Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:
•Company Overview
•Executive Summary
•Results of Operations
•Liquidity and Capital Resources
•Contractual Obligations and Commercial Commitments
•Critical Accounting Policies and Estimates
•Recent Accounting Pronouncements
•Forward-Looking Statements Our MD&A should be read in conjunction with our Consolidated Financial Statements and related Notes in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Company Overview

Trinity Industries, Inc. headquartered in Dallas, Texas, is a diversified industrial company that owns a variety of market-leading businesses which provide products and services to the industrial, energy, transportation, and construction sectors. We operate in five distinct business groups which we report on a segment basis: the Rail Group, Construction Products Group, Inland Barge Group, Energy Equipment Group, and Railcar Leasing and Management Services Group. We also report the All Other segment which includes the Company's captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; other peripheral businesses; and the change in market valuation related to ineffective commodity hedges.

Our Rail and Inland Barge Groups and our structural wind towers and containers businesses operate in cyclical industries. Results in our Construction Products and Energy Equipment Groups are subject to seasonal fluctuations with the first quarter historically being the weakest quarter. Railcar sales from the lease fleet are the primary driver of fluctuations in results in the Railcar Leasing and Management Services Group.

Following an extended period of weak demand for new railcars through 2010, demand for new railcars recovered sharply, primarily due to an increase in the shipment of commodities, replacement of older railcars, and federal tax benefits received from taking delivery of railcars in 2011 and 2012. While moderating from the accelerated pace in the first half of 2011, demand conditions and corresponding order levels for new railcars in 2012 continued to be favorable, particularly from the oil, gas, and chemicals industries. Orders for structural wind towers have been slow since mid-2008 when energy development companies encountered tightened credit markets, lower demand for electricity, and heightened competition arising from declining natural gas prices and imports from foreign manufacturers. The slowdown in the commercial construction markets and budgetary constraints at the state level have negatively impacted the results of our Construction Products Group.

We continually assess our manufacturing capacity and take steps to align our production capacity with demand for our products. Rail Group operating results include certain costs associated with the repositioning of a portion of the Company's production capacity to meet railcar demand. Due to improvements in demand for certain products, we have increased production staff at certain facilities since late 2010. We expect that facilities on non-operating status will be available for future operations to the extent that demand further increases.

Executive Summary

The Company's revenues for 2012 were $3.8 billion, representing an increase of $873.6 million or 30% over last year. Operating profit increased to $574.8 million compared to $426.8 million last year. While all of our business segments reported increases in revenues for the year ended December 31, 2012 when compared to the prior year, the largest contributors to the increase were our Rail, Inland Barge, and Leasing Groups. The increase in revenues in our Rail and Inland Barge Groups was primarily due to higher shipment volumes while the increase in revenues in our Leasing Group was due to higher railcar sales from the lease fleet, increased revenues from lease fleet additions, and an increase in rental rates. Operating profit and margin grew for the year ended December 31, 2012 when compared with the prior year, primarily due to higher shipment levels in our Rail and Inland Barge Groups and from revenue growth in our Leasing Group. Our Construction Products Group experienced a decline in operating margin primarily as a result of competitive pricing pressures and higher operating costs in our Highway Products business. Net income attributable to Trinity Industries, Inc. common stockholders for 2012 increased $113.0 million compared to last year.

Our backlog at December 31, 2012 compared with the prior year was approximately as follows:

                        December 31,      December 31,
                            2012              2011
                                 (in millions)
Rail Group
External Customers     $      2,867.5    $      1,973.2
Leasing Group                   834.7             621.9
                       $      3,702.2    $      2,595.1
Inland Barge           $        564.1    $        494.6
Structural wind towers $        680.3    $        934.3

For the twelve months ended December 31, 2012, our rail manufacturing businesses received orders for 22,350 railcars. The increase in backlog as of December 31, 2012 reflects the value of orders taken during the year as well as contractual pricing adjustments on long-term orders previously received. Approximately 60% of the railcar backlog is expected to be delivered in the twelve months ending December 31, 2013 with the remainder to be delivered from 2014 through 2016. The orders in our backlog from the Leasing Group are supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery. Approximately 83% of our backlog for barges is expected to be delivered in the twelve months ending December 31, 2013 with the remainder to be delivered in 2014. For multi-year barge agreements, deliveries scheduled for 2013 and 2014 are included in the backlog at this time where specific production quantities for future years have been determined. Approximately $412.5 million of the structural wind towers backlog is subject to litigation with a structural wind towers customer for the customer's breach of a long-term supply contract for the manufacture of towers. Approximately 64% of our backlog for structural wind towers not currently subject to litigation is expected to be delivered in 2013 with the remainder contracted for delivery in future years.

Capital expenditures for 2012 were $469.2 million with $352.6 million utilized for lease fleet additions, net of deferred profit of $50.8 million. Capital expenditures for 2013 are projected to be approximately $510.0 million to $595.0 million, including $350.0 million to $400.0 million in net lease fleet additions.

In April 2012, Trinity increased its quarterly dividend by 22% to $0.11 per share and in September 2012, the Company's Board of Directors approved a new $200 million share repurchase program which became effective October 1, 2012 and will expire on December 31, 2014. The new program replaced the Company's previous share repurchase program.

In December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations. The terms of the transaction are expected to be finalized and the transaction closed during 2013. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as a discontinued operation and, accordingly, historical amounts previously reported have been adjusted, where appropriate, to remove the effect of discontinued operations. Further, assets and liabilities related to the discontinued operations have been classified as Assets/Liabilities Held for Sale and Discontinued Operations in the accompanying consolidated balance sheets.

In December 2012, Trinity Rail Leasing 2012 LLC, a Delaware limited liability company ("TRL 2012"), a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $333.8 million in aggregate principal amount of Secured Railcar Equipment Notes which are non-recourse to Trinity.

In February 2013, the $475 million TILC warehouse loan facility was extended for an additional six months and now matures in August 2013. Amounts outstanding at maturity, absent renewal will be payable in three installments in February 2014, August 2014, and February 2015.

Results of Operations

Years Ended December 31, 2012, 2011, and 2010

Overall Summary for Continuing Operations

Revenues
                                             Year Ended December 31, 2012
                                                       Revenues                      Percent Change 2012
                                       External       Intersegment       Total           versus 2011
                                                     ($ in millions)
Rail Group                           $   1,512.1     $      500.9     $  2,013.0         57.9 %
Construction Products Group                461.2             22.5          483.7          6.7
Inland Barge Group                         675.2                -          675.2         23.1
Energy Equipment Group                     506.0             52.6          558.6         18.1
Railcar Leasing and Management
Services Group                             644.4              2.7          647.1         17.2
All Other                                   13.0             68.4           81.4         31.7
Eliminations - Lease subsidiary                -           (485.9 )       (485.9 )
Eliminations - Other                           -           (161.2 )       (161.2 )
Consolidated Total                   $   3,811.9     $          -     $  3,811.9         29.7

                                             Year Ended December 31, 2011
                                                       Revenues                      Percent Change 2011
                                       External       Intersegment       Total           versus 2010
                                                    ($ in millions)
Rail Group                           $     931.7     $      343.0     $  1,274.7        144.1 %
Construction Products Group                440.4             12.9          453.3         28.1
Inland Barge Group                         548.5                -          548.5         29.9
Energy Equipment Group                     454.8             18.0          472.8         12.7
Railcar Leasing and Management
Services Group                             551.4              0.6          552.0         18.8
All Other                                   11.5             50.3           61.8         27.4
Eliminations - Lease subsidiary                -           (325.5 )       (325.5 )
Eliminations - Other                           -            (99.3 )        (99.3 )
Consolidated Total                   $   2,938.3     $          -     $  2,938.3         52.2

                                             Year Ended December 31, 2010
                                                       Revenues
                                       External       Intersegment       Total
                                                    ($ in millions)
Rail Group                           $     289.7     $      232.4     $    522.1
Construction Products Group                333.5             20.5          354.0
Inland Barge Group                         422.3                -          422.3
Energy Equipment Group                     408.5             11.1          419.6
Railcar Leasing and Management
Services Group                             464.5                -          464.5
All Other                                   12.2             36.3           48.5
Eliminations - Lease subsidiary                -           (216.8 )       (216.8 )
Eliminations - Other                           -            (83.5 )        (83.5 )
Consolidated Total                   $   1,930.7     $          -     $  1,930.7

Our revenues for the years ended December 31, 2012 and 2011 increased from the previous year primarily due to higher shipment volumes in our Rail and Inland Barge Groups while our Leasing Group experienced increased revenue primarily due to higher railcar sales from the lease fleet, increased revenues from lease fleet additions, and higher rental rates.

Operating Profit (Loss)
                                                   Year Ended December 31,
                                                2012        2011        2010
                                                        (in millions)
Rail Group                                    $ 199.0     $  77.3     $   1.5
Construction Products Group                      44.8        54.9        37.8
Inland Barge Group                              124.7       106.4        69.0
Energy Equipment Group                           18.2         8.9        35.1
Railcar Leasing and Management Services Group   300.9       254.5       207.0
All Other                                       (10.2 )      (3.8 )     (11.4 )
Corporate                                       (51.5 )     (43.6 )     (33.8 )
Eliminations - lease subsidiary                 (50.8 )     (28.3 )      (8.4 )
Eliminations - other                             (0.3 )       0.5        (2.6 )
Consolidated Total                            $ 574.8     $ 426.8     $ 294.2

Our operating profit for the years ended December 31, 2012 and 2011 increased primarily as a result of consistently higher shipment levels in our Rail and Inland Barge groups and from revenue growth and an increase in the net gain on the sales of railcars from our lease fleet in our Leasing Group. For 2012 and 2011, the increased cost of revenues was primarily volume-related and included certain repositioning costs from our Rail Group in 2012. Operating profit in 2011 and 2010 also included flood-related gains of $15.5 million and $5.1 million, respectively, in our Inland Barge Group. Selling, engineering, and administrative expenses as a percentage of revenue decreased to 5.9% for 2012 as compared to 6.6% for 2011 and 8.6% for 2010.

Other Income and Expense. Other income and expense is summarized in the following table:

                     2012        2011        2010
                             (in millions)
Interest income    $  (1.5 )   $  (1.5 )   $  (1.4 )
Interest expense     194.7       185.3       182.1
Other, net            (4.3 )       4.0         6.8
Consolidated Total $ 188.9     $ 187.8     $ 187.5

Interest expense in 2012 increased $9.4 million over the prior year due to the TRIP Holdings debt refinancing completed in 2011 while interest income was substantially unchanged from the prior year. The decrease in Other, net expense for the year ended December 31, 2012 was primarily due to higher foreign currency translation gains over the prior year. The decrease in Other, net expense for the year ended December 31, 2011 was primarily due to certain expenses in 2010 related to the retirement of the Company's senior notes partially offset by higher foreign currency translation losses in 2011.

Income Taxes. The provision for income taxes results in effective tax rates that differ 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 on income from continuing operations:

                           Year Ended December 31,
                          2012        2011      2010
Statutory rate           35.0  %     35.0 %    35.0  %
State taxes               2.0         2.1       3.4
Tax settlements          (0.6 )         -       4.8
Changes in tax reserves  (1.4 )       0.4     (10.7 )
Other, net               (0.3 )       1.1       2.5
Effective rate           34.7  %     38.6 %    35.0  %

At December 31, 2012, the Company, excluding TRIP Holdings, had $103.3 million of Federal consolidated net operating loss carryforwards and tax-effected $5.4 million of state loss carryforwards. The Company has $42.2 million of foreign tax credit carryforwards which will expire between 2014 and 2022. The Federal net operating loss carryforwards are due to expire between 2028 and 2031. We have established a valuation allowance for Federal, state, and foreign tax operating losses and credits which may not be realizable. We believe that it is more likely than not that we will be able to generate sufficient future taxable income to utilize the remaining deferred tax assets.

TRIP Holdings had $439.7 million in Federal tax loss carryforwards at December 31, 2012 which are due to expire between 2027 and 2032. We expect TRIP Holdings to begin utilizing their tax loss carryforwards beginning in 2020. Because TRIP Holdings files a separate tax return from the Company, its tax loss carryforwards can only be used by TRIP Holdings and cannot be used to offset future taxable income of the Company.

For the year ended December 31, 2012, cash taxes were not substantially different from the current provision for income taxes. In 2011, the current provision for income taxes of $31.7 million exceeded expected cash taxes of $12.1 million related to 2011 income due to additional accruals for uncertain tax positions, refunds of excess payments from prior years, and prior year true ups.

During the year ended December 31, 2012, we settled our audit with the Internal Revenue Service ("IRS") for the 2004-2005 tax years. As a result of closing this audit, we recognized a $3.5 million tax benefit in the first quarter, primarily related to favorable claims filed and approved by the IRS in the final audit settlement.

The IRS field work for our 2006-2008 audit cycle has concluded and all issues, except for transfer pricing, have been agreed to and tentatively settled. The transfer pricing issue has been appealed and we are working with both the U.S. and Mexican taxing authorities to coordinate taxation. As we do not control the timing of when our issues will be settled, we cannot determine when the 2006-2008 cycle will close and all issues formally settled and thus when the statute of limitations for years after 2005 will close. In addition, we are currently under IRS audit for the 2009-2011 tax years.

Segment Discussion

Rail Group
                                         Year Ended December 31,                    Percent Change
                                                                                                2011 versus
                                     2012          2011          2010       2012 versus 2011        2010
                                             ($ in millions)
Revenues:
Rail                              $ 1,850.5     $ 1,105.5     $  391.9             67.4  %         182.1 %
Components                            162.5         169.2        130.2             (4.0 )           30.0
Total revenues                      2,013.0       1,274.7        522.1             57.9            144.1

Operating costs:
Cost of revenues                    1,773.9       1,167.3        489.3             52.0            138.6
Selling, engineering, and
administrative costs                   40.1          34.0         31.3             17.9              8.6
Property disposition
(gains)/losses                            -          (3.9 )          -
Operating profit                  $   199.0     $    77.3     $    1.5
Operating profit margin                 9.9 %         6.1 %        0.3 %

As of December 31, 2012, 2011, and 2010 our Rail Group backlog of railcars was as follows:

                      2012         2011        2010
                             (in millions)
External Customers $ 2,867.5    $ 1,973.2    $ 346.6
Leasing Group          834.7        621.9      111.0
Total              $ 3,702.2    $ 2,595.1    $ 457.6

The changes in the number of railcars in the Rail Group backlog are as follows:

                    2012        2011        2010
Beginning balance  29,000       5,960      2,320
Orders received    22,350      37,105      8,390
Shipments         (19,360 )   (14,065 )   (4,750 )
Ending balance     31,990      29,000      5,960

Total revenues increased $738.3 million for the year ended December 31, 2012 compared to the prior year as a result of an increase in railcar deliveries and an increase in average sales price, resulting from higher overall demand and product mix changes. Total revenues increased $752.6 million for the year ended December 31, 2011 when compared to 2010 as a result of increased railcar deliveries and related components.

Cost of revenues increased $606.6 million for the year ended December 31, 2012 compared to the prior year as a result of increased unit deliveries as well as a larger mix of higher-cost railcars. Production efficiencies and costs were impacted by costs of $10.6 million incurred in 2012 to reposition a portion of the Company's production capacity to meet railcar demand. Additionally, the Company incurred capital expenditures of $10.0 million for the year ended December 31, 2012 related to these repositioning efforts. Cost of revenues increased $678.0 million when comparing 2011 with 2010 as a result of increased railcar deliveries.

Unit and price increases as well as product mix change increased total backlog dollars when comparing December 31, 2012 year end to the previous year end. The increase in backlog as of December 31, 2012 also reflects contractual pricing adjustments on long-term orders previously received. The average selling price in the backlog at December 31, 2012 increased as compared to the previous year end due to higher demand and product mix. Backlog increased when comparing 2011 versus 2010 due to favorable demand. The backlog dedicated to the Leasing Group is supported by lease commitments with external customers. The final amount dedicated to the Leasing Group may vary by the time of delivery.

In the year ended December 31, 2012, railcar shipments included sales to the Leasing Group of $485.9 million compared to $325.5 million in the comparable period in 2011, with a deferred profit of $50.8 million compared to $28.3 million for the same period in 2011. Results for the year ended December 31, 2010, included $216.8 million in sales to the Leasing Group with a deferred profit of $8.4 million. Sales to the Leasing Group and related profits are included in the operating results of the Rail Group but are eliminated in consolidation.

Global Insight, Inc., an independent industry research firm, has estimated in its fourth quarter 2012 report that the average age of the North American freight car fleet is 19.8 years, with 36% older than 25 years and has estimated that North American carload traffic will grow by 1.8% in 2013, with an increase of 3.3% for 2014 and 1.6% for 2015 before slowing to 0.8% in 2016, and 0.7% in 2017.

The table below is an average of the most recent estimates of approximate industry railcar deliveries for the next five years from two independent third party research firms, Global Insight, Inc. and Economic Planning Associates, Inc.
2013 53,000
2014 62,200
2015 63,100
2016 57,700
2017 55,300

The Leasing Group purchases a portion of our railcar production, financing a portion of the purchase price through a non-recourse warehouse loan facility, and periodically refinances those borrowings through equipment financing transactions. In 2012, the Leasing Group purchased 28.0% of our railcar production compared to 26.7% in 2011. On a segment basis, sales to the Leasing Group and related profits are included in the operating results of our Rail Group but are eliminated in consolidation.

Construction Products Group
                                        Year Ended December 31,                      Percent Change
                                     2012         2011         2010      2012 versus 2011     2011 versus 2010
                                            ($ in millions)
Revenues:
Highway Products                  $  376.1     $  377.0     $  312.9           (0.2 )%                20.5 %
Aggregates                            65.1         45.5         32.1           43.1                   41.7
Other                                 42.5         30.8          9.0              *                      *
Total revenues                       483.7        453.3        354.0            6.7                   28.1

Operating costs:
Cost of revenues                     387.0        357.9        280.8            8.1                   27.5
Selling, engineering, and
administrative costs                  52.0         40.8         36.1           27.5                   13.0
Property disposition
(gains)/losses                        (0.1 )       (0.3 )       (0.7 )
Operating profit                  $   44.8     $   54.9     $   37.8
Operating profit margin                9.3 %       12.1 %       10.7 %

* not meaningful

Revenues increased for the year ended December 31, 2012 compared to the same period last year due primarily to higher Aggregate volumes and increased sales in other product lines. Revenues increased for the year ended December 31, 2011 compared to the same period in 2010 primarily due to higher volumes in all product lines.

For the year ended December 31, 2012, operating profit and operating profit margin decreased compared to the same period last year primarily due to lower operating profit from our Highway Products business related to competitive pricing pressures and higher operating costs offset partially by improved operating efficiencies in our Aggregates business. Selling, engineering, and administrative costs increased for 2012 when compared to 2011 due to higher legal and compensation costs. Operating profit and operating profit margin increased for the year ended December 31, 2011 compared to the same period in 2010 due to lower operating costs relative to revenues as a result of higher Highway Products and Aggregates sales volumes.

In December 2012, the Company entered into an agreement to sell its remaining ready-mix concrete operations. The terms of the transaction are expected to be finalized and the transaction closed during 2013. The expected divestiture of our remaining ready-mix concrete operations has been accounted for and reported as a discontinued operation and, accordingly, historical amounts previously reported have been adjusted, where appropriate, to remove the effect of these discontinued operations.

. . .