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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

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

For the quarterly period ended September 30, 2005



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



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UNION TANK CAR COMPANY

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 36-3104688                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|225 W. Washington Street, Chicago, Illinois                    |  | 60606                                  
|(Address of principal executive offices)                       |  | (Zip Code)                             



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



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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 an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).    Yes ̈No  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.



The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form
with the reduced disclosure format.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

FORM 10-Q

INDEX



|                              |  |         |  |                                                                                                             |  |     
|----------------------------- |  | ------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |         |  |                                                                                                             |  | Page
|Part I. Financial Information |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Financial Statements                                                                                        |  |     
|                              |  |         | 
|                              |  |         |  | Condensed consolidated statement of income - three and nine month periods ended September 30, 2005 and 2004 |  | 3   
|                              |  |         | 
|                              |  |         |  | Condensed consolidated balance sheet - September 30, 2005 and December 31, 2004                             |  | 4   
|                              |  |         | 
|                              |  |         |  | Condensed consolidated statement of cash flows - nine months ended September 30, 2005 and 2004              |  | 5   
|                              |  |         | 
|                              |  |         |  | Notes to condensed consolidated financial statements                                                        |  | 6   
|                              |  |         | 
|                              |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                       |  | 16  
|                              |  |         | 
|                              |  | Item 4. |  | Controls and Procedures                                                                                     |  | 22  
|                              | 
|Part II. Other Information    |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Legal Proceedings                                                                                           |  | 23  
|                              |  |         | 
|                              |  | Item 5. |  | Other Information                                                                                           |  | 23  
|                              |  |         | 
|                              |  | Item 6. |  | Exhibits                                                                                                    |  | 23  
|                              | 
|Signatures                    |  | 24     



- 2 -



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PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Dollars in Thousands)

(Unaudited)



|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|--------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------ | ---- | - | ------- |  | - | --------- | - |  | - | ---------
|                                                    |  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                    |  | 2005                            |         |                                | 2004 |   | 2005    |  |   | 2004     
|Revenues                                            |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|Services (leasing and other)                        |  | $                               | 193,708 |                                |      | $ | 188,418 |  | $ | 568,649   |   |  | $ | 554,700  
|Net sales                                           |  |                                 | 223,468 |                                |      |   | 205,886 |  |   | 665,698   |   |  |   | 562,306  
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|                                                    |  |                                 | 417,176 |                                |      |   | 394,304 |  |   | 1,234,347 |   |  |   | 1,117,006
|                                                    |  |                                 |         |                               
|Costs and expenses                                  |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|Cost of services                                    |  |                                 | 118,651 |                                |      |   | 115,913 |  |   | 334,520   |   |  |   | 347,103  
|Cost of sales                                       |  |                                 | 177,465 |                                |      |   | 168,756 |  |   | 547,550   |   |  |   | 454,587  
|General and administrative                          |  |                                 | 34,346  |                                |      |   | 35,201  |  |   | 109,139   |   |  |   | 105,284  
|Interest                                            |  |                                 | 22,629  |                                |      |   | 20,564  |  |   | 62,531    |   |  |   | 54,880   
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|                                                    |  |                                 | 353,091 |                                |      |   | 340,434 |  |   | 1,053,740 |   |  |   | 961,854  
|                                                    |  |                                 |         |                               
|Other income, net                                   |  |                                 | 10,503  |                                |      |   | 10,594  |  |   | 21,515    |   |  |   | 18,356   
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|Income before income taxes                          |  |                                 | 74,588  |                                |      |   | 64,464  |  |   | 202,122   |   |  |   | 173,508  
|                                                    |  |                                 |         |                               
|Provision for income taxes                          |  |                                 | 28,016  |                                |      |   | 25,176  |  |   | 76,787    |   |  |   | 68,075   
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|                                                    |  |                                 | 46,572  |                                |      |   | 39,288  |  |   | 125,335   |   |  |   | 105,433  
|                                                    |  |                                 |         |                               
|Minority interest                                   |  |                                 | 1,105   |                                |      |   | 1,343   |  |   | 4,345     |   |  |   | 4,050    
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|Net income                                          |  |                                 | 45,467  |                                |      |   | 37,945  |  |   | 120,990   |   |  |   | 101,383  
|                                                    |  |                                 |         |                               
|Other comprehensive income (losses)                 |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|Unrealized (losses) gains on securities, net of tax |  |                                 | (272    | )                              |      |   | 316     |  |   | (800      | ) |  |   | 328      
|Minimum pension liability, net of tax               |  |                                 | (39     | )                              |      |   |        |  |   | (853      | ) |  |   |         
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          
|Comprehensive income                                |  | $                               | 45,156  |                                |      | $ | 38,261  |  | $ | 119,337   |   |  | $ | 101,711  
|                                                    |  |                                 |         |                                |      |   |         |  |   |           |   |  |   |          



See notes to condensed
consolidated financial statements.



- 3 -



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in Thousands)



|                                                                                    |  |                   |           |   |                  |   |           |  
|----------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                    |  | September 30,2005 |           |   | December 31,2004 |  
|                                                                                    |  | (Unaudited)       |           |   |                  |  
|Assets                                                                              |  |                   |           |   |                  |   |           |  
|                                                                                    |  |                  
|Cash and cash equivalents                                                           |  | $                 | 43,252    |   |                  | $ | 98,336    |  
|Short-term investments                                                              |  |                   | 82,003    |   |                  |   | 45,429    |  
|Available-for-sale securities                                                       |  |                   | 300,166   |   |                  |   | 244,896   |  
|Accounts receivable, net of allowances of $9,543 ($10,938 at December 31, 2004)     |  |                   | 181,756   |   |                  |   | 172,689   |  
|Accounts and notes receivable, affiliates                                           |  |                   | 45,146    |   |                  |   | 43,626    |  
|Inventories, net of LIFO reserves of $79,794 ($74,379 at December 31, 2004)         |  |                   | 150,161   |   |                  |   | 146,944   |  
|Prepaid expenses and deferred charges                                               |  |                   | 22,110    |   |                  |   | 13,292    |  
|Advances to parent company, principally at LIBOR plus 1%                            |  |                   | 132,378   |   |                  |   | 150,246   |  
|Railcar lease fleet, net                                                            |  |                   | 2,065,911 |   |                  |   | 1,804,350 |  
|Intermodal tank container lease fleet, net                                          |  |                   | 338,816   |   |                  |   | 323,601   |  
|Other fixed assets, net                                                             |  |                   | 233,590   |   |                  |   | 198,986   |  
|Other assets                                                                        |  |                   | 30,768    |   |                  |   | 35,422    |  
|                                                                                    |  |                   |           |   |                  |   |           |  
|Total assets                                                                        |  | $                 | 3,626,057 |   |                  | $ | 3,277,817 |  
|                                                                                    |  |                   |           |   |                  |   |           |  
|Liabilities and Stockholders Equity                                                |  |                   |           |   |                  |   |           |  
|                                                                                    |  |                  
|Accounts payable                                                                    |  | $                 | 94,017    |   |                  | $ | 74,606    |  
|Accrued liabilities                                                                 |  |                   | 244,469   |   |                  |   | 265,480   |  
|Borrowed debt, including $83,066 due within one year ($34,147 at December 31, 2004) |  |                   | 1,449,672 |   |                  |   | 1,167,251 |  
|                                                                                    |  |                   |           |   |                  |   |           |  
|                                                                                    |  |                   | 1,788,158 |   |                  |   | 1,507,337 |  
|                                                                                    |  |                  
|Deferred income taxes and investment tax credits                                    |  |                   | 623,863   |   |                  |   | 596,126   |  
|                                                                                    |  |                   |           |   |                  |   |           |  
|                                                                                    |  |                   | 2,412,021 |   |                  |   | 2,103,463 |  
|                                                                                    |  |                  
|Minority interest                                                                   |  |                   | 101,700   |   |                  |   | 97,355    |  
|                                                                                    |  |                  
|Stockholders equity                                                                |  |                   |           |   |                  |   |           |  
|Common stock                                                                        |  |                   | 106,689   |   |                  |   | 106,689   |  
|Additional capital                                                                  |  |                   | 158,372   |   |                  |   | 158,372   |  
|Retained earnings                                                                   |  |                   | 849,329   |   |                  |   | 812,339   |  
|Unrealized losses on available-for-sale securities, net                             |  |                   | (1,201    | ) |                  |   | (401      | )
|Minimum pension liability, net                                                      |  |                   | (853      | ) |                  |   |          |  
|                                                                                    |  |                   |           |   |                  |   |           |  
|Total stockholders equity                                                          |  |                   | 1,112,336 |   |                  |   | 1,076,999 |  
|                                                                                    |  |                   |           |   |                  |   |           |  
|Total liabilities and stockholders equity                                          |  | $                 | 3,626,057 |   |                  | $ | 3,277,817 |  
|                                                                                    |  |                   |           |   |                  |   |           |  



See notes to condensed
consolidated financial statements.



- 4 -



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



|                                                                                  |  |                                |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Nine Months EndedSeptember 30, |         
|                                                                                  |  | 2005                           |          |   | 2004 |  
|Cash flows from operating activities:                                             |  |                                |          |   |      |   |          |  
|Net income                                                                        |  | $                              | 120,990  |   |      | $ | 101,383  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |          |   |      |   |          |  
|Depreciation and amortization                                                     |  |                                | 123,573  |   |      |   | 120,615  |  
|Deferred taxes                                                                    |  |                                | 26,898   |   |      |   | 19,969   |  
|Gain on disposition of lease fleet and other fixed assets                         |  |                                | (5,193   | ) |      |   | (9,351   | )
|Other non-cash income and expenses                                                |  |                                | 6,307    |   |      |   | 6,271    |  
|Changes in assets and liabilities:                                                |  |                                |          |   |      |   |          |  
|Accounts receivable                                                               |  |                                | (18,608  | ) |      |   | (44,036  | )
|Inventories                                                                       |  |                                | 2,654    |   |      |   | (22,503  | )
|Prepaid expenses and deferred charges                                             |  |                                | (11,008  | ) |      |   | (7,890   | )
|Accounts payable and accrued expenses                                             |  |                                | (9,511   | ) |      |   | 12,124   |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                | 236,102  |   |      |   | 176,582  |  
|                                                                                  |  |                               
|Cash flows from investing activities:                                             |  |                                |          |   |      |   |          |  
|Construction and purchase of lease fleet and other fixed assets                   |  |                                | (442,200 | ) |      |   | (234,585 | )
|(Increase) decrease in short-term investments                                     |  |                                | (36,574  | ) |      |   | 17,159   |  
|Increase in available-for-sale securities                                         |  |                                | (56,493  | ) |      |   | (285,528 | )
|Decrease in advance to parent                                                     |  |                                | 21,438   |   |      |   | 94,964   |  
|Increase in other assets                                                          |  |                                | (1,527   | ) |      |   | (2,480   | )
|Proceeds from disposals of lease fleet and other fixed assets                     |  |                                | 17,471   |   |      |   | 24,405   |  
|Proceeds from disposition of business                                             |  |                                | 7,274    |   |      |   |         |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                | (490,611 | ) |      |   | (386,065 | )
|                                                                                  |  |                               
|Cash flows from financing activities:                                             |  |                                |          |   |      |   |          |  
|Proceeds from issuance of borrowed debt                                           |  |                                | 311,000  |   |      |   | 300,000  |  
|Principal payments of borrowed debt                                               |  |                                | (28,579  | ) |      |   | (36,410  | )
|Cash dividends                                                                    |  |                                | (84,000  | ) |      |   | (71,000  | )
|                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |                                | 198,421  |   |      |   | 192,590  |  
|                                                                                  |  |                               
|Effect of exchange rates on cash and cash equivalents                             |  |                                | 1,004    |   |      |   | 1,383    |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Decrease in cash and cash equivalents                                             |  |                                | (55,084  | ) |      |   | (15,510  | )
|                                                                                  |  |                               
|Cash and cash equivalents at beginning of year                                    |  |                                | 98,336   |   |      |   | 56,197   |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                              | 43,252   |   |      | $ | 40,687   |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Cash paid during the period for:                                                  |  |                                |          |   |      |   |          |  
|Interest                                                                          |  | $                              | 51,220   |   |      | $ | 46,698   |  
|Income taxes                                                                      |  |                                | 44,917   |   |      |   | 52,708   |  



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 include all adjustments, consisting of normal recurring accruals, which the Company
considers necessary for a fair presentation. 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 2004 Annual Report on Form 10-K.



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



The 2005 interim results presented herein are not necessarily indicative of the results of operations for the full year 2005.



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



Cash and Cash Equivalents



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



Short-Term Investments



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



Inventories



Inventories are stated at the lower of cost or market, using
the first-in, first-out (FIFO) or last-in, first-out (LIFO) methods. Finished goods, work-in-process, and raw materials represented approximately 57%, 9%, and 33% of net inventories at September 30, 2005 and 62%, 8%, and 29% of net inventories
at December 31, 2004, respectively. The Company uses the LIFO costing method for approximately 67% and 70% of its total gross inventories at September 30, 2005 and December 31, 2004, respectively.



- 6 -



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



Foreign Currency Translation



Foreign currency translation adjustments and transaction gains and losses are borne by the Companys parent. For the nine months ended
September 30, 2005 and 2004, the Companys parent absorbed losses of $640 and $552, respectively.



Lease Fleet and Other Fixed Assets



|                                      |  |                   |            |   |                  |   |            |  
|------------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|                                      |  | September 30,2005 |            |   | December 31,2004 |  
|Railcar lease fleet                   |  |                   |            |   |                  |   |            |  
|Gross cost                            |  | $                 | 3,745,185  |   |                  | $ | 3,413,293  |  
|Less accumulated depreciation         |  |                   | (1,679,274 | ) |                  |   | (1,608,943 | )
|                                      |  |                   |            |   |                  |   |            |  
|                                      |  | $                 | 2,065,911  |   |                  | $ | 1,804,350  |  
|                                      |  |                   |            |   |                  |   |            |  
|Intermodal tank container lease fleet |  |                   |            |   |                  |   |            |  
|Gross cost                            |  | $                 | 452,278    |   |                  | $ | 419,304    |  
|Less accumulated depreciation         |  |                   | (113,462   | ) |                  |   | (95,703    | )
|                                      |  |                   |            |   |                  |   |            |  
|                                      |  | $                 | 338,816    |   |                  | $ | 323,601    |  
|                                      |  |                   |            |   |                  |   |            |  
|Other fixed assets                    |  |                   |            |   |                  |   |            |  
|Gross cost                            |  | $                 | 615,985    |   |                  | $ | 571,346    |  
|Less accumulated depreciation         |  |                   | (382,395   | ) |                  |   | (372,360   | )
|                                      |  |                   |            |   |                  |   |            |  
|                                      |  | $                 | 233,590    |   |                  | $ | 198,986    |  
|                                      |  |                   |            |   |                  |   |            |  



Derivative Financial Instruments



The Companys
foreign subsidiaries periodically enter into foreign currency forward contracts to hedge against currency exchange rate exposures. There were no foreign currency forward contracts outstanding at September 30, 2005 and December 31, 2004.



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.



- 7 -



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



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 what it
reasonably expects to pay in resolution of these matters 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.



|4. | Segment Information
|-- | -------------------



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



|                                      |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|------------------------------------- |  | --------------------- | ----- | ------------------ | - | ------------------------------ |  | --------- | ---- | ------------------ | - | ----- |  | - | -----
|                                      |  | Railcar               |       | MetalsDistribution |   | IntermodalTankContainerLeasing |  | All Other |      | ConsolidatedTotals
|                                      |  | (Dollars in Millions) |       |                    |   |                                |  |          
|Three months ended September 30, 2005 |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                      |  | $                     | 150.1 |                    | $ | 2.3                            |  | $         | 26.3 |                    | $ | 15.0  |  | $ | 193.7
|Net sales revenue                     |  |                       | 14.6  |                    |   | 175.6                          |  |           |     |                    |   | 33.3  |  |   | 223.5
|Income before income taxes            |  |                       | 29.5  |                    |   | 25.4                           |  |           | 5.3  |                    |   | 14.4  |  |   | 74.6 
|                                      |  |                       |       |                    |  
|Three months ended September 30, 2004 |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                      |  | $                     | 138.6 |                    | $ | 2.2                            |  | $         | 24.3 |                    | $ | 23.3  |  | $ | 188.4
|Net sales revenue                     |  |                       | 12.6  |                    |   | 156.3                          |  |           |     |                    |   | 37.0  |  |   | 205.9
|Income before income taxes            |  |                       | 34.6  |                    |   | 15.1                           |  |           | 3.5  |                    |   | 11.3  |  |   | 64.5 
|                                      |  |                       |       |                    |  
|Nine months ended September 30, 2005  |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                      |  | $                     | 438.5 |                    | $ | 6.6                            |  | $         | 77.1 |                    | $ | 46.4  |  | $ | 568.6
|Net sales revenue                     |  |                       | 45.6  |                    |   | 518.9                          |  |           |     |                    |   | 101.2 |  |   | 665.7
|Income before income taxes            |  |                       | 88.9  |                    |   | 57.2                           |  |           | 16.2 |                    |   | 39.8  |  |   | 202.1
|                                      |  |                       |       |                    |  
|Nine months ended September 30, 2004  |  |                       |       |                    |   |                                |  |           |      |                    |   |       |  |   |      
|Services revenue                      |  | $                     | 410.1 |                    | $ | 6.4                            |  | $         | 71.4 |                    | $ | 66.8  |  | $ | 554.7
|Net sales revenue                     |  |                       | 28.2  |                    |   | 428.1                          |  |           |     |                    |   | 106.0 |  |   | 562.3
|Income before income taxes            |  |                       | 96.0  |                    |   | 38.4                           |  |           | 10.5 |                    |   | 28.6  |  |   | 173.5



|5. | Disposition of Business
|-- | -----------------------



On April 29, 2005, the Company sold its sulfur-based fertilizer business, which operated in the United States and Canada, for a sale price of
approximately $8.4 million, which amount is subject to certain post-closing adjustments. As of September 30, 2005, $7.3 million has been received.



- 8 -



---

|6. | Available-for-Sale Securities
|-- | -----------------------------



At September 30, 2005 and December 31, 2004, the Company had the following investments in marketable securities which have been classified as
available-for-sale:



|                          |  |      |         |                      |   |                       |  |   |            |   |  |   |        
|------------------------- |  | ---- | ------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | -------
|September 30, 2005        |  | Cost |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|U.S. Corporate Securities |  | $    | 302,004 |                      | $ |                      |  | $ | (1,838     | ) |  | $ | 300,166
|                          |  |      |         |                     
|December 31, 2004         |  | Cost |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|U.S. Corporate Securities |  | $    | 245,510 |                      | $ |                      |  | $ | (614       | ) |  | $ | 244,896



The gross unrealized
holding losses, less related taxes ($637 and $213 at September 30, 2005 and December 31, 2004, respectively) have been reported as a separate component of stockholders equity in the accompanying condensed consolidated balance sheet.



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



The Company has one residual value guarantee totaling $2.1 million until March 2006, several performance guarantees totaling $1.9 million until August
2008, and several standby letters of credit totaling $19.7 million.



The Companys Canadian subsidiaries have approximately $11.6 million of credit lines available on a no-fee basis. No amounts were outstanding as of September 30, 2005.



Additionally, the Company provides warranties on certain products for varying lengths of time. The Company estimates the
costs that may be incurred and records a liability in the amount of such costs at the time product revenue is recognized. Changes to the Companys product warranty accrual during the periods are as follows:



|                           |  |                                |       |   |      |   |       |  
|-------------------------- |  | ------------------------------ | ----- | - | ---- | - | ----- | -
|                           |  | Nine Months EndedSeptember 30, |      
|                           |  | 2005                           |       |   | 2004 |  
|Balance, beginning of year |  | $                              | 1,687 |   |      | $ | 602   |  
|Net warranties issued      |  |                                | 71    |   |      |   | 809   |  
|Settlements                |  |                                | (537  | ) |      |   | (170  | )
|                           |  |                                |       |   |      |   |       |  
|Balance, end of period     |  | $                              | 1,221 |   |      | $ | 1,241 |  
|                           |  |                                |       |   |      |   |       |  



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.



- 9 -



---

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



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



Effective January 1, 2005, the Companys tank car manufacturing business was transferred from Union Tank Car
Company to UTLX Manufacturing, Inc., a new wholly owned subsidiary of the Company, and is now included in Other Subsidiaries.



Condensed consolidating statements of income for the three months ended September 30, 2005 and 2004 are as follows:



|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|-------------------------- |  | ------------------------------------- | ------- | ------------- | - | ----------------- |  | ------------ | ------- |  | ------------ | ------- | - |  | - | -------
|                           |  | Three Months Ended September 30, 2005
|                           |  | Union Tank CarCompany                 |         | ProcorLimited |   | OtherSubsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                   |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Services                   |  | $                                     | 131,590 |               | $ | 5,477             |  | $            | 73,223  |  | $            | (16,582 | ) |  | $ | 193,708
|Net sales                  |  |                                       |        |               |   |                  |  |              | 304,679 |  |              | (81,211 | ) |  |   | 223,468
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           |  |                                       | 131,590 |               |   | 5,477             |  |              | 377,902 |  |              | (97,793 | ) |  |   | 417,176
|Costs and expenses         |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Cost of services           |  |                                       | 86,913  |               |   | 1,906             |  |              | 46,414  |  |              | (16,582 | ) |  |   | 118,651
|Cost of sales              |  |                                       | 11      |               |   |                  |  |              | 249,427 |  |              | (71,973 | ) |  |   | 177,465
|General and administrative |  |                                       | 9,577   |               |   | 610               |  |              | 25,555  |  |              | (1,396  | ) |  |   | 34,346 
|Interest                   |  |                                       | 17,806  |               |   | 536               |  |              | 4,287   |  |              |        |   |  |   | 22,629 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           |  |                                       | 114,307 |               |   | 3,052             |  |              | 325,683 |  |              | (89,951 | ) |  |   | 353,091
|Other income, net          |  |                                       | 39,240  |               |   | 289               |  |              | 3,042   |  |              | (32,068 | ) |  |   | 10,503 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Income before income taxes |  |                                       | 56,523  |               |   | 2,714             |  |              | 55,261  |  |              | (39,910 | ) |  |   | 74,588 
|Provision for income taxes |  |                                       | 11,056  |               |   | 1,077             |  |              | 20,384  |  |              | (4,501  | ) |  |   | 28,016 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           |  |                                       | 45,467  |               |   | 1,637             |  |              | 34,877  |  |              | (35,409 | ) |  |   | 46,572 
|Minority interest          |  |                                       |        |               |   |                  |  |              | 1,105   |  |              |        |   |  |   | 1,105  
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Net income                 |  | $                                     | 45,467  |               | $ | 1,637             |  | $            | 33,772  |  | $            | (35,409 | ) |  | $ | 45,467 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           | 
|                           |  | Three Months Ended September 30, 2004
|                           |  | Union Tank CarCompany                 |         | ProcorLimited |   | OtherSubsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                   |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Services                   |  | $                                     | 121,594 |               | $ | 5,409             |  | $            | 80,058  |  | $            | (18,643 | ) |  | $ | 188,418
|Net sales                  |  |                                       | 12,624  |               |   | 20                |  |              | 195,364 |  |              | (2,122  | ) |  |   | 205,886
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           |  |                                       | 134,218 |               |   | 5,429             |  |              | 275,422 |  |              | (20,765 | ) |  |   | 394,304
|Costs and expenses         |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Cost of services           |  |                                       | 80,032  |               |   | 2,700             |  |              | 51,824  |  |              | (18,643 | ) |  |   | 115,913
|Cost of sales              |  |                                       | 12,056  |               |   | 13                |  |              | 158,809 |  |              | (2,122  | ) |  |   | 168,756
|General and administrative |  |                                       | 9,406   |               |   | 829               |  |              | 24,966  |  |              |        |   |  |   | 35,201 
|Interest                   |  |                                       | 15,988  |               |   | 584               |  |              | 3,992   |  |              |        |   |  |   | 20,564 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           |  |                                       | 117,482 |               |   | 4,126             |  |              | 239,591 |  |              | (20,765 | ) |  |   | 340,434
|Other income, net          |  |                                       | 32,580  |               |   | 3,011             |  |              | 3,535   |  |              | (28,532 | ) |  |   | 10,594 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Income before income taxes |  |                                       | 49,316  |               |   | 4,314             |  |              | 39,366  |  |              | (28,532 | ) |  |   | 64,464 
|Provision for income taxes |  |                                       | 11,371  |               |   | 954               |  |              | 12,851  |  |              |        |   |  |   | 25,176 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|                           |  |                                       | 37,945  |               |   | 3,360             |  |              | 26,515  |  |              | (28,532 | ) |  |   | 39,288 
|Minority interest          |  |                                       |        |               |   |                  |  |              | 1,343   |  |              |        |   |  |   | 1,343  
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        
|Net income                 |  | $                                     | 37,945  |               | $ | 3,360             |  | $            | 25,172  |  | $            | (28,532 | ) |  | $ | 37,945 
|                           |  |                                       |         |               |   |                   |  |              |         |  |              |         |   |  |   |        



- 10 -



---

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



Condensed consolidating statements of income for the nine months ended September 30, 2005 and 2004 are as follows:



|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|-------------------------- |  | ------------------------------------ | ------- | - | ------------- | - | ------ | ----------------- |  | ------------ | --------- |  | ------------ | -------- | - |  | - | ---------
|                           |  | Nine Months Ended September 30, 2005
|                           |  | Union Tank CarCompany                |         |   | ProcorLimited |   |        | OtherSubsidiaries |  | Eliminations |           |  | Consolidated
|Revenues                   |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Services                   |  | $                                    | 386,279 |   |               | $ | 15,552 |                   |  | $            | 221,957   |  | $            | (55,139  | ) |  | $ | 568,649  
|Net sales                  |  |                                      |        |   |               |   |       |                   |  |              | 902,006   |  |              | (236,308 | ) |  |   | 665,698  
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           |  |                                      | 386,279 |   |               |   | 15,552 |                   |  |              | 1,123,963 |  |              | (291,447 | ) |  |   | 1,234,347
|Costs and expenses         |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Cost of services           |  |                                      | 246,459 |   |               |   | 9,753  |                   |  |              | 133,447   |  |              | (55,139  | ) |  |   | 334,520  
|Cost of sales              |  |                                      | (775    | ) |               |   |       |                   |  |              | 766,156   |  |              | (217,831 | ) |  |   | 547,550  
|General and administrative |  |                                      | 31,847  |   |               |   | 1,760  |                   |  |              | 78,873    |  |              | (3,341   | ) |  |   | 109,139  
|Interest                   |  |                                      | 49,089  |   |               |   | 1,656  |                   |  |              | 11,786    |  |              |         |   |  |   | 62,531   
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           |  |                                      | 326,620 |   |               |   | 13,169 |                   |  |              | 990,262   |  |              | (276,311 | ) |  |   | 1,053,740
|Other income, net          |  |                                      | 90,799  |   |               |   | 2,466  |                   |  |              | 5,649     |  |              | (77,399  | ) |  |   | 21,515   
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Income before income taxes |  |                                      | 150,458 |   |               |   | 4,849  |                   |  |              | 139,350   |  |              | (92,535  | ) |  |   | 202,122  
|Provision for income taxes |  |                                      | 29,468  |   |               |   | 1,928  |                   |  |              | 50,734    |  |              | (5,343   | ) |  |   | 76,787   
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           |  |                                      | 120,990 |   |               |   | 2,921  |                   |  |              | 88,616    |  |              | (87,192  | ) |  |   | 125,335  
|Minority interest          |  |                                      |        |   |               |   |       |                   |  |              | 4,345     |  |              |         |   |  |   | 4,345    
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Net income                 |  | $                                    | 120,990 |   |               | $ | 2,921  |                   |  | $            | 84,271    |  | $            | (87,192  | ) |  | $ | 120,990  
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           | 
|                           |  | Nine Months Ended September 30, 2004
|                           |  | Union Tank CarCompany                |         |   | ProcorLimited |   |        | OtherSubsidiaries |  | Eliminations |           |  | Consolidated
|Revenues                   |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Services                   |  | $                                    | 357,776 |   |               | $ | 16,302 |                   |  | $            | 235,531   |  | $            | (54,909  | ) |  | $ | 554,700  
|Net sales                  |  |                                      | 28,241  |   |               |   | 464    |                   |  |              | 542,041   |  |              | (8,440   | ) |  |   | 562,306  
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           |  |                                      | 386,017 |   |               |   | 16,766 |                   |  |              | 777,572   |  |              | (63,349  | ) |  |   | 1,117,006
|Costs and expenses         |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Cost of services           |  |                                      | 235,594 |   |               |   | 14,699 |                   |  |              | 151,719   |  |              | (54,909  | ) |  |   | 347,103  
|Cost of sales              |  |                                      | 26,645  |   |               |   | 344    |                   |  |              | 436,038   |  |              | (8,440   | ) |  |   | 454,587  
|General and administrative |  |                                      | 27,986  |   |               |   | 2,624  |                   |  |              | 74,674    |  |              |         |   |  |   | 105,284  
|Interest                   |  |                                      | 42,105  |   |               |   | 1,765  |                   |  |              | 11,010    |  |              |         |   |  |   | 54,880   
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           |  |                                      | 332,330 |   |               |   | 19,432 |                   |  |              | 673,441   |  |              | (63,349  | ) |  |   | 961,854  
|Other income, net          |  |                                      | 77,680  |   |               |   | 3,900  |                   |  |              | 7,269     |  |              | (70,493  | ) |  |   | 18,356   
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Income before income taxes |  |                                      | 131,367 |   |               |   | 1,234  |                   |  |              | 111,400   |  |              | (70,493  | ) |  |   | 173,508  
|Provision for income taxes |  |                                      | 29,984  |   |               |   | (860   | )                 |  |              | 38,951    |  |              |         |   |  |   | 68,075   
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|                           |  |                                      | 101,383 |   |               |   | 2,094  |                   |  |              | 72,449    |  |              | (70,493  | ) |  |   | 105,433  
|Minority interest          |  |                                      |        |   |               |   |       |                   |  |              | 4,050     |  |              |         |   |  |   | 4,050    
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          
|Net income                 |  | $                                    | 101,383 |   |               | $ | 2,094  |                   |  | $            | 68,399    |  | $            | (70,493  | ) |  | $ | 101,383  
|                           |  |                                      |         |   |               |   |        |                   |  |              |           |  |              |          |   |  |   |          



- 11 -



---

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



Condensed consolidating balance sheets as of September 30, 2005 and December 31, 2004 are as follows:



|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|------------------------------------------------------- |  | --------------------- | --------- | - | ------------- | - | -------- | ----------------- |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                        |  | September 30, 2005    |          
|                                                        |  | Union Tank CarCompany |           |   | ProcorLimited |   |          | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |           
|Assets                                                  |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       |           |   |              
|Cash and cash equivalents                               |  | $                     | 3,210     |   |               | $ | 36,396   |                   |  | $ | 3,646        |   |  | $            |           |   |  | $ | 43,252    |  
|Short-term investments                                  |  |                       |          |   |               |   | 82,003   |                   |  |   |             |   |  |              |           |   |  |   | 82,003    |  
|Available-for-sale securities                           |  |                       | 299,115   |   |               |   |         |                   |  |   | 1,051        |   |  |              |           |   |  |   | 300,166   |  
|Accounts receivable                                     |  |                       | 45,415    |   |               |   | 1,856    |                   |  |   | 205,677      |   |  |              | (71,192    | ) |  |   | 181,756   |  
|Accounts and notes receivable, affiliates               |  |                       |          |   |               |   | 1,353    |                   |  |   | 43,793       |   |  |              |           |   |  |   | 45,146    |  
|Inventories, net                                        |  |                       | 9,955     |   |               |   | 1,815    |                   |  |   | 138,463      |   |  |              | (72        | ) |  |   | 150,161   |  
|Prepaid expenses and deferred charges                   |  |                       | 6,240     |   |               |   | 961      |                   |  |   | 14,909       |   |  |              |           |   |  |   | 22,110    |  
|Advances (from) to parent                               |  |                       | (127,800  | ) |               |   | (107,303 | )                 |  |   | 382,349      |   |  |              | (14,868    | ) |  |   | 132,378   |  
|Railcar lease fleet, net                                |  |                       | 1,815,334 |   |               |   | 31,845   |                   |  |   | 220,064      |   |  |              | (1,332     | ) |  |   | 2,065,911 |  
|Intermodal tank container lease fleet, net              |  |                       |          |   |               |   |         |                   |  |   | 338,816      |   |  |              |           |   |  |   | 338,816   |  
|Other fixed assets, net                                 |  |                       | 41,812    |   |               |   | 15,285   |                   |  |   | 176,493      |   |  |              |           |   |  |   | 233,590   |  
|Investment in subsidiaries                              |  |                       | 941,642   |   |               |   | 75,455   |                   |  |   | 86,084       |   |  |              | (1,103,181 | ) |  |   |          |  
|Other assets                                            |  |                       |          |   |               |   | 1,173    |                   |  |   | 29,595       |   |  |              |           |   |  |   | 30,768    |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Total assets                                            |  | $                     | 3,034,923 |   |               | $ | 140,839  |                   |  | $ | 1,640,940    |   |  | $            | (1,190,645 | ) |  | $ | 3,626,057 |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Liabilities and Stockholders Equity                    |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       |           |   |              
|Accounts payable                                        |  | $                     | 56,669    |   |               | $ | 16,315   |                   |  | $ | 92,218       |   |  | $            | (71,185    | ) |  | $ | 94,017    |  
|Accrued liabilities                                     |  |                       | 151,619   |   |               |   | 3,867    |                   |  |   | 89,855       |   |  |              | (872       | ) |  |   | 244,469   |  
|Borrowed debt                                           |  |                       | 1,294,134 |   |               |   | 17,419   |                   |  |   | 138,119      |   |  |              |           |   |  |   | 1,449,672 |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       | 1,502,422 |   |               |   | 37,601   |                   |  |   | 320,192      |   |  |              | (72,057    | ) |  |   | 1,788,158 |  
|                                                        |  |                       |           |   |              
|Deferred income taxes and investment tax credits        |  |                       | 459,942   |   |               |   | 25,369   |                   |  |   | 138,552      |   |  |              |           |   |  |   | 623,863   |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       | 1,962,364 |   |               |   | 62,970   |                   |  |   | 458,744      |   |  |              | (72,057    | ) |  |   | 2,412,021 |  
|                                                        |  |                       |           |   |              
|Minority interest                                       |  |                       |          |   |               |   |         |                   |  |   | 101,700      |   |  |              |           |   |  |   | 101,700   |  
|                                                        |  |                       |           |   |              
|Stockholders equity                                    |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Common stock                                            |  |                       | 106,689   |   |               |   | 6,331    |                   |  |   | 79,044       |   |  |              | (85,375    | ) |  |   | 106,689   |  
|Additional capital                                      |  |                       | 251,786   |   |               |   | 7,014    |                   |  |   | 279,818      |   |  |              | (380,246   | ) |  |   | 158,372   |  
|Retained earnings                                       |  |                       | 727,907   |   |               |   | 65,119   |                   |  |   | 709,270      |   |  |              | (652,967   | ) |  |   | 849,329   |  
|Unrealized losses on available-for-sale securities, net |  |                       | (1,195    | ) |               |   |         |                   |  |   | (6           | ) |  |              |           |   |  |   | (1,201    | )
|Minimum pension liability, net                          |  |                       |          |   |               |   |         |                   |  |   | (853         | ) |  |              |           |   |  |   | (853      | )
|Equity adjustment from foreign currency translation     |  |                       | (12,628   | ) |               |   | (595     | )                 |  |   | 13,223       |   |  |              |           |   |  |   |          |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Total stockholders equity                              |  |                       | 1,072,559 |   |               |   | 77,869   |                   |  |   | 1,080,496    |   |  |              | (1,118,588 | ) |  |   | 1,112,336 |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Total liabilities and stockholders equity              |  | $                     | 3,034,923 |   |               | $ | 140,839  |                   |  | $ | 1,640,940    |   |  | $            | (1,190,645 | ) |  | $ | 3,626,057 |  
|                                                        |  |                       |           |   |               |   |          |                   |  |   |              |   |  |              |            |   |  |   |           |  



- 12 -



---

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



|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|------------------------------------------------------- |  | --------------------- | --------- | - | ------------- | - | ------- | ----------------- |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                        |  | December 31, 2004     |          
|                                                        |  | Union Tank CarCompany |           |   | ProcorLimited |   |         | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |           
|Assets                                                  |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       |           |   |              
|Cash and cash equivalents                               |  | $                     | 61,663    |   |               | $ | 33,123  |                   |  | $ | 3,550        |   |  | $            |           |   |  | $ | 98,336    |  
|Short-term investments                                  |  |                       |          |   |               |   | 45,429  |                   |  |   |             |   |  |              |           |   |  |   | 45,429    |  
|Available-for-sale securities                           |  |                       | 243,986   |   |               |   |        |                   |  |   | 910          |   |  |              |           |   |  |   | 244,896   |  
|Accounts receivable                                     |  |                       | 39,971    |   |               |   | 2,668   |                   |  |   | 193,962      |   |  |              | (63,912    | ) |  |   | 172,689   |  
|Accounts and notes receivable, affiliates               |  |                       |          |   |               |   |        |                   |  |   | 43,626       |   |  |              |           |   |  |   | 43,626    |  
|Inventories, net                                        |  |                       | 44,780    |   |               |   | 1,924   |                   |  |   | 100,240      |   |  |              |           |   |  |   | 146,944   |  
|Prepaid expenses and deferred charges                   |  |                       | 4,592     |   |               |   | 2,840   |                   |  |   | 5,860        |   |  |              |           |   |  |   | 13,292    |  
|Advances (from) to parent                               |  |                       | (122,196  | ) |               |   | (73,143 | )                 |  |   | 345,133      |   |  |              | 452        |   |  |   | 150,246   |  
|Railcar lease fleet, net                                |  |                       | 1,557,425 |   |               |   | 31,661  |                   |  |   | 215,995      |   |  |              | (731       | ) |  |   | 1,804,350 |  
|Intermodal tank container lease fleet, net              |  |                       |          |   |               |   |        |                   |  |   | 323,601      |   |  |              |           |   |  |   | 323,601   |  
|Other fixed assets, net                                 |  |                       | 90,524    |   |               |   | 15,303  |                   |  |   | 93,159       |   |  |              |           |   |  |   | 198,986   |  
|Investment in subsidiaries                              |  |                       | 813,631   |   |               |   | 75,455  |                   |  |   | 77,512       |   |  |              | (966,598   | ) |  |   |          |  
|Other assets                                            |  |                       | 13        |   |               |   | 3,792   |                   |  |   | 31,617       |   |  |              |           |   |  |   | 35,422    |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Total assets                                            |  | $                     | 2,734,389 |   |               | $ | 139,052 |                   |  | $ | 1,435,165    |   |  | $            | (1,030,789 | ) |  | $ | 3,277,817 |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Liabilities and Stockholders Equity                    |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       |           |   |              
|Accounts payable                                        |  | $                     | 55,474    |   |               | $ | 17,132  |                   |  | $ | 65,589       |   |  | $            | (63,589    | ) |  | $ | 74,606    |  
|Accrued liabilities                                     |  |                       | 185,005   |   |               |   | 5,505   |                   |  |   | 72,403       |   |  |              | 2,567      |   |  |   | 265,480   |  
|Borrowed debt                                           |  |                       | 1,010,625 |   |               |   | 18,479  |                   |  |   | 138,147      |   |  |              |           |   |  |   | 1,167,251 |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       | 1,251,104 |   |               |   | 41,116  |                   |  |   | 276,139      |   |  |              | (61,022    | ) |  |   | 1,507,337 |  
|                                                        |  |                       |           |   |              
|Deferred income taxes and investment tax credits        |  |                       | 442,416   |   |               |   | 23,453  |                   |  |   | 130,257      |   |  |              |           |   |  |   | 596,126   |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                       | 1,693,520 |   |               |   | 64,569  |                   |  |   | 406,396      |   |  |              | (61,022    | ) |  |   | 2,103,463 |  
|                                                        |  |                       |           |   |              
|Minority interest                                       |  |                       |          |   |               |   |        |                   |  |   | 97,355       |   |  |              |           |   |  |   | 97,355    |  
|                                                        |  |                       |           |   |              
|Stockholders equity                                    |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Common stock                                            |  |                       | 106,689   |   |               |   | 6,331   |                   |  |   | 78,981       |   |  |              | (85,312    | ) |  |   | 106,689   |  
|Additional capital                                      |  |                       | 251,786   |   |               |   | 7,014   |                   |  |   | 279,818      |   |  |              | (380,246   | ) |  |   | 158,372   |  
|Retained earnings                                       |  |                       | 691,547   |   |               |   | 61,830  |                   |  |   | 563,267      |   |  |              | (504,305   | ) |  |   | 812,339   |  
|Unrealized losses on available-for-sale securities, net |  |                       | (399      | ) |               |   |        |                   |  |   | (2           | ) |  |              |           |   |  |   | (401      | )
|Equity adjustment from foreign currency translation     |  |                       | (8,754    | ) |               |   | (692    | )                 |  |   | 9,350        |   |  |              | 96         |   |  |   |          |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Total stockholders equity                              |  |                       | 1,040,869 |   |               |   | 74,483  |                   |  |   | 931,414      |   |  |              | (969,767   | ) |  |   | 1,076,999 |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  
|Total liabilities and stockholders equity              |  | $                     | 2,734,389 |   |               | $ | 139,052 |                   |  | $ | 1,435,165    |   |  | $            | (1,030,789 | ) |  | $ | 3,277,817 |  
|                                                        |  |                       |           |   |               |   |         |                   |  |   |              |   |  |              |            |   |  |   |           |  



- 13 -



---

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



Condensed consolidating statements of cash flows for the nine months ended September 30, 2005 and 2004 are as follows:



|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------------ | -------- | - | ------------- | - | ------- | ----------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | -------- | -
|                                                                |  | Nine Months Ended September 30, 2005 |         
|                                                                |  | Union Tank CarCompany                |          |   | ProcorLimited |   |         | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net cash provided by (used in) operating activities:            |  | $                                    | 114,038  |   |               | $ | 4,150   |                   |  | $ | 118,537      |   |  | $            | (623 | ) |  | $ | 236,102  |  
|                                                                |  |                                      |          |   |              
|Cash flows from investing activities:                           |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Construction and purchase of lease fleet and other fixed assets |  |                                      | (332,703 | ) |               |   | (985    | )                 |  |   | (109,135     | ) |  |              | 623  |   |  |   | (442,200 | )
|Increase in short-term investments                              |  |                                      |         |   |               |   | (36,574 | )                 |  |   |             |   |  |              |     |   |  |   | (36,574  | )
|Increase in available-for-sale securities                       |  |                                      | (56,349  | ) |               |   |        |                   |  |   | (144         | ) |  |              |     |   |  |   | (56,493  | )
|Decrease (increase) in advance to parent                        |  |                                      | 9,541    |   |               |   | 34,160  |                   |  |   | (21,896      | ) |  |              | (367 | ) |  |   | 21,438   |  
|Decrease (increase) in other assets                             |  |                                      |         |   |               |   | 2,578   |                   |  |   | (4,105       | ) |  |              |     |   |  |   | (1,527   | )
|Proceeds from disposals of lease fleet and other fixed assets   |  |                                      | 7,510    |   |               |   |        |                   |  |   | 9,961        |   |  |              |     |   |  |   | 17,471   |  
|Proceeds from disposition of business                           |  |                                      |         |   |               |   |        |                   |  |   | 7,274        |   |  |              |     |   |  |   | 7,274    |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash (used in) provided by investing activities             |  |                                      | (372,001 | ) |               |   | (821    | )                 |  |   | (118,045     | ) |  |              | 256  |   |  |   | (490,611 | )
|                                                                |  |                                      |          |   |              
|Cash flows from financing activities:                           |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Proceeds from issuance of borrowed debt                         |  |                                      | 311,000  |   |               |   |        |                   |  |   |             |   |  |              |     |   |  |   | 311,000  |  
|Principal payments of borrowed debt                             |  |                                      | (27,490  | ) |               |   | (1,060  | )                 |  |   | (29          | ) |  |              |     |   |  |   | (28,579  | )
|Cash dividends                                                  |  |                                      | (84,000  | ) |               |   |        |                   |  |   | (367         | ) |  |              | 367  |   |  |   | (84,000  | )
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash provided by (used in) financing activities             |  |                                      | 199,510  |   |               |   | (1,060  | )                 |  |   | (396         | ) |  |              | 367  |   |  |   | 198,421  |  
|                                                                |  |                                      |          |   |              
|Effect of exchange rates on cash and cash equivalents           |  |                                      |         |   |               |   | 1,004   |                   |  |   |             |   |  |              |     |   |  |   | 1,004    |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents            |  |                                      | (58,453  | ) |               |   | 3,273   |                   |  |   | 96           |   |  |              |     |   |  |   | (55,084  | )
|                                                                |  |                                      |          |   |              
|Cash and cash equivalents at beginning of year                  |  |                                      | 61,663   |   |               |   | 33,123  |                   |  |   | 3,550        |   |  |              |     |   |  |   | 98,336   |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  
|Cash and cash equivalents at end of period                      |  | $                                    | 3,210    |   |               | $ | 36,396  |                   |  | $ | 3,646        |   |  | $            |     |   |  | $ | 43,252   |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |      |   |  |   |          |  



- 14 -



---

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



|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------------ | -------- | - | ------------- | - | ------- | ----------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------- | -
|                                                                |  | Nine Months Ended September 30, 2004 |         
|                                                                |  | Union Tank CarCompany                |          |   | ProcorLimited |   |         | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net cash provided by (used in) operating activities:            |  | $                                    | 72,987   |   |               | $ | (2,181  | )                 |  | $ | 105,776      |   |  | $            |        |   |  | $ | 176,582  |  
|                                                                |  |                                      |          |   |              
|Cash flows from investing activities:                           |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|Construction and purchase of lease fleet and other fixed assets |  |                                      | (177,065 | ) |               |   | (978    | )                 |  |   | (56,542      | ) |  |              |        |   |  |   | (234,585 | )
|Decrease in short-term investments                              |  |                                      |         |   |               |   | 17,159  |                   |  |   |             |   |  |              |        |   |  |   | 17,159   |  
|Increase in available-for-sale securities                       |  |                                      | (284,612 | ) |               |   |        |                   |  |   | (916         | ) |  |              |        |   |  |   | (285,528 | )
|Decrease (increase) in advance to parent                        |  |                                      | 203,887  |   |               |   | (22,832 | )                 |  |   | (5,801       | ) |  |              | (80,290 | ) |  |   | 94,964   |  
|Increase in other assets                                        |  |                                      |         |   |               |   | (1,747  | )                 |  |   | (733         | ) |  |              |        |   |  |   | (2,480   | )
|Proceeds from disposals of lease fleet and other fixed assets   |  |                                      | 10,571   |   |               |   | 4,002   |                   |  |   | 9,832        |   |  |              |        |   |  |   | 24,405   |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash used in investing activities                           |  |                                      | (247,219 | ) |               |   | (4,396  | )                 |  |   | (54,160      | ) |  |              | (80,290 | ) |  |   | (386,065 | )
|                                                                |  |                                      |          |   |              
|Cash flows from financing activities:                           |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|Proceeds from issuance of borrowed debt                         |  |                                      | 300,000  |   |               |   |        |                   |  |   |             |   |  |              |        |   |  |   | 300,000  |  
|Principal payments of borrowed debt                             |  |                                      | (35,229  | ) |               |   | (1,060  | )                 |  |   | (121         | ) |  |              |        |   |  |   | (36,410  | )
|Cash dividends                                                  |  |                                      | (71,000  | ) |               |   | (25,115 | )                 |  |   | (55,175      | ) |  |              | 80,290  |   |  |   | (71,000  | )
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash provided by (used in) financing activities             |  |                                      | 193,771  |   |               |   | (26,175 | )                 |  |   | (55,296      | ) |  |              | 80,290  |   |  |   | 192,590  |  
|                                                                |  |                                      |          |   |              
|Effect of exchange rates on cash and cash equivalents           |  |                                      |         |   |               |   | 1,391   |                   |  |   | (8           | ) |  |              |        |   |  |   | 1,383    |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents            |  |                                      | 19,539   |   |               |   | (31,361 | )                 |  |   | (3,688       | ) |  |              |        |   |  |   | (15,510  | )
|                                                                |  |                                      |          |   |              
|Cash and cash equivalents at beginning of year                  |  |                                      | 82       |   |               |   | 48,759  |                   |  |   | 7,356        |   |  |              |        |   |  |   | 56,197   |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  
|Cash and cash equivalents at end of period                      |  | $                                    | 19,621   |   |               | $ | 17,398  |                   |  | $ | 3,668        |   |  | $            |        |   |  | $ | 40,687   |  
|                                                                |  |                                      |          |   |               |   |         |                   |  |   |              |   |  |              |         |   |  |   |          |  



- 15 -



---

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 2004 Annual Report on Form 10-K filed with the SEC in March 2005.



Forward-Looking Statements



Certain statements contained in this quarterly report on Form 10-Q for the quarter ended September 30, 2005 may include certain forward-looking information
statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future
operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as expects, anticipates, intends, plans,
will, believes, seeks, estimates, and should and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements
made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise
any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the
Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, unanticipated changes in the markets served
by the Company (such as the railcar leasing, service and sales, intermodal tank container leasing and metal products distribution industries), acts of terrorism, interest rate trends, cost of capital requirements, competition from other companies,
changes in operating expenses, changes in prices and availability of key raw materials, governmental and public policy changes, changes in applicable laws, rules and regulations (including changes in tax laws).



Results of Operations

3rd Quarter 2005 versus 3rd Quarter 2004



Performance of the equipment leasing businesses improved in all major markets. Demand for existing railcar equipment improved, resulting in fleet growth, higher fleet
utilization and improved lease rental rates. Demand for leased intermodal tank containers improved, resulting in fleet growth and higher utilization. Third quarter revenues and gross profit from services were as follows:



|                           |  |                        |         |   |      |   |         |                    |  |   |      
|-------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ------------------ |  | - | -----
|                           |  | 2005                   |         |   | 2004 |   |         | Increase(Decrease)
|                           |  | (Dollars in Thousands)
|Services revenue           |  | $                      | 193,708 |   |      | $ | 188,418 |                    |  | $ | 5,290
|Cost of services           |  |                        | 118,651 |   |      |   | 115,913 |                    |  |   | 2,738
|                           |  |                        |         |   |      |   |         |                    |  |   |      
|Gross profit from services |  | $                      | 75,057  |   |      | $ | 72,505  |                    |  | $ | 2,552
|Gross margin %             |  |                        | 39      | % |      |   | 38      | %                  |  |   |      



- 16 -



---

Services revenue in the third quarter of 2005 increased over the third quarter of 2004 primarily due to an $11.4 million
increase in railcar leasing and service revenues (improved utilization rates and equipment additions) and a $2.1 million increase in intermodal tank container leasing revenues (improved utilization rates and equipment additions), which more than
offset a $8.4 million decrease in revenues primarily due to eliminating low-margin transportation and terminaling activity related to sulphur processing.



Gross profit on services revenue in the third quarter of 2005 increased from the third quarter of 2004 primarily due to a $2.6 million increase for the intermodal tank
container leasing business (improved utilization rates and equipment additions) and a $0.7 million improvement for railcar leasing (improved utilization rates, lower external lease expense due to exercising purchase options on leveraged leases, and
equipment additions). These increases were partially offset by decreases at various other businesses.



Average utilization of the Companys railcar fleet was 99% for the third quarter of 2005, compared with 97% for the third quarter of 2004. Utilization rates of the Companys existing railcars are driven by
long-term requirements of manufacturers and shippers of chemical products, petroleum products, food products, and bulk plastics, and suitability of the Companys fleet to meet such demand. The potential impact of short-term fluctuations in
demand is tempered by the longer-term nature of the leases.



Sales revenue
increased primarily due to increased prices and volume for products of the metals distribution business. Third quarter revenues and gross profit from sales were as follows:



|                        |  |                        |         |   |      |   |         |                    |  |   |       
|----------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ------------------ |  | - | ------
|                        |  | 2005                   |         |   | 2004 |   |         | Increase(Decrease)
|                        |  | (Dollars in Thousands)
|Net sales               |  | $                      | 223,468 |   |      | $ | 205,886 |                    |  | $ | 17,582
|Cost of sales           |  |                        | 177,465 |   |      |   | 168,756 |                    |  |   | 8,709 
|                        |  |                        |         |   |      |   |         |                    |  |   |       
|Gross profit from sales |  | $                      | 46,003  |   |      | $ | 37,130  |                    |  | $ | 8,873 
|Gross margin %          |  |                        | 21      | % |      |   | 18      | %                  |  |   |       



Sales revenue for the third quarter of
2005 increased from the third quarter of 2004 primarily due to $19.3 million higher sales of metals distribution products (higher prices and volume), $2.5 million higher sales of sulphur processing equipment (higher volume), $1.9 million higher
sales of manufactured railcars (higher volume and prices), $1.1 million higher sales of mobile railcar moving vehicles (higher volume), $0.8 million higher sales of containment vessel heads (higher volume and prices), and $0.7 million higher sales
of light rail transit components. These increases were partially offset by $4.6 million lower sales of fasteners (transferred to an affiliate of Holdings in December, 2004), and $2.8 million lower sales of sulphur-based fertilizer (business sold in
April, 2005).



Gross profit on sales in the third quarter of 2005 increased
from the third quarter of 2004 primarily due to an $11.2 million increase for metals distribution products (higher prices partially offset by higher costs), partially offset by a $1.2 million decrease for fasteners (transferred to an affiliate of
Holdings in December, 2004).



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General and administrative expenses in the third quarter of 2005 were $0.9 million lower than the third quarter of 2004
primarily due to transfer of the fasterner business to an affiliate of Holdings in December, 2004.



Interest expense related to the railcar and intermodal tank container leasing businesses in the third quarter of 2005 was $2.1 million higher than in the third quarter of 2004 due to the interest expense related to
new financing in 2004 and 2005 more than offsetting lower interest expense from principal repayments of debt.



Other income, net of expenses, of $10.5 million in the third quarter of 2005 decreased $0.1 million from the third quarter of 2004. An increase in interest income of $3.5 million was more than offset by a $3.0 million
gain in 2004 on the sale of an unused parcel of land in the railcar business and decreases in other minor items.



Provision for income taxes was $28.0 million in the third quarter of 2005 with an effective tax rate of 37.6%, compared with $25.2 million in the third quarter of 2004
with an effective tax rate of 39.1%. The decrease in the effective tax rate was primarily due to the consideration of the repatriation of undistributed earnings of foreign subsidiaries and the benefits of the newly enacted U.S. manufacturing
deduction.



Nine Months 2005 versus Nine
Months 2004



Performance of the equipment leasing businesses improved in
all major markets. Demand for existing railcar equipment improved, resulting in fleet growth, higher fleet utilization and improved lease rental rates. Demand for leased intermodal tank containers improved, resulting in fleet growth and higher
utilization. First nine months revenues and gross profit from services were as follows:



|                           |  |                        |         |   |      |   |         |                    |  |   |         |  
|-------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ------------------ |  | - | ------- | -
|                           |  | 2005                   |         |   | 2004 |   |         | Increase(Decrease) | 
|                           |  | (Dollars in Thousands) |        
|Services revenue           |  | $                      | 568,649 |   |      | $ | 554,700 |                    |  | $ | 13,949  |  
|Cost of services           |  |                        | 334,520 |   |      |   | 347,103 |                    |  |   | (12,583 | )
|                           |  |                        |         |   |      |   |         |                    |  |   |         |  
|Gross profit from services |  | $                      | 234,129 |   |      | $ | 207,597 |                    |  | $ | 26,532  |  
|Gross margin %             |  |                        | 41      | % |      |   | 37      | %                  |  |   |         |  



Services revenue in the first nine
months of 2005 increased over the first nine months of 2004 primarily due to a $28.4 million increase in railcar leasing and service revenues (improved utilization rates and equipment additions), a $5.8 million increase in intermodal tank container
leasing revenues (improved utilization rates and equipment additions), and $2.8 million higher revenue in the contract rail switching business, which more than offset a $22.0 million decrease in revenues from eliminating low-margin transportation
and terminaling activity related to sulphur processing.



Gross profit on
services revenue in the first nine months of 2005 increased from the first nine months of 2004 primarily due to a $16.8 million improvement for railcar leasing (improved utilization rates, lower external lease expense due to exercising purchase
options on leveraged leases, and equipment additions), a $7.9 million increase for the intermodal tank container leasing business (improved utilization rates and equipment additions) and a $1.0 million increase for sulphur processing operations
(higher processing rates and volumes).



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---

Sales revenue increased primarily due to increased prices and volume for products of the metals distribution business.
First nine months revenues and gross profit from sales were as follows:



|                        |  |                        |         |   |      |   |         |                    |  |   |        
|----------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ------------------ |  | - | -------
|                        |  | 2005                   |         |   | 2004 |   |         | Increase(Decrease)
|                        |  | (Dollars in Thousands)
|Net sales               |  | $                      | 665,698 |   |      | $ | 562,306 |                    |  | $ | 103,392
|Cost of sales           |  |                        | 547,550 |   |      |   | 454,587 |                    |  |   | 92,963 
|                        |  |                        |         |   |      |   |         |                    |  |   |        
|Gross profit from sales |  | $                      | 118,148 |   |      | $ | 107,719 |                    |  | $ | 10,429 
|Gross margin %          |  |                        | 18      | % |      |   | 19      | %                  |  |   |        



Sales revenue for the first nine
months of 2005 increased from the first nine months of 2004 primarily due to $90.7 million higher sales of metals distribution products (higher prices and volume), $17.3 million increased sales of manufactured railcars (higher volume and prices),
$7.1 million higher sales of containment vessel heads (higher volume and prices), $4.0 million higher sales of mobile railcar moving vehicles (higher volume), $3.4 million higher sales of sulphur processing equipment (higher volume), and $3.0
million higher sales of light rail transit components, more than offsetting $13.6 million lower sales of fasteners (transferred to an affiliate of Holdings in December, 2004), and $6.2 million lower sales of sulphur-based fertilizer (business sold
in April, 2005).



Gross profit on sales in the first nine months of 2005
increased from the first nine months of 2004 primarily due to a $20.2 million increase for metals distribution products (higher prices partially offset by higher costs), a $2.1 million increase for containment vessel heads (higher volume and
prices), a $1.4 million increase for mobile railcar moving vehicles, and a $1.3 million increase for light rail transit components. These increases were partially offset by a $9.0 million decrease for manufactured railcars (higher material prices),
a $3.3 million decrease for fasteners (transferred to an affiliate of Holdings in December, 2004), and a $2.3 million decrease for sulphur-based fertilizer (business sold in April, 2005).



General and administrative expenses in the first nine months of 2005 were $3.9 million higher than the first nine months of 2004 due to
higher costs in the railcar and intermodal tank container leasing businesses.



Interest expense related to the railcar and intermodal tank container leasing businesses in the first nine months of 2005 was $7.7 million higher than in the first nine months of 2004 due to the interest expense related to new financing in
2004 and 2005 more than offsetting lower interest expense from principal repayments of debt.



Other income, net of expenses, of $21.5 million in the first nine months of 2005 increased $3.2 million from the first nine months 2004. An increase in interest income of $5.7 million and increases in other minor
items were partially offset by a $3.0 million gain in 2004 on the sale of an unused parcel of land in the railcar business.



Provision for income taxes was $76.8 million in the first nine months of 2005 with an effective tax rate of 38.0%, compared with $68.1 million in the first nine months of
2004 with an effective tax rate of 39.2%. The decrease in the effective tax rate was primarily due to the consideration of the repatriation of undistributed earnings of foreign subsidiaries and the benefits of the newly enacted U.S. manufacturing
deduction.



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Financial Condition and Liquidity

Nine Months 2005 versus Nine Months 2004



Operating activities provided $236.1 million of net cash in the first nine months of 2005, compared with $176.6 million in the first nine months of 2004. These funds,
along with proceeds from the issuance of borrowed debt and collection of funds previously advanced to parent, were used to finance additions to the lease fleet and other fixed assets, pay dividends to the Companys stockholder, invest in
available-for-sale securities and short-term investments, and service borrowed debt obligations.



During the first nine months of 2005, the Company spent $442.2 million for construction and purchase of lease fleet and other fixed assets, compared with $234.6 million in the first nine months of 2004. The increase
in capital expenditures was due to a $76.0 million expenditure to exercise purchase options for railcars related to sale-leaseback transactions, as well as increased demand from leasing customers for new railway tank cars and intermodal tank
containers, and investment in railcar manufacturing capacity. 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. Net cash used in investing activities was $490.6 million in the first nine months of 2005
compared with $386.1 million used in the first nine months of 2004.



During the
first nine months of 2005, the Companys financing activities included $311.0 million of proceeds from the issuance of borrowed debt compared with $300.0 million issued in the first nine months of 2004. Principal repayments on borrowed debt
totaled $28.6 million compared with $36.4 million in the first nine months of 2004. Cash dividends were $84.0 million in the first nine months of 2005 compared with $71.0 million in the first nine months of 2004. Net cash provided in financing
activities was $198.4 million in the first nine months of 2005 compared with $192.6 million in the first nine months of 2004.



It is the Companys policy to pay to its stockholder 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 its parent and bear interest at commercial rates. Conversely, when the Company requires additional funds to support its operations, prior advances are
repaid by its parent. No restrictions exist regarding the amount of dividends which may be paid or advances which may be made by the Company to its parent.



Management expects future cash, provided from operating activities, long-term financings, available-for-sale securities, and collection of funds previously advanced to
parent, will be adequate to provide for the continued investment in the Companys business and enable it to meet its debt service obligations.



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New Accounting Pronouncements



In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
(FIN) No. 47, Accounting for Conditional Asset Retirement Obligations - An Interpretation of FASB Statement 143. FIN 47 clarifies the manner in which uncertainties concerning the timing and the method of settlement of an asset
retirement obligation (ARO) should be accounted for. In addition, the Interpretation clarifies the circumstances under which the fair value of an ARO is considered subject to reasonable estimation. FIN 47 is effective for fiscal years ending no
later than December 15, 2005. We are currently studying the effects it will have on our financial statements. We do not expect them to be material.



In May 2005, the FASB issued Statement of Financial Accounting Standard (SFAS) No. 154, Accounting Changes and Error Corrections - A Replacement of Accounting
Principles Board (APB) Opinion No. 20 and FASB Statement No. 3. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle. This statement is effective for fiscal years beginning after
December 15, 2005. The adoption of SFAS 154 is not expected to have a material effect on the Companys consolidated financial statements.



In December 2004, the FASB issued SFAS No. 153, Exchange of Non-Monetary Assets - An Amendment of APB Opinion No. 29. SFAS 153 amends Opinion 29 to
eliminate the exception for non-monetary exchange of similar productive assets and replaces it with a general exception for non-monetary assets that do not have commercial substance. Commercial substance is defined as if the future cash flows of the
entity are expected to change significantly as a result of the exchange. SFAS 153 must be applied prospectively after June 15, 2005. The adoption of SFAS 153 is not expected to have a material effect on the Companys consolidated financial
statements.



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



In December 2003, the FASB issued Interpretation No. 46, revised, Consolidation of Variable Interest Entities. This Interpretion requires that an
enterprises consolidated financial statements include subsidiaries in which the enterprise has a controlling financial interest. The Company does not have any unconsolidated variable interest entities.



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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.



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PART II. OTHER INFORMATION



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                                       
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|ITEM 1. |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 
|        |  | Reference is made to Business - Environmental Matters in the Companys Annual Report on Form 10-K for the year ended December 31, 2004 for a description of
certain environmental matters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 
|        |  | The Company has been designated as a Potentially Responsible Party (PRP) by the United States Environmental Protection Agency (EPA) at the Casmalia Disposal
Site in Santa Barbara County, California. Because of the nature of the Companys involvement at this site, management believes that future costs related to this site will not be material. The Company has not entered into any cost sharing
arrangements with other PRPs that make it reasonably possible the Company will incur material costs beyond its pro rata share. Further, management does not believe that any problems or uncertainties as to the financial liabilities of other
PRPs make it reasonably possible the Company will incur material costs beyond its pro rata share at this site. The Companys accruals for the site are based on the amount it reasonably expects to pay with respect to the
site.
|        | 
|ITEM5.  |  | Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                                                       
|        | 
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



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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: November 14, 2005 |  | /s/ Mark J. Garrette             
|                         |  | Mark J. Garrette                 
|                         |  | Vice President                   
|                         |  | (principal financial officer     
|                         |  | and principal accounting officer)



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