-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EeohIDScVq/wdyce0T2WjPUUhve0b7OLAOVePsJUlW2fuIxlAXbQDG75aaMbYJ/X WX8/e7nk3sb44fNweTEqYQ== /in/edgar/work/20000607/0000950129-00-002913/0000950129-00-002913.txt : 20000919 0000950129-00-002913.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950129-00-002913 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000607 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITY INDUSTRIES INC CENTRAL INDEX KEY: 0000099780 STANDARD INDUSTRIAL CLASSIFICATION: [3743 ] IRS NUMBER: 750225040 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-06903 FILM NUMBER: 650806 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 2146314420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 10-K405 1 0001.txt FORM 10-K FOR FISCAL YEAR END MARCH 31, 2000 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------- FORM 10-K --------- (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2000 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 1-6903 TRINITY INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 75-0225040 (State of Incorporation) (I.R.S. Employer Identification No.) 2525 STEMMONS FREEWAY DALLAS, TEXAS 75207-2401 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (214) 631-4420 Securities Registered Pursuant to Section 12(b) of the Act Name of each exchange Title of each class on which registered - ----------------------------- ----------------------------- COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC. Securities Registered Pursuant to Section 12(g) of the Act: NONE ---------------- 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 AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. Yes X No ------ ------ INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K [X]. The aggregate market value of voting stock held by nonaffiliates of the Registrant is $811,626,426 as of May 26, 2000. 38,104,166 (Number of Shares of common stock outstanding as of May 26, 2000) ================================================================================ (Continued on reverse side) 2 (Continued from cover page) DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's definitive Proxy Statement dated June 19, 2000 for the 2000 Annual Meeting of Stockholders to be held July 19, 2000 are incorporated by reference into Part III hereof. 3 PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS. Trinity Industries, Inc. (the "Registrant" or "Trinity") was originally incorporated under the laws of the State of Texas in 1933. On March 27, 1987, Trinity became a Delaware corporation by merger into a wholly-owned subsidiary of the same name. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Various financial information concerning the Registrant's segments for each of the last three fiscal years is presented in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 7 through 12. NARRATIVE DESCRIPTION OF BUSINESS. The Registrant is engaged in the manufacture, marketing, and leasing of a wide variety of products consisting of the following six business segments or groups: RAILCAR GROUP. The Registrant manufactures railroad freight cars, principally pressure and non-pressure tank cars, hopper cars, box cars, intermodal cars and gondola cars used for transporting a wide variety of liquids, gases and dry cargo. Tank cars transport products such as liquefied petroleum gas, liquid fertilizer, sulfur, sulfuric acids and corn syrup. Covered hopper cars carry cargo such as grain, dry fertilizer, plastic pellets and cement. Open-top hoppers haul coal, and top-loading gondola cars transport a variety of heavy bulk commodities such as scrap metals, finished flat steel products, machinery and lumber. Intermodal cars transport various products which have been loaded in containers to minimize shipping costs. The Registrant holds patents of varying duration for use in its manufacture of railcar and component products. The Registrant cannot quantify the importance of such patents, but patents are believed to offer a marketing advantage in certain circumstances. No material revenues are received from licensing of these patents. A number of well established companies are presently engaged in the manufacture of railcars on a large scale. The Registrant strives to be competitive through improvements in the efficiency of the manufacturing process and its creative designs to benefit customers. INLAND BARGE GROUP. The Registrant produces river hopper barges, inland tank barges and fiberglass barge covers. River hopper barges are used to carry coal, grain and other commodities by various barge transport companies. Tank barges are used to transport liquid products. The Registrant is North America's leading producer of inland barges and one of the largest producers of fiberglass barge covers. The inland barge business is made up of a few major manufacturers. The Registrant strives to compete through efficiency in operations and quality of product. PARTS AND SERVICES GROUP. The Registrant manufactures railcar parts, such as hitches, couplers, axles, and chutes that are ultimately used in the manufacturing and repair of railcars. The Registrant is also engaged in railcar maintenance, management, and/or leasing to various industries. A wholly-owned leasing subsidiary, Trinity Industries Leasing Company ("TILC"), incorporated in 1979, is engaged in leasing specialized types of railcars and locomotives to industrial companies in the petroleum, chemical, grain, food processing, fertilizer and other industries which supply cars to the railroads. At March 31, 2000, TILC owned 7,165 railcars. Substantially all equipment leased by TILC was purchased from the Registrant at prices comparable to the prices for equipment sold by the Registrant to third parties. As of March 31, 2000, 1 4 TILC had equipment on lease or available for lease purchased from the Registrant at a cost of $466.8 million. Generally, TILC purchases the equipment to be leased only after a lessee has committed to lease such equipment. The volume of equipment purchased and leased by TILC depends upon a number of factors, including the demand for equipment manufactured by the Registrant, the cost and availability of funds to finance the purchase of equipment, the Registrant's decision to solicit orders for the purchase or lease of equipment and factors which may affect the decision of the Registrant's customers as to whether to purchase or lease equipment. A number of well established companies actively compete with TILC in the business of owning and leasing railcars, as well as banks, investment partnerships and other financial and commercial institutions. The Registrant also manufactures mixer barrels and dump bodies, as well as container heads, which are pressed metal components used in the further manufacture of a finished product of the Registrant. In addition, the Registrant sells container heads to other manufacturers. Container heads are manufactured in various shapes and may be pressure rated or non-pressure, depending on the intended use in further manufacture. Other pressed shapes are also hot- or cold-formed to customer requirements. HIGHWAY CONSTRUCTION PRODUCTS GROUP. The highway construction products manufactured by the Registrant include highway guardrail and highway safety devices and related barrier products, and beams and girders. These products are used in the highway construction industries. Generally, customers for highway guardrail and highway safety devices are highway departments or subcontractors on highway projects. Sales of beams and girders are to general contractors and subcontractors on highway construction projects. The Registrant holds patents and is a licensee for certain of its guardrail and end-treatment products that enhance its worldwide competitive position for these products. The Registrant is the largest producer of these products in North America, with products in use in all 50 states, as well as Canada, Mexico, the Caribbean and Europe. CONCRETE & AGGREGATE GROUP. The Registrant is engaged in the production and manufacturing of ready-mix concrete and aggregates primarily in Texas and Louisiana. Ready-mix concrete and aggregates are used in the building and foundation industry, and customers include primarily owners, contractors, and sub-contractors. The concrete and aggregate business is extremely competitive depending upon the geographical area. The Registrant strives to compete through service and efficiency of operations. INDUSTRIAL GROUP. The Registrant is engaged in manufacturing metal containers for the storage and transportation of liquefied petroleum ("LP") gas and anhydrous ammonia fertilizer. Pressure LP gas containers are utilized at industrial plants, utilities, small businesses, and in suburban and rural areas for residential heating and cooking needs. Fertilizer containers are manufactured for highway and rail transport, bulk storage, farm storage, and the application and distribution of anhydrous ammonia. The Registrant manufactures butt weld type fittings and flanges. The weld fittings include caps, elbows, return bends, concentric and eccentric reducers, full and reducing outlet tees, and a full line of pipe flanges, all of which are pressure rated. The Registrant manufactures and stocks, in standard, extra-heavy, and double-extra-heavy weights and in various diameters, weld caps, tees, reducers, elbows, return bends, flanges, and also manufactures to customer specifications. The basic raw materials for weld fittings and flanges are carbon steel, stainless steel, aluminum, chrome-moly, and other metal tubing or seamless pipe and forgings. The Registrant sells its weld fittings and flanges to distributors and to other manufacturers of weld fittings. 2 5 The demand for LP gas containers is seasonal and mild winters for the past three years reduced demand for LP gas containers in the United States. Competitors range from large to small local companies. Competition for fittings and flanges has been intense and has resulted in sharply reduced prices for these products for the previous three fiscal years. ALL OTHER. All Other includes transportation services, the Company's captive insurance company, and other peripheral businesses. MARKETING, RAW MATERIALS AND EMPLOYEES. As of March 31, 2000, the Registrant operated in the continental United States, Mexico, Brazil, Romania, and Argentina. The Registrant sells substantially all of its products through its own salesmen operating from offices in the following states and foreign countries: Alabama, Illinois, Kentucky, Louisiana, Michigan, North Carolina, Ohio, Pennsylvania, Texas, Utah, Brazil, Mexico, and Romania. Independent sales representatives are also used to a limited extent. The Registrant primarily markets its transportation and industrial products throughout the United States. Except in the case of weld fittings, guardrail, and standard size LP gas containers, the Registrant's products are ordinarily fabricated to the customer's specifications pursuant to a purchase order. The principal materials used by the Registrant are steel plate, structural steel shapes, steel forgings, aluminum and cement and aggregate material for ready-mix concrete. There are numerous domestic and foreign sources of such steel and most other materials used by the Registrant. The Registrant currently has approximately 20,600 employees, of which approximately 15,300 are production employees and 5,300 are administrative, sales, supervisory, and office employees. ACQUISITIONS. The Company made certain acquisitions during fiscal 2000, 1999, and 1998 accounted for by the purchase method. The acquired operations have been included in the consolidated financial statements from the effective dates of the acquisitions. Information concerning these acquisitions are located on page 22. ENVIRONMENTAL MATTERS. The Registrant is subject to comprehensive and frequently changing federal, state and local environmental laws and regulations, including those governing emissions of air pollutants, discharges of wastewater and storm waters, and the disposal of nonhazardous and hazardous waste. The Registrant anticipates that it may incur costs in the future to comply with currently existing laws and regulations and any new statutory requirements. Such costs are not expected to be material to the Registrant. OTHER MATTERS. To date, the Registrant has not suffered any material shortages with respect to obtaining sufficient energy supplies to operate its various plant facilities or its transportation vehicles. Future limitations on the availability or consumption of petroleum products (particularly natural gas for plant operations and diesel fuel for vehicles) could have an adverse effect upon the Registrant's ability to conduct its business. The likelihood of such an occurrence or its duration, and its ultimate effect on the Registrant's operations, cannot be reasonably predicted at this time. ITEM 2. PROPERTIES. The Registrant principally operates in various locations throughout the United States with other facilities in Mexico, Brazil, and Romania, all of which are considered to be in good condition, well maintained, and adequate for its purposes. 3 6
Approximate Square Feet Productive ----------- Capacity Owned Leased Utilized --------- ---------- ---------- Railcar Group 5,419,500 57,000 70% Inland Barge Group 692,000 45,000 70% Parts & Services Group 2,893,500 477,000 75% Highway Construction Products Group 2,000,000 10,000 90% Concrete & Aggregate Group 224,000 -- 85% Industrial Group 1,356,000 317,000 50% Executive Offices 173,000 -- N/A ---------- ---------- 12,758,000 906,000
ITEM 3. LEGAL PROCEEDINGS. In December, 1999, a grand jury sitting in the Western District of Louisiana returned a two count felony indictment against Trinity Baton Rouge, Inc., a wholly owned subsidiary of the Company. The indictment charges Trinity Baton Rouge, Inc. with transporting hazardous waste without a proper manifest to an unpermitted facility in violation of the Resource Conservation Recovery Act. Trinity Baton Rouge, Inc. denies all charges in the indictment and is defending this matter vigorously. In January and March 2000, representatives of the Registrant met with representatives of the United States Environmental Protection Agency to determine the exact nature of allegations in a complaint filed against the Registrant. The complaint alleges that the Registrant failed to file certain submissions timely to the United States Environmental Protection Agency in alleged violation of the Emergency Planning Community Right to Know Act. The Registrant denies all allegations and is defending this matter vigorously. The Registrant is involved in other various claims and lawsuits incidental to its business. In the opinion of management, these claims and suits in the aggregate will not have a material adverse effect on the Registrant's consolidated financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 4 7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. The Company's common stock is traded on the New York Stock Exchange with the ticker symbol "TRN". The following table shows the price range of the Company's common stock for fiscal years 2000 and 1999:
Prices ----------------------------- Year Quarter High Low ---- ------- ---- --- 1999 First $54.56 $39.94 1999 Second 44.06 28.38 1999 Third 40.63 29.94 1999 Fourth 39.44 28.63 2000 First $37.38 $28.75 2000 Second 34.06 30.25 2000 Third 30.75 26.44 2000 Fourth 27.56 19.88
HOLDERS At March 31, 2000 the Registrant had approximately 2,150 record holders of common stock. The par value of the stock is $1. 5 8 ITEM 6. SELECTED FINANCIAL DATA.
Year Ended March 31 (in millions except for percent and per share data) 2000 1999 1998 1997 1996 - --------------------------------------------------- --------- --------- --------- --------- ---------- Revenues $ 2,740.6 2,926.9 2,473.0 2,234.3 2,241.7 Operating profit $ 279.0 284.9 255.9 214.2 194.9 Income from continuing operations $ 165.5 185.3 103.7 113.7 101.3 Income from discontinued operations, net of income taxes $ -- -- -- 23.8 12.5 Net income $ 165.5 185.3 103.7 137.5 113.8 Total assets $ 1,738.5 1,684.9 1,573.9 1,356.4 1,426.6 Long-term debt $ 95.4 120.6 149.6 178.6 206.4 Stockholders' equity $ 1,015.1 959.1 887.5 809.5 746.0 Ratio of total debt to total capital % 20.7 23.9 22.0 23.1 36.2 Stock data: Weighted average number of diluted shares outstanding 39.9 43.6 43.9 42.8 41.9 Net income per diluted common share: Continuing operations $ 4.15 4.25 2.36 2.66 2.42 Discontinued operations -- -- -- 0.55 0.30 --------- --------- --------- --------- --------- Net income per common share $ 4.15 4.25 2.36 3.21 2.72 Continuing operations before nonrecurring charges and credits(1) $ 4.15 3.93 3.36 2.66 2.42 Dividends per share $ 0.72 0.69 0.68 0.68 0.68 Book value per share $ 26.50 23.22 20.40 18.83 17.93
(1) Income from continuing operations before nonrecurring charges and credits is not a term which is defined by generally accepted accounting principles. The nonrecurring credit in fiscal 1999 represents the net-of-tax gain on a sale of an investment in land and the nonrecurring charge in fiscal 1998 represents the net-of-tax effect of a litigation settlement. 6 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. BASIS OF PRESENTATION Trinity Industries, Inc. is one of the nation's leading diversified industrial manufacturers. Segment information is reported for (i) the Railcar Group, (ii) the Inland Barge Group, (iii) the Highway Construction Products Group, (iv) the Industrial Group, (v) the Concrete & Aggregate Group, and (vi) the Parts & Services Group. See Notes to the Consolidated Financial Statements for further discussion of business segments. The following discussion compares results from continuing operations of Trinity for fiscal 2000, 1999, and 1998. 2000 COMPARED WITH 1999 - RESULTS OF OPERATIONS Revenues were $2.74 billion in fiscal 2000 compared to $2.93 billion in fiscal 1999, a 6.5% decrease. Operating profit decreased slightly to $279.0 million in fiscal 2000 compared to $284.9 million in fiscal 1999, a 2.1% decrease. Decreased revenues and operating profit were primarily attributable to the Railcar and Parts & Services Groups as a result of decreased railcar shipments. These declines are mostly offset by increased revenues and operating profit in the Inland Barge, Highway Construction Products, and Concrete & Aggregate Groups. Selling, engineering and administrative expenses increased as a percentage of revenue to 6.7% from 5.8%. This increase is primarily a result of the Company's global expansion and investments in technology. Other income, net changed from $27.4 million income in fiscal 1999 to $2.3 million in fiscal 2000 due primarily to a net gain on the sale of real estate and other assets in the first quarter of fiscal 1999 in the amount of $22.1 million. Net income in fiscal 2000 decreased 10.7% to $165.5 million, or $ 4.15 per diluted share as compared to $185.3 million, or $4.25 per diluted share, in fiscal 1999. Excluding the net gain in 1999 discussed above, net income per diluted share in fiscal 2000 increased $0.22 per share, or 5.6% from fiscal 1999.
RAILCAR GROUP (in millions) 2000 1999 --------- -------- Revenues $1,515.3 $1,694.0 Operating Profit $ 167.9 $ 172.9 Operating Profit Margin 11.1% 10.2%
While shipments of railcars declined 17% in fiscal 2000, revenues fell only 10.5%. Operating profit decreased by only 3%, while operating profit margin increased due to operating efficiencies and the product mix of railcar sales. With a weakened railcar market, shipments are expected to decline in fiscal 2001 from about 23,000 railcars to a level of 14,000 to 18,000. At this level, a very competitive market is anticipated. 7 10 INLAND BARGE GROUP
(in millions) 2000 1999 --------- -------- Revenues $ 205.4 $ 196.4 Operating Profit $ 26.8 $ 13.4 Operating Profit Margin 13.0% 6.8%
Inland Barge Group revenues increased 4.6% while operating profit approximately doubled to $26.8 million. The increase in operating profit is due mainly to cost reductions and operating efficiencies.
PARTS & SERVICES GROUP (in millions) 2000 1999 -------- -------- Revenues $ 426.6 $ 498.1 Operating Profit $ 72.6 $ 87.2 Operating Profit Margin 17.0% 17.5%
Revenues decreased by $71.5 million in the Parts & Services Group, from $498.1 million in fiscal 1999 (including intersegment sales of $155.6 million), to $426.6 million in the current year (including intersegment sales of $121.5 million), while operating profit decreased from $87.2 million in fiscal 1999 to $72.6 million in fiscal 2000. Revenue declines are primarily due to the softness in the railcar market, the sale of three railcar repair plants, and decreased sales of container heads.
HIGHWAY CONSTRUCTION PRODUCTS GROUP (in millions) 2000 1999 --------- -------- Revenues $ 193.8 $ 162.0 Operating Profit $ 35.3 $ 26.7 Operating Profit Margin 18.2% 16.5%
Revenues in the Highway Construction Products Group increased 19.6%, while operating profit increased 32.2%. Demand for highway construction products is expected to remain strong due to the level of federal funding. 8 11
CONCRETE & AGGREGATE GROUP (in millions) 2000 1999 --------- -------- Revenues $ 251.8 $ 238.9 Operating Profit $ 26.0 $ 25.6 Operating Profit Margin 10.3% 10.7%
Revenues increased due to a strong construction market, expansion, and continued small acquisitions. Revenue growth more than offset a 5.6% revenue decline resulting from the sale of certain operations in the Louisiana market.
INDUSTRIAL GROUP (in millions) 2000 1999 --------- -------- Revenues $ 218.1 $ 229.4 Operating Profit $ 15.1 $ 8.5 Operating Profit Margin 6.9% 3.7%
The decline in revenues is primarily due to the sale of Beaird Industries, Inc. in the quarter ended June 30, 1998. The increase in operating profit is due to improved market conditions in the LPG container business and improved profitability in the metal component business. ALL OTHER Revenues in the All Other group decreased from $63.7 million in fiscal 1999 to $51.1 million in fiscal 2000 while operating profit decreased from $10.2 million to $3.1 million in fiscal 2000. The decrease in revenues reflects slightly weaker activity in some small, peripheral businesses. 1999 COMPARED WITH 1998 Revenues were $2.93 billion in fiscal 1999 compared to $2.47 billion in fiscal 1998, an 18.6% increase. Operating profit was $284.9 million in fiscal 1999 compared to $255.9 million in fiscal 1998, an 11.3% increase. Increased revenues and operating profit were primarily attributable to the Railcar, Parts & Services, and Concrete & Aggregate Groups, partially offset by the Inland Barge and Industrial Groups. Selling, engineering and administrative expenses declined as a percentage of revenues to 5.8% from 6.6%. This decline was primarily a result of reduced legal cost and pension expense, partially offset by increases in technology and personnel costs to support the Company's growth. Other income/expense changed from $90.0 million expense in fiscal 1998 to $11.5 million income in fiscal 1999. In fiscal 1998, other expense included a litigation settlement of $70 million, while in fiscal 1999 other income includes a net gain on the sale of real estate and other assets in the first quarter of $22.1 million. Net income in fiscal 1999 increased 78.7% to $185.3 million, or $4.25 per diluted share as compared to $103.7 million, or $2.36 per diluted share, in fiscal 1998. Excluding the net gain and litigation settlement mentioned above, earnings per share increased $0.57 per diluted share or 17% from fiscal 1998. 9 12 RAILCAR GROUP
(in millions) 1999 1998 -------- -------- Revenues $1,694.0 $1,095.7 Operating Profit $ 172.9 $ 113.9 Operating Profit Margin 10.2% 10.4%
Revenues increased in the Railcar Group $598.3 million, or 54.6%, in fiscal 1999 due to high demand and the ongoing replacement cycle for railcars, which also contributed to strong railcar backlogs. Railcar Group operating profit increased by $59.0 million, from $113.9 million in fiscal 1998, to $172.9 million in fiscal 1999. This 51.8% increase was primarily a result of the increased volume in fiscal 1999. As a percentage of revenue, operating profit decreased slightly primarily due to the product mix of railcar sales.
INLAND BARGE GROUP (in millions) 1999 1998 -------- -------- Revenues $ 196.4 $ 335.2 Operating Profit $ 13.4 $ 31.5 Operating Profit Margin 6.8% 9.4%
Revenues decreased in the Inland Barge Group $138.8 million, from $335.2 million in fiscal 1998, to $196.4 million in fiscal 1999. Operating profit decreased by $18.1 million, from $31.5 million in fiscal 1998, to $13.4 million in fiscal 1999. The decline in barge demand was primarily driven by reduced grain export shipments and other factors, which led to lower rates paid to river freight carriers.
PARTS & SERVICES GROUP (in millions) 1999 1998 --------- -------- Revenues $ 498.1 $ 363.7 Operating Profit $ 87.2 $ 77.8 Operating Profit Margin 17.5% 21.4%
Outside revenues increased $60.4 million in the Parts & Services Group, from $282.1 million in fiscal 1998, to $342.5 million in fiscal 1999. Operating profit increased by $9.4 million in fiscal 1999 to $87.2 million from $77.8 million in fiscal 1998. Increased revenues and operating profit were due to increased demand in the railcar industry and the acquisition of McConway and Torley, a leading railcar parts manufacturer.
HIGHWAY CONSTRUCTION PRODUCTS GROUP (in millions) 1999 1998 -------- -------- Revenues $ 162.0 $ 153.6 Operating Profit $ 26.7 $ 25.8 Operating Profit Margin 16.5% 16.8%
10 13 Revenues in the Highway Construction Products Group increased $8.4 million, while operating profit increased $0.9 million. Increased revenues and operating profit were primarily due to increased demand early in the year, which decreased in the second half of the year. The Company believes delays by the state government agencies in job lettings under the new federal highway spending legislation affected demand.
CONCRETE & AGGREGATE GROUP (in millions) 1999 1998 --------- -------- Revenues $ 238.9 $ 198.7 Operating Profit $ 25.6 $ 21.1 Operating Profit Margin 10.7% 10.6%
Revenues increased by $40.2 million, or 20.2% in the Concrete & Aggregate Group, from $198.7 million in fiscal 1998 to $238.9 million in fiscal 1999. Operating profit increased by $4.5 million, or 21.3%. Better weather conditions in fiscal 1999, internal expansion, and acquisitions contributed to growth in concrete and aggregate revenues.
INDUSTRIAL GROUP (in millions) 1999 1998 -------- -------- Revenues $ 229.4 $ 316.2 Operating Profit $ 8.5 $ 33.3 Operating Profit Margin 3.7% 10.5%
Revenues in the Industrial Group decreased from $316.2 million in fiscal 1998 to $229.4 million in fiscal 1999, while operating profit decreased from $33.3 million to $8.5 million. The decline in revenues was primarily due to the sale of Beaird Industries, Inc. in the quarter ended June 30, 1998, along with softness in fittings and flange and LPG products. The decline in operating profit was attributable to the Beaird sale, continued price competition in the fittings and flange business, primarily due to a weak energy sector and increased imports as a result of the "Asian Crisis", and the mild winter and fall which impacted demand and competition for LPG products. ALL OTHER Revenues in the All Other group decreased from $91.5 million in fiscal 1998 to $63.7 million in fiscal 1999, while operating profit increased 17.2% from $8.7 million to $10.2 million in fiscal 1999. The decrease in revenues reflected slightly weaker activity in some small, peripheral businesses. LIQUIDITY & CAPITAL RESOURCES Net cash provided by operating activities increased to $275.0 million during fiscal 2000 from $176.4 million in fiscal 1999 primarily from working capital improvements. Capital expenditures during fiscal 2000 were $174.0 million, of which $71.0 million was for additions to the lease fleet. This compares to $208.3 million of capital expenditures in fiscal 1999, of which $116.5 million was for additions to the lease fleet. Proceeds from the sale of property, plant and equipment and other assets were $77.7 million in fiscal 2000, composed primarily of the sale of cars from the lease fleet, compared to $178.7 million in fiscal 1999. The Company repurchased 2.9 million shares of its common stock for $84.9 million in fiscal 2000. The Company has determined that it may purchase additional shares from 11 14 time to time in the open market and in negotiated transactions. Purchase of additional shares will be based on market conditions and other relevant factors. Future operating requirements are expected to be financed principally with net cash flow from operations. Internally generated funds and short-term and long-term debt will continue to be used to finance business acquisitions. Capital expenditures and additions to Trinity's assets under lease are anticipated to be financed through internally generated funds, the issuance of equipment trust certificates, or similar debt instruments. INFLATION Changes in price levels did not significantly affect the Company's operations in fiscal 2000, 1999, or 1998. FORWARD LOOKING STATEMENTS Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performance, estimates, projections, goals and forecasts. Potential factors which could cause the Company's actual results of operations to differ materially from those in the forward-looking statements include market conditions and demand for the Company's products; competition; technologies; steel prices; interest rates and capital costs; taxes; unstable governments and business conditions in emerging economies; and legal, regulatory and environmental issues. Any forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company's earnings are affected by changes in interest rates due to the impact those changes have on the Company's variable-rate debt obligations, which represented approximately 75% of its total debt as of March 31, 2000. If interest rates average one percentage point more in fiscal 2001 than they did during fiscal 2000, the Company's interest expense would increase by approximately $1.7 million. In comparison, at March 31, 1999, the Company estimated that if interest rates averaged one percentage point more in fiscal 2000 than they did in fiscal 1999, interest expense would have increased by approximately $2.0 million. The impact of an increase in interest rates was determined based on the impact of the hypothetical change in interest rates and scheduled principal payments on the Company's variable-rate debt obligations as of March 31, 2000 and 1999. In addition, the Company is subject to market risk related to its net investments in its foreign subsidiaries. The net investment in foreign subsidiaries as of March 31, 2000 is $163.4 million. However, the impact of such market risk exposures as a result of foreign exchange rate fluctuations has not been material to the Company. 12 15 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. TRINITY INDUSTRIES INC., INDEX TO FINANCIAL STATEMENTS
PAGE ---- Report of Independent Auditors 14 Consolidated Income Statement for the years ended March 31, 2000, 1999, and 1998 15 Consolidated Balance Sheet as of March 31, 2000 and 1999 16 Consolidated Statement of Cash Flows for the years ended March 31, 2000, 1999, and 1998 17 Consolidated Statement of Stockholders' Equity for the years ended March 31, 2000, 1999, and 1998 18 Notes to Consolidated Financial Statements 19 - 29 Selected Quarterly Financial Data (unaudited) for the years ended March 31, 2000 and 1999 30
13 16 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Trinity Industries, Inc. We have audited the accompanying consolidated balance sheets of Trinity Industries, Inc. as of March 31, 2000 and 1999, and the related consolidated statements of income, cash flows and stockholders' equity for each of the three years in the period ended March 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trinity Industries, Inc. at March 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 2000, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Dallas, Texas May 16, 2000 14 17 CONSOLIDATED INCOME STATEMENT
Year Ended March 31 (in millions except per share data) 2000 1999 1998 - ----------------------------------- --------- --------- --------- Revenues $ 2,740.6 $ 2,926.9 $ 2,473.0 Operating costs: Cost of revenues 2,278.2 2,472.8 2,054.0 Selling, engineering and administrative expenses 183.4 169.2 163.1 --------- --------- --------- 2,461.6 2,642.0 2,217.1 --------- --------- --------- Operating profit 279.0 284.9 255.9 Other (income) expense: Litigation settlement -- -- 70.0 Interest income (2.0) (4.5) (1.8) Interest expense 20.4 20.4 20.9 Other, net (2.3) (27.4) 0.9 --------- --------- --------- 16.1 (11.5) 90.0 --------- --------- --------- Income before income taxes 262.9 296.4 165.9 Provision for income taxes: Current 84.4 106.9 53.3 Deferred 13.0 4.2 8.9 --------- --------- --------- 97.4 111.1 62.2 --------- --------- --------- Net income $ 165.5 $ 185.3 $ 103.7 ========= ========= ========= Net income per common share: Basic $ 4.17 $ 4.31 $ 2.41 ========= ========= ========= Diluted $ 4.15 $ 4.25 $ 2.36 ========= ========= ========= Weighted average number of shares outstanding: Basic 39.7 43.0 43.1 Diluted 39.9 43.6 43.9
See accompanying notes to consolidated financial statements. 15 18 CONSOLIDATED BALANCE SHEET
March 31 (in millions except per share data) 2000 1999 - ----------------------------------- --------- --------- Assets Cash and equivalents $ 16.9 $ 13.5 Receivables (net of allowance for doubtful accounts of $1.7 in 2000 and $1.9 in 1999) 349.8 357.4 Inventories: Raw materials and supplies 257.0 279.5 Work in process 37.5 42.5 Finished goods 66.1 75.1 -------- -------- 360.6 397.1 Property, plant and equipment, at cost 1,304.9 1,213.6 Less accumulated depreciation (491.7) (481.3) -------- -------- 813.2 732.3 Other assets 198.0 184.6 -------- -------- $1,738.5 $1,684.9 ======== ======== Liabilities and Stockholders' Equity Short-term debt $ 170.1 $ 181.0 Accounts payable and accrued liabilities 360.9 366.7 Long-term debt 95.4 120.6 Deferred income taxes 58.5 34.0 Other liabilities 38.5 23.5 -------- -------- 723.4 725.8 Stockholders' equity: Common stock - par value $1 per share; authorized - 100.0 shares; shares issued and outstanding in 2000 - 43.8; in 1999 - 43.7 43.8 43.7 Capital in excess of par value 295.1 292.6 Retained earnings 860.6 722.9 Accumulated other comprehensive income (19.8) (20.6) Treasury stock (5.5 shares in 2000 and 2.4 shares in 1999) (164.6) (79.5) -------- -------- 1,015.1 959.1 -------- -------- $1,738.5 $1,684.9 ======== ========
See accompanying notes to consolidated financial statements. 16 19 CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended March 31 (in millions) 2000 1999 1998 - ------------- ------- ------- ------- Operating activities: Net income $165.5 $185.3 $103.7 Adjustments to reconcile net income to net cash provided (required) by operating activities: Depreciation and amortization 80.3 72.0 73.0 Deferred income taxes 13.0 4.2 8.9 Gain on sale of property, plant and equipment and other assets (10.5) (24.6) (4.2) Other 9.2 7.2 (1.1) Changes in assets and liabilities, net of effects from acquisitions: (Increase) decrease in receivables 17.4 45.3 (150.9) (Increase) decrease in inventories 43.0 (47.9) (3.2) (Increase) decrease in other assets 2.8 (13.9) (30.6) Increase (decrease) in accounts payable and accrued liabilities (60.4) (53.0) 121.1 Increase in other liabilities 14.7 1.8 4.2 ------ ------ ------ Total adjustments 109.5 (8.9) 17.2 ------ ------ ------ Net cash provided by operating activities 275.0 176.4 120.9 Investing activities: Proceeds from sale of property, plant and equipment and other assets 77.7 178.7 81.4 Capital expenditures (174.0) (208.3) (129.4) Payment for purchase of acquisitions, net of cash acquired (25.6) (82.8) (60.2) ------ ------ ------ Net cash required by investing activities (121.9) (112.4) (108.2) Financing activities: Issuance of common stock 2.3 4.8 2.4 Stock repurchases (84.9) (79.5) -- Net borrowings (repayments) of short-term debt (10.9) 80.0 34.5 Payments to retire long-term debt (27.5) (29.5) (29.4) Dividends paid (28.7) (29.4) (29.3) ------ ------ ------ Net cash required by financing activities (149.7) (53.6) (21.8) ------ ------ ------ Net increase (decrease) in cash and equivalents 3.4 10.4 (9.1) Cash and equivalents at beginning of period 13.5 3.1 12.2 ------ ------ ------ Cash and equivalents at end of period $ 16.9 $ 13.5 $ 3.1 ====== ====== ======
Interest paid in fiscal 2000, 1999, and 1998 was $20.7, $20.5 and $23.1, respectively. See accompanying notes to consolidated financial statements. 17 20 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Common Common Capital Shares Stock in (in millions except share (100,000,000 $1.00 Excess of Retained and per share data) Authorized) Par Value Par Value Earnings ------------ --------- --------- -------- Balance at March 31, 1997 43,046,365 $ 43.0 $ 280.5 $ 493.2 Net income -- -- -- 103.7 Currency translation adjustments -- -- -- -- Comprehensive income Cash dividends ($0.68 per share) -- -- -- (29.4) Other 442,911 0.5 7.2 -- ---------- -------- -------- -------- Balance at March 31, 1998 43,489,276 43.5 287.7 567.5 Net income -- -- -- 185.3 Currency translation adjustments -- -- -- -- Comprehensive income Cash dividends ($0.69 per share) -- -- -- (29.9) Stock repurchases -- -- -- -- Other 216,360 0.2 4.9 -- ---------- -------- -------- -------- BALANCE AT MARCH 31, 1999 43,705,636 43.7 292.6 722.9 NET INCOME -- -- -- 165.5 CURRENCY TRANSLATION ADJUSTMENTS -- -- -- -- COMPREHENSIVE INCOME CASH DIVIDENDS ($0.72 PER SHARE) -- -- -- (27.8) STOCK REPURCHASES -- -- -- -- OTHER 90,715 0.1 2.5 -- ---------- -------- -------- -------- BALANCE AT MARCH 31, 2000 43,796,351 $ 43.8 $ 295.1 $ 860.6 ========== ======== ======== ========
Accumulated Other Treasury Total Comprehensive Treasury Stock Stockholders' Income Shares At Cost Equity ------------- ------------ -------- ------------- Balance at March 31, 1997 $ (7.2) $ 809.5 Net Income -- 103.7 Currency translation adjustments (4.0) (4.0) -------- Comprehensive income 99.7 Cash dividends ($0.68 per share) -- (29.4) Other -- 7.7 -------- ------------ -------- -------- Balance at March 31, 1998 (11.2) 887.5 Net income -- 185.3 Currency translation adjustments (9.4) (9.4) -------- Comprehensive income 175.9 Cash dividends ($0.69 per share) -- (29.9) Stock repurchases -- (2,363,932) $ (79.5) (79.5) Other -- -- -- 5.1 -------- ------------ -------- -------- BALANCE AT MARCH 31, 1999 (20.6) (2,363,932) (79.5) 959.1 NET INCOME -- -- -- 165.5 CURRENCY TRANSLATION ADJUSTMENTS 0.8 -- -- 0.8 -------- COMPREHENSIVE INCOME 166.3 CASH DIVIDENDS ($0.72 PER SHARE) -- -- -- (27.8) STOCK REPURCHASES -- (2,941,839) (84.9) (84.9) OTHER -- (149,972) (0.2) 2.4 -------- ------------ -------- -------- BALANCE AT MARCH 31, 2000 $ (19.8) (5,455,743) $ (164.6) $1,015.1 ======== ============ ======== ========
The Company has authorized and unissued 1,500,000 shares of no par value voting preferred stock. See accompanying notes to consolidated financial statements. 18 21 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Trinity Industries, Inc. and its consolidated subsidiaries ("Trinity" or the "Company") include the accounts of all significant majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. For purposes of the Consolidated Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash investments and receivables. The Company places its cash investments in investment grade, short-term debt instruments and limits the amount of credit exposure to any one commercial issuer. Concentrations of credit risk with respect to receivables are limited due to control procedures to monitor the credit worthiness of customers, the large number of customers in the Company's customer base, and their dispersion across different industries and geographic areas. The Company maintains an allowance for losses based upon the expected collectibility of all receivables. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Inventories and investments are valued at the lower of cost or market, with cost determined principally on the specific identification method. Market is replacement cost or net realizable value. Depreciation and amortization are generally computed by the straight-line method on the estimated useful lives of the assets, generally 2 to 30 years. The costs of ordinary maintenance and repair are charged to expense while renewals and major replacements are capitalized. Diluted net income per common share is based on the weighted average shares outstanding plus the assumed exercise of dilutive stock options less the number of treasury shares assumed to be purchased from the proceeds using the average market price of Trinity's common stock. Basic net income per common share is based on the weighted average number of common shares outstanding for the period. The numerator for both basic net income per common share and diluted net income per common share is net income. The difference between the denominator in the basic calculation and the denominator in the diluted calculation is attributable to the effect of employee stock options. The Company generally recognizes revenue when products are shipped or services are provided. Revenues for contracts providing for a large number of units and few deliveries are recorded as units are produced. In fiscal 1999, Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued. Adoption of this Statement is currently proposed to be effective for fiscal years beginning after June 15, 2000. The Company does not expect that the adoption of this Statement will have a material impact on its financial statements. Certain reclassifications have been made to prior year statements to conform to the current year presentation. 19 22 SEGMENT INFORMATION Trinity manufactures, sells and leases a wide variety of products principally in the following segments or groups: (1) the Railcar Group, which manufactures and sells railcars; (2) the Inland Barge Group, consisting of barges and related products for inland waterway services; (3) the Parts & Services Group, which manufactures and sells various parts to manufacturers of railcars and other industrial products and provides services such as railcar maintenance, fleet management, and leasing; (4) the Highway Construction Products Group, consisting primarily of highway guardrail and safety products, and girders, and beams used in the construction of highway and railway bridges; (5) the Concrete & Aggregate Group, composed of ready-mix concrete and aggregate; and (6) the Industrial Group, which manufactures and sells containers, weld fittings (tees, elbows, reducers, caps and flanges) used in pressure piping systems, and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products. Finally, All Other includes transportation services, the Company's captive insurance company, and other peripheral businesses. The financial information for these segments is shown in the table below. The Company operates principally in the continental United States, Mexico, Romania, Argentina, and Brazil. Intersegmental sales are at market prices.
YEAR ENDED MARCH 31, 2000 (IN MILLIONS) REVENUES ------------------------------------ OPERATING PROFIT DEPRECIATION & CAPITAL OUTSIDE INTERSEGMENT TOTAL (LOSS) ASSETS AMORTIZATION EXPENDITURES --------- ------------ -------- --------- -------- -------------- ------------- RAILCAR GROUP $1,515.3 $ 5.9 $1,521.2 $167.9 $ 443.3 $ 12.8 $ 19.4 INLAND BARGE GROUP 205.4 -- 205.4 26.8 63.7 5.4 1.5 PARTS & SERVICES GROUP 305.1 121.5 426.6 72.6 562.9 23.4 92.4 HIGHWAY CONSTRUCTION PRODUCTS GROUP 193.8 -- 193.8 35.3 94.6 2.8 4.8 CONCRETE & AGGREGATE GROUP 251.8 -- 251.8 26.0 139.5 19.4 23.0 INDUSTRIAL GROUP 218.1 1.3 219.4 15.1 133.4 5.0 8.7 ALL OTHER 51.1 61.9 113.0 3.1 48.3 6.5 7.8 ELIMINATIONS & CORPORATE ITEMS -- -- (190.6) (67.8) 252.8 5.0 16.4 -------- ------ -------- ------ -------- ------ ------ CONSOLIDATED TOTAL $2,740.6 $279.0 $1,738.5 $ 80.3 $174.0 ======== ====== ======== ====== ======
20 23
YEAR ENDED MARCH 31, 1999 (in millions) REVENUES -------------------------------- OPERATING PROFIT DEPRECIATION & CAPITAL OUTSIDE INTERSEGMENT TOTAL (LOSS) ASSETS AMORTIZATION EXPENDITURES -------- ------------ -------- --------- -------- ------------- ------------ Railcar Group $1,694.0 $ 6.9 $1,700.9 $172.9 $ 489.5 $ 12.5 $ 30.0 Inland Barge Group 196.4 -- 196.4 13.4 75.4 6.4 1.0 Parts & Services Group 342.5 155.6 498.1 87.2 558.6 20.8 134.7 Highway Construction Products Group 162.0 -- 162.0 26.7 99.2 3.3 2.1 Concrete & Aggregate Group 238.9 -- 238.9 25.6 118.5 18.5 15.6 Industrial Group 229.4 1.4 230.8 8.5 89.6 2.0 7.2 All Other 63.7 64.9 128.6 10.2 31.5 5.5 6.6 Eliminations & Corporate Items -- -- (228.8) (59.6) 222.6 3.0 11.1 -------- ------ -------- ------ -------- ------ ------ Consolidated Total $2,926.9 $284.9 $1,684.9 $ 72.0 $208.3 ======== ====== ======== ====== ======
YEAR ENDED MARCH 31, 1998 (in millions) REVENUES -------------------------------- OPERATING PROFIT DEPRECIATION & CAPITAL OUTSIDE INTERSEGMENT TOTAL (LOSS) ASSETS AMORTIZATION EXPENDITURES -------- ------------ -------- --------- -------- ------------- ------------ Railcar Group $1,095.7 $ 9.3 $1,105.0 $113.9 $ 403.0 $ 11.6 $ 23.8 Inland Barge Group 335.2 -- 335.2 31.5 100.9 7.4 2.3 Parts & Services Group 282.1 81.6 363.7 77.8 499.9 19.9 74.3 Highway Construction Products Group 153.6 -- 153.6 25.8 90.5 3.6 0.7 Concrete & Aggregate 198.7 -- 198.7 21.1 112.6 17.2 8.4 Industrial Group 316.2 3.0 319.2 33.3 204.3 5.1 3.4 All Other 91.5 56.0 147.5 8.7 31.3 5.8 8.7 Eliminations & Corporate Items -- -- (149.9) (56.2) 131.4 2.4 7.8 -------- ------ -------- ------ -------- ------ ------ Consolidated Total $2,473.0 $255.9 $1,573.9 $ 73.0 $129.4 ======== ====== ======== ====== ======
21 24 Total revenues from external customers attributed to foreign operations for fiscal 2000, 1999, and 1998 are $72.0 million, $42.6 million, and $55.3 million, respectively. The Railcar Group includes revenues from one customer which accounted for 12.6 percent, 9.9 percent, and 10.1 percent of consolidated revenues in fiscal 2000, 1999, and 1998, respectively. Long-lived assets located outside the United States in fiscal 2000, 1999, and 1998 are $110.2 million, $52.6 million, and $30.8 million, respectively. Corporate assets are composed of cash and equivalents, notes receivable, land held for investment, certain property, plant and equipment, and other assets. Capital expenditures do not include business acquisitions. Segment operating profit excludes administrative overhead of the corporate office and certain shared services of the businesses, which are included in Eliminations & Corporate Items. ACQUISITIONS The Company made certain acquisitions during fiscal 2000, 1999, and 1998 accounted for by the purchase method. The aggregate purchase price for these acquisitions was $87.4 million, $104.4 million, and $70.8 million, respectively. Goodwill, which is included in other assets and amortized over periods ranging from 10 to 30 years, of $9.3 million and $65 million was recorded on the 2000 and 1999 acquisitions, respectively. The acquired operations have been included in the consolidated financial statements from the effective dates of the acquisitions. Proforma results would not have been materially different from actual results for any year presented. STOCK PLANS The Company's 1998 Stock Option and Incentive Plan provides for awarding 2,000,000 shares of common stock plus shares covered by forfeited, expired, and canceled options granted under prior plans for a total of 1,480,827 shares available for issuance at March 31, 2000, with a maximum of 600,000 shares being available for issuance as restricted stock or in satisfaction of performance or other awards. The plan provides for the granting of: nonqualified and incentive stock options having maximum ten-year terms to purchase common stock at its market value on the award date; stock appreciation rights based on common stock fair market values with settlement in common stock or cash; restricted stock; and performance awards with settlement in common stock or cash on achievement of specific business objectives. Under previous plans, nonqualified and incentive stock options and restricted shares were granted at their fair market values. One grant provided for granting reload options for the remaining term of the original grant at the common stock market value on the date shares already owned by the optionee are surrendered in payment of the option exercise price. Options become exercisable in various percentages over periods ranging up to eight years. 22 25
Year Ended March 31 ------------------------------------------------------------------------------ 2000 1999 1998 ------------------------ ------------------------ ------------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ---------- ---------- ---------- ---------- ---------- ---------- Outstanding beginning of year 2,059,983 $ 29.81 1,982,495 $ 26.01 1,962,722 $ 26.72 Halter property distribution -- -- -- -- 499,369 -- Granted 636,306 30.06 414,663 39.76 389,218 46.44 Exercised (147,309) 21.02 (314,453) 18.73 (554,357) 20.78 Canceled (22,144) 36.32 (22,722) 33.26 (314,457) 23.63 ---------- ---------- ---------- ---------- ---------- ---------- Outstanding end of year 2,526,836 30.33 2,059,983 29.81 1,982,495 26.01 ========== ========== ========== ========== ========== ========== Exercisable 1,319,168 28.32 961,903 23.92 967,973 19.34 ========== ========== ========== ========== ========== ==========
March 31, 2000 ----------------------------------------------------------------------------- Outstanding Options --------------------------------------------- Weighted Average Exercisable Options ----------------------------- ----------------------------- Remaining Weighted Contractual Exercise Average Exercise Price Range Shares Life (Years) Price Shares Price - -------------------- ------------- ------------- ------------- ------------- ------------- $13.22 - $23.91 633,578 2.2 $ 18.82 532,116 $ 18.35 24.50 - 29.29 515,531 6.6 25.62 313,664 25.65 29.44 - 38.81 738,164 8.4 30.63 182,226 32.86 39.31 - 53.81 639,563 7.9 45.18 291,162 46.58 ------------- ------------- ------------- ------------- ------------- $13.22 - $53.81 2,526,836 6.3 30.33 1,319,168 28.32 ============= ============= ============= ============= =============
In connection with the Halter property distribution, outstanding stock options were adjusted to preserve their economic value. 23 26 The Company has elected to apply the accounting provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and its Interpretations and, accordingly, no compensation cost has been recorded for stock options. The effect of computing compensation cost in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," and the weighted average fair value of options granted during 2000, 1999, and 1998 using the Black-Scholes option pricing method is shown in the accompanying table.
2000 1999 1998 ------------ ------------ ------------ Estimated fair value per share of options granted $ 9.10 $ 15.49 $ 17.72 Pro forma: Net income (millions) $ 162.1 $ 183.1 $ 102.7 Per diluted share $ 4.06 $ 4.20 $ 2.34 Black-Scholes assumptions: Expected option life (years) 5.7 6.7 6.5 Risk-free interest rate 6.10% 6.00% 7.05% Dividend yield 3.10% 1.82% 1.56% Common stock volatility 0.328 0.393 0.283
RESTRICTED STOCK 2000 1999 1998 ------------ ------------ ------------ Shares awarded 50,000 42,000 24,000 Grant date fair value per share $ 27.94 $ 39.04 $ 53.00 Outstanding at March 31 131,500 81,500 40,500
DEBT
LONG-TERM DEBT March 31 (in millions) 2000 1999 ------ ------ 3.0-9.25 percent industrial development revenue bonds payable in varying amounts through 2005 $ 1.6 $ 2.0 6.0-6.46 percent promissory notes, generally payable annually through 2008 28.2 30.0 6.96-9.44 percent equipment trust certificates to institutional investors generally payable in semi-annual installments of varying amounts through 2003 57.4 81.4 8.0-11.3 percent notes payable monthly through 2003 8.2 7.2 ------ ------ $ 95.4 $120.6 ====== ======
24 27 The fair value of non-traded, fixed-rate outstanding debt, estimated using discounted cash flow analysis, approximates its carrying value. Principal payments due during the next five years are: 2001 - $55.5; 2002 - $25.9; 2003 - $11.5; 2004 - $1.9; and 2005 - $0.2. The trustees of the equipment trusts have been assigned title to railcars with a net book value of $130.3 at March 31, 2000 for the life of the respective equipment trusts. Leases relating to such railcars financed by equipment trust certificates have been assigned as collateral. SHORT-TERM DEBT Short-term debt primarily consists of money market borrowings, generally due within 30 days, with interest rates ranging from 5.21% to 6.74% in 2000 and 5.21% to 5.76% in 1999.
PROPERTY, PLANT AND EQUIPMENT March 31 (in millions) 2000 1999 -------- -------- Land $ 51.0 $ 38.6 Buildings and improvements 261.0 226.8 Machinery 528.6 487.5 Equipment on lease 429.0 428.4 Construction in progress 35.3 32.3 -------- -------- $1,304.9 $1,213.6 ======== ========
Equipment on lease consists primarily of railcars leased by the Company to third parties. The Company enters into lease contracts with third parties with terms generally ranging between one and fifteen years, wherein equipment manufactured by Trinity is leased for a specified type of service over the term of the contract. The Company enters primarily into operating leases. Future minimum rental revenues on leases in each fiscal year are: 2001 - $56.2; 2002 - $49.3; 2003 - $41.8; 2004 - $35.5; 2005 - $27.3; and $112.6 thereafter. 25 28 INCOME TAXES (in millions except percent data) The components of the provision for income taxes are:
Year Ended March 31 2000 1999 1998 ------ ------ ------ Current: Federal $ 78.5 $ 96.2 $ 48.0 State 5.2 10.7 5.3 Foreign 0.7 -- -- ------ ------ ------ 84.4 106.9 53.3 Deferred 13.0 4.2 8.9 ------ ------ ------ Total $ 97.4 $111.1 $ 62.2 ====== ====== ======
Deferred income taxes represent the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred tax liabilities and assets are:
March 31 2000 1999 ------- ------- Deferred tax liabilities: Depreciation $ 78.3 $ 72.8 Deductions related to inventory and other assets of foreign operations 7.4 7.9 Other 8.6 -- ------- ------- 94.3 80.7 Deferred tax assets: Pensions and other benefits 34.2 33.1 Accounts receivable, inventory, and other asset valuation accounts 1.6 8.6 Other -- 5.0 ------- ------- Total deferred tax assets 35.8 46.7 ------- ------- Net deferred tax liabilities $ 58.5 $ 34.0 ======= =======
The provision for income taxes results in effective tax rates different from the statutory rates. The following is a reconciliation between the statutory U.S. federal income tax rate and the Company's effective income tax rate:
Year Ended March 31 2000 1999 1998 ------ ------ ------ Statutory rate 35.0% 35.0% 35.0% State taxes 1.3 2.4 2.1 Other (net) 0.8 0.1 0.4 ------ ------ ------ Effective tax rate 37.1% 37.5% 37.5% ====== ====== ======
26 29 In fiscal 2000, 1999, and 1998, income taxes of $85.2, $111.6, and $33.6, respectively, were paid net of refunds received. Income before income taxes for fiscal 2000, 1999, and 1998 was $252.9, $287.2, and $159.5, respectively, for U.S. operations, and $10.0, $9.2, and $6.4, respectively, for foreign operations. The Company has not provided U.S. deferred income taxes on the undistributed earnings of its foreign subsidiaries based on the determination that such earnings will be indefinitely reinvested. Undistributed earnings of the Company's foreign subsidiaries were $29.1 as of March 31, 2000. 27 30 EMPLOYEE RETIREMENT PLANS (in millions except percent data) The Company sponsors defined benefit pension and defined contribution profit sharing plans which provide income and death benefits for eligible employees.
Year Ended March 31 2000 1999 1998 ------------- ------------- ------------- Actuarial Assumptions Obligation discount rate 8.25% 7.25% 7.25% Compensation increase rate 4.75% 4.75% 4.75% Long-term rate of return on plan assets 9% 9% 9% Expense Components Service cost $ 13.5 $ 11.4 $ 12.5 Interest 12.9 11.2 10.5 Expected return on assets (14.3) (13.1) (10.2) Amortization and deferral (0.1) (0.1) -- Profit sharing 4.2 5.3 4.5 ------------- ------------- ------------- Net expense $ 16.2 $ 14.7 $ 17.3 ============= ============= ============= Benefit Obligations Beginning of year $ 163.2 $ 156.1 $ 127.5 Service cost 13.5 11.4 12.5 Interest 12.9 11.2 10.5 Benefits paid (5.0) (6.1) (6.9) Actuarial (gain) loss (20.6) (3.5) 12.5 Sale of Beaird Industries, Inc. -- (5.9) -- ------------- ------------- ------------- End of year $ 164.0 $ 163.2 $ 156.1 ============= ============= ============= Under funded plans $ 6.1 $ 147.9 $ 20.4 Over funded plans 157.9 15.3 135.7 ============= ============= ============= Plans' Assets Beginning of year $ 160.0 $ 153.4 $ 114.3 Actual return on assets 11.4 12.3 33.3 Employer contributions 2.7 5.1 12.7 Benefits paid (5.0) (6.1) (6.9) Sale of Beaird Industries, Inc. -- (4.7) -- ------------- ------------- ------------- End of year $ 169.1 $ 160.0 $ 153.4 ============= ============= ============= Under funded plans $ -- $ 140.4 $ 13.2 Over funded plans 169.1 19.6 140.2 ============= ============= ============= Consolidated Balance Sheet Components Funded status $ (5.1) $ 3.2 $ 2.7 Unamortized transition obligation 1.4 1.6 1.9 Unrecognized prior service cost (1.1) (1.1) (1.4) Unrecognized loss (gain) 14.4 (3.4) (5.9) ------------- ------------- ------------- Net obligation (asset) $ 9.6 $ 0.3 $ (2.7) ============= ============= ============= Accrued $ 14.5 $ 5.6 $ 5.7 Prepaid 4.9 5.3 8.4 ------------- ------------- ------------- Net accrued (prepaid) $ 9.6 $ 0.3 $ (2.7) ============= ============= =============
28 31 CONTINGENCIES In September 1997, the Company settled a 13 year-old lawsuit brought against a former subsidiary of the Company by Morse/Diesel, Inc. The settlement resulted in an after-tax charge of $43.8 million being recorded in fiscal 1998. The Company has not participated in the business associated with this matter since 1989. In April 1998, the Company settled a 5 year-old patent infringement lawsuit brought by Johnstown America Corp. for $10.5 million, net of tax. The Company is involved in various other claims and lawsuits incidental to its business. In the opinion of management, these claims and suits in the aggregate will not have a material adverse effect on the Company's consolidated financial statements. STOCKHOLDER'S RIGHTS PLAN The Company has adopted a Stockholder's Rights Plan to replace its existing plan which expired April 27, 1999. On March 11, 1999, the Board of Directors of the Company declared a dividend distribution of one right for each outstanding share of the Company's common stock, $1.00 par value, to stockholders of record at the close of business on April 27, 1999. Each right entitles the registered holder to purchase from the Company one one-hundredth (1/100) of a share of Series A Preferred Stock at a purchase price of $200.00 per one one-hundredth (1/100) of a share, subject to adjustment. The rights are not exercisable or detachable from the common stock until ten business days after a person acquires beneficial ownership of twelve percent or more of the Company's common stock or if a person or group commences a tender or exchange offer upon consummation of which that person or group would beneficially own twelve percent or more of the common stock. The Company will generally be entitled to redeem the rights at $0.01 per right at any time until the first public announcement that a twelve percent position has been acquired. If any person becomes a beneficial owner of twelve percent or more of the Company's common stock, each right not owned by that person or related parties enables its holder to purchase, at the right's purchase price, shares of the Company's common stock having a calculated value of twice the purchase price of the right. 29 32 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (in millions except per share data)
First Second Third Fourth Quarter Quarter Quarter Quarter Year ---------- ---------- ---------- ---------- ---------- YEAR ENDED MARCH 31, 2000: REVENUES $ 693.4 700.0 700.8 646.4 2,740.6 OPERATING PROFIT $ 77.4 76.9 68.8 55.9 279.0 NET INCOME $ 45.0 46.3 40.3 33.9 165.5 NET INCOME PER COMMON SHARE: BASIC $ 1.11 1.17 1.03 0.87 4.17 DILUTED $ 1.10 1.16 1.02 0.87 4.15 Year ended March 31, 1999: Revenues $ 711.5 717.4 722.9 775.1 2,926.9 Operating profit $ 74.1 74.7 69.7 66.4 284.9 Net income (1) $ 57.8 44.8 41.8 40.9 185.3 Net income per common share: (1) Basic $ 1.33 1.03 0.97 0.97 4.31 Diluted $ 1.31 1.02 0.96 0.96 4.25
(1) Results for the first quarter of fiscal 1999 included a non-recurring net-of-tax gain of $13.8 million, or 32 cents a diluted share. Excluding this net gain, net income would have been $171.5 million, or $3.93 a diluted share in fiscal 1999. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. DIRECTORS OF THE REGISTRANT. Information concerning the directors of the Registrant is incorporated herein by reference from the Registrant's proxy statement dated June 19, 2000 for the 2000 Annual Meeting of Stockholders, beginning on page 4, under the heading "Nominees". 30 33 EXECUTIVE OFFICERS OF THE REGISTRANT.* The following table sets forth the names and ages of all executive officers of the Registrant, all positions and offices with the Registrant presently held by them, the year each person first became an officer and the term of each person's office:
Officer Term Name(1) Age Office Since Expires - ---- --- ------------------------------ ------ ---------- Timothy R. Wallace 46 Chairman & Chief 1993 July 2000 Executive Officer John L. Adams 55 Executive Vice President 1999 July 2000 Mark W. Stiles 51 Senior Vice President 1993 July 2000 Jim S. Ivy 56 Vice President & 1998 July 2000 Chief Financial Officer John R. Nussrallah 53 Group President 2000 July 2000 Douglas H. Schneider 61 Group President 2000 July 2000 Jack L. Cunningham, Jr. 55 Vice President, Labor 1982 July 2000 Relations Michael G. Fortado 56 Vice President, General 1997 July 2000 Counsel, & Secretary Graceanna Jones 50 Vice President, 2000 July 2000 Communications John M. Lee 39 Vice President, Business 1994 July 2000 Development Michael J. Lintner 57 Vice President, Human 1999 July 2000 Resources William A. McWhirter, II 36 Vice President, Mergers 2000 July 2000 & Acquisitions, President Concrete & Aggregate Joseph F. Piriano 63 Vice President, Purchasing 1992 July 2000 Linda S. Sickels 49 Vice President, Government 1995 July 2000 Relations Neil O. Shoop 56 Treasurer 1985 July 2000 Christine Stucker 38 Controller 1999 July 2000
* This data is furnished as additional information pursuant to instructions to Item 401 to Regulation S-K and in lieu of inclusion in the Registrant's Proxy Statement. (1) Mr. Adams joined the Registrant in 1999. Prior to this year, Mr. Adams served as chief executive officer for a national financial institution. Mr. Ivy joined the Registrant in 1998. Prior to that, Mr. Ivy was a senior audit partner for a national public accounting firm. Mr. Fortado joined the Registrant in 1997. Prior to that, Mr. Fortado served one year as senior vice president, general counsel, and corporate secretary for an oil and gas exploration company and prior to that as vice president, corporate secretary, and assistant general counsel for an integrated energy company. Mr. Nussrallah joined the Registrant in 1994. Mr. Nussrallah was designated as an executive officer in fiscal 2000 and has held the position of Group President in the railcar segment for at least the last five years. Mr. Schneider joined the Registrant in 1995. Mr. Schneider was designated as an executive officer in fiscal 2000 and has held the position of Group President of Inland Barge for at least the last five years. Ms. Jones joined the Registrant in 1999. Prior to this year, Ms. Jones held various senior level positions with an oilfield services company. Mr. Lintner joined the Registrant in 1999. Prior to this year, Mr. Lintner held executive officer positions with administrative outsourcing and professional staffing businesses. Mr. McWhirter joined the Registrant in 1985. Prior to this year, he served as President of the Transit Mix Division, a post which he still holds. Ms. Stucker joined the Registrant in 1985. Prior to this year, Ms. Stucker 31 34 served as an officer of various operational divisions. All of the other above-mentioned executive officers have been in the full-time employ of the Registrant or its subsidiaries for more than five years. Although the titles of certain such officers have changed during the past five years, all have performed essentially the same duties during such period of time except for Timothy R. Wallace and Mark W. Stiles. Mr. Wallace became Chairman and Chief Executive Officer on December 31, 1998. He was previously the President and Chief Operating Officer. In addition to Group President, Mr. Stiles became Senior Vice President on June 10, 1999. ITEM 11. EXECUTIVE COMPENSATION. Information on executive compensation is incorporated herein by reference from the Registrant's proxy statement dated June 19, 2000 for the 2000 Annual Meeting of Stockholders, beginning on page 8, under the heading "Executive Compensation and Other Matters". ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Registrant's proxy statement dated June 19, 2000 for the 2000 Annual Meeting of Stockholders, beginning on page 2, under the heading "Voting Securities and Stockholders". ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. None. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. No form 8-K was filed in fiscal 2000. 32 35 Report of Independent Auditors The Board of Directors and Stockholders Trinity Industries, Inc. We have audited the consolidated financial statements of Trinity Industries, Inc. as of March 31, 2000 and 1999, and for each of the three years in the period ended March 31, 2000, and have issued our report thereon dated May 16, 2000. Our audits also included the financial statement schedule of Trinity Industries, Inc. listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Dallas, Texas May 16, 2000 33 36 SCHEDULE II Trinity Industries, Inc. Allowance for Doubtful Accounts Years Ended March 31, 2000, 1999 and 1998 (in millions)
Additions Balance at charged to Accounts Balance beginning costs and charged at end of year expenses off of year --------------- --------------- --------------- --------------- Year Ended March 31, 2000 $ 1.9 $ 0.7 $ 0.9 $ 1.7 =============== =============== =============== =============== Year Ended March 31, 1999 $ 1.7 $ 0.7 $ 0.5 $ 1.9 =============== =============== =============== =============== Year Ended March 31, 1998 $ 1.0 $ 0.9 $ 0.2 $ 1.7 =============== =============== =============== ===============
34 37 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. Trinity Industries, Inc. By /s/ Michael G. Fortado - ------------------------ ------------------------ Registrant Michael G. Fortado Vice President, General Counsel, and Secretary June 7, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the Registrant and in the capacities and on the dates indicated: Directors: Directors (continued) /s/ David W. Biegler - -------------------------------- -------------------------------- David W. Biegler Diana Natalicio Director Director June 7, 2000 June 7, 2000 /s/ Ronald J. Gafford /s/ W. Ray Wallace - -------------------------------- -------------------------------- Ronald J. Gafford W. Ray Wallace Director Director June 7, 2000 June 7, 2000 - -------------------------------- Barry J. Galt Director June 7, 2000 Principal Executive Officer: /s/ Clifford J. Grum /s/ Timothy R. Wallace - -------------------------------- -------------------------------- Clifford J. Grum Timothy R. Wallace Director Chairman June 7, 2000 June 7, 2000 /s/ Dean P. Guerin - -------------------------------- Dean P. Guerin Director June 7, 2000 Principal Financial Officer: /s/ Jess T. Hay /s/ Jim S. Ivy - -------------------------------- -------------------------------- Jess T. Hay Jim S. Ivy Director Vice President June 7, 2000 June 7, 2000 Principal Accounting Officer: /s/ Edmund M. Hoffman /s/ John M. Lee - -------------------------------- -------------------------------- Edmund M. Hoffman John M. Lee Director Vice President June 7, 2000 June 7, 2000 35 38 Trinity Industries, Inc. Index to Exhibits (Item 14(a))
EXHIBIT NO. DESCRIPTION - ------- --------------------------------------------------------------------- (3.1) Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.A to Registration Statement No. 33-10937 filed April 8, 1987). (3.2) By-Laws of Registrant (4.1) Specimen Common Stock Certificate of Registrant (incorporated by reference to Exhibit 4.1 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). (4.2) Rights Agreement dated March 31, 1999 (incorporated by reference to Form 8-K filed March 31, 1999). (10.1) Fixed Charges Coverage Agreement dated as of January 15, 1980, between Registrant and Trinity Industries Leasing Company (incorporated by reference to Exhibit 10.1 to Registration Statement No. 2-70378 filed January 29, 1981). (10.2) Tax Allocation Agreement dated as of January 22, 1980 between Registrant and its subsidiaries (including Trinity Industries Leasing Company) (incorporated by reference to Exhibit 10.2 to Registration Statement No. 2-70378 filed January 29, 1981). (10.3) Form of Executive Severance Agreement, as amended, entered into between the Registrant and executive officers of the Registrant (incorporated by reference to Exhibit 10.3 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). * (10.4) Trinity Industries, Inc., Stock Option Plan With Stock Appreciation Rights (incorporated by reference to Registration Statement No. 2-64813 filed July 5, 1979, as amended by Post-Effective Amendment No. 1 dated July 1, 1980, Post-Effective Amendment No.2 dated August 31, 1984, and Post-Effective Amendment No. 3 dated July 13, 1990). * (10.5) Directors' Retirement Plan adopted December 11, 1986, as amended by Amendment No. 1 dated September 10, 1998 (incorporated by reference to Exhibit 10.5 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). * (10.6) 1989 Stock Option Plan with Stock Appreciation Rights (incorporated by reference to Registration Statement No. 33-35514 filed June 20, 1990). * (10.7) 1993 Stock Option and Incentive Plan (incorporated by reference to Registration Statement No. 33-73026 filed December 15, 1993). *
36 39 Trinity Industries, Inc. Index to Exhibits -- (Continued) (Item 14(a))
EXHIBIT NO. DESCRIPTION - ------- --------------------------------------------------------------------- (10.8) Supplemental Profit Sharing Plan for Employees of Trinity Industries Inc. and Certain Affiliates as restated effective January 1, 2000. * (10.9) Supplemental Profit Sharing and Deferred Director Fee Trust dated March 31, 1999 (incorporated by reference to Exhibit 10.10 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). * (10.10) Supplemental Retirement Plan dated April 1, 1995, as amended by Amendment No. 1 dated September 14, 1995 and Amendment No. 2 dated May 6, 1997 (incorporated by reference to Exhibit 10.11 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). * (10.11) Deferred Plan for Director Fees dated July 17, 1996, as amended by Amendment No. 1 dated September 10, 1998 (incorporated by reference to Exhibit 10.12 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). * (10.12) Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (incorporated by reference to Registration Statement No. 333-77735 filed May 4, 1999). * (10.13) Form of Deferred Compensation Plan and Agreement entered into between Trinity Industries, Inc. and certain officers of the Registrant (incorporated by reference to Exhibit 10.14 to the registrant's Annual Report on Form 10K for the fiscal year ended March 31, 1999). * (10.14) Consulting agreement between the Registrant and W. R. Wallace effective January 1, 1999. * (21) Listing of subsidiaries of the Registrant. (23) Consent of Independent Auditors. (27) Financial Data Schedules for the fiscal year ended March 31, 2000.
*Management contracts and compensatory plan arrangements. NOTICE: Exhibits 3.2, 10.8, 10.14, 21, and 27 have been omitted from the reproduction of this Form 10-K. A copy of the Exhibits will be furnished upon written request to Graceanna Jones, Vice President, Communications, Trinity Industries, Inc., P.O. Box 568887, Dallas, Texas 75356-8887. The Registrant may impose a reasonable fee for its expenses in connection with providing the above-referenced Exhibits. 37 EX-3.2 2 0002.txt BY-LAWS OF REGISTRANT 1 EXHIBIT 3.2 As Amended Effective December 9, 1999 BYLAWS OF TRINITY INDUSTRIES, INC. ARTICLE I. Offices Section 1. The registered office shall be located in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places within or without the State of Delaware as the Board of Directors may from time to time determine, or as the business of the corporation may require. ARTICLE II. Meetings of Stockholders Section 1. Meetings of the stockholders for any purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. The annual meeting of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At such meeting, the stockholders entitled to vote thereat shall elect by a plurality vote a Board of Directors. Nominations for election to the Board of Directors shall be made at such meeting only by or at the direction of the Board of 2 Directors, by a nominating committee or person appointed by the Board of Directors, or by a stockholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder's notice shall be delivered to, or mailed and received at, the principal executive offices of the corporation not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs. Such stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the corporation which are beneficially owned by the person, and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under 2 3 the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice, (i) the name and record address of the stockholder, (ii) the class and number of shares of capital stock of the corporation which are beneficially owned by the stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as director of the corporation. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth herein. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. 3 4 At each annual meeting of the stockholders, only such business shall be conducted as shall have properly been brought before the meeting. To be properly before the meeting, the business to be conducted must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, otherwise properly brought before the meeting by or at the direction of the Board of Directors, or otherwise properly brought before the meeting by a stockholder entitled to vote at the meeting. In addition to any other applicable requirements, for business to be properly brought before the meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice shall be delivered to, or mailed and received at, the principal executive offices of the corporation not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. A stockholder's notice to the Secretary of the corporation shall set forth as to each matter that the stockholder proposes to bring before the annual meeting, (i) a brief description of the business desired to 4 5 be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by the stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. Notwithstanding the foregoing provisions of this Section 2, a stockholder seeking to have a proposal included in the corporation's proxy statement shall comply with the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended (including, but not limited to, Rule 14a-8 or its successor provision). Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2; provided, however, that nothing in this Section 2 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with the procedures set forth in this Section 2. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that the business sought to be so conducted was not properly brought before the meeting in 5 6 accordance with the provisions of this Section 2, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 3. Special meetings of the stockholders may be called by the chief executive officer or a majority of the Board of Directors. Section 4. Written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or person calling the meeting, to each stockholder of record entitled to vote at such meeting. Section 5. Business transacted at any special meeting shall be confined to the purposes stated in the notice thereof. Section 6. The holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at meetings of stockholders except as otherwise provided by any applicable statute. If, however, a quorum shall not be present or represented at any meeting of the stockholders, the presiding officer at the meeting or the stockholders present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be 6 7 present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. In addition, the presiding officer at any meeting of stockholders shall have the power to adjourn the meeting at the request of the Board of Directors if the Board of Directors determines that adjournment is necessary or appropriate to enable stockholders to consider fully information which the Board of Directors determines has not been made sufficiently or timely available to stockholders or to otherwise exercise effectively their voting rights. Section 7. Except as provided in Section 2 hereof with respect to the election of the Board of Directors, at a meeting at which a quorum is present, the vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote shall be the act of the stockholders' meeting, unless the vote of a greater number is required by law or the Certificate of Incorporation. Section 8. Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders, except to the extent that the voting rights of the shares of any class are limited or denied by the Certificate of Incorporation. Section 9. At any meeting of the stockholders, every stockholder having the right to vote may vote either in person, or by proxy appointed by an instrument in writing as to a particular meeting and any adjournment or adjournments thereof subscribed by such stockholder or by his duly authorized attorney-in-fact. A proxy shall be revocable unless expressly provided therein to be irrevocable and unless otherwise provided by law. 7 8 Section 10. The officer or agent having charge of the stock transfer books shall make, at least ten (10) days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the registered office of the corporation, and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting, and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer book or to vote at any such meeting of stockholders. Section 11. Notwithstanding any inconsistent provision which may be contained in these By-Laws, in order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the 8 9 Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten days of the date upon which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the corporation having custody of the book in which proceedings of stockholders' meeting are recorded, to the attention of the Secretary of the corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. ARTICLE III. Directors Section 1. The number of directors of the corporation shall be ten (10). The directors shall be elected at the annual meeting 9 10 of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified; provided, any director may be removed at any time, with or without cause, by the holders of a majority of the shares entitled to vote, represented in person or by proxy, at any duly constituted meeting of stockholders called for the purpose of removing any such director or directors. Directors need not be residents of the State of Delaware or stockholders of the corporation. Section 2. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any newly created directorship(s) resulting from an increase in the authorized number of directors elected by all stockholders entitled to vote as a single class shall be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the proposed Board of Directors. Section 3. The business and affairs of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute, the Certificate of Incorporation, or these Bylaws directed or required to be exercised and done by the stockholders. Section 4. Meetings of the Board of Directors, regular or special, may be held either within or without the State of Delaware. 10 11 Section 5. The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting, and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time and place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the Board of Directors may be held at such time and at such place as shall from time to time be determined by the Board. Special meetings of the Board of Directors may be called by the Secretary on the written request of two directors. Section 7. Written notice of regular meetings of the Board of Directors shall not be required. Special meetings of the Board of Directors may be called upon twenty-four (24) hours' notice to each director, or such shorter period of time as the person calling the meeting deems appropriate in the circumstances, either personally or by mail, telephone or telegram. Neither the business to be transacted at, nor the purposes of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such special meeting. 11 12 Section 8. A majority of the directors shall constitute a quorum for the transaction of business, and the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater number is required by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate three or more directors to constitute an executive committee, which committee, unless its authority shall be otherwise expressly limited by such resolution, shall have and may exercise all of the authority of the Board of Directors in the business and affairs of the corporation except where action of the Board of Directors is specified by statute. Vacancies in the membership of the committee shall be filled by the Board of Directors at a regular or special meeting of the Board of Directors. The executive committee shall keep regular minutes of its proceedings and report the same to the Board when required. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. 12 13 ARTICLE IV. Notices Section 1. Except as otherwise provided in these Bylaws, notices to directors and stockholders shall be in writing, and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the corporation. If mailed, such notice shall be deemed to be given when deposited in the United States mail with postage thereon prepaid. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given to any stockholder or director under the provisions of the statutes, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice. Section 3. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE V. Officers Section 1. The executive officers of the corporation shall consist of a President, one or more Vice Presidents, a Secretary and a Treasurer and may include a Chairman of the Board, one or more Senior Vice Presidents and one or more Executive Vice Presidents, each of whom shall be elected by the Board of Directors. 13 14 Section 2. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall choose a President, one or more Vice Presidents, a Secretary and a Treasurer, none of whom need be a member of the Board, and may appoint one of their number Chairman of the Board. Section 3. Such other officers and assistant officers and agents as may be deemed necessary may be appointed by the chief executive officer of the corporation, including a Chairman, a President, and one or more Vice Presidents of the respective Divisions. The President or the Vice Presidents of the Division who, in the order of their seniority, unless otherwise determined by the chief executive officer of the corporation, shall perform the duties of the Chairman or President, as the case may be, of the Division in the absence or disability of the Chairman or President, as the case may be, of that Division. Each President or Vice President, as the case may be, of a Division shall perform such other duties and have such other powers as the chief executive officer of the corporation or the Chairman or President, as the case may be, of that Division shall prescribe. Division officers shall hold office until their respective successors shall have been chosen and shall have qualified. Any Division officer appointed by the chief executive officer may be removed by the chief executive officer whenever, in his judgment, the best interests of the corporation will be served thereby. Any vacancy occurring in any office of a Division by death, resignation, removal or otherwise shall be filled by the chief executive officer of the corporation. 14 15 Section 4. The salaries of all executive officers of the corporation shall be fixed by the Board of Directors or by a committee of one or more directors, the members of which shall be selected by the Board of Directors and which, unless its authority shall be otherwise limited by resolution of the Board of Directors, shall have the power to fix the salaries of all executive officers of the corporation. Section 5. The executive officers of the corporation shall hold office until their respective successors shall have been chosen and shall have qualified. Any officer or agent or member of the executive committee elected or appointed by the Board of Directors may be removed by the Board of Directors whenever, in its judgment, the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any vacancy occurring in any executive office of the corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors. Section 6. The Board of Directors may designate whether the Chairman of the Board, if such an officer shall have been appointed, or the President, shall be the chief executive officer of the corporation. The officer so designated as the chief executive officer shall preside at all meetings of the stockholders and the Board of Directors, and shall have such other powers and duties as usually pertain to such office or as may be delegated by the Board of Directors. The President shall have such powers and duties as usually pertain to such office, except as the same may be modified by the Board of Directors. Unless the 15 16 Board of Directors shall otherwise delegate such duties, the chief executive officer shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. Section 7. The chief executive officer or his designee shall have the authority to execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. Section 8. The Vice Presidents, in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President. The Vice Presidents shall also have the authority to execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Vice Presidents shall perform such other duties and have such other powers as the Board of Directors or the chief executive officer of the corporation shall prescribe. Section 9. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and shall 16 17 record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees, when requested. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors or the President, under whose supervision he shall be. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board of Directors or directed by the President or any Vice President, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature or by the signature of the Treasurer or any Assistant Secretary. Section 10. The Assistant Secretaries, in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 11. The Treasurer shall be the financial officer of the corporation. He shall have the custody of the corporate funds and securities and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositaries as may be designated from time to time by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the 17 18 Board of Directors at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer. He shall also perform such other duties as may be assigned to him by the Board of Directors. Section 12. If required by the Board of Directors, the Treasurer shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 13. The Assistant Treasurers, in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE VI. Indemnification of Directors and Officers Section 1. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was or has agreed to become a director, officer or Division officer of the corporation, or is or was 18 19 serving or has agreed to serve at the request of the corporation as a director, officer or Division officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director, officer or Division officer of the corporation, or is or was serving or has agreed to serve at the request of the corporation 19 20 as a director, officer or Division officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 3. Notwithstanding the other provisions of this Article, to the extent that a director, officer or Division officer of the corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. 20 21 Section 4. Any indemnification under Sections 1 and 2 of this Article (unless ordered by a court) shall be paid by the corporation unless a determination is made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders, that indemnification of the director, officer, employee or agent is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections 1 and 2 of this Article. Section 5. Costs, charges and expenses (including attorneys' fees) incurred by a person referred to in Sections 1 and 2 of this Article in defending a civil or criminal action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges and expenses incurred by a director, officer or Division officer in his capacity as a director, officer or Division officer (and not in any other capacity in which service was or is rendered by such person while a director, officer or Division officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director, officer or Division officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director, officer or Division officer is not entitled to be 21 22 indemnified by the corporation as authorized in this Article. The Board of Directors may, in the manner set forth above, and upon approval of such director, officer or Division officer of the corporation, authorize the corporation's counsel to represent such person, in any action, suit or proceeding, whether or not the corporation is a party to such action, suit or proceeding. Section 6. Any indemnification under Sections 1, 2 and 3, or advance of costs, charges and expenses under Section 5 of this Article, shall be made promptly, and in any event within 60 days, upon the written request of the director, officer or Division officer. The right to indemnification or advances as granted by this Article shall be enforceable by the director, officer or Division officer in any court of competent jurisdiction, if the corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such persons' costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 5 of this Article where the required undertaking, if any, has been received by the corporation) that the claimant has not met the standard of conduct set forth in Sections 1 or 2 of this Article, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the 22 23 commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 or 2 of this Article, nor the fact that there has been an actual determination by the corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 7. The indemnification and advancement of costs, charges and expenses provided by this Article shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of costs, charges and expenses may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the corporation, and shall continue as to a person who has ceased to be a director, officer or Division officer as to actions taken while he was such a director, officer or Division officer, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Article shall be deemed to be a contract between the corporation and each director, officer or Division officer of the corporation who serves or served in such capacity at any time while this Article is in effect. Any repeal or modification of this Article or any repeal or modification of 23 24 relevant provisions of the Delaware General Corporation Law or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer or Division officer or the obligations of the corporation arising hereunder. Section 8. In addition to the specific indemnification provided for herein, the corporation shall indemnify each person who is or was or has agreed to become a director, officer or Division officer of the corporation, or is or was serving or has agreed to serve at the request of the corporation as a director, officer or Division officer of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent authorized or permitted (i) by the General Corporation Law of Delaware, or any other applicable law, or by any amendment thereof or other statutory provisions in effect on the date hereof, or (ii) by the corporation's Certificate of Incorporation as in effect on the date hereof. The corporation shall also advance expenses to any of the foregoing individuals to the fullest extent authorized or permitted (i) by the General Corporation Law of Delaware, or any other applicable law, or by any amendment thereof or other statutory provision in effect on the date hereof, or (ii) by the corporation's Certificate of Incorporation as in effect on the date hereof. Section 9. Notwithstanding the foregoing, the corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer or Division officer of the corporation, or is or was serving at the request of the corporation as a director, officer 24 25 or Division officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article. Section 10. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director, officer or Division officer of the corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. ARTICLE VII. Certificates for Shares Section 1. The corporation shall deliver certificates representing all shares to which stockholders are entitled; and such certificates shall be signed by the President or a Vice President, and the Secretary or an Assistant Secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. No certificate shall be issued for any share until the consideration therefor has been fully paid. Each certificate representing shares shall state upon the face thereof 25 26 that the corporation is organized under the laws of the State of Delaware, the name of the person to whom issued, the number and class and the designation of the series, if any, which such certificate represents, and the par value of each share represented by such certificate or a statement that the shares are without par value. Section 2. The signatures of the President or Vice President, and the Secretary or Assistant Secretary, upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of the issuance. Section 3. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the 26 27 corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. Section 5. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days, and, in case of a meeting of stockholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock transfer books are not closed and no record date is 27 28 fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of a dividend, or in order to make a determination of stockholders for any other proper purpose, the close of business on the day next preceding the day on which notice of the meeting of stockholders is given shall be the record date with respect to such meeting, and the close of business on the day on which the Board of Directors adopts a resolution declaring a dividend or with respect to any other proper purpose, as the case may be, shall be the record date for the determination of stockholders with respect thereto. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except where the determination has been made through the closing of stock transfer books and the stated period of closing has expired. Section 6. The corporation shall be entitled to recognize the exclusive rights of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. 28 29 ARTICLE VIII. General Provisions Section 1. The Board of Directors may declare and the corporation may pay dividends on its outstanding shares in cash, property, or its own shares pursuant to law and subject to the provisions of its Certificate of Incorporation. Section 2. The Board of Directors may by resolution create a reserve or reserves out of earned surplus for any purpose or purposes, and may abolish any such reserve in the same manner. Section 3. The Board of Directors must, when requested by the holders of at least one-third of the outstanding shares of the corporation, present written reports of the business and financial affairs of the corporation. Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate as provided in these bylaws. Section 5. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. Section 6. The corporate seal shall have inscribed thereon the name of the corporation and may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. ARTICLE IX. Amendments These Bylaws may be altered, amended or repealed at any regular or special meeting of, or by the unanimous written consent of, the Board of Directors. 29 EX-10.8 3 0003.txt SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES 1 EXHIBIT 10.8 SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES AS RESTATED EFFECTIVE JANUARY 1, 2000 ARTICLE I PURPOSE TRINITY INDUSTRIES, INC., a corporation organized and existing under the laws of the State of Delaware (hereinafter, the "Company"), hereby restates the SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES (hereinafter, the "Plan"), such restatement to be effective as of January 1, 2000; WITNESSETH: WHEREAS, the Company wishes to promote in certain of its highly compensated employees and those of its affiliates the strongest interest in the successful operation of the business and increased efficiency in their work, to align the financial interests of such employees with those of Company shareholders and to provide an opportunity for accumulation of funds for their retirement; and WHEREAS, it is intended that the Plan be "unfunded" for purposes of the Employee Retirement Income Security Act of 1974 (hereinafter, "ERISA") and not be construed to provide income to any participant or beneficiary under the Internal Revenue Code of 1986 (hereinafter, the "Code") prior to actual receipt of benefits hereunder; NOW, THEREFORE, the Company hereby agrees as follows: ARTICLE II DEFINITIONS, CONSTRUCTION, AND APPLICABILITY 2.01 Definitions The following words and phrases, when used herein, unless their context clearly indicates otherwise, shall have the following respective meanings: (a) ACCOUNT: A Participant's Compensation Reduction Contribution Account, Matching Contribution Account, Additional Matching Contribution Account and/or Discretionary Contribution Account, as the case maybe. 2 (b) ADDITIONAL MATCHING CONTRIBUTION: Any amount credited by an Employer for a Plan Year to a Participant pursuant to Section 4.01(c) hereof. (c) ADDITIONAL MATCHING CONTRIBUTION ACCOUNT: The account maintained for a Participant on the books of his Employer to which Additional Matching Contributions and adjustments related thereto are credited. (d) AFFILIATE: Any corporation (other than an Employer) which is included within a controlled group of corporations (as defined in Code Section 414(b)) which includes an Employer; any trade or business (other than an Employer), whether or not incorporated, which is under common control (as defined in Code Section 414(c)) with an Employer; any organization (other than an Employer), whether or not incorporated, which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes an Employer; and any other entity required to be aggregated with an Employer pursuant to regulations under Code Section 414(o). (e) ANNUAL INCENTIVE COMPENSATION: Any amount payable as an annual bonus to a Participant pursuant to the Company's incentive pay program. (f) AUTHORIZED LEAVE OF ABSENCE: Any absence authorized by an Employer under the Employer's standard personnel practices provided that all persons under similar circumstances must be treated alike in the granting of such Authorized Leaves of Absence and provided further that the Participant returns within the period of authorized absence. An absence due to service in the Armed Forces of the United States shall be considered an Authorized Leave of Absence provided that the absence is caused by war or other emergency, or provided that the Employee is required to serve under the laws of conscription in time of peace, and further provided that the Employee returns to employment with the Employer within the period provided by law. (g) AWARD COMPENSATION: All items taxable as the Participant's ordinary income under the Trinity Industries 1993 and 1998 Stock Option and Incentive Plans; provided that Award Compensation expressly shall not include income or gain attributable to incentive stock options awarded thereunder. (h) BASE COMPENSATION: All amounts payable to a Participant which constitute scheduled items of salary or wages. (i) BENEFICIARY: A person or persons (natural or otherwise) designated by a Participant in accordance with the provisions of Section 6.06 to receive any death benefit which shall be payable under this Plan. 2 3 (j) CHANGE IN CONTROL: A Change in Control shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred: (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (3) below; or (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on May 6, 1997, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on May 6, 1997, or whose appointment, election or nomination for election was previously so approved or recommended; or (3) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least sixty percent (60%) of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding securities; or (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or 3 4 disposition by the Company of all or substantially all of the Company's assets to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. For purposes of this paragraph: "Affiliate" shall have the meaning sect forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Section 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. (k) CODE: The Internal Revenue Code of 1986, as amended from time to time. (1) COMMITTEE OR PLAN COMMITTEE: The persons appointed under the provisions of Article VIII to administer the Plan. (m) COMPANY: TRINITY INDUSTRIES, INC., a corporation organized and existing under the laws of the State of Delaware, or its successor or successors. (n) COMPENSATION: Annual Incentive Compensation, Award Compensation and/or Base Compensation paid to a Participant. (o) COMPENSATION REDUCTION CONTRIBUTION: An amount credited by an Employer for the Plan Year to a Participant pursuant to Section 4.01(a) hereof. (p) COMPENSATION REDUCTION CONTRIBUTION ACCOUNT: The account maintained for a Participant on the books of his Employer to which Compensation Reduction Contributions and adjustments related thereto are credited. 4 5 (q) DISABILITY: A physical or mental condition which, in the judgment of the Committee, totally and presumably permanently prevents a Participant from engaging in any substantial or gainful employment. Determinations of Disability shall be made on the basis of standards applied uniformly to all Participants. (r) DISCRETIONARY CONTRIBUTIONS: Any amount credited by an Employer for the Plan Year to a Participant pursuant to Section 4.01(e) hereof. (s) DISCRETIONARY CONTRIBUTION ACCOUNT: The account maintained for a Participant on the books of his Employer to which Discretionary Contributions and adjustments related thereto are credited. (t) EFFECTIVE DATE: Except where otherwise indicated herein, January 1, 2000, the date on which the provisions of this amended and restated Plan become effective. (u) ELAPSED-TIME EMPLOYMENT: With respect to an Employee, the period beginning on his Employment Commencement Date (or Reemployment Commencement Date, as the case may be) and ending on the date of his Severance from Service. Such period shall be determined without regard to the actual number of Hours of Employment completed by the Employee during such period. Except to the extent otherwise permitted by the Committee in its sole discretion, Elapsed-Time Employment completed with an Affiliate or a Participating Employer prior to the date on which such Affiliate or Employer was included within a controlled group of corporations (as defined in Code Section 414(b)) which includes the Company shall not be recognized under this Plan. (v) EMPLOYEE: Any individual on the payroll of an Employer (i) whose wages from the Employer are subject to withholding for purposes of Federal income taxes and for purposes of the Federal Insurance Contributions Act, (ii) who is included within a "select group of management or highly compensated employees," as such term is used in Section 401(a)(l) of ERISA, and (iii) who is designated by the Plan Committee as eligible to participate in this Plan; provided that, under no circumstances shall an individual be an eligible Employee hereunder until the first day of the calendar quarter immediately following his Employment Commencement Date. (w) EMPLOYER or PARTICIPATING EMPLOYER: The Company and any Affiliate of the Company to the extent that an Employee of such Affiliate is a Participant hereunder. (x) EMPLOYMENT COMMENCEMENT DATE: The first date on which an Employee completes an Hour of Employment. (y) ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time. 5 6 (z) EXTENDED ABSENCE EMPLOYEE: An Employee who is absent from his Employer's employment solely because of (i) the Employee's pregnancy, (ii) the birth of the Employee's child, (iii) the placement of a child with the Employee in connection with the adoption of the child by the Employee, or (iv) the care of a child by the Employee during the period immediately following such child's birth to, or placement with, the Employee. (aa) FORFEITURES: The portion of a Participant's Matching Contribution Account, Additional Matching Contribution Account and Discretionary Contribution Account, if any, which is forfeited because of a Severance from Service before full vesting. (bb) HOUR OF EMPLOYMENT: Each hour (i) for which an Employee is on an Authorized Leave of Absence or is directly or indirectly paid or entitled to payment by his Employer for the performance of duties or for reasons other than the performance of duties, or (ii) for which back-pay has been agreed to by the Employer. Hours of Employment shall be determined from records maintained by each Employer; provided, however, that an Employer may elect to determine Hours of Employment for any classification of Employees which is reasonable, nondiscriminatory and consistently applied, on the basis that Hours of Employment include forty-five (45) Hours of Employment for each week or portion thereof during which an Employee is credited with one (1) Hour of Employment. Except to the extent otherwise permitted by the Committee in its sole discretion, Hours of Employment completed with an Affiliate or a Participating Employer prior to the date on which such Affiliate or Employer was included within a controlled group of corporations (as defined in Code Section 414(b)) which includes the Company shall not be recognized under this Plan. (cc) INITIAL EFFECTIVE DATE: July 1, 1990, the date on which the Prior Plan became effective. (dd) MATCHING CONTRIBUTION ACCOUNT: The account maintained for a Participant on the books of his Employer to which Matching Employer Contributions and adjustments related thereto are credited. (ee) MATCHING EMPLOYER CONTRIBUTION: Any amount credited by an Employer for a Plan Year to a Participant pursuant to Section 4.01(b) hereof. (ff) PARTICIPANT: An Employee participating in the Plan in accordance with the provisions of Section 3.01. (gg) PARTICIPATION: The period commencing on the date on which an Employee becomes a Participant and ending on the date on which the Employee incurs a Break in Service (as defined in Section 3.02(d)). 6 7 (hh) PLAN: The SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES AS RESTATED EFFECTIVE JANUARY 1,2000, the Plan set forth herein, as amended from time to time. (ii) PRIOR PLAN: The SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES, as in effect prior to the Effective Date. (jj) REEMPLOYMENT COMMENCEMENT DATE: The first date on which an Employee completes an Hour of Employment upon his return to the employment of the Employers after a Break in Service. (kk) SERVICE: A Participant's period of employment with the Employers determined in accordance with Section 3.02. (ll) SEVERANCE FROM SERVICE: With respect to an Employee, the later of (1) or (2), where-- (1) is the earlier of (i) the date on which he quits, or is discharged from, the employment of the Employers, or the date of his retirement or death, or (ii) the first anniversary of the first date of a period in which he remains absent from the employment of the Employers, with or without pay, for any reason other than one specified in (i), above, such as vacation, holiday, sickness, Authorized Leave of Absence or layoff; and (2) is, in the case of an Extended Absence Employee, the second anniversary of such Employee's absence. (mm) STOCK UNIT: A deemed share of Company common stock, more fully described in Section 5.04 hereof. (nn) TRUST (or TRUST FUND): The fund known as the TRINITY INDUSTRIES, INC. SUPPLEMENTAL PROFIT SHARING AND DEFERRED DIRECTOR FEE TRUST, maintained in accordance with the terms of the trust agreement, as from time to time amended, which constitutes a part of this Plan. (oo) TRUSTEE: The corporation, individual or individuals appointed to administer the Trust in accordance with the agreement governing the Trust. (pp) VALUATION DATE: The last day of each month (or if no Company stock is traded on such date, the immediately preceding trading date), and such other dates as the Committee in its discretion may prescribe. (qq) YEAR or PLAN YEAR: The twelve (12)-month period ending on March 31 of each year. 7 8 2.02 Construction The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular provision or Section. 2.03 Applicability The provisions of this Plan shall apply only to a Participant who terminates employment on or after the Effective Date. In the case of a Participant who terminates employment prior to the Effective Date, the rights and benefits, if any, of such former Employee shall be determined in accordance with the provisions of the Prior Plan, as in effect on the date on which his employment terminated. ARTICLE III PARTICIPATION AND SERVICE 3.01 Participation An Employee who was a Participant under the Prior Plan shall continue as a Participant under this Plan, to the extent provided hereunder. All references hereunder to such Participant's "compensation reduction agreement" shall include his salary reduction agreement executed under the Prior Plan. An individual classified as an Employee under Section 2.01(v) hereof shall become a Participant in this Plan on the first day of (i) the month on or immediately following such classification or (ii) any of his taxable years thereafter, provided that, prior to such date, he shall first have undertaken the actions specified in Section 3.03 hereof. An active Participant who incurs a Severance from Service and who is subsequently reemployed by an Employer shall reenter the Plan as an active Participant on his Reemployment Commencement Date or the first day of any of his next following taxable years, but only if (i) he continues to qualify as an Employee within the meaning of Section 2.01(v) hereof and (ii) prior to such date he shall have again undertaken the actions specified in Section 3.03 hereof. In the event that a Participant shall cease to qualify as an Employee within the meaning of Section 2.01(v) hereof, his Participation shall thereupon cease but he shall continue to accrue Service hereunder during the period of his continued employment with the Employers. Any provisions of this Plan to the contrary notwithstanding, effective on and after the date of a Change in Control, the term "Participant" shall be limited to those individuals who satisfy the requirements set forth for participation in this Plan and who were Participants in this Plan as of the date immediately prior to the date of such Change in Control. 8 9 3.02 Service The amount of benefit payable to or on behalf of a Participant shall be determined on the basis of his period of Service, in accordance with the following: (a) In General. Subject to the Break in Service provisions of paragraph (d) of this Section, an Employee's Service shall equal the total of his Elapsed-Time Employment. Service shall be counted in years and completed days. (b) Transfers from Affiliates. In the event that an Employee who at any time was employed by an Affiliate either commences employment with a Participating Employer, or returns to the employment of a Participating Employer, then, except as otherwise provided below, such Employee shall receive Service with respect to the period of his employment with such Affiliate (to the extent not credited under paragraph (c) of this Section). In applying the provisions of the preceding sentence-- (1) except to the extent otherwise permitted by the Committee in its sole discretion, such Employee shall not receive Service with respect to any period of employment with such Affiliate completed prior to the date on which such Affiliate became an Affiliate; (2) the amount of such Service shall be determined in accordance with paragraph (a) of this Section, as if such Affiliate were a Participating Employer; and (3) if such Employee incurs a Break in Service (as defined in paragraph (d) of this Section and determined as if such Affiliate were a Participating Employer) prior to his commencement of employment with the Participating Employer or return to the employment of the Participating Employer, then the amount of such Employee's Service attributable to the period of his employment with such Affiliate shall be determined in accordance with paragraph (d) of this Section. (c) Transfers to Affiliate. In the event that a Participant who at any time was employed by a Participating Employer either commences employment with an Affiliate, or returns to the employment of an Affiliate, then, except as otherwise provided below, such Participant shall receive Service with respect to the period of his employment with such Affiliate (to the extent not credited under paragraph (b) of this Section). In applying the provisions of the preceding sentence-- (1) the amount of such Service shall be determined in accordance with paragraph (a) of this Section, as if such Affiliate were a Participating Employer, and (2) if such Participant incurs a Break in Service (as defined in paragraph (d) of this Section and determined as if such Affiliate were a Participating Employer) prior to his commencement of employment with the Affiliate or return to the employment of the Affiliate, then 9 10 the amount of such Participant's Service attributable to his prior period of employment with the Participating Employer shall be determined in accordance with paragraph (d) of this Section. (d) Break in Service. An Employee who incurs a Severance from Service and who fails to complete at least one (1) Hour of Employment during the twelve (12)-month period beginning on the date of such Severance from Service shall have a Break in Service. If, during the twelve (12)-month period beginning on the date of an Employee's Severance from Service, the Employee shall return to the employment of a Participating Employer by completing at least one (1) Hour of Employment within such twelve (12)-month period, then such Employee will not have a Break in Service and shall receive Service for the period beginning on the date of his Severance from Service and ending on the date of his reemployment; provided, however, that in the case of an Employee who is absent from the employment of the Participating Employers for a reason specified in Section 2.01(ll)(1)(ii) hereof and who, prior to the first anniversary of the first date of such absence, incurs a Severance from Service for a reason specified in Section 2.01(ll)(1)(i) hereof, such Employee shall receive Service only if he completes at least one (1) Hour of Employment within the twelve (12)-month period beginning on the first date of such absence and shall receive such Service only for the period beginning on the first day of such absence and ending on the date of his reemployment. Upon incurring a Break in Service, an Employee's rights and benefits under the Plan shall be determined in accordance with his Service at the time of the Break in Service. For a Participant who, at the time of a Break in Service, satisfied any requirements of this Plan for vested benefits, his pre-break Service shall, upon his Reemployment Commencement Date, be restored in determining his rights and benefits under the Plan. For an Employee who, at the time of a Break in Service, had not fulfilled such requirements, periods of pre-break Service shall, upon his Reemployment Commencement Date, be restored only if the consecutive periods of Break in Service were less than the greater of (i) sixty (60) months or (ii) the total period of pre-break Service. (e) Special Rule for Participants After Initial Eligibility Date. Notwithstanding the preceding provisions of this Section 3.02, the Elapsed-Time Employment and Service of any Participant who failed to elect to participate hereunder pursuant to Section 3.03 hereof prior to the date on which he was first eligible to do so pursuant to Section 3.01 hereof shall be determined as if his Employment Commencement Date were the later of (i) the Initial Effective Date or (ii) the date on which he first completes an Hour of Employment. In addition, in the case of a Participant who was not employed by an Employer on the Initial Effective Date but was so employed prior to such date, such prior period of employment will not, under any circumstances, be treated as Service unless such Participant elects to participate hereunder pursuant to such Section 3.03 prior to the date on which he was first eligible to do so pursuant to such Section 3.01. (f) Special Rule for Extended Absence Employees. Notwithstanding the preceding provisions of this Section 3.02, in the case of an Extended 10 11 Absence Employee, the period between the first and second anniversaries of such Employee's absence shall, under no circumstances, be treated as a period of Service. 3.03 Election to Participate In order to participate hereunder, an Employee, otherwise eligible to participate pursuant to Section 3.01 hereof, must, after having received a written explanation of the terms of and the benefits provided under the Plan, elect to participate in such Plan on such form or forms as the Committee may provide and must execute a compensation reduction agreement described in Section 4.02 hereof. Such election to participate and execution of a compensation reduction agreement shall be effected on any date on or prior to the applicable date specified in such Section 3.01 for the commencement of Participation and, in all events, prior to the completion of services for which amounts subject to the compensation reduction agreement would otherwise have been paid to such Employee. 3.04 Transfer An Employee who is transferred between Participating Employers shall be as eligible for Participation and benefits as in the absence of such transfer. ARTICLE IV CONTRIBUTIONS AND FORFEITURES 4.01 Employer Contributions Employers shall credit Participant accounts in accordance with the following: (a) Compensation Reduction Contribution. For each Year, each Employer shall credit the Compensation Reduction Contribution Account of each of its Employees participating in the Plan with an amount agreed to be credited by such Employer pursuant to a compensation reduction agreement entered into between the Employer and the Participant for such Year, as provided in Section 4.02; provided that if such Participant is also a participant in the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates, such Participant must first have elected to contribute the maximum permissible salary reduction contribution for the Year to his salary reduction contribution account under such Profit Sharing Plan, with such maximum permissible amount to be determined by reference to all applicable limitations of (i) Code Section 401, (ii) the provisions of such Profit Sharing Plan and (iii) other applicable law. Such compensation reduction agreement shall include a separate deferral election for each of the following types of Compensation: (i) Base Compensation; (ii) Annual Incentive Compensation; and (iii) Award Compensation. 11 12 (b) Matching Employer Contribution. For each Year, each Employer shall credit a Matching Employer Contribution amount in the form of Stock Units to each of its Employees for whom an amount was credited pursuant to paragraph (a) of this Section 4.01; provided, however, that no such Matching Employer Contribution shall be credited prior to the date on which such Employee completes one (1) year of Service. Such Matching Employer Contribution, when added to the Forfeitures which have become available for application as of the end of the Year pursuant to Section 4.03 hereof, shall be equal to a percentage of that portion of the Participant's Compensation Reduction Contribution for such Year pursuant to Section 4.02 hereof which does not exceed six percent (6%) of his Base Compensation plus Annual Incentive Compensation for such Year, based on his years of Service as follows:
Years of Service Applicable Percentage ---------------- --------------------- Less than 1 0% 1 but less than 2 25% 2 but less than 3 30% 3 but less than 4 35% 4 but less than 5 40% 5 or more 50%
(c) Additional Matching Contribution. For each Year, each Employer shall credit an additional amount in the form of Stock Units to each of its Employees for whom an amount was credited pursuant to paragraph (a) of this Section 4.01, which when added to the Forfeitures which have become available for application as of the end of the Year pursuant to Section 4.03 hereof and which have not been applied as provided in paragraph (b) of this Section, shall be equal to seventeen and one-half percent (17 1/2%) of that portion of the Participant's Compensation Reduction Contribution for such Year pursuant to Section 4.02 hereof which is invested or deemed invested in Stock Units pursuant to Section 5.02(a) hereof up to twenty-five percent (25%) of the sum of his Base Compensation and Annual Incentive Compensation for such Year. (d) Limitations on Matching Contributions. Except in the case of a Participant who "retires" (as defined in the Trinity Industries, Inc. Standard Pension Plan), dies or incurs a Disability during a Year, no Matching Employer Contributions shall be credited to a Participant for a Year unless such Participant is actively employed by an Employer on the last day of such Year. In addition, no Matching Employer Contributions or Additional Matching Contributions shall be credited to Participants for a Year unless the Company's earnings per share for such Year are sufficient to cover dividends to stockholders; provided that in no event will a Matching Employer Contribution or Additional Matching Contribution be made if the Company's net profits for such Year are less than Thirty-Three and one-third Cents ($.33-1/3) per share. In addition, and notwithstanding paragraph (b) of this Section, the amount of Matching Employer Contribution credited to a Participant for a Year under this Plan shall be reduced by the amount of any matching contribution credited to the 12 13 Participant for such Year under the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates. (e) Discretionary Contributions. In addition to the contributions described above, for each Year an Employer may, but shall not be required to, credit the Discretionary Contribution Account of any one or more Participants in its employ during such Year with such amounts in the form of Stock Units or otherwise as the Employer may determine in its sole discretion. 4.02 Participant Compensation Reduction (a) General. Prior to commencement of Participation hereunder, a Participant shall have entered into a written compensation reduction agreement with his Employer. The terms of such compensation reduction agreement shall provide that the Participant agrees to accept a reduction in Compensation from the Employer. In consideration of such agreement, the Employer will credit the Participant's Compensation Reduction Contribution Account for each Year with an amount equal to the total amount by which the Participant's Compensation from the Employer was reduced during the Year pursuant to the compensation reduction agreement. (b) Election Requirements. Compensation reduction agreements shall be further governed by the following: (1) A compensation reduction agreement shall specify the types of Compensation to which it will apply and shall be effective during the period in which it is on file with the Participant's Employer, but in no event shall be effective to (i) reduce Award Compensation which is attributable to the exercise of nonqualified stock options, the lapse of all restrictions on a grant of restricted stock, the exercise of stock appreciation rights or the payment of dividend equivalent rights and which is payable during the six (6) month period immediately following the date of execution of the agreement; or (ii) reduce payments of Base Compensation, Annual Incentive Compensation or other types of Award Compensation for services completed on or before the date on which such compensation reduction agreement is received by the Corporate Benefits department of the Company. (2) A compensation reduction agreement shall have been entered into by a Participant on or prior to commencement of Participation hereunder and shall remain in effect until terminated or amended by the Participant in accordance with the procedures set forth herein. Any amendment or termination of a compensation reduction agreement shall not be effective until the first day of the Participant's taxable year immediately following the taxable year of the Participant in which an election so to amend or terminate is executed by the Participant and his Employer and must be received by the Corporate Benefits department of the Company at least fifteen (15) days prior to the end of the taxable year of execution. If a Participant 13 14 terminates his compensation reduction agreement as hereinabove provided, then he may elect to enter into another compensation reduction agreement to be effective as of the first day of any of his taxable years following his taxable year in which such termination was first effective, provided that written notice of such election must be received by the Corporate Benefits department of the Company at least fifteen (15) days prior to such effective date. Notwithstanding the preceding provisions of this subparagraph (2), to the extent that a compensation reduction agreement reduces Award Compensation described in subparagraph (1)(i) of this paragraph (b), such agreement shall at all times be irrevocable. 4.03 Forfeitures If, upon a Severance from Service, a Participant is not entitled to a distribution of the entire balance in his Matching Contribution Account, Additional Matching Contribution Account and/or Discretionary Contribution Account, then the amount to which the Participant is not entitled shall become a Forfeiture and shall be deducted from the Participant's Accounts at such time. The portion of the Participant's Accounts which is not a Forfeiture shall continue to be adjusted as provided in Section 5.03(a) until it is distributed in full. The Participant shall receive a distribution of the nonforfeitable portion of his Accounts pursuant to Article VI. ARTICLE V ALLOCATIONS TO PARTICIPANTS' ACCOUNTS 5.01 Individual Accounts The Committee shall create and maintain adequate records to disclose the interest hereunder of each Participant, Former Participant and Beneficiary. Such records shall be in the form of individual accounts and credits and charges shall be made to such accounts in the manner herein described. When appropriate, a Participant shall have up to four separate Accounts, a Compensation Reduction Contribution Account, a Matching Contribution Account, an Additional Matching Contribution Account, and a Discretionary Contribution Account. 5.02 Investment of Accounts (a) Participant Election. The Committee shall credit each Participant's Accounts with earnings or losses according to the hypothetical investment selections made by the Participant pursuant to his participation agreement executed pursuant to Section 3.03 hereof. The Committee shall adopt rules concerning the manner in which a Participant may elect to change his hypothetical investment selections; provided that a Participant shall be permitted to do so no less frequently than as of the first day of each month; provided further, that a Participant may not change the hypothetical election which applies to any portion of his Accounts that is invested or deemed to be invested in Stock Units. The earnings or losses attributable to a Participant's Accounts shall be determined as if the amounts credited to such Accounts 14 15 were actually invested in Stock Units, to the extent required or elected hereunder, and, to the extent not so required or elected, in the hypothetical investments selected under the Participant's participation agreement. In the case of a Participant receiving installment payments under Article VI hereof, the Participant's Accounts will continue to receive allocations of earnings or losses in accordance with this subsection until his Accounts are paid in full. If a Participant's participation agreement fails to designate one or more hypothetical investment selections, the Participant's Account will be deemed invested in Stock Units, to the extent required hereunder, and, to the extent not so required, in the investment option designated as having the least investment risk. (b) Investment Options. The Committee shall have sole and absolute discretion with respect to the number and types of investment options made available for selection by Participants pursuant to this Section, the timing of Participant elections and the method by which adjustments are made. The Committee may in its sole discretion refuse to recognize Participant elections that it determines may cause the Participant's Accounts to become subject to the short-swing profit provisions of Section 16b of the Securities Exchange Act of 1934 and establish special election procedures for Participants subject to Section 16 of such Act. The Committee shall permit Participants to designate that their investments be treated as invested in (i) Stock Units or (ii) one or more investment indices; provided that amounts credited on or after the Effective Date to a Participant's Matching Contribution Account or Additional Matching Contribution Account shall at all times be invested in Stock Units; provided further that Compensation Reduction Contributions made on or after the Effective Date of Award Compensation shall at all times be invested in Stock Units. The designation of investment options by the Committee shall be for the sole purpose of adjusting Accounts pursuant to this Section and, except to the extent that investment in Stock Units is required hereunder, the provisions of this Article V shall not obligate the Company or any of the Employers to invest or set aside any assets for the payment of benefits hereunder; provided, however, that the Company or an Employer may invest a portion of its general assets in investments, including investments which are the same as or similar to the investment indices designated by the Committee and selected by Participants, but any such investments shall remain part of the general assets of the Company or such Employer and shall not be deemed or construed to grant a property interest of any kind to any Participant, designated Beneficiary or estate. The Committee shall notify the Participants of the investment indices available and the procedures for making and changing elections. (c) Non-Binding Status of Elections. A Participant's hypothetical investment selections pursuant to the immediately preceding paragraph shall be made solely for purposes of crediting earnings and/or losses to his Accounts under Section 5.03 of this Plan. The Committee shall not, in any way, be bound to actually invest any amounts set aside pursuant to Article VII below to satisfy its obligations under this Plan in accordance with such selections. 15 16 5.03 Account Adjustments The accounts of Participants, Former Participants and Beneficiaries shall be adjusted in accordance with the following: (a) Valuation Adjustments. As of each Valuation Date, the amount credited to a Participant's Accounts as of the preceding Valuation Date, less any distributions or Forfeitures with respect to such Accounts since such preceding Valuation Date, shall be adjusted by reference to the fluctuations in value, taking into account gain, loss, expenses and other adjustments, of the investments selected by the Participant for the investment adjustment of his or her Accounts, with such adjustments to be made in the manner prescribed by the Committee. Following such adjustment, the amounts credited to a Participant's Accounts shall be increased to take into account additional deferrals and contributions credited to such Accounts since the preceding Valuation Date. (b) Compensation Reduction Contributions. The amount credited pursuant to Section 4.01(a) hereof for a Year as a Compensation Reduction Contribution shall be allocated to the Participant's Compensation Reduction Contribution Account as of the date on which such Compensation Reduction Contribution would otherwise have been paid to the Participant as Compensation. (c) Matching Contributions. Any Stock Units credited to a Participant by an Employer pursuant to Section 4.01(b) or (c) during a Year shall be allocated, as the case may be, to the Participant's Matching Contribution Account or the Participant's Additional Matching Contribution Account at such time as may be determined by the Employer in its absolute discretion, but no earlier than the last day of such Year. (d) Discretionary Contributions. Any amounts credited to a Participant by an Employer pursuant to Section 4.01(e) during a Year shall be allocated to the Participant's Discretionary Contribution Account at the time determined by the Employer in its absolute discretion. 5.04 Stock Units (a) General. For purposes of calculating the number of Stock Units credited or deemed credited to a Participant's Accounts pursuant to Section 5.03 (b) or (d), the price of a Stock Unit shall be equal to one hundred percent (100%) of the closing price on the New York Stock Exchange of a share of the Company's common stock on the date on which the Stock Units are credited or deemed credited to the Participant's Accounts (or if no shares of the Company's common stock are traded on such date, on the immediately preceding trading date). For purposes of calculating the number of Stock Units credited to a Participant's Accounts pursuant to Section 5.03 (c), the price of a Stock Unit shall be equal to one hundred percent (100%) of the average daily closing price on the New York Stock Exchange of a Share of the Company's common stock for the Year with respect to which the Stock Units are credited to the Participant's Accounts, 16 17 provided that for Stock Units credited with respect to the Year ending March 31, 2000, such average daily closing price shall be calculated for the period beginning on January 1, 2000 and ending on such March 31, 2000. (b) Voting Rights. A Participant shall not be entitled to any voting rights with respect to the Stock Units credited or deemed credited to his Accounts. (c) Dividends. To the extent that a dividend is paid on the Company's common stock, the Committee shall credit to the Accounts of each Participant whose Accounts are invested or deemed invested in Stock Units an amount equal to the value of such dividends. Such amounts shall be credited to the Participant's Accounts in the form of additional Stock Units at a price equal to one hundred percent (100%) of the closing price on the New York Stock Exchange of a share of the Company's common stock on the date on which such dividend is paid (or if no shares of the Company's common stock are traded on such date, on the immediately preceding trading date). (d) Dilution and Other Adjustments. In the event of any change in the outstanding shares of common stock of the Company by reason of any stock dividend, split, spin-off, recapitalization, merger, consolidation, combination, extraordinary dividend, exchange of shares or other similar change, the Committee shall adjust the number or kind of Stock Units then allocated or deemed allocated to the Participants' Accounts as follows: (1) Subject to any required action by stockholders, the number of Stock Units shall be proportionately adjusted for any increase or decrease in the number of issued shares of the Company's common stock resulting from (i) a subdivision or consolidation of shares, (ii) the payment of a stock dividend or (iii) any other increase or decrease in the number of shares effected without receipt of consideration by the Company. (2) In the event of a change in the shares of the Company's common stock as presently constituted, which is limited to a change of par value into the same number of shares with a different par value or without par value, the shares of the Company's common stock resulting from any such change shall be deemed to be the shares of common stock within the meaning of this Plan. Any adjustments made by the Committee pursuant to this Section 5.04 shall be final, binding, and conclusive. Except as hereinbefore provided in this Section 5.04, a Participant to whose Account Stock Units are allocated shall have no rights by reason of (i) any subdivision or consolidation of the Company's stock or securities, (ii) the payment of any stock dividend or (iii) any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, reorganization, merger, or consolidation or spinoff of assets or stock of another corporation, and any issuance by the Company of additional shares of stock (of any class), or securities 17 18 convertible into shares of stock (of any class), shall not affect the number of Stock Units allocated to such Participant's Accounts under this Plan. ARTICLE VI DISTRIBUTION OF BENEFITS 6.01 General Within thirty (30) days following the termination of a Participant's employment, the Committee (i) shall certify to the Trustee or the Treasurer of the Employer, as applicable, the total amount of the allocations to the credit of the Participant on the books of each Employer by which the Participant was employed at a time when amounts were credited by such Employer to his Accounts and the Participant's nonforfeitable interest in such Accounts, and (ii) shall determine whether the payment of the amounts credited to the Participant's Accounts under the Plan is to be paid directly by the applicable Employer, from the Trust Fund, or by a combination of such sources (except to the extent that the provisions of the Trust specify payment from the Trust Fund). 6.02 Payments of Benefits Payment of the nonforfeitable portion of the amounts credited to a Participant's Accounts shall be made in accordance with the following provisions: (a) Death, Disability or Retirement. Payments made with respect to a Participant's termination of employment on account of death, Disability or "retirement" (as defined in the Trinity Industries, Inc. Standard Pension Plan), shall be made in such form as the Participant may elect from the following alternatives: (1) In a lump sum; (2) In annual periodic payments for a specified number of years, not in excess of 20, with the first payment to be made no later than the sixtieth (60th) day following the date on which the Participant's termination of employment occurs and subsequent payments to be made in the same calendar quarter of each succeeding year, where the payment made during each year shall be in an amount equal to a fraction of the Participant's Account balances as of the last day of the calendar quarter preceding the calendar quarter in which the payment is made, and where such fraction for each payment shall be one (1) divided by the number of payments remaining (including the current payment), and in which event the unpaid balance shall continue to be adjusted as provided in Section 5.03(a) until it is distributed in full; or (3) In any combination of the methods specified in subparagraphs (1) or (2) of this paragraph (a). 18 19 Any election pursuant to this paragraph (a) must be made prior to the date on which such Employee's Participation hereunder first commences, with all payments to be made in the form of a lump sum in the absence of a timely election and, except as expressly provided otherwise in this Plan, shall be irrevocable; provided, however, that a Participant may change such election once during any Year, with the new election to be effective for a distribution arising from termination of employment of the Participant only if such distribution is to be made or commence for more than twelve (12) months after the date of the new election. The Committee shall, as of the last day of the calendar quarter within which the Participant terminates employment, certify to the Trustee or the Treasurer of the Employer, as applicable, the method of payment selected by the Participant. (b) Termination of Employment. Payments with respect to a Participant's termination of employment for reasons other than death, Disability or "retirement" (as defined in the Trinity Industries, Inc. Standard Pension Plan) shall be made in the form of a lump sum. (c) Prior Plan Elections. Notwithstanding the preceding provisions of this Section 6.02 and with respect to an Employee who became a Participant in the Prior Plan before the Effective Date, such Participant's election with respect to the form of payment made pursuant to the provisions of the Prior Plan shall remain in effect unless changed by the Participant in the manner and to the extent described in paragraph (a) above. (d) Timing. Payment of amounts credited to a Participant's Accounts must be made or commence by no later than the sixtieth (60th) day following the date on which the Participant's termination of employment occurs. The Trustee (to the extent provided in the Trust) or the Treasurer of the Employer, as applicable, shall thereafter make payments of benefits in the manner and at the times specified above, subject, however, to all of the other terms and conditions of this Plan and the Trust. This Plan shall be deemed to authorize the payment of all or any portion of a Participant's benefits from the Trust Fund to the extent such payment is required by the provisions of the Trust. Payments shall be made in cash or, to the extent that any amount to be distributed has been invested or deemed invested in Stock Units, in common stock of the Company; provided that any amount invested or deemed invested in fractional shares shall, in all events, be paid in cash. 6.03 Vesting of Benefits (a) Death or Disability. If a Participant's termination of employment is attributable to his death or Disability, he shall be entitled to the entire amount then credited to his Accounts. (b) Termination of Employment. (1) Compensation Reduction Contribution Account. If a Participant's termination of employment is not attributable to his death or Disability, he shall be entitled to the entire amount then credited to his Compensation Reduction Contribution Account. 19 20 (2) Additional Matching Contribution Account. If a Participant's termination of employment is not attributable to his death or Disability, he shall be entitled to amounts credited to his Additional Matching Contribution Account to the extent that there have elapsed at least two (2) Plan Years following the end of the Plan Year for which the Additional Matching Contribution was made; provided, however, that if the Participant terminates employment by reason of retirement on or after age sixty-five (65), the Committee may, in its sole discretion, authorize a distribution of the entire amount credited to his Additional Matching Contribution Account; provided, further, that if such termination of employment occurs on or after a Change in Control, the Participant shall be entitled to the entire amount credited to his Additional Matching Contribution Account. (3) Other Accounts. If a Participant's termination of employment is not attributable to his death or Disability, he shall be entitled to a "vested percentage" of the amounts credited to his Matching Contribution Account and Discretionary Contribution Account, if any, based on his years of Service as follows:
Vested Forfeited Years of Service Percentage Percentage ----------------- ---------- ---------- Less than 1 0% 100% 1 but less than 2 20% 80% 2 but less than 3 40% 60% 3 but less than 4 60% 40% 4 but less than 5 80% 20% 5 or more 100% 0%
; provided, however, that if the Participant terminates employment by reason of retirement on or after age sixty-five (65), the Committee may, in its discretion, authorize up to full vesting of the entire amount credited to such Accounts; provided, further, that if such termination of employment occurs on or after a Change in Control, the Participant shall under all circumstances be entitled to the entire amount credited to such Accounts. Notwithstanding the preceding provisions of this subparagraph (3), for amounts credited to a Participant's Matching Contribution Account and Discretionary Contribution Account, if any, pursuant to the terms of the Prior Plan, if the Participant's termination of employment is attributable to retirement on or after age sixty-five (65), he shall under all circumstances be entitled to one hundred percent (100%) of such amounts. (d) Amount Credited. For purposes of this Section, the amount credited to a Participant's Accounts at termination of employment shall include any amounts to be credited pursuant to Section 4.01 hereof for the Year of termination of employment but not yet allocated. 20 21 6.04 Death If a Participant shall die while in the service of an Employer, or after termination of employment with the Employers and prior to the complete distribution of all amounts payable to him under the Plan, any remaining amounts payable to the Participant hereunder shall be payable to his Beneficiary. The Committee shall cause the Trustee (to the extent provided in the Trust) or the Treasurer of the Employer, as applicable, to pay to such Beneficiary all of the amounts then standing to the credit of the Participant in his Accounts, with such payment to be made at the time and in the manner specified in Section 6.02 hereof. 6.05 Plan Termination If the Plan is terminated pursuant to the provisions of Article X hereof, the Committee shall cause the Trustee or the Treasurer of the Employer, as applicable, to pay to all Participants all of the amounts then standing to their credit, with payment to be made at the time and in the manner specified in Section 6.02 hereof; provided, however, that if the Plan is terminated on or after a Change in Control, payment shall be made in the form of a lump sum which shall be paid no later than sixty (60) days following the date on which the Plan termination occurs, or, if elected by the Participant at least one full year prior to the date on which payment otherwise would have been made upon termination of the Plan, payment may be made in the form of five annual installments, with the first installment to be made no later than sixty (60) days following the date on which the termination occurs and the remaining installments to be paid no later than the last day of February of the next four successive calendar years. Each installment shall be in an amount equal to a fraction of the total balance in the Participant's Accounts as of the end of the immediately preceding calendar quarter, where the fraction shall be one (1) divided by the number of installments remaining to be paid (including the current installment), and where the unpaid balance shall continue to be adjusted as provided in Section 5.03(a) until it is distributed in full. 6.06 Designation of Beneficiary Each Participant from time to time may designate any person or persons (who may be designated contingently or successively and who may be an entity other than a natural person) as his Beneficiary or Beneficiaries to whom his Plan benefits are paid if he dies before receipt of all such benefits. Each Beneficiary designation shall be on a form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. Each Beneficiary designation filed with the Committee will cancel all Beneficiary designations previously filed with the Committee. The revocation of a Beneficiary designation, no matter how effected, shall not require the consent of any designated Beneficiary. If any Participant fails to designate a Beneficiary in the manner provided herein, or if the Beneficiary designated by a deceased Participant dies before him or before complete distribution of the Participant's benefits, the Committee, in its sole discretion, may direct the Trustee to distribute such Participant's benefits (or the balance thereof) to his surviving spouse or to either: 21 22 (a) any one or more of the next of kin of such Participant, and in such proportions as the Committee determines; or (b) the estate of the last to die of such Participant and his Beneficiary or Beneficiaries. 6.07 In-Service Distributions No amounts credited to a Participant's Accounts shall be distributed to or on behalf of the Participant prior to the occurrence of one of the events specified in the provisions of this Article VI except as follows: (a) A distribution may be made to or on behalf of the Participant to the extent that the Committee, in its sole discretion, consents to such distribution upon a showing, by the Participant, of an unforeseeable emergency. For this purpose, an "unforeseeable emergency" is defined as severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute an unforeseeable emergency will depend on the facts of each case, but payment may not be made to the extent that such hardship is or may be relieved--(i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant's assets, to the extent that the liquidation of such assets would not itself cause severe financial hardship, or (iii) by cessation of deferrals under the Plan. (b) A lump sum distribution may be made to or on behalf of a Participant at any time, but no more often than once during any Year, of an amount equal to at least 25% of the Participant's nonforfeitable Account balances, and in such proportions from each such Account as the Participant may request; provided, however, that (i) an amount equal to 10% of the amount distributed from the Accounts of a Participant pursuant to this paragraph shall be forfeited in the same proportion from such Accounts at the time of the distribution so that the amount distributed to the Participant pursuant to this paragraph shall never exceed the amount of the Participant's nonforfeitable Account balances minus the amount so forfeited, and (ii) the compensation reduction agreement of any Participant who receives a distribution pursuant to this paragraph shall be suspended for one full year from the date of such distribution. 6.08 Designated Distributions Prior to the beginning of a calendar year, a Participant may elect that all or any portion of the amount of any Compensation Reduction Contribution to be credited to the Participant's Compensation Reduction Contribution Account during such calendar year, be distributed to or on behalf of the Participant in the form of a lump sum in a subsequent calendar year designated by the Participant, which subsequent calendar year shall not be earlier than the third calendar year following the calendar 22 23 year for which the election is made. The distribution shall be made no later than March 31 of the designated year. In the event of the Participant's termination of employment for any reason prior to the designated year, the election shall be void and of no effect. ARTICLE VII NATURE OF PLAN; FUNDING 7.01 No Trust Required The adoption of this Plan and any setting aside of amounts by the Employers with which to discharge their obligations hereunder shall not be deemed to create a trust; legal and equitable title to any funds so set aside shall remain with the Employers, and any recipient of benefits hereunder shall have no security or other interest in such funds. Any and all funds so set aside shall remain subject to the claims of the general creditors of the Employers, present and future. This provision shall not require the Employers to set aside any funds, but the Employers may set aside funds if they choose to do so. 7.02 Funding of Obligation Section 7.01 above to the contrary notwithstanding, the Employers may elect to transfer assets to the Trust, the provisions of which shall at all times require the use of the Trust's assets to satisfy claims of an Employer's general unsecured creditors in the event of such Employer's insolvency and direct that no Participant shall at any time have a prior claim to such assets. The assets of the Trust shall not be deemed to be assets of this Plan. ARTICLE VIII ADMINISTRATION 8.01 Appointment of Committee The Board of Directors of the Company shall appoint a Plan Committee to administer, construe and interpret the Plan. Such Committee, or such successor Committee as may be duly appointed by such Board of Directors, shall serve at the pleasure of the Board of Directors. All usual and reasonable expenses of the Committee shall be paid by the Employers. Decisions of the Committee with respect to any matter involving the Plan shall be final and binding on the Company, its shareholders, each Employer and all officers and other executives of the Employers. For purposes of ERISA, the Committee shall be the Plan "administrator" with respect to the general administration of the Plan. 8.02 Duties of Committee The Committee shall maintain complete and adequate records pertaining to the Plan, including but not limited to Participants' Accounts, amounts transferred to the Trust, reports from the Trustee and all other records that shall be necessary or desirable in 23 24 the proper administration of the Plan. The Committee shall furnish the Trustee such information as is required to be furnished by the Committee or the Company pursuant to the Trust. The Committee may employ such persons or appoint such agents to assist it in the performance of its duties as it may deem appropriate. If a member of the Committee is a Participant hereunder, such Committee member shall be precluded from participation in any decision relative to his benefits under the Plan. 8.03 Indemnification of Committee The Company (the "Indemnifying Party") hereby agrees to indemnify and hold harmless the members of the Committee (the "Indemnified Parties") against any losses, claims, damages or liabilities to which any of the Indemnified Parties may become subject to the extent that such losses, claims, damages or liabilities or actions in respect thereof arise out of or are based upon any act or omission of the Indemnified Party in connection with the administration of this Plan (other than any act or omission of such Indemnified Party constituting gross negligence or willful misconduct), and will reimburse the Indemnified Party for any legal or other expenses reasonably incurred by him or her in connection with investigating or defending against any such loss, claim, damage, liability or action. Promptly after receipt by the Indemnified Party of notice of the commencement of any action or proceeding with respect to any loss, claim, damage or liability against which the Indemnified Party believes he or she is indemnified, the Indemnified Party shall, if a claim with respect thereto is to be made against the Indemnifying Party, notify the Indemnifying Party in writing of the commencement thereof; provided, however, that the omission so to notify the Indemnifying Party shall not relieve it from any liability which it may have to the Indemnified Party to the extent the Indemnifying Party is not prejudiced by such omission. If any such action or proceeding shall be brought against the Indemnified Party, and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to the Indemnified Party, and, after notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation or reasonable expenses of actions taken at the written request of the Indemnifying Party. The Indemnifying Party shall not be liable for any compromise or settlement of any such action or proceeding effected without its consent, which consent will not be unreasonably withheld. 8.04 Unclaimed Benefits During the time when a benefit hereunder is payable to any Participant or Beneficiary, the Committee may, at its own instance, mail by registered or certified mail to such Participant or Beneficiary, at his last known address, a written demand for his then address, or for satisfactory evidence of his continued life, or both. If such information is not furnished to the Committee within twelve (12) months from the mailing of such demand, then the Committee may, in its sole discretion, declare such benefit, or any unpaid portion thereof, suspended, with the result that such 24 25 unclaimed benefit shall be treated as a Forfeiture for the Year with or within which such twelve (12)-month period ends, but shall be subject to restoration through an Employer contribution if the lost Participant or Beneficiary later files a claim for such benefit. ARTICLE IX MISCELLANEOUS 9.01 Nonguarantee of Employment Nothing contained in this Plan shall be construed as a contract of employment between any Employer and any Employee, or as a right of any Employee to be continued in the employment of any Employer, or as a limitation on the right of an Employer to discharge any of its Employees, with or without cause. 9.02 Nonalienation of Benefits Benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 9.03 No Preference No Participant shall have any preference over the general creditors of an Employer in the event of such Employer's insolvency. 9.04 Incompetence of Recipient If the Committee receives evidence satisfactory to it that any person entitled to receive a payment hereunder is, at the time the benefit is payable, physically, mentally or legally incompetent to receive such payment and to give a valid receipt therefor, and that an individual or institution is then maintaining or has custody of such person and that no guardian, committee or other representative of the estate of such person has been duly appointed, the Committee may direct that such payment be paid to such individual or institution maintaining or having custody of such person, and the receipt of such individual or institution shall be valid and a complete discharge for the payment of such benefit. 9.05 Texas Law to Apply THIS PLAN SHALL BE CONSTRUED AND ENFORCED UNDER THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW. 25 26 9.06 Claims Procedure/Arbitration If any person (hereinafter called the "Claimant") feels that he or she is being denied a benefit to which he or she is entitled under this Plan, such Claimant may file a written claim for said benefit with the Committee. Within sixty (60) days following the receipt of such claim the Committee shall determine and notify the Claimant as to whether he or she is entitled to such benefit. Such notification shall be in writing and, if denying the claim for benefit, shall set forth the specific reason or reasons for the denial, make specific reference to the pertinent provisions of this Plan, and advise the Claimant that he or she may, within sixty (60) days following the receipt of such notice, in writing request to appear before the Committee or its designated representative for a hearing to review such denial. Any such hearing shall be scheduled at the mutual convenience of the Committee or its designated representative and the Claimant, and at any such hearing the Claimant and/or his or her duly authorized representative may examine any relevant documents and present evidence and arguments to support the granting of the benefit being claimed. The final decision of the Committee with respect to the claim being reviewed shall be made within sixty (60) days following the hearing thereon, and the Committee shall in writing notify the Claimant of said final decision, again specifying the reasons therefor and the pertinent provisions of this Plan upon which said final decision is based. The final decision of the Committee shall be conclusive and binding upon all parties having or claiming to have an interest in the matter being reviewed. Any dispute or controversy arising out of, or relating to, the payment of benefits pursuant to this Plan shall be settled by arbitration in Dallas, Texas (or, if applicable law requires some other forum, then such other forum) in accordance with the rules then obtaining of the American Arbitration Association. The District Court of Dallas County, Texas or, as the case may be, the United States District Court for the Northern District of Texas shall have jurisdiction for all purposes in connection with any such arbitration. Any process or notice of motion or other application to either of said courts, and any paper in connection with arbitration, may be served by certified mail, return receipt requested, or by personal service or in such other manner as may be permissible under the rules of the applicable court or arbitration tribunal, provided a reasonable time for appearance is allowed. Arbitration proceedings must be instituted within one (1) year after the claimed breach occurred, and the failure to institute arbitration proceedings within such period shall constitute an absolute bar to the institution of any proceedings, and a waiver of all claims, with respect to such breach. 9.07 Reimbursement of Costs In the event that a dispute arises between a Participant or Beneficiary and the Company or other Employer with respect to the payment of benefits hereunder, and attorney's fees, expenses and costs are incurred by either party in the course of litigation or otherwise, the party against whom the other party has been successful in such dispute shall reimburse such other party for the full amount of any such attorneys' fees, expenses and costs. 26 27 9.08 Acceleration of Payment In the event that the Internal Revenue Service formally assesses a deficiency against a Participant on the grounds that an amount credited to such Participant's Accounts under this Plan is subject to Federal income tax (the "Reclassified Amount") earlier than the time payment otherwise would be made to the Participant pursuant to this Plan, then the Committee shall direct the Employer maintaining such Participant's Accounts to pay to such Participant and deduct from such Account the Reclassified Amount. ARTICLE X AMENDMENTS OR TERMINATION OF PLAN The Board of Directors of the Company shall have the power and right from time to time to modify, amend, supplement, suspend or terminate the Plan as it applies to each Employer, provided that no such change in the Plan may deprive a Participant of the amounts allocated to his or her accounts or be retroactive in effect to the prejudice of any Participant. Any provision of this Plan to the contrary notwithstanding, no action to modify, amend, supplement, suspend or terminate the Plan on or after the date of a Change in Control shall be effective without the consent of a majority of the Participants in the Plan at the time of such action. ARTICLE XI WITHDRAWING EMPLOYERS; TRANSFER TO SUCCESSOR PLAN 11.01 Withdrawing Employers In the event that a Participating Employer elects to discontinue or revoke its participation in this Plan: (a) the Company shall cause to be prepared a new plan (the "Successor Plan") for the withdrawing Participating Employer, the terms of which shall be identical to the terms of this Plan; (b) the Company shall transfer, deliver and assign any and all benefit obligations under this Plan which relate to Participants who are employees of the withdrawing Participating Employer or its subsidiaries to the Successor Plan; and (c) the withdrawing Participating Employer shall be deemed to have consented to the adoption of the Successor Plan. For purposes of this provision, the Successor Plan shall treat all benefit obligations described under (b) above as if they had accrued due to an individual's service with the withdrawing Participating Employer. Subsequent to the withdrawing Participating Employer's adoption of the Successor Plan, and the transfer of benefit obligations from this Plan to the Successor Plan, Participants whose benefits were 27 28 transferred to the Successor Plan shall not be entitled to receive any amounts from this Plan which relate to benefit obligations which accrued prior to the transfer. 11.02 Transfer to Successor Plan Any provision of this Plan to the contrary notwithstanding, in the event that: (a) the employment of a Participant with the Company or other Participating Employer is terminated in connection with the sale, spin-off or other disposition of a direct or indirect subsidiary of the Company or a sale or other disposition of assets of the Company or the assets of a direct or indirect subsidiary of the Company (the "Transaction"); (b) in connection with the Transaction, such terminated Participant becomes employed by the subsidiary that is sold, spun-off or otherwise disposed of, the purchaser of the subsidiary or assets or other surviving entity in the Transaction, as the case may be, or an affiliate thereof, (the "Successor Employer"); and (c) in connection with and effective as of or prior to the closing of the Transaction, the Successor Employer establishes a new plan, the terms of which are substantially identical to the terms of this Plan and which treat all benefit obligations which relate to the Participant (including those transferred to the Successor Plan pursuant to the provisions of this Section) as if they had accrued due to the Participant's service with the Successor Employer (the "Successor Plan"), and a new rabbi trust, the terms of which are substantially identical to the terms of the Trust (the "Successor Trust"), then the Participant shall not be entitled to a distribution of benefits from this Plan on account of such termination of employment, and the Company or other Participating Employer which formerly employed the Participant and which maintains an Account or Accounts for such Participant under this Plan shall transfer, deliver and assign to the Successor Plan and Successor Employer as of the date the Participant becomes employed by the Successor Employer any and all benefit obligations under this Plan which relate to the Participant, and effective with and subsequent to the adoption of the Successor Plan by the Successor Employer and the transfer of the Participant's benefit obligations from this Plan to the Successor Plan, the Participant whose benefits were transferred to the Successor Plan shall not be entitled to receive any amounts from this Plan which relate to benefit obligations which accrued prior to the transfer. The preceding provisions to the contrary notwithstanding, the provisions of this Section 11.02 shall not be effective for Transactions that occur on or after the date of a Change in Control without the written consent of a majority of the Participants in the Plan at such time. 28 29 IN TESTIMONY WHEREOF, TRINITY INDUSTRIES, INC. has caused this instrument to be executed in its name and on its behalf, by the officer thereunto duly authorized, this 16 day of November, 1999, effective as of January 1, 2000. TRINITY INDUSTRIES, INC. By: /s/ MJ LINTNER -------------------------------------- Title: VP of Human Resources ---------------------------------- ATTEST: [ILLEGIBLE] - -------------------------- THE STATE OF TEXAS ) ) COUNTY OF DALLAS ) This instrument was acknowledged before me on the 16th day of November, 1999, by M.J. Linter of TRINITY INDUSTRIES, INC., a Delaware corporation, on behalf of said corporation. [SEAL] /s/ KATHLEEN L. SOUTHMAYD ----------------------------------------- Notary Public in and for the State of Texas My Commission Expires: Printed Name of Notary: 06/24/2003 Kathleen L. Southmayd - -------------------------- ----------------------------------------- EX-10.14 4 0004.txt CONSULTING AGREEMENT - W. R. WALLACE 1 EXHIBIT 10.14 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (the "Agreement") is entered into effective as of the 1st day of January, 1999 (the "Effective Date"), by and between Trinity Industries, Inc., a Delaware corporation (the "Company") and W. Ray Wallace (the "Consultant"). RECITALS A. Consultant is retiring as Chief Executive Officer of the Company and Chairman of the Board of Directors of the Company (the "Board") effective as of December 31, 1998, and will remain as a director of the Company. B. Consultant possesses certain experience, knowledge and skills and certain historic information regarding the operation of the Company which the Board and the successor Chief Executive Officer ("CEO") desire to retain the ability to use, as needed. C. Consultant has agreed to serve as a consultant for the Company and to provide such consulting services as requested from time to time by the Board and CEO during the term of this Agreement. NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Consulting Relationship. The Board hereby retains Consultant and Consultant hereby agrees to be retained by the Board as an employee of the Company. 2. Consulting Services. Consultant agrees that during the term of this Agreement, he shall perform such consulting services as requested by the Board or CEO from time to time, subject to the following: (a) Consultant shall be available to render consulting services to the Company under this Agreement as the Board or CEO shall request. (b) The parties understand and agree that Consultant shall report directly to the Board and CEO. Consultant may perform the consulting services hereunder at places other than the principal offices of the Company. (c) Consultant shall not be required to provide more than two-hundred forty (240) hours of service per year under this Agreement. 2 3. Consulting Fees and Other Emoluments (a) The Company agrees to pay Consultant for his services under this Agreement the sum of $10,000 per month, beginning on January 1, 1999 payable semi-monthly, whether or not services are actually rendered under this Agreement. (b) During the term hereof, Consultant shall be entitled to emoluments, which will be provided either directly by the Company or by reimbursement to the Consultant, as follows: (i) The Company will provide Consultant with a furnished office of a comparable size and character to that occupied by Consultant prior to his retirement as Chairman and Chief Executive Officer of the Company, provided such office space is located, in a building of Consultant's choice, in the Preston Center, Turtle Creek, Crescent or downtown area of Dallas, Texas. (ii) The Company will provide a company employee of Consultant's choice to serve as an assistant providing secretarial and administrative services. (iii) The Company will provide expenses related to Consultant's operation of his automobile, including regular maintenance and upkeep. (iv) Consultant shall also be entitled to use one of the Company's airplanes for up to ten (10) hours a month at reasonable times, upon reasonable notice and consistent with the Company's other requirements. (v) Consultant shall be entitled to reimbursement for any and all reasonable expenses incurred by Consultant on behalf of the Company. (c) Additionally, the Company will provide medical coverage for Consultant for the remainder of Consultant's life, substantially equivalent to such coverage in effect for Consultant immediately prior to his retirement. This obligation of the Company shall survive any termination of the Agreement. 4. Board Membership (a) The Board will designate Consultant as Chairman Emeritus of the Company effective as of the date of Consultant's retirement and resignation on December 31, 1998, and such designation will continue during the term, and survive any termination, of the Agreement. (b) Consultant shall continue to serve as a member of the Board during the term of the Agreement, provided Consultant is eligible to have his name placed 2 3 in nomination for re-election to the Board and is duly elected to the Board at each Annual Meeting of the Company's stockholders. 5. Term of Agreement (a) The initial term of this Agreement shall commence on January 1, 1999 and shall continue in full force and effect for a period of three (3) years, ending on December 31, 2001 (the "Ending Date"), provided, however, the Ending Date of the Agreement is automatically extended for an additional period of one (1) year beginning December 31, 1999 and on each December 31st following thereafter, unless either party notifies the other in writing of his or its intent to terminate the Agreement (the "Notice"). The Notice will cause the Agreement to terminate as of the second anniversary date of the Notice, and the Notice shall be given on or before December 31st during any term of the Agreement. (b) This Agreement shall terminate upon the death of Consultant. In addition, if Consultant becomes totally disabled (as hereinafter defined), the Board may, in its discretion, at any time after such total disability, upon five (5) days' prior written notice to Consultant, terminate this Agreement. "Total disability" shall mean a physical or mental incapacity of such a nature that it prevents Consultant from performing the consulting services requested by the Board on a continuing and sustained basis for a period of more than six (6) substantially consecutive months. (c) Upon the termination of this Agreement, all the liabilities and obligations of the Company and Consultant under the Agreement shall cease, except as follows: (i) The Company shall remain obligated to pay Consultant any fees, expense reimbursements or other amounts owing for periods prior to the date of termination of this Agreement. (ii) The Company shall remain subject to the obligations imposed by paragraphs 3(c) and 4(a). 6. Miscellaneous Provisions (a) All tangible materials (whether original or duplicates), other information in the possession or control of Consultant and all knowledge acquired by Consultant which in any way relate or pertain to the Company's business, including the business of any subsidiaries or affiliates of the Company, whether furnished to Consultant by the Company or prepared, compiled or acquired by Consultant while an employee of the Company or during the term of this Agreement and which derive economic value from not being generally known to the public or to people who can obtain economic value from their use or 3 4 development, shall be preserved by Consultant as confidential material, information or knowledge and shall not be disclosed to others, either during the term of this Agreement or thereafter, without the prior written consent of the Board. (b) If any provision of this Agreement shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair, or invalidate the remainder of this Agreement but shall be confined in its operation to the provisions of this Agreement directly involved in the controversy in which such judgment shall have been rendered. To the extent that the provisions of this Agreement are adjudged to be invalid or unenforceable, this Agreement shall be construed and (in the absence of such construction) reformed so as to allow the maximum benefit of the provisions of this Agreement permitted by law. (c) All notices and other communications hereunder must be delivered in writing and shall be deemed to have been given if delivered by hand or mailed by first class, registered mail, return receipt requested, postage and registered fees prepaid, and addressed as follows: (i) if to the Company: Trinity Industries, Inc. P.O. Box 568887 Dallas, Texas 75356-8887 Attention: Chief Executive Officer (ii) if to Consultant: W. Ray Wallace 4011 Miramar Dallas, Texas 75205 (d) This Agreement embodies the entire understanding between the parties hereto respecting the subject matter hereof and no change, alteration or modification may be made except by authorization of the Board and except in writing signed by both parties hereto. (e) This Agreement shall in all respects be construed and enforced in accordance with the laws of the State of Texas. (f) Any successor to the Company shall be bound by the terms of this Agreement in the same manner and to the same extent as the Company, and this Agreement shall be binding upon Consultant, his heirs and legal representatives. 4 5 IN WITNESS WHEREOF, the Company and Consultant have each duly executed this Agreement the 23rd day of December, 1998, effective as of the date and year first written above. COMPANY: TRINITY INDUSTRIES, INC. By: /s/ JESS T. HAY ------------------------------------ Chairman, Human Resources Committee of the Board of Directors CONSULTANT: /s/ W. RAY WALLACE --------------------------------------- W. Ray Wallace 5 EX-21 5 0005.txt LISTING OF SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 Trinity Industries, Inc. Listing of Subsidiaries of the Registrant The Registrant has no parent. At March 31, 2000, the operating subsidiaries of the Registrant were:
Percentage of Organized voting securities under the owned by the Name of subsidiary laws of Registrant - -------------------------------------------------------------------------------- ------------- ----------------- Excell Materials, Inc. Delaware 100% Helmsdale AG Switzerland 100% International Industrial Indemnity Co. Vermont 100% MCT Holdings, Inc. Delaware 100% McConway and Torley Corporation Pennsylvania 100% Railcar Services International OY Finland 70% Reunion General Agency, Inc. Texas 100% S.C. Apromat Romania 50% S.C. Astra Vagoane S.A. - Arad Romania 82% S.C. ICPV S.A. - Arad Romania 62% S.C. MEVA S.A. - Drobeta Turnu Severin Romania 70% Standard Forged Products, Inc. Delaware 100% Syro, Inc Ohio 100% Transit Mix Concrete - Baytown, Inc. Texas 100% Transit Mix Concrete & Materials Company Delaware 100% Transit Mix Concrete & Materials Company of Louisiana Louisiana 100% Trinity Argentina S.R.L. Argentina 90% Trinity DIFCO, Inc Delaware 100% Trinity Casteel, Inc. Delaware 100% Trinity E-Ventures, Inc. Delaware 100% Trinity Equipment Co., Inc Delaware 100% Trinity Equipment Manufacturing Co. Delaware 100% Trinity Financial Services, Inc. Delaware 100% Trinity Fitting & Flange Group, Inc. Delaware 100% Trinity Industries Buffalo, Inc. Delaware 100% Trinity Industries de Mexico SA de CV Mexico 100% Trinity Industries do Brasil, Ltda. Brazil 100% Trinity Industries GmbH Switzerland 100% Trinity Industries Leasing Company Delaware 100% Trinity Industries Rail do Brasil, Ltda. Brazil 100% Trinity Industries Real Properties, Inc. Delaware 100% Trinity Industries Transportation, Inc. Texas 100% Trinity Marine Products, Inc. Delaware 100% Trinity Materials, Inc. Delaware 100% Trinity Mobile Railcar Repair, Inc. Delaware 100% Trinity Rail, Inc. Delaware 100% Trinity Rail Management, Inc. Delaware 100% Transcisco Trading Company Delaware 100% Trinity Rail Services, Inc. California 100% Transcisco Trading Company Delaware 100% Waldorf Properties, Inc. Delaware 100%
EX-23 6 0006.txt CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT (23) Consent of Independent Auditors We consent to the incorporation by reference in Post-Effective Amendment No. 3 to the Registration Statement (Form S-8, No. 2-64813), Post-Effective Amendment No. 1 to the Registration Statement (Form S-8, No. 33-10937), Registration Statement (Form S-8, No. 33-35514), Registration Statement (Form S-8, No. 33-73026), Registration Statement (Form S-8, No. 333-77735), Registration Statement (Form S-8, No. 333-91067), of Trinity Industries, Inc. and in the related Prospectuses of our report dated May 16, 2000 with respect to the consolidated financial statements and schedule of Trinity Industries, Inc. included in this Annual Report (Form 10-K) for the year ended March 31, 2000. ERNST & YOUNG LLP Dallas, Texas June 2, 2000 EX-27 7 0007.txt FINANCIAL DATA SCHEDULE
5 1,000 12-MOS MAR-31-2000 MAR-31-2000 16,900 0 349,800 0 360,600 0 1,304,900 (491,700) 1,738,500 0 0 0 0 43,800 971,300 1,738,500 0 2,740,600 0 2,278,200 0 0 20,400 262,877 97,400 165,500 0 0 0 165,500 4.17 4.15
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