UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended November 30, 1996
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from ______ to ______
Commission File No. 1-13146
THE GREENBRIER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0816972
(State of Incorporation)(I.R.S. Employer Identification No.)
One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035
(Address of principal executive offices) (Zip Code)
(503)684-7000
(Registrant's telephone number, including area code)
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
The number of shares of the registrant's common stock, $0.001
par value per share, outstanding on December 31, 1996 was
14,160,000 shares.
<PAGE>
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts, unaudited)
November 30, August 31,
1996 1996
Assets
Manufacturing
Current assets:
Cash and cash equivalents $ 7,118 $ 2,303
Accounts receivable 17,448 63,009
Inventories 69,355 75,989
Prepaid expenses 1,752 1,512
-------- --------
95,673 142,813
Property, plant and equipment 36,490 35,893
Other 4,070 3,720
-------- --------
136,233 182,426
Leasing and services
Cash and cash equivalents 7,302 3,780
Restricted cash and investments 6,773 6,400
Accounts and notes receivable 22,111 20,353
Railcars held for refurbishment or sale 18,963 14,459
Investment in direct finance leases 194,612 190,307
Equipment on operating leases 177,989 174,394
Prepaid expenses and other 26,271 23,369
-------- --------
454,021 433,062
-------- --------
$590,254 $615,488
======== ========
Liabilities and Stockholders' Equity
Manufacturing
Current liabilities:
Revolving notes $ - $ 13,314
Accounts payable and accrued liabilities 46,545 49,924
Current portion of notes payable 954 1,053
-------- --------
47,499 64,291
Notes payable 12,886 13,014
-------- --------
60,385 77,305
Leasing And Services
Revolving notes 7,309 14,500
Accounts payable and accrued liabilities 63,480 68,209
Deferred revenue 4,560 4,377
Deferred participation 34,363 32,316
Deferred income taxes 23,046 22,126
Notes payable 198,575 202,211
-------- --------
331,333 343,739
Subordinated debt 46,246 44,554
Minority interest 38,325 38,154
Commitments and contingencies (Note 3)
Stockholders' equity
Preferred stock - $0.001 par value, 25,000
shares authorized, none issued - -
Common stock - $0.001 par value, 50,000
shares authorized, 14,160 outstanding 14 14
Additional paid-in capital 49,094 49,079
Retained earnings 64,330 62,259
Foreign currency translation adjustment 527 384
-------- --------
113,965 111,736
-------- --------
$590,254 $615,488
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts, unaudited)
Three Months Ended
November 30,
1996 1995
Revenues
Manufacturing $101,879 $ 95,109
Leasing and services 39,016 21,656
-------- --------
Total revenues 140,895 116,765
Costs and expenses
Cost of manufacturing sales 94,121 86,070
Leasing and services 23,679 10,050
Selling and administrative expense:
Manufacturing 3,787 3,176
Leasing and services 5,415 3,201
Corporate 1,627 1,554
-------- --------
10,829 7,931
Interest expense:
Manufacturing 582 958
Leasing and services 5,875 5,363
-------- --------
6,457 6,321
Minority interest:
Manufacturing 499 (606)
Leasing and services 627 743
-------- --------
1,126 137
-------- --------
Total costs and expenses 136,212 110,509
Earnings before income tax expense
Manufacturing 2,890 5,511
Leasing and services 3,420 2,299
Corporate (1,627) (1,554)
-------- --------
4,683 6,256
Income tax expense (1,763) (2,893)
-------- --------
Net earnings $ 2,920 $ 3,363
======== ========
Net earnings per share $ 0.21 $ 0.24
======== ========
Weighted average shares outstanding 14,160 14,160
======== ========
Dividends declared per share $ 0.06 $ 0.06
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended
November 30,
1996 1995
Cash flows from operating activities
Net earnings $ 2,920 $ 3,363
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Deferred income taxes 920 (214)
Deferred participation 2,047 1,625
Depreciation and amortization 6,903 5,957
Gain on sales of equipment (586) (458)
Other 277 (483)
Decrease (increase) in assets:
Accounts and notes receivable 43,803 (18,983)
Inventories 6,634 (3,004)
Prepaid expenses and other (4,002) 368
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (8,108) 13,897
Deferred revenue 183 (1,122)
-------- --------
Net cash provided by operating activities 50,991 946
Cash flows from investing activities
Principal payments received under direct
finance leases 2,796 2,304
Investment in direct finance leases (6,227) (4,795)
Proceeds from sales of equipment 3,703 15,549
Purchase of property and equipment (15,699) (33,635)
Investment in restricted cash and investments (373) (286)
-------- --------
Net cash used in investing activities (15,800) (20,863)
Cash flows from financing activities
Proceeds from borrowings 609 19,911
Repayments of borrowings (26,613) (5,563)
Dividends (850) (850)
-------- --------
Net cash provided by (used in)
financing activities (26,854) 13,498
-------- --------
Increase (decrease) in cash and
cash equivalents 8,337 (6,419)
Cash and cash equivalents
Beginning of period 6,083 10,350
-------- --------
End of period $ 14,420 $ 3,931
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 6,420 $ 6,830
Income taxes 26 1,039
Supplemental schedule of noncash investing and
financing activities
Equipment obtained through borrowings $ 3,327 $ 1,303
Repayment of borrowings through return of railcars
held for refurbishment or sale - 1,534
The accompanying notes are an integral part of these statements.
<PAGE>
THE GREENBRIER COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, unaudited)
Note 1 - INTERIM FINANCIAL STATEMENTS
The consolidated financial statements of The Greenbrier Companies,
Inc. and Subsidiaries ("Greenbrier" or the "company") as of
November 30, 1996 and for the three months ended November 30, 1996
and 1995, have been prepared without audit and reflect all
adjustments (consisting of normal recurring accruals) which in the
opinion of management are necessary for a fair presentation of the
financial position and operating results for the periods
indicated. The results of operations for the three months ended
November 30, 1996 are not necessarily indicative of the results to
be expected for the entire year ending August 31, 1997.
Certain notes and other information have been condensed or omitted
from the interim financial statements presented in this Quarterly
Report on Form 10-Q. Therefore, these financial statements should
be read in conjunction with the consolidated financial statements
contained in Greenbrier's 1996 Annual Report incorporated by
reference into the company's 1996 Annual Report on Form 10-K.
Note 2 - INVENTORIES
November 30, August 31,
1996 1996
Manufacturing supplies and raw materials $ 6,654 $ 5,856
Work-in-process 52,852 60,474
Assets held for sale 9,849 9,659
-------- --------
$ 69,355 $ 75,989
======== ========
Note 3 - COMMITMENTS AND CONTINGENCIES
Purchase commitments of approximately $6,200 for leasing and
services operating equipment were outstanding as of November 30,
1996.
Subsequent to November 30, 1996, a minority investor's interest in
a consolidated subsidiary was acquired for $16 million, utilizing
operating cash flow and available lines of credit.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Greenbrier Companies, Inc. and Subsidiaries ("Greenbrier")
currently operates in two primary business segments: the
manufacture of railcars and marine vessels and the refurbishment
of railcars; and the leasing and management of surface
transportation equipment and related services, including third-
party transportation logistics. The two business segments are
operationally integrated. The manufacturing operations produce
double-stack intermodal railcars, conventional railcars and marine
vessels and perform refurbishment and maintenance activities, a
portion of which is for railcar leasing operations. The leasing
and services operation undertakes most of the sales and marketing
activities for the manufacturing operations. New product
development is also conducted on an integrated basis.
The following table sets forth information regarding costs and
expenses, expressed as a percentage of the associated
manufacturing or leasing and services revenue.
Three Months Ended
November 30,
1996 1995
Manufacturing:
Sales 100.0% 100.0%
Cost of sales 92.4 90.5
Selling and administrative expense 3.7 3.3
Interest expense 0.6 1.0
Minority interest 0.5 (0.6)
Earnings before income tax expense 2.8 5.8
Leasing and services:
Revenues 100.0% 100.0%
Operating expense 60.7 46.4
Selling and administrative expense 13.9 14.8
Interest expense 15.0 24.8
Minority interest 1.6 3.4
Earnings before income tax expense 8.8 10.6
Corporate expense as a percentage of total revenues 1.2 1.3
Income tax expense as a percentage of
pre-tax earnings 37.6 46.2
Net earnings as a percentage of total revenues 2.1 2.9
Three Months Ended November 30, 1996 Compared to Three Months
Ended November 30, 1995
Revenues. Manufacturing revenue for the three-month period ended
November 30, 1996 increased 7% over the corresponding period in
the prior year. Total deliveries increased by 127 to 1,600 in the
current quarter, compared to 1,473 in the prior comparable period.
Revenue from Canadian operations was substantially greater than
the prior comparable period due to increased volume and a product
mix with higher unit sales value. During the 1995 period the
Canadian facility experienced production difficulties. The
increase in revenue from Canadian operations in 1996 was largely
offset by decreased revenue from U.S. operations resulting from
fewer railcar deliveries and a product mix including railcars with
a lower unit sales value. In the quarter ended November 30, 1995,
40% of total new railcar deliveries were double-stack railcars
while virtually all of the deliveries in the quarter ended
November 30, 1996 were conventional railcars. This shift to
conventional railcars is expected to continue for the near term
due to the pause in the intermodal transportation market. The
manufacturing backlog of railcars for sale and lease was
approximately 1,200 railcars with an estimated value of $77
million as of November 30, 1996 compared to 2,200 railcars valued
at $123 million as of August 31, 1996. Subsequent to quarter end,
additional orders for 700 new railcars valued at approximately $40
million were received. Due to an industry-wide softening in
demand for certain car types, the Canadian facility is expected to
operate at reduced production and workforce levels for the
foreseeable future which will impact operating results.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Leasing and services revenue increased $17 million, or 80%, for
the quarter ended November 30, 1996 compared to the quarter ended
November 30, 1995. This increase is primarily due to the recently
expanded third-party transportation logistics operation and, to a
lesser extent, additional railcars placed in lease service,
partially offset by a decrease in revenue from automobile
transportation services as a result of the lower volume of
automobiles transported.
Pre-tax earnings realized on the disposition of leased equipment
during the quarter amounted to $538 compared to $285 realized in
the corresponding prior period.
Cost of Manufacturing Sales. Cost of sales as a percentage of
manufacturing revenue increased in the quarter ended November 30,
1996 to 92.4% from 90.5% in the quarter ended November 30, 1995.
The lower margins achieved in the current quarter result from a
less favorable product mix at U.S. operations partially offset by
continuing improvement in manufacturing efficiencies at the
Canadian operation. The prior period margin benefited from a
favorable product mix and the efficiencies of longer production
runs.
Leasing and Services Expense. Leasing and services expense as a
percentage of revenue was 60.7% for the quarter ended November 30,
1996 which is indicative of the ratio expected for the foreseeable
future. Expense as a percentage of revenue for the corresponding
prior period was 46.4% as it did not include the recently expanded
logistics operation. Logistics typically is a high-volume
business with lower margins than the leasing operation. Reduced
contribution from automobile transportation services due to lower
volumes also had a negative impact on expense as a percentage of
revenue for the current quarter.
Selling and Administrative Expense. Total selling and
administrative expense as a percentage of total revenue for the
three months ended November 30, 1996 increased compared to the
corresponding prior period primarily due to increased sales
expense and costs associated with the recently acquired logistics
operations.
Interest Expense. Manufacturing interest expense declined due to
lower working capital borrowings in the current period. The
increase in leasing and services interest expense resulted from
working capital borrowings offset somewhat by normal paydowns of
term debt.
Minority Interest. Manufacturing minority interest increased as
a result of improved earnings of the Canadian operation. Leasing
and services minority interest decreased due to reduced earnings
from automobile transportation services.
Income Tax Expense. The income tax provision for the quarter
ended November 30, 1996 represents an effective tax rate of 42% on
U.S. operations which is consistent with the corresponding prior
period. Consolidated income taxes as a percentage of pre-tax
earnings are less than 42% as the Canadian operation, which is not
included in the U.S. consolidated tax return, previously generated
operating loss carryforwards which offset current period earnings.
In the prior period, no tax benefit was recognized for the losses
incurred by Canadian operations.
Liquidity and Capital Resources
Cash provided by operations totaled $51 million for the three-
month period ended November 30, 1996 compared to $1 million for
the corresponding prior period. The fluctuation in cash from
operations is primarily due to the decrease in accounts receivable
related to the timing of payment for newly manufactured railcars
and to a lesser extent decreased inventory as a result of
increased railcar deliveries.
Existing credit facilities aggregate approximately $102 million
at November 30, 1996. Revolving lines of credit aggregating $43
million, bearing interest primarily at the bank's Money Market
Rate plus 1.5%, are available through March 1997 to provide
working capital and interim financing of equipment for the leasing
and services operations. Borrowings outstanding under these
revolving lines of credit were $7 million as of November 30, 1996.
A $30 million operating line of credit, bearing interest at prime,
for working capital and a $10 million term loan facility for
certain manufacturing capital expenditures are available through
February 1999 and December 1997 for U.S. manufacturing operations.
There were no borrowings outstanding under the operating line or
the term facility as of November 30, 1996. A $19 million (at the
November 30, 1996 exchange rate) operating line of credit, bearing
interest at prime plus 1.125%, is available through March 1997 for
working capital and certain capital expenditures for the Canadian
operations. There were no borrowings outstanding under this
operating line of credit as of November 30, 1996.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Subsequent to quarter end, Greenbrier acquired a minority
investor's interest in a consolidated leasing and services
subsidiary for approximately $16 million and increased the
ownership percentage in the Canadian manufacturing facility by
10%. These transactions were financed through available lines of
credit and operating cash flow.
Capital expenditures totaled $25 million for the three months
ended November 30, 1996 compared to $40 million for the three
months ended November 30, 1995. Of these capital expenditures,
approximately $23 million and $38 million, respectively, were
attributable to leasing and services operations. Significant
leasing and services capital expenditure programs included
additions to the leased railcar fleet under refurbishment programs
and various additions to the lease fleet related to other
equipment purchases, some of which may be syndicated. Leasing and
services capital expenditures for the remainder of 1997 are
expected to be approximately $63 million.
Approximately $2 million of the total capital expenditures for
the three months ended November 30, 1996 and November 30, 1995
were attributable to manufacturing operations. Manufacturing
capital expenditures for the remainder of 1997 are expected to be
approximately $6 million. Capital expenditure programs include
new and upgraded manufacturing plant and equipment to improve
efficiencies and increase capacity.
Operations in Canada give rise to market risks from changes in
foreign currency exchange rates. To minimize these risks, forward
exchange contracts are utilized. As of November 30, 1996 forward
exchange contracts outstanding for the purchase of Canadian
dollars were $24 million and for the purchase of U.S. dollars were
$6 million, maturing at various dates through March 1997.
Realized and unrealized gains and losses from such off-balance
sheet contracts are deferred and recognized in income concurrent
with the hedged transaction.
Dividends of $.06 per share have been paid quarterly beginning in
1995. The most recent quarterly dividend of $.06 per share was
declared in January 1997 to be paid in February 1997.
Management expects existing funds and cash generated from
operations, together with borrowings under existing credit
facilities, will be sufficient to fund dividends, working capital
needs, planned capital expenditures and expected debt repayments.
Management anticipates long-term financing will be required and
will continue to be available for the purchase of equipment to
expand Greenbrier's lease fleet.
Forward-Looking Statements
Statements contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations that are not
statements of historical fact may include forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including, without limitation, statements as
to expectations, beliefs and strategies regarding the future. It
is important to note that actual results or outcomes could differ
materially from such forward-looking statements due to a number of
factors, including, among others, general political, regulatory or
economic conditions; competitive factors and pricing pressures;
shifts in market demand; the performance and needs of industries
served by Greenbrier; actual future costs and availability of
materials and a trained workforce; changes in interest rates; the
financial condition of principal customers; or a delay in or
failure of new acquisitions or products to compete successfully.
The forward-looking statements should be considered in light of
these factors.
<PAGE>
THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
<PAGE>
THE GREENBRIER COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE GREENBRIER COMPANIES, INC.
Date: January 14, 1997 By: /s/ Larry G. Brady
Larry G. Brady
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the company's
consolidated financial statements for the quarter ended November 30, 1996 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 21,193<F1>
<SECURITIES> 0
<RECEIVABLES> 39,559
<ALLOWANCES> 0
<INVENTORY> 69,355
<CURRENT-ASSETS> 95,673
<PP&E> 36,490
<DEPRECIATION> 0
<TOTAL-ASSETS> 590,254
<CURRENT-LIABILITIES> 47,499
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 113,951
<TOTAL-LIABILITY-AND-EQUITY> 590,254
<SALES> 0
<TOTAL-REVENUES> 140,895
<CGS> 117,800
<TOTAL-COSTS> 136,212
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,457
<INCOME-PRETAX> 4,683
<INCOME-TAX> 1,763
<INCOME-CONTINUING> 2,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,920
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<FN>
<F1>Of this amount, $6,773 is restricted.
</FN>
</TABLE>
