According to the Association of American Railroads, there were approximately 1.3 million railcars in circulation in 2003, and the number of railcars delivered in the North American market increased from 17,736 railcars in 2002 to 32,183 railcars in 2003. According to Economic Planning Associates, the compound annual growth rate for railcar deliveries over the next four years is expected to be approximately 14.2%, resulting in an estimated 53,550 railcar deliveries per year by 2007.

Rail transport is important to the North American economy. In 2001, railroads transported approximately 42% of the freight hauled in the United States, an increase from approximately 38% in 1990. A number of industries in North America rely heavily on rail for the transport of the various inputs and outputs associated with their operations, including coal, chemicals and related products, farm products, non-metallic minerals, food products, metals, building products, petroleum products, waste and scrap materials, forest and paper products, motor vehicles and related parts and metallic ores.

The near-term outlook for railcar demand is positive due to the current economic recovery, which is resulting in the replacement of aging railcar fleets, an improved outlook for U.S. steel manufacturers and an increasing demand for electricity. Economic Planning Associates expects that approximately 43,100 railcars will be delivered to North American customers in 2004, an increase of approximately 34% over 2003. According to Economic Planning Associates, the compound annual growth rate for railcar deliveries over the next four years is expected to be approximately 14.2%, resulting in an estimated 53,550 annual railcar deliveries by 2007. These projections are based on current backlog levels, which have historically been strong indicators of future deliveries.

The Company also refurbishes and rebuilds railcars and sells forged, cast and fabricated parts for all of the railcars that it manufactures, as well as those manufactured by others.

The Company also has established a licensing arrangement with a railcar manufacturer in Brazil pursuant to which the Company’s proprietary technology is used to produce covered hopper railcars for carrying grain. In addition, the Company manufactures coal-carrying railcars for export to Colombia and will manufacture intermodal railcars that it will be exporting to Saudi Arabia. The Company is also exploring opportunities in other international markets.

The Company manufactures two primary types of coal-carrying railcars: gondolas and open-top hoppers. The Company builds all of its coal-carrying railcars using a patented one-piece center sill, the main longitudinal structural component of the railcar. A one-piece center sill has a higher carrying capacity and is more durable than two-piece center sills and weighs significantly less than traditional multiple-piece seam-welded center sills. The Company is presently the only manufacturer of railcars with one-piece center sills. Coal-carrying railcars are purchased by utilities, railroads, leasing companies and industrial companies solely for the hauling of coal.

The Company’s aluminum-bodied coal-carrying gondola railcar, the BethGon, is the leader in the aluminum-bodied coal-carrying gondola railcar segment. The Company has continuously improved the BethGon’s design since it began making this railcar. These improvements have been aimed at increasing carrying capacity and reducing weight while maintaining structural integrity.

Net sales for the nine months ended September 30, 2004 were $302.4 million as compared to $166.0 million for the nine months ended September 30, 2003, representing an increase of $136.4 million.

Gross profit in the nine months ended September 30, 2004 was $7.6 million as compared to $12.8 million in the nine months ended September 30, 2003, representing a decrease of approximately $5.2 million, or 40.9%, in gross profit.

Selling, general and administrative expenses in the nine months ended September 30, 2004 were $10.7 million as compared to $9.0 million in the nine months ended September 30, 2003, representing an increase of approximately $1.7 million, or 18.5%.