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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

For the year ended December 31, 2004

OR

For the transition period from              to             

Commission file number: 1-5666

UNION TANK CAR COMPANY

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (312) 372-9500

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

There is no voting stock held by non-affiliates of the registrant. The registrant is not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. The registrant is a voluntary filer.

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UNION TANK CAR COMPANY

FORM 10-K

Year Ended December 31, 2004

CONTENTS

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PART I

ITEM 1. BUSINESS

General

UNION TANK CAR COMPANY (with its wholly-owned and majority-owned subsidiaries herein collectively referred to, unless the context otherwise requires, as the “Company”) was organized under the laws of Delaware on September 23, 1980 and is the successor to a business which was originally incorporated in New Jersey in 1891. The Company is a wholly-owned subsidiary of Marmon Holdings, Inc. (“Holdings”). Substantially all of the stock of Holdings is owned, directly or indirectly, by trusts for the benefit of certain members of the Pritzker family. As used herein, “Pritzker family” refers to the lineal descendants of Nicholas J. Pritzker, deceased.

Railcar Leasing, Services and Sales

The principal activity of the Company is leasing of railway tank cars and other railcars to North American manufacturers and other shippers of chemical products, including liquid fertilizers, liquefied petroleum gas and other petroleum products, food products and bulk plastics. The Company owns and operates one of the largest fleets of privately-owned railway tank cars in the world.

As of December 31, 2004, the Company’s railcar fleet comprised 66,893 tank cars and 14,919 railway cars of other types. A total of 28,929 railcars were added to the lease fleet during the ten years ended December 31, 2004. These railcars accounted for approximately 38% of total railcar lease revenues during 2004. Most of the Company’s railcars were built by the Company or to its specifications and the rest were purchased from other sources.

Railway tank cars carrying chemicals and acids account for the greatest portion of total leasing revenues, followed in order by railway tank cars carrying refined petroleum products (such as fuel oils and asphalt), compressed gases (particularly liquefied petroleum gas and anhydrous ammonia), food products and liquid fertilizers.

A significant portion of revenues from the Company’s non-tank railcar fleet derives from leasing of hopper cars for carrying bulk plastics. Remaining non-tank railcar revenues are attributable to leasing of railcars serving the dry bulk chemical and coal industries.

The Company builds railway tank cars primarily for its leasing business, but also builds railway tank cars for sale to others. Generally, manufacturing follows receipt of a firm order for lease or sale of a railway tank car.

Substantially all of the Company’s railcars are leased directly to several hundred manufacturers and other shippers under leases covering from one to several thousand railcars and ranging from one to twenty years. The average term of leases entered into during 2004 for newly manufactured railcars was approximately six years. The average term of leases entered into during 2004 for used railway tank cars and other railcars was approximately four years. Under the terms of most leases, the Company agrees to provide a full range of services, including railcar repair and maintenance. The Company supplies relatively few railcars directly to railroads. The Company markets its railcars through regional sales offices located throughout the United States and Canada and through a sales agent in Mexico. To ensure optimum use of the railcar lease fleet, the Company maintains data processing systems that contain

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information about each railcar, including mechanical specifications, maintenance and repair data, and lease terms.

The Company maintains repair facilities at strategic points throughout North America. In addition to work performed by the Company, certain maintenance and repair work is performed for the Company’s account by railroads when railroad inspection determines the need for such work under the interchange rules of the Association of American Railroads (“AAR”).

The Company is not subject to regulation or supervision as a common carrier. The Company’s railcars are subject to construction, safety and maintenance regulations of the Department of Transportation, various other government agencies and the AAR. These regulations have required, and may in the future require, the Company to make significant modifications to certain of its railcars from time to time.

The Company’s facilities for manufacturing and assembling railway tank cars are located in East Chicago, Indiana and Sheldon, Texas. The Company also operates North America’s largest network of shops for repairing and servicing railcars, as well as a fleet of specially equipped trucks to perform repairs at customer plant sites. Principal shops are located in Valdosta, Georgia; Muscatine, Iowa; Ville Platte, Louisiana; Marion, Ohio; Altoona, Pennsylvania; Cleveland, Texas; Evanston, Wyoming; Edmonton, Alberta; Sarnia and Oakville, Ontario; Regina, Saskatchewan; and Celaya, Mexico. In 2004, the Company began construction of a railcar manufacturing facility in Alexandria, Louisiana.

Other Activities

The Company is engaged in several other activities, as described below.

Metals Distribution

Subsidiaries of the Company are leading distributors of carbon steel, stainless steel and aluminum tubular products; chrome and stainless bar; other carbon steel products, including beams and channels; and aircraft grade tubing and sheets, rolled form shapes and other raw materials.

These subsidiaries serve the agriculture, capital goods, machine tool, construction, transportation, refining, petrochemical, and fluid power industries, as well as aerospace companies, the military, construction trades, steel fabricators, and OEMs.

Intermodal Tank Container Leasing

Subsidiaries of the Company own, manage, lease and maintain intermodal tank containers. Intermodal tank containers are capable of transporting cargo by way of multiple modes of transportation including road, rail or ship. The container fleet consists of a wide range of equipment for the global transportation, distribution and storage of bulk liquids, chemicals and gases, which allows the Company to service the full range of customer requirements. These customers include the international chemical industry and logistics operators specializing in bulk liquid transportation. These subsidiaries also own a fleet of drop frame tank chassis.

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Sulphur Processing

Subsidiaries of the Company provide sulphur producers in Canada with various services, including processing of liquefied sulphur into crystalline slates and granules, and storage and shipping of the product. A subsidiary also designs, manufactures and sells sulphur processing plants worldwide. Other subsidiaries are engaged in manufacturing and distribution of sulphur bentonite products and micronutrients to the agricultural industry.

Other Railway Equipment and Services

A subsidiary of the Company manufactures mobile railcar moving vehicles for in-plant and yard switching. Another subsidiary of the Company manufactures wheels, axles and gear sets for light rail transit. Other subsidiaries provide contract switching services to companies with on-site rail yards.

Containment Vessel Head Manufacturing

A subsidiary of the Company manufactures and distributes metal containment vessel heads, primarily made of steel, to the metal containment vessel construction industry.

Gear Drive Manufacturing

Subsidiaries of the Company manufacture right-angle gear drives for industrial and agricultural applications and wind machines used to protect fruits and vegetables from frost.

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Segment Information

The principal activity of the Company’s primary industry segment is railcar leasing, services and sales. In addition, the Company has two secondary industry segments as shown in the table below. All other activities of the Company, as described previously, plus corporate headquarters items, are shown as All Other in the table:

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Geographic Information

The following table presents geographic information for the Company. Revenues are attributed to countries based on location of customers.

Major Customers

Revenues from any one customer did not exceed 10% of consolidated or industry segment revenues during the last three years.

Raw Materials

The Company purchases raw materials from a variety of suppliers, with no one supplier being significant. In management’s opinion, the Company will have adequate availability of raw materials in the future.

Increased prices and reduced availability of steel and other metals have not had and are not expected to have a material impact on the Company’s activities. The Company’s exposure is mitigated via a combination of purchase agreements, the ability to increase prices and the discretionary nature of railcar construction.

Foreign Operations

The Company does not believe that there are other than normal business risks attendant to its foreign operations.

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Competition

All activities of the Company compete with similar activities by other companies.

Several competitors are in the business of leasing railcars in the United States and Canada. Principal competitors are GATX Corporation, General Electric Railcar Services Corporation, and ACF Industries, Incorporated. Principal competitive factors are price, service and product design. International cooperation within the Company’s engineering, manufacturing, repair and leasing activities has enhanced its ability to provide competitive products and services to its customers throughout North America.

In the metals distribution business, the Company has numerous competitors, both large and small. The Company is one of the largest participants in the distribution of its class of products. Principal competitive factors include price, availability of product and service.

The Company, the largest lessor of intermodal tank containers in the world, competes with numerous competitors in this industry. Competition is based on a number of factors, including technical expertise, availability of equipment, price, service and reputation.

Supply and Demand

Demand for railway tank cars and bulk plastic hopper cars is generally met with a combination of the industry’s existing fleet and new railcar additions. The industry’s generally high overall utilization of the railway tank car and bulk plastic covered hopper car fleets evidences an appropriate level and mix of equipment to meet existing railcar demands. New railcars are needed to satisfy growth, for specialized requirements, or the desire of certain customers for newer equipment. Since railcars are typically built to customer order, the supply of new railcars generally stays in reasonable balance with demand.

Major underlying factors affecting demand for new railcars are: (a) the rate of growth of the overall economy, (b) growth of certain industry segments, manufacturers, or shippers, particularly involving significant new or expanded production operations, and (c) replacement of aged, obsolete, or worn out railcars.

Demand for products of metals distribution business is primarily related to the level of manufacturing and construction activity in the United States.

Demand for intermodal tank containers is dependent on growth of the global economy and demand for chemicals and other liquid products. Global economic factors impacting demand include overall demand for chemicals, location of production of the products carried and stored in relation to location of demand for these products, import/export tariffs and other trade restrictions.

Manufacturing Backlog

The Company builds railway tank cars primarily for use in its leasing business and the number of railcars added in any one year is a small percentage of the Company’s lease fleet. Additionally, for railway tank cars built for sale to customers, the Company delivers against orders within a relatively brief period. Therefore, backlog is not material to the Company’s business.

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Employees

As of December 31, 2004, the Company had approximately 5,200 employees.

Environmental Matters

The Company believes that all of its facilities are in substantial compliance with applicable laws and regulations relating to environmental protection. Over the past several years, the Company has attempted to identify and remediate potential problem areas. In 2004, the Company spent approximately $4.5 million on remediation and related matters, compared with $3.0 million and $2.5 million in 2003 and 2002, respectively. The Company expects to spend approximately $2.3 million in 2005 on similar activities.

The Company has been designated as a Potentially Responsible Party (“PRP”) by the EPA at the Calumet Containers site in Hammond, Indiana and the Lake Calumet Cluster in Chicago, Illinois. Costs incurred to date have not been material, either individually or in the aggregate. Because of the nature of the Company’s involvement at these sites, management believes that future costs related to these sites will not be material, either individually or in the aggregate. The Company has not entered into any cost sharing arrangements with other PRP’s that make it reasonably possible the Company will incur material costs beyond its pro rata share. Further, management does not believe that any problems or uncertainties as to the financial liabilities of other PRP’s make it reasonably possible the Company will incur material costs beyond its pro rata share at these sites. The Company’s accruals for these sites are based on the amount it reasonably expects to pay with respect to the sites.

Management believes that amounts accrued for remedial activities and environmental liabilities (which in the aggregate are not material) are adequate.

Available Information

The Company files annual reports, quarterly reports, current reports and other information with the Securities and Exchange Commission. Copies of such materials can be read, copied and obtained from the Public Reference Room of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. You can access the Company’s filings electronically by visiting the Securities and Exchange Commission’s website at http://www.sec.gov. In addition, the Company will provide copies of such filings free of charge upon request to Union Tank Car Company, Attention: Secretary, 225 West Washington Street, Suite 1900, Chicago, Illinois 60606.

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ITEM 2. PROPERTIES

In management’s opinion, the Company’s properties are in good condition, substantially utilized and adequate to meet the Company’s current and reasonably anticipated future needs.

The Company estimates that its plant facilities were utilized during the year at an average of approximately 75% of productive capacity for railcar manufacturing, 75% for railcar servicing and repair, 80% for sulphur processing, 65% for railcar moving vehicles manufacturing, 60% for light rail transit product manufacturing, 75% for containment vessel head manufacturing, and 90% for gear drive manufacturing.

Railcars

The Company owns approximately 84% of its total lease fleet of 81,812 railcars, of which 66,893 are tank cars and 14,919 are other railway freight cars. Of the approximately 68,960 owned railcars, 58,130 are free of liens. Railcars which are not owned are leased from others under long-term net leases.

Railcar Manufacturing and Assembling Facilities

Facilities for the manufacturing and assembling of railcars are located at East Chicago, Indiana and Sheldon, Texas, together occupying about 172 acres. In 2004, the Company began construction of a railcar manufacturing facility in Alexandria, Louisiana, which will occupy 229 acres.

Railcar Servicing and Repair Shops

The Company operates a network of shops for repairing and servicing railcars. Principal shops owned by the Company are located at Valdosta, Georgia; Muscatine, Iowa; Ville Platte, Louisiana; Marion, Ohio; Altoona, Pennsylvania; Cleveland, Texas; Evanston, Wyoming; Edmonton, Alberta; Sarnia and Oakville, Ontario; Regina, Saskatchewan; and Celaya, Mexico. Several other repair shops and small repair points are strategically located throughout the United States and Canada.

Metals Distribution

Subsidiaries of the Company maintain numerous distribution warehouses and business offices, which are located throughout North America. There are 34 warehouse and distribution centers from which products are distributed to customers.

Intermodal Tank Container Leasing

Subsidiaries of the Company maintain a fleet of approximately 29,150 owned/managed intermodal tank containers consisting of a wide range of equipment types, specifications and capacities from 7,500 to 35,000 liters. These subsidiaries also own a fleet of 1,493 drop frame tank chassis. Customer service is provided through offices, agents and depots located throughout the world. The Company owns approximately 75% of its intermodal tank container and drop frame tank chassis fleet, of which approximately 42% are free of liens.

Sulphur Processing

A subsidiary of the Company owns facilities in Canada which process liquefied sulphur into crystalline slates and granules and handle the formed product. The Company also owns facilities in North America for the manufacture and distribution of sulphur bentonite products and micronutrients.

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Other Railway Equipment Facilities

A subsidiary of the Company owns a mobile railcar moving vehicle manufacturing facility in LaGrange, Georgia. Another subsidiary of the Company owns gear, wheels and axles manufacturing facilities in Johnstown and Blairsville, Pennsylvania and Twinsburg, Ohio.

Containment Vessel Head Manufacturing Facilities

A subsidiary of the Company owns a metal containment vessel head manufacturing facility in Sheldon, Texas.

Gear Drive Manufacturing Facilities

Subsidiaries of the Company own a gear drive manufacturing facility in Amarillo, Texas and a wind machine manufacturing facility in Exeter, California.

Other Properties

The Company and its subsidiaries maintain numerous other manufacturing facilities, sales and business offices, and warehouses, most of which are leased, throughout North America and Europe.

ITEM 3. LEGAL PROCEEDINGS

The Company and its subsidiaries have been named as defendants in a number of lawsuits and certain claims are pending. The Company has accrued what it reasonably expects to pay to resolve such claims, including legal fees, and, in the opinion of management, the ultimate resolution of these matters will not have a material effect on the Company’s consolidated financial position, results of operations or liquidity. See “Business - Environmental Matters”.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

Not applicable.

ITEM 6. SELECTED FINANCIAL DATA

Significant items in net income during 2003 included goodwill impairment of ($10,865) after taxes, write-down of investment in direct financing lease of ($15,714) after taxes, adjustment to prior years’ taxes of $19,000 and deferred tax liability adjustment on foreign income previously considered permanently reinvested of ($5,500).

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements contained in this annual report on Form 10-K may include certain forward-looking information statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as “expects”, “anticipates”, “intends”, “plans”, “will”, “believes”, “seeks”, “estimates”, and “should” and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and

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assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, unanticipated changes in the markets served by the Company (such as the railcar leasing, service and sales, intermodal tank container leasing and metal products distribution industries), acts of terrorism, interest rate trends, cost of capital requirements, competition from other companies, changes in operating expenses, governmental and public policy changes, changes in applicable laws, rules and regulations (including changes in tax laws).

Executive Overview

The core business activity of the Company is full service leasing of railway tank cars in North America. Key characteristics of the Company’s core business are: (a) consistent and predictable cash flows, (b) a strong and creditworthy customer base, (c) multi-year leases that tend to bridge the Company over cyclical downturns, (d) long-lived revenue earning assets, and (e) diversification across railway tank car types, customers within the industrial sectors served, and geographically across North America.

The major challenges in the business are: (a) competition from several strong and experienced competitors, and (b) continuing to provide the level of consistent, high quality product and value-added service necessary to distinguish the Company’s products and services from the competition.

The key indicators of performance are revenue growth, lease fleet growth, lease fleet utilization, and profitability.

The most significant opportunities in the business are: (a) general growth in the economy, which relies on the bulk movement of chemicals, petrochemicals, foods and other liquid and gas products, and (b) displacing railway tank cars owned or net leased by shippers with equipment provided through full service leases.

Significant external factors that contribute to the long term financial performance of full service railway tank car lessors are inflation and interest rates. New railcar lease rental rates, which are largely determined by equipment cost, operating costs and interest rates, influence lease rental rates (upon renewal or leasing to a different customer) on the existing lease fleet.

Risk factors in the business of full service leasing of railway tank cars include, but are not limited to, general economic cycles, competitive pricing, regulatory change, asset obsolescence, legal matters, environmental matters, and changes in federal tax policy.

Increased prices and reduced availability of steel and other metals are not expected to have a material impact on the Company’s activities. The Company’s exposure is mitigated via a combination of purchase agreements, the ability to increase prices, and the discretionary nature of railcar construction.

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2004 versus 2003

Results of Operations

Performance of the railcar leasing business improved in all major markets. Demand for existing railcar equipment improved, resulting in higher fleet utilization and improved lease rental rates. Demand for leased intermodal tank containers increased, resulting in fleet growth and higher utilization.

Revenues and gross profit from services were as follows:

Services revenue in 2004 increased from 2003 primarily due to a $10.1 million increase in intermodal tank container leasing revenue (improved utilization rates and equipment additions), a $9.7 million increase in revenues related to sulphur processing (higher volume), and a $7.6 million increase in railcar leasing and services revenue (improved utilization rates and equipment additions).

Gross profit on services revenue in 2004 increased from 2003 primarily due to a $24.1 million improvement in railcar leasing (improved utilization rates, higher gains on disposals, and equipment additions), a $5.4 million increase in intermodal tank container leasing business (improved utilization rates and equipment additions) and a $2.5 million increase related to sulphur processing (higher volume).

Average fleet utilization of the Company’s railcar fleet was 96% for 2004, compared with 93% for 2003. Utilization rates of the Company’s existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, petroleum products, food products, and bulk plastics, and suitability of the Company’s fleet to meet such demand. The potential impact of short-term fluctuations in demand is tempered by the longer-term nature of the leases. Over the past five years, the average term of leases entered into for newly manufactured railcars was approximately seven years, and the average term of leases entered into for used railcars was approximately four years. The average term of leases entered into during 2004 for newly manufactured railcars was approximately six years, and the average term of leases entered into for used railcars was approximately four years.

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Sales revenue increased primarily due to increased demand for products of the metals distribution business.

Revenues and gross profit from sales were as follows:

Sales revenue for 2004 increased from 2003 primarily due to $191.6 million higher sales of metals distribution products (higher volume and prices), $8.6 million higher sales of gear drives (higher demand), $7.1 million higher sales of sulphur processing equipment (timing of project completion) and a $5.8 million increase in sales of metal containment vessel heads (higher volume and prices).

Gross profit on sales in 2004 improved from 2003, primarily due to a $30.2 million increase for metals distribution products (higher volume and prices), a $3.7 million increase for metal containment vessel heads (higher volume and prices), a $3.6 million improvement for the gear drive business (higher volume), a $2.7 million increase for sulphur processing equipment (timing of project completion), and a $1.7 million improvement from sales of railcars (higher prices and lower unit costs from increased production volume partially offset by higher material costs).

Interest income in 2004 was $2.3 million higher than in 2003 primarily due to higher interest rates and higher average balances including available-for-sale securities.

Other income in 2004 was $9.7 million higher than in 2003 primarily due to $6.2 million income from the receipt and disposal of certain financial assets related to settlement of a bankruptcy claim against Air Canada. See Note 5 of the Notes to Consolidated Financial Statements.

General & Administrative expense for 2004 increased by $9.2 million over 2003 primarily due to increased business activity in the railcar and metals distribution businesses.

Interest expense in 2004 was $3.0 million higher than in 2003 due to the interest expense related to new financing in 2004 more than offsetting lower interest expense from principal repayments of debt. Interest rates and borrowed debt are discussed in Note 7 of the Notes to Consolidated Financial Statements.

Provision for income taxes was $81.8 million in 2004 with an effective tax rate of 36.4%, compared with $39.0 million in 2003 with an effective tax rate of 35.8%. Income taxes are discussed in Note 8 of the Notes to Consolidated Financial Statements.

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Financial Condition and Liquidity

Operating activities provided $283.0 million of cash in 2004, compared with $311.2 million in 2003. The net cash provided by operating activities was lower in 2004 primarily due to higher inventories (increased production and distribution activity) and higher accounts receivable (increased revenue), partially offset by the increase in net income and higher accounts payable (increased production and distribution activity).

The net cash provided by operating activities, along with proceeds from the issuance of borrowed debt, collection of funds previously advanced to parent, and redemption of short-term investments, were used to finance lease fleet additions, invest in available-for-sale securities, pay dividends to the Company’s stockholder, and service borrowed debt obligations.

It is the Company’s policy to pay to its stockholder a quarterly dividend equal to 70% of net income. To the extent that the Company generates cash in excess of its operating needs, such funds, in excess of the amounts paid as dividends, are advanced to its parent and bear interest at commercial rates. Conversely, when the Company requires additional funds to support its operations, prior advances are repaid by its parent. No restrictions exist regarding the amount of dividends which may be paid or advances which may be made by the Company to its parent.

In 2004, the Company invested $245.5 million in available-for-sale securities. The securities are investment-grade debt obligations with a combined weighted-average maturity under two years. The investments are available for the Company’s use to fund repayment of principal obligations, finance lease fleet additions (including the exercise of leveraged lease purchase options), or fund other operating needs.

In 2004, the Company spent $331.4 million for construction and purchase of lease fleet and other fixed assets, compared with $246.2 million in 2003. The increase in capital expenditures is primarily due to increased demand from leasing customers for new railway tank cars and intermodal tank containers. Of the capital expenditures for construction and purchase of lease fleet and other fixed assets over the past five years, approximately 74% have been for railcars. Since capital expenditures for railcars are generally incurred subsequent to receipt of firm customer lease orders, such expenditures are discretionary to the Company based on its desire to enter into those lease orders. Capital expenditures for intermodal tank containers are likewise discretionary in the intermodal tank container business.

Proceeds from disposals of lease fleet and other fixed assets were $31.1 million in 2004 compared with $32.4 million in 2003. The lower proceeds in 2004 were due to fewer railcars sold partially offset by higher prices obtained for railcars sold for scrap.

Net cash used in investing activities was $367.3 million in 2004 compared with $192.8 million in 2003.

In June 2004, the Company issued $300.0 million of unsecured senior notes. During 2004, the Company’s financing activities included the use of $78.4 million for principal repayments on borrowed debt compared with $62.5 million in 2003. Cash dividends were $99.0 million in 2004 compared with $48.0 million in 2003. Net cash provided by financing activities in 2004 was $122.6 million compared with $110.4 million used in 2003.

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On September 30, 2004, the Company exercised options to purchase approximately 1,824 railcars that the Company has leased since 1994 as part of certain sale-leaseback transactions. See Note 6 to the Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 1994. The aggregate purchase price payable by the Company for these railcars is approximately $76.0 million, of which approximately $42.4 million was paid on January 2, 2005 and the remaining approximately $33.6 million is payable in four installments ending in December 2005. The Company’s purchase of these railcars was consummated on January 2, 2005, at which time the purchased railcars ceased to be subject to the operating leases.

Management expects that future cash to be provided by operating activities, long-term financings, and collection of funds previously advanced to parent will be adequate to provide for continued expansion of the Company’s business and enable it to meet its debt service obligations. The Company may undertake long-term financing in 2005.

Approximately 16% of Company-owned railcars are pledged to secure equipment obligations and secured notes. The remaining railcars are free of liens.

The following table presents the scheduled cash inflows and outflows for the railcar leasing business over the next five years based on leases and railcar-related indebtedness outstanding as of December 31, 2004:

Minimum future lease rentals above relate to railcar leases in effect at December 31, 2004. Based upon its historical experience, the Company expects that the railcars (other than those which are retired in the ordinary course of business) will be re-leased at the expiration of such leases. The rentals under such future leases cannot be ascertained and are not reflected above.

In addition, maturities of debt obligations and interest payments for the intermodal tank container leasing business over the next five years are as follows (dollars in millions):

The Company has not experienced any significant impact from general inflation on its financial position or results of operations over the last several years.

The Company’s foreign subsidiaries periodically enter into foreign currency forward contracts to hedge against currency exchange rate exposures. There were no foreign currency forward contracts outstanding at December 31, 2004 and 2003.

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Contractual Obligations

At December 31, 2004, contractual obligations of the Company are as follows:

Off-Balance Sheet Arrangements

The Company currently has no “off-balance sheet arrangements” that would be required to be disclosed pursuant to Item 303 of Regulation S-K under the Securities Exchange Act of 1934, as amended.

Critical Accounting Policies

Management’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Preparation of these financial statements requires the Company to make estimates and judgements that affect reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis, the Company evaluates its estimates and judgements based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The Company annually reviews its financial reporting and disclosure practices and accounting policies to ensure that its financial reporting and disclosures provide accurate and transparent information relative to the current economic and business environment. The Company believes that, of its significant accounting policies (see “Summary of Accounting Principles and Practices” more fully described in Note 2 in Item 8), the following policies involve a higher degree of judgement and/or complexity.

Property and Equipment

Property and equipment are depreciated or amortized over their useful lives based on management’s estimates of the period over which the assets will generate revenue. The Company periodically reviews these lives relative to physical factors, economic factors and industry trends.

Asset Impairment

In assessing recoverability of the Company’s long-lived assets, the Company considers changes in economic conditions and makes assumptions regarding estimated future cash flows and other factors. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges.

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Income Taxes

The Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. The Company records accruals for the estimated outcomes of these audits, and the accruals may change in the future due to new developments in each matter.

New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 151, “Inventory Costs – An Amendment of Accounting Research Bulletin No. 43, Chapter 4”. SFAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be expensed as incurred and not included as overhead. SFAS 151 also requires that the allocation of fixed production overhead to conversion costs be based on normal capacity of the production facilities. SFAS 151 must be applied prospectively beginning January 1, 2006. The adoption of SFAS 151 is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities”. This Interpretion requires that an enterprise’s consolidated financial statements include subsidiaries in which the enterprise has a controlling financial interest. At December 31, 2004, the Company did not have any unconsolidated variable interest entities.

2003 versus 2002

Results of Operations

Performance of the railcar leasing business was adversely affected by the general economic slowdown in all major markets. Demand for existing equipment remained low causing downward pressure on both lease rental rates and fleet utilization.

Revenues and gross profit from services were as follows:

Services revenue in 2003 increased over 2002 primarily due to a $13.7 million in increased revenues related to sulphur processing (higher rates and volume), a $6.3 million increase in intermodal tank container leasing (higher utilization and equipment additions), and a $5.3 million increase in railcar leasing and service revenues (favorable currency exchange rates and equipment additions offsetting lower rental rates).

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Gross profit on services revenue of $251.3 million in 2003 decreased slightly from 2002. Railcar leasing was $6.1 million lower primarily due to lower rental rates and higher maintenance expense. Intermodal tank container leasing was $4.6 million higher primarily due to new fleet additions and higher utilization. Sulphur processing was $1.6 million higher due to higher rates and volume.

Average fleet utilization of the Company’s railcar fleet was 93% for 2003, the same as for 2002. Utilization rates of the Company’s existing railcars are driven by long-term requirements of manufacturers and shippers of chemical products, petroleum products, food products, and bulk plastics, and suitability of the Company’s fleet to meet such demand. The potential impact of short-term fluctuations in demand is tempered by the longer-term nature of the leases. Over the past five years, the average term of leases entered into for newly manufactured railcars was approximately seven years, and the average term of leases entered into for used railcars was approximately four years. The average term of leases entered into during 2003 for newly manufactured railcars was approximately eight years, and the average term of leases entered into for used railcars was approximately three years.

Sales revenue decreased as demand for products of the metals distribution business continued to be adversely impacted by the general economic slowdown in the U.S. Demand for new railcars in 2003 improved over 2002, resulting in higher production and capacity utilization.

Revenues and gross profit from sales were as follows:

Sales revenue for 2003 decreased from 2002 primarily due to $9.3 million lower sales of metals distribution products (reduced demand), $7.0 million lower sales of sulphur processing equipment (timing of project completion), partially offset by $11.9 million higher sales of railcars (higher volume).

Gross profit on sales in 2003 decreased from 2002, primarily due to a $5.4 million decrease for metals distribution products (reduced demand) partially offset by $2.0 million improved gross profit on sales of railcars (higher volume).

Interest income in 2003 was $3.1 million lower than in 2002 primarily due to lower interest rates and lower average balances.

The write-down of investment in direct financing lease is related to the Boeing 767-233 aircraft discussed in Note 5 of the Notes to Consolidated Financial Statements.

Goodwill impairment expense of $16.0 million is from the write-off of goodwill in the metals distribution business.

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Interest expense in 2003 was $6.4 million lower than in 2002 due to principal repayments of debt with no significant new financing in 2003. Interest rates and borrowed debt are discussed in Note 7 of the Notes to Consolidated Financial Statements.

Provision for income taxes was $39.0 million in 2003 with an effective tax rate of 35.8%, compared with $56.3 million in 2002 with an effective tax rate of 36.8%. Income taxes are discussed in Note 8 of the Notes to Consolidated Financial Statements.

Financial Condition and Liquidity

Operating activities provided $311.2 million of cash in 2003, compared with $282.7 million in 2002. These funds, along with proceeds from redemption of short-term investments, were used to finance lease fleet additions, service borrowed debt obligations, and pay dividends to the Company’s stockholder. It is the Company’s policy to pay to its stockholder a quarterly dividend equal to 70% of net income. To the extent that the Company generates cash in excess of its operating needs, such funds, in excess of the amounts paid as dividends, are advanced to its parent and bear interest at commercial rates. Conversely, when the Company requires additional funds to support its operations, prior advances are repaid by its parent. No restrictions exist regarding the amount of dividends which may be paid or advances which may be made by the Company to its parent.

Net cash used in investing activities was $192.8 million in 2003 compared with $48.9 million in 2002.

In 2003, the Company spent $246.2 million for construction and purchase of lease fleet and other fixed assets, compared with $122.7 million in 2002. The increase was primarily higher investment in additions to the railcar lease fleet. Of the capital expenditures for construction and purchase of lease fleet and other fixed assets over the past five years, approximately 78% have been for railcars. Since capital expenditures for railcars are generally incurred subsequent to receipt of firm customer lease orders, such expenditures are discretionary to the Company based on its desire to enter into those lease orders. Capital expenditures for intermodal tank containers are likewise discretionary in the intermodal tank container business.

Proceeds from disposals of lease fleet and other fixed assets was $32.4 million in 2003 compared with $13.9 million in 2002. The higher proceeds in 2003 was due to a higher number of railcars sold as well as higher prices obtained for railcars sold for scrap.

Net cash used in financing activities was $110.4 million in 2003 compared with $204.9 million used in 2002.

In 2003, the Company used $62.5 million for principal repayments on borrowed debt compared with $141.3 million in 2002. Of the 2003 principal repayments, $17.6 million were prepayments compared with $52.0 million of prepayments in 2002. Cash dividends were $48.0 million in 2003 compared with $67.0 million in 2002.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company’s financial instruments is the potential loss in fair value arising from adverse changes in interest rates. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes.

The following table provides information about the Company’s debt obligations with fair value sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity dates and estimated fair value of the Company’s debt obligations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Union Tank Car Company

We have audited the accompanying consolidated balance sheet of Union Tank Car Company and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the index at Item 15(a)2. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Union Tank Car Company and subsidiaries at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

ERNST & YOUNG LLP

Chicago, Illinois

March 9, 2005

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Dollars in Thousands)

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Dollars in Thousands)

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY

Years Ended December 31, 2004, 2003 and 2002

(Dollars in Thousands)

See Notes to Consolidated Financial Statements.

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UNION TANK CAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in Thousands)