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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 March 31, 2005



OR



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



For the transition period from  to



Commission file number 1-5666



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UNION TANK CAR COMPANY

(Exact name of registrant as specified in its charter)



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



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



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



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



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



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



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UNION TANK CAR COMPANY AND SUBSIDIARIES

FORM 10-Q

INDEX



|                              |  |         |  |                                                                                             |  |     
|----------------------------- |  | ------- |  | ------------------------------------------------------------------------------------------- |  | ----
|                              |  |         |  |                                                                                             |  | Page
|Part I. Financial Information |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Financial Statements                                                                        |  |     
|                              |  |         | 
|                              |  |         |  | Condensed consolidated statement of income- three months ended March 31, 2005 and 2004      |  | 3   
|                              |  |         | 
|                              |  |         |  | Condensed consolidated balance sheet - March 31, 2005 and December 31, 2004                 |  | 4   
|                              |  |         | 
|                              |  |         |  | Condensed consolidated statement of cash flows - three months ended March 31, 2005 and 2004 |  | 5   
|                              |  |         | 
|                              |  |         |  | Notes to condensed consolidated financial statements                                        |  | 6   
|                              |  |         | 
|                              |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations       |  | 13  
|                              |  |         | 
|                              |  | Item 4. |  | Controls and Procedures                                                                     |  | 16  
|                              | 
|Part II. Other Information    |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Legal Proceedings                                                                           |  | 17  
|                              |  |         | 
|                              |  | Item 5. |  | Other Information                                                                           |  | 17  
|                              |  |         | 
|                              |  | Item 6. |  | Exhibits                                                                                    |  | 17  
|                              | 
|Signatures                    |  | 18     



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PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Dollars in Thousands)

(Unaudited)



|                                            |  |                              |         |   |      |   |        
|------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | -------
|                                            |  | Three Months Ended March 31,
|                                            |  | 2005                         |         |   | 2004
|Revenues                                    |  |                              |         |   |      |   |        
|Services (leasing and other)                |  | $                            | 185,115 |   |      | $ | 183,779
|Net sales                                   |  |                              | 215,592 |   |      |   | 164,387
|                                            |  |                              |         |   |      |   |        
|                                            |  |                              | 400,707 |   |      |   | 348,166
|Other income, net                           |  |                              | 3,025   |   |      |   | 2,569  
|                                            |  |                              |         |   |      |   |        
|                                            |  |                              | 403,732 |   |      |   | 350,735
|                                            |  |                             
|Costs and expenses                          |  |                              |         |   |      |   |        
|Cost of services                            |  |                              | 107,620 |   |      |   | 117,705
|Cost of sales                               |  |                              | 179,624 |   |      |   | 133,009
|General and administrative                  |  |                              | 39,490  |   |      |   | 35,476 
|Interest                                    |  |                              | 19,619  |   |      |   | 16,777 
|                                            |  |                              |         |   |      |   |        
|                                            |  |                              | 346,353 |   |      |   | 302,967
|                                            |  |                              |         |   |      |   |        
|Income before income taxes                  |  |                              | 57,379  |   |      |   | 47,768 
|                                            |  |                             
|Provision for income taxes                  |  |                              | 21,528  |   |      |   | 19,311 
|                                            |  |                              |         |   |      |   |        
|Net income                                  |  |                              | 35,851  |   |      |   | 28,457 
|                                            |  |                             
|Other comprehensive loss                    |  |                              |         |   |      |   |        
|Unrealized losses on securities, net of tax |  |                              | (822    | ) |      |   |       
|                                            |  |                              |         |   |      |   |        
|Comprehensive income                        |  | $                            | 35,029  |   |      | $ | 28,457 
|                                            |  |                              |         |   |      |   |        



See notes to condensed
consolidated financial statements.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in Thousands)



|                                                                                    |  |                |           |   |                   |   |           |  
|----------------------------------------------------------------------------------- |  | -------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                    |  | March 31, 2005 |           |   | December 31, 2004 |  
|                                                                                    |  | (Unaudited)    |           |   |                   |  
|Assets                                                                              |  |                |           |   |                   |   |           |  
|                                                                                    |  |               
|Cash and cash equivalents                                                           |  | $              | 122,926   |   |                   | $ | 98,336    |  
|Short-term investments                                                              |  |                |          |   |                   |   | 45,429    |  
|Available-for-sale securities                                                       |  |                | 232,047   |   |                   |   | 244,896   |  
|Accounts receivable, primarily due within one year                                  |  |                | 175,918   |   |                   |   | 172,689   |  
|Accounts and notes receivable, affiliates                                           |  |                | 44,597    |   |                   |   | 43,626    |  
|Inventories, net of LIFO reserves of $80,145 ($74,379 at December 31, 2004)         |  |                | 168,909   |   |                   |   | 146,944   |  
|Prepaid expenses and deferred charges                                               |  |                | 14,348    |   |                   |   | 13,292    |  
|Advances to parent company, principally at LIBOR plus 1%                            |  |                | 48,540    |   |                   |   | 150,246   |  
|Railcar lease fleet, net                                                            |  |                | 1,918,876 |   |                   |   | 1,804,350 |  
|Intermodal tank container lease fleet, net                                          |  |                | 327,173   |   |                   |   | 323,601   |  
|Other fixed assets, net                                                             |  |                | 203,316   |   |                   |   | 198,986   |  
|Other assets                                                                        |  |                | 35,154    |   |                   |   | 35,422    |  
|                                                                                    |  |                |           |   |                   |   |           |  
|Total assets                                                                        |  | $              | 3,291,804 |   |                   | $ | 3,277,817 |  
|                                                                                    |  |                |           |   |                   |   |           |  
|Liabilities and Stockholders Equity                                                |  |                |           |   |                   |   |           |  
|                                                                                    |  |               
|Accounts payable                                                                    |  | $              | 90,555    |   |                   | $ | 74,606    |  
|Accrued liabilities                                                                 |  |                | 263,872   |   |                   |   | 265,480   |  
|Borrowed debt, including $64,642 due within one year ($34,147 at December 31, 2004) |  |                | 1,157,696 |   |                   |   | 1,167,251 |  
|                                                                                    |  |                |           |   |                   |   |           |  
|                                                                                    |  |                | 1,512,123 |   |                   |   | 1,507,337 |  
|                                                                                    |  |               
|Deferred income taxes and investment tax credits                                    |  |                | 593,739   |   |                   |   | 596,126   |  
|Minority interest                                                                   |  |                | 98,914    |   |                   |   | 97,355    |  
|                                                                                    |  |               
|Stockholders equity                                                                |  |                |           |   |                   |   |           |  
|Common stock and additional capital                                                 |  |                | 265,061   |   |                   |   | 265,061   |  
|Retained earnings                                                                   |  |                | 823,190   |   |                   |   | 812,339   |  
|Unrealized losses on available-for-sale securities, net                             |  |                | (1,223    | ) |                   |   | (401      | )
|                                                                                    |  |                |           |   |                   |   |           |  
|Total stockholders equity                                                          |  |                | 1,087,028 |   |                   |   | 1,076,999 |  
|                                                                                    |  |                |           |   |                   |   |           |  
|Total liabilities and stockholders equity                                          |  | $              | 3,291,804 |   |                   | $ | 3,277,817 |  
|                                                                                    |  |                |           |   |                   |   |           |  



See notes to condensed
consolidated financial statements.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



|                                                                                  |  |                              |          |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | ------- | -
|                                                                                  |  | Three Months Ended March 31, |         
|                                                                                  |  | 2005                         |          |   | 2004 |  
|Cash flows from operating activities:                                             |  |                              |          |   |      |   |         |  
|Net income                                                                        |  | $                            | 35,851   |   |      | $ | 28,457  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |          |   |      |   |         |  
|Depreciation and amortization                                                     |  |                              | 42,083   |   |      |   | 39,797  |  
|Deferred taxes                                                                    |  |                              | (1,605   | ) |      |   | (1,438  | )
|Gain on disposition of lease fleet and other fixed assets                         |  |                              | (2,809   | ) |      |   | (2,452  | )
|Other non-cash income and expenses                                                |  |                              | 2,383    |   |      |   | 2,120   |  
|Changes in assets and liabilities:                                                |  |                              |          |   |      |   |         |  
|Accounts receivable                                                               |  |                              | (5,056   | ) |      |   | (21,073 | )
|Inventories                                                                       |  |                              | (22,095  | ) |      |   | (2,690  | )
|Prepaid expenses and deferred charges                                             |  |                              | (1,132   | ) |      |   | 1,188   |  
|Accounts payable and accrued expenses                                             |  |                              | 15,060   |   |      |   | (10,962 | )
|                                                                                  |  |                              |          |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                              | 62,680   |   |      |   | 32,947  |  
|                                                                                  |  |                             
|Cash flows from investing activities:                                             |  |                              |          |   |      |   |         |  
|Construction and purchase of lease fleet and other fixed assets                   |  |                              | (168,199 | ) |      |   | (77,100 | )
|Decrease in short-term investments                                                |  |                              | 45,429   |   |      |   | 62,606  |  
|Decrease in available-for-sale securities                                         |  |                              | 11,586   |   |      |   |        |  
|Decrease in advance to parent                                                     |  |                              | 103,091  |   |      |   | 19,368  |  
|Increase in other assets                                                          |  |                              | (215     | ) |      |   | (183    | )
|Proceeds from disposals of lease fleet and other fixed assets                     |  |                              | 5,043    |   |      |   | 7,883   |  
|                                                                                  |  |                              |          |   |      |   |         |  
|Net cash (used in) provided by investing activities                               |  |                              | (3,265   | ) |      |   | 12,574  |  
|                                                                                  |  |                             
|Cash flows from financing activities:                                             |  |                              |          |   |      |   |         |  
|Principal payments of borrowed debt                                               |  |                              | (9,555   | ) |      |   | (24,325 | )
|Cash dividends                                                                    |  |                              | (25,000  | ) |      |   | (20,000 | )
|                                                                                  |  |                              |          |   |      |   |         |  
|Net cash used in financing activities                                             |  |                              | (34,555  | ) |      |   | (44,325 | )
|Effect of exchange rates on cash and cash equivalents                             |  |                              | (270     | ) |      |   | (1,152  | )
|                                                                                  |  |                              |          |   |      |   |         |  
|Net increase in cash and cash equivalents                                         |  |                              | 24,590   |   |      |   | 44      |  
|Cash and cash equivalents at beginning of year                                    |  |                              | 98,336   |   |      |   | 56,197  |  
|                                                                                  |  |                              |          |   |      |   |         |  
|Cash and cash equivalents at end of period                                        |  | $                            | 122,926  |   |      | $ | 56,241  |  
|                                                                                  |  |                              |          |   |      |   |         |  
|Cash paid during the period for:                                                  |  |                              |          |   |      |   |         |  
|Interest (net of amount capitalized)                                              |  | $                            | 17,342   |   |      | $ | 13,978  |  
|Income taxes                                                                      |  |                              | 14,263   |   |      |   | 21,189  |  



See notes to condensed
consolidated financial statements.



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UNION TANK CAR COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands)

(Unaudited)



|1. | UNION TANK CAR COMPANY (the Company) is a wholly-owned subsidiary of Marmon Holdings, Inc. (Holdings), all of the stock of which 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. | The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a
fair presentation. These interim financial statements do not include all disclosures normally provided in annual financial statements. Accordingly, they should be read in conjunction with the consolidated financial statements and notes thereto in
the Companys 2004 Annual Report on Form 10-K.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|3. | As more fully described in the Companys 2004 Annual Report on Form 10-K, under an arrangement with Holdings, the Company is included in the consolidated federal income tax
return 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 group.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. | The Company and its subsidiaries have been named as defendants in a number of lawsuits, and certain claims are pending. The Company has accrued what it reasonably expects to pay in
resolution of these matters and, in the opinion of management, their ultimate resolution will not have a material adverse effect on the Companys consolidated financial position or results of operations.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. | Foreign currency translation adjustments and transaction gains and losses are borne by the Companys parent. For the three months ended March 31, 2005 and 2004, the
Companys parent absorbed gains of $168 and $325, respectively.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. | The Companys short-term investments consist of commercial paper with original maturities between four and six months. No such investments were held at March 31, 2005.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|7. | The Companys foreign subsidiaries periodically enter into foreign currency forward contracts to hedge against currency exchange rate exposures. There were no foreign currency
forward contracts outstanding at March 31, 2005 and December 31, 2004.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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8. Consolidating Financial Information



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



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



Condensed consolidating statements of income for the three months ended March 31, 2005 and 2004 are as follows:



Three Months Ended March 31, 2005



|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|-------------------------- |  | ---------------------- | ------- | - | -------------- | - | ------ | ------------------ |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                           |  | Union Tank Car Company |         |   | Procor Limited |   |        | Other Subsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                   |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Services                   |  | $                      | 125,964 |   |                | $ | 4,780  |                    |  | $            | 75,250  |  | $            | (20,879  | ) |  | $ | 185,115
|Net sales                  |  |                        |        |   |                |   |       |                    |  |              | 285,826 |  |              | (70,234  | ) |  |   | 215,592
|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                           |  |                        | 125,964 |   |                |   | 4,780  |                    |  |              | 361,076 |  |              | (91,113  | ) |  |   | 400,707
|Other income, net          |  |                        | 24,820  |   |                |   | 657    |                    |  |              | 220     |  |              | (22,672  | ) |  |   | 3,025  
|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                           |  |                        | 150,784 |   |                |   | 5,437  |                    |  |              | 361,296 |  |              | (113,785 | ) |  |   | 403,732
|                           |  |                        |         |   |               
|Costs and expenses         |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Cost of services           |  |                        | 79,502  |   |                |   | 5,643  |                    |  |              | 43,354  |  |              | (20,879  | ) |  |   | 107,620
|Cost of sales              |  |                        | (8      | ) |                |   |       |                    |  |              | 245,089 |  |              | (65,457  | ) |  |   | 179,624
|General and administrative |  |                        | 12,271  |   |                |   | 537    |                    |  |              | 27,258  |  |              | (576     | ) |  |   | 39,490 
|Interest                   |  |                        | 15,341  |   |                |   | 566    |                    |  |              | 3,712   |  |              |         |   |  |   | 19,619 
|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|                           |  |                        | 107,106 |   |                |   | 6,746  |                    |  |              | 319,413 |  |              | (86,912  | ) |  |   | 346,353
|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Income before income taxes |  |                        | 43,678  |   |                |   | (1,309 | )                  |  |              | 41,883  |  |              | (26,873  | ) |  |   | 57,379 
|Provision for income taxes |  |                        | 7,827   |   |                |   | (381   | )                  |  |              | 15,482  |  |              | (1,400   | ) |  |   | 21,528 
|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        
|Net income                 |  | $                      | 35,851  |   |                | $ | (928   | )                  |  | $            | 26,401  |  | $            | (25,473  | ) |  | $ | 35,851 
|                           |  |                        |         |   |                |   |        |                    |  |              |         |  |              |          |   |  |   |        



Three Months Ended
March 31, 2004



|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|-------------------------- |  | ---------------------- | ------- | -------------- | - | ------ | ------------------ |  | ------------ | ------- |  | ------------ | ------- | - |  | - | -------
|                           |  | Union Tank Car Company |         | Procor Limited |   |        | Other Subsidiaries |  | Eliminations |         |  | Consolidated
|Revenues                   |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|Services                   |  | $                      | 117,669 |                | $ | 5,594  |                    |  | $            | 78,725  |  | $            | (18,209 | ) |  | $ | 183,779
|Net sales                  |  |                        | 6,527   |                |   | 189    |                    |  |              | 161,088 |  |              | (3,417  | ) |  |   | 164,387
|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|                           |  |                        | 124,196 |                |   | 5,783  |                    |  |              | 239,813 |  |              | (21,626 | ) |  |   | 348,166
|Other income, net          |  |                        | 19,542  |                |   | 668    |                    |  |              | 815     |  |              | (18,456 | ) |  |   | 2,569  
|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|                           |  |                        | 143,738 |                |   | 6,451  |                    |  |              | 240,628 |  |              | (40,082 | ) |  |   | 350,735
|                           |  |                        |         |                |  
|Costs and expenses         |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|Cost of services           |  |                        | 78,035  |                |   | 6,789  |                    |  |              | 51,090  |  |              | (18,209 | ) |  |   | 117,705
|Cost of sales              |  |                        | 6,400   |                |   | 107    |                    |  |              | 129,919 |  |              | (3,417  | ) |  |   | 133,009
|General and administrative |  |                        | 9,553   |                |   | 1,251  |                    |  |              | 24,672  |  |              |        |   |  |   | 35,476 
|Interest                   |  |                        | 12,747  |                |   | 596    |                    |  |              | 3,434   |  |              |        |   |  |   | 16,777 
|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|                           |  |                        | 106,735 |                |   | 8,743  |                    |  |              | 209,115 |  |              | (21,626 | ) |  |   | 302,967
|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|Income before income taxes |  |                        | 37,003  |                |   | (2,292 | )                  |  |              | 31,513  |  |              | (18,456 | ) |  |   | 47,768 
|Provision for income taxes |  |                        | 8,546   |                |   | (592   | )                  |  |              | 11,357  |  |              |        |   |  |   | 19,311 
|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        
|Net income                 |  | $                      | 28,457  |                | $ | (1,700 | )                  |  | $            | 20,156  |  | $            | (18,456 | ) |  | $ | 28,457 
|                           |  |                        |         |                |   |        |                    |  |              |         |  |              |         |   |  |   |        



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##### Table of Contents

8. Consolidating Financial Information (Continued)



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



March 31, 2005



|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|------------------------------------------------------- |  | ---------------------- | --------- | - | -------------- | - | ------- | ------------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                        |  | Union Tank Car Company |           |   | Procor Limited |   |         | Other Subsidiaries |  |   | Eliminations |   |  | Consolidated |           
|Assets                                                  |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                        |           |   |               
|Cash and cash equivalents                               |  | $                      | 33,043    |   |                | $ | 86,020  |                    |  | $ | 3,863        |   |  | $            |           |   |  | $ | 122,926   |  
|Available-for-sale securities                           |  |                        | 231,132   |   |                |   |        |                    |  |   | 915          |   |  |              |           |   |  |   | 232,047   |  
|Accounts receivable                                     |  |                        | 40,832    |   |                |   | 1,693   |                    |  |   | 211,071      |   |  |              | (77,678    | ) |  |   | 175,918   |  
|Accounts and notes receivable, affiliates               |  |                        |          |   |                |   | 915     |                    |  |   | 43,682       |   |  |              |           |   |  |   | 44,597    |  
|Inventories, net                                        |  |                        | 11,703    |   |                |   | 1,778   |                    |  |   | 155,428      |   |  |              |           |   |  |   | 168,909   |  
|Prepaid expenses and deferred charges                   |  |                        | 4,070     |   |                |   | 285     |                    |  |   | 9,993        |   |  |              |           |   |  |   | 14,348    |  
|Advances (from) to parent                               |  |                        | (209,467  | ) |                |   | (80,397 | )                  |  |   | 340,898      |   |  |              | (2,494     | ) |  |   | 48,540    |  
|Railcar lease fleet, net                                |  |                        | 1,679,945 |   |                |   | 31,128  |                    |  |   | 208,864      |   |  |              | (1,061     | ) |  |   | 1,918,876 |  
|Intermodal tank container lease fleet, net              |  |                        |          |   |                |   |        |                    |  |   | 327,173      |   |  |              |           |   |  |   | 327,173   |  
|Other fixed assets, net                                 |  |                        | 42,795    |   |                |   | 14,859  |                    |  |   | 145,662      |   |  |              |           |   |  |   | 203,316   |  
|Investment in subsidiaries                              |  |                        | 889,236   |   |                |   | 75,455  |                    |  |   | 86,083       |   |  |              | (1,050,774 | ) |  |   |          |  
|Other assets                                            |  |                        |          |   |                |   | 3,089   |                    |  |   | 32,065       |   |  |              |           |   |  |   | 35,154    |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Total assets                                            |  | $                      | 2,723,289 |   |                | $ | 134,825 |                    |  | $ | 1,565,697    |   |  | $            | (1,132,007 | ) |  | $ | 3,291,804 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Liabilities and Stockholders Equity                    |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                        |           |   |               
|Accounts payable                                        |  | $                      | 62,453    |   |                | $ | 15,912  |                    |  | $ | 89,452       |   |  | $            | (77,262    | ) |  | $ | 90,555    |  
|Accrued liabilities                                     |  |                        | 162,363   |   |                |   | 3,874   |                    |  |   | 95,635       |   |  |              | 2,000      |   |  |   | 263,872   |  
|Borrowed debt                                           |  |                        | 1,001,089 |   |                |   | 18,479  |                    |  |   | 138,128      |   |  |              |           |   |  |   | 1,157,696 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                        | 1,225,905 |   |                |   | 38,265  |                    |  |   | 323,215      |   |  |              | (75,262    | ) |  |   | 1,512,123 |  
|                                                        |  |                        |           |   |               
|Deferred income taxes and investment tax credits        |  |                        | 445,559   |   |                |   | 22,642  |                    |  |   | 125,538      |   |  |              |           |   |  |   | 593,739   |  
|Minority interest                                       |  |                        |          |   |                |   |        |                    |  |   | 98,914       |   |  |              |           |   |  |   | 98,914    |  
|                                                        |  |                        |           |   |               
|Stockholders equity                                    |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Common stock and additional capital                     |  |                        | 358,475   |   |                |   | 13,345  |                    |  |   | 358,862      |   |  |              | (465,621   | ) |  |   | 265,061   |  
|Retained earnings                                       |  |                        | 701,768   |   |                |   | 61,270  |                    |  |   | 651,372      |   |  |              | (591,220   | ) |  |   | 823,190   |  
|Unrealized losses on available-for-sale securities, net |  |                        | (1,218    | ) |                |   |        |                    |  |   | (5           | ) |  |              |           |   |  |   | (1,223    | )
|Equity adjustment from foreign currency translation     |  |                        | (7,200    | ) |                |   | (697    | )                  |  |   | 7,801        |   |  |              | 96         |   |  |   |          |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Total stockholders equity                              |  |                        | 1,051,825 |   |                |   | 73,918  |                    |  |   | 1,018,030    |   |  |              | (1,056,745 | ) |  |   | 1,087,028 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Total liabilities and stockholders equity              |  | $                      | 2,723,289 |   |                | $ | 134,825 |                    |  | $ | 1,565,697    |   |  | $            | (1,132,007 | ) |  | $ | 3,291,804 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  





- 8 -



---

##### Table of Contents

8. Consolidating Financial Information (Continued)



December 31, 2004



|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|------------------------------------------------------- |  | ---------------------- | --------- | - | -------------- | - | ------- | ------------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                        |  | Union Tank Car Company |           |   | Procor Limited |   |         | Other Subsidiaries |  |   | Eliminations |   |  | Consolidated |           
|Assets                                                  |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                        |           |   |               
|Cash and cash equivalents                               |  | $                      | 61,663    |   |                | $ | 33,123  |                    |  | $ | 3,550        |   |  | $            |           |   |  | $ | 98,336    |  
|Short-term investments                                  |  |                        |          |   |                |   | 45,429  |                    |  |   |             |   |  |              |           |   |  |   | 45,429    |  
|Available-for-sale securities                           |  |                        | 243,986   |   |                |   |        |                    |  |   | 910          |   |  |              |           |   |  |   | 244,896   |  
|Accounts receivable                                     |  |                        | 39,971    |   |                |   | 2,668   |                    |  |   | 193,962      |   |  |              | (63,912    | ) |  |   | 172,689   |  
|Accounts and notes receivable, affiliates               |  |                        |          |   |                |   |        |                    |  |   | 43,626       |   |  |              |           |   |  |   | 43,626    |  
|Inventories, net                                        |  |                        | 44,780    |   |                |   | 1,924   |                    |  |   | 100,240      |   |  |              |           |   |  |   | 146,944   |  
|Prepaid expenses and deferred charges                   |  |                        | 4,592     |   |                |   | 2,840   |                    |  |   | 5,860        |   |  |              |           |   |  |   | 13,292    |  
|Advances (from) to parent                               |  |                        | (122,196  | ) |                |   | (73,143 | )                  |  |   | 345,133      |   |  |              | 452        |   |  |   | 150,246   |  
|Railcar lease fleet, net                                |  |                        | 1,557,425 |   |                |   | 31,661  |                    |  |   | 215,995      |   |  |              | (731       | ) |  |   | 1,804,350 |  
|Intermodal tank container lease fleet, net              |  |                        |          |   |                |   |        |                    |  |   | 323,601      |   |  |              |           |   |  |   | 323,601   |  
|Other fixed assets, net                                 |  |                        | 90,524    |   |                |   | 15,303  |                    |  |   | 93,159       |   |  |              |           |   |  |   | 198,986   |  
|Investment in subsidiaries                              |  |                        | 813,631   |   |                |   | 75,455  |                    |  |   | 77,512       |   |  |              | (966,598   | ) |  |   |          |  
|Other assets                                            |  |                        | 13        |   |                |   | 3,792   |                    |  |   | 31,617       |   |  |              |           |   |  |   | 35,422    |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Total assets                                            |  | $                      | 2,734,389 |   |                | $ | 139,052 |                    |  | $ | 1,435,165    |   |  | $            | (1,030,789 | ) |  | $ | 3,277,817 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Liabilities and Stockholders Equity                    |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                        |           |   |               
|Accounts payable                                        |  | $                      | 55,474    |   |                | $ | 17,132  |                    |  | $ | 65,589       |   |  | $            | (63,589    | ) |  | $ | 74,606    |  
|Accrued liabilities                                     |  |                        | 185,005   |   |                |   | 5,505   |                    |  |   | 72,403       |   |  |              | 2,567      |   |  |   | 265,480   |  
|Borrowed debt                                           |  |                        | 1,010,625 |   |                |   | 18,479  |                    |  |   | 138,147      |   |  |              |           |   |  |   | 1,167,251 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|                                                        |  |                        | 1,251,104 |   |                |   | 41,116  |                    |  |   | 276,139      |   |  |              | (61,022    | ) |  |   | 1,507,337 |  
|                                                        |  |                        |           |   |               
|Deferred income taxes and investment tax credits        |  |                        | 442,416   |   |                |   | 23,453  |                    |  |   | 130,257      |   |  |              |           |   |  |   | 596,126   |  
|Minority interest                                       |  |                        |          |   |                |   |        |                    |  |   | 97,355       |   |  |              |           |   |  |   | 97,355    |  
|                                                        |  |                        |           |   |               
|Stockholders equity                                    |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Common stock and additional capital                     |  |                        | 358,475   |   |                |   | 13,345  |                    |  |   | 358,799      |   |  |              | (465,558   | ) |  |   | 265,061   |  
|Retained earnings                                       |  |                        | 691,547   |   |                |   | 61,830  |                    |  |   | 563,267      |   |  |              | (504,305   | ) |  |   | 812,339   |  
|Unrealized losses on available-for-sale securities, net |  |                        | (399      | ) |                |   |        |                    |  |   | (2           | ) |  |              |           |   |  |   | (401      | )
|Equity adjustment from foreign currency translation     |  |                        | (8,754    | ) |                |   | (692    | )                  |  |   | 9,350        |   |  |              | 96         |   |  |   |          |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Total stockholders equity                              |  |                        | 1,040,869 |   |                |   | 74,483  |                    |  |   | 931,414      |   |  |              | (969,767   | ) |  |   | 1,076,999 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  
|Total liabilities and stockholders equity              |  | $                      | 2,734,389 |   |                | $ | 139,052 |                    |  | $ | 1,435,165    |   |  | $            | (1,030,789 | ) |  | $ | 3,277,817 |  
|                                                        |  |                        |           |   |                |   |         |                    |  |   |              |   |  |              |            |   |  |   |           |  



- 9 -



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##### Table of Contents

8. Consolidating Financial Information (Continued)



Condensed consolidating statements of cash flows for the three months ended March 31, 2005
and 2004 are as follows:



Three Months Ended March 31,
2005



|                                                                |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|--------------------------------------------------------------- |  | ---------------------- | -------- | - | -------------- | - | ------ | ------------------ |  | - | ------------ | - |  | ------------ | ---- | - |  | - | -------- | -
|                                                                |  | Union Tank Car Company |          |   | Procor Limited |   |        | Other Subsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net cash provided by (used in) operating activities:            |  | $                      | 49,252   |   |                | $ | (27    | )                  |  | $ | 12,857       |   |  | $            | 598  |   |  | $ | 62,680   |  
|                                                                |  |                        |          |   |               
|Cash flows from investing activities:                           |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Construction and purchase of lease fleet and other fixed assets |  |                        | (146,202 | ) |                |   | (180   | )                  |  |   | (21,219      | ) |  |              | (598 | ) |  |   | (168,199 | )
|Decrease in short-term investments                              |  |                        |         |   |                |   | 45,429 |                    |  |   |             |   |  |              |     |   |  |   | 45,429   |  
|Decrease (increase) in available-for-sale securities            |  |                        | 11,594   |   |                |   |       |                    |  |   | (8           | ) |  |              |     |   |  |   | 11,586   |  
|Decrease in advance to parent                                   |  |                        | 88,657   |   |                |   | 7,254  |                    |  |   | 7,180        |   |  |              |     |   |  |   | 103,091  |  
|Decrease (increase) in other assets                             |  |                        |         |   |                |   | 678    |                    |  |   | (893         | ) |  |              |     |   |  |   | (215     | )
|Proceeds from disposals of lease fleet and other fixed assets   |  |                        | 2,615    |   |                |   | 13     |                    |  |   | 2,415        |   |  |              |     |   |  |   | 5,043    |  
|                                                                |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash (used in) provided by investing activities             |  |                        | (43,336  | ) |                |   | 53,194 |                    |  |   | (12,525      | ) |  |              | (598 | ) |  |   | (3,265   | )
|Cash flows from financing activities:                           |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Principal payments of borrowed debt                             |  |                        | (9,536   | ) |                |   |       |                    |  |   | (19          | ) |  |              |     |   |  |   | (9,555   | )
|Cash dividends                                                  |  |                        | (25,000  | ) |                |   |       |                    |  |   |             |   |  |              |     |   |  |   | (25,000  | )
|                                                                |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Net cash used in financing activities                           |  |                        | (34,536  | ) |                |   |       |                    |  |   | (19          | ) |  |              |     |   |  |   | (34,555  | )
|Effect of exchange rates on cash and cash equivalents           |  |                        |         |   |                |   | (270   | )                  |  |   |             |   |  |              |     |   |  |   | (270     | )
|                                                                |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents            |  |                        | (28,620  | ) |                |   | 52,897 |                    |  |   | 313          |   |  |              |     |   |  |   | 24,590   |  
|Cash and cash equivalents at beginning of year                  |  |                        | 61,663   |   |                |   | 33,123 |                    |  |   | 3,550        |   |  |              |     |   |  |   | 98,336   |  
|                                                                |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  
|Cash and cash equivalents at end of period                      |  | $                      | 33,043   |   |                | $ | 86,020 |                    |  | $ | 3,863        |   |  | $            |     |   |  | $ | 122,926  |  
|                                                                |  |                        |          |   |                |   |        |                    |  |   |              |   |  |              |      |   |  |   |          |  



- 10 -



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##### Table of Contents

8. Consolidating Financial Information (Continued)



Three Months Ended March 31, 2004



|                                                                |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ---------------------- | ------- | - | -------------- | - | ------- | ------------------ |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                |  | Union Tank Car Company |         |   | Procor Limited |   |         | Other Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net cash provided by operating activities:                      |  | $                      | 1,112   |   |                | $ | 3,067   |                    |  | $ | 28,768       |   |  | $            |        |   |  | $ | 32,947  |  
|                                                                |  |                        |         |   |               
|Cash flows from investing activities:                           |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|Construction and purchase of lease fleet and other fixed assets |  |                        | (58,753 | ) |                |   | (318    | )                  |  |   | (18,029      | ) |  |              |        |   |  |   | (77,100 | )
|Decrease in short-term investments                              |  |                        |        |   |                |   | 62,606  |                    |  |   |             |   |  |              |        |   |  |   | 62,606  |  
|Decrease (increase) in advance to parent                        |  |                        | 98,002  |   |                |   | (39,685 | )                  |  |   | 41,341       |   |  |              | (80,290 | ) |  |   | 19,368  |  
|Increase in other assets                                        |  |                        |        |   |                |   |        |                    |  |   | (183         | ) |  |              |        |   |  |   | (183    | )
|Proceeds from disposals of lease fleet and other fixed assets   |  |                        | 3,931   |   |                |   | 16      |                    |  |   | 3,936        |   |  |              |        |   |  |   | 7,883   |  
|                                                                |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) investing activities             |  |                        | 43,180  |   |                |   | 22,619  |                    |  |   | 27,065       |   |  |              | (80,290 | ) |  |   | 12,574  |  
|                                                                |  |                        |         |   |               
|Cash flows from financing activities:                           |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|Principal payments of borrowed debt                             |  |                        | (24,285 | ) |                |   |        |                    |  |   | (40          | ) |  |              |        |   |  |   | (24,325 | )
|Cash dividends                                                  |  |                        | (20,000 | ) |                |   | (25,115 | )                  |  |   | (55,175      | ) |  |              | 80,290  |   |  |   | (20,000 | )
|                                                                |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash (used in) provided by financing activities             |  |                        | (44,285 | ) |                |   | (25,115 | )                  |  |   | (55,215      | ) |  |              | 80,290  |   |  |   | (44,325 | )
|Effect of exchange rates on cash and cash equivalents           |  |                        |        |   |                |   | (1,156  | )                  |  |   | 4            |   |  |              |        |   |  |   | (1,152  | )
|                                                                |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents            |  |                        | 7       |   |                |   | (585    | )                  |  |   | 622          |   |  |              |        |   |  |   | 44      |  
|Cash and cash equivalents at beginning of year                  |  |                        | 82      |   |                |   | 48,759  |                    |  |   | 7,356        |   |  |              |        |   |  |   | 56,197  |  
|                                                                |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  
|Cash and cash equivalents at end of period                      |  | $                      | 89      |   |                | $ | 48,174  |                    |  | $ | 7,978        |   |  | $            |        |   |  | $ | 56,241  |  
|                                                                |  |                        |         |   |                |   |         |                    |  |   |              |   |  |              |         |   |  |   |         |  



- 11 -



---

##### Table of Contents

9. Segment Information



|                                  |  |                       |       |                     |   |                                   |  |          |      |                     |   |      |  |   |      
|--------------------------------- |  | --------------------- | ----- | ------------------- | - | --------------------------------- |  | -------- | ---- | ------------------- | - | ---- |  | - | -----
|                                  |  | Railcar               |       | Metals Distribution |   | Intermodal Tank Container Leasing |  | AllOther |      | Consolidated Totals
|                                  |  | (Dollars in Millions)
|Three months ended March 31, 2005 |  |                       |       |                     |   |                                   |  |          |      |                     |   |      |  |   |      
|Services revenue                  |  | $                     | 142.0 |                     | $ | 2.1                               |  | $        | 25.2 |                     | $ | 15.8 |  | $ | 185.1
|Net sales revenue                 |  |                       | 14.9  |                     |   | 168.2                             |  |          |     |                     |   | 32.5 |  |   | 215.6
|Income before income taxes        |  |                       | 30.4  |                     |   | 12.8                              |  |          | 5.1  |                     |   | 9.1  |  |   | 57.4 
|                                  |  |                       |       |                     |  
|Three months ended March 31, 2004 |  |                       |       |                     |   |                                   |  |          |      |                     |   |      |  |   |      
|Services revenue                  |  | $                     | 135.7 |                     | $ | 1.9                               |  | $        | 23.4 |                     | $ | 22.8 |  | $ | 183.8
|Net sales revenue                 |  |                       | 6.5   |                     |   | 125.6                             |  |          |     |                     |   | 32.3 |  |   | 164.4
|Income before income taxes        |  |                       | 28.6  |                     |   | 9.4                               |  |          | 3.5  |                     |   | 6.3  |  |   | 47.8 



|10. | The Company has one residual value guarantee totaling $2.1 million until March 2006, several performance guarantees totaling $3.0 million until June 2007, and several standby
letters of credit totaling $17.9 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|                           |  |                              |       |   |      |   |     |  
|-------------------------- |  | ---------------------------- | ----- | - | ---- | - | --- | -
|                           |  | Three Months Ended March 31, |      
|                           |  | 2005                         |       |   | 2004 |  
|                           |  | (Dollars in Thousands)       |      
|Balance, beginning of year |  | $                            | 1,687 |   |      | $ | 602 |  
|Warranties issued          |  |                              | 83    |   |      |   | 86  |  
|Settlements                |  |                              | (106  | ) |      |   | (82 | )
|                           |  |                              |       |   |      |   |     |  
|Balance, end of period     |  | $                            | 1,664 |   |      | $ | 606 |  
|                           |  |                              |       |   |      |   |     |  



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



|11. | On April 29, 2005, the Company sold its sulfur-based fertilizer business, which operated in the United States and Canada, for a sale price of approximately $9.0 million, which
amount is subject to certain post-closing adjustments.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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



The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this
document as well as our 2004 Annual Report on Form 10-K filed with the SEC in March 2005.



Forward-Looking Statements



Certain
statements contained in this quarterly report on Form 10-Q for the quarter ended March 31, 2005 may include certain forward-looking information statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of
expectation. Words such as expects, anticipates, intends, plans, will, believes, seeks, estimates, and should and variations of these words
and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such
statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future
performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of these
factors include (without limitation) general industry and economic conditions, unanticipated changes in the markets served by the Company (such as the railcar leasing, service and sales, intermodal tank container leasing and metal products
distribution industries), acts of terrorism, interest rate trends, cost of capital requirements, competition from other companies, changes in operating expenses, changes in prices and availability of key raw materials, governmental and public policy
changes, changes in applicable laws, rules and regulations (including changes in tax laws).



Results of Operations



1st Quarter
2005 versus 1st Quarter 2004



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



|                           |  |                        |         |      |   |                     |  |   |         |  
|-------------------------- |  | ---------------------- | ------- | ---- | - | ------------------- |  | - | ------- | -
|                           |  | 2005                   |         | 2004 |   | Increase (Decrease) | 
|                           |  | (Dollars in Thousands) |        
|Services revenue           |  | $                      | 185,115 |      | $ | 183,779             |  | $ | 1,336   |  
|Cost of services           |  |                        | 107,620 |      |   | 117,705             |  |   | (10,085 | )
|                           |  |                        |         |      |   |                     |  |   |         |  
|Gross profit from services |  | $                      | 77,495  |      | $ | 66,074              |  | $ | 11,421  |  



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Services revenue in the first quarter of 2005 increased over the first quarter of 2004 primarily due to a $6.2 million
increase in railcar leasing and service revenues (improved utilization rates and equipment additions), a $1.8 million increase in intermodal tank container leasing revenues (improved utilization rates and equipment additions), and $1.0 million
higher revenue in the contract rail switching business, which more than offset an $8.0 million decline in revenues from exiting low-margin transportation and terminaling activity related to sulphur processing.



Gross profit on services revenue in the first quarter of 2005 increased from the first
quarter of 2004 primarily due to an $8.2 million improvement in railcar leasing (improved utilization rates, lower external lease expense due to exercising purchase options on leveraged leases, and equipment additions), and a $2.3 million increase
in the tank container leasing business (improved utilization rates and equipment additions).



Average utilization of the Companys railcar fleet was 98% for the first quarter of 2005, compared with 95% for the first quarter of 2004. Utilization rates of the Companys existing railcars are driven by
long-term requirements of manufacturers and shippers of chemical products, petroleum products, food products, and bulk plastics, and suitability of the Companys fleet to meet such demand. The potential impact of short-term fluctuations in
demand is tempered by the longer-term nature of the leases.



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



|                        |  |                        |         |      |   |                     |  |   |       
|----------------------- |  | ---------------------- | ------- | ---- | - | ------------------- |  | - | ------
|                        |  | 2005                   |         | 2004 |   | Increase (Decrease)
|                        |  | (Dollars in Thousands)
|Net sales               |  | $                      | 215,592 |      | $ | 164,387             |  | $ | 51,205
|Cost of sales           |  |                        | 179,624 |      |   | 133,009             |  |   | 46,615
|                        |  |                        |         |      |   |                     |  |   |       
|Gross profit from sales |  | $                      | 35,968  |      | $ | 31,378              |  | $ | 4,590 



Sales revenue for the first quarter of
2005 increased from the first quarter of 2004 primarily due to $42.6 million higher sales of metals distribution products (higher prices) and $8.3 million increased sales of manufactured railcars (higher volume and prices).



Gross profit on sales in the first quarter of 2005 improved from the first quarter of 2004
primarily due to a $4.8 million increase for metals distribution products (higher prices).



General and administrative expenses in the first quarter of 2005 were $4.0 million higher than the first quarter of 2004 due to higher activity in the railcar and metals distribution businesses.



Interest expense in the first quarter of 2005 was $2.8 million higher than in the first
quarter of 2004 due to the interest expense related to the new financing in 2004 more than offsetting lower interest expense from principal repayments of debt.



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Provision for income taxes was $21.5 million in the first quarter of 2005 with an effective tax rate of 37.5%, compared
with $19.3 million in the first quarter of 2004 with an effective tax rate of 40.4%. The decrease in tax rate was primarily due to changes to foreign tax liability and the benefits of manufacturing deductions.



Financial Condition and Liquidity



1st Quarter 2005 versus 1st Quarter 2004



Operating activities provided $62.7 million of net cash in the first quarter of 2005,
compared with $32.9 million in the first quarter of 2004. These funds, along with collection of funds previously advanced to parent, redemption of short-term investments, and liquidation of available-for-sale securities, were used to finance lease
fleet additions, pay dividends to the Companys stockholder, and service borrowed debt obligations.



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



During the first quarter of 2005, the Company spent $168.2 million for construction and purchase of lease fleet and other fixed assets, compared with $77.1 million in the first quarter of 2004. The increase in capital
expenditures is primarily due to a $76.0 million expenditure to exercise purchase options for railcars that were leased pursuant to prior sale-leaseback transactions. (Of this amount $42.4 million was paid on January 2, 2005 with the remaining $33.6
million payable in four installments ending December 31, 2005). The remaining increase in capital expenditures was largely due to increased demand from leasing customers for new railway tank cars. Since capital expenditures for railcars are
generally incurred subsequent to receipt of firm customer lease orders, such expenditures are discretionary to the Company based on its desire to enter into those lease orders. Capital expenditures for intermodal tank containers are likewise
discretionary in the intermodal tank container business.



Decreases in advance
to parent, short-term investments and available-for-sale securities combined to provide more than enough cash for first quarter 2005 investing activities. Net cash used in investing activities was $3.3 million in the first quarter of 2005 compared
with $12.6 million provided in the first quarter of 2004.



During the first
quarter of 2005, the Companys financing activities included the use of $9.6 million for principal repayments on borrowed debt compared with $24.3 million in the first quarter of 2004. Cash dividends were $25.0 million in the first quarter of
2005 compared with $20.0 million in the first quarter of 2004. Net cash used in financing activities was $34.6 million compared with $44.3 million in 2004.



Management expects future cash to be provided from operating activities, long-term financings, available-for-sale securities, and collection of funds previously advanced
to parent will be adequate to provide for the continued investment in the Companys business and enable it to meet its debt service obligations. The Company plans to undertake long-term financing in 2005.



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New Accounting Pronouncements



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



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



ITEM 4. CONTROLS AND PROCEDURES



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



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



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



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PART II. OTHER INFORMATION



ITEM 1. Legal Proceedings



Reference
is made to Business - Environmental Matters in the Companys Annual Report on Form 10-K for the year ended December 31, 2004 for a description of certain environmental matters.



ITEM 5. Other Information



None.



ITEM 6. Exhibits



|             |  |                                                                                                                       
|------------ |  | ----------------------------------------------------------------------------------------------------------------------
|Exhibit 31.1 |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
|             | 
|Exhibit 31.2 |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                
|             | 
|Exhibit 32.1 |  | Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|             | 
|Exhibit 32.2 |  | Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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SIGNATURES



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



|                    |  |                                  
|------------------- |  | ---------------------------------
|                    |  | UNION TANK CAR COMPANY           
|                    | 
|                    |  | REGISTRANT                       
|                    | 
|Dated: May 13, 2005 |  | /s/ Mark J. Garrette             
|                    |  | Mark J. Garrette                 
|                    |  | Vice President                   
|                    |  | (principal financial officer     
|                    |  | and principal accounting officer)





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