Many diverse industries depend on the railroad system to transport items such as plastic pellets, chemicals and related products, non-metallic minerals, grains and other farm products, food products, metals and ores, coal, lumber and other building products, petroleum products, oils, ethanol related products, paper products, vehicles, equipment and associated parts. Demand for railcars reflects their importance for the North American economy in moving goods and raw materials. In periods of rising economic activity, fleet utilization typically increases, driving an increase in demand for new railcars, which also increases backlog for new railcars.

According to Global Insight, orders for new railcars are expected to be strong with deliveries projected to average 59,100 railcars per year from 2005 through 2010. This compares to deliveries of 17,714 railcars in 2002, 32,184 railcars in 2003 and 46,871 railcars in 2004, as reported by the Railway Supply Institute, or RSI. RSI reported that at the end of 2004, the total backlog for the railcar manufacturing industry reached 58,677 railcars. This growth trend has continued through the first six months of 2005, with 36,695 new railcars ordered and 33,695 railcars delivered, with total backlog increasing to 60,544 railcars.

Railroad industry deregulation also prompted a series of consolidations among railcar manufacturers which is the result of consolidation and more efficient fleet management, According to the Association of American Railroads, the total U.S. railcar fleet size was reduced from 1.7 million railcars in 1980 to 1.2 million railcars in 1995. The North American railcar market is highly cyclical and trends in the railcar manufacturing industry are directly affected by the level of activity in the North American economy. When the economy is in a period of sustained growth, railcar users generally tend to increase the size of their fleets and replace older railcars with newer railcars or railcars with greater capacity and durability.

The Company manufactures two primary types of railcars, covered hopper railcars and tank railcars.

The Company manufactures both general services and specialty covered hopper railcars. The Company’s general service covered hopper railcars have capacities ranging from 3,200 to 6,500 cubic feet and primarily carry plastic pellets, cement, grain and other food products, soda ash and other dry granular products. The Company provides a range of coatings to protect the railcar and the shipper’s product against corrosion and product contamination. The Company builds carbon steel and stainless steel covered hopper railcars.

The Company manufactures non-pressure and high pressure tank railcars. The Company’s non-pressure tank railcars have capacities ranging from 14,000 to 30,000 gallons and are flexibly designed to enable the handling of a variety of commodities including petroleum products, ethanol, asphalt, vegetable oil, corn syrup and other food products. The Company’s high pressure tank railcars have capacities ranging from 13,500 to 33,600 gallons and transport products that require a pressurized state due to their liquid, semi-gaseous or gaseous nature, including chlorine, anhydrous ammonia, liquid propane and butane.

The Company manufactures over 300 different components for the North American railcar industry. The Company’s products include hitches for the intermodal market, tank railcar components and valves, discharge outlets for covered hopper railcars, man way covers and valve body castings, and outlet components and running boards for industrial and railroad customers. The Company manufactures a variety of outlet types for its covered hopper railcars that it also sells to other railcar manufacturers.

The Company’s primary railcar services are railcar repair and refurbishment and railcar fleet management services. The Company’s primary customers for these services are leasing companies and shippers. The Company can service the entire railcar fleets of its customers, including railcars manufactured by other companies. The Company offers its railcar services in both bundled and unbundled arrangements. Some of the customers use both the Company’s railcar repair and refurbishment business and its fleet management services. The Company often provides these preferred customers with expedited repair services to strengthen its overall customer relationships.

Revenues for the six months ended June 30, 2005 increased 83% to $291.6 million from $159.0 million in the six months ended June 30, 2004.

Manufacturing operations revenues increased 92% to 270.0 million in the first six months of 2005 from $140.4 million in the first six months of 2004.

Income tax expense for the six months ended June 30, 2005 was $6.0 million, or 39.9% of income before income taxes, as compared to $1.7 million for the six months ended June 30, 2004.

Gross profit increased to $22.0 million in the first six months of 2005 from $11.2 million in the first six months of 2004.