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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, 2007

OR



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

For the transition period from 
to

Commission file number: 1-5666



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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)



|                                                     |  |           
|---------------------------------------------------- |  | ----------
|181 W. Madison Street, 26th Floor, Chicago, Illinois |  | 60602-4510
|(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 ̈No  x *

* NOTE: As a voluntary filer not subject to the filing requirements, the registrant 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.

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

Large accelerated filer ̈Accelerated filer ̈Non-accelerated file  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 common stock held by non-affiliates of the registrant. The registrant is not subject to the filing requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934. The registrant is a voluntary filer.



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##### Table of Contents

UNION TANK CAR COMPANY AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2007

INDEX



|                              |  |                                                                                                              |  |     
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|                              |  |                                                                                                              |  | Page
|Part I. Financial Information |  |                                                                                                             
|                              |  |                                                                                                             
|Item 1.                       |  | Financial Statements                                                                                         |  | 3   
|                              |  |                                                                                                             
|                              |  | Condensed consolidated statements of income - three and nine month periods ended September 30, 2007 and 2006 |  | 3   
|                              |  |                                                                                                             
|                              |  | Condensed consolidated balance sheets - September 30, 2007 and December 31, 2006                             |  | 4   
|                              |  |                                                                                                             
|                              |  | Condensed consolidated statements of cash flows - nine months ended September 30, 2007 and 2006              |  | 5   
|                              |  |                                                                                                             
|                              |  | Notes to condensed consolidated financial statements                                                         |  | 6   
|                              |  |                                                                                                             
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 18  
|                              |  |                                                                                                             
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 26  
|                              |  |                                                                                                             
|Item 4.                       |  | Controls and Procedures                                                                                      |  | 26  
|                              | 
|Part II. Other Information    |  |                                                                                                             
|                              |  |                                                                                                             
|Item 1.                       |  | Legal Proceedings                                                                                            |  | 27  
|                              |  |                                                                                                             
|Item 1A.                      |  | Risk Factors                                                                                                 |  | 27  
|                              |  |                                                                                                             
|Item 2.                       |  | Unregistered Sales of Equity and Use of Proceeds                                                             |  | *   
|                              |  |                                                                                                             
|Item 3.                       |  | Defaults Upon Senior Securities                                                                              |  | *   
|                              |  |                                                                                                             
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                          |  | *   
|                              |  |                                                                                                             
|Item 5.                       |  | Other Information                                                                                            |  | *   
|                              |  |                                                                                                             
|Item 6.                       |  | Exhibits                                                                                                     |  | 28  
|                              | 
|Signatures                    |  | 29                                                                                                          

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



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##### Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands)

(Unaudited)



|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|------------------------------------------------ |  | -------------------------------- | ------- | ------------------------------- | - | ------- |  | ---- | --------- |  | - | ---------
|                                                 |  | Three Months Ended September 30, |         | Nine Months Ended September 30,
|                                                 |  | 2007                             |         | 2006                            |   | 2007    |  | 2006
|Revenues                                         |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|Services (leasing and other)                     |  | $                                | 230,852 |                                 | $ | 205,036 |  | $    | 661,978   |  | $ | 609,748  
|Sales                                            |  |                                  | 277,295 |                                 |   | 251,414 |  |      | 873,973   |  |   | 812,084  
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|                                                 |  |                                  | 508,147 |                                 |   | 456,450 |  |      | 1,535,951 |  |   | 1,421,832
|Costs and expenses                               |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|Cost of services                                 |  |                                  | 117,633 |                                 |   | 114,200 |  |      | 356,684   |  |   | 336,791  
|Cost of sales                                    |  |                                  | 229,266 |                                 |   | 208,783 |  |      | 705,530   |  |   | 683,714  
|General and administrative                       |  |                                  | 38,075  |                                 |   | 35,087  |  |      | 110,353   |  |   | 103,874  
|Interest expense                                 |  |                                  | 31,437  |                                 |   | 26,204  |  |      | 88,397    |  |   | 68,476   
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|                                                 |  |                                  | 416,411 |                                 |   | 384,274 |  |      | 1,260,964 |  |   | 1,192,855
|Operating income                                 |  |                                  | 91,736  |                                 |   | 72,176  |  |      | 274,987   |  |   | 228,977  
|Interest income                                  |  |                                  | 3,616   |                                 |   | 4,368   |  |      | 10,304    |  |   | 12,612   
|Other income, net                                |  |                                  | 1,273   |                                 |   | 2,025   |  |      | 3,729     |  |   | 4,604    
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|Income before income taxes and minority interest |  |                                  | 96,625  |                                 |   | 78,569  |  |      | 289,020   |  |   | 246,193  
|Provision for income taxes                       |  |                                  | 40,916  |                                 |   | 30,331  |  |      | 119,645   |  |   | 90,484   
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|                                                 |  |                                  | 55,709  |                                 |   | 48,238  |  |      | 169,375   |  |   | 155,709  
|Minority interest                                |  |                                  | 2,568   |                                 |   | 2,092   |  |      | 7,145     |  |   | 5,829    
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|Net income                                       |  |                                  | 53,141  |                                 |   | 46,146  |  |      | 162,230   |  |   | 149,880  
|Other comprehensive income                       |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|Unrealized gains on securities, net of tax       |  |                                  | 30      |                                 |   | 351     |  |      | 41        |  |   | 951      
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          
|Comprehensive income                             |  | $                                | 53,171  |                                 | $ | 46,497  |  | $    | 162,271   |  | $ | 150,831  
|                                                 |  |                                  |         |                                 |   |         |  |      |           |  |   |          

See notes to condensed consolidated financial statements.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)



|                                                                               |  |                    |           |                   |   |           |  
|------------------------------------------------------------------------------ |  | ------------------ | --------- | ----------------- | - | --------- | -
|                                                                               |  | September 30, 2007 |           | December 31, 2006 |  
|                                                                               |  | (Unaudited)        |           |                   |  
|Assets                                                                         |  |                    |           |                   |   |           |  
|Cash and cash equivalents                                                      |  | $                  | 108,149   |                   | $ | 165,588   |  
|Short-term investments                                                         |  |                    | 199,270   |                   |   | 97,542    |  
|Available-for-sale securities                                                  |  |                    |          |                   |   | 24,445    |  
|Accounts receivable, net of allowances of $6,033 ($6,577 at December 31, 2006) |  |                    | 238,372   |                   |   | 205,336   |  
|Accounts and notes receivable, affiliate                                       |  |                    | 44,012    |                   |   | 44,012    |  
|Inventories, net of LIFO reserves of $115,718 ($103,543 at December 31, 2006)  |  |                    | 207,750   |                   |   | 218,879   |  
|Prepaid expenses and deferred charges                                          |  |                    | 12,515    |                   |   | 10,923    |  
|Railcar lease fleet, net                                                       |  |                    | 3,048,346 |                   |   | 2,669,700 |  
|Intermodal tank container lease fleet, net                                     |  |                    | 363,284   |                   |   | 356,329   |  
|Other fixed assets, net                                                        |  |                    | 287,831   |                   |   | 276,478   |  
|Other assets                                                                   |  |                    | 60,206    |                   |   | 38,339    |  
|                                                                               |  |                    |           |                   |   |           |  
|Total assets                                                                   |  | $                  | 4,569,735 |                   | $ | 4,107,571 |  
|                                                                               |  |                    |           |                   |   |           |  
|Liabilities and Stockholders Equity                                           |  |                    |           |                   |   |           |  
|Accounts payable                                                               |  | $                  | 121,166   |                   | $ | 96,418    |  
|Accrued liabilities                                                            |  |                    | 219,723   |                   |   | 231,109   |  
|Advances from parent and affiliates                                            |  |                    | 986,497   |                   |   | 472,146   |  
|Debt, including $126,484 due within one year ($216,061 at December 31, 2006)   |  |                    | 1,171,612 |                   |   | 1,353,647 |  
|Deferred income taxes and investment tax credits                               |  |                    | 720,596   |                   |   | 643,453   |  
|                                                                               |  |                    |           |                   |   |           |  
|Total liabilities                                                              |  |                    | 3,219,594 |                   |   | 2,796,773 |  
|                                                                               |  |                   
|Minority interest                                                              |  |                    | 108,353   |                   |   | 101,208   |  
|                                                                               |  |                   
|Stockholders equity                                                           |  |                    |           |                   |   |           |  
|Common stock                                                                   |  |                    | 106,689   |                   |   | 106,689   |  
|Additional capital                                                             |  |                    | 169,455   |                   |   | 169,455   |  
|Retained earnings                                                              |  |                    | 965,614   |                   |   | 933,457   |  
|Accumulated other comprehensive income (losses)                                |  |                    | 30        |                   |   | (11       | )
|                                                                               |  |                    |           |                   |   |           |  
|Total stockholders equity                                                     |  |                    | 1,241,788 |                   |   | 1,209,590 |  
|                                                                               |  |                    |           |                   |   |           |  
|Total liabilities and stockholders equity                                     |  | $                  | 4,569,735 |                   | $ | 4,107,571 |  
|                                                                               |  |                    |           |                   |   |           |  

See notes to condensed consolidated financial statements.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



|                                                                                  |  |                                 |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Nine Months Ended September 30, |         
|                                                                                  |  | 2007                            |          |   | 2006 |  
|Cash flows from operating activities:                                             |  |                                 |          |   |      |   |          |  
|Net income                                                                        |  | $                               | 162,230  |   |      | $ | 149,880  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |          |   |      |   |          |  
|Depreciation and amortization                                                     |  |                                 | 159,594  |   |      |   | 141,929  |  
|Deferred income taxes                                                             |  |                                 | 55,438   |   |      |   | 37,336   |  
|Gain on disposition of lease fleet and other fixed assets                         |  |                                 | (21,074  | ) |      |   | (19,561  | )
|Other non-cash income and expenses                                                |  |                                 | 8,494    |   |      |   | 10,624   |  
|Changes in assets and liabilities:                                                |  |                                 |          |   |      |   |          |  
|Accounts receivable                                                               |  |                                 | (25,914  | ) |      |   | (23,641  | )
|Inventories                                                                       |  |                                 | 24,029   |   |      |   | (44,978  | )
|Prepaid expenses and deferred charges                                             |  |                                 | (2,341   | ) |      |   | (956     | )
|Accounts payable and accrued expenses                                             |  |                                 | (37      | ) |      |   | 24,725   |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                 | 360,419  |   |      |   | 275,358  |  
|                                                                                  |  |                                
|Cash flows from investing activities:                                             |  |                                 |          |   |      |   |          |  
|Construction and purchase of lease fleet                                          |  |                                 | (513,570 | ) |      |   | (561,223 | )
|Construction and purchase of other fixed assets                                   |  |                                 | (28,279  | ) |      |   | (54,673  | )
|Proceeds from sales of available-for-sale securities                              |  |                                 | 24,462   |   |      |   | 131,884  |  
|Purchases of short-term investments                                               |  |                                 | (235,275 | ) |      |   | (116,084 | )
|Proceeds from sales of short-term investments                                     |  |                                 | 151,040  |   |      |   | 81,736   |  
|Increase in other assets                                                          |  |                                 | (2,163   | ) |      |   | (2,475   | )
|Proceeds from disposals of lease fleet and other fixed assets                     |  |                                 | 36,813   |   |      |   | 33,191   |  
|Proceeds from disposition of business                                             |  |                                 |         |   |      |   | 900      |  
|Purchases of businesses, net of cash acquired                                     |  |                                 | (35,523  | ) |      |   |         |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                 | (602,495 | ) |      |   | (486,744 | )
|                                                                                  |  |                                
|Cash flows from financing activities:                                             |  |                                 |          |   |      |   |          |  
|Increase in advances from parent and affiliates                                   |  |                                 | 455,016  |   |      |   | 350,350  |  
|Principal payments of debt                                                        |  |                                 | (182,035 | ) |      |   | (71,118  | )
|Cash dividends                                                                    |  |                                 | (113,000 | ) |      |   | (104,000 | )
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |                                 | 159,981  |   |      |   | 175,232  |  
|Effect of exchange rates on cash and cash equivalents                             |  |                                 | 24,656   |   |      |   | 2,661    |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net decrease in cash and cash equivalents                                         |  |                                 | (57,439  | ) |      |   | (33,493  | )
|Cash and cash equivalents at beginning of year                                    |  |                                 | 165,588  |   |      |   | 150,628  |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                               | 108,149  |   |      | $ | 117,135  |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Cash paid during the period for:                                                  |  |                                 |          |   |      |   |          |  
|Interest                                                                          |  | $                               | 46,301   |   |      | $ | 55,599   |  
|Income taxes                                                                      |  |                                 | 58,630   |   |      |   | 49,505   |  
|Non-cash item:                                                                    |  |                                 |          |   |      |   |          |  
|Cumulative effect of adopting FIN 48                                              |  | $                               | 17,073   |   |      | $ |         |  

See notes to condensed consolidated financial statements.



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##### Table of Contents

UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands)

(Unaudited)



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

UNION TANK CAR COMPANY (the
Company) is a wholly owned subsidiary of Marmon Holdings, Inc. (Holdings). Substantially all of the stock of Holdings is owned, directly or indirectly, by trusts for the benefit of certain members of the Pritzker family. As
used herein, Pritzker family refers to the lineal descendants of Nicholas J. Pritzker, deceased.



|2. | Basis of Presentation
|-- | ---------------------

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

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



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

Revenue
Recognition

Revenue from sales of products is generally recognized upon shipment to customers which is when title and the risks and rewards
of ownership are passed on to the customers. Such revenue is based upon determinable sales prices and is recognized only upon collectibility being reasonably assured. Certain long-term contracts are accounted for under the completed contract method
when the Company is unable to reasonably forecast costs and the time required to complete those contracts.

Lessor
Accounting

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

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



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##### Table of Contents

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



Foreign Currency Translation

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

Foreign currency translation adjustments and transaction gains and losses are borne by Holdings. For the nine
months ended September 30, 2007 and 2006, Holdings absorbed a gain of $12,481 and $660, respectively.

Income Taxes

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

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

Holdings has completed federal income tax return examinations
through 2002. Canadian federal income tax returns have been audited through 2001.

On January 1, 2007, the Company adopted Financial
Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which is an interpretation of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes including defining the criteria that an individual tax position must meet for any part of the benefit of that position to be recognized in
consolidated financial statements and provides guidance on the measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of FIN 48, the Company
recorded an increase in its deferred income tax liability and a corresponding decrease of $17,073 to the January 1, 2007 retained earnings. This adjustment was related primarily to state income taxes. As of January 1, 2007, the Company had
approximately $38.4 million ($40.2 million at September 30, 2007) of unrecognized tax benefits, all of which would reduce the Companys provision for income taxes, if fully recognized. The Company does not expect any significant change to
the unrecognized tax benefits in the next twelve months. As of January 1, 2007, the Companys accrual for interest and penalties related to uncertain tax positions was $3.6 million.



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##### Table of Contents

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



Available-for-Sale Securities

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

Accounts Receivable and Allowance for Doubtful Accounts

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

Inventories

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



|                                |  |                    |          |   |                   |   |          |  
|------------------------------- |  | ------------------ | -------- | - | ----------------- | - | -------- | -
|                                |  | September 30, 2007 |          |   | December 31, 2006 |  
|Raw materials                   |  | $                  | 32,204   |   |                   | $ | 35,012   |  
|Work-in-process                 |  |                    | 46,654   |   |                   |   | 52,222   |  
|Finished goods                  |  |                    | 249,933  |   |                   |   | 240,556  |  
|Obsolescence and other reserves |  |                    | (5,323   | ) |                   |   | (5,368   | )
|                                |  |                    |          |   |                   |   |          |  
|                                |  |                    | 323,468  |   |                   |   | 322,422  |  
|LIFO reserve                    |  |                    | (115,718 | ) |                   |   | (103,543 | )
|                                |  |                    |          |   |                   |   |          |  
|Net                             |  | $                  | 207,750  |   |                   | $ | 218,879  |  
|                                |  |                    |          |   |                   |   |          |  

Property and Equipment

Property and equipment are depreciated or amortized over their useful lives primarily on the straight-line method based on managements estimates of
the period over which the assets will generate revenue. The Company periodically reviews these lives relative to physical factors, economic factors and industry trends. Gains and losses on disposals are included in cost of services or cost of sales.

Asset Impairment

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



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##### Table of Contents

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



Lease Fleet and Other Fixed Assets



|                                      |  |               |            |   |              |   |            |  
|------------------------------------- |  | ------------- | ---------- | - | ------------ | - | ---------- | -
|                                      |  | September 30, |            |   | December 31, |  
|                                      |  | 2007          |            |   | 2006         |  
|Railcar lease fleet                   |  |               |            |   |              |   |            |  
|Gross cost                            |  | $             | 4,934,175  |   |              | $ | 4,437,125  |  
|Less accumulated depreciation         |  |               | (1,885,829 | ) |              |   | (1,767,425 | )
|                                      |  |               |            |   |              |   |            |  
|                                      |  | $             | 3,048,346  |   |              | $ | 2,669,700  |  
|                                      |  |               |            |   |              |   |            |  
|Intermodal tank container lease fleet |  |               |            |   |              |   |            |  
|Gross cost                            |  | $             | 527,680    |   |              | $ | 497,665    |  
|Less accumulated depreciation         |  |               | (164,396   | ) |              |   | (141,336   | )
|                                      |  |               |            |   |              |   |            |  
|                                      |  | $             | 363,284    |   |              | $ | 356,329    |  
|                                      |  |               |            |   |              |   |            |  
|Other fixed assets                    |  |               |            |   |              |   |            |  
|Gross cost                            |  | $             | 702,437    |   |              | $ | 680,443    |  
|Less accumulated depreciation         |  |               | (414,606   | ) |              |   | (403,965   | )
|                                      |  |               |            |   |              |   |            |  
|                                      |  | $             | 287,831    |   |              | $ | 276,478    |  
|                                      |  |               |            |   |              |   |            |  

Legal Matters

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

Use of Estimates

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



|4. | Short-Term Investments
|-- | ----------------------

A subsidiary of the Company has
investments in Canadian short-term, asset-backed commercial paper, some of which were not paid out on their maturity dates due to the recent North American credit issues. This subsidiary is part of an investor group that has been organized to
provide for an orderly restructuring and payment of the commercial paper. The investor group has agreed to a standstill agreement through December 14, 2007, which may be extended, to permit the restructuring and objective of receiving full
value on the investments. At September 30, 2007, short-term investments included $81,803 related to this commercial paper. The Company anticipates receiving the carrying value of these investments and, accordingly, no impairment has been
recorded.



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##### Table of Contents

|5. | Available-for-Sale Securities
|-- | -----------------------------

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



|                            |  |      |        |                        |   |                         |  |   |            |   |  |   |       
|--------------------------- |  | ---- | ------ | ---------------------- | - | ----------------------- |  | - | ---------- | - |  | - | ------
|December 31, 2006           |  | Cost |        | Gross Unrealized Gains |   | Gross Unrealized Losses |  |   | Fair Value
|Corporate debt securities   |  | $    | 19,404 |                        | $ |                        |  | $ | (12        | ) |  | $ | 19,392
|U.S. government obligations |  |      | 5,056  |                        |   |                        |  |   | (3         | ) |  |   | 5,053 
|                            |  |      |        |                        |   |                         |  |   |            |   |  |   |       
|                            |  | $    | 24,460 |                        | $ |                        |  | $ | (15        | ) |  | $ | 24,445
|                            |  |      |        |                        |   |                         |  |   |            |   |  |   |       

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



|6. | Segment Information
|-- | -------------------

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



|                                                 |  |                       |       |                     |   |                                   |  |           |      |                     |   |       |  |   |      
|------------------------------------------------ |  | --------------------- | ----- | ------------------- | - | --------------------------------- |  | --------- | ---- | ------------------- | - | ----- |  | - | -----
|                                                 |  | Railcar               |       | Metals Distribution |   | Intermodal Tank Container Leasing |  | All Other |      | Consolidated Totals
|                                                 |  | (Dollars in Millions)
|Three months ended September 30, 2007            |  |                       |       |                     |   |                                   |  |           |      |                     |   |       |  |   |      
|Services revenue                                 |  | $                     | 176.6 |                     | $ | 2.6                               |  | $         | 31.2 |                     | $ | 20.5  |  | $ | 230.9
|Sales revenue                                    |  |                       | 13.2  |                     |   | 224.6                             |  |           |     |                     |   | 39.5  |  |   | 277.3
|Income before income taxes and minority interest |  |                       | 62.7  |                     |   | 22.2                              |  |           | 11.4 |                     |   | 0.3   |  |   | 96.6 
|                                                 |  |                       |       |                     |  
|Three months ended September 30, 2006            |  |                       |       |                     |   |                                   |  |           |      |                     |   |       |  |   |      
|Services revenue                                 |  | $                     | 157.1 |                     | $ | 1.9                               |  | $         | 28.9 |                     | $ | 17.1  |  | $ | 205.0
|Sales revenue                                    |  |                       | 16.8  |                     |   | 200.2                             |  |           |     |                     |   | 34.4  |  |   | 251.4
|Income before income taxes and minority interest |  |                       | 44.3  |                     |   | 20.5                              |  |           | 8.5  |                     |   | 5.3   |  |   | 78.6 
|                                                 |  |                       |       |                     |  
|Nine months ended September 30, 2007             |  |                       |       |                     |   |                                   |  |           |      |                     |   |       |  |   |      
|Services revenue                                 |  | $                     | 505.6 |                     | $ | 7.2                               |  | $         | 91.0 |                     | $ | 58.2  |  | $ | 662.0
|Sales revenue                                    |  |                       | 29.4  |                     |   | 686.8                             |  |           |     |                     |   | 157.8 |  |   | 874.0
|Income before income taxes and minority interest |  |                       | 162.0 |                     |   | 70.7                              |  |           | 30.8 |                     |   | 25.5  |  |   | 289.0
|                                                 |  |                       |       |                     |  
|Nine months ended September 30, 2006             |  |                       |       |                     |   |                                   |  |           |      |                     |   |       |  |   |      
|Services revenue                                 |  | $                     | 468.1 |                     | $ | 5.9                               |  | $         | 83.7 |                     | $ | 52.0  |  | $ | 609.7
|Sales revenue                                    |  |                       | 83.5  |                     |   | 594.3                             |  |           |     |                     |   | 134.3 |  |   | 812.1
|Income before income taxes and minority interest |  |                       | 123.6 |                     |   | 67.0                              |  |           | 23.5 |                     |   | 32.1  |  |   | 246.2



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|7. | Completed Contracts
|-- | -------------------

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



|                              |  |                    |        |   |                   |   |         |  
|----------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------- | -
|                              |  | September 30, 2007 |        |   | December 31, 2006 |  
|Cost incurred                 |  | $                  | 1,931  |   |                   | $ | 16,274  |  
|Deferred revenue              |  |                    | (4,290 | ) |                   |   | (36,971 | )
|                              |  |                    |        |   |                   |   |         |  
|Net billing in excess of cost |  | $                  | (2,359 | ) |                   | $ | (20,697 | )
|                              |  |                    |        |   |                   |   |         |  



|8. | Commitments and Contingencies
|-- | -----------------------------

The Companys Canadian
subsidiaries have a demand credit facility of approximately $35,210 available on a no-fee basis. Holdings is a guarantor of this demand credit facility. At September 30, 2007, $8,829 of letters of credit were outstanding. No amounts were
outstanding for overdrafts or borrowings as of September 30, 2007.

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

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

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



|                             |  |                                 |       |   |      |   |      |  
|---------------------------- |  | ------------------------------- | ----- | - | ---- | - | ---- | -
|                             |  | Nine Months Ended September 30, |      
|                             |  | 2007                            |       |   | 2006 |  
|Balance at beginning of year |  | $                               | 769   |   |      | $ | 833  |  
|Warranties issued            |  |                                 | 1,932 |   |      |   | 367  |  
|Settlements/reversals        |  |                                 | (969  | ) |      |   | (348 | )
|                             |  |                                 |       |   |      |   |      |  
|Balance at end of period     |  | $                               | 1,732 |   |      | $ | 852  |  
|                             |  |                                 |       |   |      |   |      |  

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.



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##### Table of Contents

|9. | Consolidating Financial Information
|-- | -----------------------------------

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

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



|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|------------------------------------------------ |  | ------------------------------------- | ------- | -------------- | - | ------ | ------------------ |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                 |  | Three Months Ended September 30, 2007
|                                                 |  | Union Tank Car Company                |         | Procor Limited |   |        | Other Subsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                                         |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Services                                         |  | $                                     | 158,100 |                | $ | 7,026  |                    |  | $            | 89,018  |  | $            | (23,292  | ) |  | $ | 230,852
|Sales                                            |  |                                       |        |                |   |       |                    |  |              | 452,821 |  |              | (175,526 | ) |  |   | 277,295
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                       | 158,100 |                |   | 7,026  |                    |  |              | 541,839 |  |              | (198,818 | ) |  |   | 508,147
|Costs and expenses                               |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Cost of services                                 |  |                                       | 93,210  |                |   | (3,232 | )                  |  |              | 50,947  |  |              | (23,292  | ) |  |   | 117,633
|Cost of sales                                    |  |                                       |        |                |   |       |                    |  |              | 404,703 |  |              | (175,437 | ) |  |   | 229,266
|General and administrative                       |  |                                       | 9,429   |                |   | 703    |                    |  |              | 27,943  |  |              |         |   |  |   | 38,075 
|Interest expense                                 |  |                                       | 26,290  |                |   | 675    |                    |  |              | 4,480   |  |              | (8       | ) |  |   | 31,437 
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                       | 128,929 |                |   | (1,854 | )                  |  |              | 488,073 |  |              | (198,737 | ) |  |   | 416,411
|Operating income                                 |  |                                       | 29,171  |                |   | 8,880  |                    |  |              | 53,766  |  |              | (81      | ) |  |   | 91,736 
|Other income, net                                |  |                                       | 1,039   |                |   | 2,080  |                    |  |              | 1,778   |  |              | (8       | ) |  |   | 4,889  
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Income before income taxes and minority interest |  |                                       | 30,210  |                |   | 10,960 |                    |  |              | 55,544  |  |              | (89      | ) |  |   | 96,625 
|Provision for income taxes                       |  |                                       | 17,236  |                |   | 2,421  |                    |  |              | 21,259  |  |              |         |   |  |   | 40,916 
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                       | 12,974  |                |   | 8,539  |                    |  |              | 34,285  |  |              | (89      | ) |  |   | 55,709 
|Equity in income of subsidiaries                 |  |                                       | 40,167  |                |   |       |                    |  |              |        |  |              | (40,167  | ) |  |   |       
|Minority interest                                |  |                                       |        |                |   |       |                    |  |              | 2,568   |  |              |         |   |  |   | 2,568  
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Net income                                       |  | $                                     | 53,141  |                | $ | 8,539  |                    |  | $            | 31,717  |  | $            | (40,256  | ) |  | $ | 53,141 
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 | 
|                                                 |  | Three Months Ended September 30, 2006
|                                                 |  | Union Tank Car Company                |         | Procor Limited |   |        | Other Subsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                                         |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Services                                         |  | $                                     | 137,810 |                | $ | 6,178  |                    |  | $            | 82,353  |  | $            | (21,305  | ) |  | $ | 205,036
|Sales                                            |  |                                       |        |                |   |       |                    |  |              | 362,091 |  |              | (110,677 | ) |  |   | 251,414
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                       | 137,810 |                |   | 6,178  |                    |  |              | 444,444 |  |              | (131,982 | ) |  |   | 456,450
|Costs and expenses                               |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Cost of services                                 |  |                                       | 86,045  |                |   | 4,427  |                    |  |              | 45,033  |  |              | (21,305  | ) |  |   | 114,200
|Cost of sales                                    |  |                                       |        |                |   |       |                    |  |              | 319,428 |  |              | (110,645 | ) |  |   | 208,783
|General and administrative                       |  |                                       | 9,221   |                |   | 1,162  |                    |  |              | 24,704  |  |              |         |   |  |   | 35,087 
|Interest expense                                 |  |                                       | 20,829  |                |   | 864    |                    |  |              | 4,511   |  |              |         |   |  |   | 26,204 
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                       | 116,095 |                |   | 6,453  |                    |  |              | 393,676 |  |              | (131,950 | ) |  |   | 384,274
|Operating income (loss)                          |  |                                       | 21,715  |                |   | (275   | )                  |  |              | 50,768  |  |              | (32      | ) |  |   | 72,176 
|Other income, net                                |  |                                       | 1,628   |                |   | 2,468  |                    |  |              | 2,297   |  |              |         |   |  |   | 6,393  
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Income before income taxes and minority interest |  |                                       | 23,343  |                |   | 2,193  |                    |  |              | 53,065  |  |              | (32      | ) |  |   | 78,569 
|Provision for income taxes                       |  |                                       | 9,571   |                |   | 839    |                    |  |              | 19,921  |  |              |         |   |  |   | 30,331 
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                                                 |  |                                       | 13,772  |                |   | 1,354  |                    |  |              | 33,144  |  |              | (32      | ) |  |   | 48,238 
|Equity in income of subsidiaries                 |  |                                       | 32,374  |                |   |       |                    |  |              |        |  |              | (32,374  | ) |  |   |       
|Minority interest                                |  |                                       |        |                |   |       |                    |  |              | 2,092   |  |              |         |   |  |   | 2,092  
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Net income                                       |  | $                                     | 46,146  |                | $ | 1,354  |                    |  | $            | 31,052  |  | $            | (32,406  | ) |  | $ | 46,146 
|                                                 |  |                                       |         |                |   |        |                    |  |              |         |  |              |          |   |  |   |        



- 12 -



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##### Table of Contents

|9. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



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



|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|------------------------------------------------ |  | ------------------------------------ | ------- | -------------- | - | ------------------ |  | ------------ | --------- |  | ------------ | -------- | - |  | - | ---------
|                                                 |  | Nine Months Ended September 30, 2007
|                                                 |  | Union Tank Car Company               |         | Procor Limited |   | Other Subsidiaries |  | Eliminations |           |  | Consolidated
|Revenues                                         |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Services                                         |  | $                                    | 450,121 |                | $ | 19,836             |  | $            | 259,373   |  | $            | (67,352  | ) |  | $ | 661,978  
|Sales                                            |  |                                      |        |                |   |                   |  |              | 1,408,153 |  |              | (534,180 | ) |  |   | 873,973  
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                      | 450,121 |                |   | 19,836             |  |              | 1,667,526 |  |              | (601,532 | ) |  |   | 1,535,951
|Costs and expenses                               |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Cost of services                                 |  |                                      | 269,652 |                |   | 7,544              |  |              | 146,840   |  |              | (67,352  | ) |  |   | 356,684  
|Cost of sales                                    |  |                                      |        |                |   |                   |  |              | 1,239,291 |  |              | (533,761 | ) |  |   | 705,530  
|General and administrative                       |  |                                      | 24,877  |                |   | 2,882              |  |              | 82,594    |  |              |         |   |  |   | 110,353  
|Interest expense                                 |  |                                      | 72,531  |                |   | 2,610              |  |              | 13,256    |  |              |         |   |  |   | 88,397   
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                      | 367,060 |                |   | 13,036             |  |              | 1,481,981 |  |              | (601,113 | ) |  |   | 1,260,964
|Operating income                                 |  |                                      | 83,061  |                |   | 6,800              |  |              | 185,545   |  |              | (419     | ) |  |   | 274,987  
|Other income, net                                |  |                                      | 603     |                |   | 7,669              |  |              | 5,761     |  |              |         |   |  |   | 14,033   
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Income before income taxes and minority interest |  |                                      | 83,664  |                |   | 14,469             |  |              | 191,306   |  |              | (419     | ) |  |   | 289,020  
|Provision for income taxes                       |  |                                      | 42,214  |                |   | 3,502              |  |              | 73,929    |  |              |         |   |  |   | 119,645  
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                      | 41,450  |                |   | 10,967             |  |              | 117,377   |  |              | (419     | ) |  |   | 169,375  
|Equity in income of subsidiaries                 |  |                                      | 120,780 |                |   |                   |  |              |          |  |              | (120,780 | ) |  |   |         
|Minority interest                                |  |                                      |        |                |   |                   |  |              | 7,145     |  |              |         |   |  |   | 7,145    
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Net income                                       |  | $                                    | 162,230 |                | $ | 10,967             |  | $            | 110,232   |  | $            | (121,199 | ) |  | $ | 162,230  
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 | 
|                                                 |  | Nine Months Ended September 30, 2006
|                                                 |  | Union Tank Car Company               |         | Procor Limited |   | Other Subsidiaries |  | Eliminations |           |  | Consolidated
|Revenues                                         |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Services                                         |  | $                                    | 408,499 |                | $ | 19,417             |  | $            | 245,051   |  | $            | (63,219  | ) |  | $ | 609,748  
|Sales                                            |  |                                      |        |                |   |                   |  |              | 1,096,722 |  |              | (284,638 | ) |  |   | 812,084  
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                      | 408,499 |                |   | 19,417             |  |              | 1,341,773 |  |              | (347,857 | ) |  |   | 1,421,832
|Costs and expenses                               |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Cost of services                                 |  |                                      | 252,858 |                |   | 13,428             |  |              | 133,724   |  |              | (63,219  | ) |  |   | 336,791  
|Cost of sales                                    |  |                                      |        |                |   |                   |  |              | 968,153   |  |              | (284,439 | ) |  |   | 683,714  
|General and administrative                       |  |                                      | 25,578  |                |   | 2,842              |  |              | 75,454    |  |              |         |   |  |   | 103,874  
|Interest expense                                 |  |                                      | 58,083  |                |   | 1,623              |  |              | 8,770     |  |              |         |   |  |   | 68,476   
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                      | 336,519 |                |   | 17,893             |  |              | 1,186,101 |  |              | (347,658 | ) |  |   | 1,192,855
|Operating income                                 |  |                                      | 71,980  |                |   | 1,524              |  |              | 155,672   |  |              | (199     | ) |  |   | 228,977  
|Other income, net                                |  |                                      | 7,607   |                |   | 4,686              |  |              | 4,923     |  |              |         |   |  |   | 17,216   
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Income before income taxes and minority interest |  |                                      | 79,587  |                |   | 6,210              |  |              | 160,595   |  |              | (199     | ) |  |   | 246,193  
|Provision for income taxes                       |  |                                      | 32,626  |                |   | 207                |  |              | 57,651    |  |              |         |   |  |   | 90,484   
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|                                                 |  |                                      | 46,961  |                |   | 6,003              |  |              | 102,944   |  |              | (199     | ) |  |   | 155,709  
|Equity in income of subsidiaries                 |  |                                      | 102,919 |                |   |                   |  |              |          |  |              | (102,919 | ) |  |   |         
|Minority interest                                |  |                                      |        |                |   |                   |  |              | 5,829     |  |              |         |   |  |   | 5,829    
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          
|Net income                                       |  | $                                    | 149,880 |                | $ | 6,003              |  | $            | 97,115    |  | $            | (103,118 | ) |  | $ | 149,880  
|                                                 |  |                                      |         |                |   |                    |  |              |           |  |              |          |   |  |   |          



- 13 -



---

##### Table of Contents

|9. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



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



|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|--------------------------------------------------- |  | ---------------------- | --------- | - | -------------- | - | ------- | ------------------ |  | ------------ | --------- |  | ------------ | ---------- | - |  | - | ---------
|                                                    |  | September 30, 2007    
|                                                    |  | Union Tank Car Company |           |   | Procor Limited |   |         | Other Subsidiaries |  | Eliminations |           |  | Consolidated
|Assets                                              |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Cash and cash equivalents                           |  | $                      | 27        |   |                | $ | 102,976 |                    |  | $            | 5,146     |  | $            |           |   |  | $ | 108,149  
|Short-term investments                              |  |                        |          |   |                |   | 199,270 |                    |  |              |          |  |              |           |   |  |   | 199,270  
|Accounts receivable, net                            |  |                        | 110,749   |   |                |   | 8,982   |                    |  |              | 234,570   |  |              | (115,929   | ) |  |   | 238,372  
|Accounts and notes receivable, affiliate            |  |                        |          |   |                |   |        |                    |  |              | 44,012    |  |              |           |   |  |   | 44,012   
|Inventories, net                                    |  |                        | 5,027     |   |                |   | 1,046   |                    |  |              | 201,677   |  |              |           |   |  |   | 207,750  
|Prepaid expenses and deferred charges               |  |                        | 3,466     |   |                |   | 4,118   |                    |  |              | 4,931     |  |              |           |   |  |   | 12,515   
|Advances to parent and affiliates                   |  |                        |          |   |                |   |        |                    |  |              | 448,522   |  |              | (448,522   | ) |  |   |         
|Railcar lease fleet, net                            |  |                        | 2,826,959 |   |                |   | 34,322  |                    |  |              | 188,051   |  |              | (986       | ) |  |   | 3,048,346
|Intermodal tank container lease fleet, net          |  |                        |          |   |                |   |        |                    |  |              | 363,284   |  |              |           |   |  |   | 363,284  
|Other fixed assets, net                             |  |                        | 40,090    |   |                |   | 15,186  |                    |  |              | 232,555   |  |              |           |   |  |   | 287,831  
|Investment in subsidiaries                          |  |                        | 1,040,463 |   |                |   | 75,409  |                    |  |              | 42,558    |  |              | (1,158,430 | ) |  |   |         
|Other assets                                        |  |                        | 5,514     |   |                |   | 226     |                    |  |              | 57,484    |  |              | (3,018     | ) |  |   | 60,206   
|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Total assets                                        |  | $                      | 4,032,295 |   |                | $ | 441,535 |                    |  | $            | 1,822,790 |  | $            | (1,726,885 | ) |  | $ | 4,569,735
|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Liabilities and Stockholders Equity                |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Accounts payable                                    |  | $                      | 42,102    |   |                | $ | 17,978  |                    |  | $            | 177,015   |  | $            | (115,929   | ) |  | $ | 121,166  
|Accrued liabilities                                 |  |                        | 122,971   |   |                |   | 7,685   |                    |  |              | 91,679    |  |              | (2,612     | ) |  |   | 219,723  
|Advances from parent and affiliates                 |  |                        | 1,089,498 |   |                |   | 346,913 |                    |  |              |          |  |              | (449,914   | ) |  |   | 986,497  
|Debt                                                |  |                        | 1,057,480 |   |                |   | 1,060   |                    |  |              | 113,072   |  |              |           |   |  |   | 1,171,612
|Deferred income taxes and investment tax credits    |  |                        | 559,739   |   |                |   | 20,832  |                    |  |              | 140,025   |  |              |           |   |  |   | 720,596  
|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Total liabilities                                   |  |                        | 2,871,790 |   |                |   | 394,468 |                    |  |              | 521,791   |  |              | (568,455   | ) |  |   | 3,219,594
|Minority interest                                   |  |                        |          |   |                |   |        |                    |  |              | 108,353   |  |              |           |   |  |   | 108,353  
|Stockholders equity                                |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Common stock and additional capital                 |  |                        | 369,558   |   |                |   | 13,345  |                    |  |              | 370,156   |  |              | (476,915   | ) |  |   | 276,144  
|Retained earnings                                   |  |                        | 834,793   |   |                |   | 38,992  |                    |  |              | 773,344   |  |              | (681,515   | ) |  |   | 965,614  
|Accumulated other comprehensive income              |  |                        | 20        |   |                |   |        |                    |  |              | 10        |  |              |           |   |  |   | 30       
|Equity adjustment from foreign currency translation |  |                        | (43,866   | ) |                |   | (5,270  | )                  |  |              | 49,136    |  |              |           |   |  |   |         
|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Total stockholders equity                          |  |                        | 1,160,505 |   |                |   | 47,067  |                    |  |              | 1,192,646 |  |              | (1,158,430 | ) |  |   | 1,241,788
|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          
|Total liabilities and stockholders equity          |  | $                      | 4,032,295 |   |                | $ | 441,535 |                    |  | $            | 1,822,790 |  | $            | (1,726,885 | ) |  | $ | 4,569,735
|                                                    |  |                        |           |   |                |   |         |                    |  |              |           |  |              |            |   |  |   |          



- 14 -



---

##### Table of Contents

|9. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|--------------------------------------------------- |  | ---------------------- | --------- | - | -------------- | - | ------------------ |  | ------------ | --------- |  | ------------ | ---------- | - |  | - | --------- | -
|                                                    |  | December 31, 2006      |          
|                                                    |  | Union Tank Car Company |           |   | Procor Limited |   | Other Subsidiaries |  | Eliminations |           |  | Consolidated |           
|Assets                                              |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Cash and cash equivalents                           |  | $                      | 48,935    |   |                | $ | 115,723            |  | $            | 930       |  | $            |           |   |  | $ | 165,588   |  
|Short-term investments                              |  |                        |          |   |                |   | 97,542             |  |              |          |  |              |           |   |  |   | 97,542    |  
|Available-for-sale securities                       |  |                        | 24,445    |   |                |   |                   |  |              |          |  |              |           |   |  |   | 24,445    |  
|Accounts receivable, net                            |  |                        | 122,788   |   |                |   | 1,737              |  |              | 237,665   |  |              | (156,854   | ) |  |   | 205,336   |  
|Accounts and notes receivable, affiliate            |  |                        |          |   |                |   |                   |  |              | 44,012    |  |              |           |   |  |   | 44,012    |  
|Inventories, net                                    |  |                        | 7,246     |   |                |   | 1,429              |  |              | 210,204   |  |              |           |   |  |   | 218,879   |  
|Prepaid expenses and deferred charges               |  |                        | 3,323     |   |                |   | 3,568              |  |              | 4,032     |  |              |           |   |  |   | 10,923    |  
|Advances to parent and affiliates                   |  |                        |          |   |                |   |                   |  |              | 342,450   |  |              | (342,450   | ) |  |   |          |  
|Railcar lease fleet, net                            |  |                        | 2,450,558 |   |                |   | 30,164             |  |              | 189,544   |  |              | (566       | ) |  |   | 2,669,700 |  
|Intermodal tank container lease fleet, net          |  |                        |          |   |                |   |                   |  |              | 356,329   |  |              |           |   |  |   | 356,329   |  
|Other fixed assets, net                             |  |                        | 40,867    |   |                |   | 15,321             |  |              | 220,290   |  |              |           |   |  |   | 276,478   |  
|Investment in subsidiaries                          |  |                        | 934,687   |   |                |   | 75,453             |  |              | 41,718    |  |              | (1,051,858 | ) |  |   |          |  
|Other assets                                        |  |                        | 6,630     |   |                |   | 359                |  |              | 31,350    |  |              |           |   |  |   | 38,339    |  
|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Total assets                                        |  | $                      | 3,639,479 |   |                | $ | 341,296            |  | $            | 1,678,524 |  | $            | (1,551,728 | ) |  | $ | 4,107,571 |  
|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Liabilities and Stockholders Equity                |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Accounts payable                                    |  | $                      | 67,588    |   |                | $ | 17,335             |  | $            | 168,336   |  | $            | (156,841   | ) |  | $ | 96,418    |  
|Accrued liabilities                                 |  |                        | 122,997   |   |                |   | 6,349              |  |              | 101,372   |  |              | 391        |   |  |   | 231,109   |  
|Advances from parent and affiliates                 |  |                        | 557,753   |   |                |   | 257,813            |  |              |          |  |              | (343,420   | ) |  |   | 472,146   |  
|Debt                                                |  |                        | 1,238,382 |   |                |   | 2,119              |  |              | 113,146   |  |              |           |   |  |   | 1,353,647 |  
|Deferred income taxes and investment tax credits    |  |                        | 485,275   |   |                |   | 17,530             |  |              | 140,648   |  |              |           |   |  |   | 643,453   |  
|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Total liabilities                                   |  |                        | 2,471,995 |   |                |   | 301,146            |  |              | 523,502   |  |              | (499,870   | ) |  |   | 2,796,773 |  
|Minority interest                                   |  |                        |          |   |                |   |                   |  |              | 101,208   |  |              |           |   |  |   | 101,208   |  
|Stockholders equity                                |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Common stock and additional capital                 |  |                        | 369,558   |   |                |   | 13,345             |  |              | 370,791   |  |              | (477,550   | ) |  |   | 276,144   |  
|Retained earnings                                   |  |                        | 810,814   |   |                |   | 26,687             |  |              | 670,264   |  |              | (574,308   | ) |  |   | 933,457   |  
|Accumulated other comprehensive (losses) income     |  |                        | (12       | ) |                |   |                   |  |              | 1         |  |              |           |   |  |   | (11       | )
|Equity adjustment from foreign currency translation |  |                        | (12,876   | ) |                |   | 118                |  |              | 12,758    |  |              |           |   |  |   |          |  
|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Total stockholders equity                          |  |                        | 1,167,484 |   |                |   | 40,150             |  |              | 1,053,814 |  |              | (1,051,858 | ) |  |   | 1,209,590 |  
|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  
|Total liabilities and stockholders equity          |  | $                      | 3,639,479 |   |                | $ | 341,296            |  | $            | 1,678,524 |  | $            | (1,551,728 | ) |  | $ | 4,107,571 |  
|                                                    |  |                        |           |   |                |   |                    |  |              |           |  |              |            |   |  |   |           |  



- 15 -



---

##### Table of Contents

|9. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



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



|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------------ | -------- | - | -------------- | - | -------- | ------------------ |  | - | ------------ | - |  | ------------ | ---- | - |  | - | -------- | -
|                                                              |  | Nine Months Ended September 30, 2007 |         
|                                                              |  | Union Tank Car Company               |          |   | Procor Limited |   |          | Other Subsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net cash provided by (used in) operating activities:          |  | $                                    | 172,331  |   |                | $ | (1,804   | )                  |  | $ | 190,317      |   |  | $            | (425 | ) |  | $ | 360,419  |  
|Cash flows from investing activities:                         |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Construction and purchase of lease fleet                      |  |                                      | (480,634 | ) |                |   | (69      | )                  |  |   | (33,301      | ) |  |              | 434  |   |  |   | (513,570 | )
|Construction and purchase of other fixed assets               |  |                                      | (3,948   | ) |                |   | (1,584   | )                  |  |   | (22,747      | ) |  |              |     |   |  |   | (28,279  | )
|Proceeds from sales of available-for-sale securities          |  |                                      | 24,462   |   |                |   |         |                    |  |   |             |   |  |              |     |   |  |   | 24,462   |  
|Purchases of short-term investments                           |  |                                      |         |   |                |   | (235,275 | )                  |  |   |             |   |  |              |     |   |  |   | (235,275 | )
|Proceeds from sales of short-term investments                 |  |                                      |         |   |                |   | 151,040  |                    |  |   |             |   |  |              |     |   |  |   | 151,040  |  
|(Increase) decrease in other assets                           |  |                                      | (222     | ) |                |   | 133      |                    |  |   | (2,074       | ) |  |              |     |   |  |   | (2,163   | )
|Proceeds from disposals of lease fleet and other fixed assets |  |                                      | 15,404   |   |                |   | 10,831   |                    |  |   | 10,578       |   |  |              |     |   |  |   | 36,813   |  
|Purchases of businesses, net of cash acquired                 |  |                                      |         |   |                |   |         |                    |  |   | (35,523      | ) |  |              |     |   |  |   | (35,523  | )
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash used in investing activities                         |  |                                      | (444,938 | ) |                |   | (74,924  | )                  |  |   | (83,067      | ) |  |              | 434  |   |  |   | (602,495 | )
|                                                              |  |                                      |          |   |               
|Cash flows from financing activities:                         |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Increase (decrease) in advances from parent and affiliates    |  |                                      | 517,602  |   |                |   | 44,562   |                    |  |   | (106,485     | ) |  |              | (663 | ) |  |   | 455,016  |  
|Principal payments of debt                                    |  |                                      | (180,903 | ) |                |   | (1,060   | )                  |  |   | (72          | ) |  |              |     |   |  |   | (182,035 | )
|Cash dividends                                                |  |                                      | (113,000 | ) |                |   |         |                    |  |   | (654         | ) |  |              | 654  |   |  |   | (113,000 | )
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash provided by (used in) financing activities           |  |                                      | 223,699  |   |                |   | 43,502   |                    |  |   | (107,211     | ) |  |              | (9   | ) |  |   | 159,981  |  
|Effect of exchange rates on cash and cash equivalents         |  |                                      |         |   |                |   | 20,479   |                    |  |   | 4,177        |   |  |              |     |   |  |   | 24,656   |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents          |  |                                      | (48,908  | ) |                |   | (12,747  | )                  |  |   | 4,216        |   |  |              |     |   |  |   | (57,439  | )
|Cash and cash equivalents at beginning of year                |  |                                      | 48,935   |   |                |   | 115,723  |                    |  |   | 930          |   |  |              |     |   |  |   | 165,588  |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Cash and cash equivalents at end of period                    |  | $                                    | 27       |   |                | $ | 102,976  |                    |  | $ | 5,146        |   |  | $            |     |   |  | $ | 108,149  |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |      |   |  |   |          |  



- 16 -



---

##### Table of Contents

|9. | Consolidating Financial Information (Continued)
|-- | -----------------------------------------------



|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------------ | -------- | - | -------------- | - | -------- | ------------------ |  | - | ------------ | - |  | ------------ | -------- | - |  | - | -------- | -
|                                                              |  | Nine Months Ended September 30, 2006 |         
|                                                              |  | Union Tank Car Company               |          |   | Procor Limited |   |          | Other Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Net cash provided by operating activities:                    |  | $                                    | 90,275   |   |                | $ | 2,809    |                    |  | $ | 182,186      |   |  | $            | 88       |   |  | $ | 275,358  |  
|Cash flows from investing activities:                         |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|Construction and purchase of lease fleet                      |  |                                      | (520,051 | ) |                |   | (89      | )                  |  |   | (41,361      | ) |  |              | 278      |   |  |   | (561,223 | )
|Construction and purchase of other fixed assets               |  |                                      | (4,377   | ) |                |   | (1,596   | )                  |  |   | (48,700      | ) |  |              |         |   |  |   | (54,673  | )
|Proceeds from sales of available-for-sale securities          |  |                                      | 131,884  |   |                |   |         |                    |  |   |             |   |  |              |         |   |  |   | 131,884  |  
|Purchases of short-term investments                           |  |                                      |         |   |                |   | (116,084 | )                  |  |   |             |   |  |              |         |   |  |   | (116,084 | )
|Proceeds from sales of short-term investments                 |  |                                      |         |   |                |   | 81,736   |                    |  |   |             |   |  |              |         |   |  |   | 81,736   |  
|(Increase) decrease in other assets                           |  |                                      | (366     | ) |                |   | 423      |                    |  |   | (2,532       | ) |  |              |         |   |  |   | (2,475   | )
|Proceeds from disposals of lease fleet and other fixed assets |  |                                      | 15,423   |   |                |   | 19       |                    |  |   | 17,749       |   |  |              |         |   |  |   | 33,191   |  
|Proceeds from disposition of business                         |  |                                      |         |   |                |   |         |                    |  |   | 900          |   |  |              |         |   |  |   | 900      |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|Net cash used in investing activities                         |  |                                      | (377,487 | ) |                |   | (35,591  | )                  |  |   | (73,944      | ) |  |              | 278      |   |  |   | (486,744 | )
|                                                              |  |                                      |          |   |               
|Cash flows from financing activities:                         |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|Increase in advances from parent and affiliates               |  |                                      | 389,890  |   |                |   | 102,128  |                    |  |   | 70,380       |   |  |              | (212,048 | ) |  |   | 350,350  |  
|Principal payments of debt                                    |  |                                      | (55,752  | ) |                |   | (15,299  | )                  |  |   | (67          | ) |  |              |         |   |  |   | (71,118  | )
|Cash dividends                                                |  |                                      | (104,000 | ) |                |   | (33,402  | )                  |  |   | (178,280     | ) |  |              | 211,682  |   |  |   | (104,000 | )
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|Net cash provided by (used in) financing activities           |  |                                      | 230,138  |   |                |   | 53,427   |                    |  |   | (107,967     | ) |  |              | (366     | ) |  |   | 175,232  |  
|Effect of exchange rates on cash and cash equivalents         |  |                                      |         |   |                |   | 2,661    |                    |  |   |             |   |  |              |         |   |  |   | 2,661    |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents          |  |                                      | (57,074  | ) |                |   | 23,306   |                    |  |   | 275          |   |  |              |         |   |  |   | (33,493  | )
|Cash and cash equivalents at beginning of year                |  |                                      | 70,943   |   |                |   | 75,151   |                    |  |   | 4,534        |   |  |              |         |   |  |   | 150,628  |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  
|Cash and cash equivalents at end of period                    |  | $                                    | 13,869   |   |                | $ | 98,457   |                    |  | $ | 4,809        |   |  | $            |         |   |  | $ | 117,135  |  
|                                                              |  |                                      |          |   |                |   |          |                    |  |   |              |   |  |              |          |   |  |   |          |  



|10. | Acquisitions
|--- | ------------

During the first quarter of 2007, the
Company acquired two businesses for its Metals Distribution segment for cash of $35,523. These businesses operate steel service centers in Pennsylvania, Ohio and Kentucky and complement existing Metals Distribution locations. Revenues from these
operations since the acquisition (approximately seven months of operations) were $39,051 and income before income taxes was not significant. The Companys estimate of goodwill is $18,906, as the purchase price allocation is preliminary and
further refinements may be necessary pending finalization of valuations.

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



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##### Table of Contents

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

The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document as well as our Annual Report on Form
10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission (SEC) on March 23, 2007 and our quarterly reports for the periods ended March 31, 2007 and June 30, 2007 filed with the SEC
on May 14, 2007 and August 9, 2007, respectively.

Forward-Looking Statements

Certain statements contained in this quarterly report on Form 10-Q for the quarter ended September 30, 2007 may include certain forward-looking statements, within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial
performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as expects, anticipates, intends, plans, believes, seeks,
estimates, and should and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates,
projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information or otherwise. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks,
uncertainties and assumptions. In addition, certain factors, including risk factors identified in Item 1ARisk Factors herein and in the Companys Annual Report on Form 10-K for the year ended December 31, 2006, may
affect the Companys businesses. As a result, past financial results may not be a reliable indicator of future performance.

Results of Operations

3rdQuarter 2007 versus 3rdQuarter 2006

Services revenue and gross profit:

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

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



|                           |  |                        |         |   |      |   |         |          |  |   |       
|-------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                           |  | 2007                   |         |   | 2006 |   |         | Increase
|                           |  | (Dollars in Thousands)
|Services revenue           |  | $                      | 230,852 |   |      | $ | 205,036 |          |  | $ | 25,816
|Cost of services           |  |                        | 117,633 |   |      |   | 114,200 |          |  |   | 3,433 
|                           |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from services |  | $                      | 113,219 |   |      | $ | 90,836  |          |  | $ | 22,383
|Gross profit %             |  |                        | 49      | % |      |   | 44      | %        |  |   |       



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##### Table of Contents

Services revenue in the third quarter of 2007 increased $25.8 million from the third quarter of 2006 primarily due to a
$19.6 million increase in railcar leasing and service revenues (equipment additions and higher lease rates), a $2.4 million increase in intermodal tank container leasing revenues (equipment additions, higher lease rates and higher utilization rate),
a $1.8 million increase in the sulphur processing business (higher volume) and $1.4 million higher revenue in the contract rail switching business (higher volume).

Gross profit on services revenue in the third quarter of 2007 increased $22.4 million from the third quarter of 2006 primarily due to a $19.2 million increase for railcar leasing (higher disposal gains, equipment additions and higher lease
rates partially offset by higher maintenance expense), a $2.4 million increase for the intermodal tank container leasing business (equipment additions, higher lease rates and higher utilization rate) and a $0.8 million increase in the sulphur
processing business (higher volume) .

Gains on disposals totaled $11.9 million in the third quarter of 2007. Of this total, $8.0 million was from the sale
of unused real properties. The remainder of the gains were primarily from disposals of railcars and tank containers. Gains on disposals in the third quarter of 2006, primarily on railcars and tank containers, totaled $5.3 million. Gains on disposals
are treated as a reduction to the cost of services.

The gross margin on services revenue of 49% in the third quarter of 2007 increased from 44% in the
third quarter of 2006 primarily due to a higher margin in the railcar leasing business resulting from higher gains on disposals, equipment additions and higher lease rates, more than offsetting higher maintenance expense.

Average fleet utilization of the Companys railcar fleet was 99% for the third quarter of 2007 compared with 98% for the third quarter of 2006. Utilization rates of
the Companys existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, including liquid fertilizers, liquified petroleum gas and other petroleum and fuel products, food products, and bulk
plastics, and suitability of the Companys fleet to meet such demand. The potential impact of short-term fluctuations in demand is tempered by the longer-term nature of the leases.

Sales revenue and gross profit:

Overall sales revenue was higher primarily due to increased demand for products of
the metals distribution business. Outside sales of new railcars were decreased, despite an increase in railcar production from the third quarter of 2006 to the third quarter of 2007, in order to increase fleet additions in response to demand for new
leased railcars.

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



|                        |  |                        |         |   |      |   |         |          |  |   |       
|----------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                        |  | 2007                   |         |   | 2006 |   |         | Increase
|                        |  | (Dollars in Thousands)
|Sales revenue           |  | $                      | 277,295 |   |      | $ | 251,414 |          |  | $ | 25,881
|Cost of sales           |  |                        | 229,266 |   |      |   | 208,783 |          |  |   | 20,483
|                        |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from sales |  | $                      | 48,029  |   |      | $ | 42,631  |          |  | $ | 5,398 
|Gross profit %          |  |                        | 17      | % |      |   | 17      | %        |  |   |       



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##### Table of Contents

Sales revenue for the third quarter of 2007 increased $25.9 million from the third quarter of 2006 primarily due to $23.1
million higher sales of metals distribution products (impact of acquisitions and higher prices), $2.0 million higher sales of containment vessel heads (higher volume), $2.0 million higher sales of light rail transit equipment (higher volume) and
$1.8 million higher sales of mobile railcar moving equipment (higher volume). The sales revenue increases were partially offset by a $3.6 million decrease in sales of manufactured railcars (lower sales volume).

Sales revenue from the acquisitions of two steel service center operations in March 2007 added approximately $15.3 million of metals distribution products revenue in the
third quarter of 2007. The gross profit impact was $2.6 million.

Gross profit on sales revenue in the third quarter of 2007 increased $5.4 million from
the third quarter of 2006 primarily due to a $3.7 million increase for metals distribution products (impact of acquisitions and higher prices more than offsetting higher cost of sales), a $0.8 million increase for containment vessel heads (higher
volume and lower costs), a $0.8 million increase for mobile railcar moving equipment (higher volume) and a $0.6 million increase for light transit rail products (higher volume). The gross profit increases were partially offset by $1.3 million
decrease for manufactured railcars (lower sales volume).

The gross margin on sales revenue of 17% in the third quarter of 2007 was unchanged from the
third quarter of 2006.

All other:

General and
administrative expenses in the third quarter of 2007 were $3.0 million higher than in the third quarter of 2006 primarily due to higher expenses in the metals distribution business, partially a result of the March acquisitions.

Interest expense in the third quarter of 2007 was $5.2 million higher than in the third quarter of 2006 primarily due to $9.1 million higher interest on advances from
parent and affiliates, more than offsetting $3.9 million lower interest expense on third-party debt due to principal repayments.

The provision for income
taxes was $40.9 million in the third quarter of 2007 with an effective tax rate of 42.3%, compared with $30.3 million in the third quarter of 2006 with an effective tax rate of 38.6%. The increase in the effective rate was due to higher state income
tax accruals as well as an increase in taxes on unremitted foreign earnings.

Nine Months 2007 versus Nine Months 2006

Services revenue and gross profit:

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



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##### Table of Contents

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



|                           |  |                        |         |   |      |   |         |          |  |   |       
|-------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                           |  | 2007                   |         |   | 2006 |   |         | Increase
|                           |  | (Dollars in Thousands)
|Services revenue           |  | $                      | 661,978 |   |      | $ | 609,748 |          |  | $ | 52,230
|Cost of services           |  |                        | 356,684 |   |      |   | 336,791 |          |  |   | 19,893
|                           |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from services |  | $                      | 305,294 |   |      | $ | 272,957 |          |  | $ | 32,337
|Gross profit %             |  |                        | 46      | % |      |   | 45      | %        |  |   |       

Services revenue in the first nine months of 2007 increased $52.2 million from the first nine months of 2006 due
to $37.5 million higher railcar leasing and service revenues (equipment additions and higher lease rates), $7.3 million higher intermodal tank container leasing revenues (equipment additions, higher lease rates and higher utilization rate), $3.8
million higher revenue in the contract rail switching business (higher volume) and $2.4 million higher revenue in the sulphur processing business (higher volume).

Gross profit on services revenue in the first nine months of 2007 increased $32.3 million from the first nine months of 2006 primarily due to a $25.0 million increase for railcar leasing (equipment additions, higher lease rates and higher
disposal gains more than offsetting higher maintenance expense), a $6.5 million increase for the intermodal tank container leasing business (equipment additions, higher lease rates and higher utilization rate) and a $0.8 million increase for the
contract rail switching business (higher volume).

Gains on disposals totaled $21.1 million in the first nine months of 2007. Of this total, $8.0 million
was from the sale of unused real properties. The remainder of the gains were primarily from disposals of railcars and tank containers. Gains on disposals in the first nine months of 2006, primarily on railcars and tank containers, totaled $19.6
million. Gains on disposals are treated as a reduction to the cost of services.

The gross margin on services revenue of 46% in the first nine months of
2007 increased from 45% in the first nine months of 2006 primarily due to a higher margin in the railcar leasing business resulting from equipment additions, higher lease rates and higher disposal gains partially offset by higher maintenance
expense.

Average fleet utilization of the Companys railcar fleet was 99% for the first nine months of 2007 and the first nine months of 2006.
Utilization rates of the Companys existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, including liquid fertilizers, liquified petroleum gas and other petroleum and fuel products, food
products, and bulk plastics, and suitability of the Companys fleet to meet such demand. The potential impact of short-term fluctuations in demand is tempered by the longer-term nature of the leases.

Sales revenue and gross profit:

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



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##### Table of Contents

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



|                        |  |                        |         |   |      |   |         |          |  |   |       
|----------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -------- |  | - | ------
|                        |  | 2007                   |         |   | 2006 |   |         | Increase
|                        |  | (Dollars in Thousands)
|Sales revenue           |  | $                      | 873,973 |   |      | $ | 812,084 |          |  | $ | 61,889
|Cost of sales           |  |                        | 705,530 |   |      |   | 683,714 |          |  |   | 21,816
|                        |  |                        |         |   |      |   |         |          |  |   |       
|Gross profit from sales |  | $                      | 168,443 |   |      | $ | 128,370 |          |  | $ | 40,073
|Gross profit %          |  |                        | 19      | % |      |   | 16      | %        |  |   |       

Sales revenue for the first nine months of 2007 increased $61.9 million from the first nine months of 2006 due to
$90.0 million higher sales of metals distribution products (higher prices and impact of acquisitions), $11.2 million higher sales of mobile railcar moving equipment (higher volume), $5.3 million higher sales of light rail transit products (higher
volume), $4.3 million higher sales of containment vessel heads (higher volume), $3.8 million higher sales of sulphur processing equipment (higher prices) and $1.1 million higher sales of gear drives (higher volume). These increases were partially
offset by a $54.1 million decrease in sales of manufactured railcars (lower sales volume).

Sales revenue from the acquisitions of two steel service center
operations in March 2007 added approximately $39.1 million of metals distribution products revenue in the first nine months of 2007. The gross profit impact was $6.2 million.

Gross profit on sales revenue in the first nine months of 2007 increased $40.1 million from the first nine months of 2006 primarily due to a $14.5 million increase for sulphur processing equipment (lower costs and
higher prices), a $10.8 million increase for metals distribution products (impact of acquisitions and higher prices more than offsetting higher cost of sales), a $6.2 million improvement for manufactured railcars (higher prices and lower costs), a
$3.4 million increase for mobile railcar moving equipment (higher volume), a $2.8 million increase for containment vessel heads (higher volume and lower costs), a $1.6 million increase for light transit rail products (higher volume) and a $1.1
million increase for gear drives (higher volume and lower cost).

The gross margin on sales revenues of 19% in the first nine months of 2007 increased from
16% in the first nine months of 2006 primarily due to improved margins on the sales of the sulphur processing equipment and manufactured railcars.

All
other:

General and administrative expenses in the first nine months of 2007 were $6.5 million higher than in the first nine months of 2006 primarily
due to higher expenses in the metals distribution business, partially a result of the March acquisitions.

Interest expense in the first nine months of
2007 was $19.9 million higher than in the first nine months of 2006 primarily due to $26.2 million higher interest on advances from parent and affiliates, more than offsetting $6.3 million lower interest expense on third-party debt due to principal
repayments.

The provision for income taxes was $119.6 million in the first nine months of 2007 with an effective tax rate of 41.4%, compared with $90.5
million in the first nine months of 2006 with an effective tax rate of 36.8%. The increase in the effective tax rate was due to higher state income tax accruals and an increase in taxes on unremitted foreign earnings.



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##### Table of Contents

Financial Condition and Liquidity

Nine Months 2007 versus Nine Months 2006

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

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

Cash flows from operating activities:

Operating activities provided $360.4 million of net cash in the first nine months of 2007, compared with $275.4 million provided in the first nine months of 2006. The net cash provided by operating activities was higher in the first nine
months of 2007 primarily due to higher deferred taxes, depreciation and net income.

Cash flows from investing activities:

Net cash used in investing activities was $602.5 million in the first nine months of 2007 compared with $486.7 million in the first nine months of 2006. The increase in
net cash used in investing activities was primarily due to lower proceeds from the sale of available-for-sale securities and the purchases of businesses.

During the first nine months of 2007, the Company invested $513.6 million in the construction and purchase of lease fleet assets, compared with $561.2 million in the first nine months of 2006. The first nine months of 2006 capital
expenditures included $229.3 million to exercise purchase options for railcars related to sale-leaseback transactions.

Since capital expenditures for
railcars are generally incurred subsequent to receipt of firm customer lease orders, such expenditures are discretionary to the Company based on its desire to accept those lease orders. Capital expenditures for intermodal tank containers are
likewise discretionary in the intermodal tank container business.



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##### Table of Contents

During the first nine months of 2007, the Company invested $28.3 million in the construction and purchase of other fixed
assets, compared with $54.7 million in the first nine months of 2006. The amount in 2006 included expenditures related to the tank car manufacturing plant in Alexandria, Louisiana which was completed in the second quarter of 2006.

During the first nine months of 2007, the Company invested a net amount of $59.8 million from the purchases in excess of sales of available-for-sale securities and
short-term investments, compared to the receipt of net proceeds of $97.5 million during the first nine months of 2006 from sales in excess of purchases. The available-for-sale securities are investment-grade debt obligations with a combined
weighted-average maturity under two years. The short-term investments consist of commercial paper with original maturities between four and six months. These investments are available for the Companys use to fund repayment of principal
obligations, finance lease fleet additions (including the exercise of sale-leaseback purchase options), fund acquisitions or fund other operating needs.

A
subsidiary of the Company has investments in Canadian short-term, asset-backed commercial paper, some of which were not paid out on their maturity dates due to the recent North American credit issues. This subsidiary is part of an investor group
that has been organized to provide for an orderly restructuring and payment of the commercial paper. The investor group has agreed to a standstill agreement through December 14, 2007, which may be extended, to permit the restructuring and
objective of receiving full value on the investments. At September 30, 2007, short-term investments included $81,803 related to this commercial paper. The Company anticipates receiving the carrying value of these investments and, accordingly,
no impairment has been recorded.

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

Proceeds from disposals of lease fleet and other fixed assets
were $36.8 million in the first nine months of 2007 compared with $33.2 million in the first nine months of 2006.

Cash flows from financing activities:

Net cash provided by financing activities was $160.0 million in the first nine months of 2007 compared with $175.2 million in the first nine months of
2006 due to higher principal repayments of debt and higher cash dividends offsetting higher increases in advances from parent and affiliates. Cash dividends to Holdings were $113.0 million in the first nine months of 2007 compared with $104.0
million in the first nine months of 2006.

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



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##### Table of Contents

New Accounting Pronouncements

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

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

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



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##### Table of Contents

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

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



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

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

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

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



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##### Table of Contents

PART II. OTHER INFORMATION



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

Reference is made to Business -
Environmental Matters in Item 1 and Note 11 Contingencies of the Notes to Consolidated Financial Statements of the Companys Annual Report on Form 10-K for the year ended December 31, 2006 for a description of
certain environmental matters and Note 8 Commitments and Contingencies to the Condensed Consolidated Financial Statements in this Form 10-Q for the quarter ended September 30, 2007.

On January 5, 2007, two subsidiaries of the Company, Enersul Inc. and Tiger Industries L.P. were charged with six offenses under the Alberta
Environmental Protection and Enhancement Act relating to an alleged discharge of sulfur dioxide from Tiger Industries plant in Calgary, Alberta, Canada on January 15, 2005. The subsidiaries were subject to a fine for each offense. The
case was under the jurisdiction of the Alberta Provincial Court. On October 30, 2007, Tiger Industries pled guilty to one count under the Alberta Environmental Protection and Enhancement Act. A total penalty of $278,330 was imposed on Tiger
Industries. All other counts against Tiger Industries and all counts against Enersul Inc. were withdrawn by the Province of Alberta.



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

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

We may be subject to unusual volatility and uncertainty in the financial
markets.

The Companys investments in cash equivalents, short-term investments and available-for-sale securities are subject
to the inherent economic and other risks of the financial markets. There can be no assurance that the expected returns and liquidity of such investments will be attained when such financial markets become uncertain or volatile as a result of unusual
economic or other events beyond the Companys control.



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|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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##### Table of Contents

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 9, 2007 |  | By:                    |  | /s/ Mark J. Garrette                                          
|                        |  |                        |  | Mark J. Garrette                                              
|                        |  |                        |  | Vice President                                                
|                        |  |                        |  | (principal financial officer and principal accounting officer)



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