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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2007

OR



| ̈ | 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)
|                                                               | 
|181 W. Madison Street, 26thFloor, Chicago, Illinois            |  | 60602-4510                             
|(Address of principal executive offices)                       |  | (Zip Code)                             

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

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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
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.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2007

INDEX



|                              |  |                                                                                                        |  |     
|----------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ----
|                              |  |                                                                                                        |  | Page
|                              | 
|Part I. Financial Information |  |                                                                                                       
|                              |  |                                                                                                       
|Item 1.                       |  | Financial Statements                                                                                   |  | 3   
|                              |  |                                                                                                       
|                              |  | Condensed consolidated statements of income - three and six month periods ended June 30, 2007 and 2006 |  | 3   
|                              |  |                                                                                                       
|                              |  | Condensed consolidated balance sheets - June 30, 2007 and December 31, 2006                            |  | 4   
|                              |  |                                                                                                       
|                              |  | Condensed consolidated statements of cash flows - six months ended June 30, 2007 and 2006              |  | 5   
|                              |  |                                                                                                       
|                              |  | Notes to condensed consolidated financial statements                                                   |  | 6   
|                              |  |                                                                                                       
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                  |  | 18  
|                              |  |                                                                                                       
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                             |  | 25  
|                              |  |                                                                                                       
|Item 4.                       |  | Controls and Procedures                                                                                |  | 25  
|                              | 
|Part II. Other Information    |  |                                                                                                       
|                              |  |                                                                                                       
|Item 1.                       |  | Legal Proceedings                                                                                      |  | 26  
|                              |  |                                                                                                       
|Item 1A.                      |  | Risk Factors                                                                                           |  | 26  
|                              |  |                                                                                                       
|Item 2.                       |  | Unregistered Sales of Equity and Use of Proceeds                                                       |  | *   
|                              |  |                                                                                                       
|Item 3.                       |  | Defaults Upon Senior Securities                                                                        |  | *   
|                              |  |                                                                                                       
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                    |  | *   
|                              |  |                                                                                                       
|Item 5.                       |  | Other Information                                                                                      |  | *   
|                              |  |                                                                                                       
|Item 6.                       |  | Exhibits                                                                                               |  | 26  
|                              | 
|Signatures                    |  | 27                                                                                                    



|* | The response to these items is None and the items are omitted from the report pursuant to the instructions to Item II to Form 10-Q.
|- | -------------------------------------------------------------------------------------------------------------------------------------



- 2 -



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PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands)

(Unaudited)



|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|--------------------------------------------------- |  | -------------------------- | ------- | ------------------------ | ---- | - | ------- |  | ---- | --------- |  | - | -------
|                                                    |  | Three Months EndedJune 30, |         | Six Months EndedJune 30,
|                                                    |  | 2007                       |         |                          | 2006 |   | 2007    |  | 2006
|Revenues                                            |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|Services (leasing and other)                        |  | $                          | 217,862 |                          |      | $ | 205,664 |  | $    | 431,126   |  | $ | 404,712
|Sales                                               |  |                            | 287,883 |                          |      |   | 302,017 |  |      | 596,678   |  |   | 560,670
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|                                                    |  |                            | 505,745 |                          |      |   | 507,681 |  |      | 1,027,804 |  |   | 965,382
|Costs and expenses                                  |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|Cost of services                                    |  |                            | 121,433 |                          |      |   | 109,631 |  |      | 239,051   |  |   | 222,591
|Cost of sales                                       |  |                            | 233,947 |                          |      |   | 255,753 |  |      | 476,264   |  |   | 474,931
|General and administrative                          |  |                            | 35,204  |                          |      |   | 32,836  |  |      | 72,278    |  |   | 68,787 
|Interest expense                                    |  |                            | 29,695  |                          |      |   | 22,299  |  |      | 56,960    |  |   | 42,272 
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|                                                    |  |                            | 420,279 |                          |      |   | 420,519 |  |      | 844,553   |  |   | 808,581
|                                                    |  |                            |         |                         
|Operating income                                    |  |                            | 85,466  |                          |      |   | 87,162  |  |      | 183,251   |  |   | 156,801
|                                                    |  |                            |         |                         
|Interest income                                     |  |                            | 3,361   |                          |      |   | 4,759   |  |      | 6,688     |  |   | 8,244  
|Other income, net                                   |  |                            | 1,464   |                          |      |   | 2,601   |  |      | 2,456     |  |   | 2,579  
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|Income before income taxes and minority interest    |  |                            | 90,291  |                          |      |   | 94,522  |  |      | 192,395   |  |   | 167,624
|                                                    |  |                            |         |                         
|Provision for income taxes                          |  |                            | 35,534  |                          |      |   | 32,551  |  |      | 78,729    |  |   | 60,153 
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|                                                    |  |                            | 54,757  |                          |      |   | 61,971  |  |      | 113,666   |  |   | 107,471
|                                                    |  |                            |         |                         
|Minority interest                                   |  |                            | 2,183   |                          |      |   | 2,037   |  |      | 4,577     |  |   | 3,737  
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|Net income                                          |  |                            | 52,574  |                          |      |   | 59,934  |  |      | 109,089   |  |   | 103,734
|                                                    |  |                            |         |                         
|Other comprehensive (losses) income                 |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|Unrealized (losses) gains on securities, net of tax |  |                            | (10     | )                        |      |   | 363     |  |      | 11        |  |   | 600    
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        
|Comprehensive income                                |  | $                          | 52,564  |                          |      | $ | 60,297  |  | $    | 109,100   |  | $ | 104,334
|                                                    |  |                            |         |                          |      |   |         |  |      |           |  |   |        

See notes to condensed consolidated financial statements.



- 3 -



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)



|                                                                               |  |              |           |                  |   |           |  
|------------------------------------------------------------------------------ |  | ------------ | --------- | ---------------- | - | --------- | -
|                                                                               |  | June 30,2007 |           | December 31,2006 |  
|                                                                               |  | (Unaudited)  |           |                  |  
|Assets                                                                         |  |              |           |                  |   |           |  
|Cash and cash equivalents                                                      |  | $            | 234,801   |                  | $ | 165,588   |  
|Short-term investments                                                         |  |              | 22,774    |                  |   | 97,542    |  
|Available-for-sale securities                                                  |  |              |          |                  |   | 24,445    |  
|Accounts receivable, net of allowances of $6,207 ($6,577 at December 31, 2006) |  |              | 231,051   |                  |   | 205,336   |  
|Accounts and notes receivable, affiliates                                      |  |              | 44,015    |                  |   | 44,012    |  
|Inventories, net of LIFO reserves of $112,862 ($103,543 at December 31, 2006)  |  |              | 220,270   |                  |   | 218,879   |  
|Prepaid expenses and deferred charges                                          |  |              | 12,050    |                  |   | 10,923    |  
|Railcar lease fleet, net                                                       |  |              | 2,924,510 |                  |   | 2,669,700 |  
|Intermodal tank container lease fleet, net                                     |  |              | 360,630   |                  |   | 356,329   |  
|Other fixed assets, net                                                        |  |              | 284,080   |                  |   | 276,478   |  
|Other assets                                                                   |  |              | 61,853    |                  |   | 38,339    |  
|                                                                               |  |              |           |                  |   |           |  
|Total assets                                                                   |  | $            | 4,396,034 |                  | $ | 4,107,571 |  
|                                                                               |  |              |           |                  |   |           |  
|Liabilities and Stockholders Equity                                           |  |              |           |                  |   |           |  
|Accounts payable                                                               |  | $            | 117,283   |                  | $ | 96,418    |  
|Accrued liabilities                                                            |  |              | 193,462   |                  |   | 231,109   |  
|Advances from parent and affiliates                                            |  |              | 870,420   |                  |   | 472,146   |  
|Debt, including $131,482 due within one year ($216,061 at December 31, 2006)   |  |              | 1,186,637 |                  |   | 1,353,647 |  
|Deferred income taxes and investment tax credits                               |  |              | 696,830   |                  |   | 643,453   |  
|                                                                               |  |              |           |                  |   |           |  
|Total liabilities                                                              |  |              | 3,064,632 |                  |   | 2,796,773 |  
|                                                                               |  |             
|Minority interest                                                              |  |              | 105,785   |                  |   | 101,208   |  
|                                                                               |  |             
|Stockholders equity                                                           |  |              |           |                  |   |           |  
|Common stock                                                                   |  |              | 106,689   |                  |   | 106,689   |  
|Additional capital                                                             |  |              | 169,455   |                  |   | 169,455   |  
|Retained earnings                                                              |  |              | 949,473   |                  |   | 933,457   |  
|Accumulated other comprehensive losses                                         |  |              |          |                  |   | (11       | )
|                                                                               |  |              |           |                  |   |           |  
|Total stockholders equity                                                     |  |              | 1,225,617 |                  |   | 1,209,590 |  
|                                                                               |  |              |           |                  |   |           |  
|Total liabilities and stockholders equity                                     |  | $            | 4,396,034 |                  | $ | 4,107,571 |  
|                                                                               |  |              |           |                  |   |           |  

See notes to condensed consolidated financial statements.



- 4 -



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



|                                                                                  |  |                           |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Six Months Ended June 30, |         
|                                                                                  |  | 2007                      |          |   | 2006 |  
|Cash flows from operating activities:                                             |  |                           |          |   |      |   |          |  
|Net income                                                                        |  | $                         | 109,089  |   |      | $ | 103,734  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |          |   |      |   |          |  
|Depreciation and amortization                                                     |  |                           | 104,994  |   |      |   | 92,656   |  
|Deferred income taxes                                                             |  |                           | 35,877   |   |      |   | 17,720   |  
|Gain on disposition of lease fleet and other fixed assets                         |  |                           | (9,166   | ) |      |   | (14,214  | )
|Other non-cash income and expenses                                                |  |                           | 5,555    |   |      |   | 7,679    |  
|Changes in assets and liabilities:                                                |  |                           |          |   |      |   |          |  
|Accounts receivable                                                               |  |                           | (18,429  | ) |      |   | (16,113  | )
|Inventories                                                                       |  |                           | 11,493   |   |      |   | (25,592  | )
|Prepaid expenses and deferred charges                                             |  |                           | (1,961   | ) |      |   | (3,736   | )
|Accounts payable and accrued expenses                                             |  |                           | (30,534  | ) |      |   | 20,490   |  
|                                                                                  |  |                           |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                           | 206,918  |   |      |   | 182,624  |  
|                                                                                  |  |                          
|Cash flows from investing activities:                                             |  |                           |          |   |      |   |          |  
|Construction and purchase of lease fleet                                          |  |                           | (345,631 | ) |      |   | (334,409 | )
|Construction and purchase of other fixed assets                                   |  |                           | (17,239  | ) |      |   | (37,015  | )
|Proceeds from sales of available-for-sale securities                              |  |                           | 24,462   |   |      |   | 79,716   |  
|Purchases of short-term investments                                               |  |                           | (53,293  | ) |      |   |         |  
|Proceeds from sales of short-term investments                                     |  |                           | 130,618  |   |      |   | 81,736   |  
|Increase in other assets                                                          |  |                           | (1,470   | ) |      |   | (2,038   | )
|Proceeds from disposals of lease fleet and other fixed assets                     |  |                           | 17,709   |   |      |   | 22,954   |  
|Purchases of businesses, net of cash acquired                                     |  |                           | (35,523  | ) |      |   |         |  
|                                                                                  |  |                           |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                           | (280,367 | ) |      |   | (189,056 | )
|                                                                                  |  |                          
|Cash flows from financing activities:                                             |  |                           |          |   |      |   |          |  
|Increase in advances from parent and affiliates                                   |  |                           | 372,895  |   |      |   | 254,424  |  
|Principal payments of debt                                                        |  |                           | (167,010 | ) |      |   | (49,655  | )
|Cash dividends                                                                    |  |                           | (76,000  | ) |      |   | (72,000  | )
|                                                                                  |  |                           |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |                           | 129,885  |   |      |   | 132,769  |  
|                                                                                  |  |                          
|Effect of exchange rates on cash and cash equivalents                             |  |                           | 12,777   |   |      |   | 2,619    |  
|                                                                                  |  |                           |          |   |      |   |          |  
|Net increase in cash and cash equivalents                                         |  |                           | 69,213   |   |      |   | 128,956  |  
|                                                                                  |  |                          
|Cash and cash equivalents at beginning of year                                    |  |                           | 165,588  |   |      |   | 150,628  |  
|                                                                                  |  |                           |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                         | 234,801  |   |      | $ | 279,584  |  
|                                                                                  |  |                           |          |   |      |   |          |  
|                                                                                  |  |                          
|Cash paid during the period for:                                                  |  |                           |          |   |      |   |          |  
|Interest                                                                          |  | $                         | 42,155   |   |      | $ | 45,199   |  
|Income taxes                                                                      |  |                           | 39,934   |   |      |   | 37,680   |  
|                                                                                  |  |                          
|Non-cash item:                                                                    |  |                           |          |   |      |   |          |  
|Cumulative effect of adopting FIN 48                                              |  | $                         | 17,073   |   |      | $ |         |  

See notes to condensed consolidated financial statements.



- 5 -



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UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands)

(Unaudited)



|1. | Ownership
|-- | ---------

UNION TANK CAR COMPANY (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. | Basis of Presentation
|-- | ---------------------

The accompanying unaudited
condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim periods. These interim financial statements do not include all disclosures normally
provided in annual financial statements. Accordingly, they should be read in conjunction with the consolidated financial statements and notes thereto in the Companys Annual Report on Form 10-K for the year ended December 31, 2006.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications include restating
the condensed consolidated statement of cash flows for amounts related to certain long-term contracts accounted for under the completed contract method on a net basis. These changes have no impact on previously reported net income and are deemed to
be immaterial.

The 2007 interim results presented herein are not necessarily indicative of the results of operations for the full year
2007.



|3. | Significant Accounting Policies
|-- | -------------------------------

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. Certain long-term contracts are accounted for under the completed contract method
when the Company is unable to reasonably forecast costs and the time required to complete those contracts.

Lessor Accounting

Most of the Companys railcar and intermodal tank container leases with its customers 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.



- 6 -



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|3. | Significant Accounting Policies (Continued)
|-- | -------------------------------------------

The Company
periodically reviews and evaluates the ultimate realization of the receivables and properties under lease contracts. Allowances for losses are maintained at amounts necessary to cover anticipated losses based on managements assessment of
various factors, including loss experience and review of specific accounts.

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 balance sheet date. Average exchange rates are used for revenues, costs and expenses.

Foreign currency translation
adjustments and transaction gains and losses are borne by Holdings. For the six months ended June 30, 2007 and 2006, Holdings absorbed a gain of $8,668 and a loss of $549, respectively.

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. 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. State, local and foreign income
taxes, in general, are reflected on the basis of individual company tax liabilities.

The Company includes interest and penalties accrued on
unrecognized tax benefits as a component of the provision for income taxes. Interest income attributable to overpayments of income taxes is included in interest income.

Holdings has completed federal income tax return examinations through 2002. Canadian federal income tax returns are audited through 2002.



- 7 -



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|3. | Significant Accounting Policies (Continued)
|-- | -------------------------------------------

On
January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which is an interpretation of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes including defining the criteria that an individual tax position must meet for any part of the
benefit of that position to be recognized in consolidated financial statements and provides guidance on the measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of
the implementation of FIN 48, the Company recorded an increase in its deferred income tax liability and a corresponding decrease of $17,073 to the January 1, 2007 retained earnings. This adjustment was related primarily to state income taxes.
As of January 1, 2007, the Company had approximately $38.4 million ($40.1 million at June 30, 2007) of unrecognized tax benefits, all of which would reduce the Companys provision for income taxes, if fully recognized. The Company
does not expect any significant change to the unrecognized tax benefits in the next twelve months. As of January 1, 2007, the Companys accrual for interest and penalties related to uncertain tax positions was not significant.

Available-for-Sale Securities

Available-for-sale securities consist of investment-grade corporate debt securities and U.S. government obligations. Management determines the appropriate classification of investments at the time of acquisition and reevaluates such
determination at each balance sheet date. Available-for-sale securities are carried at fair value, with unrealized holding gains and losses, net of tax, reported as a separate component of stockholders equity.

Accounts Receivable 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.

Inventories

Inventories are valued at the lower of cost or market, using the first-in, first-out
(FIFO) or last-in, first-out (LIFO) methods.



|                                |  |              |          |   |                  |   |          |  
|------------------------------- |  | ------------ | -------- | - | ---------------- | - | -------- | -
|                                |  | June 30,2007 |          |   | December 31,2006 |  
|Raw materials                   |  | $            | 32,721   |   |                  | $ | 35,012   |  
|Work-in-process                 |  |              | 50,355   |   |                  |   | 52,222   |  
|Finished goods                  |  |              | 255,603  |   |                  |   | 240,556  |  
|Obsolescence and other reserves |  |              | (5,547   | ) |                  |   | (5,368   | )
|                                |  |              |          |   |                  |   |          |  
|                                |  |              | 333,132  |   |                  |   | 322,422  |  
|LIFO reserve                    |  |              | (112,862 | ) |                  |   | (103,543 | )
|                                |  |              |          |   |                  |   |          |  
|Net                             |  | $            | 220,270  |   |                  | $ | 218,879  |  
|                                |  |              |          |   |                  |   |          |  



- 8 -



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|3. | Significant Accounting Policies (Continued)
|-- | -------------------------------------------

Property and
Equipment

Property and equipment are depreciated or amortized over their useful lives primarily on the straight-line method 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. Gains and 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.

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.

Lease Fleet and Other Fixed Assets



|                                      |  |               |            |   |                  |   |            |  
|------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                      |  | June 30, 2007 |            |   | December 31,2006 |  
|Railcar lease fleet                   |  |               |            |   |                  |   |            |  
|Gross cost                            |  | $             | 4,765,503  |   |                  | $ | 4,437,125  |  
|Less accumulated depreciation         |  |               | (1,840,993 | ) |                  |   | (1,767,425 | )
|                                      |  |               |            |   |                  |   |            |  
|                                      |  | $             | 2,924,510  |   |                  | $ | 2,669,700  |  
|                                      |  |               |            |   |                  |   |            |  
|Intermodal tank container lease fleet |  |               |            |   |                  |   |            |  
|Gross cost                            |  | $             | 514,286    |   |                  | $ | 497,665    |  
|Less accumulated depreciation         |  |               | (153,656   | ) |                  |   | (141,336   | )
|                                      |  |               |            |   |                  |   |            |  
|                                      |  | $             | 360,630    |   |                  | $ | 356,329    |  
|                                      |  |               |            |   |                  |   |            |  
|Other fixed assets                    |  |               |            |   |                  |   |            |  
|Gross cost                            |  | $             | 700,496    |   |                  | $ | 680,443    |  
|Less accumulated depreciation         |  |               | (416,416   | ) |                  |   | (403,965   | )
|                                      |  |               |            |   |                  |   |            |  
|                                      |  | $             | 284,080    |   |                  | $ | 276,478    |  
|                                      |  |               |            |   |                  |   |            |  

Legal Matters

The Company and its subsidiaries have been named as defendants in a number of lawsuits and certain claims are pending. The Company has accrued its best estimate of such claims, and, in the opinion of management, their
ultimate resolution will not have a material adverse effect on the Companys consolidated financial position or results of operations.

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 consolidated financial statements and accompanying notes. Actual results could differ from those estimates.



- 9 -



---

|4. | Available-for-Sale Securities
|-- | -----------------------------

At December 31, 2006,
the Company had the following investments in marketable securities which have been classified as available-for-sale:



|                            |  |      |        |                      |   |                       |  |   |           |   |  |   |       
|--------------------------- |  | ---- | ------ | -------------------- | - | --------------------- |  | - | --------- | - |  | - | ------
|December 31, 2006           |  | Cost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|Corporate debt securities   |  | $    | 19,404 |                      | $ |                      |  | $ | (12       | ) |  | $ | 19,392
|U.S. government obligations |  |      | 5,056  |                      |   |                      |  |   | (3        | ) |  |   | 5,053 
|                            |  |      |        |                      |   |                       |  |   |           |   |  |   |       
|                            |  | $    | 24,460 |                      | $ |                      |  | $ | (15       | ) |  | $ | 24,445
|                            |  |      |        |                      |   |                       |  |   |           |   |  |   |       

The gross unrealized holding losses, less related taxes of $5 at December 31, 2006, have been
reported as a separate component of stockholders equity in the accompanying condensed consolidated balance sheet. There were no available-for-sale securities held at June 30, 2007.



|5. | Segment Information
|-- | -------------------

The Company operates its largest
businesses in three segments: Railcar, Metals Distribution and Intermodal Tank Container Leasing. Segmentation of the Companys businesses is based upon markets served and organizational structure. The remaining businesses of the Company plus
corporate headquarters items and eliminations, are shown as All Other in the table:



|                                                 |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|------------------------------------------------ |  | --------------------- | ----- | ------------------ | - | ------------------------------ |  | --------- | ---- | ------------------ | - | ----- |  | - | -----
|                                                 |  | Railcar               |       | MetalsDistribution |   | IntermodalTankContainerLeasing |  | All Other |      | ConsolidatedTotals
|                                                 |  | (Dollars in Millions)
|Three months ended June 30, 2007                 |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                                 |  | $                     | 165.5 |                    | $ | 2.7                            |  | $         | 30.3 |                    | $ | 19.4  |  | $ | 217.9
|Sales revenue                                    |  |                       | 6.0   |                    |   | 242.3                          |  |           |     |                    |   | 39.6  |  |   | 287.9
|Income before income taxes and minority interest |  |                       | 53.5  |                    |   | 25.1                           |  |           | 9.8  |                    |   | 1.9   |  |   | 90.3 
|                                                 |  |                       |       |                    |  
|Three months ended June 30, 2006                 |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                                 |  | $                     | 157.6 |                    | $ | 2.0                            |  | $         | 28.2 |                    | $ | 17.9  |  | $ | 205.7
|Sales revenue                                    |  |                       | 33.1  |                    |   | 201.5                          |  |           |     |                    |   | 67.4  |  |   | 302.0
|Income before income taxes and minority interest |  |                       | 45.7  |                    |   | 24.7                           |  |           | 8.6  |                    |   | 15.5  |  |   | 94.5 
|                                                 |  |                       |       |                    |  
|Six months ended June 30, 2007                   |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                                 |  | $                     | 329.0 |                    | $ | 4.6                            |  | $         | 59.8 |                    | $ | 37.7  |  | $ | 431.1
|Sales revenue                                    |  |                       | 16.2  |                    |   | 462.2                          |  |           |     |                    |   | 118.3 |  |   | 596.7
|Income before income taxes and minority interest |  |                       | 99.3  |                    |   | 48.5                           |  |           | 19.4 |                    |   | 25.2  |  |   | 192.4
|                                                 |  |                       |       |                    |  
|Six months ended June 30, 2006                   |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                                 |  | $                     | 311.0 |                    | $ | 4.0                            |  | $         | 54.8 |                    | $ | 34.9  |  | $ | 404.7
|Sales revenue                                    |  |                       | 66.7  |                    |   | 394.1                          |  |           |     |                    |   | 99.9  |  |   | 560.7
|Income before income taxes and minority interest |  |                       | 79.3  |                    |   | 46.5                           |  |           | 15.0 |                    |   | 26.8  |  |   | 167.6



- 10 -



---

|6. | Completed Contracts
|-- | -------------------

Certain projects are accounted for
using the completed contract method because of the inherent difficulty and uncertainty in estimating the total cost of completion and the extent of progress toward completion. Net billing in excess of cost included in accrued liabilities in the
condensed consolidated balance sheets is as follows:



|                              |  |              |        |   |                  |   |         |  
|----------------------------- |  | ------------ | ------ | - | ---------------- | - | ------- | -
|                              |  | June 30,2007 |        |   | December 31,2006 |  
|Cost incurred                 |  | $            | 684    |   |                  | $ | 16,274  |  
|Deferred revenue              |  |              | (2,925 | ) |                  |   | (36,971 | )
|                              |  |              |        |   |                  |   |         |  
|Net billing in excess of cost |  | $            | (2,241 | ) |                  | $ | (20,697 | )
|                              |  |              |        |   |                  |   |         |  



|7. | Commitments and Contingencies
|-- | -----------------------------

The Companys Canadian
subsidiaries have a demand credit facility of approximately $32,865 available on a no-fee basis. Holdings is a guarantor of this demand credit facility. At June 30, 2007, $8,615 of letters of credit were outstanding. No amounts were outstanding
for overdrafts or borrowings as of June 30, 2007.

As part of its risk management plan, the Company self-insures certain levels of its
property damage, general liability, products liability, health 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 claims, as well as incurred but not reported, health and workers compensation claims.

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 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 periods
are as follows:



|                           |  |                          |        |   |      |   |       |  
|-------------------------- |  | ------------------------ | ------ | - | ---- | - | ----- | -
|                           |  | Six Months EndedJune 30, |       
|                           |  | 2007                     |        |   | 2006 |  
|Balance, beginning of year |  | $                        | 696    |   |      | $ | 833   |  
|Warranties issued          |  |                          | 2,482  |   |      |   | 555   |  
|Settlements                |  |                          | (1,741 | ) |      |   | (229  | )
|                           |  |                          |        |   |      |   |       |  
|Balance, end of period     |  | $                        | 1,437  |   |      | $ | 1,159 |  
|                           |  |                          |        |   |      |   |       |  

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.



- 11 -



---

|8. | Consolidating Financial Information
|-- | -----------------------------------

The following
condensed consolidating statements are provided because Procor Limited, a wholly owned subsidiary of the Company, has issued a 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 three months ended
June 30, 2007 and 2006 are as follows:



|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|------------------------------------------------ |  | -------------------------------- | ------- | - | ------------- | - | ------ | ----------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                 |  | Three Months Ended June 30, 2007
|                                                 |  | Union Tank CarCompany            |         |   | ProcorLimited |   |        | OtherSubsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                                         |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Services                                         |  | $                                | 147,135 |   |               | $ | 6,503  |                   |  | $            | 86,337  |  | $            | (22,113  | ) |  | $ | 217,862
|Sales                                            |  |                                  |        |   |               |   |       |                   |  |              | 475,937 |  |              | (188,054 | ) |  |   | 287,883
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                  | 147,135 |   |               |   | 6,503  |                   |  |              | 562,274 |  |              | (210,167 | ) |  |   | 505,745
|Costs and expenses                               |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Cost of services                                 |  |                                  | 88,149  |   |               |   | 5,508  |                   |  |              | 49,889  |  |              | (22,113  | ) |  |   | 121,433
|Cost of sales                                    |  |                                  |        |   |               |   |       |                   |  |              | 421,761 |  |              | (187,814 | ) |  |   | 233,947
|General and administrative                       |  |                                  | 5,765   |   |               |   | 1,240  |                   |  |              | 28,199  |  |              |         |   |  |   | 35,204 
|Interest expense                                 |  |                                  | 24,318  |   |               |   | 955    |                   |  |              | 4,414   |  |              | 8        |   |  |   | 29,695 
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                  | 118,232 |   |               |   | 7,703  |                   |  |              | 504,263 |  |              | (209,919 | ) |  |   | 420,279
|                                                 |  |                                  |         |   |              
|Operating income (loss)                          |  |                                  | 28,903  |   |               |   | (1,200 | )                 |  |              | 58,011  |  |              | (248     | ) |  |   | 85,466 
|                                                 |  |                                  |         |   |              
|Other (expense) income, net                      |  |                                  | (477    | ) |               |   | 3,370  |                   |  |              | 1,924   |  |              | 8        |   |  |   | 4,825  
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Income before income taxes and minority interest |  |                                  | 28,426  |   |               |   | 2,170  |                   |  |              | 59,935  |  |              | (240     | ) |  |   | 90,291 
|Provision for income taxes                       |  |                                  | 11,601  |   |               |   | 460    |                   |  |              | 23,473  |  |              |         |   |  |   | 35,534 
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                  | 16,825  |   |               |   | 1,710  |                   |  |              | 36,462  |  |              | (240     | ) |  |   | 54,757 
|Equity in income of subsidiaries                 |  |                                  | 35,749  |   |               |   |       |                   |  |              |        |  |              | (35,749  | ) |  |   |       
|Minority interest                                |  |                                  |        |   |               |   |       |                   |  |              | 2,183   |  |              |         |   |  |   | 2,183  
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Net income                                       |  | $                                | 52,574  |   |               | $ | 1,710  |                   |  | $            | 34,279  |  | $            | (35,989  | ) |  | $ | 52,574 
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 | 
|                                                 |  | Three Months Ended June 30, 2006
|                                                 |  | Union Tank CarCompany            |         |   | ProcorLimited |   |        | OtherSubsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                                         |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Services                                         |  | $                                | 136,717 |   |               | $ | 7,453  |                   |  | $            | 83,037  |  | $            | (21,543  | ) |  | $ | 205,664
|Sales                                            |  |                                  |        |   |               |   |       |                   |  |              | 389,945 |  |              | (87,928  | ) |  |   | 302,017
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                  | 136,717 |   |               |   | 7,453  |                   |  |              | 472,982 |  |              | (109,471 | ) |  |   | 507,681
|Costs and expenses                               |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Cost of services                                 |  |                                  | 85,126  |   |               |   | 4,374  |                   |  |              | 41,674  |  |              | (21,543  | ) |  |   | 109,631
|Cost of sales                                    |  |                                  |        |   |               |   |       |                   |  |              | 343,671 |  |              | (87,918  | ) |  |   | 255,753
|General and administrative                       |  |                                  | 7,213   |   |               |   | 718    |                   |  |              | 24,905  |  |              |         |   |  |   | 32,836 
|Interest expense                                 |  |                                  | 19,567  |   |               |   | 375    |                   |  |              | 2,357   |  |              |         |   |  |   | 22,299 
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                  | 111,906 |   |               |   | 5,467  |                   |  |              | 412,607 |  |              | (109,461 | ) |  |   | 420,519
|                                                 |  |                                  |         |   |              
|Operating income                                 |  |                                  | 24,811  |   |               |   | 1,986  |                   |  |              | 60,375  |  |              | (10      | ) |  |   | 87,162 
|                                                 |  |                                  |         |   |              
|Other income, net                                |  |                                  | 3,075   |   |               |   | 1,711  |                   |  |              | 2,574   |  |              |         |   |  |   | 7,360  
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Income before income taxes and minority interest |  |                                  | 27,886  |   |               |   | 3,697  |                   |  |              | 62,949  |  |              | (10      | ) |  |   | 94,522 
|Provision (benefit) for income taxes             |  |                                  | 13,202  |   |               |   | (728   | )                 |  |              | 20,077  |  |              |         |   |  |   | 32,551 
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                  | 14,684  |   |               |   | 4,425  |                   |  |              | 42,872  |  |              | (10      | ) |  |   | 61,971 
|Equity in income of subsidiaries                 |  |                                  | 45,250  |   |               |   |       |                   |  |              |        |  |              | (45,250  | ) |  |   |       
|Minority interest                                |  |                                  |        |   |               |   |       |                   |  |              | 2,037   |  |              |         |   |  |   | 2,037  
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        
|Net income                                       |  | $                                | 59,934  |   |               | $ | 4,425  |                   |  | $            | 40,835  |  | $            | (45,260  | ) |  | $ | 59,934 
|                                                 |  |                                  |         |   |               |   |        |                   |  |              |         |  |              |          |   |  |   |        



- 12 -



---

|8. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------

Condensed
consolidating statements of income for the six months ended June 30, 2007 and 2006 are as follows:



|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|------------------------------------------------ |  | ------------------------------ | ------- | - | ------------- | - | ------ | ----------------- |  | ------------ | --------- |  | ------------ | -------- | - |  | - | ---------
|                                                 |  | Six Months Ended June 30, 2007
|                                                 |  | Union Tank CarCompany          |         |   | ProcorLimited |   |        | OtherSubsidiaries |  | Eliminations |           |  | Consolidated
|Revenues                                         |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Services                                         |  | $                              | 292,021 |   |               | $ | 12,810 |                   |  | $            | 170,355   |  | $            | (44,060  | ) |  | $ | 431,126  
|Sales                                            |  |                                |        |   |               |   |       |                   |  |              | 955,332   |  |              | (358,654 | ) |  |   | 596,678  
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                | 292,021 |   |               |   | 12,810 |                   |  |              | 1,125,687 |  |              | (402,714 | ) |  |   | 1,027,804
|Costs and expenses                               |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Cost of services                                 |  |                                | 176,442 |   |               |   | 10,776 |                   |  |              | 95,893    |  |              | (44,060  | ) |  |   | 239,051  
|Cost of sales                                    |  |                                |        |   |               |   |       |                   |  |              | 834,588   |  |              | (358,324 | ) |  |   | 476,264  
|General and administrative                       |  |                                | 15,448  |   |               |   | 2,179  |                   |  |              | 54,651    |  |              |         |   |  |   | 72,278   
|Interest expense                                 |  |                                | 46,241  |   |               |   | 1,935  |                   |  |              | 8,776     |  |              | 8        |   |  |   | 56,960   
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                | 238,131 |   |               |   | 14,890 |                   |  |              | 993,908   |  |              | (402,376 | ) |  |   | 844,553  
|                                                 |  |                                |         |   |              
|Operating income (loss)                          |  |                                | 53,890  |   |               |   | (2,080 | )                 |  |              | 131,779   |  |              | (338     | ) |  |   | 183,251  
|                                                 |  |                                |         |   |              
|Other (expense) income, net                      |  |                                | (436    | ) |               |   | 5,589  |                   |  |              | 3,983     |  |              | 8        |   |  |   | 9,144    
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Income before income taxes and minority interest |  |                                | 53,454  |   |               |   | 3,509  |                   |  |              | 135,762   |  |              | (330     | ) |  |   | 192,395  
|Provision for income taxes                       |  |                                | 24,978  |   |               |   | 1,081  |                   |  |              | 52,670    |  |              |         |   |  |   | 78,729   
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                | 28,476  |   |               |   | 2,428  |                   |  |              | 83,092    |  |              | (330     | ) |  |   | 113,666  
|Equity in income of subsidiaries                 |  |                                | 80,613  |   |               |   |       |                   |  |              |          |  |              | (80,613  | ) |  |   |         
|Minority interest                                |  |                                |        |   |               |   |       |                   |  |              | 4,577     |  |              |         |   |  |   | 4,577    
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Net income                                       |  | $                              | 109,089 |   |               | $ | 2,428  |                   |  | $            | 78,515    |  | $            | (80,943  | ) |  | $ | 109,089  
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 | 
|                                                 |  | Six Months Ended June 30, 2006
|                                                 |  | Union Tank CarCompany          |         |   | ProcorLimited |   |        | OtherSubsidiaries |  | Eliminations |           |  | Consolidated
|Revenues                                         |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Services                                         |  | $                              | 270,689 |   |               | $ | 13,239 |                   |  | $            | 162,698   |  | $            | (41,914  | ) |  | $ | 404,712  
|Sales                                            |  |                                |        |   |               |   |       |                   |  |              | 734,631   |  |              | (173,961 | ) |  |   | 560,670  
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                | 270,689 |   |               |   | 13,239 |                   |  |              | 897,329   |  |              | (215,875 | ) |  |   | 965,382  
|Costs and expenses                               |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Cost of services                                 |  |                                | 166,813 |   |               |   | 9,001  |                   |  |              | 88,691    |  |              | (41,914  | ) |  |   | 222,591  
|Cost of sales                                    |  |                                |        |   |               |   |       |                   |  |              | 648,725   |  |              | (173,794 | ) |  |   | 474,931  
|General and administrative                       |  |                                | 16,357  |   |               |   | 1,680  |                   |  |              | 50,750    |  |              |         |   |  |   | 68,787   
|Interest expense                                 |  |                                | 37,254  |   |               |   | 759    |                   |  |              | 4,259     |  |              |         |   |  |   | 42,272   
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                | 220,424 |   |               |   | 11,440 |                   |  |              | 792,425   |  |              | (215,708 | ) |  |   | 808,581  
|                                                 |  |                                |         |   |              
|Operating income                                 |  |                                | 50,265  |   |               |   | 1,799  |                   |  |              | 104,904   |  |              | (167     | ) |  |   | 156,801  
|                                                 |  |                                |         |   |              
|Other income, net                                |  |                                | 5,979   |   |               |   | 2,218  |                   |  |              | 2,626     |  |              |         |   |  |   | 10,823   
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Income before income taxes and minority interest |  |                                | 56,244  |   |               |   | 4,017  |                   |  |              | 107,530   |  |              | (167     | ) |  |   | 167,624  
|Provision (benefit) for income taxes             |  |                                | 23,055  |   |               |   | (632   | )                 |  |              | 37,730    |  |              |         |   |  |   | 60,153   
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                | 33,189  |   |               |   | 4,649  |                   |  |              | 69,800    |  |              | (167     | ) |  |   | 107,471  
|Equity in income of subsidiaries                 |  |                                | 70,545  |   |               |   |       |                   |  |              |          |  |              | (70,545  | ) |  |   |         
|Minority interest                                |  |                                |        |   |               |   |       |                   |  |              | 3,737     |  |              |         |   |  |   | 3,737    
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Net income                                       |  | $                              | 103,734 |   |               | $ | 4,649  |                   |  | $            | 66,063    |  | $            | (70,712  | ) |  | $ | 103,734  
|                                                 |  |                                |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          



- 13 -



---

|8. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------

Condensed
consolidating balance sheets as of June 30, 2007 and December 31, 2006 are as follows:



|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|--------------------------------------------------- |  | --------------------- | --------- | - | ------------- | - | ------- | ----------------- |  | ------------ | --------- |  | ------------ | ---------- | - |  | - | ---------
|                                                    |  | June 30, 2007        
|                                                    |  | Union Tank CarCompany |           |   | ProcorLimited |   |         | OtherSubsidiaries |  | Eliminations |           |  | Consolidated
|Assets                                              |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Cash and cash equivalents                           |  | $                     | 29        |   |               | $ | 231,948 |                   |  | $            | 2,824     |  | $            |           |   |  | $ | 234,801  
|Short-term investments                              |  |                       |          |   |               |   | 22,774  |                   |  |              |          |  |              |           |   |  |   | 22,774   
|Accounts receivable, net                            |  |                       | 99,243    |   |               |   | 2,738   |                   |  |              | 243,181   |  |              | (114,111   | ) |  |   | 231,051  
|Accounts and notes receivable, affiliates           |  |                       |          |   |               |   | 9       |                   |  |              | 44,006    |  |              |           |   |  |   | 44,015   
|Inventories, net                                    |  |                       | 5,030     |   |               |   | 1,245   |                   |  |              | 213,995   |  |              |           |   |  |   | 220,270  
|Prepaid expenses and deferred charges               |  |                       | 3,660     |   |               |   | 2,976   |                   |  |              | 5,414     |  |              |           |   |  |   | 12,050   
|Advances to parent and affiliates                   |  |                       |          |   |               |   |        |                   |  |              | 386,212   |  |              | (386,212   | ) |  |   |         
|Railcar lease fleet, net                            |  |                       | 2,706,481 |   |               |   | 32,368  |                   |  |              | 186,557   |  |              | (896       | ) |  |   | 2,924,510
|Intermodal tank container lease fleet, net          |  |                       |          |   |               |   |        |                   |  |              | 360,630   |  |              |           |   |  |   | 360,630  
|Other fixed assets, net                             |  |                       | 40,240    |   |               |   | 17,194  |                   |  |              | 226,646   |  |              |           |   |  |   | 284,080  
|Investment in subsidiaries                          |  |                       | 1,000,296 |   |               |   | 75,409  |                   |  |              | 41,371    |  |              | (1,117,076 | ) |  |   |         
|Other assets                                        |  |                       | 6,637     |   |               |   | 237     |                   |  |              | 54,979    |  |              |           |   |  |   | 61,853   
|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Total assets                                        |  | $                     | 3,861,616 |   |               | $ | 386,898 |                   |  | $            | 1,765,815 |  | $            | (1,618,295 | ) |  | $ | 4,396,034
|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|                                                    |  |                       |           |   |              
|Liabilities and Stockholders Equity                |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Accounts payable                                    |  | $                     | 41,395    |   |               | $ | 17,635  |                   |  | $            | 172,358   |  | $            | (114,105   | ) |  | $ | 117,283  
|Accrued liabilities                                 |  |                       | 97,717    |   |               |   | 4,684   |                   |  |              | 90,630    |  |              | 431        |   |  |   | 193,462  
|Advances from parent and affiliates                 |  |                       | 952,597   |   |               |   | 304,242 |                   |  |              |          |  |              | (386,419   | ) |  |   | 870,420  
|Debt                                                |  |                       | 1,072,480 |   |               |   | 1,060   |                   |  |              | 113,097   |  |              |           |   |  |   | 1,186,637
|Deferred income taxes and investment tax credits    |  |                       | 539,081   |   |               |   | 18,451  |                   |  |              | 139,298   |  |              |           |   |  |   | 696,830  
|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Total liabilities                                   |  |                       | 2,703,270 |   |               |   | 346,072 |                   |  |              | 515,383   |  |              | (500,093   | ) |  |   | 3,064,632
|                                                    |  |                       |           |   |              
|Minority interest                                   |  |                       |          |   |               |   |        |                   |  |              | 105,785   |  |              |           |   |  |   | 105,785  
|                                                    |  |                       |           |   |              
|Stockholders equity                                |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Common stock and additional capital                 |  |                       | 369,558   |   |               |   | 13,345  |                   |  |              | 370,156   |  |              | (476,915   | ) |  |   | 276,144  
|Retained earnings                                   |  |                       | 818,652   |   |               |   | 30,453  |                   |  |              | 741,655   |  |              | (641,287   | ) |  |   | 949,473  
|Equity adjustment from foreign currency translation |  |                       | (29,864   | ) |               |   | (2,972  | )                 |  |              | 32,836    |  |              |           |   |  |   |         
|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Total stockholders equity                          |  |                       | 1,158,346 |   |               |   | 40,826  |                   |  |              | 1,144,647 |  |              | (1,118,202 | ) |  |   | 1,225,617
|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          
|Total liabilities and stockholders equity          |  | $                     | 3,861,616 |   |               | $ | 386,898 |                   |  | $            | 1,765,815 |  | $            | (1,618,295 | ) |  | $ | 4,396,034
|                                                    |  |                       |           |   |               |   |         |                   |  |              |           |  |              |            |   |  |   |          



- 14 -



---

|8. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|--------------------------------------------------- |  | --------------------- | --------- | - | ------------- | - | ----------------- |  | ------------ | --------- |  | ------------ | ---------- | - |  | - | --------- | -
|                                                    |  | December 31, 2006     |          
|                                                    |  | Union Tank CarCompany |           |   | ProcorLimited |   | OtherSubsidiaries |  | Eliminations |           |  | Consolidated |           
|Assets                                              |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Cash and cash equivalents                           |  | $                     | 48,935    |   |               | $ | 115,723           |  | $            | 930       |  | $            |           |   |  | $ | 165,588   |  
|Short-term investments                              |  |                       |          |   |               |   | 97,542            |  |              |          |  |              |           |   |  |   | 97,542    |  
|Available-for-sale securities                       |  |                       | 24,445    |   |               |   |                  |  |              |          |  |              |           |   |  |   | 24,445    |  
|Accounts receivable, net                            |  |                       | 122,788   |   |               |   | 1,737             |  |              | 237,665   |  |              | (156,854   | ) |  |   | 205,336   |  
|Accounts and notes receivable, affiliate            |  |                       |          |   |               |   |                  |  |              | 44,012    |  |              |           |   |  |   | 44,012    |  
|Inventories, net                                    |  |                       | 7,246     |   |               |   | 1,429             |  |              | 210,204   |  |              |           |   |  |   | 218,879   |  
|Prepaid expenses and deferred charges               |  |                       | 3,323     |   |               |   | 3,568             |  |              | 4,032     |  |              |           |   |  |   | 10,923    |  
|Advances to parent and affiliates                   |  |                       |          |   |               |   |                  |  |              | 343,224   |  |              | (343,224   | ) |  |   |          |  
|Railcar lease fleet, net                            |  |                       | 2,450,558 |   |               |   | 30,164            |  |              | 189,544   |  |              | (566       | ) |  |   | 2,669,700 |  
|Intermodal tank container lease fleet, net          |  |                       |          |   |               |   |                  |  |              | 356,329   |  |              |           |   |  |   | 356,329   |  
|Other fixed assets, net                             |  |                       | 40,867    |   |               |   | 15,321            |  |              | 220,290   |  |              |           |   |  |   | 276,478   |  
|Investment in subsidiaries                          |  |                       | 934,687   |   |               |   | 75,453            |  |              | 40,944    |  |              | (1,051,084 | ) |  |   |          |  
|Other assets                                        |  |                       | 6,630     |   |               |   | 359               |  |              | 31,350    |  |              |           |   |  |   | 38,339    |  
|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Total assets                                        |  | $                     | 3,639,479 |   |               | $ | 341,296           |  | $            | 1,678,524 |  | $            | (1,551,728 | ) |  | $ | 4,107,571 |  
|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|                                                    |  |                       |           |   |              
|Liabilities and Stockholders Equity                |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Accounts payable                                    |  | $                     | 67,588    |   |               | $ | 17,335            |  | $            | 168,336   |  | $            | (156,841   | ) |  | $ | 96,418    |  
|Accrued liabilities                                 |  |                       | 122,997   |   |               |   | 6,349             |  |              | 101,372   |  |              | 391        |   |  |   | 231,109   |  
|Advances from parent and affiliates                 |  |                       | 557,753   |   |               |   | 257,813           |  |              |          |  |              | (343,420   | ) |  |   | 472,146   |  
|Debt                                                |  |                       | 1,238,382 |   |               |   | 2,119             |  |              | 113,146   |  |              |           |   |  |   | 1,353,647 |  
|Deferred income taxes and investment tax credits    |  |                       | 485,275   |   |               |   | 17,530            |  |              | 140,648   |  |              |           |   |  |   | 643,453   |  
|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Total liabilities                                   |  |                       | 2,471,995 |   |               |   | 301,146           |  |              | 523,502   |  |              | (499,870   | ) |  |   | 2,796,773 |  
|                                                    |  |                       |           |   |              
|Minority interest                                   |  |                       |          |   |               |   |                  |  |              | 101,208   |  |              |           |   |  |   | 101,208   |  
|                                                    |  |                       |           |   |              
|Stockholders equity                                |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Common stock and additional capital                 |  |                       | 369,558   |   |               |   | 13,345            |  |              | 370,791   |  |              | (477,550   | ) |  |   | 276,144   |  
|Retained earnings                                   |  |                       | 810,814   |   |               |   | 26,687            |  |              | 670,264   |  |              | (574,308   | ) |  |   | 933,457   |  
|Accumulated other comprehensive (losses) income     |  |                       | (12       | ) |               |   |                  |  |              | 1         |  |              |           |   |  |   | (11       | )
|Equity adjustment from foreign currency translation |  |                       | (12,876   | ) |               |   | 118               |  |              | 12,758    |  |              |           |   |  |   |          |  
|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Total stockholders equity                          |  |                       | 1,167,484 |   |               |   | 40,150            |  |              | 1,053,814 |  |              | (1,051,858 | ) |  |   | 1,209,590 |  
|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  
|Total liabilities and stockholders equity          |  | $                     | 3,639,479 |   |               | $ | 341,296           |  | $            | 1,678,524 |  | $            | (1,551,728 | ) |  | $ | 4,107,571 |  
|                                                    |  |                       |           |   |               |   |                   |  |              |           |  |              |            |   |  |   |           |  



- 15 -



---

|8. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------

Condensed
consolidating statements of cash flows for the six months ended June 30, 2007 and 2006 are as follows:



|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------ | -------- | - | ------------- | - | ------- | ----------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | -------- | -
|                                                              |  | Six Months Ended June 30, 2007 |         
|                                                              |  | Union Tank CarCompany          |          |   | ProcorLimited |   |         | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net cash provided by (used in) operating activities:          |  | $                              | 97,761   |   |               | $ | (852    | )                 |  | $ | 110,338      |   |  | $            | (329 | ) |  | $ | 206,918  |  
|                                                              |  |                                |          |   |              
|Cash flows from investing activities:                         |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Construction and purchase of lease fleet                      |  |                                | (324,527 | ) |               |   | (51     | )                 |  |   | (21,393      | ) |  |              | 340  |   |  |   | (345,631 | )
|Construction and purchase of other fixed assets               |  |                                | (2,770   | ) |               |   | (1,226  | )                 |  |   | (13,243      | ) |  |              |     |   |  |   | (17,239  | )
|Proceeds from sales of available-for-sale securities          |  |                                | 24,462   |   |               |   |        |                   |  |   |             |   |  |              |     |   |  |   | 24,462   |  
|Purchases of short-term investments                           |  |                                |         |   |               |   | (53,293 | )                 |  |   |             |   |  |              |     |   |  |   | (53,293  | )
|Proceeds from sales of short-term investments                 |  |                                |         |   |               |   | 130,618 |                   |  |   |             |   |  |              |     |   |  |   | 130,618  |  
|(Increase) decrease in other assets                           |  |                                | (153     | ) |               |   | 122     |                   |  |   | (1,439       | ) |  |              |     |   |  |   | (1,470   | )
|Proceeds from disposals of lease fleet and other fixed assets |  |                                | 10,511   |   |               |   |        |                   |  |   | 7,198        |   |  |              |     |   |  |   | 17,709   |  
|Purchases of businesses, net of cash acquired                 |  |                                |         |   |               |   |        |                   |  |   | (35,523      | ) |  |              |     |   |  |   | (35,523  | )
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash (used in) provided by investing activities           |  |                                | (292,477 | ) |               |   | 76,170  |                   |  |   | (64,400      | ) |  |              | 340  |   |  |   | (280,367 | )
|                                                              |  |                                |          |   |              
|Cash flows from financing activities:                         |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Increase (decrease) in advances from parent and affiliates    |  |                                | 387,712  |   |               |   | 31,656  |                   |  |   | (45,808      | ) |  |              | (665 | ) |  |   | 372,895  |  
|Principal payments of debt                                    |  |                                | (165,902 | ) |               |   | (1,060  | )                 |  |   | (48          | ) |  |              |     |   |  |   | (167,010 | )
|Cash dividends                                                |  |                                | (76,000  | ) |               |   |        |                   |  |   | (654         | ) |  |              | 654  |   |  |   | (76,000  | )
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash provided by (used in) financing activities           |  |                                | 145,810  |   |               |   | 30,596  |                   |  |   | (46,510      | ) |  |              | (11  | ) |  |   | 129,885  |  
|                                                              |  |                                |          |   |              
|Effect of exchange rates on cash and cash equivalents         |  |                                |         |   |               |   | 10,311  |                   |  |   | 2,466        |   |  |              |     |   |  |   | 12,777   |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents          |  |                                | (48,906  | ) |               |   | 116,225 |                   |  |   | 1,894        |   |  |              |     |   |  |   | 69,213   |  
|                                                              |  |                                |          |   |              
|Cash and cash equivalents at beginning of year                |  |                                | 48,935   |   |               |   | 115,723 |                   |  |   | 930          |   |  |              |     |   |  |   | 165,588  |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Cash and cash equivalents at end of period                    |  | $                              | 29       |   |               | $ | 231,948 |                   |  | $ | 2,824        |   |  | $            |     |   |  | $ | 234,801  |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  



- 16 -



---

|8. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------ | -------- | - | ------------- | - | ------- | ----------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | -------- | -
|                                                              |  | Six Months Ended June 30, 2006 |         
|                                                              |  | Union Tank CarCompany          |          |   | ProcorLimited |   |         | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net cash provided by (used in) operating activities:          |  | $                              | 116,233  |   |               | $ | (563    | )                 |  | $ | 63,331       |   |  | $            | 3,623  |   |  | $ | 182,624  |  
|                                                              |  |                                |          |   |              
|Cash flows from investing activities:                         |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|Construction and purchase of lease fleet                      |  |                                | (315,289 | ) |               |   | (60     | )                 |  |   | (19,303      | ) |  |              | 243    |   |  |   | (334,409 | )
|Construction and purchase of other fixed assets               |  |                                | (2,908   | ) |               |   | (1,005  | )                 |  |   | (29,267      | ) |  |              | (3,835 | ) |  |   | (37,015  | )
|Proceeds from sales of available-for-sale securities          |  |                                | 79,716   |   |               |   |        |                   |  |   |             |   |  |              |       |   |  |   | 79,716   |  
|Proceeds from sales of short-term investments                 |  |                                |         |   |               |   | 81,736  |                   |  |   |             |   |  |              |       |   |  |   | 81,736   |  
|(Increase) decrease in other assets                           |  |                                | (3       | ) |               |   | 188     |                   |  |   | (2,223       | ) |  |              |       |   |  |   | (2,038   | )
|Proceeds from disposals of lease fleet and other fixed assets |  |                                | 11,063   |   |               |   | 15      |                   |  |   | 11,876       |   |  |              |       |   |  |   | 22,954   |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|Net cash (used in) provided by investing activities           |  |                                | (227,421 | ) |               |   | 80,874  |                   |  |   | (38,917      | ) |  |              | (3,592 | ) |  |   | (189,056 | )
|                                                              |  |                                |          |   |              
|Cash flows from financing activities:                         |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|Increase (decrease) in advances from parent and affiliates    |  |                                | 213,971  |   |               |   | 63,697  |                   |  |   | (22,833      | ) |  |              | (411   | ) |  |   | 254,424  |  
|Principal payments of debt                                    |  |                                | (34,311  | ) |               |   | (15,299 | )                 |  |   | (45          | ) |  |              |       |   |  |   | (49,655  | )
|Cash dividends                                                |  |                                | (72,000  | ) |               |   |        |                   |  |   | (380         | ) |  |              | 380    |   |  |   | (72,000  | )
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|Net cash provided by (used in) financing activities           |  |                                | 107,660  |   |               |   | 48,398  |                   |  |   | (23,258      | ) |  |              | (31    | ) |  |   | 132,769  |  
|                                                              |  |                                |          |   |              
|Effect of exchange rates on cash and cash equivalents         |  |                                |         |   |               |   | 2,619   |                   |  |   |             |   |  |              |       |   |  |   | 2,619    |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents          |  |                                | (3,528   | ) |               |   | 131,328 |                   |  |   | 1,156        |   |  |              |       |   |  |   | 128,956  |  
|                                                              |  |                                |          |   |              
|Cash and cash equivalents at beginning of year                |  |                                | 70,943   |   |               |   | 75,151  |                   |  |   | 4,534        |   |  |              |       |   |  |   | 150,628  |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  
|Cash and cash equivalents at end of period                    |  | $                              | 67,415   |   |               | $ | 206,479 |                   |  | $ | 5,690        |   |  | $            |       |   |  | $ | 279,584  |  
|                                                              |  |                                |          |   |               |   |         |                   |  |   |              |   |  |              |        |   |  |   |          |  



|9. | Acquisitions
|-- | ------------

During the first quarter of 2007, the
Company acquired two businesses for its Metals Distribution segment for cash of $35,523. These businesses operate steel service centers in Pennsylvania, Ohio and Kentucky and complement existing Metals Distribution locations. Revenues from these
operations since the acquisition (approximately four months of operations) were $22,965 and income before income taxes was not significant. The Companys estimate of goodwill is $18,906, as the purchase price allocation is preliminary and
further refinements may be necessary pending finalization of valuations.

The results of operations for these acquisitions have been
included in the consolidated financial results from the date of respective acquisition. The Company does not consider these acquisitions, individually or in the aggregate, to be material to its consolidated results of operations for any of the
periods presented.



- 17 -



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document as well as our Annual Report on Form
10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission (SEC) on March 23, 2007 and our quarterly report for the period ended March 31, 2007 filed with the SEC on May 14, 2007.

Forward-Looking Statements

Certain statements
contained in this quarterly report on Form 10-Q for the quarter ended June 30, 2007 may include certain forward-looking 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, 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 assumptions. In addition, certain factors, including risk
factors identified in Item 1ARisk Factors in the Companys Annual Report on Form 10-K for the year ended December 31, 2006, may affect the Companys businesses. As a result, past financial results may not be a
reliable indicator of future performance.

Results of Operations

2ndQuarter 2007
versus 2ndQuarter 2006

Services revenue
and gross profit:

The equipment leasing businesses continued to perform well in all major markets. Demand for leased railcars and intermodal tank
containers remained strong, resulting in fleet growth, improved lease rental rates, and continued high fleet utilization.

Second quarter revenues and
gross profit from services were as follows:



|                           |  |                        |         |   |      |   |         |          |  |   |       
|-------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                           |  | 2007                   |         |   | 2006 |   |         | Increase
|                           |  | (Dollars in Thousands)
|Services revenue           |  | $                      | 217,862 |   |      | $ | 205,664 |          |  | $ | 12,198
|Cost of services           |  |                        | 121,433 |   |      |   | 109,631 |          |  |   | 11,802
|                           |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from services |  | $                      | 96,429  |   |      | $ | 96,033  |          |  | $ | 396   
|Gross profit %             |  |                        | 44      | % |      |   | 47      | %        |  |   |       



- 18 -



---

Services revenue in the second quarter of 2007 increased $12.2 million from the second quarter of 2006 primarily due to a
$7.9 million increase in railcar leasing and service revenues (equipment additions and higher lease rates), a $2.1 million increase in intermodal tank container leasing revenues (equipment additions, higher lease rates and higher utilization rate),
and $1.1 million higher revenue in the contract rail switching business (higher volume).

Gross profit on services revenue in the second quarter of 2007
increased $0.4 million from the second quarter of 2006 primarily due to a $1.1 million increase for the intermodal tank container leasing business (equipment additions, higher lease rates and higher utilization rate) offset by a $0.8 million
decrease for railcar leasing (lower gains on disposals and higher maintenance expense partially offset by equipment additions and higher lease rates).

Gains on disposals, primarily on railcars and tank containers, totaled $3.9 million in the second quarter of 2007 compared with $11.7 million in the second quarter of 2006. Gains on disposals of railcars and tank containers are treated as a
reduction to the cost of services.

The gross margin on services revenue of 44% in the second quarter of 2007 decreased from 47% in the second quarter of
2006 primarily due to lower margin in the railcar leasing business resulting from lower gains on disposals in the second quarter of 2007 more than offsetting other margin improvements.

Average fleet utilization of the Companys railcar fleet was 99% for the second quarter of 2007 and the second quarter of 2006. Utilization rates of the Companys existing railcars are driven by long-term
requirements of manufacturers and shippers of chemical products, including liquid fertilizers, liquified petroleum gas and other petroleum and fuel 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.

Sales revenue and gross profit:

Overall sales revenue was lower due to lower sales of sulphur processing equipment and manufactured railcars, partially offest by increased demand for
products of the metals distribution business. Outside sales of new railcars were decreased, despite an increase in railcar production from the second quarter of 2006 to the second quarter of 2007, in order to increase fleet additions in response to
demand for new leased railcars.

Second quarter revenues and gross profit from sales were as follows:



|                        |  |                        |         |   |      |   |         |                    |  |   |         |  
|----------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ------------------ |  | - | ------- | -
|                        |  | 2007                   |         |   | 2006 |   |         | Increase(Decrease) | 
|                        |  | (Dollars in Thousands) |        
|Sales revenue           |  | $                      | 287,883 |   |      | $ | 302,017 |                    |  | $ | (14,134 | )
|Cost of sales           |  |                        | 233,947 |   |      |   | 255,753 |                    |  |   | (21,806 | )
|                        |  |                        |         |   |      |   |         |                    |  |   |         |  
|Gross profit from sales |  | $                      | 53,936  |   |      | $ | 46,264  |                    |  | $ | 7,672   |  
|Gross profit %          |  |                        | 19      | % |      |   | 15      | %                  |  |   |         |  



- 19 -



---

Sales revenue for the second quarter of 2007 decreased $14.1 million from the second quarter of 2006 primarily due to a
$35.4 million decrease in sales of sulphur processing equipment (completion of a large project in the second quarter of 2006) and a $27.2 million decrease in sales of manufactured railcars (lower sales volume). The sales revenue decreases were
partially offset by $40.7 million higher sales of metals distribution products (higher prices and impact of acquisitions), $5.7 million higher sales of mobile railcar moving equipment (higher volume), and a $1.8 million increase for containment
vessel heads (higher volume).

Sales revenue from the acquisitions of two steel service center operations in March 2007 added approximately $17.8 million
of metals distribution products revenue in the second quarter of 2007. The gross profit impact was $2.9 million.

Gross profit on sales revenue in the
second quarter of 2007 increased $7.7 million from the second quarter of 2006 primarily due to a $4.4 million increase for manufactured railcars (higher prices and lower costs), a $3.9 million increase for metals distribution products (higher prices
and the impact of acquisitions more than offset higher cost of sales), a $1.8 million increase for containment vessel heads (higher volume and lower costs) and a $1.4 million increase for mobile railcar moving equipment (higher volume). The gross
profit increases were partially offset by a $4.5 million decrease in sulphur processing equipment (completion of a large project in the second quarter of 2006).

The gross margin on sales revenue of 19% in the second quarter of 2007 increased from 15% in the second quarter of 2006 primarily due to the improvement in margins on the sale of manufactured railcars and relatively low margins on the sale
of sulphur processing equipment in the second quarter of 2006.

All other:

General and administrative expenses in the second quarter of 2007 were $2.4 million higher than in the second quarter of 2006 primarily due to higher expenses in the metals distribution business, partially a result of
the impact of March acquisitions.

Interest expense in the second quarter of 2007 was $7.4 million higher than in the second quarter of 2006 primarily due
to $9.3 million higher interest on advances from parent and affiliates, more than offsetting $1.9 million lower interest expense on third-party debt due to principal repayments.

The provision for income taxes was $35.5 million in the second quarter of 2007 with an effective tax rate of 39.4%, compared with $32.6 million in the second quarter of 2006 with an effective tax rate of 34.4%. The
increase in the effective rate was due to higher state income tax accruals and the reduction of Canadian income tax rates enacted in the second quarter of 2006.

Six Months 2007 versus Six Months 2006

Services revenue and gross profit:

The equipment leasing businesses continued to perform well in all major markets. Demand for leased railcars and intermodal tank containers remained strong, resulting in
fleet growth, improved lease rental rates, and continued high fleet utilization.



- 20 -



---

First six months revenues and gross profit from services were as follows:



|                           |  |                        |         |   |      |   |         |          |  |   |       
|-------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                           |  | 2007                   |         |   | 2006 |   |         | Increase
|                           |  | (Dollars in Thousands)
|Services revenue           |  | $                      | 431,126 |   |      | $ | 404,712 |          |  | $ | 26,414
|Cost of services           |  |                        | 239,051 |   |      |   | 222,591 |          |  |   | 16,460
|                           |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from services |  | $                      | 192,075 |   |      | $ | 182,121 |          |  | $ | 9,954 
|Gross profit %             |  |                        | 45      | % |      |   | 45      | %        |  |   |       

Services revenue in the first six months of 2007 increased $26.4 million from the first six months of 2006 due to
a $17.9 million increase in railcar leasing and service revenues (equipment additions and higher lease rates), a $4.9 million increase in intermodal tank container leasing revenues (equipment additions, higher lease rates and higher utilization
rate), and $2.4 million higher revenue in the contract rail switching business (higher volume).

Gross profit on services revenue in the first six months
of 2007 increased $10.0 million from the first six months of 2006 primarily due to a $5.8 million increase for railcar leasing (equipment additions and higher lease rates more than offsetting lower gains on disposals and higher maintenance expense),
a $4.1 million increase for the intermodal tank container leasing business (equipment additions, higher lease rates and higher utilization rate) and a $0.9 million increase for the contract rail switching business (higher volume).

Gains on disposals, primarily on railcars and tank containers, totaled $9.2 million in the first six months of 2007 compared with $14.2 million in the first six months
of 2006. Gains on disposals of railcars and tank containers are treated as a reduction to the cost of services.

The gross margin on services revenue of
45% in the first six months of 2007 was unchanged from the first six month of 2006.

Average fleet utilization of the Companys railcar fleet was 99%
for the first six months of 2007 and the first six months of 2006. Utilization rates of the Companys existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, including liquid fertilizers,
liquified petroleum gas and other petroleum and fuel 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.

Sales revenue and gross profit:

Demand increased for products of the metals distribution business. Outside sales of new railcars were decreased, despite an increase in railcar production from the first six months of 2006 to the first six months of
2007, in order to increase fleet additions in response to demand for new leased railcars.

First six months revenues and gross profit from sales were as
follows:



|                        |  |                        |         |   |      |   |         |          |  |   |       
|----------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                        |  | 2007                   |         |   | 2006 |   |         | Increase
|                        |  | (Dollars in Thousands)
|Sales revenue           |  | $                      | 596,678 |   |      | $ | 560,670 |          |  | $ | 36,008
|Cost of sales           |  |                        | 476,264 |   |      |   | 474,931 |          |  |   | 1,333 
|                        |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from sales |  | $                      | 120,414 |   |      | $ | 85,739  |          |  | $ | 34,675
|Gross profit %          |  |                        | 20      | % |      |   | 15      | %        |  |   |       



- 21 -



---

Sales revenue for the first six months of 2007 increased $36.0 million from the first six months of 2006 due to $68.1
million higher sales of metals distribution products (higher prices, the impact of acquisitions and higher volumes), $9.3 million higher sales of mobile railcar moving equipment (higher volume), a $3.8 million increase for containment vessel heads
(higher volume), a $3.7 million increase in sales of sulphur processing equipment (higher prices), and $3.3 million higher sales of light rail transit products (higher volume). These increases were partially offset by a $50.5 million decrease in
sales of manufactured railcars (lower sales volume).

Sales revenue from the acquisitions of two steel service center operations in March 2007 added
approximately $23.0 million of metals distribution products revenue in the first six months of 2007. The gross profit impact was $3.7 million.

Gross
profit on sales revenue in the first six months of 2007 increased $34.7 million from the first six months of 2006 primarily due to a $14.1 million increase in sulphur processing equipment (lower costs and higher prices), a $7.5 million improvement
for manufactured railcars (higher prices and lower costs), a $7.1 million increase for metals distribution products (higher prices, the impact of acquisitions and higher volume more than offset higher cost of sales), a $2.5 million increase for
mobile railcar moving equipment (higher volume) and a $2.0 million increase for containment vessel heads (higher volume and lower costs).

The gross margin
on sales revenues of 20% in the first six months of 2007 increased from 15% in the first six months of 2006 primarily due to improved margins on the sales of the sulphur processing equipment and manufactured railcars.

All other:

General and administrative expenses in the first six
months of 2007 were $3.5 million higher than in the first six months of 2006 primarily due to higher expenses in the metals distribution business, partially a result of the impact of March acquisitions.

Interest expense in the first six months of 2007 was $14.7 million higher than in the first six months of 2006 primarily due to $17.1 million higher interest on advances
from parent and affiliates, more than offsetting $2.4 million lower interest expense on third-party debt due to principal repayments.

The provision for
income taxes was $78.7 million in the first six months of 2007 with an effective tax rate of 40.9%, compared with $60.2 million in the first six months of 2006 with an effective tax rate of 35.9%. The increase in the effective tax rate was due to
higher state income tax accruals and the reduction of Canadian income tax rates enacted in the second quarter of 2006.

Financial Condition and
Liquidity

Six Months 2007 versus Six Months 2006

The funds advanced from parent and affiliates, net cash provided by operating activities, and funds from the liquidation of short-term investments and available-for-sale securities were used to finance additions to the lease fleet,
acquisitions and other fixed assets, to service debt obligations, and to pay dividends to the Companys stockholder.



- 22 -



---

It is the Companys policy to pay to Holdings a quarterly dividend of approximately 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 Holdings. Conversely, when the Company requires additional funds to support its operations and capital
expenditures, required amounts are provided by Holdings. Funds advanced to or from Holdings bear interest at commercial rates. No restrictions exist regarding the amount of dividends which may be paid to Holdings, or advances which may be made
between the Company and Holdings.

Cash flows from operating activities:

Operating activities provided $206.9 million of net cash in the first six months of 2007, compared with $182.6 million provided in the first six months of 2006. The net cash provided by operating activities was higher
in the first six months of 2007 primarily due to higher deferred taxes, depreciation and net income partially offset by the net impact of changes in operating assets and liabilities.

Cash flows from investing activities:

Net cash used in investing activities was $280.4 million in the first six
months of 2007 compared with $189.1 million in the first six months of 2006. The increase in net cash used in investing activities was primarily due to lower proceeds from the sale of available-for-sale securities and the purchases of businesses.

During the first six months of 2007, the Company invested $345.6 million in the construction and purchase of lease fleet assets, compared with $334.4
million in the first six months of 2006. The first six months of 2006 capital expenditures included $113.9 million to exercise purchase options for railcars related to sale-leaseback transactions. 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 accept those lease orders. Capital expenditures for intermodal tank containers are likewise
discretionary in the intermodal tank container business.

During the first six months of 2007, the Company invested $17.2 million in the construction and
purchase of other fixed assets, compared with $37.0 million in the first six months of 2006. The amount in 2006 included expenditures related to the tank car manufacturing plant in Alexandria, Louisiana which was completed in the second quarter of
2006.

During the first six months of 2007, the Company received net proceeds of $101.8 million from the sales in excess of purchases of available-for-sale
securities and short-term investments, compared to net proceeds of $161.5 million during the first six months of 2006. The available-for-sale securities were investment-grade debt obligations with a combined weighted-average maturity under two
years. The short-term investments consist of commercial paper with original maturities between four and six months. These investments are available for the Companys use to fund repayment of principal obligations, to finance lease fleet
additions (including the exercise of sale-leaseback purchase options), to fund acquisitions or to fund other operating needs.

In March 2007, the Company
acquired two businesses for its Metals Distribution segment for cash of approximately $35.5 million. These businesses operate steel service centers in Pennsylvania, Ohio and Kentucky.



- 23 -



---

Proceeds from disposals of lease fleet and other fixed assets were $17.7 million in the first six months of 2007 compared
with $23.0 million in the first six months of 2006.

Cash flows from financing activities:

Net cash provided by financing activities was $129.9 million in the first six months of 2007 compared with $132.8 million in the first six months of 2006 due to higher
principal repayments of debt and higher cash dividends offsetting higher increases in advances from parent and affiliates. Cash dividends to Holdings were $76.0 million in the first six months of 2007 compared with $72.0 million in the first six
months of 2006.

Management expects future cash provided from operating activities, advances from parent and affiliates, and long-term financings will be
adequate to provide for the continued investment in the Companys business and enable it to meet its debt service obligations.

New Accounting
Pronouncements

In February 2007, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The statement is effective in 2008 for the Company. The adoption of
this statement is not expected to have a material effect on the Companys consolidated financial statements.

In September 2006, the FASB issued FASB
Statement No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and 132(R). This statement requires the recognition of overfunded or
underfunded status of defined benefit plans as an asset or liability and the recognition of changes in the funded status through comprehensive income. This statement also requires the measurement of funded status as of the Companys year-end,
which will be adopted by the Company at the end of 2007. The requirement to use the Companys year-end as the measurement date is effective for fiscal years ending after December 15, 2008. The adoption of this statement is not expected to
have a material effect on the Companys consolidated financial statements.

In September 2006, the FASB issued FASB Statement No. 157, Fair
Value Measurements. This statement clarifies the definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This statement is effective in 2008 for the Company. The
adoption of this statement is not expected to have a material effect on the Companys consolidated financial statements.



- 24 -



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|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

There
have been no material changes during the first six months of 2007 in the Companys disclosure of the quantitative and qualitative market risk contained in Item 7A of the Companys Annual Report on Form 10-K for the year ended
December 31, 2006.



|ITEM 4. | 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.



- 25 -



---

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reference is made to Business - Environmental Matters in Item 1 and Note 11 Contingencies of the Notes to Consolidated Financial Statements of the Companys
Annual Report on Form 10-K for the year ended December 31, 2006 for a description of certain environmental matters and Note 7 Commitments and Contingencies to the Condensed Consolidated Financial Statements in this Form 10-Q
for the quarter ended June 30, 2007.



|ITEM 1A. | RISK FACTORS
|-------- | ------------



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | There have been no material changes in the Companys risk factors from those disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2006. In
addition to the other information set forth in this report, you should carefully consider the risk factors contained in such annual report, as such risks or other risks not currently known to the Company or that the Company does not currently deem
material could materially affect the Companys business, financial condition or future results.



|ITEM 6. | EXHIBITS
|------- | --------



|             |  |                                                                                                                       
|------------ |  | ----------------------------------------------------------------------------------------------------------------------
|             | 
|Exhibit 31.1 |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
|             | 
|Exhibit 31.2 |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
|             | 
|Exhibit 32.1 |  | Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|             | 
|Exhibit 32.2 |  | Certification 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(v) of Item 601(b) of Regulation S-K. The Company
agrees to furnish a copy of any such instrument to the Commission upon request.



- 26 -



---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.



|                      |  |     |  |                                                               
|--------------------- |  | --- |  | --------------------------------------------------------------
|                      |  |     |  | UNION TANK CAR COMPANY                                        
|                      |  |    
|                      |  |     |  | REGISTRANT                                                    
|                      |  |    
|Dated: August 9, 2007 |  | By: |  | /s/ Mark J. Garrette                                          
|                      |  |     |  | Mark J. Garrette                                              
|                      |  |     |  | Vice President                                                
|                      |  |     |  | (principal financial officer and principal accounting officer)



- 27 -