<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 May 31, 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 June 30, 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)
May 31, August 31,
1999 1998
---------- ----------
Assets
Cash and cash equivalents $ 46,829 $ 41,912
Restricted cash and investments 629 15,997
Accounts and notes receivable 60,324 47,537
Inventories 86,366 79,849
Investment in direct finance leases 148,255 160,940
Equipment on operating leases 93,760 95,569
Property, plant and equipment 62,439 49,452
Prepaid expenses and other 25,919 14,233
---------- ----------
$524,521 $505,489
========== ==========
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $135,632 $132,121
Deferred participation 49,320 45,243
Deferred income taxes 13,510 11,164
Notes payable 144,112 147,876
Subordinated debt 37,816 37,932
Minority interest 12,181 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
May 31, 1999 and August 31, 1998 14 14
Additional paid-in capital 50,490 50,416
Retained earnings 83,243 71,612
Accumulated other comprehensive income (1,797) (672)
---------- ----------
131,950 121,370
---------- ----------
$524,521 $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 Nine Months Ended
May 31, May 31,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Revenue
Manufacturing $152,360 $129,899 $397,482 $348,874
Leasing and services 21,712 20,759 63,616 66,786
-------- -------- -------- --------
174,072 150,658 461,098 415,660
Cost of revenue
Manufacturing 133,695 116,664 351,216 320,289
Leasing and services 10,300 8,169 28,837 26,418
-------- -------- -------- --------
143,995 124,833 380,053 346,707
Margin 30,077 25,825 81,045 68,953
Other costs
Selling and administrative expense 13,013 10,288 34,805 26,597
Interest expense 4,390 5,094 14,541 16,325
-------- -------- -------- --------
17,403 15,382 49,346 42,922
Earnings before income tax expense,
minority interest, equity in
unconsolidated subsidiary and
extraordinary charge 12,674 10,443 31,699 26,031
Income tax expense (5,801) (4,381) (14,948) (10,941)
-------- -------- -------- --------
Earnings before minority interest,
equity in unconsolidated subsidiary
and extraordinary charge 6,873 6,062 16,751 15,090
Minority interest (1,041) (554) (1,936) (1,146)
Equity in unconsolidated subsidiary 347 - 319 -
-------- -------- -------- --------
Earnings before extraordinary charge 6,179 5,508 15,134 13,944
Extraordinary charge, net of taxes - - (938) -
-------- -------- -------- --------
Net earnings $ 6,179 $ 5,508 $ 14,196 $ 13,944
======== ======== ======== ========
Basic earnings per share:
Earnings before extraordinary charge $ 0.43 $ 0.39 $ 1.06 $ 0.98
Extraordinary charge - - (0.07) -
-------- -------- -------- --------
Net earnings $ 0.43 $ 0.39 $ 0.99 $ 0.98
======== ======== ======== ========
Diluted earnings per share:
Earnings before extraordinary charge $ 0.43 $ 0.38 $ 1.06 $ 0.97
Extraordinary charge - - (0.07) -
-------- -------- -------- --------
Net earnings $ 0.43 $ 0.38 $ 0.99 $ 0.97
======== ======== ======== ========
Weighted average shares outstanding:
Basic 14,255 14,219 14,254 14,189
Diluted 14,272 14,379 14,285 14,333
The accompanying notes are an integral part of these statements.
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Nine Months Ended
May 31,
------------------
1999 1998
-------- --------
Cash flows from operating activities
Net earnings $ 14,196 $ 13,944
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Extraordinary charge 938 -
Deferred income taxes 2,346 (2,132)
Deferred participation 4,077 4,739
Depreciation and amortization 11,643 11,459
Gain on sales of equipment (3,540) (6,666)
Other 1,092 1,119
Decrease (increase) in assets:
Accounts and notes receivable (15,023) (2,566)
Inventories (8,246) 29,904
Prepaid expenses and other (663) 1,450
Increase in liabilities:
Accounts payable and accrued liabilities 423 8,059
-------- --------
Net cash provided by operating activities 7,243 59,310
-------- --------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash (8,553) -
Principal payments received under direct finance leases 12,448 11,254
Investment in direct finance leases (135) (574)
Proceeds from sales of equipment 31,093 112,889
Purchase of property and equipment (42,030) (38,411)
Use of (investment in) restricted cash and investments 15,368 (7,988)
-------- --------
Net cash provided by investing activities 8,191 77,170
-------- --------
Cash flows from financing activities
Proceeds from borrowings 33,586 1,436
Repayments of borrowings (41,567) (106,644)
Purchase of minority interest - (7,772)
Dividends paid (2,565) (2,554)
Proceeds from stock options 29 1,065
-------- --------
Net cash used in financing activities (10,517) (114,469)
-------- --------
Increase in cash and cash equivalents 4,917 22,011
Cash and cash equivalents
Beginning of period 41,912 14,384
-------- --------
End of period $ 46,829 $ 36,395
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 13,195 $ 16,563
Income taxes 5,355 9,600
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 nine-month
periods ended May 31, 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
May 31, August 31,
1999 1998
---------- ----------
Supplies and raw materials $12,094 $ 8,750
Work-in-process 49,034 62,267
Assets held for sale or refurbishment 25,238 8,832
---------- ----------
$86,366 $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 Nine Months Ended
May 31, May 31,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Net earnings $6,179 $5,508 $14,196 $13,944
Foreign currency translation
adjustment, net of tax (90) (153) (1,125) (349)
-------- -------- -------- --------
Comprehensive income $6,089 $5,355 $13,071 $13,595
======== ======== ======== ========
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 the write-off of deferred
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
of $6 million and inventory of $2 million. WagonySwidnica's
functional currency is the Polish zloty, which is translated to
U.S. dollars for reporting purposes. 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 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; therefore,
Greenbrier's investment is being accounted for using the equity
method, and Greenbrier's share of operating results 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 existing cash balances.
Note 6 - COMMITMENTS AND CONTINGENCIES
Purchase commitments of approximately $2 million for leasing and
services operating equipment were outstanding as of May 31, 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 the suit is without merit and 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 33,000 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 nine-month periods ended May 31,
1999 were $6.2 million or $.43 per diluted share and $14.2 million
or $.99 per diluted share. This compares to net earnings of $5.5
million or $.38 per diluted share and $13.9 million or $.97 per
diluted share for the corresponding periods in 1998. The current
period nine-month results include an after-tax extraordinary
charge of $938 thousand, or $.07 per diluted share, resulting from
the refinancing of $22 million of notes payable in February 1999.
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,
therefore Greenbrier's investment is being accounted for using the
equity method, and Greenbrier's share of operating results 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 were $800
thousand and $2.3 million for the three and nine-month periods
ended May 31, 1999. The company has committed sales and marketing
resources to the development of European operations based on the
growth potential of the European rail market. Sales efforts have
been intensified in order to increase production to higher, more
profitable levels.
Three Months Ended May 31, 1999 Compared to Three Months Ended May
31, 1998
Manufacturing
New railcar deliveries from all facilities, including the joint
venture in Mexico accounted for under the equity method, were
3,000 units in the current period compared to 2,200 units in the
prior comparable period.
The backlog of new railcars to be manufactured for sale and lease
at all facilities as of May 31, 1999 was approximately 5,600
railcars with an estimated value of $350 million compared to 7,400
railcars valued at $450 million as of February 28, 1999.
Manufacturing revenue for the three-month period ended May 31,
1999 was $152.4 million compared to $129.9 million in the
corresponding prior period, an increase of $22.5 million, or 17%.
The increase in revenue resulted primarily from increased new
railcar deliveries and a product mix with a higher unit sales
value.
Manufacturing gross margin of 12% for the three months ended May
31, 1999 compares favorably to the prior period gross margin of
10% as a result of manufacturing efficiencies and a temporary
reduction in certain material costs for the North American
operations.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Leasing and Services
Leasing and services revenue was $21.7 million for the three
months ended May 31, 1999, compared to $20.8 million for the prior
comparable period. A multi-year maintenance management agreement
that began in December 1998 contributed to an increase in revenue
in the current period, offset by lower gains on sales of leased
equipment. Assets from Greenbrier's owned lease fleet are
periodically sold to take advantage of market conditions, manage
risk and maintain liquidity.
Pre-tax earnings realized on the disposition of leased equipment
during the quarter ended May 31, 1999 were $300 thousand compared
to $2.7 million in the corresponding prior period.
Leasing and services operating margin was 53% for the three-month
period ended May 31, 1999 compared to 61% in the corresponding
prior period. The decreased margin is primarily due to lower gains
on the disposition of leased equipment and the lower-margin
maintenance agreement that began in December 1998.
Other Costs
Selling and administrative expense increased $2.7 million, or
26%, to $13.0 million for the three months ended May 31, 1999 as
compared to $10.3 million in the prior comparable period. The
increase is primarily due to the addition of the European
operations, international sales, marketing and business
development activities, and employee related costs. As a
percentage of revenue, selling and administrative expense was 7%
for the three months ended May 31, 1999 and 1998.
Interest expense declined to $4.4 million for the three-month
period ended May 31, 1999 as compared to $5.1 million in the prior
period as a result of decreased borrowings related to North
American operations, partially offset by increased borrowings and
related costs for European operations.
Income tax expense for the three months ended May 31, 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 46% in the current period is 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%.
Minority interest increased for the three months ended May 31,
1999 as compared to the prior period as a result of improved
results from the Canadian manufacturing operation partially offset
by losses from the Polish manufacturing operation.
Nine Months Ended May 31, 1999 Compared to Nine Months Ended May
31, 1998
Manufacturing
New railcar deliveries at all facilities, including the joint
venture in Mexico accounted for under the equity method, were
6,700 units compared to 5,800 units in the prior comparable
period.
Manufacturing revenue for the nine-month period ended May 31,
1999 was $397.5 million compared to $348.9 million in the
corresponding prior period, an increase of $48.6 million or 14%.
The increase in revenue resulted primarily from increased new
railcar deliveries and a product mix with a higher unit sale
value.
Manufacturing gross margin of 12% compares favorably to the prior
period gross margin of 8% as a result of manufacturing
efficiencies and a temporary reduction in certain material costs
for the North American operations in the current period.
Conversely, the prior period margin was affected by a temporary
increase in certain material costs.
<PAGE>
THE GREENBRIER COMPANIES, INC.
Leasing and Services
Leasing and services revenue decreased $3.2 million, or 5%, to
$63.6 million for the nine months ended May 31, 1999 compared to
$66.8 million for the nine months ended May 31, 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 gains on sales of
leased equipment. The decrease was partially offset by revenue
from a maintenance management agreement that began in December
1998.
Pre-tax earnings realized on the disposition of leased equipment
during the nine-month period ended May 31, 1999 were $3.4 million
compared to $6.0 million in the corresponding prior period.
Leasing and services operating margin was 55% for the nine months
ended May 31, 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
maintenance management agreement that began in December 1998.
Other Costs
Selling and administrative expense increased $8.2 million, or
31%, to $34.8 million for the nine months ended May 31, 1999
compared to $26.6 million for the comparable period in 1998. As a
percentage of revenue, selling and administrative expense
increased to 8% for the nine months ended May 31, 1999 from 6% in
the prior comparable period. The increase is primarily due to the
addition of the European operations, international sales,
marketing and business development activities, and employee-
related costs.
Interest expense for the nine months ended May 31, 1999 decreased
$1.8 million to $14.5 million compared to $16.3 million in the
prior period as a result of decreased borrowings related to North
American operations, offset in part by financing costs associated
with the European operations.
Income tax expense for the nine months ended May 31, 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% in the current period is 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%.
Minority interest increased for the nine months ended May 31,
1999 as compared to the prior period as a result of improved
results from the Canadian manufacturing operation offset by losses
from the Polish manufacturing operation.
Liquidity and Capital Resources
Credit facilities aggregated $130 million as of May 31, 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 May 31, 1999 exchange rate) operating line of credit is
available through March 2000 for working capital for Canadian
operations. Advances under both the revolving and operating lines
of credit are based upon defined levels of receivables, inventory
and leased equipment. Interest rates vary depending on the type of
borrowing and certain defined ratios. An additional $7 million
five-year term loan facility and $3 million lease facility are
available through March 2000 for Canadian capital expenditures. At
May 31, 1999, no borrowings were outstanding under any of the
operating lines or the lease facility and $3 million was
outstanding under the term loan facility.
Capital expenditures totaled $42 million for the nine months
ended May 31, 1999 compared to $39 million for the nine months
ended May 31, 1998. Of these capital expenditures, approximately
$29 million and $31 million, respectively, were attributable to
leasing and services operations. Leasing and services capital
expenditures for the remainder of 1999 are expected to be
approximately $24 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 $13 million and $8 million of the total capital
expenditures for the nine months ended May 31, 1999 and 1998,
respectively, were attributable to manufacturing operations.
Manufacturing capital expenditures for the remainder of 1999 are
expected to be approximately $14 million, and will include plant
improvements and equipment acquisitions to further increase
capacity, enhance efficiencies and allow for the production of new
products.
<PAGE>
THE GREENBRIER COMPANIES, INC.
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 May 31, 1999, forward exchange contracts
outstanding for the purchase of Canadian and US dollars were $74.5
million, maturing at various dates through April 2000. Realized
and unrealized gains and losses from such off-balance sheet
contracts are deferred and recognized in income concurrent with
the hedged transaction.
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.
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 a computer failing to perform 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 80% 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 more than 75% 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 $1 million. 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, component supplies 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 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 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: July 14, 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
May 31, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> MAY-31-1999
<CASH> 47,458<F1>
<SECURITIES> 0
<RECEIVABLES> 60,324
<ALLOWANCES> 0
<INVENTORY> 86,366
<CURRENT-ASSETS> 0
<PP&E> 62,439
<DEPRECIATION> 0
<TOTAL-ASSETS> 524,521
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 131,936
<TOTAL-LIABILITY-AND-EQUITY> 524,521
<SALES> 0
<TOTAL-REVENUES> 461,098
<CGS> 380,053
<TOTAL-COSTS> 429,399
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,541
<INCOME-PRETAX> 31,699
<INCOME-TAX> 14,948
<INCOME-CONTINUING> 15,134
<DISCONTINUED> 0
<EXTRAORDINARY> (938)
<CHANGES> 0
<NET-INCOME> 14,196
<EPS-BASIC> 0.99
<EPS-DILUTED> 0.99
<FN>
<F1>Of this amount, $629 is restricted.
</FN>
</TABLE>
