• our reliance upon a small number of customers that represent a large percentage of our revenues and backlog;

• the conversion of our railcar backlog into revenues, including without limitation the material adverse effects that could result from CIT Group Inc.'s (CIT) financial difficulty and bankruptcy proceedings;

• the health of and prospects for the overall railcar industry;

• our prospects in light of the cyclical nature of the railcar manufacturing business and the current economic environment;

• our ability to manage overhead and production slowdowns;

• the highly competitive nature of the railcar manufacturing industry, fluctuating costs of raw materials, including steel and railcar components and delays in the delivery of such raw materials and components;

• fluctuations in the supply of components and raw materials we use in railcar manufacturing;

• risks associated with potential acquisitions or joint ventures;

• the risk of lack of acceptance of our new railcar offerings by our customers;

• the sufficiency of our liquidity and capital resources;

• anticipated production schedules for our products and the anticipated financing needs and construction and production schedules of our joint ventures;

• the impact and anticipated benefits of any acquisitions we may complete;

• the impact and costs and expenses of any litigation we may be subject to now or in the future;

• compliance with covenants contained in our unsecured senior notes; and

• the ongoing benefits and risks related to our relationship with Mr. Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, and certain of his affiliates.

In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential" and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date of this report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under "Risk Factors" in our Annual Report on Form 10-K filed on March 6, 2009 (the Annual Report) and in Part II - Item 1A of this report, as well as the risks and uncertainties discussed elsewhere in the Annual Report and in this report. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time.

OVERVIEW
We are a leading North American designer and manufacturer of hopper and tank railcars. We also repair and refurbish railcars, provide fleet management services and design and manufacture certain railcar and industrial components. We provide our railcar customers with integrated solutions through a comprehensive set of high quality products and related services. We operate in two reportable segments: manufacturing operations and railcar services. Manufacturing operations consist of railcar manufacturing and industrial and railcar component manufacturing. Railcar services consist of railcar repair, refurbishment and fleet management services. Financial information about our business segments for both the three and nine months ended September 30, 2009 and 2008, is set forth in Note 20 of our condensed consolidated financial statements.
The ongoing economic downturn is continuing to have an adverse effect on the railcar and other industrial manufacturing markets in which we compete, resulting in substantially reduced orders in the marketplace, increased competition for those fewer orders, increased pricing pressures and lower revenues. Moreover, as a result of the economic downturn, we believe that a significant amount of the railcar fleet in North America is idle. The availability of these railcars to be brought back into service would, we believe, delay a recovery in railcar orders following an economic revival. As a result of the current market conditions, our backlog has been declining significantly. In response, we have reduced production rates and workforce at our manufacturing facilities and continue to evaluate our capacity and production schedules. If we are unable to obtain significant new orders, we will be required to further curtail our manufacturing operations. We continue to monitor expenses in an effort to reduce overhead costs at all of our locations. Our Railcar Services segment has experienced growth primarily facilitated through expansions, which have allowed higher volumes. These higher volumes along with our seasoned workforce have also resulted in efficiencies in our ability to complete repair projects. In addition, one of our railcar manufacturing facilities utilizes its capacity and highly skilled labor force, in part, to perform certain repair projects in 2009.
The CIT Group/Equipment Financing, Inc. (CIT Equipment Financing), a subsidiary of CIT, is our largest customer and accounted for approximately 39% and approximately 33% of our total consolidated revenues for the three and nine months ended September 30, 2009, respectively, and accounted for approximately 55% of our backlog as of September 30, 2009. CIT has announced that it and its subsidiary, CIT Group Funding Company of Delaware LLC, filed for bankruptcy protection on November 1, 2009 with a prepackaged plan of reorganization. In connection with that announcement, CIT further stated that none of its operating subsidiaries, including CIT Equipment Financing, will be included in the bankruptcy filings and, as a result, we understand that all of its operating entities are expected to continue normal operations during the pendency of the bankruptcy cases. Our business with CIT Equipment Financing is subject to a number of risks, including our ability to convert the backlog into revenue as well as the risks that CIT's prepackaged plan of reorganization may not be successful, or that CIT Equipment Financing may not continue normal operations or may seek to renegotiate its existing obligations through bankruptcy protection or otherwise.
RESULTS OF OPERATIONS
Three Months ended September 30, 2009 compared to Three Months ended September 30, 2008
The following table summarizes our historical operations as a percentage of revenues for the periods shown. Our historical results are not necessarily indicative of operating results that may be expected in the future.

                                                    For the Three Months Ended,
                                                           September 30,
                                                       2009               2008
     Revenues:
     Manufacturing Operations                           79.4 %              94.4 %
     Railcar services                                   20.6 %               5.6 %

     Total revenues                                    100.0 %             100.0 %
     Cost of revenue:
     Cost of manufacturing                             (72.1 %)            (86.5 %)
     Cost of railcar services                          (16.6 %)             (4.5 %)

     Total cost of revenues                            (88.7 %)            (91.0 %)
     Gross profit                                       11.3 %               9.0 %
     Selling, administrative and other                  (8.3 %)             (3.0 %)

     Earnings from operations                            3.0 %               6.0 %
     Interest income                                     2.4 %               0.8 %
     Interest expense                                   (6.8 %)             (2.3 %)
     Other income                                        4.0 %               0.8 %
     (Loss) earnings from joint venture                 (2.8 %)              0.2 %

     (Loss) earnings before income tax expense          (0.2 %)              5.5 %
     Income tax benefit (expense)                        1.6 %              (2.1 %)

     Net earnings                                        1.4 %               3.4 %

Revenues
Our revenues for the three months ended September 30, 2009 decreased 64.1% to $78.1 million from $217.2 million in the three months ended September 30, 2008. This decrease was primarily due to decreased revenues from our manufacturing operations, partially offset by increased revenues from our railcar services segment.
Our manufacturing operations revenues for the three months ended September 30, 2009 decreased 69.7% to $62.0 million from $205.1 million for the three months ended September 30, 2008. The primary reasons for the decrease in revenues were a decrease in railcar shipments and a decrease in surcharges that we pass on to our customers, all partially offset by increased overall average selling prices on railcars due to a change in product mix. During the three months ended September 30, 2009, we continued to decrease our workforce and production rates at our manufacturing plants due to reduced demand resulting in lower shipments. During the three months ended September 30, 2009, we shipped approximately 610 railcars compared to approximately 2,120 railcars in the same period of 2008. Of these railcar shipments, none related to our railcar manufacturing agreement with ACF Industries, LLC (ACF) in 2009 as compared to approximately 260 railcar shipments in 2008. Our agreement with ACF terminated effective in March 2009, as described in Note 19 to our condensed consolidated financial statements. For the three months ended September 30, 2009, our manufacturing operations included $8.0 million, or 10.3%, of our total consolidated revenues, from transactions with affiliates, compared to $47.7 million, or 22.0% of our total consolidated revenues in the three months ended September 30, 2008. These revenues were attributable to sales of railcars and railcar parts to companies controlled by Mr. Carl Icahn.
Our railcar services revenues in the three months ended September 30, 2009 increased to $16.1 million compared to $12.1 million for the three months ended September 30, 2008. The increase was primarily attributable to the completion of expansion projects at repair facilities and repair projects performed at a railcar manufacturing facility. For the third quarter of 2009, our railcar services revenues included $3.6 million, or 4.6% of our total consolidated revenues, from transactions with affiliates, compared to $3.4 million, or 1.6% of our total consolidated revenues, in the third quarter of 2008.

Gross Profit
Our gross profit decreased to $8.8 million in the three months ended September 30, 2009 from $19.6 million in the three months ended September 30, 2008. However, our gross profit margin increased to 11.3% in the third quarter of 2009 from 9.0% in the third quarter of 2008, driven primarily by an increase in our gross profit margins from our manufacturing operations.
Gross profit from our manufacturing operations decreased $11.6 million for the three months ended September 30, 2009 compared to the three months ended September 30, 2008 due primarily to reduced railcar shipments. Gross profit margin, for our manufacturing operations, however, was 9.2% in the three months ended September 30, 2009, an increase from 8.5% in the three months ended September 30, 2008. This increase is primarily attributable to fixed overhead cost control measures and strong labor efficiencies at most of our manufacturing locations, partially offset by lower absorption of our manufacturing locations' fixed costs due to lower volumes. Additionally, the 2008 gross profit margin was negatively impacted by low margins on fixed price hopper railcar orders. Gross profit for our railcar services operations increased $0.8 million for the three months ended September 30, 2009 compared to the three months ended September 30, 2008 primarily due to an increase in revenue. Gross profit margin for our railcar services operations increased to 19.4% in the three months ended September 30, 2009 from 18.7% in the three months ended September 30, 2008. The increase is primarily attributable to efficiencies created by increased volume due to completed expansion projects and repair projects performed at a railcar manufacturing facility.
Selling, Administrative and Other Expenses Our total selling, administrative and other expenses decreased to $6.5 million for the third quarter of 2009, compared to $6.6 million for the third quarter of 2008. The decrease of $0.1 million was primarily attributable to a decrease of $0.4 million due to cost control measures partially offset by a stock-based compensation expense increase of $0.3 million as described below. In the third quarter of 2009, we recognized expense related to stock-based compensation of $0.5 million, attributable to stock appreciation rights (SARs), which settle in cash, granted in 2009, 2008 and 2007. This is compared to stock-based compensation expense of $0.2 million for the three months ended September 30, 2008, which was attributable to stock options we granted in 2006 and to SARs, which settle in cash, granted in 2007 and 2008. Stock-based compensation increased due to an increasing trend in our stock price during the third quarter of 2009 as compared to a decreasing trend during the same period of 2008.
Interest Expense and Income
Net interest expense for the three months ended September 30, 2009 was $3.4 million, representing $5.3 million of interest expense and $1.9 million of interest income, compared to $3.3 million of net interest expense for the three months ended September 30, 2008, representing $5.0 million of interest expense and $1.7 million of interest income.
Other Income
Other income for the three months ended September 30, 2009 increased $1.4 million when compared to the three months ended September 30, 2008. Other income of $3.1 million recognized in the third quarter of 2009 related to realized gains on the sale of a portion of our investment in corporate bonds. The other income of $1.8 million recognized in the third quarter of 2008 related to realized gains on the sale of Greenbrier shares and the settlement of total return swaps.
(Loss) Earnings from Joint Ventures Our joint venture activity decreased to a loss of $2.2 million for the three months ended September 30, 2009 from earnings of $0.5 million for the three months ended September 30, 2008. This was partially attributable to our share of Ohio Castings earnings decreasing $1.1 million for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008, due to idling production in June 2009. Another factor was our share of Axis' losses increasing approximately $1.6 million for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008, due to weak demand.

Income Taxes
We experienced an income tax benefit for the three months ended September 30, 2009 of $1.2 million primarily due to a one-time $1.0 million adjustment to accrued taxes due to certain tax benefits becoming recognizable during the third quarter of 2009. As of September 30, 2008, our income tax expense was $4.5 million.
Nine Months ended September 30, 2009 compared to Nine Months ended September 30, 2008
The following table summarizes our historical operations as a percentage of revenues for the periods shown. Our historical results are not necessarily indicative of operating results that may be expected in the future.

                                                 For the Nine Months Ended,
                                                       September 30,
                                                   2009               2008
        Revenues:
        Manufacturing Operations                    87.3 %              93.6 %
        Railcar services                            12.7 %               6.4 %

        Total revenues                             100.0 %             100.0 %
        Cost of revenue:
        Cost of manufacturing                      (78.7 %)            (84.5 %)
        Cost of railcar services                   (10.3 %)             (5.2 %)

        Total cost of revenues                     (89.0 %)            (89.7 %)
        Gross profit                                11.0 %              10.3 %
        Selling, administrative and other           (5.5 %)             (3.2 %)

        Earnings from operations                     5.5 %               7.1 %
        Interest income                              1.4 %               1.0 %
        Interest expense                            (4.5 %)             (2.5 %)
        Other income                                 0.9 %               0.6 %
        (Loss) earnings from joint venture          (1.5 %)              0.2 %

        Earnings before income tax expense           1.8 %               6.4 %
        Income tax expense                          (0.4 %)             (2.4 %)

        Net earnings                                 1.4 %               4.0 %

Revenues
Our revenues for the nine months ended September 30, 2009 decreased 43.1% to $345.0 million from $605.8 million in the nine months ended September 30, 2008. This decrease was primarily due to decreased revenues from our manufacturing operations, partially offset by increased revenues from our railcar services segment.
Our manufacturing operations revenues for the nine months ended September 30, 2009 decreased 46.8% to $301.3 million from $566.8 million for the nine months ended September 30, 2008. The primary reasons for the decrease in revenues were a decrease in railcar shipments and a decrease in surcharges that we pass on to our customers, all partially offset by increased overall average selling prices on all railcars due to a change in product mix. During the nine months ended September 30, 2009, we continued to decrease our workforce and production rates at our manufacturing plants due to reduced demand resulting in lower shipments. During the nine months ended September 30, 2009, we shipped approximately 3,080 railcars compared to approximately 6,100 railcars in the same period of 2008. Of these railcar shipments, 220 were related to our railcar manufacturing agreement with ACF in 2009 as compared to approximately 730 railcar shipments in 2008. Our agreement with ACF terminated effective in March 2009, as described in Note 19 to our condensed consolidated financial statements.
For the nine months ended September 30, 2009, our manufacturing operations included $93.8 million, or 27.2% of our total consolidated revenues, from transactions with affiliates, compared to $136.1 million, or 22.5% of our total consolidated revenues in the nine months ended September 30, 2008. These revenues were attributable to sales of railcars and railcar parts to companies controlled by Mr. Carl Icahn.

Our railcar services revenues in the nine months ended September 30, 2009 increased to $43.6 million compared to $39.0 million for the nine months ended September 30, 2008. The increase was primarily attributable to the completion of expansion projects at repair facilities and the repair projects performed at a railcar manufacturing facility, both of which allowed for higher volumes. For the nine months ended September 30, 2009, our railcar services revenues included $11.5 million, or 3.3% of our total consolidated revenues, from transactions with affiliates, compared to $11.6 million, or 1.9% of our total consolidated revenues in the nine months ended September 30, 2008. Gross Profit
Our gross profit decreased to $38.0 million in the nine months ended September 30, 2009 from $62.5 million in the nine months ended September 30, 2008. Our gross profit margin increased to 11.0% in the nine months ended September 30, 2009 from 10.3% for the same period in 2008, driven by an increase in our gross profit margins from our manufacturing operations.
Gross profit from our manufacturing operations decreased $25.2 million for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. However, gross profit margin for our manufacturing operations was 9.9% in the nine months ended September 30, 2009, an increase from 9.7% in the nine months ended September 30, 2008. This increase is primarily attributable to fixed overhead cost control measures and strong labor efficiencies at most of our manufacturing locations, partially offset by lower absorption of our manufacturing locations' fixed costs due to lower volumes. Additionally, the 2008 gross profit margin was negatively impacted by low margins on fixed price hopper railcar orders.
Gross profit for our railcar services operations increased $0.7 million for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. Gross profit margin for our railcar services operations decreased to 18.8% in the nine months ended September 30, 2009 from 19.4% in the nine months ended September 30, 2008. The decrease is primarily attributable to inefficiencies experienced early in 2009 due to lower work content prior to the completion of the expansion projects at facilities partially offset by repair projects performed at a railcar manufacturing facility. Selling, Administrative and Other Expenses Our total selling, administrative and other expenses decreased to $19.2 million for the nine months ended September 30, 2009, compared to $19.6 million for the same period of 2008. The decrease of $0.4 million was primarily attributable to decreased workforce and other cost cutting measures partially offset by a legal settlement and an increase in stock-based compensation expense. For the first nine months of 2009, we recognized stock-based compensation expense of $0.7 million, attributable to stock appreciation rights (SARs), which settle in cash, granted in 2009, 2008 and 2007. This is compared to stock-based compensation expense of $0.1 million for the nine months ended September 30, 2008, which was attributable to stock options we granted in 2006 and SARs, which settle in cash, granted in 2007 and 2008. The stock-based compensation during the first nine months of 2008 was impacted by $0.4 million of income being recognized in the second quarter 2008 as a result of the cancelation of William Benac's stock options. Stock-based compensation increased due to an increasing trend in our stock price during the nine months ended September 30, 2009 as compared to a decreasing trend during the same period of 2008. Interest Expense and Income
Net interest expense for the nine months ended September 30, 2009 was $10.7 million, representing $15.6 million of interest expense and $4.9 million of interest income, as compared to $9.1 million of net interest expense for the nine months ended September 30, 2008, representing $15.1 million of interest expense and $6.0 million of interest income.

Our interest expense for the nine months ended September 30, 2009 was comparable to the same period of 2008. Our interest income decreased $1.0 million for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. The decrease in interest income was primarily attributable to lower interest rates in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. Other Income
Other income for the nine months ended September 30, 2009 was $3.0 million as compared to other income of $3.5 million for the nine months ended September 30, 2008. Other income of $3.0 million recognized in the nine months ended September 30, 2009 related to the realized gains on the sale of a portion of our investment in corporate bonds partially offset by realized losses on foreign currency option. The other income of $3.5 million recognized in the nine months ended September 30, 2008 related to realized gains on total return swaps and the sale of Greenbrier stock.
(Loss) Earnings from Joint Ventures Our joint venture activity decreased to a loss of $5.0 million for the nine months ended September 30, 2009 from earnings of $0.9 million for the nine months ended September 30, 2008. This was partially attributable to our share of Ohio Castings profits and losses decreasing approximately $3.1 million for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008, due to the weak market and the idling of production in June 2009. The decrease was also attributable to our share of Axis' losses increasing $2.8 million for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008, due to weak demand. Income Taxes
Our income tax expense for the nine months ended September 30, 2009 was $1.2 million or 20.1% of our earnings before income taxes, as compared to $14.3 million for the nine months ended September 30, 2008, or 37.6% of our earnings before income taxes. The change in our effective tax rate is primarily due to a one-time $1.0 million adjustment to accrued taxes due to certain tax benefits becoming recognizable during the third quarter of 2009.
BACKLOG
We define backlog as the number and sales value of railcars that our customers have committed in writing to purchase from us that have not been recognized as revenues. As of September 30, 2009, our total backlog was approximately 1,160 railcars valued at approximately $100.8 million. As of December 31, 2008, our total backlog was approximately 4,240 railcars valued at approximately $373.1 million. We estimate that approximately 55% of our September 30, 2009, . . .