Note 1. Summary of Significant Accounting Policies

Principles of Consolidation

The financial statements of Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity”, “Company”, “we” or “our”) include the accounts of all majority owned subsidiaries. The equity method of accounting is used for companies in which the Company has significant influence and 50% or less ownership. All significant intercompany accounts and transactions have been eliminated.

On January 1, 2010, the Company adopted the provisions of a new accounting standard, Accounting Standards Codification (“ASC”) 810-10, requiring the inclusion of the consolidated financial statements of TRIP Holdings and subsidiary in the consolidated financial statements of the Company as of January 1, 2010. Prior to January 1, 2010, the Company’s investment in TRIP Holdings was accounted for using the equity method. Accordingly, the consolidated balance sheets of the Company as of December 31, 2011 and 2010 and the consolidated statements of operations, cash flows, and stockholders’ equity for the years ended December 31, 2011 and 2010 include the accounts of all subsidiaries including TRIP Holdings. As a result of adopting this pronouncement, we determined the effects on Trinity’s consolidated financial statements as if TRIP Holdings had been included in the Company’s consolidated financial statements from TRIP Holdings’ inception and recorded a charge to retained earnings of $105.4 million, net of $57.7 million of tax benefit, and a noncontrolling interest of $129.9 million as of January 1, 2010. Prior periods were not restated. All significant intercompany accounts and transactions have been eliminated. Profits have been deferred on sales of railcars from the Rail or Leasing Group to TRIP Holdings and will be amortized over the life of the related equipment. Additionally, any future profits on the sale of railcars to TRIP Holdings will be deferred and amortized over the life of the related equipment. The noncontrolling interest represents the non-Trinity equity interest in TRIP Holdings. In September 2010, Trinity increased its ownership interest in TRIP Holdings to 57%. The effect of adopting this accounting standard was an increase to income from continuing operations and net income attributable to Trinity Industries, Inc. of $5.3 million or $0.07 per share in 2010. See Note 6 Investment in TRIP Holdings for further discussion.

Stockholders’ Equity

On December 9, 2010, the Company’s Board of Directors authorized a $200 million share repurchase program, effective January 1, 2011. This program replaced the Company’s previous share repurchase program and expires December 31, 2012. No shares were repurchased under this program for the year ended December 31, 2011.

For the quarter ended June 30, 2011, an amount of $15.5 million was reclassified between capital in excess of par value and accumulated other comprehensive loss to properly reflect the additional amount of accumulated unrealized loss on derivative financial instruments attributable to the Company after the purchase of additional interests in TRIP Holdings.

Revenue Recognition

Revenues for contracts providing for a large number of units and few deliveries are recorded as the individual units are produced, inspected, and accepted by the customer as the risk of loss passes to the customer upon pre-delivery acceptance on these contracts. This occurs primarily in the Rail and Inland Barge Groups. Revenue from rentals and operating leases, including contracts which contain non-level fixed rental payments, is recognized monthly on a straight-line basis. Fees for shipping and handling are recorded as revenue. For all other products, we recognize revenue when products are shipped or services are provided.

Effective December 31, 2011, the Company adopted the emerging industry policy of recognizing revenue from the sales of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet that have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balances have been reclassified to conform to this policy resulting in a decrease in revenue of $33.6 million and $154.3 million for the years ended December 31, 2010 and 2009, respectively. Additionally, this change resulted in additional cash flow provided by operating activities with an offsetting decrease in cash flow from investing activities of $0.3 million and $2.1 million for the years ended December 31, 2010 and 2009, respectively.

 

Income Taxes

The liability method is used to account for income taxes. Deferred income taxes represent the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized.

The Company regularly evaluates the likelihood of realization of tax benefits derived from positions it has taken in various federal and state filings after consideration of all relevant facts, circumstances, and available information. For those tax benefits deemed more likely than not that will be sustained, the Company recognizes the benefit it believes is cumulatively greater than 50% likely to be realized. To the extent the Company were to prevail in matters for which accruals have been established or be required to pay amounts in excess of recorded reserves, the effective tax rate in a given financial statement period could be materially impacted.

Financial Instruments

The Company considers all highly liquid debt instruments to be either cash and cash equivalents if purchased with a maturity of three months or less or short-term marketable securities if purchased with a maturity of more than three months and less than one year.

Financial instruments that potentially subject the Company to a concentration of credit risk are primarily cash investments, short-term marketable securities, and receivables. The Company places its cash investments and short-term marketable securities in bank deposits and investment grade, short-term debt instruments and limits the amount of credit exposure to any one commercial issuer. Concentrations of credit risk with respect to receivables are limited due to control procedures to monitor the credit worthiness of customers, the large number of customers in the Company’s customer base, and their dispersion across different industries and geographic areas. As receivables are generally unsecured, the Company maintains an allowance for doubtful accounts based upon the expected collectability of all receivables. Receivable balances determined to be uncollectible are charged against the allowance. The carrying values of cash, receivables and accounts payable are considered to be representative of their respective fair values. One customer accounted for approximately 21% of the total receivables balance outstanding at December 31, 2011 and paid approximately 69% of their balance to date in 2012.

Inventories

Inventories are valued at the lower of cost or market, with cost determined principally on the first in first out method. Market is replacement cost or net realizable value. Work in process and finished goods include material, labor, and overhead.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives are: buildings and improvements — 3 to 30 years; leasehold improvements — the lesser of the term of the lease or 7 years; machinery and equipment — 2 to 10 years; information systems hardware and software — 2 to 5 years; and railcars in our lease fleet — generally 35 years. The costs of ordinary maintenance and repair are charged to operating costs while renewals and major replacements are capitalized.

Long-lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used for potential impairment. The carrying value of long-lived assets to be held and used is considered impaired only when their carrying value is not recoverable through undiscounted future cash flows and the fair value of the assets is less than their carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced for the estimated cost to dispose of the assets. Impairment losses were not material for the years ended December 31, 2011, 2010, and 2009.

Goodwill and Intangible Assets

Goodwill is required to be tested for impairment annually, or on an interim basis whenever events or circumstances change, indicating that the carrying amount of the goodwill might be impaired. The 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. Step two of the impairment test is necessary to determine the amount of goodwill impairment to be recorded when 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. The estimates and judgments that most significantly affect the fair value calculations are assumptions related to revenue and operating profit growth, discount rates and exit multiples. Due to an overall market decline for products in the Rail Group during the second quarter of 2009, we concluded that indications of impairment existed that required an interim goodwill impairment analysis. Accordingly, we tested the Rail Group’s goodwill for impairment as of June 30, 2009 and recorded a charge of $325.0 million during the second quarter of 2009. See Note 9 Goodwill for further explanation and results of this test. As of December 31, 2011 and 2010, the Company’s annual impairment test of goodwill was completed at the reporting unit level and no additional impairment charges were determined to be necessary.

Intangible assets with defined useful lives, which as of December 31, 2011 had net book values of $24.7 million, are amortized over their estimated useful lives, and are also evaluated for potential impairment at least annually. Impairment losses were not material for the years ended December 31, 2011, 2010, and 2009.

Restricted Cash

Restricted cash consists of cash and cash equivalents that are held as collateral for the Company’s non-recourse debt and lease obligations and as such are restricted in use.

Insurance

The Company is effectively self-insured for workers’ compensation. A third party administrator is used to process claims. We accrue our workers’ compensation liability based upon independent actuarial studies.

Warranties

Depending on the product, the Company provides warranties against materials and manufacturing defects generally ranging from one to five years. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. The Company provides for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties, and assesses the adequacy of the resulting reserves on a quarterly basis.

Foreign Currency Translation

Operations outside the United States prepare financial statements in currencies other than the United States dollar. The income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’ equity and other comprehensive loss. The functional currency of our Mexico operations is considered to be the United States dollar.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive net income (loss) consists of net income (loss), foreign currency translation adjustments, the effective unrealized portions of changes in fair value of the Company’s derivative financial instruments, and the change in the funded status of pension liabilities. See Note 15 Accumulated Other Comprehensive Loss (“AOCL”). All components are shown net of tax.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”) which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after Dec. 15, 2011 with early adoption permitted. Accordingly, the Company adopted this new standard on January 1, 2012. The adoption of ASU 2011-05 did not have an impact on the Company’s consolidated financial position, results of operations or cash flows as it only requires a change in the format of the current presentation.

In June 2009, the FASB issued a new accounting standard, ASC 810-10, which amended the previous accounting rules for consolidation of variable interest entities. The new standard replaced the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly affect its economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, the new standard provided more timely and useful information about an enterprise’s involvement with a variable interest entity. This standard was effective for annual reporting periods beginning after November 15, 2009. Accordingly, the Company adopted this new standard on January 1, 2010. See Note 6 Investment in TRIP Holdings for additional explanation of the effects of implementing this pronouncement as it applies to our investment in TRIP Holdings.

Management’s Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications and Revisions

Certain prior year balances have been reclassified in the Consolidated Statements of Operations and Cash Flows to conform to the 2011 presentations related to the presentation of lease fleet railcar sales. The effect of properly classifying deferred loan issuance costs incurred in the Consolidated Statements of Cash Flows from an operating activity within the change in other assets to a financing activity to properly state such costs as financing activities, amounted to $6.6 million and $19.0 million for the years ended December 31, 2010 and 2009, respectively. See Note 19 Selected Quarterly Financial Data for further discussion.

 

Note 2. Acquisitions and Divestitures

For the year ended December 31, 2011, all of our acquisition and divestiture activity occurred in the Construction Products Group. This activity consisted of four acquisitions and one divestiture. In February 2010, the Company acquired Quixote Corporation (“Quixote”), a leading manufacturer of energy-absorbing highway crash cushions, truck-mounted attenuators, and other transportation products, for a total cost of $58.1 million. In addition, the Company assumed $40.0 million in debt that was subsequently retired in the first quarter of 2010. Based on its valuation of the net assets acquired, Trinity recorded goodwill of $22.7 million and $24.2 million in intangible assets primarily consisting of the acquisition-date fair value allocated to patents, trade names and customer relationships that are being amortized over their estimated economic life which generally ranges from four to twenty years and. As a result of the acquisition, the Company recorded transaction-related expenses of $4.6 million including a $1.5 million write-down of its pre-acquisition investment in Quixote classified as other selling, engineering, and administrative costs. In addition to the transaction-related expenses listed above, there was a $1.8 million reclassification of previously-recognized charges from AOCL to earnings representing the decline in fair value of the Company’s pre-acquisition investment in Quixote, included in other, net in the consolidated statement of operations. See Note 12 Other, Net and Note 15 Accumulated Other Comprehensive Loss.

Acquisition and divestiture activity for 2011 and 2010 is summarized as follows. There was no acquisition and divestiture activity in 2009:

 

 

		Acquisitions												Divestitures
		Total cost				Net cash paid during the year				Goodwill recorded				Proceeds				Gain recognized				Goodwill charged off
		(in millions)
2011:
Construction Products Group		$	56.4			$	42.5			$	29.3			$	8.3			$	0.7			$	1.0
2010:
Construction Products Group
Quixote		$	58.1			$	39.9			$	22.7			$	—			$	—			$	—
Other			5.0				5.0				4.0				30.8				3.8				16.5
			63.1				44.9				26.7				30.8				3.8				16.5
Energy Equipment Group			7.4				5.0				6.6				—				—				—
		$	70.5			$	49.9			$	33.3			$	30.8			$	3.8			$	16.5

 

Note 3. Fair Value Accounting

Assets and liabilities measured at fair value on a recurring basis are summarized below:

 

 

		Fair Value Measurement as of December 31, 2011
		(in millions)
		Level 1				Level 2				Level 3				Total
Assets:
Cash equivalents		$	246.6			$	—			$	—			$	246.6
Restricted cash			240.3				—				—				240.3
Equity call agreement with TRIP Holdings equity investor (1)			—				—				0.7				0.7
Total assets		$	486.9			$	—			$	0.7			$	487.6
Liabilities:
Interest rate hedges (2)
Wholly-owned subsidiary		$	—			$	48.9			$	—			$	48.9
TRIP Holdings			—				4.8				—				4.8
Equity put agreement with TRIP Holdings equity investor (3)			—				—				3.1				3.1
Fuel derivative instruments (1)			—				0.1				—				0.1
Total liabilities		$	—			$	53.8			$	3.1			$	56.9

 

		Fair Value Measurement as of December 31, 2010
		(in millions)
		Level 1				Level 2				Level 3				Total
Assets:
Cash equivalents		$	286.0			$	—			$	—			$	286.0
Short-term marketable securities			158.0				—				—				158.0
Restricted cash			207.1				—				—				207.1
Fuel derivative instruments (1)			—				0.1				—				0.1
Total assets		$	651.1			$	0.1			$	—			$	651.2
Liabilities:
Interest rate hedges (2)
Wholly-owned subsidiary		$	—			$	45.7			$	—			$	45.7
TRIP Holdings			—				48.3				—				48.3
Total liabilities		$	—			$	94.0			$	—			$	94.0

 

(1)	Included in other assets on the consolidated balance sheet.

 

(2)	Included in accrued liabilities on the consolidated balance sheet.

 

(3)	Included in other liabilities on the consolidated balance sheet.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market to that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair values are listed below:

Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. The Company’s cash equivalents, short-term marketable securities, and restricted cash are instruments of the United States Treasury, fully-insured certificates of deposit or highly-rated money market mutual funds.

Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s fuel derivative instruments, which are commodity options, are valued using energy and commodity market data. Interest rate hedges are valued at exit prices obtained from each counterparty. See Note 7 Derivative Instruments and Note 11 Debt.

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. The equity put and call agreements with the TRIP equity investor are valued based on cash flow projections and certain assumptions regarding the likelihood of exercising the option under the related agreement. See Note 6 Investment in TRIP Holdings.

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

 

 

		December 31, 2011								December 31, 2010
		Carrying Value				Estimated Fair Value				Carrying Value				Estimated Fair Value
		(in millions)
Recourse:
Convertible subordinated notes		$	450.0			$	439.4			$	450.0			$	448.3
Less: unamortized discount			(99.8	)							(111.1	)
			350.2								338.9
Capital lease obligations			48.6				48.6				51.2				51.2
Term loan			54.7				55.7				57.4				54.2
Other			4.2				4.2				2.8				2.8
			457.7				547.9				450.3				556.5
Non-recourse:
2006 secured railcar equipment notes			269.3				278.5				283.2				302.8
Promissory notes			465.5				448.6				493.8				482.2
2009 secured railcar equipment notes			218.4				228.6				229.2				256.1
2010 secured railcar equipment notes			354.3				333.1				367.1				345.5
TILC warehouse facility			308.5				308.5				80.2				80.2
TRIP Holdings senior secured notes			61.2				61.6				—				—
TRIP Master Funding secured railcar equipment notes			840.0				834.9				—				—
TRIP Holdings warehouse loan			—				—				1,003.9				994.0
			2,517.2				2,493.8				2,457.4				2,460.8
Total		$	2,974.9			$	3,041.7			$	2,907.7			$	3,017.3

The estimated fair value of our convertible subordinated notes was based on a quoted market price as of December 31, 2011 and 2010, respectively. The estimated fair values of our 2006, 2009, and 2010 secured railcar equipment notes, promissory notes, TRIP Holdings senior secured notes, TRIP Master Funding secured railcar equipment notes, TRIP Holdings warehouse loan, and term loan are based on our estimate of their fair value as of December 31, 2011 and 2010, respectively. These values were determined by discounting their future cash flows at the current market interest rate. The carrying value of our Trinity Industries Leasing Company (“TILC”) warehouse facility approximates fair value because the interest rate adjusts to the market interest rate and the Company’s credit rating has not changed since the loan agreement was renewed in February 2011. The fair values of all other financial instruments are estimated to approximate carrying value.

Note 4. Segment Information

The Company reports operating results in five principal business segments: (1) the Rail Group, which manufactures and sells railcars and related parts and components; (2) the Construction Products Group, which manufactures and sells highway products and concrete and aggregates; (3) the Inland Barge Group, which manufactures and sells barges and related products for inland waterway services; (4) the Energy Equipment Group, which manufactures and sells products for energy related businesses, including structural wind towers, tank containers and tank heads for pressure and non-pressure vessels, frac tanks, and utility, traffic, and lighting structures; and (5) the Railcar Leasing and Management Services Group (“Leasing Group”), which provides fleet management, maintenance, and leasing services. The segment All Other includes our captive insurance and transportation companies; legal, environmental, and maintenance costs associated with non-operating facilities; other peripheral businesses; and the change in market valuation related to ineffective commodity hedges. Gains and losses from the sale of property, plant, and equipment which are related to manufacturing and dedicated to the specific manufacturing operations of a particular segment are included in operating profit of that respective segment. Gains and losses from the sale of property, plant, and equipment which can be utilized by multiple segments are included in operating profit of the All Other segment.

Sales and related net profits from the Rail Group to the Leasing Group are recorded in the Rail Group and eliminated in consolidation. Sales between these groups are recorded at prices comparable to those charged to external customers taking into consideration quantity, features, and production demand. Amortization of deferred profit on railcars sold to the Leasing Group is included in the operating profits of the Leasing Group. Sales of railcars from the lease fleet are included in the Leasing Group. Revenue and operating profit of the Leasing Group for the years ended December 31, 2011 and 2010 include the operating results of TRIP Holdings. Total assets of the Leasing Group include the assets of TRIP Holdings as of December 31, 2011 and 2010. See Note 1 Summary of Significant Accounting Policies – Principles of Consolidation for further discussion.

The financial information for these segments is shown in the tables below. We operate principally in North America.

Year Ended December 31, 2011

 

		Revenues												Operating Profit (Loss)								Depreciation  & Amortization				Capital Expenditures
		External				Intersegment				Total								Assets
		(in millions)
Rail Group		$	931.7			$	343.0			$	1,274.7			$	77.3			$	684.6			$	23.9			$	11.4
Construction Products Group			577.2				12.9				590.1				53.4				403.2				20.7				12.1
Inland Barge Group			548.5				—				548.5				106.4				189.2				6.4				38.0	(1)
Energy Equipment Group			454.8				18.0				472.8				8.9				392.9				18.4				10.4
Railcar Leasing and Management Services Group			551.4				0.6				552.0				254.5				4,462.1				115.7				258.6
All Other			11.5				50.3				61.8				(3.8	)			30.5				4.4				4.0
Corporate			—				—				—				(43.6	)			512.9				3.6				5.5
Eliminations-Lease subsidiary			—				(325.5	)			(325.5	)			(28.3	)			(440.3	)			—				—
Eliminations – Other			—				(99.3	)			(99.3	)			0.5				(114.1	)			(0.2	)			—
Consolidated Total		$	3,075.1			$	—			$	3,075.1			$	425.3			$	6,121.0			$	192.9			$	340.0

Year Ended December 31, 2010

 

														Operating
		Revenues												Profit								Depreciation &				Capital
		External				Intersegment				Total				(Loss)				Assets				Amortization				Expenditures
		(in millions)
Rail Group		$	289.7			$	232.4			$	522.1			$	1.5			$	482.9			$	24.0			$	4.0
Construction Products Group			558.3				20.5				578.8				47.4				335.2				23.7				5.5
Inland Barge Group			422.3				—				422.3				69.0				94.5				5.5				14.6	(1)
Energy Equipment Group			408.5				11.1				419.6				35.1				352.4				17.1				8.1
Railcar Leasing and Management Services Group			464.5				—				464.5				207.0				4,452.6				112.6				213.8
All Other			12.2				36.3				48.5				(11.4	)			27.5				3.6				4.2
Corporate			—				—				—				(33.8	)			538.5				3.4				4.6
Eliminations-Lease subsidiary			—				(216.8	)			(216.8	)			(8.4	)			(522.1	)			—				—
Eliminations – Other			—				(83.5	)			(83.5	)			(2.6	)			(1.5	)			(0.3	)			—
Consolidated Total		$	2,155.5			$	—			$	2,155.5			$	303.8			$	5,760.0			$	189.6			$	254.8

 

(1)	Primarily related to repair and replacement of property, plant and equipment at the Company’s inland barge manufacturing facilities in Missouri and Tennessee. See Note 8 – Property, Plant, and Equipment.

 

Year Ended December 31, 2009

 

		Revenues												Operating Profit (Loss)								Depreciation  & Amortization				Capital Expenditures
		External				Intersegment				Total								Assets
		(in millions)
Rail Group		$	485.2			$	410.1			$	895.3			$	(355.9	)		$	450.7			$	25.0			$	19.6
Construction Products Group			524.0				14.5				538.5				32.6				277.3				23.5				11.6
Inland Barge Group			527.3				—				527.3				125.2				69.4				6.1				1.3
Energy Equipment Group			502.2				7.8				510.0				73.8				242.0				16.9				9.1
Railcar Leasing and Management Services Group			370.2				—				370.2				149.0				3,167.3				82.4				343.0
All Other			12.0				36.4				48.4				0.8				27.6				3.1				2.0
Corporate			—				—				—				(30.8	)			753.1				4.2				3.8
Eliminations-Lease subsidiary			—				(391.6	)			(391.6	)			(22.6	)			(329.0	)			—				—
Eliminations – Other			—				(77.2	)			(77.2	)			(3.0	)			(2.0	)			(0.4	)			—
Consolidated Total		$	2,420.9			$	—			$	2,420.9			$	(30.9	)		$	4,656.4			$	160.8			$	390.4

Effective December 31, 2011, the Company adopted the emerging industry policy of recognizing revenue from the sales of railcars from the lease fleet on a gross basis in leasing revenues and cost of revenues if the railcar has been owned by the lease fleet for one year or less at the time of sale. Sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset. Prior year reported balances have been reclassified to conform to this policy. See Note 1 of the Notes to Consolidated Financial Statements.

Corporate assets are composed of cash and cash equivalents, short-term marketable securities, notes receivable, certain property, plant, and equipment, and other assets. Capital expenditures do not include business acquisitions.

Externally reported revenues and operating profit for our Mexico operations for the years ended December 31, 2011, 2010, and 2009 are presented below:

 

 

		External Revenues												Operating Profit
		Year Ended December 31,												Year Ended December 31,
		2011				2010				2009				2011						2010		2009
		(in millions)
Mexico		$	123.0			$	98.3			$	86.8			$	18.4			$3.4				$	15.2

Total assets and long-lived assets for our Mexico operations as of December 31, 2011 and 2010 are presented below:

 

 

		Total Assets								Long-Lived Assets
		December 31,
		2011				2010				2011				2010
		(in millions)
Mexico		$	240.4			$	288.8			$	143.2			$	151.7