<PAGE>
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 February 28, 1999
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 March 31, 1999 was 14,254,632
shares.
<PAGE>
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts, unaudited)
February 28, August 31,
1999 1998
------------ ------------
Assets
Cash and cash equivalents $ 26,389 $ 41,912
Restricted cash and investments 622 15,997
Accounts and notes receivable 73,069 47,537
Inventories 104,132 79,849
Investment in direct finance leases 152,764 160,940
Equipment on operating leases 83,966 95,569
Property, plant and equipment 55,799 49,452
Prepaid expenses and other 26,098 14,233
------------ ------------
$522,839 $505,489
============ ============
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $136,977 $132,121
Deferred participation 48,095 45,243
Deferred income taxes 13,407 11,164
Notes payable 148,917 147,876
Subordinated debt 37,932 37,932
Minority interest 10,815 9,783
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock - $0.001 par value, 25,000
shares authorized, none outstanding - -
Common stock - $0.001 par value, 50,000 shares
authorized, 14,255 and 14,253 outstanding at
February 28, 1999 and August 31, 1998 14 14
Additional paid-in capital 50,470 50,416
Retained earnings 77,919 71,612
Accumulated other comprehensive income (1,707) (672)
------------ ------------
126,696 121,370
------------ ------------
$522,839 $505,489
============ ============
The accompanying notes are an integral part of these statements.
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three Months Ended Six Months Ended
February 28, February 28,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Revenue
Manufacturing $145,048 $104,349 $245,122 $218,975
Leasing and services 21,892 22,443 41,904 46,027
-------- -------- -------- --------
166,940 126,792 287,026 265,002
Cost of revenue
Manufacturing 127,128 96,866 217,521 203,625
Leasing and services 10,339 8,487 18,537 18,249
-------- -------- -------- --------
137,467 105,353 236,058 221,874
Margin 29,473 21,439 50,968 43,128
Other costs
Selling and administrative expense 12,347 8,315 21,792 16,309
Interest expense 5,405 4,878 10,151 11,231
-------- -------- -------- --------
17,752 13,193 31,943 27,540
Earnings before income tax expense,
minority interest, equity in
unconsolidated subsidiary and
extraordinary charge 11,721 8,246 19,025 15,588
Income tax expense (5,592) (3,528) (9,147) (6,560)
-------- -------- -------- --------
Earnings before minority interest,
equity in unconsolidated subsidiary
and extraordinary charge 6,129 4,718 9,878 9,028
Minority interest (238) (358) (895) (592)
Equity in unconsolidated subsidiary 198 - (28) -
-------- -------- -------- --------
Earnings before extraordinary charge 6,089 4,360 8,955 8,436
Extraordinary charge, net of taxes (938) - (938) -
-------- -------- -------- --------
Net earnings $ 5,151 $ 4,360 $ 8,017 $ 8,436
======== ======== ======== ========
Basic earnings per share:
Earnings before extraordinary charge $ 0.43 $ 0.31 $ 0.63 $ 0.60
Extraordinary charge (0.07) - (0.07) -
-------- -------- -------- --------
Net earnings $ 0.36 $ 0.31 $ 0.56 $ 0.60
======== ======== ======== ========
Diluted earnings per share:
Earnings before extraordinary charge $ 0.43 $ 0.30 $ 0.63 $ 0.59
Extraordinary charge (0.07) - (0.07) -
-------- -------- -------- --------
Net earnings $ 0.36 $ 0.30 $ 0.56 $ 0.59
======== ======== ======== ========
Weighted average shares outstanding:
Basic 14,254 14,184 14,254 14,174
Diluted 14,271 14,325 14,286 14,309
The accompanying notes are an integral part of these statements.
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Six Months Ended
February 28,
------------------
1999 1998
-------- --------
Cash flows from operating activities
Net earnings $ 8,017 $ 8,436
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Extraordinary charge 938 -
Deferred income taxes 2,243 (2,454)
Deferred participation 2,852 3,199
Depreciation and amortization 7,534 8,694
Gain on sales of equipment (3,203) (3,814)
Other 1,055 243
Decrease (increase) in assets:
Accounts and notes receivable (27,710) (14,557)
Inventories (21,178) 21,132
Prepaid expenses and other 488 2,859
Increase in liabilities:
Accounts payable and accrued liabilities 1,249 11,013
-------- --------
Net cash provided by (used in) operating activities (27,715) 34,751
-------- --------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash (8,553) -
Principal payments received under direct finance leases 8,336 7,455
Investment in direct finance leases (120) (518)
Proceeds from sales of equipment 25,513 105,119
Purchase of property and equipment (23,686) (26,448)
Use of (investment in) restricted cash and investments 15,375 (7,762)
-------- --------
Net cash provided by investing activities 16,865 77,846
-------- --------
Cash flows from financing activities
Proceeds from borrowings 32,102 436
Repayments of borrowings (35,089) (83,204)
Purchase of minority interest - (7,772)
Dividends paid (1,710) (1,701)
Proceeds from stock options 24 549
-------- --------
Net cash used in financing activities (4,673) (91,692)
-------- --------
Increase (decrease) in cash and cash equivalents (15,523) 20,905
Cash and cash equivalents
Beginning of period 41,912 14,384
-------- --------
End of period $ 26,389 $ 35,289
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 8,644 $ 10,845
Income taxes 2,969 6,852
Supplemental schedule of noncash investing and
financing activities
Purchase of minority interest $ - $ 1,580
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 accompanying consolidated financial statements of The
Greenbrier Companies, Inc. and Subsidiaries ("Greenbrier" or the
"company") 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 and six-month
periods ended February 28, 1999 are not necessarily indicative of
the results to be expected for the entire year ending August 31,
1999. Certain reclassifications have been made to the prior year's
consolidated financial statements to conform with the 1999
presentation.
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 and notes thereto contained in Greenbrier's
1998 Annual Report incorporated by reference into the company's
1998 Annual Report on Form 10-K.
Note 2 - INVENTORIES
February 28, August 31,
1999 1998
------------ ------------
Manufacturing:
Supplies and raw materials $ 12,549 $ 8,750
Work-in-process 56,721 62,267
Assets held for sale 27,860 2,622
Leasing equipment held for refurbishment or sale 7,002 6,210
------------ ------------
$104,132 $ 79,849
============ ============
Note 3 - COMPREHENSIVE INCOME
As of September 1, 1998, the company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes new rules for the
reporting and display of comprehensive income and its components;
however, the adoption of this statement had no impact on net
earnings. The following is a reconciliation of net earnings to
comprehensive income:
Three Months Ended Six Months Ended
February 28, February 28,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Net earnings $5,151 $4,360 $8,017 $8,436
Foreign currency translation
adjustment, net of tax (1,109) (22) (1,035) (196)
-------- -------- -------- --------
Comprehensive income $4,042 $4,338 $6,982 $8,240
======== ======== ======== ========
Note 4 - NOTES PAYABLE
In February 1999, Greenbrier issued $30,000 of 6.48% senior term
notes due 2006 (the "Notes"). Interest on the Notes is payable
semi-annually commencing June 1999, and semi-annual principal
payments of $2,800 are required beginning June 2001. In
conjunction with the issuance of the Notes, $22,000 of leasing
equipment notes payable were repaid. The early retirement of this
debt resulted in a $938 extraordinary charge, net of income taxes
of $680, for prepayment penalties and prepaid loan costs.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Note 5 - ACQUISITIONS
In September 1998, Greenbrier acquired a 60% interest in a
railcar manufacturer, WagonySwidnica, located in Swidnica, Poland.
Polish investors hold the remaining ownership interest. This
acquisition establishes a European manufacturing base and provides
access to the European markets, particularly the market in Poland.
The acquisition has been accounted for using the purchase method
and goodwill arising out of the transaction is included in other
assets and is being amortized on a straight-line basis over 12
years. Assets acquired consisted primarily of plant and equipment
and inventory. The company has not yet completed its purchase
price allocation. WagonySwidnica's functional currency is the
Polish zloty, which is translated to U.S. dollars at the exchange
rate in effect at the balance sheet date. Revenue and expenses are
translated primarily at average rates of exchange prevailing
during the reporting period. Translation adjustments are
accumulated as a separate component of stockholders' equity.
Results of operations of WagonySwidnica have been included in the
accompanying financial statements from the date of the
acquisition. Pro-forma information is not presented as the impact
of this acquisition was not significant in relation to the
company's financial position or results of operations.
Also in September 1998 Greenbrier entered into a joint venture,
Greenbrier-Concarril, with Bombardier Transportation to build
railroad freight cars at Bombardier's existing manufacturing
facility in Sahagun, Mexico. This investment expands Greenbrier's
North American capacity, enhances geographic coverage and provides
improved access to the Mexican marketplace. Each party maintains a
50% non-controlling interest in the joint venture, and therefore
Greenbrier's investment is being accounted for using the equity
method. Greenbrier's share of earnings or losses is included in
consolidated net income as equity in unconsolidated subsidiary.
The initial investments, required capital expenditures and
working capital needs for both of these operations were funded
through available cash balances.
Note 6 - COMMITMENTS AND CONTINGENCIES
Purchase commitments of approximately $12,000 for leasing and
services operating equipment were outstanding as of February 28,
1999.
Greenbrier is involved as a defendant in litigation in the
ordinary course of business, the outcome of which cannot be
predicted with certainty. Litigation has been initiated by former
shareholders of Interamerican Logistics Inc. ("Interamerican"),
which was acquired in 1996. The plaintiffs allege that Greenbrier
violated the agreements pursuant to which it acquired ownership of
Interamerican and seek damages aggregating $4,000 Canadian.
Management believes that any ultimate liability resulting from
litigation will not materially affect the financial position,
results of operations or cash flows of the company.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Greenbrier currently operates in two primary business segments:
manufacturing and leasing and services. The two business segments
are operationally integrated. With operations in North America and
Europe, the manufacturing segment produces double-stack intermodal
railcars, conventional railcars, marine vessels and forged steel
products and performs railcar refurbishment and maintenance
activities, a portion of which is for the leasing operation. The
leasing and services segment owns or manages a fleet of
approximately 32,000 railcars for railroads, institutional
investors and other leasing companies.
Railcars are generally manufactured under firm orders from third
parties, and revenue is recognized when the cars are completed and
accepted by the customer. From time to time Greenbrier commits to
manufacture railcars prior to receipt of firm orders to maintain
continuity of manufacturing operations, and railcars produced in a
given period may be delivered in subsequent periods, delaying
revenue recognition. Greenbrier may also build railcars for its
own lease fleet. Revenues do not include sales of new railcars to,
or refurbishment services performed for, the leasing operation
since intercompany transactions are eliminated in preparing the
consolidated financial statements. The margin generated from such
sales or refurbishment activity is realized by the leasing segment
over the related life of the asset or upon sale of the equipment.
Overview
Net earnings for the three and six-month periods ended February
28, 1999 were $5 million or $.36 per diluted share and $8 million
or $.56 per diluted share. This compares to net earnings of $4
million or $.30 per diluted share and $8 million or $.59 per
diluted share for the corresponding periods in 1998. The current
period results include an after-tax extraordinary charge of $900
thousand, or $.07 per diluted share, resulting from the
refinancing of $22 million of notes payable.
In September 1998, Greenbrier entered into a joint venture with
Bombardier Transportation to build railroad freight cars at
Bombardier's existing manufacturing facility in Mexico. Each party
holds a 50% non-controlling interest in the joint venture, and
therefore Greenbrier's investment is being accounted for using the
equity method. Greenbrier's share of earnings or losses is
included in consolidated net income as equity in unconsolidated
subsidiary.
Also in September 1998, Greenbrier acquired a 60% interest in a
Polish facility that produces freight cars for the European
market. Net losses from European operations, which include the
Polish facility and related sales and marketing costs since the
date of acquisition, were $800 thousand and $1.6 million for the
three and six-month periods ended February 28, 1999.
Three Months Ended February 28, 1999 Compared to Three Months
Ended February 28, 1998
Manufacturing
Manufacturing revenue for the three-month period ended February
28, 1999 was $145 million compared to $104 million in the
corresponding prior period, an increase of $41 million, or 39%.
Revenue resulted primarily from railcar deliveries of 2,000 units
in the current period compared to 1,700 units in the prior
comparable period. Revenue in the current period benefited from a
product mix with a higher unit sales value.
Manufacturing gross margin of 12% for the three months ended
February 28, 1999 compares favorably to the prior period gross
margin of 7% as a result of the efficiencies of longer production
runs for the North American operations.
The backlog of railcars to be manufactured for sale and lease at
all facilities as of February 28, 1999 was approximately 7,400
railcars with an estimated value of $450 million compared to 7,700
railcars valued at $450 million as of November 30, 1998.
Leasing and Services
Leasing and services revenue was $22 million for the three months
ended February 28, 1999, consistent with the prior comparable
period. A multi-year agreement to manage maintenance that began in
December 1998 contributed to an increase in revenue in the current
period that was offset by lower gains on sales of leased
equipment.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Pre-tax earnings realized on the disposition of leased equipment
during the quarter amounted to $600 thousand compared to $2.6
million for the corresponding prior period.
Leasing and services operating margin was 53% for the three-month
period ended February 28, 1999 compared to 62% in the
corresponding prior period. The decreased margin is primarily due
to the reduction in gains on sales and the lower-margin
maintenance agreement that began in December 1998.
Other Costs
Selling and administrative expense increased $4 million, or 48%,
to $12.3 million for the three months ended February 28, 1999 as
compared to $8.3 million in the prior comparable period. As a
percentage of revenue, selling and administrative expense was 7.4%
for the three months ended February 28, 1999, compared to 6.6% in
the comparable prior period. The increase is primarily due to the
addition of the European operations, increased international
sales, marketing and business development costs, and higher
employee-related costs.
Interest expense was $5.4 million for the three-month period
ended February 28, 1999 as compared to $4.9 million in the prior
comparable period. The current period increase is due to increased
borrowings and related costs for European operations, offset by
decreased costs related to North American operations.
Income tax expense for the three months ended February 28, 1999
represents an effective tax rate of 42% on U.S. operations and
varying effective tax rates on foreign operations, consistent with
the prior comparable period. The consolidated effective tax rate
of 47.7% in the current period is primarily a result of European
operating losses for which no tax benefit has been recognized. The
consolidated effective tax rate for the prior comparable period
was 42.8%.
Minority interest decreased for the three months ended February
28, 1999 as compared to the comparable prior period primarily as a
result of losses from the Polish manufacturing operation offset by
improved results from the Canadian manufacturing operation.
Six Months Ended February 28, 1999 Compared to Six Months Ended
February 28, 1998
Manufacturing
Manufacturing revenue for the six-month period ended February 28,
1999 was $245 million compared to $219 million in the
corresponding prior period, an increase of $26 million or 12%.
Railcar deliveries remained consistent at 3,600 units, however, a
product mix with higher unit sales values contributed to increased
revenue.
Manufacturing gross margin of 11% compares favorably to the prior
period gross margin of 7% as a result of improved production
efficiencies and economies of long production runs for the North
American operations.
Leasing and Services
Leasing and services revenue decreased $4 million, or 9%, to $42
million for the six months ended February 28, 1999 compared to $46
million for the six months ended February 28, 1998. This decrease
is primarily due to reduced revenue from trailer and container
leasing operations as substantially all of these assets were sold
in October 1997, as well as decreased revenues from automobile
transportation services. The decrease was partially offset by
revenue from the agreement to manage maintenance that began in
December 1998.
Pre-tax earnings realized on the disposition of leased equipment
during the six-month period ended February 28, 1999 were $3.1
million compared to $3.3 million in the corresponding prior
period.
Leasing and services operating margin was 56% for the six months
ended February 28, 1999 compared to 60% for the corresponding
period in 1998. The decreased margin is primarily due to a
reduction in gains on sales of leased equipment and the lower-
margin agreement to manage maintenance that began in December
1998.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Other Costs
Selling and administrative expense increased $5.5 million, or
34%, to $21.8 million for the six months ended February 28, 1999
compared to $16.3 million for the comparable period in 1998. As a
percentage of revenue, selling and administrative expense
increased to 7.6% for the six months ended February 28, 1999 from
6.2% in the prior comparable period. The increase is primarily due
to the addition of the European operations, increased
international sales, marketing and business development costs, and
higher employee-related costs.
Interest expense for the six months ended February 28, 1999
decreased $1 million to $10 million compared to $11 million in the
corresponding prior period. Borrowings and related costs decreased
in North America, offset by increased costs for the European
operations.
Income tax expense for the six months ended February 28, 1999
represents an effective tax rate of 42% on U.S. operations and
varying effective tax rates on foreign operations, consistent with
the prior comparable period. The consolidated effective tax rate
of 48.1% in the current period is primarily a result of European
operating losses for which no tax benefit has been recognized. The
consolidated effective tax rate for the prior comparable period
was 42.1%.
Liquidity and Capital Resources
Cash used in operating activities was $28 million for the six-
month period ended February 28, 1999. Cash provided by net
earnings adjusted for depreciation and amortization and other non-
cash items was offset by increases in accounts receivable and
inventories. Accounts receivable increased primarily due to longer
payment terms on current contracts and loans to support the start-
up of Mexican operations. Inventories increased principally due to
railcars produced and placed on lease during the period that will
be sold in the third and fourth quarters.
Credit facilities aggregated $127 million as of February 28,
1999. A $60 million revolving line of credit is available through
May 2000 to provide working capital and interim financing of
equipment for the leasing and services operations. A $40 million
operating line of credit to be used for working capital is
available through February 2002 for U.S. manufacturing operations.
A $20 million (at the February 28, 1999 exchange rate) operating
line of credit is available through March 2000 for working capital
and certain capital expenditures for Canadian operations. Advances
under both the revolving and operating lines of credit bear
interest at rates which vary depending on the type of borrowing
and certain defined ratios. An additional $4 million five-year
term loan facility is available through March 2000 for Canadian
capital expenditures. There were no borrowings outstanding under
any of the operating lines or the term facility as of February 28,
1999. Borrowings under these lines are based upon defined levels
of receivables, inventory and leased equipment.
Capital expenditures totaled $24 million for the six months ended
February 28, 1999 compared to $27 million for the six months ended
February 28, 1998. Of these capital expenditures, approximately
$17 million and $23 million, respectively, were attributable to
leasing and services operations. Leasing and services capital
expenditures for the remainder of 1999 are expected to be
approximately $30 million. Greenbrier regularly sells assets from
its lease fleet, some of which may have been purchased within the
current year and included in capital expenditures.
Approximately $7 million and $4 million of the total capital
expenditures for the six months ended February 28, 1999 and 1998,
respectively, were attributable to manufacturing operations.
Manufacturing capital expenditures for the remainder of 1999 are
expected to be approximately $20 million, and will include plant
improvements and equipment acquisitions to further increase
capacity, enhance efficiencies and allow for the production of new
rail products.
Foreign operations give rise to market risks from changes in
foreign currency exchange rates. Forward exchange contracts are
utilized to hedge a portion of the risk of foreign currency
fluctuations. As of February 28, 1999, forward exchange contracts
outstanding for the purchase of Canadian dollars were $85 million,
maturing at various dates through February 2000. 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 April 1999 to be paid in May 1999.
Management expects existing funds and cash generated from
operations, borrowings under existing credit facilities, and long-
term financing to be sufficient to fund dividends, working capital
needs, planned capital expenditures, acquisitions and expected
debt repayments.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Year 2000
The "Year 2000" issue refers to computer programs which use two
rather than four digits to define a given year and which therefore
might read a date using "00" as the year 1900 rather than the year
2000. This could result in the computer shutting down or
performing incorrect computations in programs that have date-
sensitive software. A variety of computer systems, applications
and automated equipment are utilized in daily operations and may
be affected by the Year 2000 issue.
Greenbrier developed a Year 2000 readiness plan which assessed
the impact of the Year 2000 issue on both information systems and
embedded manufacturing control technology. An audit of the Year
2000 readiness plan was performed by an outside consultant.
Greenbrier is developing and implementing a remediation plan for
mission-critical systems. These systems include manufacturing
equipment and internal computer systems supporting the
manufacturing and railcar leasing and services operations.
Greenbrier is working with equipment manufacturers to obtain Year
2000 certification. Systems and embedded technology not already
Year 2000 compliant are expected to be corrected by August 1999.
As part of ongoing equipment replacement programs, non-compliant
computers are being replaced in advance of any key Year 2000
processing dates and non-compliant software is being corrected or
replaced. To date, Greenbrier's internal remediation efforts and
readiness is more than 75% complete.
Some critical business systems rely on data supplied by third-
parties. Greenbrier is making efforts to determine the Year 2000
preparedness of these outside entities, but it could be adversely
impacted if its suppliers and vendors do not make necessary
changes to their own systems and products successfully or in a
timely manner. Greenbrier also supplies data in electronic format
to various customers and suppliers.
Greenbrier has key relationships with a number of vendors and
suppliers, including banks and other providers of goods and
services. The company has requested vendors to supply Year 2000
compliance documentation, but it has not yet been determined
whether all of the vendors and suppliers are Year 2000 compliant.
Reliance on single vendor source suppliers, however, is minimal,
and the company seeks to limit sole source supply relationships.
The company could be adversely impacted if its suppliers and
vendors do not make necessary changes to their own systems and
products successfully or timely. To date, critical vendor and
supplier assessment is less than 50% complete.
Costs to be incurred in responding to Year 2000 computer system
deficiencies, together with the cost of any required modifications
to the company's systems, beyond ongoing hardware replacements and
software upgrades performed in the normal course of business,
cannot be accurately estimated at this time. Costs incurred to
date in assessing and remediating Year 2000 issues have aggregated
approximately $900 thousand. Internal costs incurred in responding
to the Year 2000 issue are not separately tracked. Such costs are
principally payroll related costs.
Contingency plans are being developed for continued operations
without, or with reduced functionality, mission-critical systems
and suppliers. These plans are expected to be complete by August
1999. Activation of these plans, if necessary, may result in
reduced capabilities, restricted access to data, slower business
processes and delayed product delivery.
If the remaining elements of Greenbrier's plan to address the
Year 2000 issue are not implemented successfully or timely, the
contingency plan, which remains under development, may need to be
implemented, and at a minimum more time will be devoted to the
process and additional costs may be incurred. In addition,
significant disruption to operations, including slowing the
manufacturing process, resulting in potential revenue loss and
increased costs, could result, particularly if critical suppliers
are impacted by Year 2000 non-compliance. Any of these
eventualities could have a material adverse effect on the
financial position, results of operations or cash flows of the
company.
<PAGE>
THE GREENBRIER COMPANIES, INC.
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. The
following are among the factors that could cause actual results or
outcomes to differ materially from the forward-looking statements:
general political, regulatory or economic conditions; changes in
interest rates; business conditions and growth in the surface
transportation industry, both domestic and international; currency
and other risks associated with international operations; shifts
in market demand; a delay or failure of acquisitions, products or
services to compete successfully; changes in product mix and the
mix between manufacturing and leasing and services revenue; labor
disputes or operating difficulties which might disrupt
manufacturing operations or the flow of cargo; competitive
factors, including increased competition, new product offerings by
competitors and price pressures; actual future costs and
availability of materials and a trained workforce; production
difficulties and product delivery delays in the future as a result
of, among other matters, changing process technologies and
increasing production; lower than expected customer orders; the
ability to consummate expected sales; delays in receipt of orders
or cancellation of orders; financial condition of principal
customers; and the impact of Year 2000 compliance by the company
or by its customers, suppliers or service partners. Any forward-
looking statements should be considered in light of these factors.
<PAGE>
THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of stockholders of the registrant was
held on January 12, 1999.
(b) The meeting involved the election of directors. Proxies
for the meeting were solicited pursuant to Regulation 14 under
the Securities Exchange Act of 1934. There was no solicitation
in opposition to management's nominees as listed in the proxy
statement. All of management's nominees were elected. The
following table sets forth information with respect to votes
cast for and against each nominee:
Votes
Votes Against
For Election or Votes Broker
Nominee Election Withheld Abstaining Non-Votes
------- ---------- ----------- ---------- ---------
Victor G. Atiyeh 14,005,034 5,783 -- --
Benjamin R. Whitely 14,006,614 4,203 -- --
The term of office for the following directors continued after
the meeting: Alan James, William A. Furman, Peter K. Nevitt, C.
Bruce Ward and A. Daniel O'Neal, Jr.
(c) Stockholders ratified appointment of Deloitte & Touche LLP
as independent auditors for fiscal 1999. The appointment was
approved by the vote of 14,004,311 shares in favor, 4,481 shares
against, and 2,025 shares abstained from voting. There were no
broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
27.2 Financial Data Schedule - Restated
27.3 Financial Data Schedule - Restated
(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.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Date: April 13, 1999 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 February 28, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> FEB-28-1999
<CASH> 27,011<F1>
<SECURITIES> 0
<RECEIVABLES> 73,069
<ALLOWANCES> 0
<INVENTORY> 104,132
<CURRENT-ASSETS> 0
<PP&E> 55,799
<DEPRECIATION> 0
<TOTAL-ASSETS> 522,839
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 126,682
<TOTAL-LIABILITY-AND-EQUITY> 522,839
<SALES> 0
<TOTAL-REVENUES> 287,026
<CGS> 236,058
<TOTAL-COSTS> 268,001
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,151
<INCOME-PRETAX> 19,025
<INCOME-TAX> 9,147
<INCOME-CONTINUING> 8,955
<DISCONTINUED> 0
<EXTRAORDINARY> (938)
<CHANGES> 0
<NET-INCOME> 8,017
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
<FN>
<F1>Of this amount, $622 is restricted.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS YEAR
3-MOS
<FISCAL-YEAR-END> AUG-31-1998 AUG-31-1998 AUG-31-1998 AUG-31-1997
AUG-31-1999
<PERIOD-END> AUG-31-1998 MAY-31-1998 FEB-28-1998 AUG-31-1997
NOV-30-1998
<CASH> 57,909<F1> 51,743<F2> 50,411<F3> 21,744<F4>
52,108<F5>
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 47,537 63,300 68,291 61,024
49,622
<ALLOWANCES> 0 0 0 0
0
<INVENTORY> 79,849 53,845 62,842 87,233
95,280
<CURRENT-ASSETS> 0 0 0 0
0
<PP&E> 49,452 47,983 46,195 44,925
54,054
<DEPRECIATION> 0 0 0 0
0
<TOTAL-ASSETS> 505,489 495,271 507,605 580,518
513,282
<CURRENT-LIABILITIES> 0 0 0 0
0
<BONDS> 0 0 0 0
0
0 0 0 0
0
0 0 0 0
0
<COMMON> 14 14 14 14
14
<OTHER-SE> 121,356 116,106 111,073 103,955
123,575
<TOTAL-LIABILITY-AND-EQUITY> 505,489 495,271 507,605 580,518
513,282
<SALES> 0 0 0 0
0
<TOTAL-REVENUES> 540,361 415,660 265,002 430,920
120,086
<CGS> 447,004 346,707 221,874 349,208
98,591
<TOTAL-COSTS> 502,957 389,629 249,414 419,861
112,782
<OTHER-EXPENSES> 0 0 0 0
0
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 20,933 16,325 11,231 27,057
4,746
<INCOME-PRETAX> 37,404 26,031 15,588 11,059
7,304
<INCOME-TAX> 15,643 10,941 6,560 4,366
3,555
<INCOME-CONTINUING> 20,332 13,944 8,436 6,021
2,866
<DISCONTINUED> 0 0 0 (10,192)
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 20,332 13,944 8,436 (4,171)
2,866
<EPS-PRIMARY> 1.43 0.98 0.60 (0.29)
0.20
<EPS-DILUTED> 1.42 0.97 0.59 (0.29)
0.20
<FN>
<F1>Of this amount, $15,997 is restricted.
<F2>Of this amount, $15,348 is restricted.
<F3>Of this amount, $15,122 is restricted.
<F4>Of this amount, $7,360 is restricted.
<F5>Of this amount, $16,378 is restricted.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
3-MOS
<FISCAL-YEAR-END> AUG-31-1996 AUG-31-1997 AUG-31-1997 AUG-31-1997
AUG-31-1998
<PERIOD-END> AUG-31-1996 NOV-30-1996 FEB-28-1997 MAY-31-1997
NOV-30-1997
<CASH> 12,483<F1> 21,193<F2> 11,627<F3> 22,919<F4>
74,684<F5>
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 83,362 39,559 56,699 38,792
66,136
<ALLOWANCES> 0 0 0 0
0
<INVENTORY> 75,989 69,355 58,734 90,571
68,305
<CURRENT-ASSETS> 0 0 0 0
0
<PP&E> 35,893 36,490 38,356 39,816
44,989
<DEPRECIATION> 0 0 0 0
0
<TOTAL-ASSETS> 615,488 590,254 600,380 602,817
530,344
<CURRENT-LIABILITIES> 0 0 0 0
0
<BONDS> 0 0 0 0
0
0 0 0 0
0
0 0 0 0
0
<COMMON> 14 14 14 14
14
<OTHER-SE> 111,553 113,719 114,977 114,872
107,114
<TOTAL-LIABILITY-AND-EQUITY>615,488 590,254 600,380 602,817
530,344
<SALES> 0 0 0 0
0
<TOTAL-REVENUES> 519,940 127,351 229,686 312,268
138,210
<CGS> 423,168 105,740 186,034 250,369
116,521
<TOTAL-COSTS> 485,043 120,395 216,849 296,924
130,868
<OTHER-EXPENSES> 0 0 0 0
0
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 25,793 6,221 12,955 20,109
6,353
<INCOME-PRETAX> 34,897 6,956 12,837 15,344
7,342
<INCOME-TAX> 13,414 2,469 4,653 5,614
3,032
<INCOME-CONTINUING> 18,613 3,581 7,021 8,253
4,076
<DISCONTINUED> (338) (661) (1,924) (2,376)
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 18,275 2,920 5,097 5,877
4,076
<EPS-PRIMARY> 1.29 0.21 0.36 0.42
0.29
<EPS-DILUTED> 1.29 0.21 0.36 0.42
0.29
<FN>
<F1>Of this amount, $6,400 is restricted.
<F2>Of this amount, $6,773 is restricted.
<F3>Of this amount, $6,459 is restricted.
<F4>Of this amount, $18,170 is restricted.
<F5>Of this amount, $19,637 is restricted.
</FN>
</TABLE>
