What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-17 compared with 2021-02-24 · 592 added, 496 removed, 1205 unchanged (47% of the section changed)

2 unchanged sentences

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of small cube covered hopper railcars

Description of the Matter As discussed in Note 1 and Note 11, the Company evaluates long-lived assets, which includes property, plant, and equipment and lease right-of-use assets, for potential impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable.

During the second quarter of 2020, the Company identified the decline in global oil prices and pressure on the oil and gas industry to maintain a low-cost structure as an indicator that an impairment assessment for its small cubed covered hopper railcars was required.

As a result of this assessment, the Company recorded impairment charges of $369.4 million, including $358.3 million related to small cubed covered hopper railcars held in its railcar lease fleet and $11.1 million related to right-of-use assets associated with the leased-in portfolio of small cubed covered hopper railcars.

Auditing the Company's impairment measurement involved a high degree of subjectivity as estimates underlying the determination of fair value were based on assumptions about future market and economic conditions.

Significant assumptions used in the Company’s fair value estimate included estimated future lease rental rates and the applicable discount rate.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's processes to determine the fair value of the asset group and measure the long-lived asset impairment.

This included testing management's review controls over the data used in their impairment analysis and the significant assumptions underlying the fair value

determination.

Our testing of the Company's impairment measurement included, among other procedures, evaluating the significant assumptions used to estimate fair value.

For example, we compared the significant assumptions used to estimate market participant cash flows to historical results, evaluated industry reports containing analysis of the small cubed covered hopper demand, performed a sensitivity analysis of the significant assumptions used in the valuation to evaluate the change in the fair value estimate that would result from changes in assumptions and recalculated management's estimate.

In addition, we involved our valuation specialists to assist in our evaluation of the market lease rates and discount rate used in the fair value estimate.

We also tested the completeness and accuracy of the underlying data.

Recognition of deferred tax assets and liabilities

Description of the Matter As more fully described in Note 9 to the consolidated financial statements, at December 31, 2021, the Company recorded gross deferred tax assets related to deductible temporary differences of $ 110.7 million, offset by a $ 24.4 million valuation allowance and recorded $ 1,192.0 million in deferred tax liabilities.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and other tax attributes using currently enacted tax rates.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date.

Auditing the Company’s recognition of deferred tax assets and liabilities was complex because the Company is required to identify and evaluate differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and other tax attributes based on enacted law and tax rates for multiple federal and state tax jurisdictions to determine the amount of such deferred tax assets and liabilities.

In addition, a higher degree of auditor judgment was required to evaluate the Company’s deferred income tax provision as a result of the Company’s application of tax law in each jurisdiction.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the recognition of deferred tax assets and liabilities, including controls over the accuracy and completeness of permanent and temporary differences, the valuation of deferred income tax assets and liabilities and changes in tax laws and regulations that may impact the Company’s deferred income tax provision.

Among other audit procedures performed, we assessed the completeness and accuracy of deferred tax assets and deferred tax liabilities based on enacted law and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities.

In addition, we assessed the reasonableness of the Company’s deferred income tax provision based on application of tax law in each jurisdiction the Company operates in.

/s/ ERNST & YOUNG LLP

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179.6 189.6 217.0

Gains (losses) on dispositions of property:

Net gains on railcar lease fleet sales owned more than one year at the time of sale 17.3 50.5 50.4

Gains on dispositions of property:

Lease portfolio sales (Note 1) 54.1 17.3 50.5

Other 24.1 2.7 3.9

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Other (income) expense:

Interest income ( 3.2 ) ( 7.3 ) ( 11.9 )

Interest expense 219.2 221.8 179.3

Interest expense, net 191.4 211.0 214.5

Loss on extinguishment of debt 11.7 5.0 —

Pension plan settlement ( 0.6 ) 151.5 —

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Income (loss) from continuing operations 39.3 ( 250.5 ) 122.4

Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $( 0.1 ), $( 1.0 ), $ 30.7

Income from discontinued operations, net of provision for income taxes of $ 3.5 , $ 5.5 , and $ 1.7

11.1 24.3 13.7

Gain on sale of discontinued operations, net of provision for income taxes of $ 51.9 , $ — , and $ —

Net income (loss) 181.8 ( 226.2 ) 136.1

Net income (loss) attributable to noncontrolling interest

( 78.9 ) ( 1.5 ) 3.8

Net loss attributable to noncontrolling interest ( 0.2 ) ( 78.9 ) ( 1.5 )

Net income (loss) attributable to Trinity Industries, Inc.

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Income (loss) from continuing operations $ 0.39 $ ( 1.48 ) $ 0.98

Income (loss) from discontinued operations — ( 0.02 ) 0.37

Income from discontinued operations 1.40 0.21 0.11

Basic net income (loss) attributable to Trinity Industries, Inc.

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Income (loss) from continuing operations $ 0.38 $ ( 1.48 ) $ 0.96

Income (loss) from discontinued operations — ( 0.02 ) 0.37

Income from discontinued operations 1.37 0.21 0.11

Diluted net income (loss) attributable to Trinity Industries, Inc.

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Derivative financial instruments:

Unrealized losses arising during the period, net of tax benefit of $ 5.9 , $ 3.8 , and $ 3.0

Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $( 2.8 ), $ 5.9 , and $ 3.8

9.2 ( 19.4 ) ( 12.8 )

Reclassification adjustments for losses included in net income, net of tax benefit of $ 3.5 , $ 0.8 , and $ 0.4

Reclassification adjustments for losses included in net income (loss), net of tax benefit of $ 1.2 , $ 3.5 , and $ 0.8

Defined benefit plans:

Settlement of pension plan, net of tax benefit of $ — , $ 34.9 , and $ —

Unrealized gains (losses) arising during the period, net of tax benefit of $ 2.7 , $ 9.0 , and $ 2.9

Unrealized gains (losses) arising during the period, net of tax (benefit) expense of $ 0.1 , $ 2.7 , and $( 9.0 )

0.3 7.7 ( 30.2 )

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comprehensive income (loss) attributable to noncontrolling interest 1.0 ( 77.7 ) ( 0.2 )

( 77.7 ) ( 0.2 ) 5.2

Comprehensive income (loss) attributable to Trinity Industries, Inc.

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Goodwill 154.2 147.2

Assets of discontinued operations — 178.5

Other assets 266.5 283.5

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Deferred income taxes 1,106.8 1,047.5

Liabilities of discontinued operations — 18.5

Other liabilities 147.9 146.7

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Accumulated other comprehensive loss ( 17.0 ) ( 30.9 )

Treasury stock – shares at December 31, 2020 and 2019 – 0.1

Treasury stock – shares at December 31, 2021 – 0.0 ;

at December 31, 2020 – 0.1

( 0.6 ) ( 0.8 )

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Net income (loss) $ 181.8 $ ( 226.2 ) $ 136.1

(Income) loss from discontinued operations, net of income taxes 0.1 3.1 ( 54.1 )

Income from discontinued operations, net of income taxes ( 11.1 ) ( 24.3 ) ( 13.7 )

Gain on sale of discontinued operations, net of income taxes ( 131.4 ) — —

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

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Provision for deferred income taxes 13.1 238.5 52.6

Net gains on railcar lease fleet sales owned more than one year at the time of sale ( 17.3 ) ( 50.5 ) ( 50.4 )

(Gains) losses on dispositions of property and other assets ( 5.5 ) ( 3.9 ) 9.0

Net gains on lease portfolio sales ( 54.1 ) ( 17.3 ) ( 50.5 )

Gains on dispositions of property and other assets ( 20.0 ) ( 5.3 ) ( 3.9 )

Gains on insurance recoveries from property damage ( 7.8 ) — —

Pension plan settlement — 151.5 —

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Investing activities:

Decrease in short-term marketable securities — — 319.5

Proceeds from dispositions of property and other assets 40.5 32.7 20.0

Proceeds from railcar lease fleet sales owned more than one year at the time of sale 138.7 205.7 230.5

Capital expenditures – leasing, net of sold lease fleet railcars owned one year or less with a net cost of $ 54.0 , $ 319.3 , and $ 92.4

Proceeds from lease portfolio sales 454.3 138.7 205.7

Capital expenditures – leasing, net of sold lease fleet railcars owned one year or less with a net cost of $ 54.0 and $ 319.3 for the years ended December 31, 2020 and 2019, respectively

( 547.2 ) ( 602.2 ) ( 1,122.2 )

Capital expenditures – manufacturing and other ( 23.6 ) ( 95.9 ) ( 88.0 )

Acquisitions, net of cash acquired ( 16.6 ) — —

Proceeds from insurance recoveries 9.5 — —

Other 0.1 — —

Net cash used in investing activities – continuing operations ( 83.0 ) ( 526.7 ) ( 984.5 )

Proceeds from sale of discontinued operations 364.7 — —

Net cash used in investing activities – discontinued operations ( 5.4 ) ( 6.2 ) ( 8.8 )

Net cash used in investing activities ( 532.9 ) ( 993.3 ) ( 490.5 )

Net cash provided by (used in) investing activities 276.3 ( 532.9 ) ( 993.3 )

Financing activities:

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Shares repurchased ( 833.4 ) ( 191.3 ) ( 224.7 )

Dividends paid to common stockholders ( 91.7 ) ( 82.1 ) ( 77.4 )

Dividends paid to common shareholders ( 88.5 ) ( 91.7 ) ( 82.1 )

Purchase of shares to satisfy employee tax on vested stock ( 9.3 ) ( 9.5 ) ( 8.2 )

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Other — ( 0.1 ) —

Net cash provided by (used in) financing activities – continuing operations ( 168.0 ) 526.5 ( 291.1 )

Cash distributions to Arcosa, Inc.

— — ( 220.5 )

Net cash provided by (used in) financing activities ( 814.1 ) ( 168.0 ) 526.5

Net decrease in cash, cash equivalents, and restricted cash ( 49.2 ) ( 73.2 ) ( 623.0 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 74.0 ( 49.2 ) ( 73.2 )

Cash, cash equivalents, and restricted cash at beginning of period 228.4 277.6 350.8

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Interest paid $ 178.4 $ 205.5 $ 208.1

Income tax payments (refunds) $ ( 62.5 ) $ ( 16.7 ) $ 4.1

Distribution of noncash net assets to Arcosa, Inc.

$ — $ — $ 1,534.9

Debt assumed in railcar purchase from unrelated seller $ — $ — $ 283.9

Income tax refunds, net of payments $ 435.7 $ 62.5 $ 16.7

See accompanying notes to Consolidated Financial Statements.

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Balances at December 31, 2018 133.3 $ 1.3 $ 1.2 $ 2,326.1 $ ( 116.8 ) ( 0.1 ) $ ( 1.0 ) $ 2,210.8 $ 351.2 $ 2,562.0

Net income — — — 159.3 — — — 159.3 3.8 163.1

Net income (loss) — — — 137.6 — — — 137.6 ( 1.5 ) 136.1

Other comprehensive income (loss) — — — — ( 36.3 ) — — ( 36.3 ) 1.3 ( 35.0 )

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— — — ( 88.2 ) — — — ( 88.2 ) — ( 88.2 )

Distributions to noncontrolling interest — — — — — — — — ( 2.2 ) ( 2.2 )

Stock-based compensation expense — — 27.8 — — — — 27.8 — 27.8

Shares repurchased — — 75.9 ( 145.9 ) — ( 17.2 ) ( 430.1 ) ( 500.1 ) — ( 500.1 )

Settlement of share-based awards, net 0.7 — 4.2 — — ( 0.6 ) ( 11.3 ) ( 7.1 ) — ( 7.1 )

Stock options exercised — — 0.3 — — — — 0.3 — 0.3

Shares repurchased — — 70.0 — — ( 13.7 ) ( 294.7 ) ( 224.7 ) — ( 224.7 )

Retirement of treasury stock ( 14.3 ) ( 0.1 ) ( 103.2 ) ( 202.8 ) — 14.3 306.1 — — —

Distributions to noncontrolling interest — — — — — — — — ( 10.9 ) ( 10.9 )

Cumulative effect of adopting new accounting standards — — — 13.7 — — — 13.7 — 13.7

Redemption of convertible subordinated notes — — ( 152.9 ) — — — — ( 152.9 ) — ( 152.9 )

Distribution of Arcosa, Inc.

— — — ( 1,753.5 ) 21.3 — — ( 1,732.2 ) — ( 1,732.2 )

Other — — — ( 3.5 ) — — — ( 3.5 ) — ( 3.5 )

Balances at December 31, 2019 119.7 $ 1.2 $ — $ 2,182.9 $ ( 153.1 ) ( 0.1 ) $ ( 0.9 ) $ 2,030.1 $ 348.8 $ 2,378.9

Net income (loss) — — — 137.6 — — — 137.6 ( 1.5 ) 136.1

Other comprehensive (loss) income — — — — ( 36.3 ) — — ( 36.3 ) 1.3 ( 35.0 )

Net loss — — — ( 147.3 ) — — — ( 147.3 ) ( 78.9 ) ( 226.2 )

Other comprehensive income — — — — 122.2 — — 122.2 1.2 123.4

Cash dividends declared on common stock (1)

— — — ( 90.7 ) — — — ( 90.7 ) — ( 90.7 )

Contributions from noncontrolling interest — — — — — — — — 6.1 6.1

Stock-based compensation expense — — 25.4 — — — — 25.4 — 25.4

Shares repurchased — — 70.0 — — ( 13.7 ) ( 294.7 ) ( 224.7 ) — ( 224.7 )

Settlement of share-based awards, net 1.5 — 5.1 — — ( 0.7 ) ( 13.9 ) ( 8.8 ) — ( 8.8 )

Shares repurchased — — — — — ( 9.3 ) ( 193.1 ) ( 193.1 ) — ( 193.1 )

Retirement of treasury stock ( 10.0 ) ( 0.1 ) ( 30.5 ) ( 176.5 ) — 10.0 207.1 — — —

Distributions to noncontrolling interest — — — — — — — — ( 2.2 ) ( 2.2 )

Cumulative effect of adopting new accounting standards — — — 0.5 — — — 0.5 — 0.5

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— — — ( 84.3 ) — — — ( 84.3 ) — ( 84.3 )

Distributions to noncontrolling interest — — — — — — — — ( 11.2 ) ( 11.2 )

Stock-based compensation expense — — 20.7 — — — — 20.7 — 20.7

Shares repurchased — — — — — ( 9.3 ) ( 193.1 ) ( 193.1 ) — ( 193.1 )

Settlement of share-based awards, net 1.2 — 4.3 ( 0.5 ) — ( 0.5 ) ( 13.5 ) ( 9.7 ) — ( 9.7 )

Shares repurchased — — — — — ( 25.2 ) ( 706.6 ) ( 706.6 ) — ( 706.6 )

Accelerated share repurchase agreement — — ( 25.0 ) — — ( 3.3 ) ( 100.0 ) ( 125.0 ) — ( 125.0 )

Retirement of treasury stock ( 29.1 ) ( 0.3 ) — ( 820.0 ) — 29.1 820.3 — — —

Contributions from noncontrolling interest — — — — — — — — 6.1 6.1

Cumulative effect of adopting new accounting standards — — — 0.5 — — — 0.5 — 0.5

Other — — — 0.5 — — — 0.5 — 0.5

Balances at December 31, 2021 83.3 $ 0.8 $ — $ 1,046.6 $ ( 17.0 ) — $ ( 0.6 ) $ 1,029.8 $ 267.0 $ 1,296.8

(1) Dividends of $ 0.78 , $ 0.70 , and $ 0.52 per common share for the years ended December 31, 2020, 2019, and 2018.

(1) Dividends of $ 0.86 , $ 0.78 , and $ 0.70 per common share for the years ended December 31, 2021, 2020, and 2019, respectively.

See accompanying notes to Consolidated Financial Statements.

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All significant intercompany accounts and transactions have been eliminated.

Spin-off of Arcosa, Inc.

Upon completion of the spin-off of Arcosa, Inc.

("Arcosa") on November 1, 2018, the accounting requirements for reporting Arcosa as a discontinued operation were met.

Accordingly, Arcosa's results of operations are presented as discontinued operations for all periods in this Form 10-K.

See Note 2 for further information related to the spin-off transaction.

Certain prior year balances have been reclassified to conform to the 2021 presentation.

Sale of Highway Products Business

In the fourth quarter of 2021, the Company completed the sale of Trinity Highway Products, LLC (“THP”), a wholly-owned subsidiary of the Company, and certain direct and indirect subsidiaries of THP, to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners, for an aggregate purchase price of $ 375.0 million, subject to certain adjustments.

THP is a leading manufacturer and global supplier of commercial highway products.

We concluded that the sale of THP represented a strategic shift that would have a major effect on the Company’s operations and financial results.

Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this 2021 Annual Report on Form 10-K.

Results of prior periods have been recast to reflect these changes and present results on a comparable basis.

See Note 2 for further information related to the sale of THP.

Revenue Recognition

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Interest income related to sales-type leases is recognized over the lease term using the effective interest method.

We had no sales-type leases as of December 31, 2020.

During the fourth quarter of 2020, we began presenting sales from our lease fleet in the Railcar Leasing and Management Services Group on a net basis regardless of the age of railcar that is sold.

Historically, in accordance with ASC 606, Revenue from contracts with customers , we presented sales of railcars from the lease fleet on a gross basis in revenues and cost of revenues if the railcars had been owned for one year or less at the time of sale.

We had no sales-type leases as of December 31, 2021 and 2020.

During the fourth quarter of 2020, we began presenting sales from our lease fleet in the Leasing Group on a net basis regardless of the age of railcar that is sold.

Historically, in accordance with ASC 606, Revenue from contracts with customers , we presented sales of railcars from the lease fleet on a gross basis in Revenues – Leasing and Cost of revenues – Leasing in our Consolidated Statements of Operations if the railcars had been owned for one year or less at the time of sale.

Sales of railcars from the lease fleet owned for more than one year had historically been presented as a net gain or loss from the disposal of a long-term asset.

We will now report all sales of railcars from the lease fleet as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets .

We have concluded that the new presentation is appropriate given the significant change in the strategic focus of the Company.

This change was effected on a prospective basis, beginning in the fourth quarter of 2020.

The new presentation had no effect on the Company’s operating profit, net income, earnings per share, or Consolidated Balance Sheet.

We now report all sales of railcars from the lease fleet as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets.

These sales are presented in the Lease portfolio sales line in our Consolidated Statements of Operations;

however, because this change in presentation was effected on a prospective basis beginning in the fourth quarter of 2020, lease portfolio sales for the years ended December 31, 2020 and 2019 only include sales of railcars from the lease fleet owned for more than one year.

There were no lease portfolio sales during the fourth quarter of 2020.

We have concluded that this presentation is appropriate given the significant change in the strategic focus of the Company.

The presentation change had no effect on the Company’s operating profit, net income, earnings per share, or Consolidated Balance Sheet.

We account for shipping and handling costs as activities to fulfill the promise to transfer the good;

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These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.

Our highway products business recognizes revenue when shipment has occurred and legal title of the product has passed to the customer.

Unsatisfied Performance Obligations

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Rail Products Group:

New railcars:

External customers $ 1,018.1

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$ 1,516.8 69.1 %

Sustainable railcar conversions (1)

$ 111.5 95.7 %

Maintenance services $ 3.0 100.0 %

Railcar Leasing and Management Services Group $ 71.3 21.7 %

(1) During 2021, the Rail Products Group introduced a sustainable railcar conversion program whereby certain tank cars and freight cars are converted or upgraded to better meet changing market demands.

The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2025.

The orders in the Rail Products Group's backlog from the Leasing Group are fully supported by lease commitments with external customers.

The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may choose to change their procurement decision.

Unsatisfied performance obligations for the Railcar Leasing and Management Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.

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We are the lessee of operating leases predominantly for railcars, as well as office buildings, manufacturing equipment, and office equipment.

Our operating leases have remaining lease terms ranging from one year to sixteen years , some of which include options to extend for up to five years , and some of which include options to terminate within one year .

Our operating leases have remaining lease terms ranging from one year to fifteen years , some of which include options to extend for up to five years , and some of which include options to terminate within one year .

As of December 31, 2021, we had no material finance leases in which we were the lessee.

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As applicable, the lease liability is also reduced by the amount of lease incentives that have not yet been reimbursed by the lessor.

In March 2020, we entered into a lease agreement for a new headquarters facility in Dallas, Texas.

The new lease has a contractual term of 16 years from the legal commencement date, which was February 1, 2021.

There is an option to extend the lease term;

however, we determined that the renewal was not reasonably certain at lease inception.

For accounting purposes, the lease commencement date was determined to be in April 2020, which is when we obtained control of the new facility for build-out purposes.

The following table summarizes the impact of our operating leases on our Consolidated Financial Statements (in millions, except lease term and discount rate):

2021 2020 2019

Consolidated Statement of Operations

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Short-term lease expense $ 0.2 $ 2.1 $ 4.1

Consolidated Statement of Cash Flows

Cash flows from operating activities $ 15.2 $ 15.1 $ 17.4

Right-of-use assets recognized in exchange for new lease liabilities (1)

$ 23.0 $ 54.5 $ 8.5

December 31, 2021 December 31, 2020

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Weighted average discount rate 3.0 % 3.3 %

Consolidated Statement of Cash Flows

Cash flows from operating activities $ 15.8 $ 18.0

Right-of-use assets recognized in exchange for new lease liabilities (3)

$ 56.3 $ 10.3

(1) Included in other assets in our Consolidated Balance Sheet.

See Note 11 for more information on the impairment of right-of-use assets.

(2) Included in other liabilities in our Consolidated Balance Sheet.

(3) Includes the commencement of the new headquarters facility described above for the year ended December 31, 2020 .

(1) Includes the commencement of the new headquarters facility for the year ended December 31, 2020 .

(2) Included in other assets in our Consolidated Balance Sheets.

(3) Included in other liabilities in our Consolidated Balance Sheets.

Future contractual minimum operating lease liabilities will mature as follows (in millions):

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Present value adjustment ( 18.8 )

Lease incentives ( 3.0 )

Total operating lease liabilities $ 106.3

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A portion of our fleet operates on per diem leases that earn usage-based variable lease payments.

Some of our leases include options to extend the leases for up to five years , and a small percentage of our leases include options to terminate within one year with certain notice requirements and early termination penalties.

In the second quarter, due to COVID-19, certain of the Leasing Group's customers requested rent relief, primarily in the form of rent payment extensions.

In April 2020, the FASB staff issued a question and answer document (the "Lease Modification Q&A") focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic.

The Lease Modification Q&A provides entities with the option to elect to account for lease concessions resulting from COVID-19 as though the enforceable rights and obligations existed in the original lease in certain circumstances.

We have elected this practical expedient in our accounting for any eligible lease concessions provided for our leased railcars.

To date, these concessions have not had a significant impact on our Consolidated Financial Statements.

Leases previously classified as sales-type leases included an option for the lessee to purchase the leased railcars with certain notice.

During the three months ended March 31, 2020, a lessee exercised its option to purchase such leased railcars.

Some of our leases include options to extend the leases for up to five years , and a small percentage of our leases include early termination options with certain notice requirements and early termination penalties.

As of December 31, 2021, non-Leasing Group operating leases were not significant, and we had no sales-type leases and no direct finance leases.

We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and active participants in secondary markets.

Additionally, our lease agreements contain normal wear and tear return condition provisions and high mileage thresholds designed to protect the value of our residual assets.

Our lease agreements do not contain any material residual value guarantees or restrictive covenants.

The following table summarizes the impact of our leases on our Consolidated Statement of Operations (in millions):

The following table summarizes the impact of our leases in our Consolidated Statement of Operations (in millions):

2021 2020 2019

Operating lease revenues $ 652.5 $ 671.4 $ 676.3

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Financial instruments that potentially subject us to a concentration of credit risk are primarily cash investments including restricted cash and receivables.

We place our cash investments in bank deposits and investment grade, short-term debt instruments and limit the amount of credit exposure to any one commercial issuer.

We place our cash investments in bank deposits, investment grade, short-term debt instruments, and highly-rated commercial paper.

We limit the amount of credit exposure to any one commercial issuer.

The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.

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Receivables are generally evaluated at a portfolio level based on these characteristics.

As receivables are generally unsecured, we maintain an allowance for credit losses using a forward-looking approach based on historical expected losses and consideration of current and expected future economic conditions.

As receivables are generally unsecured, we maintain an allowance for credit losses using a forward-looking approach based on historical losses and consideration of current and expected future economic conditions.

Historically, we have observed that the likelihood of loss increases when receivables have aged beyond 180 days.

When a receivable is deemed uncollectible, the write-off is recorded as a reduction to allowance for credit losses.

During the year ended December 31, 2020, we recognized approximately $ 3.8 million of credit loss expense, which included $ 0.8 million in write-offs, related to our trade receivables that are in the scope of ASC 326, bringing the allowance for credit losses balance at December 31, 2020 to $ 9.3 million.

This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450.

The balance of the allowance for credit losses that are in the scope of ASC 326, Financial Instruments – Credit Losses was $ 10.5 million and $ 9.0 million at December 31, 2021 and 2020, respectively.

This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450, Contingencies .

Inventories are valued at the lower of cost or net realizable value.

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This change was accounted for as a change in accounting estimate, which is required to be accounted for on a prospective basis.

This change in estimate resulted in a decrease in depreciation expense and a corresponding increase in income from continuing operations of approximately $ 30.8 million, as well as an increase in net income of approximately $ 23.7 million, for the year ended December 31, 2020.

Further, earnings per share increased $ 0.20 per share for the year ended December 31, 2020.

For the years ended December 31, 2021 and 2020, this change in estimate resulted in a decrease in depreciation expense and a corresponding increase in income from continuing operations of approximately $ 30.8 million, as well as an increase in net income of approximately $ 23.7 million.

Further, earnings per share increased $ 0.23 and $ 0.20 per share for the years ended December 31, 2021 and 2020, respectively.

See Note 11 for further information regarding impairment of long-lived assets related to our small cube covered hopper railcars recorded in the year ended December 31, 2020.

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Assets held for sale are recorded at fair value, less any costs to sell, and are no longer subject to depreciation.

During the fourth quarter of 2020, management approved a plan to exit certain non-strategic maintenance facilities.

Additionally, we relocated our headquarters in Dallas, Texas into a leased facility.

As of December 31, 2020, assets held for sale totaling $ 32.9 million are included in the Other assets line of our Consolidated Balance Sheets.

There were no assets classified as held for sale on our Consolidated Balance Sheets as of December 31, 2019.

As of December 31, 2021 and 2020, assets held for sale totaling $ 6.2 million and $ 32.9 million, respectively, are included in the other assets line of our Consolidated Balance Sheets.

During the fourth quarter of 2021, we sold our prior corporate headquarters facility, which was previously classified as held for sale as of December 31, 2020.

In January 2021, we completed the acquisition of a company that owns and operates proprietary railcar cleaning technology systems.

This transaction was recorded as a business combination within the Rail Products Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs.

The acquisition did not have a significant impact on our Consolidated Financial Statements.

This transaction resulted in goodwill of $ 7.0 million and intellectual property of $ 11.3 million, which will be amortized over fifteen years.

There was no acquisition activity for the year ended December 31, 2020.

Goodwill and Intangible Assets

Goodwill is required to be tested for impairment at least annually, or on an interim basis if events or circumstances change indicating that the carrying amount of the goodwill might be impaired.

The quantitative goodwill impairment test is a two-step process, with step one requiring the comparison of the reporting unit's estimated fair value with the carrying amount of its net assets.

If necessary, step two of the impairment test determines the amount of goodwill impairment to be recorded when the reporting unit's recorded net assets exceed its fair value.

We have the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment assessment.

If, after assessing the totality of events and circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will perform the quantitative impairment test.

We can also elect to forgo the qualitative assessment and perform the quantitative test.

The quantitative goodwill impairment test compares the reporting unit's estimated fair value with the carrying amount of its net assets.

An impairment is recognized if the reporting unit's recorded net assets exceed its fair value.

Impairment is assessed at the reporting unit level by applying a fair value-based test for each unit with recorded goodwill.

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Rail Products Group 152.4 145.4

All Other 61.6 61.6

$ 154.2 $ 147.2

The net book value of intangible assets totaled $ 16.0 million and $ 18.7 million as of December 31, 2020 and 2019, respectively, and included finite-lived intangible assets of $ 13.5 million and $ 16.2 million, respectively, which are amortized over their estimated useful lives ranging from one year to twenty years .

The net book value of intangible assets totaled $ 28.1 million and $ 8.9 million as of December 31, 2021 and 2020, respectively, which are finite-lived intangible assets amortized over their estimated useful lives ranging from one year to fifteen years .

Based on our evaluations of intangible assets, no impairment charges were determined to be necessary as of December 31, 2021 and 2020.

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At December 31, 2021, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 141.4 million.

For further information regarding our partially-owned leasing subsidiaries, see Note 5 of the Consolidated Financial Statements.

See Note 5 for further information regarding our partially-owned leasing subsidiaries.

Other Investments

In August 2021, the Company and Wafra, Inc.

announced a new railcar investment vehicle ("RIV") program between Trinity and certain funds managed by Wafra, Inc.

("Wafra Funds").

The joint venture created as part of this program, known as Signal Rail Holdings LLC ("Signal Rail"), is owned 90 % by Wafra Funds and 10 % by our wholly-owned subsidiary, Trinity Industries Leasing Company ("TILC").

Upon consideration under the VIE model, Trinity has concluded that Signal Rail meets the definition of a VIE;

however, Trinity is not the primary beneficiary and therefore does not consolidate this entity as we do not have the power to direct the activities of the entity that most significantly impact its economic performance.

Our investment in Signal Rail is being accounted for under the equity method of accounting.

At December 31, 2021, the carrying value of TILC’s equity investment in Signal Rail was $ 6.3 million, which is included in other assets in our Consolidated Balance Sheet.

We hold certain other investments for which we do not have a controlling financial interest but have a significant influence over the financial and operating policies.

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All components are shown net of tax.

Recent Accounting Pronouncements

Adopted in 2020

ASU 2016-13 — In June 2016, FASB issued ASU No.

2016-13, "Measurement of Credit Losses on Financial Instruments," which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables.

This approach may result in the earlier recognition of allowances for losses.

In November 2018, the FASB issued ASU No.

2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses," which excludes operating lease receivables from the scope of ASU 2016-13.

ASU 2016-13 is effective for public companies during interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted.

We adopted ASU 2016-13 effective January 1, 2020 using a cumulative-effect adjustment to the opening balance of retained earnings on January 1, 2020.

Therefore, comparative financial information was not adjusted.

We assessed our outstanding receivables by reportable segment and determined the expected loss rate using historical loss information and aging considerations, as well as the current and future economic conditions of our customer base and the end markets in which they operate.

The Leasing Group's outstanding receivables primarily relate to their servicing and management agreements.

The method for evaluating the Leasing Group's operating lease receivables remained unchanged by ASU 2016-13.

The Rail Products Group's outstanding receivables primarily relate to amounts due on manufactured railcars, as well as completed repairs and maintenance projects.

Upon adoption, we recorded an adjustment to opening retained earnings of approximately $ 0.7 million ($ 0.5 million, net of tax).

The ongoing application of ASU 2016-13 is not expected to materially impact our results of operations, financial position, or cash flows.

ASU 2018-15 — In August 2018, the FASB issued ASU No.

2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.

ASU 2018-15 is effective for public companies during interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted.

We adopted ASU 2018-15 effective January 1, 2020 on a prospective basis.

Beginning January 1, 2020, capitalized implementation costs are included within other assets in the Consolidated Balance Sheet and are depreciated within selling, general, and administrative expenses in the Consolidated Statement of Operations.

The adoption did not have a significant impact on our Consolidated Financial Statements.

ASU 2020-04 — In March 2020, the FASB issued ASU No.

2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides temporary optional expedients to accounting guidance on contract modifications and hedge accounting to ease the potential financial reporting burdens as the market transitions from the London Interbank Offered Rate ("LIBOR") to alternative reference rates .

ASU 2020-04 was effective upon issuance.

ASU 2020-04 is in response to the announcement by United Kingdom's Financial Conduct Authority, which regulates the LIBOR, that it will no longer persuade or require banks to submit rates for the calculation of LIBOR after June 30, 202 3.

In the U.S., the Alternative Reference Rates Committee has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR.

We currently have LIBOR-based contracts that extend beyond June 2023 including derivative instruments, promissory notes for Trinity Rail Leasing 2017, LLC, a Delaware limited liability company and a limited purpose, indirect wholly-owned subsidiary of the Company owned through Trinity Industries Leasing Company (“TILC”), TILC's warehouse loan facility, and our revolving credit facility.

The adoption is not expected to have a significant impact on our Consolidated Financial Statements.

Management's Estimates

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Discontinued Operations

On November 1, 2018, we completed the spin-off of Arcosa.

Upon completion of the spin-off transaction, the accounting requirements for reporting Arcosa as a discontinued operation were met, and, accordingly, Arcosa's historical results have been reclassified to discontinued operations for the periods presented herein.

The following is a summary of operating results included in income (loss) from discontinued operations for the years ended December 31, 2020, 2019, and 2018:

Sale of Highway Products Business

In the fourth quarter of 2021, we completed the sale of our highway products business, THP.

The sale closed on December 31, 2021, and we received net proceeds of approximately $ 364.7 million, after certain adjustments and closing costs.

Substantially all of the proceeds from the sale were used to return capital to stockholders.

We recorded a gain of $ 183.3 million ($ 131.4 million, net of income taxes), which is net of related transaction costs of approximately $ 14.7 million.

These transaction costs primarily relate to investment banking fees and professional fees associated with various legal, accounting, and tax matters related to the sale.

We concluded that the sale of THP represented a strategic shift that would have a major effect on the Company’s operations and financial results.

Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this 2021 Annual Report on Form 10-K.

In connection with the sale, Trinity and Rush Hour entered into various agreements to effect the distribution and provide a framework for their relationship after the separation, including a purchase and sale agreement, a transition services agreement, and a lease agreement.

These agreements have various durations ranging between one and eighteen months.

We have determined that the continuing cash flows generated by these agreements do not constitute significant continuing involvement in the operations of THP.

The amount billed for transition services provided under the above agreements is not expected to be material to our results of operations.

Additionally, in connection with the sale of THP, the Company has agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”).

Consequently, results from discontinued operations below include certain legal expenses that were directly attributable to the highway products business, which were previously reported in continuing operations.

In the table below, selling, engineering, and administrative expenses for the year ended December 31, 2021 include a pre-tax $ 23.9 million litigation charge recorded for the Missouri class action based on the Company's assessment that a settlement is probable.

Similar expenses incurred in the future related to these retained obligations will likewise be reported in discontinued operations.

See Note 15 for further information regarding obligations retained in connection with the THP sale.

The following is a summary of THP's operating results included in income from discontinued operations for the years ended December 31, 2021, 2020, and 2019:

Year Ended December 31,

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Selling, engineering, and administrative expenses 65.3 41.2 51.5

Restructuring activities — 0.1 0.1

Other income — ( 0.3 ) —

Income from discontinued operations before income taxes 14.6 30.0 19.5

Provision for income taxes 2.7 5.6 2.7

Income from discontinued operations, net of income taxes $ 11.9 $ 24.4 $ 16.8

The following is a summary of THP's assets and liabilities attributable to discontinued operations, which were included in our Consolidated Balance Sheet as of December 31, 2020:

(in millions)

Receivables, net of allowance $ 34.6

Inventories 36.0

Property, plant, and equipment, net 34.6

Goodwill 61.6

Other assets 11.7

Total assets, discontinued operations $ 178.5

Accounts payable $ 10.3

Accrued liabilities 4.7

Other liabilities 3.5

Total liabilities, discontinued operations $ 18.5

Spin-off of Arcosa

In November 2018, we completed the spin-off of Arcosa, Inc ("Arcosa").

Upon completion of the spin-off transaction, the accounting requirements for reporting Arcosa as a discontinued operation were met, and, accordingly, Arcosa's historical results have been presented as discontinued operations for the periods presented herein.

The following is a summary of Arcosa's operating results included in income from discontinued operations for the years ended December 31, 2021, 2020, and 2019:

Year Ended December 31,

2021 2020 2019

(in millions)

Revenues $ — $ — $ —

Cost of revenues — — —

Selling, engineering, and administrative expenses — 0.2 4.1

Other (income) expense — — —

Income (loss) from discontinued operations before income taxes ( 0.2 ) ( 4.1 ) 84.8

Loss from discontinued operations before income taxes — ( 0.2 ) ( 4.1 )

Provision (benefit) for income taxes 0.8 ( 0.1 ) ( 1.0 )

Income (loss) from discontinued operations, net of income taxes $ ( 0.1 ) $ ( 3.1 ) $ 54.1

Derivative Instruments and Fair Value Accounting

Loss from discontinued operations, net of income taxes $ ( 0.8 ) $ ( 0.1 ) $ ( 3.1 )

Derivative Instruments and Fair Value Measurements

Derivative Instruments

We use derivative instruments to mitigate the impact of changes in interest rates, both in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding.

We also may use derivative instruments to mitigate the impact of changes in natural gas and diesel fuel prices and changes in foreign currency exchange rates.

Derivative instruments that are designated and qualify as cash flow hedges are accounted for by recording the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive loss ("AOCL") as a separate component of stockholders' equity and reclassified into earnings in the period during which the hedged transaction affects earnings.

We also use derivative instruments to mitigate the impact of changes in foreign currency exchange rates.

These accumulated gains or losses are reclassified into earnings in the periods during which the hedged transactions affect earnings.

We continuously monitor our derivative positions and the credit ratings of our counterparties and do not anticipate losses due to non-performance.

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at December 31, 2021

AOCL – loss/(income)

Amount Interest

Asset/(Liability) AOCL –

(income) Controlling Interest AOCL –

(income) Noncontrolling

Asset/(Liability) Controlling Interest Noncontrolling

(in millions, except %)

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TRIP Holdings warehouse loan $ 788.5 3.60 % $ — $ 0.6 $ 0.7

TRIP Master Funding secured railcar equipment notes

$ 34.8 2.62 % $ — $ 0.1 $ 0.1

2017 promissory notes – interest rate cap

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2006 secured railcar equipment notes $ — $ ( 0.1 ) $ ( 0.2 ) $ —

$ ( 0.1 ) $ ( 0.2 ) $ ( 0.2 ) $ —

2018 secured railcar equipment notes

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$ ( 0.1 ) $ ( 0.1 ) $ ( 0.1 ) $ ( 0.1 )

Open hedge (1) :

2017 promissory notes – interest rate swap

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(1) Based on the fair value of open hedges as of December 31, 2021 .

(2) Upon settlement of the debt in March 2020, the remaining balance of $ 0.1 million in AOCL was recognized through interest expense.

See Note 8 for additional information on the debt redemption.

Other Derivatives

Foreign Currency Hedge

Our exposure related to foreign currency transactions is currently hedged for up to a maximum of twelve months.

Information related to our foreign currency hedge is as follows:

accompanying balance sheet at December 31, 2021

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loss/(income) Year Ended December 31, Expected effect during next twelve months (1)

2021 2020 2019

(in millions)

Foreign currency hedge

$ 37.5 $ ( 0.1 ) $ 0.4 $ ( 7.7 ) $ 3.2 $ 0.1 $ 0.4

(1) Based on the fair value of open hedges as of December 31, 2021.

Our exposure related to foreign currency and commodity transactions is currently hedged for up to a maximum of twelve months.

The effect of commodity hedge transactions was immaterial to the Consolidated Financial Statements for all periods presented herein.

Fair Value Measurements

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$ 21.0 $ 45.2

Foreign currency hedge (2)

Total liabilities $ 21.1 $ 45.2

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Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of December 31, 2020 and 2019, we have no assets measured as Level 3 in the fair value hierarchy, except as described in Note 10 and Note 11.

As of December 31, 2021 and 2020, we have no assets measured as Level 3 in the fair value hierarchy.

See Note 11 for more information regarding the non-recurring fair value measurement considerations during the year ended December 31, 2020 for the impairment charge related to our small cube covered hopper railcars.

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Segment Information

We report our operating results in three principal business segments:

We report our operating results in two reportable segments:

(1) the Railcar Leasing and Management Services Group, which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services;

(2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services;

and (3) All Other, which includes our highway products business and legal, environmental, and maintenance costs associated with non-operating facilities.

In connection with the implementation of our rail-focused strategy, in the first quarter of 2020, we realigned certain activities previously reported in the All Other segment to now be presented within the Rail Products Group.

The prior period results have been recast to reflect these changes and present results on a comparable basis.

and (2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services.

Following the sale of THP, which was previously reported within All Other, we have combined the results of the prior Corporate and All Other groupings into a single Corporate and other grouping.

The remaining activity previously reported in All Other primarily includes legal, environmental, and maintenance costs associated with non-operating facilities.

Results of prior periods have been recast to reflect these changes and present results on a comparable basis.

Gains and losses from the sale of property, plant, and equipment are included in the operating profit of each respective segment.

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Amortization of deferred profit on railcars sold to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars.

Sales of railcars from the lease fleet are included in the Leasing Group, with related gains and losses computed based on the net book value of the original manufacturing cost of the railcars.

Lease portfolio sales are included in the Leasing Group, with related gains and losses computed based on the net book value of the original manufacturing cost of the railcars.

The financial information for these segments is shown in the tables below (in millions).

Year Ended December 31, 2021

Railcar Leasing and Management Services Group Rail Products Group All Other Corporate Eliminations – Lease Subsidiary

Railcar Leasing and Management Services Group Rail Products Group Corporate and other Eliminations – Lease Subsidiary

Eliminations – Other

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Depreciation & amortization $ 226.0 $ 33.6 $ 6.1 $ — $ — $ 265.7

$ 214.7 $ 35.1 $ 8.0 $ 8.2 $ — $ — $ 266.0

Capital expenditures $ 547.2 $ 21.3 $ 2.3 $ — $ — $ 570.8

Year Ended December 31, 2020

Railcar Leasing and Management Services Group Rail Products Group All Other Corporate Eliminations – Lease Subsidiary

Railcar Leasing and Management Services Group Rail Products Group Corporate and other Eliminations – Lease Subsidiary

Eliminations – Other

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Depreciation & amortization $ 214.7 $ 35.1 $ 8.7 $ — $ — $ 258.5

$ 232.2 $ 34.1 $ 8.3 $ 9.0 $ — $ — $ 283.6

Capital expenditures $ 602.2 $ 78.5 $ 17.4 $ — $ — $ 698.1

Year Ended December 31, 2019

Railcar Leasing and Management Services Group Rail Products Group All Other Corporate Eliminations – Lease Subsidiary

Railcar Leasing and Management Services Group Rail Products Group Corporate and other Eliminations – Lease Subsidiary

Eliminations – Other

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Depreciation & amortization $ 232.2 $ 34.1 $ 10.2 $ — $ — $ 276.5

$ 196.6 $ 35.6 $ 9.8 $ 9.9 $ — $ — $ 251.9

Capital expenditures $ 1,122.2 $ 85.6 $ 2.4 $ — $ — $ 1,210.2

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Rail Products Group 4.7 36.3 277.6

All Other 28.2 19.9 40.2

Segment Totals before Eliminations, Corporate Expenses, Impairment of long-lived assets, and Restructuring activities

418.2 704.1 558.9

Corporate ( 97.7 ) ( 108.0 ) ( 149.1 )

Segment Totals 355.6 390.0 684.2

Corporate and other ( 84.1 ) ( 99.7 ) ( 107.7 )

Impairment of long-lived assets — ( 396.4 ) —

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Provision (benefit) for income taxes 15.9 ( 274.1 ) 58.8

Income (loss) from discontinued operations, net of income taxes ( 0.1 ) ( 3.1 ) 54.1

Income from discontinued operations, net of income taxes 11.1 24.3 13.7

Gain on sale of discontinued operations, net of income taxes 131.4 — —

Net income (loss) $ 181.8 $ ( 226.2 ) $ 136.1

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Rail Products Group 1,064.4 858.6

All Other 199.4 195.7

Segment Totals before Eliminations and Corporate 8,710.1 9,228.1

Corporate 812.0 378.1

Segment Totals 8,649.8 8,510.7

Corporate and other 365.2 832.9

Assets of discontinued operations — 178.5

Eliminations – Lease Subsidiary ( 779.1 ) ( 820.3 )

Eliminations – Other — ( 1.0 )

Total assets $ 8,235.9 $ 8,701.8

Corporate assets are composed of cash and cash equivalents, short-term marketable securities, income tax receivable, notes receivable, certain property, plant, and equipment, and other assets.

Corporate and other assets are composed of cash and cash equivalents, short-term marketable securities, income tax receivable, notes receivable, certain property, plant, and equipment, and other assets.

We operate principally in North America.

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Total long-lived assets for our Mexico operations as of December 31, 2021 and 2020 are $ 102.0 million and $ 111.9 million, respectively.

One customer in the Rail Products Group comprised approximately 14 % of our consolidated revenues during the year ended December 31, 2020.

One customer in the Rail Products Group comprised approximately 22 %, 16 %, and 11 % of our consolidated revenues during the years ended December 31, 2021, 2020, and 2019, respectively.

Partially-Owned Leasing Subsidiaries

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Each of TRIP Holdings and RIV 2013 has wholly-owned subsidiaries that are the owners of railcars acquired from our Rail Products and Leasing Groups.

These wholly-owned subsidiaries are TRIP Master Funding LLC ("TRIP Master Funding") (wholly-owned by TRIP Holdings) and Trinity Rail Leasing 2012 LLC ("TRL-2012", wholly-owned by RIV 2013).

Railcar purchases by these subsidiaries were funded by secured borrowings and capital contributions from TILC and third-party equity investors.

TILC is the contractual servicer for TRIP Master Funding and TRL-2012, with the authority to manage and service each entity's owned railcars.

TRIP Holdings has wholly-owned subsidiaries known as Triumph Rail LLC ("Triumph Rail"), formerly known as TRIP Master Funding LLC ("TRIP Master Funding”), and TRIP Railcar Co.

LLC ("TRIP Railcar Co.").

RIV 2013 has a wholly owned-subsidiary known as TRP 2021 LLC ("TRP-2021"), formerly known as Trinity Rail Leasing 2012 LLC (“TRL-2012”).

TILC is the contractual servicer for Triumph Rail, TRIP Railcar Co., and TRP-2021, with the authority to manage and service each entity's owned railcars.

Our controlling interest in each of TRIP Holdings and RIV 2013 results from our combined role as both equity member and agent/servicer.

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Trinity has no obligation to guarantee performance under any of our partially-owned subsidiaries' (or their respective subsidiaries') debt agreements, guarantee any railcar residual values, shield any parties from losses or guarantee minimum yields.

The assets of each of TRIP Master Funding and TRL-2012 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of TRIP Master Funding and TRL-2012 have recourse only to the particular subsidiary's assets.

The assets of each of Triumph Rail, TRIP Railcar Co., and TRP-2021 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of Triumph Rail, TRIP Railcar Co., and TRP-2021 have recourse only to the particular subsidiary's assets.

Each of TILC and the third-party equity investors receive distributions from TRIP Holdings and RIV 2013, when available, in proportion to its respective equity interests, and has an interest in the net assets of the partially-owned subsidiaries upon a liquidation event in the same proportion.

TILC is paid fees for the services it provides to TRIP Master Funding and TRL-2012 and has the potential to earn certain incentive fees.

TILC and the third-party equity investors have commitments to provide additional equity funding to TRIP Holdings that are scheduled to expire in May 2021, contingent upon certain returns on investment in TRIP Holdings and other conditions being met.

There are no remaining equity commitments with respect to RIV 2013.

See Note 8 regarding the debt of TRIP Holdings and RIV 2013 and their respective subsidiaries.

See Note 11 for further information regarding impairment of long-lived assets related to our small cube covered hopper railcars recorded in the year ended December 31, 2020.

TILC is paid fees for the services it provides to Triumph Rail, TRIP Railcar Co., and TRP-2021 and has the potential to earn certain incentive fees.

There are no remaining equity commitments with respect to TRIP Holdings or RIV 2013.

See Note 8 regarding TRIP Holdings and RIV 2013, including the redemption and refinancing of the debt of their respective subsidiaries.

Investment in Unconsolidated Affiliate

In August 2021, the Company and Wafra announced a new RIV program between Trinity and Wafra Funds.

As part of this program, a joint venture was formed, Signal Rail, which is owned 90 % by Wafra Funds and 10 % by TILC.

Signal Rail or its subsidiaries are expected to invest in diversified portfolios of leased railcars originated by TILC targeting up to $ 1 billion in total acquisitions over an expected three-year investment period.

TILC will service all railcars owned by Signal Rail.

In connection with the launch of the RIV program, in August 2021, TILC and certain of its subsidiaries sold an initial portfolio of 3,582 railcars and related leases to Signal Rail for an aggregate sales price of approximately $ 325.1 million.

As a result of the sale, TILC received approximately $ 318.7 million in cash, of which $ 2.9 million was recognized as revenue for services performed associated with the delivery of railcars with attached leases.

Additionally, in connection with the sale, TILC received a 10 % equity interest in Signal Rail valued at $ 6.4 million, which was primarily received in exchange for its contribution of railcars to Signal Rail.

TILC recognized a gain of approximately $ 32.9 million on the initial portfolio sale during the year ended December 31, 2021 and will earn on-going fee revenue from servicing these railcars.

Signal Rail financed this purchase primarily through an asset-backed securitization.

In the event of future railcar portfolio sales, we expect that Signal Rail would issue additional debt, and Wafra Funds and TILC would make additional equity contributions to Signal Rail such that TILC would maintain its 10 % equity interest.

Upon consideration under the VIE model of ASC 810, Trinity has concluded that Signal Rail meets the definition of a VIE.

TILC has variable interests in Signal Rail arising from its 10 % equity ownership position and its role as a service provider.

We have evaluated the potential for consolidation using the variable interest model and have determined that Trinity is not the primary beneficary and therefore does not consolidate this entity as we do not have the power to direct the activities of the entity that most significantly impact its economic performance.

We will absorb portions of Signal Rail’s expected losses and/or receive portions of expected residual returns commensurate with our 10 % equity interest in Signal Rail.

Our investment in Signal Rail is being accounted for under the equity method of accounting.

At December 31, 2021, the carrying value of TILC’s equity investment in Signal Rail was $ 6.3 million, which is included in other assets in our Consolidated Balance Sheet.

The carrying value of this investment, together with any potential future investments described above, collectively represent our maximum exposure in Signal Rail.

Railcar Leasing and Management Services Group

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Property, plant, and equipment, net 5,706.1 1,570.6 7,276.7 ( 779.1 ) 6,497.6

5,795.9 1,626.3 7,422.2 ( 820.3 ) 6,601.9

Restricted cash 76.5 58.6 135.1 — 135.1

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Property, plant, and equipment, net (2)

5,795.9 1,626.3 7,422.2 ( 820.3 ) 6,601.9

Restricted cash 65.2 31.1 96.3 — 96.3

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($ in millions)

Leasing and management revenues $ 747.9 $ 756.5 $ 728.9 ( 1.1 ) % 3.8 %

Leasing and management $ 735.3 $ 747.9 $ 756.5 ( 1.7 ) % ( 1.1 ) %

Sales of railcars owned one year or less at the time of sale (1)(2)

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Leasing and management $ 296.8 $ 336.0 $ 314.7 ( 11.7 ) % 6.8 %

Railcars owned one year or less at the time of sale 0.4 41.4 21.5 ( 99.0 ) % 92.6 %

Railcars owned more than one year at the time of sale 17.3 50.5 50.4 ( 65.7 ) % 0.2 %

Property disposition losses (4)

Lease portfolio sales (1)

54.1 17.7 91.9 205.6 % ( 80.7 ) %

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Maintenance and compliance $ 95.0 $ 88.1 $ 102.1 7.8 % ( 13.7 ) %

Rent $ 9.7 $ 16.9 $ 42.4 ( 42.6 ) % ( 60.1 ) %

Rent and ad valorem taxes $ 18.4 $ 21.1 $ 28.5 ( 12.8 ) % ( 26.0 ) %

Selling, engineering, and administrative expenses

$ 50.6 $ 51.3 $ 49.5 ( 1.4 ) % 3.6 %

Interest $ 196.2 $ 197.2 $ 142.3 ( 0.5 ) % 38.6 %

$ 181.6 $ 196.2 $ 197.2 ( 7.4 ) % ( 0.5 ) %

* Not meaningful

(1) Includes revenues associated with sales-type leases of $ 160.5 million for the year ended December 31, 2019.

(1) Beginning in the fourth quarter of 2020, we made a prospective change in the presentation of sales of railcars from the lease fleet.

Therefore, all railcar sales for the year ended December 31, 2021 are presented as a net gain or loss from the disposal of a long-term asset regardless of the age of railcar that is sold.

See Note 1 for more information.

(2) Includes revenues associated with sales-type leases of $ 160.5 million for the year ended December 31, 2019.

(3) Operating profit includes:

depreciation;

maintenance and compliance;

fleet operating costs, which include maintenance, compliance, freight, and storage;

rent and ad valorem taxes;

and selling, engineering, and administrative expenses.

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Interest expense is not a component of operating profit and includes the effect of hedges.

(4) Property disposition losses for the year ended December 31, 2018 included a non-cash charge of $ 12.6 million associated with our election to forego the early purchase options contained in certain lease agreements.

(4) In connection with our sustainable railcar conversion program, depreciation expense increased $ 8.8 million for the year ended December 31, 2021, as a result of the disposal of certain railcar components.

Additionally, depreciation expense related to our small cube covered hopper railcars decreased by approximately $ 7.0 million for the years ended December 31, 2021 and 2020 as a result of the impairment charge recorded in the second quarter of 2020 related to these railcars.

(5) Effective January 1, 2020, we revised the estimated useful lives and salvage values of certain railcar types in our lease fleet.

This change in estimate resulted in a decrease in depreciation expense in the year ended December 31, 2020 of approximately $ 30.8 million.

This decrease was partially offset by higher depreciation associated with growth in the lease fleet.

This change in estimate resulted in a decrease in depreciation expense of approximately $ 30.8 million in the years ended December 31, 2021 and 2020.

See Note 1 for further information.

(6) As a result of the impairment of long-lived assets related to our small cube covered hopper railcars recorded in the second quarter of 2020, our quarterly depreciation expense beginning in the third quarter of 2020 has decreased by approximately $ 3.5 million, for a total reduction of $ 7.0 million for the year ended December 31, 2020 .

During the years ended December 31, 2020, 2019, and 2018, information related to the sales of leased railcars is as follows:

(6) Interest expense for the year ended December 31, 2021 includes $ 11.7 million of loss on extinguishment of debt associated with the refinancing of our partially-owned subsidiaries' debt.

See Note 8 for more information.

Interest expense for the year ended December 31, 2020 includes $ 5.0 million of loss on extinguishment of debt associated with the early redemption of debt.

Information related to lease portfolio sales is as follows:

Year Ended December 31,

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(in millions)

Sales of leased railcars:

Railcars owned one year or less at the time of sale (1)(2)

$ 54.4 $ 360.7 $ 113.9

Railcars owned more than one year at the time of sale

138.7 205.7 230.5

$ 193.1 $ 566.4 $ 344.4

Operating profit on sales of leased railcars:

Railcars owned one year or less at the time of sale $ 0.4 $ 41.4 $ 21.5

Railcars owned more than one year at the time of sale 17.3 50.5 50.4

$ 17.7 $ 91.9 $ 71.9

Operating profit margin on sales of leased railcars:

Railcars owned one year or less at the time of sale 0.7 % 11.5 % 18.9 %

Railcars owned more than one year at the time of sale 12.5 % 24.6 % 21.9 %

Weighted average operating profit margin on sales of leased railcars

Lease portfolio sales (1)

$ 460.7 $ 193.1 $ 566.4

Operating profit on lease portfolio sales $ 54.1 $ 17.7 $ 91.9

Operating profit margin on lease portfolio sales 11.7 % 9.2 % 16.2 %

(1) Includes revenues associated with sales-type leases of $ 160.5 million for the year ended December 31, 2019.

(2) Beginning in the fourth quarter of 2020, we made a prospective change in the presentation of sales of railcars from the lease fleet.

See Note 1 for more information.

Railcar Leasing Equipment Portfolio.

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Creditors of each of TRIP Holdings and RIV 2013 and their respective subsidiaries have recourse only to the particular subsidiary's assets.

TRIP Master Funding equipment with a net book value of $ 1,149.9 million is pledged as collateral for the TRIP Master Funding debt.

TRL-2012 equipment with a net book value of $ 476.4 million is pledged solely as collateral for the TRL-2012 secured railcar equipment notes.

See Note 5 for a description of TRIP Holdings and RIV 2013.

TRIP Holdings held equipment with a net book value of $ 1,110.7 million, which is pledged as collateral for the TRIP Holdings' debt held by its subsidiaries.

TRP-2021 equipment with a net book value of $ 459.9 million is pledged solely as collateral for the TRP-2021 debt.

See Note 5 for a description of TRIP Holdings and RIV 2013 and their respective subsidiaries.

Operating Lease Obligations.

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Construction in progress 18.1 41.9

979.4 1,040.4

Less accumulated depreciation ( 577.9 ) ( 631.6 )

accumulated depreciation ( 478.7 ) ( 506.7 )

Wholly-owned subsidiaries:

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7,082.0 7,030.1

Less accumulated depreciation ( 1,234.2 ) ( 1,139.0 )

accumulated depreciation ( 1,375.9 ) ( 1,234.2 )

5,706.1 5,795.9

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Equipment on lease 2,242.9 2,248.2

Less accumulated depreciation ( 621.9 ) ( 623.3 )

accumulated depreciation ( 672.3 ) ( 621.9 )

1,570.6 1,626.3

Deferred profit on railcars sold to the Leasing Group ( 1,047.3 ) ( 1,064.7 )

Less accumulated amortization 244.4 232.0

accumulated amortization 268.2 244.4

( 779.1 ) ( 820.3 )

$ 6,846.9 $ 6,968.8

In early 2020, we finalized an assessment of the estimated useful lives and salvage value assumptions for the railcars in our lease fleet.

This resulted in a revision to the useful lives and salvage values of certain railcar types in our lease fleet.

See Note 1 for further information.

We lease certain equipment and facilities under operating leases.

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See Note 1 and Note 6 for information related to the lease agreements, future operating lease obligations, and future minimum rental revenues associated with the Leasing Group.

We capitalized an insignificant amount of interest expense as part of the construction of facilities and equipment during 2020.

We did not capitalize any interest expense during 2019.

We capitalized an insignificant amount of interest expense as part of the construction of facilities and equipment during 2021 and 2020.

We estimate the fair market value of properties no longer in use based on the location and condition of the properties, the fair market value of similar properties in the area, and our experience selling similar properties in the past.

As of December 31, 2021, we had non-operating plants with a net book value of $ 6.3 million.

See Note 11 for further information regarding impairment of long-lived assets recorded in the year ended December 31, 2020, as well as asset impairment charges related to non-operating plants that were recorded during the year ended D ecember 31, 2019.

See Note 1 for more information regarding assets classified as held for sale as of December 31, 2020.

See Note 1 for more information regarding assets classified as held for sale as of December 31, 2021 and 2020.

The carrying amounts and estimated fair values of our long-term debt are as follows:

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2010 secured railcar equipment notes 220.6 234.6 235.9 248.5

2010 secured railcar equipment notes 235.9 248.5 248.5 264.3

2017 promissory notes, net of unamortized discount of $ 7.8 and $ 10.1

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416.5 423.3 434.7 449.3

TRIHC 2018 secured railcar equipment notes, net of unamortized discount of $ — and $ 1.4

— — 265.4 270.9

2019 secured railcar equipment notes, net of unamortized discount of $ 0.3 and $ 0.3

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348.8 349.9 369.0 370.2

2021 secured railcar equipment notes, net of unamortized discount of $ — and $ —

320.3 319.6 — —

TILC warehouse facility 561.8 561.8 519.4 519.4

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Partially-owned subsidiaries:

TRL 2012 secured railcar equipment notes 352.5 373.9 371.4 374.4

TRIP Master Funding secured railcar equipment notes 885.0 959.7 917.9 984.0

TRP-2021 secured railcar equipment notes, net of unamortized discount of $ 0.1 and $ —

352.2 347.7 352.5 373.9

Triumph Rail secured railcar equipment notes, net of unamortized discount of $ 0.2 and $ —

551.3 548.1 885.0 959.7

TRIP Railcar Co.

term loan 323.7 323.7 — —

1,227.2 1,219.5 1,237.5 1,333.6

unamortized debt issuance costs ( 11.1 ) ( 9.2 )

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The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs).

The respective carrying values of our revolving credit facility, TILC warehouse facility, and 2017 promissory notes approximate fair value because the interest rate adjusts to the market interest rate.

The respective carrying values of our revolving credit facility, 2017 promissory notes, TILC warehouse facility, and TRIP Railcar Co.

term loan approximate fair value because the interest rate adjusts to the market interest rate.

Revolving Credit Facility – We have a $ 450.0 million unsecured corporate revolving credit facility that matures in November 2023.

During the year ended December 31, 2020, we had total borrowings of $ 545.0 million and total repayments of $ 620.0 million under the revolving credit facility, with a remaining outstanding balance of $ 50.0 million as of December 31, 2020.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 35.2 million, leaving $ 364.8 million available for borrowing as of December 31, 2020.

During the year ended December 31, 2021, we had total borrowings of $ 470.0 million and total repayments of $ 520.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 28.3 million.

Of the $ 421.7 million remaining unused amount, $ 176.8 million is available for borrowing as of December 31, 2021.

The outstanding letters of credit as of December 31, 2021 are scheduled to expire in July 2022.

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The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage.

In July 2020, we amended our revolving credit facility to increase the maximum leverage ratio to provide additional near-term flexibility through December 31, 2021.

In December 2021, we amended our revolving credit facility to increase the maximum leverage ratio through June 30, 2022 to provide additional near-term flexibility.

Additionally, in March 2021, we amended our revolving credit facility to decrease the minimum interest coverage ratio through December 31, 2021.

As of December 31, 2021, we were in compliance with all such financial covenants.

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Wholly-owned leasing subsidiaries

TRL V – In May 2006, Trinity Rail Leasing V, L.P., a limited partnership (“TRL V”) and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC issued $ 355.0 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2006-1A (the “2006 Secured Railcar Equipment Notes”).

In March 2020, TRL V redeemed its 2006 Secured Railcar Equipment Notes due May 2036, of which $ 104.7 million was outstanding at the redemption date.

The fixed interest rate for these notes was at 5.90 % per annum.

In connection with the early redemption, we recognized a loss on extinguishment of debt of $ 5.0 million, which included a $ 4.7 million early redemption premium and $ 0.3 million in unamortized debt issuance costs.

The loss on extinguishment of debt is included in interest expense in our Consolidated Statement of Operations.

TRL VII – In November 2009, Trinity Rail Leasing VII LLC, a Delaware limited liability company (“TRL VII”) and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 238.3 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2009-1 (the “2009 Secured Railcar Equipment Notes”), of which $ 142.3 million was outstanding as of December 31, 2020.

The 2009 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture, dated November 5, 2009 between TRL VII and Wilmington Trust Company, as indenture trustee.

The 2009 Secured Railcar Equipment Notes bear interest at a fixed rate of 6.66 % per annum, are payable monthly, and have a final maturity date of November 16, 2039.

The 2009 Secured Railcar Equipment Notes are obligations of TRL VII and are non-recourse to Trinity.

TRL VII – In November 2009, Trinity Rail Leasing VII LLC, a Delaware limited liability company (“TRL VII”) and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 238.3 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2009-1 (the “2009 Notes”), of which $ 128.5 million was outstanding as of December 31, 2021.

The 2009 Notes were issued pursuant to a Master Indenture, dated November 5, 2009 between TRL VII and Wilmington Trust Company, as indenture trustee.

The 2009 Notes bear interest at a fixed rate of 6.66 % per annum, are payable monthly, and have a final maturity date of November 16, 2039.

The 2009 Notes are obligations of TRL VII and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL VII.

TRL-2010 – In October 2010, Trinity Rail Leasing 2010 LLC, a Delaware limited liability company ("TRL-2010") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 369.2 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2010-1 (“2010 Secured Railcar Equipment Notes"), of which $ 235.9 million was outstanding as of December 31, 2020.

The 2010 Secured Railcar Equipment Notes were issued pursuant to an Indenture, dated as of October 25, 2010 between TRL-2010 and Wilmington Trust Company, as indenture trustee.

The 2010 Secured Railcar Equipment Notes bear interest at a fixed rate of 5.19 %, are payable monthly, and have a stated final maturity date of October 16, 2040.

The 2010 Secured Railcar Equipment Notes are obligations of TRL-2010 and are non-recourse to Trinity.

TRL-2010 – In October 2010, Trinity Rail Leasing 2010 LLC, a Delaware limited liability company ("TRL-2010") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 369.2 million in aggregate principal amount of Secured Railcar Equipment Notes, Series 2010-1 (the “TRL-2010 Notes"), of which $ 220.6 million was outstanding as of December 31, 2021.

The TRL-2010 Notes were issued pursuant to an Indenture, dated as of October 25, 2010 between TRL-2010 and Wilmington Trust Company, as indenture trustee.

The TRL-2010 Notes bear interest at a fixed rate of 5.19 %, are payable monthly, and have a stated final maturity date of October 16, 2040.

The TRL-2010 Notes are obligations of TRL-2010 and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2010.

TILC Warehouse Loan Facility – TILC has a $ 750.0 million warehouse loan facility, which was established to finance railcars owned by TILC.

During the year ended December 31, 2020, we had total borrowings of $ 283.6 million and total repayments of $ 117.6 million under the TILC warehouse loan facility, with a remaining outstanding balance of $ 519.4 million as of December 31, 2020.

The entire unused facility amount of $ 230.6 million was available as of December 31, 2020 based on the amount of warehouse-eligible, unpledged equipment.

TILC Warehouse Loan Facility – TILC has a $ 1.0 billion warehouse loan facility, which was established to finance railcars owned by TILC.

In March 2021, the facility was extended through March 15, 2024, the total commitment was increased from $ 750 million to $ 1.0 billion, with a potential increase of up to an additional $ 250 million, subject to certain conditions, and provided for a facility margin of 185 basis points.

During the year ended December 31, 2021, we had total borrowings of $ 425.1 million and total repayments of $ 382.7 million under the TILC warehouse loan facility.

Under the renewed facility, the entire unused facility amount of $ 438.2 million was available as of December 31, 2021 based on the amount of warehouse-eligible, unpledged equipment.

The warehouse loan facility is a non-recourse obligation and is secured by a portfolio of railcars and operating leases, certain cash reserves, and other assets acquired and owned by the warehouse loan facility trust.

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Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 1.95 % at December 31, 2021.

Amounts outstanding at maturity, absent renewal, are payable in March 2022.

TRL-2017 – Trinity Rail Leasing 2017, LLC, a Delaware limited liability company ("TRL-2017") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, previously issued $ 302.4 million of promissory notes (the "2017 Promissory Notes") due May 15, 2024.

In November 2018, the 2017 Promissory Notes were extended through November 8, 2025 at an increased aggregate amount of $ 663.0 million.

In November 2018, the Original 2017 Promissory Notes were extended through November 8, 2025 at an increased aggregate amount of $ 663.0 million.

In July 2020, TRL-2017 issued an additional $ 225.0 million of promissory notes pursuant to a provision contained in its existing Amended and Restated Loan Agreement dated November 8, 2018 (together with previously-issued promissory notes, the "2017 Promissory Notes").

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The 2017 Promissory Notes are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2017.

Net proceeds received from the July 2020 transaction were used to repay approximately $ 48.3 million of borrowings under TILC's secured warehouse credit facility, and the remaining proceeds were used to repay borrowings under the Company’s revolving credit facility, and for general corporate purposes.

TRL-2018 – In June 2018, Trinity Rail Leasing 2018, LLC, a Delaware limited liability company ("TRL-2018") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 482.5 million in Secured Railcar Equipment Notes (the "TRL-2018 Secured Railcar Equipment Notes").

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The 2020-1 Notes, of which $ 134.1 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 1.96 %, are payable monthly, and have a stated final maturity date of October 17, 2050.

The TRL-2018 Notes are obligations of TRL-2018 only, secured by a portfolio of railcars and operating leases thereon acquired and owned by TRL-2018, certain cash reserves, and other assets of TRL-2018.

TRIHC 2018 – In October 2018, TRIHC 2018 LLC ("TRIHC 2018") was acquired by the Leasing Group, from an unrelated seller, and included the entire equity interest of a railcar leasing entity for $ 75.4 million in cash.

As a result of the purchase transaction, the Leasing Group acquired approximately 4,150 railcars, substantially all of which are currently under lease to third parties, and assumed indebtedness of approximately $ 283.9 million with maturities ranging from 2018 through 2035.

In November 2020, Trinity Rail Leasing 2020 LLC, a Delaware limited liability company (“TRL-2020”) and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, redeemed in full approximately $ 258.6 million of secured notes issued by TRIHC 2018.

TRL-2019 – In April 2019, Trinity Rail Leasing 2019 LLC ("TRL-2019"), a Delaware limited liability company and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 528.3 million in Secured Railcar Equipment Notes (the "TRL-2019 Secured Railcar Equipment Notes").

The TRL-2019 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture, dated as of April 10, 2019 between TRL-2019 and U.S.

The TRL-2018 Notes are obligations of TRL-2018 only, secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2018.

TRL-2019 – In April 2019, Trinity Rail Leasing 2019 LLC, a Delaware limited liability company ("TRL-2019") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 528.3 million in Secured Railcar Equipment Notes (the "TRL-2019 Notes").

The TRL-2019 Notes were issued pursuant to a Master Indenture, dated as of April 10, 2019 between TRL-2019 and U.S.

Bank National Association, as indenture trustee.

The TRL-2019 Secured Railcar Equipment Notes, of which $ 491.1 million was outstanding as of December 31, 2020, bear interest at a fixed rate of 3.82 %, are payable monthly, and have a stated final maturity date of April 17, 2049.

The TRL-2019 Secured Railcar Equipment Notes are obligations of TRL-2019 and are non-recourse to Trinity.

The TRL-2019 Notes, of which $ 468.8 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 3.82 %, are payable monthly, and have a stated final maturity date of April 17, 2049.

The TRL-2019 Notes are obligations of TRL-2019 and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2019.

In October 2019, TRL-2019 issued an additional $ 386.5 million in Secured Railcar Equipment Notes (the "TRL-2019-2 Secured Railcar Equipment Notes").

The TRL-2019-2 Secured Railcar Equipment Notes consisted of two classes of notes with (i) an aggregate principal amount of $ 106.9 million of TRL-2019's Series 2019-2 Class A-1 Secured Railcar Equipment Notes (the "TRL-2019 Class A-1 Notes"), and (ii) an aggregate principal amount of $ 279.6 million of TRL-2019's Series 2019-2 Class A-2 Secured Railcar Equipment Notes (the “TRL-2019 Class A-2 Notes”).

The TRL-2019-2 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture, dated April 10, 2019 between TRL-2019 and U.S.

In October 2019, TRL-2019 issued an additional $ 386.5 million in Secured Railcar Equipment Notes (the "TRL-2019-2 Notes").

The TRL-2019-2 Notes consisted of two classes of notes with (i) an aggregate principal amount of $ 106.9 million of TRL-2019's Series 2019-2 Class A-1 Secured Railcar Equipment Notes (the "TRL-2019 Class A-1 Notes"), and (ii) an aggregate principal amount of $ 279.6 million of TRL-2019's Series 2019-2 Class A-2 Secured Railcar Equipment Notes (the “TRL-2019 Class A-2 Notes”).

The TRL-2019-2 Notes were issued pursuant to a Master Indenture, dated April 10, 2019 between TRL-2019 and U.S.

Bank National Association, as indenture trustee, as supplemented by a Series 2019-2 Supplement dated as of October 17, 2019.

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The TRL-2019 Class A-2 Notes, of which $ 279.6 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 3.10 %, are payable monthly, and have a stated final maturity date of October 17, 2049.

The TRL-2019-2 Secured Railcar Equipment Notes are obligations of TRL-2019 and are non-recourse to Trinity.

The TRL-2019-2 Notes are obligations of TRL-2019 and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2019.

TRL-2020 – In November 2020, TRL-2020 issued an aggregate principal amount of (i) $ 110.0 million of TRL-2020’s Series 2020-2 Class A-1 Secured Railcar Equipment Notes (the “TRL-2020 Class A-1 Notes”), (ii) $ 240.3 million of TRL-2020’s Series 2020-2 Class A-2 Secured Railcar Equipment Notes (the “TRL-2020 Class A-2 Notes”), and (iii) $ 20.5 million of TRL-2020’s Series 2020-2 Class B Secured Railcar Equipment Notes (the “TRL-2020 Class B Notes”) (the TRL-2020 Class A-1 Notes, the TRL-2020 Class A-2 Notes, and the TRL-2020 Class B Notes are, collectively, the “TRL-2020 Notes”).

TRL-2020 – In November 2020, Trinity Rail Leasing 2020 LLC, a Delaware limited liability company (“TRL-2020”) and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued an aggregate principal amount of (i) $ 110.0 million of TRL-2020’s Series 2020-2 Class A-1 Secured Railcar Equipment Notes (the “TRL-2020 Class A-1 Notes”), (ii) $ 240.3 million of TRL-2020’s Series 2020-2 Class A-2 Secured Railcar Equipment Notes (the “TRL-2020 Class A-2 Notes”), and (iii) $ 20.5 million of TRL-2020’s Series 2020-2 Class B Secured Railcar Equipment Notes (the “TRL-2020 Class B Notes”) (the TRL-2020 Class A-1 Notes, the TRL-2020 Class A-2 Notes, and the TRL-2020 Class B Notes are, collectively, the “TRL-2020 Notes”).

The TRL-2020 Notes were issued pursuant to a Master Indenture, dated November 19, 2020 between TRL-2020 and U.S.

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The TRL-2020 Notes are payable monthly, and have a stated final maturity date of November 19, 2050.

Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2020 Notes were used to repay approximately $ 22.1 million of borrowings under the Leasing Group's secured warehouse credit facility, to redeem in full approximately $ 258.6 million of secured notes issued by TRIHC 2018 as described above, and for general corporate purposes.

The TRL-2020 Notes are obligations of TRL-2020 and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2020.

TRL-2021 – In June 2021, Trinity Rail Leasing 2021 LLC, a Delaware limited liability company ("TRL-2021") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued an aggregate principal amount of (i) $ 305.2 million of its Series 2021-1 Class A Green Secured Railcar Equipment Notes (the "TRL-2021 Class A Notes") and (ii) $ 19.8 million of its Series 2021-1 Class B Green Secured Railcar Equipment Notes (the "TRL-2021 Class B Notes") (the TRL-2021 Class A Notes and the TRL-2021 Class B Notes are, collectively, the “TRL-2021 Notes”).

The TRL-2021 Class A Notes, of which $ 300.5 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 2.26 %.

The TRL-2021 Class B Notes, of which $ 19.8 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 3.08 %.

The TRL-2021 Notes are payable monthly, and have a stated final maturity date of July 19, 2051.

We incurred $ 3.3 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRL-2021 Notes.

The TRL-2021 Notes are obligations of TRL-2021 and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2021.

Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2021 Notes were used to repay approximately $ 214.4 million of borrowings under TILC's warehouse loan facility and for general corporate purposes.

Partially-owned leasing subsidiaries

TRIP Master Funding – The TRIP Master Funding Secured Railcar Equipment Notes consisted of three classes with (i) the Class A-1a TRIP Master Funding Secured Railcar Equipment Notes ("TRMF Class A-1a Notes") bearing interest at 4.37 %, (ii) the Class A-1b TRIP Master Funding Secured Railcar Equipment Notes ("TRMF Class A-1b Notes") bearing interest at LIBOR plus 2.50 %, and (iii) the Class A-2 TRIP Master Funding Secured Railcar Equipment Notes ("TRMF Class A-2 Notes") bearing interest at 6.02 %, all payable monthly, with a final maturity date in July 2041.

In May 2014, TRIP Master Funding issued $ 335.7 million in aggregate principal amount of Series 2014-1 Secured Railcar Equipment Notes consisting of two classes with (i) the Class A-1 Series 2014-1 Secured Railcar Equipment Notes ("TRMF 2014-1 Class A-1 Notes") bearing interest at 2.86 % and (ii) the Class A-2 Series 2014-1 Secured Railcar Equipment Notes ("TRMF 2014-1 Class A-2 Notes") bearing interest at 4.09 %, with a final maturity date of April 2044.

In August 2017, TRIP Master Funding issued $ 237.9 million in aggregate principal amount of Series 2017-1 Secured Railcar Equipment Notes pursuant to the Master Indenture between TRIP Master Funding and Wilmington Trust Company, as indenture trustee, with a final maturity date of August 2047.

The proceeds from the issuance were used primarily to retire the TRMF Class A-1a Notes and TRMF Class A-1b Notes as well as the TRMF 2014-1 Class A-1 Notes in full.

The TRIP Master Funding Secured Railcar Equipment Notes and the TRIP Master Funding Series 2014-1 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture dated July 6, 2011 between TRIP Master Funding and Wilmington Trust Company, as indenture trustee;

are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings;

and are secured by TRIP Master Funding's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRIP Master Funding.

As of December 31, 2020, there were $ 508.8 million outstanding of the TRMF Class A-2 Notes and $ 220.7 million of the TRMF 2014-1 Class A-2 Notes.

The TRIP Master Funding Series 2017-1 Secured Railcar Equipment Notes consist of two classes with (i) the Class A-1 2017-1 Secured Railcar Equipment Notes ("TRMF 2017-1 Class A-1 Notes") bearing interest at 2.71 % and (ii) the Class A-2 2017-1 Secured Railcar Equipment Notes ("TRMF 2017-1 Class A-2 Notes") bearing interest at 3.74 %.

The TRIP Master Funding Series 2017-1 Secured Railcar Equipment Notes are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings and are secured by TRIP Master Funding's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRIP Master Funding.

As of December 31, 2020, there were $ 20.6 million and $ 134.9 million of TRMF 2017-1 Class A-1 Notes and TRMF 2017-1 Class A-2 Notes outstanding, respectively.

TRL-2012 – In December 2012, TRL-2012, a Delaware limited liability company and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued $ 145.4 million in aggregate principal amount of Series 2012-1 Class A-1 Secured Railcar Equipment Notes (the "2012 Class A-1 Notes") and $ 188.4 million in aggregate principal amount of Series 2012-1 Class A-2 Secured Railcar Equipment Notes (the "2012 Class A-2 Notes" and collectively with the 2012 Class A-1 Notes, the "2012 Secured Railcar Equipment Notes"), of which $ 25.9 million and $ 188.4 million, respectively, were outstanding as of December 31, 2020.

The 2012 Class A-1 Notes bear interest at a fixed rate of 2.27 %, are payable monthly, and have a stated final maturity date of January 15, 2043.

The 2012 Class A-2 Notes bear interest at a fixed rate of 3.53 %, are payable monthly, and have a stated final maturity date of January 15, 2043.

In May 2013, TRL-2012 became a subsidiary of one of the Company's partially-owned subsidiaries, RIV 2013.

See Note 5 for further explanation.

In August 2013, TRL-2012 issued $ 183.4 million in aggregate principal amount of Series 2013-1 Secured Railcar Equipment Notes of which $ 138.2 million was outstanding as of December 31, 2020.

The 2013-1 Secured Railcar Equipment Notes bear interest at a fixed rate of 3.90 %, are payable monthly, and have a stated final maturity date of July 15, 2043.

The 2012 Secured Railcar Equipment Notes and the 2013-1 Secured Railcar Equipment Notes were issued pursuant to a Master Indenture dated December 19, 2012 between TRL-2012 and Wilmington Trust Company, as indenture trustee;

are non-recourse to Trinity, TILC, RIV 2013, and the other equity investors in RIV 2013;

and are secured by TRL-2012's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRL-2012.

TRIP Master Funding and TRL-2012 are wholly-owned subsidiaries of TRIP Holdings and RIV 2013, respectively, which, in turn, are partially-owned subsidiaries of the Company, through its wholly-owned subsidiary, TILC.

Triumph Rail – In June 2021, Triumph Rail, formerly known as TRIP Master Funding, issued an aggregate principal amount of (i) $ 535.0 million of its Series 2021-2 Class A Green Secured Railcar Equipment Notes (the “Triumph Class A Notes”) and (ii) $ 25.4 million of its Series 2021-2 Class B Green Secured Railcar Equipment Notes (the “Triumph Class B Notes”) (the Triumph Class A Notes and the Triumph Class B Notes are, collectively, the “Triumph Notes”).

The Triumph Class A Notes, of which $ 526.1 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 2.15 %.

The Triumph Class B Notes, of which $ 25.4 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 3.08 %.

The Triumph Notes are payable monthly, and have a stated final maturity date of June 15, 2051.

We incurred $ 5.6 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the Triumph Notes.

The Triumph Notes are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings, and are secured by Triumph Rail's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by Triumph Rail.

Triumph Rail used the net proceeds received from the issuance of the Triumph Notes, as well as proceeds from the sale of railcars and related operating leases to TRIP Railcar Co.

described below, to redeem its outstanding debt, consisting of (i) the Series 2011 Class A-2 TRIP Master Funding Secured Railcar Equipment Notes due July 2041, (ii) the Series 2014-1 Class A-2 Secured Railcar Equipment Notes due April 2044, and (iii) the Series 2017-1 Secured Railcar Equipment Notes due August 2047, of which $ 869.1 million was outstanding at the redemption date.

The all-in rate for these notes was 5.16 % per annum at the time of redemption.

In connection with the redemption, we recognized a loss on extinguishment of debt of $ 8.7 million, which included a $ 3.3 million early redemption premium and a write-off of $ 5.4 million in unamortized debt issuance costs.

These charges are reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the year ended December 31, 2021.

TRIP Railcar Co.

Term Loan – In June 2021, TRIP Railcar Co.

drew down $ 329.6 million under a term loan agreement ("TRIP Railcar Co.

The TRIP Railcar Co.

term loan was established to finance railcars and operating leases thereon purchased by TRIP Railcar Co.

from Triumph Rail.

The principal and interest of this indebtedness are paid from the cash flows of the underlying leases.

The TRIP Railcar Co.

term loan bears interest at LIBOR plus 1.85 %, for an all-in interest rate of 1.95 % at December 31, 2021, and has a stated maturity date of June 2025.

We incurred $ 2.9 million in debt issuance costs, which will be amortized to interest expense over the anticipated repayment term of the TRIP Railcar Co.

The TRIP Railcar Co.

term loan is non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings;

and is secured by TRIP Railcar Co.'s portfolio of railcars, operating leases thereon, and all other assets owned by TRIP Railcar Co.

Net proceeds received from the transaction were used to purchase railcars and related operating leases from Triumph Rail.

TRP-2021 – In June 2021, TRP-2021, formerly known as TRL-2012, issued an aggregate principal amount of (i) $ 334.0 million of its Series 2021-1 Class A Green Secured Railcar Equipment Notes (the “TRP-2021 Class A Notes”) and (ii) $ 21.0 million of its Series 2021-1 Class B Green Secured Railcar Equipment Notes (the “TRP-2021 Class B Notes”) (the TRP-2021 Class A Notes and the TRP-2021 Class B Notes are, collectively, the “TRP-2021 Notes”).

The TRP-2021 Class A Notes, of which $ 331.3 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 2.07 %.

The TRP-2021 Class B Notes, of which $ 21.0 million was outstanding as of December 31, 2021, bear interest at a fixed rate of 3.06 %.

The TRP-2021 Notes are payable monthly, and have a stated final maturity date of June 15, 2051.

We incurred $ 3.7 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRP-2021 Notes.

The TRP-2021 Notes are non-recourse to Trinity, TILC, RIV 2013, and the other equity investors in RIV 2013, and are secured by TRP-2021's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRP-2021.

TRP-2021 used the net proceeds from the issuance of the TRP-2021 Notes to redeem its outstanding debt, consisting of (i) the Series 2012-1 Secured Railcar Equipment Notes due January 2043 and (ii) the Series 2013-1 Class A-1 Secured Railcar Equipment Notes due July 2043, of which $ 348.0 million was outstanding at the redemption date.

The all-in rate for these notes was 3.59 % per annum at the time of redemption.

In connection with the redemption, we recognized a loss on extinguishment of debt of $ 3.0 million, which related to the write-off of unamortized debt issuance costs.

This write-off is reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the year ended December 31, 2021.

Triumph Rail and TRP-2021 are wholly-owned subsidiaries of TRIP Holdings and RIV 2013, respectively, which, in turn, are partially-owned subsidiaries of the Company, through its wholly-owned subsidiary, TILC.

Our combined weighted average ownership interest in TRIP Holdings and RIV 2013 is 38 %.

See Note 5 for further explanation.

The remaining principal payments under existing debt agreements as of December 31, 2020 are as follows:

Scheduled Repayments of Long-Term Debt

Each of our secured railcar equipment notes generally has an anticipated repayment date and a stated final maturity date.

While the stated final maturity dates of each of these notes can be up to 30 years after the respective issuance dates, the cash flows from the encumbered assets of each of these notes will be applied, pursuant to the payment priorities of their respective indentures, so as to amortize their respective notes to achieve monthly targeted principal balances.

If the cash flow assumptions used in determining the targeted balances are met, it is anticipated that the notes will be repaid well in advance of their stated final maturity date;

the repayments reflected in the table below are based on the earlier anticipated repayment dates rather than the stated final maturity dates.

There can be no assurance, however, that such cash flow assumptions will be realized.

If these notes are not repaid by the anticipated repayment date, the respective interest rates on these notes would increase from the fixed rates stated above.

The remaining principal payments under existing debt agreements as of December 31, 2021 based on the anticipated repayment dates are as follows:

2022 2023 2024 2025 2026 Thereafter Total

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2020 secured railcar equipment notes 18.5 18.3 14.3 11.3 14.1 272.4 348.9

2021 secured railcar equipment notes 12.6 12.2 13.3 12.6 14.0 255.6 320.3

TILC warehouse facility

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— — — 500.3 — — 500.3

TRL 2012 secured railcar equipment notes

19.8 19.5 22.7 28.9 31.3 230.3 352.5

TRIP Master Funding secured railcar equipment notes

40.5 41.8 37.0 191.6 70.3 503.8 885.0

TRP-2021 secured railcar equipment notes 5.3 10.9 15.6 15.8 17.3 287.4 352.3

Triumph Rail secured railcar equipment notes 19.2 16.5 33.2 30.0 24.0 428.6 551.5

TRIP Railcar Co.

term loan 12.6 311.1 — — — — 323.7

Total principal payments $ 231.4 $ 520.7 $ 628.7 $ 1,298.5 $ 441.4 $ 2,094.6 $ 5,215.3

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Effect of CARES Act 4.5 34.4 —

Impairment - noncontrolling interest in partially-owned subsidiaries ( 3.5 ) — —

State taxes 3.0 1.1 2.3

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Executive compensation limitations 1.8 ( 0.3 ) 1.3

Interest expense limitations from partially-owned subsidiaries 0.2 1.0 1.3

Noncontrolling interest in partially-owned subsidiaries 0.1 0.1 ( 0.5 )

Foreign rate differential 1.4 ( 0.1 ) 0.4

Excise tax 1.3 — —

Nondeductible compensation 1.2 ( 0.2 ) 0.6

Changes in state laws and apportionment 0.3 ( 1.4 ) 5.8

Changes in valuation allowances and reserves 0.5 — 1.6

Equity compensation ( 4.0 ) — ( 0.9 )

Effect of Tax Cuts and Jobs Act — — ( 3.9 )

Changes in valuation allowances and reserves ( 4.3 ) 0.7 —

Impairment – noncontrolling interest in partially-owned subsidiaries — ( 3.3 ) —

Interest expense limitations from partially-owned subsidiaries — 0.2 1.1

Noncontrolling interest in partially-owned subsidiaries — 0.1 0.2

Other, net ( 0.4 ) 0.2 ( 0.6 )

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For the year ended December 31, 2021, the difference between the U.S.

statutory rate and effective tax rate is primarily due the impact of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") partially offset by the portion of the non-cash small cube covered hopper railcar impairment charge that is not tax-effected because it is related to the noncontrolling interest.

statutory rate and effective tax rate is primarily due to an adjustment to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") carryback benefit previously recognized, state taxes, and foreign taxes, partially offset by excess tax benefits associated with equity based compensation.

For the year ended December 31, 2020, the difference between the U.S.

statutory rate and effective tax rate is primarily due to state income tax expense, foreign branch taxes, and changes in state tax laws and apportionment.

statutory rate and effective tax rate is primarily due the impact of the CARES Act partially offset by the portion of the non-cash small cube covered hopper railcar impairment charge that is not tax-effected because it is related to the noncontrolling interest.

For the year ended December 31, 2019, the difference between the U.S.

statutory tax rate and the effective tax rate was primarily attributed to state income tax expense, foreign branch taxes, changes in state tax and apportionment laws, and the final accounting for the effects of the Tax Cuts and Jobs Act (the "Tax Act") that was enacted on December 22, 2017.

statutory rate and effective tax rate is primarily due to state income tax expense, foreign branch taxes, and changes in state tax laws and apportionment.

See Note 5 for a further explanation of activities with respect to our partially-owned leasing subsidiaries.

On March 27, 2020, the CARES Act was enacted.

The CARES Act was a stimulus package and part of a series of bills meant to address the economic uncertainties associated with COVID-19.

Due to the enactment of the CARES Act, Trinity filed a carryback claim for the 2018 and 2019 tax losses to the 2013-2015 tax years, allowing the recovery of taxes previously paid.

The tax losses generated in 2020 will also be carried back to offset the remaining income in 2015.

Due to the enactment of the CARES Act, Trinity filed a carryback claim for the 2018-2020 tax losses to the 2013-2015 tax years, allowing the recovery of taxes previously paid.

The income taxes associated with the carryback claims were paid at a federal rate of 35.0 %, rather than the current rate of 21.0 % in effect beginning with the 2018 tax year.

The overall net impact of the CARES Act resulted in a tax benefit of $ 180.4 million for the year ended December 31, 2020.

Income (loss) before income taxes for the years ended December 31, 2020, 2019, and 2018 was $( 487.1 ) million, $ 201.1 million, and $ 139.8 million, respectively, for U.S.

The overall net impact of the CARES Act resulted in a tax expense of $ 2.5 million and a tax benefit of $ 180.4 million for the years ended December 31, 2021 and 2020, respectively.

Income (loss) from continuing operations before income taxes for the years ended December 31, 2021, 2020, and 2019 was $ 44.6 million, $( 517.2 ) million, and $ 181.6 million, respectively, for U.S.

operations, and $ 10.6 million, $( 7.4 ) million, and $( 0.4 ) million, respectively, for foreign operations, principally Mexico and Canada.

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Right-of-use assets 18.7 17.5

Accrued liabilities and other 1.9 —

Total deferred tax liabilities 1,192.0 1,154.2

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At December 31, 2021, we had $ 3.9 million of federal consolidated net operating loss carryforwards and $ 20.6 million of tax-effected state loss carryforwards remaining.

All of the federal net operating loss carryforwards were acquired in 2010.

The acquired federal net operating loss carryforwards are subject to limitations on the amount that can be utilized in any one year tax year and are due to expire in 2028 and 2029.

The federal net operating loss generated in the current year will be carried back five years under the CARES Act to offset income remaining in 2015.

All of the federal net operating loss carryforwards were acquired in a stock acquisition in 2010 and are subject to limitations on the amount that can be utilized in any one year tax year and are due to expire in 2029.

We have established valuation allowances for federal, state, and foreign tax operating losses and credits that we have estimated may not be realizable.

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Our 2016 and 2017 tax years are effectively settled.

The 2013-2015 tax years statutes will remain open due to tax loss carryback claims that have been filed.

We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax return statutes remain open from 2014 forward.

The statutes of limitations for auditing the 2013-2015 and 2018-2020 tax years will remain open due to tax loss carryback claims we have filed.

We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax return statutes of limitations remain open for auditing 2014 forward.

We believe we are appropriately reserved for any potential matters.

Unrecognized tax benefits

The change in unrecognized tax benefits for the years ended December 31, 2020, 2019, and 2018 was as follows:

The change in unrecognized tax benefits was as follows:

Year Ended December 31,

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Ending balance $ 2.3 $ 2.3 $ 2.3

Settlements during the years ended December 31, 2019 and 2018 were due to the resolution of state audits.

Settlements during the year ended December 31, 2019 were due to the resolution of state audits.

The total amount of unrecognized tax benefits including interest and penalties at December 31, 2021 and 2020, that would affect our effective tax rate if recognized, was $ 4.3 million and $ 4.1 million, respectively.

Trinity accounts for interest expense and penalties related to income tax issues as income tax expense.

The Company accounts for interest expense and penalties related to income tax issues as income tax expense.

Accordingly, interest expense and penalties associated with an uncertain tax position are included in the income tax provision.

The total amount of accrued interest and penalties from continuing operations as of December 31, 2021 and 2020 was $ 3.0 million and $ 2.9 million, respectively.

Income tax expense for the years ended December 31, 2020, 2019, and 2018 included an increase of $ 0.2 million, a decrease of $ 1.0 million, and an increase of $ 0.5 million, respectively, with regard to interest expense and penalties related to uncertain tax positions.

Income tax expense for the years ended December 31, 2021, 2020, and 2019 included an increase of $ 0.1 million, an increase of $ 0.2 million, and a decrease of $ 1.0 million, respectively, with regard to interest expense and penalties related to uncertain tax positions.

Employee Retirement Plans

We sponsor defined benefit plans and defined contribution profit sharing plans that provide retirement income and death benefits for eligible employees.

We sponsor defined benefit plans and a defined contribution plan (the "401(k) plan") that provide retirement income and death benefits for eligible employees.

The annual measurement date of the benefit obligations, fair value of plan assets, and funded status is December 31.

Pension Plan Termination

On September 4, 2019, our Board of Directors approved the termination of the Trinity Industries, Inc.

In September 2019, our Board of Directors approved the termination of the Trinity Industries, Inc.

Consolidated Pension Plan (the "Pension Plan"), effective December 31, 2019.

The Pension Plan was settled in the fourth quarter of 2020, which resulted in the Company no longer having any remaining funded pension plan obligations.

Except for retirees receiving payments under the Pension Plan, participants had the choice of receiving a single lump sum payment or an annuity from a highly-rated insurance company that will pay and administer future benefit payments.

Upon settlement, we recognized a pre-tax non-cash pension settlement charge of $ 151.5 million, which was inclusive of all unamortized losses previously recorded in AOCL.

The settlement charge was recognized in our Statement of Operations during the fourth quarter when the payments were made to those participants electing to receive a lump sum distribution and when the annuity contracts were purchased to settle all remaining outstanding pension obligations.

The surplus of the Pension Plan of $ 23.6 million will be used, as prescribed in the applicable regulations, to fund obligations associated with the Company's defined contribution profit sharing plan and final pension administrative expenses.

We expect that any remaining surplus would be used for other corporate purposes, subject to applicable taxes.

Upon settlement, we recognized a pre-tax non-cash pension settlement charge in the fourth quarter of 2020 of $ 151.5 million, which was inclusive of all unamortized losses previously recorded in AOCL.

As of December 31, 2020, the remaining surplus of the Pension Plan was $ 23.6 million.

During the year ended December 31, 2021, as permitted by applicable regulations, we used $ 10.9 million of the Pension Plan surplus to fund obligations associated with the Company's profit sharing plans and used $ 2.5 million to fund pension administrative expenses required to finalize the settlement of the Pension Plan.

Additionally, we received a $ 6.4 million net refund upon final settlement of the annuity contract, which resulted in a remaining surplus of the Pension Plan of $ 16.6 million.

During the fourth quarter of 2021, we reverted $ 16.0 million of the surplus pension assets to the Company and incurred an excise tax of approximately $ 3.2 million.

These activities are included in the pension plan settlement line in our Consolidated Statements of Operations.

Actuarial assumptions

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Assumptions used to determine benefit obligations at the annual measurement date were:

Obligation discount rate N/A 2.73 % 4.45 %

Obligation discount rate (1)

N/A N/A 2.73 %

Assumptions used to determine net periodic benefit costs were:

Obligation discount rate (1)

Long-term rate of return on plan assets 3.90 % 4.90 % 5.65 %

N/A 2.71 % 4.45 %

Long-term rate of return on plan assets N/A 3.90 % 4.90 %

(1) Not applicable as of December 31, 2021 and for the year ended December 31, 2021 as all qualified pension plans were settled as of December 31, 2020.

Prior to the settlement of our Pension Plan, the obligation discount rate assumption was determined by deriving a single discount rate from a theoretical settlement portfolio of high quality corporate bonds sufficient to provide for the plans' projected benefit payments.

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Settlement loss — 151.5 —

Other — — 0.6

Net periodic benefit cost 0.7 152.6 1.4

Profit sharing 9.0 11.0 11.1

Defined contribution expense 8.6 7.5 9.6

Net expense $ 9.3 $ 160.1 $ 11.0

The expected return on plan assets is based on the plan assets' fair value.

The expected return on plan assets for the years ended December 31, 2020 and 2019 was based on the plan assets' fair value.

Amortization of actuarial loss is determined using the corridor method.

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Obligations and funded status

Information regarding the terminated Pension Plan and the Supplemental Executive Retirement Plan ("SERP") based upon a December 31 measurement date is as follows:

Information regarding the terminated Pension Plan and the SERP based upon a December 31 measurement date is as follows:

Year Ended December 31,

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Beginning of year $ 15.5 $ 557.9

Service cost — 0.1

Interest 0.4 14.8

1 unchanged sentence

Actuarial (gain) loss ( 0.4 ) 18.0

Plan amendments — 1.5

Settlements — ( 552.2 )

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Settlements — ( 552.2 )

401(k) funding ( 10.9 ) —

Final annuity contract true-up, net of administrative expenses 3.9 —

Reversion of excess plan assets ( 16.0 ) —

End of year $ 0.6 $ 23.6

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Actuarial losses included in AOCL and expected to be recognized in net periodic pension cost for the year ended December 31, 2022 are $ 0.3 million ($ 0.2 million net of related income taxes).

Upon settlement of our Pension Plan in the fourth quarter of 2020, the target and actual investment allocation strategy at December 31, 2020 is 100 % cash and cash equivalents.

The target and actual investment allocation strategy at December 31, 2021 is 100 % cash and cash equivalents.

The estimated fair value of the plans' assets at December 31, 2021 was $ 0.6 million of temporary cash investments (Level 1).

In anticipation of the planned settlement, we adjusted our target allocation at December 31, 2019 to a 100 % liability hedging portfolio.

Historically, our investment strategies were developed as part of a comprehensive asset/liability management process that considered the relationship between both the assets and liabilities of the plans for the purpose of providing the capital assets necessary to meet the financial obligations made to participants of our pension plans.

These strategies considered not only the expected risk and returns on the plans' assets, but also the actuarial projections of liabilities, projected contributions, and funded status.

Our investment policy statement allocated our pension plan assets into two portfolios as follows:

• Liability hedging portfolio – The objective of the liability hedging portfolio is to match the characteristics of the pension plans' liabilities.

This portfolio consists of fixed income holdings which are generally investment grade.

• Growth portfolio – The objective of the growth portfolio is to focus upon total return with an acceptable level of risk.

This portfolio is heavily weighted toward U.S.

equities with a lesser exposure to international equities, domestic real estate investment trusts, U.S.

high yield and emerging market sovereign debt.

The target allocation between these two portfolios varied based on the pension plans' percentage of projected benefit obligations funded status.

The range of target asset allocations were determined after giving consideration to the expected returns of each asset category within the two portfolios, the expected performance of each asset category, the volatility of asset returns over time, and the complementary nature of the asset mix within the portfolio.

The principal pension investment strategies included asset allocation and active asset management within approved guidelines.

These assets were managed by an investment advisor.

The estimated fair value of the plans' assets at December 31, 2019, indicating input levels used to determine fair value are as follows:

Fair Value Measurement as of December 31, 2019

(in millions)

Level 1 Level 2 Level 3 Total

Temporary cash investments $ 13.5 $ — $ — $ 13.5

Fixed Income – Government and agencies — 121.7 — 121.7

Fixed Income – Corporate — 370.5 — 370.5

Fixed Income – Asset-backed securities — 2.2 — 2.2

Fixed Income – Collateralized mortgage-backed — 4.1 — 4.1

Equity common trust funds — 29.1 — 29.1

Debt common trust funds — — 7.4 7.4

$ 13.5 $ 527.6 $ 7.4 $ 548.5

Upon settlement of our Pension Plan in the fourth quarter of 2020, the target and actual investment allocation strategy at December 31, 2020 was 100 % cash and cash equivalents.

The estimated fair value of the plans' assets at December 31, 2020 was $ 23.6 million of temporary cash investments (Level 1).

The pension plans' assets are valued at fair value.

The following is a description of the valuation methodologies used in determining fair value, including the general classification of such instruments pursuant to the valuation hierarchy as described further in Note 3:

Temporary cash investments – These investments consist of U.S.

Temporary cash investments consist of U.S.

dollars held in master trust accounts with the trustee.

These temporary cash investments are classified as Level 1 instruments.

Fixed Income – Government and agencies – These investments consist primarily of U.S.

treasury bonds and notes, U.S.

treasury inflation protected securities, U.S.

government agency debt, municipal bonds, and other global government bonds.

The fair value of these securities is based on quoted market prices when available or is based on yields currently available on comparable securities or on an industry valuation model, which maximizes observable inputs.

These securities are categorized as Level 2 instruments.

Fixed Income – Corporate – These investments consist of U.S.

and global corporate bonds and notes.

The fair value of these securities is based on yields currently available on comparable securities of issuers with similar credit ratings.

When quoted prices are not available for identical or similar debt instruments, the fair value is based upon an industry valuation model, which maximizes observable inputs.

These securities are categorized as Level 2 instruments.

Fixed Income – Asset-backed securities – Asset-backed securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, including market interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable.

These securities are categorized as Level 2 instruments.

Fixed Income – Collateralized mortgage-backed – Mortgage-backed securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, including market interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable.

These securities are categorized as Level 2 instruments.

Common trust funds – Common trust funds are comprised of shares or units in commingled funds that are not publicly traded.

The underlying assets in these funds are publicly traded on exchanges and price quotes for the assets held by these funds are readily available.

Holdings of common trust funds are classified as a combination of Level 2 and Level 3 instruments.

See Note 3 for a description of the valuation methodologies used in determining fair value.

Funding of Defined Contribution Plans

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The contribution ranged from one to three percent of eligible compensation based on service.

Both the annual retirement contribution and the company matching contribution are discretionary, requiring board approval, and are made annually with the investment of the funds directed by the participants.

Both the annual retirement contribution and the company matching contribution were discretionary, requiring board approval, and were made annually with the investment of the funds directed by the participants.

In August 2020, the Company amended the plan to replace the company-funded annual retirement contribution with a qualified automatic contribution arrangement safe harbor plan structure.

The revised matching structure will provide for a dollar-for-dollar Company match on up to 6% of participants' eligible compensation, subject to a two-year cliff vesting period.

Employer contributions to the 401(k) plan and the Supplemental Profit Sharing Plan (effective as of January 1, 2021, the Trinity Industries, Inc.

Deferred Compensation Plan) during 2020 totaled $ 11.4 million.

The new matching structure provides for a dollar-for-dollar Company match on up to 6% of participants' eligible compensation, subject to a two-year cliff vesting period.

Employer contributions to the 401(k) plan and the Trinity Industries, Inc.

Deferred Compensation Plan for the year ending December 31, 2021 are expected to be $ 18.5 million, which includes the payment of the contributions accrued as of December 31, 2020, as well as the 2021 contributions pursuant to the plan design changes described above.

Deferred Compensation Plan for the year ending December 31, 2022 are expected to be $ 7.6 million compared to $ 19.4 million contributed during 2021, which included the payment of the contributions accrued as of December 31, 2020, as well as the 2021 contributions pursuant to the plan design changes described above.

Asset Impairments and Restructuring Activities

Impairment of small cube covered hopper railcars

We monitor the carrying value of long-lived assets and right-of-use assets for potential impairment.

The carrying value of long-lived assets and right-of-use assets is considered impaired when the asset's carrying value is not recoverable through undiscounted future cash flows and the asset's carrying value exceeds its fair value.

During the second quarter, the oil and gas proppants (or “frac sand”) industry continued to experience economic pressure created by low oil prices, reduced fracking activity, and the ongoing economic impact of COVID-19.

Second quarter of 2020 impairment of small cube covered hopper railcars

We monitor the carrying values of long-lived assets and right-of-use assets for potential impairment.

The carrying values of long-lived assets and right-of-use assets are considered impaired when the asset's carrying value is not recoverable through undiscounted future cash flows and the asset's carrying value exceeds its fair value.

During the second quarter of 2020, the oil and gas proppants (or “frac sand”) industry continued to experience economic pressure created by low oil prices, reduced fracking activity, and the ongoing economic impact of COVID-19.

Significant price declines in the crude oil market, as well as lower demand for certain commodities, resulted in a decline in customer demand for certain types of railcars.

In particular, small cube covered hopper railcars are primarily used in North America to serve the frac sand industry.

In recent years, these railcars primarily transported Northern White sand from Wisconsin and other locations in the Midwest for use in fracking operations, including operations located in the Permian Basin.

However, given the decline in global oil prices, reduced fracking activity, and pressure on the oil and gas industry to maintain a low cost structure, fracking operations, particularly those located in the Permian Basin, have increasingly shifted away from the use of Northern White sand and towards the use of in-basin sand, which can be sourced locally rather than transporting by rail.

Consequently, the cash flows and profitability of the frac sand industry continued to decline during the second quarter.

As a result, certain of the Leasing Group's small cube covered hopper customers requested rent relief and, in a number of cases, filed for bankruptcy in the second quarter.

As a result, certain of the Leasing Group's small cube covered hopper customers requested rent relief and, in a number of cases, filed for bankruptcy in the second quarter of 2020.

We believe that the collective impact of these developments, including the shift towards the use of in-basin sand, constituted a fundamental and other-than-temporary change in the future demand for this railcar type.

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Significant management judgment was used to determine the key assumptions utilized in our impairment analysis, the substantial majority of which represent unobservable (Level 3) inputs.

These assumptions include, but are not limited to:

These assumptions included, but were not limited to:

estimates regarding the remaining useful life over which the railcars are expected to generate cash flows;

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We also consulted with third-party energy and frac sand industry experts to gain insights with respect to the long-term outlook for these underlying markets.

Although we believe the estimates utilized in our analysis were reasonable, any change in these estimates could materially affect the amount of the impairment charge.

Other asset write-downs

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Throughout 2020, we continued our efforts to better align support services with our rail-focused strategy, which resulted in headcount reductions across multiple functions, including certain corporate and operational support functions primarily at our Dallas headquarters.

Additionally, we executed a lease agreement on a new headquarters facility to better suit our new organizational structure, which prompted the need to perform a recoverability test on our existing corporate headquarters campus to evaluate for impairment.

This test indicated that the carrying value was not recoverable.

The fair value of our corporate headquarters campus was measured based on a third-party valuation estimate using Level 2 and Level 3 inputs in the fair value hierarchy and resulted in a non-cash impairment charge of $ 5.2 million during the year ended December 31, 2020.

During the year ended December 31, 2020, we recorded total restructuring charges of $ 11.0 million, consisting of $ 7.8 million for severance costs, $ 5.3 million of non-cash charges primarily from the write-down of our corporate headquarters campus described above and certain other assets, and $ 0.6 million in contract termination costs, partially offset by a $ 2.7 million net gain on the disposition of a non-operating facility and certain related assets.

During the year ended December 31, 2020, we recorded total restructuring charges of $ 10.9 million, consisting of $ 7.7 million for severance costs, $ 5.3 million of non-cash charges primarily from the write-down of our corporate headquarters campus and certain other assets, and $ 0.6 million in contract termination costs, partially offset by a $ 2.7 million net gain on the disposition of a non-operating facility and certain related assets.

During the year ended December 31, 2021, restructuring activities resulted in a net gain of $ 3.7 million, primarily as a result of a $ 4.0 million net gain on the disposition of our prior corporate headquarters facility and certain non-operating facilities, partially offset by $ 0.3 million in employee severance costs.

As we continue to reposition the organization, it is possible that we will engage in additional restructuring activities in the near term.

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Employee severance costs $ 1.4 $ 0.3 $ ( 1.6 ) $ 0.1

Contract termination costs — 0.6 ( 0.6 ) —

$ 1.4 $ 0.3 $ ( 1.6 ) $ 0.1

Asset impairment charges:

Write-down of assets $ 5.3

(Gain)/loss on disposition of assets ( 2.7 )

Non-cash charges:

Gain on disposition of assets $ ( 4.0 )

Total restructuring activities $ ( 3.7 )

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Year Ended December 31, 2021

Employee Severance Costs Gain on Disposition of Assets Total

(in millions)

Railcar Leasing and Management Services Group $ — $ — $ —

Rail Products Group 0.3 — 0.3

Corporate and other — ( 4.0 ) ( 4.0 )

Total restructuring activities $ 0.3 $ ( 4.0 ) $ ( 3.7 )

Year Ended December 31, 2020

Employee Severance Costs Contract Termination Costs (Gain)/Loss on Disposition of Assets Write-down of Assets Total

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Rail Products Group 4.0 0.2 ( 2.9 ) — 1.3

All Other 0.2 — 0.2 — 0.4

Corporate 2.2 0.4 — 5.3 7.9

Corporate and other 2.3 0.4 0.2 5.3 8.2

Total restructuring activities $ 7.7 $ 0.6 $ ( 2.7 ) $ 5.3 $ 10.9

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Rail Products Group 0.7 — 0.7

All Other 0.5 10.9 11.4

Corporate 2.4 — 2.4

Corporate and other 2.9 10.8 13.7

Total restructuring activities $ 3.8 $ 10.8 $ 14.6

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$ ( 1.3 ) $ ( 17.9 ) $ ( 133.9 ) $ ( 153.1 )

Other comprehensive loss, net of tax, before reclassifications — ( 12.8 ) ( 30.2 ) ( 43.0 )

Other comprehensive income (loss), net of tax, before reclassifications — ( 19.4 ) 7.7 ( 11.7 )

Amounts reclassified from AOCL, net of tax benefit of $ — , $ 3.5 , $ 1.6 , and $ 5.1

— 12.9 5.6 18.5

noncontrolling interest

Amounts reclassified from AOCL related to settlement of pension plan, net of tax benefit of $ — , $ — , $ 34.9 , and $ 34.9

— — 116.6 116.6

Other comprehensive loss

noncontrolling interest

— ( 1.2 ) — ( 1.2 )

Other comprehensive income (loss) — ( 7.7 ) 129.9 122.2

Balances at December 31, 2020

( 1.3 ) ( 25.6 ) ( 4.0 ) ( 30.9 )

Other comprehensive income (loss), net of tax, before reclassifications — ( 19.4 ) 7.7 ( 11.7 )

Other comprehensive income, net of tax, before reclassifications — 9.2 0.3 9.5

Amounts reclassified from AOCL, net of tax benefit of $ — , $ 1.2 , $ 0.1 , and $ 1.3

— 5.4 0.2 5.6

Amounts reclassified from AOCL related to settlement of pension plan, net of tax benefit of

$ — , $ — , $ 34.9 , and $ 34.9

— — 116.6 116.6

noncontrolling interest — ( 1.2 ) — ( 1.2 )

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See Note 3 for information on the reclassification of amounts in AOCL into earnings.

Reclassifications of unrealized before-tax gains and losses on derivative financial instruments are included in interest expense for our interest rate hedges and in cost of revenues for our foreign currency hedges in our Consolidated Statements of Operations.

Reclassifications of unrealized before-tax gains and losses on derivative financial instruments are included in interest expense, net for our interest rate hedges and in cost of revenues for our foreign currency hedges in our Consolidated Statements of Operations.

Reclassifications of before-tax net actuarial gains/(losses) of defined benefit plans are included in other, net (income) expense in our Consolidated Statements of Operations, with the exception of amounts related to the settlement of our pension plan, which are included in the pension plan settlement line in our Consolidated Statements of Operations.

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Stockholders' Equity

Completed Share Repurchase Authorization

In March 2019, our Board of Directors authorized a share repurchase program effective March 7, 2019 through December 31, 2020.

The share repurchase program authorized the Company to repurchase up to $ 350.0 million of its common stock, not to exceed 13.7 million shares.

On April 24, 2020, as a result of then-current market conditions, the Board of Directors amended the repurchase program to remove the share limitation.

Share repurchase activity under this program was as follows:

Repurchase Agreements with ValueAct

On April 29, 2021, we entered into a stock repurchase agreement with ValueAct Capital Master Fund, L.P.

(“ValueAct”), the Company's then-largest shareholder and a related party, to repurchase 8.1 million shares of our common stock for $ 27.47 per share, for an aggregate purchase price of $ 222.5 million, in a privately negotiated transaction.

The price per share represents a discount of 3.5 % from the closing price for a share of common stock on the New York Stock Exchange on April 29, 2021.

The repurchase from ValueAct was approved by our Board of Directors separately from, and did not reduce the authorized amount remaining under, the previous share repurchase program described below.

On December 31, 2021, we entered into an additional stock repurchase agreement with ValueAct to repurchase 8.8 million shares of our common stock for $ 28.49 per share, for an aggregate purchase price of $ 250.0 million, in a privately negotiated transaction.

The price per share represents a discount of 3.5 % from the closing price for a share of common stock on the New York Stock Exchange on December 30, 2021.

The repurchase from ValueAct was approved by our Board of Directors separately from, and did not reduce the authorized amount remaining under, the existing share repurchase program described below.

New Share Repurchase Authorization

In September 2021, our Board of Directors authorized a new share repurchase program effective September 9, 2021 through December 31, 2022.

The new share repurchase program authorizes the Company to repurchase up to $ 250.0 million of its common stock.

In December 2021, we entered into an accelerated share repurchase agreement (the "ASR") to repurchase $ 125.0 million of our common stock.

Approximately 3.3 million shares repurchased as part of the ASR on December 31, 2021 were delivered to the Company in January 2022 in accordance with normal settlement practices, representing approximately 80% of the total notional value of the ASR.

The ASR is expected to be completed during the third quarter of 2022, at which time any remaining shares will be delivered to the Company.

Approximately $ 73.1 million of the share repurchase program will remain after the completion of the ASR.

Share repurchase activity under the authorized program is as follows:

Shares Repurchased Remaining Authorization to Repurchase

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(in millions)

March 7, 2019 Authorization $ 350.0

March 7, 2019 through March 31, 2019 866,715 $ 19.0 $ 331.0

April 1, 2019 through June 30, 2019 2,133,116 44.0 $ 287.0

July 1, 2019 through September 30, 2019 5,171,489 100.9 $ 186.1

September 9, 2021 Authorization $ 250.0

September 9, 2021 through September 30, 2021 — $ — $ 250.0

October 1, 2021 through December 31, 2021 5,155,491 151.9 $ 98.1

January 1, 2020 through March 31, 2020 1,850,000 35.4 $ 89.9

April 1, 2020 through June 30, 2020 — — $ 89.9

July 1, 2020 through September 30, 2020 4,466,896 89.9 $ —

Total 5,155,491 $ 151.9

In the third quarter of 2020, we completed the existing share repurchase program.

In addition to the amounts reported in the table above, share repurchases for the year ended December 31, 2019 included 2.6 million shares at a cost of approximately $ 70.0 million representing the final settlement of an accelerated share repurchase program, which was funded in November 2018 but a portion of which remained outstanding as of December 31, 2018.

Active Share Repurchase Authorization

In October 2020, our Board of Directors authorized a new share repurchase program effective October 23, 2020 through December 31, 2021.

The new share repurchase program authorized the Company to repurchase up to $ 250.0 million of its common stock.

Previous Share Repurchase Authorization

In October 2020, our Board of Directors authorized a share repurchase program effective October 23, 2020 through December 31, 2021.

The share repurchase program authorized the Company to repurchase up to $ 250.0 million of its common stock and was completed in the third quarter of 2021.

Share repurchase activity under this program is as follows:

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October 23, 2020 through December 31, 2020 2,974,922 $ 67.8 $ 182.2

January 1, 2021 through March 31, 2021 1,291,860 36.8 $ 145.4

April 1, 2021 through June 30, 2021 2,440,793 68.3 $ 77.1

July 1, 2021 through September 30, 2021 2,815,307 77.1 $ —

Total 9,522,882 $ 250.0

Certain shares of stock repurchased during December 2020, totaling $ 1.8 million, were cash settled in January 2021 in accordance with normal settlement practices.

Shares repurchased as part of the ASR on December 31, 2021, totaling $ 100.0 million, were delivered to the Company in January 2022 in accordance with normal settlement practices.

During the years ended December 31, 2021, 2020, and 2019, share repurchases totaled 28.5 million, 9.3 million, and 13.7 million shares, respectively, at a cost of approximately $ 806.6 million, $ 193.1 million, and $ 294.7 million, respectively.

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and performance awards with settlement in common stock or cash on achievement of specific business objectives.

Our stock options have contractual terms of ten years and become exercisable in various percentages over periods ranging up to five years.

Our stock options have contractual terms of ten years and become exercisable over a three-year period.

Stock-Based Compensation Expense

The cost of employee services received in exchange for awards of equity instruments is referred to as share-based compensation and is based on the grant date fair-value of those awards.

The cost of employee services received in exchange for awards of equity instruments is referred to as stock-based compensation and is based on the grant date fair-value of those awards.

Stock-based compensation includes compensation expense, recognized over the applicable vesting periods, for share-based awards.

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Expense related to stock options is recognized on a straight-line basis over the vesting period.

There were no options outstanding at December 31, 2019.

No options were exercisable at December 31, 2021.

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Options outstanding at December 31, 2020

300,000 $ 5.26

Granted — $ —

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The weighted average exercise price of stock options outstanding as of December 31, 2021 was $ 21.61 .

The fair value of the stock options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

The fair value of the stock options granted during the year ended December 31, 2020 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Year Ended December 31, 2020

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Restricted share awards consist of restricted stock and restricted stock units ("RSUs").

Expense related RSUs issued to eligible employees under the Plan is recognized ratably over the vesting period, generally between three years and four years .

Expense related to RSUs issued to eligible employees under the Plan is recognized ratably over the vesting period, generally between three years and four years .

Certain restricted stock and RSUs vest in their entirety upon the employee's retirement from the Company, taking into consideration the employee's age and years of service to the Company, as defined more specifically in our benefit plans.

Certain RSU grants made in 2020 provide for full vesting when the award recipients reach 60 years of age and have provided at least 10 years of service to the Company, provided that the awards remain outstanding for a period of six months from the date of grant.

Beginning in 2020, certain RSU grants provide for full vesting when the award recipients retire having reached 60 years of age and having provided at least 10 years of service to the Company, provided that the awards remain outstanding for a period of at least six months from the date of grant.

The expense for these awards is recognized over the applicable service period for each of the eligible award recipients.

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At December 31, 2021, unrecognized compensation expense related to performance units totaled $ 6.8 million, which will be recognized over a weighted average period of 1.2 years.

The total grant-date fair value of performance units vested and released during the year ended December 31, 2020 was $ 0.1 million.

There were no performance units vested during the years ended December 31, 2019, and 2018.

The total grant-date fair value of performance units vested and released during the years ended December 31, 2021 and 2020 was $ 7.2 million and $ 0.1 million, respectively.

There were no performance units vested during the year ended December 31, 2019.

The weighted average grant-date fair value of performance units granted during the years ended December 31, 2021, 2020, and 2019 was $ 30.85 , $ 20.31 , and $ 22.22 per share, respectively.

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per common share ("EPS") is computed by dividing net income (loss) attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period.

Except when the effect would be antidilutive, the calculation of diluted EPS includes 1) the net impact of unvested RSAs and RSUs and 2) with respect to the year ended December 31, 2018, the dilutive impact of our then-outstanding convertible notes due 2036 (the "Convertible Notes"), which were converted and settled in cash during the second quarter of 2018.

See Note 11 of our 2018 Annual Report on Form 10-K for further information regarding the settlement of the Convertible Notes.

Total weighted average restricted shares were 4.5 million, 5.5 million, and 5.8 million shares for the years ended December 31, 2020, 2019, and 2018, respectively.

Except when the effect would be antidilutive, the calculation of diluted EPS includes the net impact of potentially dilutive common shares.

The Company has certain unvested RSAs that participate in dividends on a nonforfeitable basis and are therefore considered to be participating securities.

Consequently, diluted net income (loss) attributable to Trinity Industries, Inc.

per common share is calculated under both the two-class method and the treasury stock method, and the more dilutive of the two calculations is presented.

There were no restricted shares and stock options included in the computation of diluted earnings per common share for the year ended December 31, 2020 as we incurred a loss for the period, and any effect on loss per common share would have been antidilutive.

Approximately 0.2 million of these restricted shares were excluded from the EPS calculation for the year ended December 31 2019, as their effect would have been antidilutive.

There were no antidilutive restricted shares for the year ended December 31, 2018.

The computation of basic and diluted net income (loss) attributable to Trinity Industries, Inc.

is as follows:

The following table sets forth the computation of basic and diluted net income (loss) attributable to Trinity Industries, Inc.

Year Ended December 31,

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Income (loss) from continuing operations $ 39.3 $ ( 250.5 ) $ 122.4

Net (income) loss attributable to noncontrolling interest 78.9 1.5 ( 3.8 )

Net loss attributable to noncontrolling interest 0.2 78.9 1.5

Unvested restricted share participation – continuing operations — — ( 1.7 )

— ( 1.8 ) ( 2.2 )

Net income (loss) from continuing operations attributable to Trinity Industries, Inc.

39.5 ( 171.6 ) 122.2

Net income (loss) from discontinued operations, net of income taxes

( 0.1 ) ( 3.1 ) 54.1

Income from discontinued operations, net of income taxes 11.1 24.3 13.7

Gain on sale of discontinued operations, net of income taxes 131.4 — —

Unvested restricted share participation – discontinued operations — — ( 0.1 )

Net income (loss) from discontinued operations attributable to Trinity Industries, Inc.

Net income from discontinued operations attributable to Trinity Industries, Inc.

142.5 24.3 13.6

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Effect of dilutive securities 2.3 — 1.7

Nonparticipating unvested RSUs and RSAs — 1.7 1.0

Convertible subordinated notes

Diluted weighted average shares outstanding

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Income (loss) from continuing operations $ 0.39 $ ( 1.48 ) $ 0.98

Income (loss) from discontinued operations — ( 0.02 ) 0.37

Income from discontinued operations 1.40 0.21 0.11

Basic net income (loss) attributable to Trinity Industries, Inc.

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Income (loss) from continuing operations $ 0.38 $ ( 1.48 ) $ 0.96

Income (loss) from discontinued operations — ( 0.02 ) 0.37

Income from discontinued operations 1.37 0.21 0.11

Diluted net income (loss) attributable to Trinity Industries, Inc.

$ 1.75 $ ( 1.27 ) $ 1.07

Potentially dilutive securities excluded from EPS calculation:

Antidilutive restricted shares $ 0.1 $ — $ 0.2

Antidilutive stock options $ — $ — $ —

Contingencies

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Government declined to intervene, the relator, Mr.

Joshua Harman, alleged the Company violated the FCA pertaining to sales of the Company's ET-Plus® System, a highway guardrail end-terminal system (“ET Plus”).

On October 20, 2014, a trial in this case concluded with a jury verdict stating that the Company and its subsidiary, Trinity Highway Products, LLC (“Trinity Highway Products”), “knowingly made, used or caused to be made or used, a false record or statement material to a false or fraudulent claim," and the District Court entered judgment on the verdict in the total amount of $ 682.4 million.

On September 29, 2017, the United States Court of Appeals for the Fifth Circuit ("Fifth Circuit") reversed the District Court’s $ 682.4 million judgment and rendered judgment as a matter of law in favor of the Company and Trinity Highway Products.

Joshua Harman, alleged the Company violated the FCA pertaining to sales of the Company's ET Plus.

On October 20, 2014, a trial in this case concluded with a jury verdict stating that the Company and its subsidiary, THP, “knowingly made, used or caused to be made or used, a false record or statement material to a false or fraudulent claim," and the District Court entered judgment on the verdict in the total amount of $ 682.4 million.

On January 7, 2019, the United States Supreme Court denied Mr.

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Harman's petition ended this action.

State, county, and municipal actions

Pursuant to the Purchase and Sale Agreement, the Company has agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including those liabilities resulting from or arising out of (a) the proceedings set forth under “State actions” and "Missouri class action" below and (b) any other proceedings to the extent resulting from or arising out of ET Plus systems or specified ET Plus component parts that are both (i) manufactured prior to December 31, 2021, and (ii) sold in the United States on or prior to April 30, 2022, or related warranty obligations with respect thereto.

State actions

Harman also has separate state qui tam actions currently pending pursuant to:

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and Trinity Highway Products, LLC , Case No.

CL13-698, in the Circuit Court, Richmond, Virginia);

the Massachusetts False Claims Act (Commonwealth of Massachusetts ex rel.

CL13-698, in the Circuit Court, Richmond, Virginia) and the Massachusetts False Claims Act ( Commonwealth of Massachusetts ex rel.

Harman Qui Tam v.

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and Trinity Highway Products, LLC , Case No.

1484-CV-02364, in the Superior Court Department of the Trial Court);

and the California False Claims Act (State of California ex rel.

Harman Qui Tam v.

1484-CV-02364, in the Superior Court Department of the Trial Court) and has sought leave to file an amended complaint in a previously dismissed action pursuant to the New Jersey False Claims Act ( State of New Jersey ex rel.

Trinity Industries, Inc.

and Trinity Highway Products, LLC, Case No.

RG 14721864, in the Superior Court of California, Alameda County).

and Trinity Highway Products, LLC , Case No.L-1344-14, in the Superior Court of New Jersey Law Division:

Mercer County).

In each of these cases, Mr.

Harman alleged the Company violated the respective states' false claims act pertaining to sales of the ET Plus, and he is seeking damages, civil penalties, attorneys’ fees, costs and interest.

Also, the respective states’ Attorneys General filed Notices of Election to Decline Intervention in all of these matters, with the exception of the Commonwealth of Virginia Attorney General, who intervened in the Virginia matter.

Following the United States Supreme Court’s denial of Mr.

Harman’s petition for certiorari, the stays have expired or been lifted by court order in all of the above-referenced state qui tam cases except Virginia, whose Motion to Lift Stay of Proceedings was filed on November 13, 2020, and remains pending.

Also, the respective states’ Attorneys General filed Notices of Election to Decline Intervention in each of these matters, with the exception of the Commonwealth of Virginia Attorney General, who intervened in the Virginia matter.

The Massachusetts action has been scheduled for trial on June 7, 2022, and the Virginia action has been scheduled for trial on April 17, 2023.

In a similar Tennessee state qui tam action filed by Mr.

Harman ( State of Tennessee ex rel.

Trinity Industries, Inc., and Trinity Highway Products, LLC , Case No.

14C2652, in the Circuit Court for Davidson County, Tennessee), on January 10, 2022, the Court granted Trinity’s Motion to Dismiss Harman’s Second Amended Complaint and entered an order dismissing Mr.

Harman’s complaint with prejudice.

On February 7, 2022, Mr.

Harman filed a Notice of Appeal of the trial court's order dismissing the case.

The Company believes these state qui tam lawsuits are without merit and intends to vigorously defend all allegations.

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As previously reported, state qui tam actions filed by Mr.

Harman in the states of Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Minnesota, Montana, Nevada, Rhode Island, Tennessee, and New Jersey were dismissed.

Harman in the states of Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Minnesota, Montana, Nevada, Rhode Island, New Jersey, and California were dismissed.

Based on information currently available to the Company and previously disclosed, we currently do not believe that a loss is probable in any one or more of the actions described under "State actions," therefore no accrual has been included in the accompanying Consolidated Financial Statements.

Because of the complexity of these actions as well as the current status of certain of these actions, we are not able to estimate a range of possible losses with respect to any one or more of these actions.

While the financial impacts of these state actions are currently unknown, they could be material.

Missouri class action

The Company has been served in a lawsuit filed November 5, 2015, titled Jackson County, Missouri, individually and on behalf of a class of others similarly situated vs.

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Louis, and the State of Missouri’s transportation authority.

The plaintiff alleges that the Company and Trinity Highway Products did not disclose design changes to the ET Plus and these allegedly undisclosed design changes made the ET Plus allegedly defective, unsafe, and unreasonably dangerous.

The plaintiff alleges that the Company and THP did not disclose design changes to the ET Plus and these allegedly undisclosed design changes made the ET Plus allegedly defective, unsafe, and unreasonably dangerous.

The plaintiff alleges product liability negligence, product liability strict liability, and negligently supplying dangerous instrumentality for supplier’s business purposes.

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Louis and the State of Missouri's transportation authority that have or had ET Plus guardrail end terminals with 4-inch wide guide channels installed on roadways they own or maintain.

As previously reported, a trial date had been scheduled in this case for February 22, 2021.

On January 19, 2021, the trial date was reset to April 4, 2022.

The Company believes this lawsuit is without merit and intends to vigorously defend all allegations.

While the financial impacts of these state, county, and municipal actions are currently unknown, they could be material.

Based on information currently available to the Company and previously disclosed, we currently do not believe that a loss is probable in any one or more of the actions described under "State, county, and municipal actions," therefore no accrual has been included in the accompanying Consolidated Financial Statements.

A trial date has been scheduled in this case for April 4, 2022.

The parties are engaging in discussions regarding a potential settlement in an effort to resolve the matter before incurring significant additional legal fees and costs.

In accordance with ASC 450, Contingencies , the Company recorded a pre-tax charge of $ 23.9 million ($ 18.3 million, net of income taxes) during the year ended December 31, 2021, which is included in income from discontinued operations, net of income taxes, in our Consolidated Statement of Operations, based on the Company’s assessment that a settlement is probable.

However, there is no assurance that a settlement will be reached or, if a settlement is reached, that the charge will represent the amount of the settlement.

If a settlement is unable to be reached, the Company will continue to vigorously defend the action.

The accrual and related range of reasonably possible loss related to this matter are included in the amounts described below under "Other matters."

Product liability cases

The Company is currently defending product liability lawsuits in several different states that are alleged to involve the ET Plus as well as other products manufactured by Trinity Highway Products.

The Company is currently defending product liability lawsuits in several different states that are alleged to involve the ET Plus as well as other products manufactured by THP.

These cases are diverse in light of the randomness of collisions in general and the fact that each accident involving a roadside device, such as an end terminal, or any other fixed object along the highway, has its own unique facts and circumstances.

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We believe that we are currently in substantial compliance with environmental and workplace laws and regulations.

Georgia tornado

On March 26, 2021, a tornado damaged the Company’s rail maintenance facility in Cartersville, Georgia.

We have incurred costs related to cleanup and damage remediation activities in order for the facility to resume operations in the second quarter.

We believe our insurance coverage is sufficient to cover property damage costs related to the event.

Accordingly, at the time the loss was sustained, we recorded an insurance receivable of approximately $ 1.2 million for property damage recoveries, which was collected during the year.

As of December 31, 2021, we have received total advanced payments from insurance of approximately $ 17.8 million, which includes $ 8.1 million for reimbursement of cleanup and damage remediation expenditures and the $ 1.2 million insurance receivable described above.

We recorded a gain of $ 7.8 million for insurance recoveries received in excess of the net book value of assets destroyed, net of the applicable deductible, which is included in the gains on dispositions of other property line in our Consolidated Statements of Operations.

As of December 31, 2021, we have utilized $ 4.9 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.

Any additional property damage insurance proceeds received in excess of the net book value of property lost and related cleanup costs will be accounted for as gains in future quarters.

Selected Quarterly Financial Data (Unaudited)

Three Months Ended

March 31, 2021

June 30, 2021

September 30,

December 31, 2021

(in millions, except per share data)

Manufacturing $ 147.4 $ 108.3 $ 234.5 $ 291.2

Leasing 183.3 185.0 185.3 181.0

330.7 293.3 419.8 472.2

Operating costs:

Costs of revenues:

Manufacturing 149.6 99.6 238.8 281.9

Leasing 96.7 102.5 98.6 93.8

246.3 202.1 337.4 375.7

Selling, engineering, and administrative expenses 44.7 46.2 45.8 42.9

Gains on dispositions of property 11.5 12.1 41.6 13.0

Restructuring activities, net ( 0.3 ) ( 0.7 ) ( 0.1 ) ( 2.6 )

Operating profit 51.5 57.8 78.3 69.2

Other expense 52.5 63.5 44.5 41.1

Income (loss) from continuing operations before income taxes ( 1.0 ) ( 5.7 ) 33.8 28.1

Provision (benefit) for income taxes 4.0 ( 2.9 ) 8.3 6.5

Income (loss) from continuing operations ( 5.0 ) ( 2.8 ) 25.5 21.6

Income (loss) from discontinued operations, net of income taxes 6.3 7.6 10.4 ( 13.2 )

Gain on sale of discontinued operations, net of income taxes — — — 131.4

Net income 1.3 4.8 35.9 139.8

Net income (loss) attributable to noncontrolling interest

( 2.0 ) ( 7.9 ) 3.9 5.8

Net income attributable to Trinity Industries, Inc.

$ 3.3 $ 12.7 $ 32.0 $ 134.0

Basic earnings per common share (1) :

Income (loss) from continuing operations $ ( 0.03 ) $ 0.05 $ 0.22 $ 0.16

Income from discontinued operations 0.06 0.07 0.11 1.23

Basic net income attributable to Trinity Industries, Inc.

$ 0.03 $ 0.12 $ 0.33 $ 1.39

Diluted earnings per common share (1) :

Income (loss) from continuing operations $ ( 0.03 ) $ 0.05 $ 0.22 $ 0.16

Income from discontinued operations 0.06 0.07 0.11 1.21

Diluted net income attributable to Trinity Industries, Inc.

$ 0.03 $ 0.12 $ 0.33 $ 1.37

(1) The sum of the quarters may not necessarily be equal to the full year net income per common share amount.

Three Months Ended

March 31, 2020

June 30, 2020

September 30, 2020

December 31, 2020

(in millions, except per share data)

Manufacturing $ 317.2 $ 247.3 $ 213.1 $ 170.6

Leasing 236.1 192.6 183.7 189.1

553.3 439.9 396.8 359.7

Operating costs:

Costs of revenues:

Manufacturing 301.0 241.6 202.5 164.9

Leasing 138.6 102.9 86.4 89.5

439.6 344.5 288.9 254.4

Selling, engineering, and administrative expenses 50.6 48.6 42.9 47.5

Gains on dispositions of property 9.6 6.6 3.7 0.1

Impairment of long-lived assets (1)

— 369.4 — 27.0

Restructuring activities, net 5.4 0.3 4.7 0.5

Operating profit (loss) 67.3 ( 316.3 ) 64.0 30.4

Other expense (2)

58.1 52.3 53.7 205.9

Income (loss) from continuing operations before income taxes 9.2 ( 368.6 ) 10.3 ( 175.5 )

Provision (benefit) for income taxes ( 149.1 ) ( 74.0 ) ( 8.7 ) ( 42.3 )

Income (loss) from continuing operations 158.3 ( 294.6 ) 19.0 ( 133.2 )

Income from discontinued operations, net of income taxes 4.0 6.8 6.9 6.6

Net income (loss) 162.3 ( 287.8 ) 25.9 ( 126.6 )

Net income (loss) attributable to noncontrolling interest 0.6 ( 80.9 ) 0.8 0.6

Net income (loss) attributable to Trinity Industries, Inc.

$ 161.7 $ ( 206.9 ) $ 25.1 $ ( 127.2 )

Basic earnings per common share (3) :

Income (loss) from continuing operations $ 1.32 $ ( 1.82 ) $ 0.15 $ ( 1.19 )

Income from discontinued operations 0.04 0.06 0.06 0.06

Basic net income (loss) attributable to Trinity Industries, Inc.

$ 1.36 $ ( 1.76 ) $ 0.21 $ ( 1.13 )

Diluted earnings per common share (3) :

Income (loss) from continuing operations $ 1.30 $ ( 1.82 ) $ 0.15 $ ( 1.19 )

Income from discontinued operations 0.03 0.06 0.06 0.06

Diluted net income (loss) attributable to Trinity Industries, Inc.

$ 1.33 $ ( 1.76 ) $ 0.21 $ ( 1.13 )

(1) Impairment of long-lived assets during the three months ended June 30, 2020 relates to our small cube covered hopper railcars.

See Note 11 for further information.

(2) Other expense during the three months ended December 31, 2020 includes $ 151.5 million related to the settlement of our Pension Plan.

See Note 10 for further information.

(3) The sum of the quarters may not necessarily be equal to the full year net income per common share amount.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data