from increased production volume partially offset by higher material costs).

Interest income in 2004 was $2.3 million higher than in 2003 primarily due to higher interest rates and higher average balances including available-for-sale securities.

Other income in 2004 was $9.7 million higher than in 2003 primarily due to $6.2 million income from the receipt and disposal of certain financial assets related to settlement of a bankruptcy claim against Air Canada. See Note 5 of the Notes to Consolidated Financial Statements.

General & Administrative expense for 2004 increased by $9.2 million over 2003 primarily due to increased business activity in the railcar and metals distribution businesses.

Interest expense in 2004 was $3.0 million higher than in 2003 due to the interest expense related to new financing in 2004 more than offsetting lower interest expense from principal repayments of debt. Interest rates and borrowed debt are discussed in Note 7 of the Notes to Consolidated Financial Statements.

Provision for income taxes was $81.8 million in 2004 with an effective tax rate of 36.4%, compared with $39.0 million in 2003 with an effective tax rate of 35.8%. Income taxes are discussed in Note 8 of the Notes to Consolidated Financial Statements.

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Financial Condition and Liquidity

Operating activities provided $283.0 million of cash in 2004, compared with $311.2 million in 2003. The net cash provided by operating activities was lower in 2004 primarily due to higher inventories (increased production and distribution activity) and higher accounts receivable (increased revenue), partially offset by the increase in net income and higher accounts payable (increased production and distribution activity).

The net cash provided by operating activities, along with proceeds from the issuance of borrowed debt, collection of funds previously advanced to parent, and redemption of short-term investments, were used to finance lease fleet additions, invest in available-for-sale securities, pay dividends to the Company’s stockholder, and service borrowed debt obligations.

It is the Company’s policy to pay to its stockholder a quarterly dividend equal to 70% of net income. To the extent that the Company generates cash in excess of its operating needs, such funds, in excess of the amounts paid as dividends, are advanced to its parent and bear interest at commercial rates. Conversely, when the Company requires additional funds to support its operations, prior advances are repaid by its parent. No restrictions exist regarding the amount of dividends which may be paid or advances which may be made by the Company to its parent.

In 2004, the Company invested $245.5 million in available-for-sale securities. The securities are investment-grade debt obligations with a combined weighted-average maturity under two years. The investments are available for the Company’s use to fund repayment of principal obligations, finance lease fleet additions (including the exercise of leveraged lease purchase options), or fund other operating needs.

In 2004, the Company spent $331.4 million for construction and purchase of lease fleet and other fixed assets, compared with $246.2 million in 2003. The increase in capital expenditures is primarily due to increased demand from leasing customers for new railway tank cars and intermodal tank containers. Of the capital expenditures for construction and purchase of lease fleet and other fixed assets over the past five years, approximately 74% have been for railcars. Since capital expenditures for railcars are generally incurred subsequent to receipt of firm customer lease orders, such expenditures are discretionary to the Company based on its desire to enter into those lease orders. Capital expenditures for intermodal tank containers are likewise discretionary in the intermodal tank container business.

Proceeds from disposals of lease fleet and other fixed assets were $31.1 million in 2004 compared with $32.4 million in 2003. The lower proceeds in 2004 were due to fewer railcars sold partially offset by higher prices obtained for railcars sold for scrap.

Net cash used in investing activities was $367.3 million in 2004 compared with $192.8 million in 2003.

In June 2004, the Company issued $300.0 million of unsecured senior notes. During 2004, the Company’s financing activities included the use of $78.4 million for principal repayments on borrowed debt compared with $62.5 million in 2003. Cash dividends were $99.0 million in 2004 compared with $48.0 million in 2003. Net cash provided by financing activities in 2004 was $122.6 million compared with $110.4 million used in 2003.

- 14 -

On September 30, 2004, the Company exercised options to purchase approximately 1,824 railcars that the Company has leased since 1994 as part of certain sale-leaseback transactions. See Note 6 to the Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 1994. The aggregate purchase price payable by the Company for these railcars is approximately $76.0 million, of which approximately $42.4 million was paid on January 2, 2005 and the remaining approximately $33.6 million is payable in four installments ending in December 2005. The Company’s purchase of these railcars was consummated on January 2, 2005, at which time the purchased railcars ceased to be subject to the operating leases.

Management expects that future cash to be provided by operating activities, long-term financings, and collection of funds previously advanced to parent will be adequate to provide for continued expansion of the Company’s business and enable it to meet its debt service obligations. The Company may undertake long-term financing in 2005.

Approximately 16% of Company-owned railcars are pledged to secure equipment obligations and secured notes. The remaining railcars are free of liens.

The following table presents the scheduled cash inflows and outflows for the railcar leasing business over the next five years based on leases and railcar-related indebtedness outstanding as of December 31, 2004:


	2005		2006		2007			2008			2009
	(Dollars in Millions)
Railcar Leasing Cash Inflows
Minimum future lease rentals	$	417.3	$	319.2	$	239.1		$	165.8		$	102.4

Railcar Leasing Cash Outflows
Minimum future lease payments		74.5		81.8		70.4			68.9			65.5
Principal and interest amount of obligations		89.4		142.1		257.1			136.0			223.9

Excess (Deficit) of inflows over outflows	$	253.4	$	95.3	$	(88.4	)	$	(39.1	)	$	(187.0	)

Minimum future lease rentals above relate to railcar leases in effect at December 31, 2004. Based upon its historical experience, the Company expects that the railcars (other than those which are retired in the ordinary course of business) will be re-leased at the expiration of such leases. The rentals under such future leases cannot be ascertained and are not reflected above.

In addition, maturities of debt obligations and interest payments for the intermodal tank container leasing business over the next five years are as follows (dollars in millions):


2005	2006	2007	2008	2009
$22.6	$23.7	$22.6	$22.5	$21.4

The Company has not experienced any significant impact from general inflation on its financial position or results of operations over the last several years.

The Company’s foreign subsidiaries periodically enter into foreign currency forward contracts to hedge against currency exchange rate exposures. There were no foreign currency forward contracts outstanding at December 31, 2004 and 2003.

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Contractual Obligations

At December 31, 2004, contractual obligations of the Company are as follows:


	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
	(Dollars in Millions)
Long-term Debt Obligations	$	1,591.4	$	112.0	$	445.5	$	403.9	$	630.0
Operating Leases		659.6		78.1		156.7		137.1		287.7
Purchase Obligations		94.7		94.7		—		—		—

Total contractual obligations	$	2,345.7	$	284.8	$	602.2	$	541.0	$	917.7

Off-Balance Sheet Arrangements

The Company currently has no “off-balance sheet arrangements” that would be required to be disclosed pursuant to Item 303 of Regulation S-K under the Securities Exchange Act of 1934, as amended.

Critical Accounting Policies

Management’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Preparation of these financial statements requires the Company to make estimates and judgements that affect reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis, the Company evaluates its estimates and judgements based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The Company annually reviews its financial reporting and disclosure practices and accounting policies to ensure that its financial reporting and disclosures provide accurate and transparent information relative to the current economic and business environment. The Company believes that, of its significant accounting policies (see “Summary of Accounting Principles and Practices” more fully described in Note 2 in Item 8), the following policies involve a higher degree of judgement and/or complexity.

Property and Equipment

Property and equipment are depreciated or amortized over their useful lives based on management’s estimates of the period over which the assets will generate revenue. The Company periodically reviews these lives relative to physical factors, economic factors and industry trends.

Asset Impairment

In assessing recoverability of the Company’s long-lived assets, the Company considers changes in economic conditions and makes assumptions regarding estimated future cash flows and other factors. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges.

- 16 -

Income Taxes

The Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. The Company records accruals for the estimated outcomes of these audits, and the accruals may change in the future due to new developments in each matter.

New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 151, “Inventory Costs – An Amendment of Accounting Research Bulletin No. 43, Chapter 4”. SFAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be expensed as incurred and not included as overhead. SFAS 151 also requires that the allocation of fixed production overhead to conversion costs be based on normal capacity of the production facilities. SFAS 151 must be applied prospectively beginning January 1, 2006. The adoption of SFAS 151 is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities”. This Interpretion requires that an enterprise’s consolidated financial statements include subsidiaries in which the enterprise has a controlling financial interest. At December 31, 2004, the Company did not have any unconsolidated variable interest entities.

2003 versus 2002

Results of Operations

Performance of the railcar leasing business was adversely affected by the general economic slowdown in all major markets. Demand for existing equipment remained low causing downward pressure on both lease rental rates and fleet utilization.

Revenues and gross profit from services were as follows:


	2003		2002		Increase (Decrease)
	(Dollars in Thousands)
Services revenue	$	718,436	$	691,707	$	26,729
Cost of services		467,157		440,276		26,881

Gross profit from services	$	251,279	$	251,431	$	(152	)

Services revenue in 2003 increased over 2002 primarily due to a $13.7 million in increased revenues related to sulphur processing (higher rates and volume), a $6.3 million increase in intermodal tank container leasing (higher utilization and equipment additions), and a $5.3 million increase in railcar leasing and service revenues (favorable currency exchange rates and equipment additions offsetting lower rental rates).

- 17 -

Gross profit on services revenue of $251.3 million in 2003 decreased slightly from 2002. Railcar leasing was $6.1 million lower primarily due to lower rental rates and higher maintenance expense. Intermodal tank container leasing was $4.6 million higher primarily due to new fleet additions and higher utilization. Sulphur processing was $1.6 million higher due to higher rates and volume.

Average fleet utilization of the Company’s railcar fleet was 93% for 2003, the same as for 2002. Utilization rates of the Company’s existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, petroleum products, food products, and bulk plastics, and suitability of the Company’s fleet to meet such demand. The potential impact of short-term fluctuations in demand is tempered by the longer-term nature of the leases. Over the past five years, the average term of leases entered into for newly manufactured railcars was approximately seven years, and the average term of leases entered into for used railcars was approximately four years. The average term of leases entered into during 2003 for newly manufactured railcars was approximately eight years, and the average term of leases entered into for used railcars was approximately three years.

Sales revenue decreased as demand for products of the metals distribution business continued to be adversely impacted by the general economic slowdown in the U.S. Demand for new railcars in 2003 improved over 2002, resulting in higher production and capacity utilization.

Revenues and gross profit from sales were as follows:


	2003		2002		Increase (Decrease)
	(Dollars in Thousands)
Net sales	$	559,591	$	566,703	$	(7,112	)
Cost of sales		467,883		468,281		(398	)

Gross profit from sales	$	91,708	$	98,422	$	(6,714	)

Sales revenue for 2003 decreased from 2002 primarily due to $9.3 million lower sales of metals distribution products (reduced demand), $7.0 million lower sales of sulphur processing equipment (timing of project completion), partially offset by $11.9 million higher sales of railcars (higher volume).

Gross profit on sales in 2003 decreased from 2002, primarily due to a $5.4 million decrease for metals distribution products (reduced demand) partially offset by $2.0 million improved gross profit on sales of railcars (higher volume).

Interest income in 2003 was $3.1 million lower than in 2002 primarily due to lower interest rates and lower average balances.

The write-down of investment in direct financing lease is related to the Boeing 767-233 aircraft discussed in Note 5 of the Notes to Consolidated Financial Statements.

Goodwill impairment expense of $16.0 million is from the write-off of goodwill in the metals distribution business.

- 18 -

Interest expense in 2003 was $6.4 million lower than in 2002 due to principal repayments of debt with no significant new financing in 2003. Interest rates and borrowed debt are discussed in Note 7 of the Notes to Consolidated Financial Statements.

Provision for income taxes was $39.0 million in 2003 with an effective tax rate of 35.8%, compared with $56.3 million in 2002 with an effective tax rate of 36.8%. Income taxes are discussed in Note 8 of the Notes to Consolidated Financial Statements.

Financial Condition and Liquidity

Operating activities provided $311.2 million of cash in 2003, compared with $282.7 million in 2002. These funds, along with proceeds from redemption of short-term investments, were used to finance lease fleet additions, service borrowed debt obligations, and pay dividends to the Company’s stockholder. It is the Company’s policy to pay to its stockholder a quarterly dividend equal to 70% of net income. To the extent that the Company generates cash in excess of its operating needs, such funds, in excess of the amounts paid as dividends, are advanced to its parent and bear interest at commercial rates. Conversely, when the Company requires additional funds to support its operations, prior advances are repaid by its parent. No restrictions exist regarding the amount of dividends which may be paid or advances which may be made by the Company to its parent.

Net cash used in investing activities was $192.8 million in 2003 compared with $48.9 million in 2002.

In 2003, the Company spent $246.2 million for construction and purchase of lease fleet and other fixed assets, compared with $122.7 million in 2002. The increase was primarily higher investment in additions to the railcar lease fleet. Of the capital expenditures for construction and purchase of lease fleet and other fixed assets over the past five years, approximately 78% have been for railcars. Since capital expenditures for railcars are generally incurred subsequent to receipt of firm customer lease orders, such expenditures are discretionary to the Company based on its desire to enter into those lease orders. Capital expenditures for intermodal tank containers are likewise discretionary in the intermodal tank container business.

Proceeds from disposals of lease fleet and other fixed assets was $32.4 million in 2003 compared with $13.9 million in 2002. The higher proceeds in 2003 was due to a higher number of railcars sold as well as higher prices obtained for railcars sold for scrap.

Net cash used in financing activities was $110.4 million in 2003 compared with $204.9 million used in 2002.

In 2003, the Company used $62.5 million for principal repayments on borrowed debt compared with $141.3 million in 2002. Of the 2003 principal repayments, $17.6 million were prepayments compared with $52.0 million of prepayments in 2002. Cash dividends were $48.0 million in 2003 compared with $67.0 million in 2002.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company’s financial instruments is the potential loss in fair value arising from adverse changes in interest rates. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes.

The following table provides information about the Company’s debt obligations with fair value sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity dates and estimated fair value of the Company’s debt obligations.


	2005			2006			2007			2008			2009			Thereafter			Total			Fair Value 12-31-2004
	(Dollars in Millions)
Fixed rate debt	$	34.1		$	91.5		$	216.0		$	107.4		$	205.0		$	513.2		$	1,167.2		$	1,276.5
Average interest rate		7.46	%		7.09	%		7.04	%		6.75	%		7.18	%		6.29	%		6.73	%

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements


		Page
Report of Independent Registered Public Accounting Firm		22

Financial Statements

Consolidated statement of income for each of the three years in the period ended December 31, 2004		23

Consolidated balance sheet - December 31, 2004 and 2003		24

Consolidated statement of stockholder’s equity for each of the three years in the period ended December 31, 2004		25

Consolidated statement of cash flows for each of the three years in the period ended December 31, 2004		26

Notes to consolidated financial statements		27

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Union Tank Car Company

We have audited the accompanying consolidated balance sheet of Union Tank Car Company and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the index at Item 15(a)2. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Union Tank Car Company and subsidiaries at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

ERNST & YOUNG LLP

Chicago, Illinois

March 9, 2005

- 22 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Dollars in Thousands)


	For the Year Ended December 31,
	2004		2003			2002
Revenues
Services (leasing and other)	$	747,915	$	718,436		$	691,707
Net sales		778,371		559,591			566,703

		1,526,286		1,278,027			1,258,410

Interest income		13,029		10,714			13,858
Other income (expense), net		9,489		(259	)		2,094

		1,548,804		1,288,482			1,274,362

Costs and expenses
Cost of services		465,219		467,157			440,276
Cost of sales		642,813		467,883			468,281
Write-down of investment in direct financing lease		—		24,506			—
Goodwill impairment		—		16,044			—
General and administrative		141,546		132,320			134,463
Interest expense		74,796		71,840			78,289

		1,324,374		1,179,750			1,121,309

Income before income taxes		224,430		108,732			153,053

Provision for income taxes		81,784		38,978			56,304

Net income	$	142,646	$	69,754		$	96,749

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Dollars in Thousands)


	December 31,
	2004			2003
Assets

Cash and cash equivalents	$	98,336		$	56,197
Short-term investments		45,429			62,606
Available-for-sale securities		244,896			—
Accounts receivable, primarily due within one year, less allowance for doubtful accounts of $10,938 in 2004 and $11,647 in 2003		172,689			133,036
Accounts and notes receivable, affiliates		43,626			43,546
Inventories, net of LIFO reserves of $74,379 in 2004 and $35,056 in 2003		146,944			121,899
Prepaid expenses and deferred charges		13,292			9,711
Advances to parent company, principally at LIBOR plus 1%		150,246			310,792
Railcar lease fleet, net		1,804,350			1,676,293
Intermodal tank container lease fleet, net		323,601			299,897
Other fixed assets, net		198,986			192,818
Investment in direct financing lease (see Note 5)		—			2,082
Other assets		35,422			42,089

Total assets	$	3,277,817		$	2,950,966

Liabilities and Stockholder’s Equity
Accounts payable	$	74,606		$	60,336
Accrued rent		94,508			95,164
Accrued liabilities		170,972			169,648
Borrowed debt		1,167,251			945,687

		1,507,337			1,270,835
Deferred income taxes and investment tax credits		596,126			554,819
Minority interest		97,355			91,558

Stockholder’s equity
Common stock, no par value; 1,000 shares authorized and issued		106,689			106,689
Additional capital		158,372			158,372
Retained earnings		812,339			768,693
Unrealized losses on available-for-sale securities, net		(401	)		—

Total stockholder’s equity		1,076,999			1,033,754

Total liabilities and stockholder’s equity	$	3,277,817		$	2,950,966

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY

Years Ended December 31, 2004, 2003 and 2002

(Dollars in Thousands)


	Common Stock		Additional Capital		Retained Earnings			Other Comprehensive Loss			Total
Balance at December 31, 2001	$	106,689	$	158,372	$	717,190		$	—		$	982,251
Net income		—		—		96,749			—			96,749
Cash dividends		—		—		(67,000	)		—			(67,000	)

Balance at December 31, 2002		106,689		158,372		746,939			—			1,012,000

Net income		—		—		69,754			—			69,754
Cash dividends		—		—		(48,000	)		—			(48,000	)

Balance at December 31, 2003		106,689		158,372		768,693			—			1,033,754

Net income		—		—		142,646			—			142,646
Unrealized losses on available-for-sale securities, net		—		—		—			(401	)		(401	)

Comprehensive income												142,245
Cash dividends		—		—		(99,000	)		—			(99,000	)

Balance at December 31, 2004	$	106,689	$	158,372	$	812,339		$	(401	)	$	1,076,999

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in Thousands)


	For the Year Ended December 31,
	2004			2003			2002
Cash flows from operating activities:
Net income	$	142,646		$	69,754		$	96,749
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		162,190			155,649			153,102
Deferred taxes		37,072			25,169			42,448
Write-down of investment in direct financing lease		—			24,506			—
Goodwill impairment		—			16,044			—
Gain on disposition of lease fleet and other fixed assets		(10,785	)		(5,988	)		(1,288	)
Loss on disposition of business		—			1,494			—
Other non-cash income and expenses		9,138			8,309			7,232
Changes in operating assets and liabilities		(57,299	)		16,269			(15,519	)

Net cash provided by operating activities		282,962			311,206			282,724

Cash flows from investing activities:
Construction and purchase of lease fleet and other fixed assets		(331,385	)		(246,217	)		(122,726	)
Decrease in short-term investments		15,614			11,706			33,758
Increase in available-for-sale securities		(245,510	)		—			—
Decrease in advance to parent		148,209			10,455			36,278
Decrease (Increase) in other assets and investments		8,256			(1,679	)		(1,014	)
Proceeds from disposals of lease fleet and other fixed assets		31,125			32,350			13,925
Proceeds from disposition of business		6,344			625			—
Purchases of businesses, net of cash acquired		—			—			(9,074	)

Net cash used in investing activities		(367,347	)		(192,760	)		(48,853	)

Cash flows from financing activities:
Proceeds from issuance of borrowed debt		300,000			145			3,412
Principal payments of borrowed debt		(78,436	)		(62,549	)		(141,313	)
Cash dividends		(99,000	)		(48,000	)		(67,000	)

Net cash provided by (used in) financing activities		122,564			(110,404	)		(204,901	)

Effect of exchange rates on cash and cash equivalents		3,960			7,933			121

Net increase in cash and cash equivalents		42,139			15,975			29,091

Cash and cash equivalents at beginning of year		56,197			40,222			11,131

Cash and cash equivalents at end of year	$	98,336		$	56,197		$	40,222

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands)

1. Ownership

UNION TANK CAR COMPANY (with its wholly-owned and majority-owned subsidiaries herein collectively referred to, unless the context otherwise requires, as the “Company”) is a wholly-owned subsidiary of Marmon Holdings, Inc. (“Holdings”). Substantially all of the stock of Holdings is owned, directly or indirectly, by trusts for the benefit of certain members of the Pritzker family. As used herein, “Pritzker family” refers to the lineal descendants of Nicholas J. Pritzker, deceased.

2. Summary of Accounting Principles and Practices

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and all subsidiaries. All significant intercompany accounts and transactions have been eliminated.

At the close of business on June 30, 2002, the Company distributed the stock of Atlas Bolt & Screw Company, Atlas Bolt & Screw Sp.zo.o and Pan American Screw, Inc. to Marmon Industrial LLC (MIC), MIC distributed the stock of the Company to Holdings and Holdings contributed the stock of Amarillo Gear Company, Penn Machine Company and WCTU Railway Company to the Company. As a result of such realignment, (i) Holdings owns all of the Company’s capital stock, (ii) the Company ceased to own any capital stock of Atlas Bolt & Screw Company, Atlas Bolt & Screw Sp.zo.o or Pan American Screw, Inc. and (iii) the Company owns all of the capital stock of Amarillo Gear Company, Penn Machine Company and WCTU Railway Company. The transactions have been accounted for as a change in reporting entity on an “as if pooled” basis and, accordingly, all financial and other information has been restated to reflect these transactions for comparative purpose for all periods presented. The impact of this realignment is not material.

Effective December 30, 2004, the Company transferred all of its shares in Robertson Inc. and acquired a minority interest in Marmon Holdings Corporation, a Canadian federal corporation. The impact of these transactions is not material.

Cash and Cash Equivalents

Cash and cash equivalents includes all highly liquid debt instruments purchased with an original maturity of three months or less.

Short-Term Investments

Short-term investments consist of commercial paper with original maturities between four and six months.

- 27 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Receivables and Allowance for Doubtful Accounts

The Company carries its accounts receivable at their face amounts less an allowance for doubtful accounts. On a regular basis, the Company evaluates its accounts receivable as well as establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions and based on a history of write-offs and collections. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Uncollectible receivables are charged against the allowance for doubtful accounts when approved by management after all collection efforts have been exhausted.

Lessor Accounting

Operating Leases - Most of the Company’s railcar and intermodal tank container leases are classified as operating leases. Aggregate rentals from operating leases are reported as revenue ratably over the life of the lease as collectibility is reasonably assured. Expenses, including depreciation and maintenance, are charged as incurred.

Direct Financing Leases - Some of the Company’s railcar and other rental equipment leases are classified as direct financing leases. Gross investment in leases (minimum lease payments plus estimated residual values) less the cost of the equipment is designated as unearned income. This unearned income is recognized over the life of the lease based upon the “constant yield method” or similar methods which generally result in an approximate level rate of return on the investment.

Revenue Recognition

Revenue from sales of products is generally recognized upon shipment to customers which is when title and the risks and rewards of ownership are passed on to the customers. Such revenue is based upon determinable sales prices and is recognized only upon collectibility being reasonably assured.

Shipping and Handling Costs

All freight costs incurred by the Company to ship its products to its customers are included in cost of sales.

- 28 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Depreciation and Fixed Assets Accounting

Railcars, intermodal tank containers and other fixed assets are recorded at cost less accumulated depreciation. These assets are depreciated to salvage value over their estimated useful lives on the straight-line method. The estimated useful lives are principally: railcars, 20-30 years; intermodal tank containers, 20 years; buildings and improvements, 10-50 years; and machinery and equipment, 3-20 years.

The cost of major conversions and betterments are capitalized and depreciated over their estimated useful lives or, if shorter, the remaining useful lives of the related assets. Maintenance and repairs are charged to expense when incurred.

Gains or losses on disposals are included in other income, except for those related to railcar and intermodal tank containers disposals which are included in cost of services.

Impairment of Long-lived and Identifiable Intangible Assets

Carrying values of long-lived assets and identifiable intangible assets are reviewed if facts and circumstances suggest that they may be impaired. If this review indicates that the carrying value of an asset will not be recoverable, as determined based on the undiscounted net cash flows of the asset acquired over the remaining depreciation or amortization period, the carrying value of the asset is reduced to its estimated fair value (based on an estimate of discounted net future cash flows).

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.

Foreign Currency Translation

The Company’s foreign operations use the local currency as their functional currency. Accordingly, assets and liabilities are translated at exchange rates in effect at the date of translation. Average exchange rates are used for revenues, costs and expenses, and income taxes.

Translation adjustments and transaction gains and losses are borne by the Company’s parent. For the years ended December 31, 2004, 2003 and 2002, the Company’s parent absorbed a loss of $1,126, a loss of $8,178, and a gain of $1,344, respectively.

Inventories

Inventories are stated at the lower of cost or market, using the first-in, first-out (FIFO) or last-in, first-out (LIFO) methods. Finished goods represented approximately 60% of net inventories at December 31, 2004. The Company uses the LIFO costing method for approximately 70% of its total gross inventories at December 31, 2004.

- 29 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Financial Instruments

All book value amounts for financial instruments approximate the instruments’ fair value except for borrowed debt discussed in Note 7.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

3. Railcar Lease Data

Railcars are leased directly to several hundred shippers located throughout North America. The Company leases to a wide variety of customers, and no customer accounted for more than 10% of consolidated lease revenues. Each lease involves one to several thousand railcars, normally for periods ranging from one to twenty years. The average term of leases entered into during 2004 for newly manufactured railcars was approximately six years. The average term of leases entered into during 2004 for used railway tank cars and other railcars was approximately four years. Under the terms of most of the leases, the Company agrees to provide a full range of services including railcar repair and maintenance.

Minimum future lease rentals to be received on the railcar lease fleet (including railcars leased from others) were as follows as of December 31, 2004:


	Operating Leases
2005	$	417,263
2006		319,220
2007		239,107
2008		165,753
2009		102,406
2010 and thereafter		170,532

Totals	$	1,414,281

- 30 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Lease Fleet and Other Fixed Assets


	December 31,
	2004			2003
Railcar lease fleet
Gross cost	$	3,413,293		$	3,208,673
Less accumulated depreciation		(1,608,943	)		(1,532,380	)

	$	1,804,350		$	1,676,293

Intermodal tank container lease fleet
Gross cost	$	419,304		$	371,484
Less accumulated depreciation		(95,703	)		(71,587	)

	$	323,601		$	299,897

Other Fixed assets, at cost
Land	$	16,628		$	18,145
Buildings and improvements		194,657			194,702
Machinery and equipment		360,061			341,747

		571,346			554,594
Less accumulated depreciation		(372,360	)		(361,776	)

	$	198,986		$	192,818

5. Investment in Direct Financing Lease

On February 8, 1988, Procor Limited (“Procor”) entered into a Canadian dollar denominated Operating Lease Agreement (“Lease”) for an 18-year period with Air Canada for one Boeing 767-233 aircraft, the only aircraft owned by the Company. On the same day and as part of the same transaction, Procor entered into a Trust Indenture (“Indenture”) under which it borrowed Cdn$45.0 million and granted a security interest in the aircraft to the trustee. On April 1, 2003, Air Canada filed for an interim court order for protection from its creditors under the Canadian Companies Creditors Arrangement Act. On May 9, 2003, Air Canada notified Procor that it was electing to terminate the Lease effective as of May 30, 2003. This filing and the termination of the Lease constituted defaults under the Lease. The defaults under the Lease constituted defaults under the Indenture and would have allowed the trustee, among other things, to declare the remaining principal and interest immediately due. The trustee did not do so, and on July 29, 2003, with the consent of the Indenture holders, Procor prepaid the remaining debt of Cdn$17.7 million and paid a make-whole premium of Cdn$2.4 million.

The net book value of the aircraft was Cdn$37.3 million as of March 31, 2003. During the second quarter of 2003, the value of the aircraft was written down to Cdn$2.7 million based on advice Procor received concerning the then-current value of the aircraft.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the fourth quarter of 2004, Air Canada emerged from court protection. At about the same time, Procor received a distribution of shares and options for shares in ACE Aviation Holdings Ltd. (“ACE”), Air Canada’s holding company, from the court-appointed monitor in the Air Canada restructuring. Procor exercised these options and then sold all of its shares in ACE for a gain of Cdn$7.7 million (US$6.2 million) which is included in other income.

Procor has entered an agreement for the sale of the aircraft for parts. Procor will receive payments, less a commission, as the parts are sold. The amount received so far is not material.

6. Lease Commitments

The Company, as lessee, has entered into long-term leases for certain railcars and various manufacturing, office and warehouse facilities.

At December 31, 2004, future minimum rental commitments for all noncancelable leases are as follows:


	Operating Leases
	Sale- Leaseback		Others		Total
2005	$	72,882	$	5,241	$	78,123
2006		80,131		4,213		84,344
2007		68,746		3,591		72,337
2008		67,127		3,312		70,439
2009		63,695		3,045		66,740
2010 and thereafter		273,296		14,361		287,657

	$	625,877	$	33,763	$	659,640

Minimum future sublease revenue to be received under existing railcar sale-leaseback leases as of December 31, 2004 is presented below. Future sublease revenue under other existing operating leases is not material and is primarily included in other income. The Company expects that the subleased railcars will be re-leased at the expiration of such leases. The rentals under such future subleases cannot be ascertained and therefore are not reflected in this table.


	Sale- Leaseback Leases
2005	$	71,283
2006		54,032
2007		40,241
2008		27,237
2009		15,413
2010 and thereafter		33,575

	$	241,781

- 32 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Sublease rentals recorded as revenue for the years ended December 31, 2004, 2003 and 2002 were approximately $83,000, $82,000 and $87,000, respectively.

Rentals charged to costs and expenses were $77,315, $78,794 and $77,726 in 2004, 2003 and 2002, respectively.

7. Borrowed Debt


	December 31,
	2004		2003
Unsecured notes, payable periodically through 2019 at 5.64% - 7.45% (average rate of 6.48% as of December 31, 2004 and 7.02% as of December 31, 2003)	$	720,000	$	465,000
Senior secured notes, payable periodically through 2016 at 6.79% - 7.68% (average rate of 7.16% as of December 31, 2004 and 7.18% as of December 31, 2003)		336,411		352,529
Equipment obligations, payable periodically through 2009 at 6.50% - 9.34% (average rate of 7.01% as of December 31, 2004 and 7.06% as of December 31, 2003)		110,693		127,864
Other long-term borrowings, payable periodically through 2013 (average rate of 4.76% as of December 31, 2004 and December 31, 2003)		147		294

	$	1,167,251	$	945,687

In June 2004, the Company issued $300,000 principal amount of unsecured Senior Notes. Interest on the notes is payable semiannually on June 1 and December 1, commencing December 1, 2004 at the rate of 5.64% per annum. Principal is payable annually commencing on June 1, 2009 and continuing until maturity on June 1, 2019.

Senior secured notes of $98,411 are secured by approximately 1,900 railcars with an original cost of approximately $122,700 and 1,100 intermodal tank containers and wheeled chassis with an original cost of approximately $23,800. Senior secured notes of $100,000 are secured by railcars with an original cost of approximately $133,100. Senior secured notes of $138,000 are secured by intermodal tank container assets with an original cost of approximately $240,000 and the future stream of leasing income on such intermodal tank containers.

Equipment obligations are secured by railcars with an original cost of approximately $407,100 and $407,200 at December 31, 2004 and 2003, respectively.

The Company’s Canadian subsidiaries have approximately $11,259 of credit lines available on a no-fee basis. No amounts were outstanding as of December 31, 2004 and 2003.

- 33 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Maturities of debt obligations for the years 2005 - 2009 are as follows:


2005	2006	2007	2008	2009
$34,147	$91,502	$215,978	$107,397	$205,006

The estimated fair value of borrowed debt is as follows:


	December 31,
	2004		2003
Unsecured notes	$	774,386	$	527,457
Senior secured notes		384,315		412,954
Equipment obligations		117,671		141,549
Other long-term borrowings		150		294

	$	1,276,522	$	1,082,254

The current fair value of the Company’s borrowed debt is estimated by discounting the future interest and principal cash flows at the Company’s estimated incremental borrowing rate at the respective year-end for debt with similar maturities.

8. Income Taxes

The Company and its more than 80% owned U.S. subsidiaries are included in the consolidated U.S. federal income tax return of Holdings. Under an arrangement with Holdings, federal income taxes, before consideration of tax credits, are computed as if the Company files a separate consolidated return. For this computation, the Company generally uses tax accounting methods which minimize the current tax liability (these methods may differ from those used in the consolidated tax return). Tax liabilities are remitted to, and refunds are obtained from, Holdings on this basis. If deductions and credits available to Holdings’ entire consolidated group exceed those which can be used on its tax return, allocation of the related benefits between the Company and others will be at the sole discretion of Holdings. The consolidated tax credits allocated to the Company exceeded those computed as if the company had filed a separate consolidated tax return by $3.9 million in 2004 and $2.4 million in 2003. As a member of a consolidated federal income tax group, the Company is contingently liable for the federal income taxes of the other members of the consolidated group.

Undistributed earnings of the Company’s non-U.S. subsidiaries reflect full provision for non-U.S. income taxes. The Company recorded a provision for taxes that would be payable upon repatriation of such earnings into the U.S of $3.3 million in 2004 and $5.5 million in 2003.

- 34 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following summarizes the provision (benefit) for income taxes:


	2004			2003			2002
State
Current	$	6,638		$	217		$	2,026
Deferred		73			3,108			(769	)
Federal
Current		20,353			245			5,751
Deferred and investment tax credit		38,057			32,471			37,173
Foreign
Current		17,724			13,347			6,079
Deferred and investment tax credit		(1,061	)		(10,410	)		6,044

Total	$	81,784		$	38,978		$	56,304

In 2004, 2003, and 2002, the Company paid foreign withholding taxes of $4,858, $4,169 and $2,821, respectively.

Income tax expense is based upon domestic and foreign income before taxes as follows:


	2004		2003			2002
Domestic	$	184,456	$	116,918		$	128,691
Foreign		39,974		(8,186	)		24,362

Total	$	224,430	$	108,732		$	153,053

Income tax effects of significant items which resulted in effective tax rates of 36.4% in 2004, 35.8% in 2003, and 36.8% in 2002 follow:


	2004			2003			2002
Income taxes at 35% federal statutory rate	$	78,550		$	38,056		$	53,569
Increase (decrease) resulting from:
Amortization of investment tax credits		(843	)		(945	)		(1,399	)
State income taxes, net of federal income tax benefit		4,387			3,249			548
Excess tax (benefit) on foreign income		(7,792	)		10,634			3,578
Tax on unremitted foreign earnings		3,314			5,500			—
Adjustment to prior years’ taxes		1,400			(19,000	)		—
Other, net		2,768			1,484			8

Total income taxes	$	81,784		$	38,978		$	56,304

- 35 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The excess benefit on foreign income in 2004 is due primarily to Holdings’ allocation in 2004 of 2003 and 2004 foreign tax credits pursuant to the Holdings’ tax sharing agreement as noted above.

The excess tax (benefit) on foreign income represents differences due to lower foreign tax rates and foreign tax credits not benefited. In 2004, the Company recorded a $1.4 million adjustment based on the adjustments required for prior years’ tax matters with the various taxing authorities.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Components of net deferred tax balances are as follows:


	2004			2003
Excess of tax over book depreciation	$	(613,938	)	$	(582,346	)
Other		(10,912	)		(8,593	)

Gross liabilities		(624,850	)		(590,939	)

Expenses per books not yet deductible for tax		29,027			34,241
Other		5,437			8,842

Gross assets		34,464			43,083

Deferred investment tax credits		(5,740	)		(6,963	)

Net deferred income tax liability	$	(596,126	)	$	(554,819	)

The Company has approximately $47.1 million of foreign tax credit carryforwards available to reduce future income taxes at December 31, 2004. Due to the uncertain realization of the benefit of these credits, they are subject to a 100% valuation allowance.

9. Contingencies

The Company and its subsidiaries have been named as defendants in a number of lawsuits and certain claims are pending. The Company has accrued what it reasonably expects to pay to resolve such claims, and, in the opinion of management, their ultimate resolution will not have a material effect on the Company’s consolidated financial position or results of operations.

As part of its risk management plan, the Company self-insures certain levels of its property damage, general liability, products liability and workers’ compensation liabilities. The Company maintains no property damage insurance on its railcars or intermodal tank containers. The Company has accrued for the estimated costs of reported, as well as incurred but not reported, self-insured claims. The Company reserves the full estimated value of claims, it does not discount its claims liability.

- 36 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has no environmental matters currently pending which are significant to the Company’s results of operations or financial condition, either individually or in the aggregate. Management believes that amounts accrued for remedial activities and environmental liabilities (which in the aggregate are not material) are adequate.

The Company has one residual value guarantee totaling $2.1 million until March 2006, several performance guarantees totaling $7.1 million until June 2007, and several standby letters of credit totaling $18.5 million. Additionally, the Company provides warranties on certain products for varying lengths of time. The Company estimates the costs that may be incurred and records a liability in the amount of such costs at the time product revenue is recognized. Changes to the Company’s product warranty accrual during the year are as follows:


	2004			2003
Balance, beginning of year	$	602		$	724
Warranties issued		1,332			360
Settlements		(247	)		(482	)

Balance, end of year	$	1,687		$	602

The Company maintains appropriate allowances for warranties and periodically reviews the amount of allowances based on management’s assessment of various factors, including claims experience.

10. Pension Benefits

Substantially all of the Company’s employees are covered by discretionary contribution or defined benefit retirement plans.

Costs of the discretionary contribution pension plans are accrued in amounts determined on the basis of percentages, generally established annually by the Company, of employee compensation of the various units covered by such plans. The contributions are funded as accrued. Discretionary and defined contribution plan expense for 2004, 2003 and 2002 was $12,444, $12,060 and $12,525, respectively.

As of December 31, 2004, the Company’s defined benefit plans either had their benefits frozen or were terminated. The benefits are based on payment of a specific amount, which varies by plan, for each year of service. The Company’s funding policy is to contribute the minimum amount required either by law or union agreement. Contributions are intended to provide not only for benefits attributed to service through the plans’ termination dates, but also for those expected to be earned in the future. Benefits are based on both years of service and compensation. Defined benefit pension plan (income) expense was ($25), $264 and ($140) for 2004, 2003 and 2002, respectively. Accrued pension costs recognized in the consolidated balance sheet were $2,276 and $3,717 at December 31, 2004 and 2003, respectively.

- 37 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Retirement Health Care and Life Insurance Benefits

The Company provides limited health care and life insurance benefits for certain retired employees. These benefits are subject to deductible and co-payment provisions, Medicare supplements and other limitations. At December 31, 2004 and 2003, the liability for postretirement health care and life insurance benefits was $4,522 and $4,718 respectively, and was included in accrued liabilities in the consolidated balance sheet.

Expense related to these benefits was $923, $803 and $724 in 2004, 2003 and 2002, respectively.

12. Purchase Obligation Commitments

At December 31, 2004, the Company had purchase obligation commitments outstanding of $94,746 primarily for the purchase of hopper cars and intermodal tank containers.

13. Consolidating Financial Information

The following condensed consolidating statements for the years ended December 31, 2004, 2003 and 2002 are provided because Procor Limited, a wholly-owned subsidiary of the Company, has issued three separate series of equipment trust certificates, guaranteed by Union Tank Car Company, as part of certain public debt offerings issued by Union Tank Car Company in the United States.

Condensed consolidating statements of income for the years ended December 31, 2004, 2003 and 2002 are as follows:

Year Ended December 31, 2004


	Union Tank Car Company		Procor Limited		Other Subsidiaries		Eliminations			Consolidated
Revenues
Services	$	481,324	$	23,303	$	317,030	$	(73,742	)	$	747,915
Net sales		46,448		464		742,501		(11,042	)		778,371

		527,772		23,767		1,059,531		(84,784	)		1,526,286
Other income, net		103,906		9,936		2,015		(93,339	)		22,518

		631,678		33,703		1,061,546		(178,123	)		1,548,804

Costs and expenses
Cost of services		316,302		17,245		205,414		(73,742	)		465,219
Cost of sales		45,183		344		607,597		(10,311	)		642,813
General and administrative		37,508		3,662		100,376		—			141,546
Interest		57,610		2,364		14,822		—			74,796

		456,603		23,615		928,209		(84,053	)		1,324,374

Income before income taxes		175,075		10,088		133,337		(94,070	)		224,430
Provision for income taxes		32,429		1,883		47,472		—			81,784

Net income	$	142,646	$	8,205	$	85,865	$	(94,070	)	$	142,646

- 38 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Consolidating Financial Information (Continued)

Year Ended December 31, 2003


	Union Tank Car Company		Procor Limited			Other Subsidiaries		Eliminations			Consolidated
Revenues
Services	$	468,758	$	25,885		$	294,049	$	(70,256	)	$	718,436
Net sales		44,625		858			523,010		(8,902	)		559,591

		513,383		26,743			817,059		(79,158	)		1,278,027
Other income (expense), net		37,574		(5,644	)		2,897		(24,372	)		10,455

		550,957		21,099			819,956		(103,530	)		1,288,482

Costs and expenses
Cost of services		322,362		25,739			189,312		(70,256	)		467,157
Cost of sales		45,265		821			430,699		(8,902	)		467,883
Write-down of investment in direct financing lease		—		24,506			—		—			24,506
Goodwill impairment		—		—			16,044		—			16,044
General and administrative		36,150		658			95,512		—			132,320
Interest		52,303		4,464			15,073		—			71,840

		456,080		56,188			746,640		(79,158	)		1,179,750

Income (loss) before income taxes		94,877		(35,089	)		73,316		(24,372	)		108,732
Provision for income taxes		25,123		(10,639	)		24,494		—			38,978

Net income (loss)	$	69,754	$	(24,450	)	$	48,822	$	(24,372	)	$	69,754


Year Ended December 31, 2002
	Union Tank Car Company		Procor Limited			Other Subsidiaries		Eliminations			Consolidated
Revenues
Services	$	469,132	$	26,548		$	259,251	$	(63,224	)	$	691,707
Net sales		30,957		6,002			539,059		(9,315	)		566,703

		500,089		32,550			798,310		(72,539	)		1,258,410
Other income, net		70,987		6,149			478		(61,662	)		15,952

		571,076		38,699			798,788		(134,201	)		1,274,362

Costs and expenses
Cost of services		317,410		22,887			163,203		(63,224	)		440,276
Cost of sales		33,252		5,728			438,616		(9,315	)		468,281
General and administrative		37,079		1,118			96,266		—			134,463
Interest		60,571		3,254			14,464		—			78,289

		448,312		32,987			712,549		(72,539	)		1,121,309

Income before income taxes		122,764		5,712			86,239		(61,662	)		153,053
Provision for income taxes		26,015		1,116			29,173		—			56,304

Net income	$	96,749	$	4,596		$	57,066	$	(61,662	)	$	96,749

- 39 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Consolidating Financial Information (Continued)

Condensed consolidating balance sheets as of December 31, 2004 and 2003 are as follows:

December 31, 2004


	Union Tank Car Company			Procor Limited			Other Subsidiaries			Eliminations			Consolidated
Assets

Cash and cash equivalents	$	61,663		$	33,123		$	3,550		$	—		$	98,336
Short-term investments		—			45,429			—			—			45,429
Available-for-sale securities		243,986			—			910			—			244,896
Accounts receivable		39,971			2,668			193,962			(63,912	)		172,689
Accounts and notes receivable, affiliates		—			—			43,626			—			43,626
Inventories, net		44,780			1,924			100,240			—			146,944
Prepaid expenses and deferred charges		4,592			2,840			5,860			—			13,292
Advances (from) to parent		(122,196	)		(73,143	)		345,133			452			150,246
Railcar lease fleet, net		1,557,425			31,661			215,995			(731	)		1,804,350
Intermodal tank container lease fleet, net		—			—			323,601			—			323,601
Other fixed assets, net		90,524			15,303			93,159			—			198,986
Investment in subsidiaries		813,631			75,455			77,512			(966,598	)		—
Other assets		13			3,792			31,617			—			35,422

Total assets	$	2,734,389		$	139,052		$	1,435,165		$	(1,030,789	)	$	3,277,817

Liabilities and Stockholder’s Equity

Accounts payable	$	55,474		$	17,132		$	65,589		$	(63,589	)	$	74,606
Accrued liabilities		185,005			5,505			72,403			2,567			265,480
Borrowed debt		1,010,625			18,479			138,147			—			1,167,251

		1,251,104			41,116			276,139			(61,022	)		1,507,337

Deferred income taxes and investment tax credits		442,416			23,453			130,257			—			596,126
Minority interest		—			—			97,355			—			97,355

Stockholder’s equity
Common stock and additional capital		358,475			13,345			358,799			(465,558	)		265,061
Retained earnings		691,547			61,830			563,267			(504,305	)		812,339
Unrealized losses on available-for-sale securities, net		(399	)		—			(2	)		—			(401	)
Equity adjustment from foreign currency translation		(8,754	)		(692	)		9,350			96			—

Total stockholder’s equity		1,040,869			74,483			931,414			(969,767	)		1,076,999

Total liabilities and stockholder’s equity	$	2,734,389		$	139,052		$	1,435,165		$	(1,030,789	)	$	3,277,817

- 40 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Consolidating Financial Information (Continued)

December 31, 2003


	Union Tank Car Company		Procor Limited			Other Subsidiaries			Eliminations			Consolidated
Assets

Cash and cash equivalents	$	82	$	48,759		$	7,356		$	—		$	56,197
Short-term investments		—		62,606			—			—			62,606
Accounts receivable		36,036		2,957			153,195			(59,152	)		133,036
Accounts and notes receivable, affiliates		—		—			43,546			—			43,546
Inventories, net		27,820		3,739			90,340			—			121,899
Prepaid expenses and deferred charges		3,873		2,503			3,335			—			9,711
Advances to (from) parent		104,831		(90,828	)		296,316			473			310,792
Railcar lease fleet, net		1,411,232		30,200			234,861			—			1,676,293
Intermodal tank container lease fleet, net		—		—			299,897			—			299,897
Other fixed assets, net		83,313		16,224			93,281			—			192,818
Investment in direct financing lease		—		2,082			—			—			2,082
Investment in subsidiaries		780,205		75,452			126,655			(982,312	)		—
Other assets		92		(1	)		41,997			1			42,089

Total assets	$	2,447,484	$	153,693		$	1,390,779		$	(1,040,990	)	$	2,950,966

Liabilities and Stockholder’s Equity

Accounts payable	$	51,242	$	17,525		$	50,431		$	(58,862	)	$	60,336
Accrued liabilities		189,729		3,654			68,809			2,620			264,812
Borrowed debt		775,854		19,538			150,295			—			945,687

		1,016,825		40,717			269,535			(56,242	)		1,270,835

Deferred income taxes and investment tax credits		417,885		21,114			115,820			—			554,819
Minority interest		—		—			91,557			1			91,558

Stockholder’s equity
Common stock and additional capital		358,475		13,345			359,606			(466,365	)		265,061
Retained earnings		647,271		78,318			561,596			(518,492	)		768,693
Equity adjustment from foreign currency translation		7,028		199			(7,335	)		108			—

Total stockholder’s equity		1,012,774		91,862			913,867			(984,749	)		1,033,754

Total liabilities and stockholder’s equity	$	2,447,484	$	153,693		$	1,390,779		$	(1,040,990	)	$	2,950,966

- 41 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Consolidating Financial Information (Continued)

Condensed consolidating statements of cash flows for the years ended December 31, 2004, 2003 and 2002 are as follows:

Year Ended December 31, 2004


	Union Tank Car Company			Procor Limited			Other Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities:	$	144,134		$	7,514		$	131,314		$	—		$	282,962

Cash flows from investing activities:
Construction and purchase of lease fleet and other fixed assets		(260,358	)		(1,294	)		(69,733	)		—			(331,385	)
Decrease in short-term investments		—			15,614			—			—			15,614
Increase in available-for-sale securities		(244,598	)		—			(912	)		—			(245,510	)
Decrease (increase) in advance to parent		266,185			(17,685	)		(20,001	)		(80,290	)		148,209
(Increase) decrease in other assets		—			(1,612	)		9,868			—			8,256
Proceeds from disposals of lease fleet and other fixed assets		14,103			4,018			13,004			—			31,125
Proceeds from disposition of business		6,344			—			—			—			6,344

Net cash used in investing activities		(218,324	)		(959	)		(67,774	)		(80,290	)		(367,347	)

Cash flows from financing activities:
Proceeds from issuance of borrowed debt		300,000			—			—			—			300,000
Principal payments of borrowed debt		(65,229	)		(1,060	)		(12,147	)		—			(78,436	)
Cash dividends		(99,000	)		(25,115	)		(55,175	)		80,290			(99,000	)

Net cash provided by (used in) financing activities		135,771			(26,175	)		(67,322	)		80,290			122,564

Effect of exchange rates on cash and cash equivalents		—			3,984			(24	)		—			3,960

Net increase (decrease) in cash and cash equivalents		61,581			(15,636	)		(3,806	)		—			42,139
Cash and cash equivalents at beginning of year		82			48,759			7,356			—			56,197

Cash and cash equivalents at end of year	$	61,663		$	33,123		$	3,550		$	—		$	98,336

- 42 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Consolidating Financial Information (Continued)

Year Ended December 31, 2003


	Union Tank Car Company			Procor Limited			Other Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities:	$	153,880		$	13,451		$	143,875		$	—		$	311,206

Cash flows from investing activities:
Construction and purchase of lease fleet and other fixed assets		(198,640	)		(1,194	)		(46,383	)		—			(246,217	)
Decrease in short-term investments		—			11,706			—			—			11,706
Decrease (increase) in advance to parent		107,340			46,151			(45,709	)		(97,327	)		10,455
Increase in other assets		—			—			(1,679	)		—			(1,679	)
Proceeds from disposals of lease fleet and other fixed assets		19,815			590			11,945			—			32,350
Proceeds from disposition of business		—			—			625			—			625

Net cash (used in) provided by investing activities		(71,485	)		57,253			(81,201	)		(97,327	)		(192,760	)

Cash flows from financing activities:
Proceeds from issuance of borrowed debt		—			—			145			—			145
Principal payments of borrowed debt		(34,472	)		(15,525	)		(12,552	)		—			(62,549	)
Cash dividends		(48,000	)		(50,815	)		(46,512	)		97,327			(48,000	)

Net cash (used in) provided by financing activities		(82,472	)		(66,340	)		(58,919	)		97,327			(110,404	)

Effect of exchange rates on cash and cash equivalents		—			7,773			160			—			7,933

Net (decrease) increase in cash and cash equivalents		(77	)		12,137			3,915			—			15,975
Cash and cash equivalents at beginning of year		159			36,622			3,441			—			40,222

Cash and cash equivalents at end of year	$	82		$	48,759		$	7,356		$	—		$	56,197

- 43 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Consolidating Financial Information (Continued)

Year Ended December 31, 2002


	Union Tank Car Company			Procor Limited			Other Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities:	$	122,891		$	16,053		$	143,780		$	—		$	282,724

Cash flows from investing activities:
Construction and purchase of lease fleet and other fixed assets		(83,842	)		(1,093	)		(37,791	)		—			(122,726	)
Decrease in short-term investments		—			33,758			—			—			33,758
Decrease (increase) in advance to parent		132,422			(5,797	)		(63,919	)		(26,428	)		36,278
Increase in other assets		—			—			(1,014	)		—			(1,014	)
Proceeds from disposals of lease fleet and other fixed assets		7,835			853			5,237			—			13,925
Purchases of businesses, net of cash acquired		—			—			(9,074	)		—			(9,074	)

Net cash provided by (used in) investing activities		56,415			27,721			(106,561	)		(26,428	)		(48,853	)

Cash flows from financing activities:
Proceeds from issuance of borrowed debt		—			—			3,412			—			3,412
Principal payments of borrowed debt		(112,207	)		(15,851	)		(13,255	)		—			(141,313	)
Cash dividends		(67,000	)		—			(26,428	)		26,428			(67,000	)

Net cash (used in) provided by financing activities		(179,207	)		(15,851	)		(36,271	)		26,428			(204,901	)
Effect of exchange rates on cash and cash equivalents		—			109			12			—			121

Net increase in cash and cash equivalents		99			28,032			960			—			29,091
Cash and cash equivalents at beginning of year		60			8,590			2,481			—			11,131

Cash and cash equivalents at end of year	$	159		$	36,622		$	3,441		$	—		$	40,222

- 44 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Related Party Transactions

The following table sets forth the major related party transaction amounts included in the consolidated financial statements, other than those disclosed elsewhere.


	Interest Income		Management Expense		Insurance Billed
2004	$	7,774	$	4,314	$	5,616
2003		8,649		4,314		5,595
2002		11,015		4,314		5,258

The Company from time to time advances funds in excess of its current cash requirements for domestic operations to Holdings or its subsidiaries on an unsecured demand basis. Such advances, which bear interest principally at LIBOR plus 1%, amounted to $130,459 and $297,437 at December 31, 2004 and 2003, respectively.

Certain of the Company’s Canadian operations and its affiliates enter into intercompany loans utilizing their respective excess cash balances. These advances between the Company and subsidiaries of Holdings resulted in receivables of $19,787 and $13,355 at December 31, 2004 and 2003, respectively, that are included in advances to parent company.

An administrative services fee is paid to The Marmon Group, Inc. (“Marmon”), a subsidiary of Holdings, for certain services provided by Marmon’s officers and employees including services with respect to accounting, tax, finance, legal and related matters which Marmon provides to certain of Holdings’ subsidiaries and affiliates. The Company obtains these services from Marmon because it is considered more cost efficient to obtain such services in this manner.

The interest of minority shareholders in Worldwide Containers, Inc. at December 31, 2004 and 2003 was $97,355 and $91,558, respectively. The minority interest in income for the years ended December 31, 2004, 2003 and 2002 was $5,797, $4,918 and $4,257, respectively.

All minority interest in income was included as a charge against other income.

- 45 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Derivative Financial Instruments

16. Quarterly Data (Unaudited)


	Three Months Ended
	March 31		June 30		Sept. 30		Dec. 31
2004
Net sales and services revenues	$	348,166	$	374,536	$	394,304	$	409,280
Cost of sales and services		250,714		266,307		284,669		306,342

Gross profit		97,452		108,229		109,635		102,938

Net income	$	28,457	$	34,981	$	37,945	$	41,263

2003
Net sales and services revenues	$	306,057	$	317,095	$	321,972	$	332,903
Cost of sales and services		221,370		232,319		232,380		248,971

Gross profit		84,687		84,776		89,592		83,932

Net income	$	20,859	$	5,025	$	27,093	$	16,777

Results for the second quarter of 2003 included the write-down of $15.7 million in value of the investment in direct financing lease (see Note 5). Results for the fourth quarter of 2003 included a $10.9 million goodwill impairment and a $13.5 million tax adjustment.

Certain amounts previously reported in the Form 10-Q for 2004 and 2003 have been reclassified from general and administrative to cost of sales and services to conform to the year-end presentation.

- 46 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Supplementary Disclosures of Cash Flow Information


	For the Year Ended December 31,
	2004			2003			2002
Changes in operating assets and liabilities:
Accounts receivable	$	(40,606	)	$	(15,528	)	$	13,568
Inventories		(36,675	)		8,804			(190	)
Prepaid expenses and deferred charges		(3,928	)		1,277			(1,087	)
Accounts payable, accrued rent and accrued liabilities		23,910			21,716			(27,810	)

	$	(57,299	)	$	16,269		$	(15,519	)

Cash paid during the year for:
Interest	$	74,275		$	72,565		$	84,106
Income taxes		40,594			1,130			17,868

Unrealized foreign currency translation gains and losses, which are non-cash items, are excluded from the change in short-term investments and advances to parent.

18. Investment in Marketable Securities

At December 31, 2004, the Company had the following investments in marketable securities which have been classified as “available-for-sale”:

December 31, 2004

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair

Value

U.S. Corporate Securities

245,510

—

(614

)

244,896

The gross unrealized holding losses, less related tax of $213, have been reported as a separate component of stockholder’s equity in the accompanying condensed consolidated balance sheet.

- 47 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Industry Segment Information


	Railcar		Metals Distribution			Intermodal Tank Container Leasing		All Other		Consolidated Totals
	(Dollars in Millions)
2004
Services revenue	$	552.5	$	8.5		$	96.5	$	90.4	$	747.9
Net sales revenue		46.4		578.8			—		153.2		778.4
Interest income		—		—			—		13.0		13.0
Interest expense		60.8		0.1			13.8		0.1		74.8
Depreciation and amortization		125.0		3.9			25.9		7.4		162.2
Income before income taxes		127.4		38.5			15.6		42.9		224.4
Segment assets		1,948.1		194.3			347.7		787.7		3,277.8
Expenditures for long-lived assets		261.1		3.5			52.9		13.9		331.4

2003
Services revenue	$	544.9	$	8.1		$	86.5	$	78.9	$	718.4
Net sales revenue		44.6		387.2			—		127.8		559.6
Interest income		—		—			—		10.7		10.7
Interest expense		58.2		0.1			13.4		0.1		71.8
Depreciation and amortization		119.5		3.9			24.2		8.0		155.6
Income (loss) before income taxes*		103.9		(6.1	)		10.0		0.9		108.7
Segment assets		1,921.0		159.0			330.2		540.8		2,951.0
Expenditures for long-lived assets		201.9		6.5			31.0		6.8		246.2

2002
Services revenue	$	539.6	$	8.6		$	80.2	$	63.3	$	691.7
Net sales revenue		32.7		396.4			—		137.6		566.7
Interest income		—		—			—		13.9		13.9
Interest expense		65.0		0.1			13.1		0.1		78.3
Depreciation and amortization		119.0		4.4			22.1		7.6		153.1
Income before income taxes		111.7		11.1			6.4		23.9		153.1
Segment assets		1,853.4		181.8			318.9		582.5		2,936.6
Expenditures for long-lived assets		86.0		6.3			24.8		5.6		122.7

*	Metals Distribution includes goodwill impairment of $16.0 million and All Other includes write-down of investment in direct financing lease of $24.5 million.

- 48 -

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Industry Segment Information (Continued)

Geographic

Information

The following table presents geographic information for the Company. Revenues are attributed to countries based on location of customers.


	Revenues		Long-lived Assets
	(Dollars in Millions)
2004
United States	$	1,258.9	$	1,970.6
Canada		166.5		173.3
Other countries		100.9		218.5

Consolidated total	$	1,526.3	$	2,362.4

2003
United States	$	1,027.0	$	1,844.0
Canada		162.0		165.5
Other countries		89.0		203.7

Consolidated total	$	1,278.0	$	2,213.2

2002
United States	$	1,015.5	$	1,775.7
Canada		146.8		171.0
Other countries		96.1		209.4

Consolidated total	$	1,258.4	$	2,156.1

- 49 -

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There was no change in the Company’s internal control over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

The Company’s management, including the Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

ITEM 9B. OTHER INFORMATION

None.

- 50 -

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


Name	Age	Current Positions or Offices	First Elected to Position
Kenneth P. Fischl	55	President, Chief Executive Officer Director	2002 1994

Mark J. Garrette	51	Vice President, Principal Financial Officer Vice President of the Company and Senior Vice President and Controller - Tank Car Division	2002 1994

Frank D. Lester	64	Vice President of the Company and President - Tank Car Division	1999

Robert K. Lorch	58	Vice President	2002

John D. Nichols	74	Director	2002

Robert W. Webb	65	Director General Counsel and Secretary	2003 1986

Kenneth P. Fischl

Mr. Fischl was elected President of the Company in January 2002 and was elected President, Chief Executive Officer of the Company in August 2002. He was elected a Vice President of The Marmon Group, Inc. (“Marmon”) in May 1998. He was elected as a Director in March 1994, and served as President of the Tank Car Division from February 1993 to August 1999. He was appointed Vice President of the Company and Executive Vice President and General Manager of the Tank Car Division in July 1992. He joined the Company in 1977 as a Market Analyst. Mr. Fischl was promoted to Manager of Tank Car Marketing and Administration in 1979 and became Vice President of Fleet Management in 1981.

Mark J. Garrette

Mr. Garrette was elected Principal Financial Officer of the Company in August 2002. He joined Marmon as a sector Chief Financial Officer in April 2002. He was appointed Senior Vice President and Controller of the Tank Car Division and elected Vice President of the Company in August 1994. He joined the Tank Car Division as Vice President and Assistant Controller in May 1994.

- 51 -

Frank D. Lester

In August 1999, Mr. Lester was named President of the Tank Car Division and elected a Vice President of the Company. Mr. Lester joined the Tank Car Division in 1979 as a district sales manager. In 1981, he was promoted to Vice President - Sales, and in 1988, he was named Vice President - Quality. In 1994, Mr. Lester was elected to President of Procor Limited.

Robert K. Lorch

Mr. Lorch was elected Vice President of the Company in September 2002. He has served as Vice President and Chief Financial Officer of Holdings and Senior Vice President and Chief Financial Officer of Marmon since April 2002. Prior to joining Marmon, Mr. Lorch was Vice President, Global Picture Tube Business, for Thomson Multimedia. He was appointed to that position in 1998 after having served Thomson Multimedia since 1988, first as General Manager, Sales, Marketing and New Business Development, and then as Vice President, Americas Business.

John D. Nichols

Mr. Nichols was elected as a Director of the Company in January 2002. He is President and Chief Executive Officer of Holdings and Marmon. Prior to joining Marmon in January 2002, Mr. Nichols was Chief Executive Officer and chairman of the board of Illinois Tool Works Inc. (ITW) before his retirement in 1996. Mr. Nichols joined ITW in 1980 as executive vice president.

Robert W. Webb

Mr. Webb was elected as a Director of the Company in May 2003. Mr. Webb is Vice President and Secretary of Holdings and Senior Vice President, Secretary and General Counsel of Marmon. Mr. Webb has served in these or other capacities for each of the Company, Holdings and Marmon in excess of five years.

There are no family relationships among the directors and executive officers of the Company.

Directors and executive officers are elected for a term of one year, or until a successor is appointed.

Other Directorships

None of the members of the Company’s Board of Directors are members of the board of directors of companies with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of that Act or of a company registered as an investment company under the Investment Company Act of 1940.

- 52 -

Audit Committee and Audit Committee Financial Expert

The Company is not subject to the listing requirements of a national exchange. As a result, the Company is not required to have a separately designated standing audit committee, and the entire Board of Directors acts as the Company’s audit committee. While the Company does not have on its Board of Directors an “Audit Committee Financial Expert” (as that term is defined under federal securities laws), the Company and its Board of Directors have available to them, through Holdings and Marmon, financial experts and financial expertise relating to accounting and auditing matters.

Code of Ethics

The Company has adopted a written Code of Ethics that applies to its executive officers, including the Principal Executive Officer and Principal Financial Officer, as well as the head and senior financial officer of each operating unit and all other key financial and accounting personnel having responsibility in connection with the preparation, review, or disclosure of any aspect of the Company’s financial statements or other financial information or data. Copies of the Company’s Code of Ethics, including any future amendments, are available without charge upon request to Union Tank Car Company, Attention: Secretary, 225 West Washington Street, Suite 1900, Chicago, Illinois 60606.

ITEM 11. EXECUTIVE COMPENSATION

Frank D. Lester, Vice President, was the only executive officer of the Company who in the year ended December 31, 2004, received salary and bonus in excess of $100,000 from the Company and its subsidiaries for services in all capacities to the Company.

All other officers of the Company received their 2004 compensation from Marmon and are primarily involved in the management of Marmon. The Company, together with the other subsidiaries of Holdings, has been required to pay Marmon a portion of such compensation which is encompassed in the charge for certain common services provided by Marmon to the Company and such other subsidiaries. The amount of such charge has been determined pursuant to a formula based upon the dollar value of revenues, earnings and assets. See Note 14 to the consolidated financial statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. Directors of the Company do not receive any compensation in such capacity.

Shown below is the aggregate of all forms of compensation paid by the Company to Mr. Lester:

Summary Compensation Table


	Annual Compensation					All Other Compensation*
Name and Principal Position	Year	Salary		Bonus		All Other Compensation*
Frank D. Lester, Vice President of the Company and President of the Tank Car Division	2004 2003 2002	$	318,021 294,554 282,600	$	116,163 68,400 80,000	$	48,725 41,642 43,715

*	Primarily represents the aggregate amounts of Company contributions to defined contribution plans on behalf of the named individual.

- 53 -

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Holdings, a Delaware corporation having its principal executive offices at 225 West Washington Street, Chicago, Illinois, owns 1,000 shares, or 100% of the Company’s issued and outstanding common stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Note 14 to the consolidated financial statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, which contains a description of certain related party transactions, is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Auditor Fee Information

Fees for professional services provided by our independent auditors in each of the last two fiscal years, in each of the following categories are:


	For the Year Ended December 31,
	2004		2003
	(Dollars in Thousands)
Audit fees	$	848	$	912
Audit-related fees		8		213
Tax fees		189		213
All other fees		2		2

	$	1,047	$	1,340

Fees for audit services include fees associated with the annual audit which have been allocated to the Company by Holdings, the reviews of the Company’s quarterly reports on Form 10-Q, and statutory audits required internationally. Audit-related fees principally included internal control review and compliance reports. Tax fees included tax compliance, tax advice and tax planning, including expatriate tax services.

Pre-Approval Policies and Procedures

The Company’s Board of Directors currently has a policy in place that requires its review and pre-approval of all audit and permissible non-audit services provided by its independent auditors. These services requiring pre-approval by the Board of Directors may include audit services, audit-related services, tax services and other services.

- 54 -

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES


		Page
a)	1. Financial Statements -
	Consolidated statement of income for each of the three years in the period ended December 31, 2004	23
	Consolidated balance sheet - December 31, 2004 and 2003	24
	Consolidated statement of stockholder’s equity for each of the three years in the period ended December 31, 2004	25
	Consolidated statement of cash flows for each of the three years in the period ended December 31, 2004	26
	Notes to consolidated financial statements	27

	2. Schedules

	The following consolidated financial schedule of Union Tank Car Company is included in response to Item 15(a).

	II – Valuation and qualifying accounts	57

	All other financial statement schedules have been omitted because they are not applicable or because the required information is included in the financial statements or notes thereto.

	3. Index to Exhibits	58

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:


UNION TANK CAR COMPANY (Registrant)

By:		/s/ Mark J. Garrette
		Mark J. Garrette
		Vice President

Dated: March 28, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:


Signature	Title	Date
/s/ Kenneth P. Fischl Kenneth P. Fischl	President and Director (principal executive officer)	March 28, 2005

/s/ Mark J. Garrette Mark J. Garrette	Vice President (principal financial officer and principal accounting officer)	March 28, 2005

/s/ John D. Nichols John D. Nichols	Director	March 28, 2005

/s/ Robert W. Webb Robert W. Webb	Director, General Counsel and Secretary	March 28, 2005

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UNION TANK CAR COMPANY AND SUBSIDIARIES

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

(Dollars in Thousands)


	Balance at Beginning of Period		Additions Charged to					Deductions			Balance at End of Period
	Balance at Beginning of Period		Costs and Expenses		Other			Deductions			Balance at End of Period
Year Ended December 31, 2004
Reserves and allowances deducted from asset accounts:
Allowance for doubtful accounts	$	11,647	$	1,808	$	244	(1)	$	2,761	(2)	$	10,938

Year Ended December 31, 2003
Reserves and allowances deducted from asset accounts:
Allowance for doubtful accounts	$	11,151	$	4,338	$	132	(1)	$	3,974	(3)	$	11,647

Year Ended December 31, 2002
Reserves and allowances deducted from asset accounts:
Allowance for doubtful accounts	$	9,613	$	2,787	$	23	(1)	$	1,272	(2)	$	11,151

(1)	Foreign currency translation loss.

(2)	Amount determined not to be collectible, net of recoveries.

(3)	Amounts determined not to be collectible, net of recoveries. Amount also includes a reduction in the reserve from the divestiture of a subsidiary of $143.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

INDEX TO EXHIBITS



2 (a)		Asset Purchase Agreement between Transamerica Leasing Inc., Trans Ocean Tank Services Corporation and EXSIF Worldwide, Inc. (as assignee of Worldwide Containers, Inc.) dated as of July 11, 2000 (submitted with the electronic filing to the Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and is incorporated herein by reference)

3 (a)		Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of Delaware on September 2, 1982 (which was filed as Exhibit 3(a) to the Annual Report on Form 10-K for the fiscal year ended December 31, 1982, and is incorporated herein by reference)

3 (b)		By-Laws of the Company, as adopted November 25, 1987 (which was filed as Exhibit 3(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 1988, and is incorporated herein by reference)

4 (a)		Trust Indenture and Security Agreement (UTC Trust No. 2000-A) (L-16) dated June 29, 2000 between Norwest Bank Minnesota, National Association, as Owner Trustee, and LaSalle Bank National Association, as Indenture Trustee (submitted with the electronic filing to the Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and is incorporated herein by reference)

4 (b)		Indenture and Security Agreement dated September 28, 2000 among Bank One, N.A., EXSIF Worldwide, Inc. and the Company (submitted with the electronic filing to the Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and is incorporated herein by reference)

12		Statements re computation of ratios The computation of the Ratio of Earnings to Fixed Charges

21		Subsidiaries of the registrant

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Instruments defining the rights of holders of long-term debt are not being filed herewith pursuant to the provisions of paragraph 4(iii) of Item 601(b) of Regulation S-K. The Company agrees to furnish a copy of any such instrument to the Commission upon request.

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UNION TANK CAR CO 10-K