-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FXzXi3tpnUfRIwpfddmii7fg84+QpCUkfWwKwEbPkhAp9P5DSps1SzwvBT5jodcB /yubunFFFEbgIv5A9/z+7Q== 0000923120-98-000003.txt : 19980115 0000923120-98-000003.hdr.sgml : 19980115 ACCESSION NUMBER: 0000923120-98-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENBRIER COMPANIES INC CENTRAL INDEX KEY: 0000923120 STANDARD INDUSTRIAL CLASSIFICATION: RAILROAD EQUIPMENT [3743] IRS NUMBER: 930816972 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13146 FILM NUMBER: 98506520 BUSINESS ADDRESS: STREET 1: ONE CENTERPOINT DR STREET 2: STE 200 CITY: LAKE OSWEGO STATE: OR ZIP: 97035 BUSINESS PHONE: 5036847000 MAIL ADDRESS: STREET 1: ONE CENTERPOINTE DR STREET 2: STE 200 CITY: LAKE OSWEGO STATE: OR ZIP: 97035 10-Q 1 THE GREENBRIER COMPANIES, INC. FORM 10-Q 11/30/97 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, 1997 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, 1997 was 14,178,800 shares. 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, 1997 1997 ___________ ___________ Assets Cash and cash equivalents $ 55,047 $ 14,384 Restricted cash and investments 19,637 7,360 Accounts and notes receivable 66,136 61,024 Inventories 68,305 87,233 Equipment held for refurbishment or sale 5,624 64,358 Investment in direct finance leases 179,725 182,421 Equipment on operating leases 77,243 102,120 Property, plant and equipment 44,989 44,925 Prepaid expenses and other 13,638 16,693 ___________ ___________ $530,344 $ 580,518 =========== =========== Liabilities and Stockholders' Equity Revolving notes $ 27,337 $ 57,709 Accounts payable and accrued liabilities 127,586 107,738 Deferred participation 40,564 39,032 Deferred income taxes 6,124 13,909 Notes payable 165,228 201,786 Subordinated debt 37,994 38,089 Minority interest 18,417 18,183 Commitments and contingencies (Note 5) Stockholders' equity Preferred stock - $0.001 par value, 25,000 shares authorized, none issued - - Common stock - $0.001 par value, 50,000 shares authorized, 14,167 outstanding 14 14 Additional paid-in capital 49,242 49,135 Retained earnings 57,915 54,689 Foreign currency translation adjustment (77) 234 ___________ ___________ 107,094 104,072 ___________ ___________ $530,344 $ 580,518 =========== =========== The accompanying notes are an integral part of these statements. THE GREENBRIER COMPANIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited) Three Months Ended November 30, 1997 1996 --------- --------- Revenues Manufacturing $114,436 $101,879 Leasing and services 23,584 25,472 --------- --------- Total revenues 138,020 127,351 Costs and expenses Cost of manufacturing sales 106,608 94,121 Leasing and services 9,762 11,303 Selling and administrative expense: Manufacturing 3,929 3,787 Leasing and services 2,621 3,114 Corporate 1,822 1,627 --------- --------- 8,372 8,528 Interest expense: Manufacturing 635 582 Leasing and services 5,301 5,861 --------- --------- 5,936 6,443 Minority interest: Manufacturing 151 499 Leasing and services 150 627 --------- --------- 301 1,126 --------- --------- Total costs and expenses 130,979 121,521 Earnings from continuing operations before income tax expense Manufacturing 3,113 2,890 Leasing and services 5,750 4,567 Corporate (1,822) (1,627) --------- --------- 7,041 5,830 Income tax expense (2,965) (2,249) --------- --------- Earnings from continuing operations 4,076 3,581 Discontinued operations: Loss on operations (net of tax benefit of $486 in 1996) - (661) --------- --------- Net earnings $ 4,076 $ 2,920 ========= ========= Earnings per share from continuing operations $ 0.29 $ 0.25 ========= ========= Earnings per share $ 0.29 $ 0.21 ========= ========= Weighted average shares outstanding 14,163 14,160 ========= ========= Dividends declared per share $ 0.06 $ 0.06 ========= ========= The accompanying notes are an integral part of these statements. THE GREENBRIER COMPANIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Three Months Ended November 30, 1997 1996 --------- --------- Cash flows from operating activities Net earnings $ 4,076 $ 2,920 Adjustments to reconcile net earnings to net cash provided by operating activities: Deferred income taxes (7,785) 920 Deferred participation 1,532 2,047 Depreciation and amortization 5,226 6,903 Gain on sales of equipment (906) (586) Other 190 277 Decrease (increase) in assets: Accounts and notes receivable (5,402) 43,803 Inventories 18,928 6,634 Prepaid expenses and other 2,718 (4,002) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 13,152 (7,925) --------- --------- Net cash provided by operating activities 31,729 50,991 --------- --------- Cash flows from investing activities Principal payments received under direct finance leases 3,766 2,796 Investment in direct finance leases - (6,227) Proceeds from sales of equipment 92,549 3,703 Purchase of property and equipment (7,325) (15,699) Investment in restricted cash and investments (12,277) (373) --------- --------- Net cash provided by (used in) investing activities 76,713 (15,800) --------- --------- Cash flows from financing activities Proceeds from borrowings - 609 Repayments of borrowings (66,929) (26,613) Dividends (850) (850) --------- --------- Net cash used in financing activities (67,779) (26,854) --------- --------- Increase in cash and cash equivalents 40,663 8,337 Cash and cash equivalents Beginning of period 14,384 6,083 --------- --------- End of period $ 55,047 $ 14,420 ========= ========= Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 4,346 $ 6,420 Income taxes 15 26 Supplemental schedule of noncash investing and financing activities Equipment obtained through borrowings $ - $ 3,327 Repayment of borrowings through return of railcars held for refurbishment or sale 96 - The accompanying notes are an integral part of these statements. 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, 1997 and for the three months ended November 30, 1997 and 1996, 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, 1997 are not necessarily indicative of the results to be expected for the entire year ending August 31, 1998. 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 1997 Annual Report incorporated by reference into the company's 1997 Annual Report on Form 10-K. Note 2 - INVENTORIES November 30, August 31, 1997 1997 ---------- ---------- Manufacturing supplies and raw materials $ 7,355 $ 5,999 Work-in-process 41,485 42,582 Assets held for sale 19,465 38,652 ---------- ---------- $ 68,305 $ 87,233 ========== ========== Note 3 - DISCONTINUED OPERATIONS AND DIVESTITURES During 1997 a plan was adopted to discontinue the third-party transportation logistics segment as well as to sell the trailer and container leasing operation in order to focus on core business operations of manufacturing and related leasing and services. In December 1997 the sale of a majority of the assets of the third- party transportation logistics segment was completed. The remainder of the logistics operations is anticipated to be disposed of during 1998. In October 1997 the sale of substantially all of the remaining trailer and container fleet, which was included in Equipment held for sale or refurbishment as of August 31, 1997, was completed. Note 4 - EQUIPMENT ON OPERATING LEASES During the first quarter, equipment with a net book value of approximately $22,000 was sold to a third party in the normal course of operations. This equipment is being leased back by Greenbrier on a short-term basis. Note 5 - COMMITMENTS AND CONTINGENCIES Purchase commitments of approximately $7,700 for leasing and services operating equipment were outstanding as of November 30, 1997. Greenbrier is involved as a defendant in litigation in the ordinary course of business, the outcome of which cannot be predicted with certainty. Management believes that any ultimate liability will not materially affect the financial position or results of operations of the company. 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. 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 leases and/or manages a fleet of approximately 27,000 railcars for its own account or for third parties such as railroads, institutional investors and other leasing companies. Sales, marketing and new product development are conducted on an integrated basis. The following table sets forth information regarding costs and expenses from continuing operations, expressed as a percentage of the associated revenue. Three Months Ended November 30, ------------------- 1997 1996 --------- --------- Manufacturing: Sales 100.0% 100.0% Cost of sales 93.2 92.4 Selling and administrative expense 3.4 3.7 Interest expense 0.6 0.6 Minority interest 0.1 0.5 Earnings before income tax expense 2.7 2.8 Leasing and services: Revenues 100.0% 100.0% Operating expense 41.4 44.4 Selling and administrative expense 11.1 12.2 Interest expense 22.5 23.0 Minority interest 0.6 2.5 Earnings before income tax expense 24.4 17.9 Corporate expense as a percentage of total revenues 1.3 1.3 Income tax expense as a percentage of pre-tax earnings 42.1 38.6 Net earnings as a percentage of total revenues 3.0 2.3 Three Months Ended November 30, 1997 Compared to Three Months Ended November 30, 1996 Revenues. Manufacturing revenues for the three-month period ended November 30, 1997 amounted to $114 million on deliveries of 1,900 railcars compared to $102 million on deliveries of 1,600 railcars in the corresponding prior period, an increase of $12 million, or 12%. Deliveries were higher than the prior period due to an overall stronger market demand for general freightcars and a rebound in the intermodal transportation industry where Greenbrier is a market leader. In the quarter ended November 30, 1997, 50% 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. The manufacturing backlog of railcars for sale and lease as of November 30, 1997 was approximately 6,600 railcars with an estimated value of $326 million compared to 2,600 railcars valued at $133 million as of August 31, 1997. Subsequent to quarter end, additional orders for 1,000 new railcars valued at approximately $60 million were received. Leasing and services revenue decreased $2 million, or 7%, for the quarter ended November 30, 1997 compared to the quarter ended November 30, 1996. This decrease is primarily due to reduced revenue from trailer and container leasing operations as substantially all of these assets were sold during the quarter, partially offset by an increase in revenue from automobile transportation services as a result of the unusually high volume of automobiles transported. Pre-tax earnings realized on the disposition of leased equipment in the normal course of operations during the quarter amounted to $583 compared to $538 realized in the corresponding prior period. THE GREENBRIER COMPANIES, INC. Cost of Manufacturing Sales. Cost of sales as a percentage of manufacturing revenue increased in the quarter ended November 30, 1997 to 93.2% from 92.4% in the quarter ended November 30, 1996 primarily due to production line changeovers and a highly competitive market environment at the time the orders were received for the current period production. Leasing and Services Expense. Leasing and services expense as a percentage of revenue was 41.4% for the quarter ended November 30, 1997 compared to 44.4% for the corresponding prior period. This change results primarily from the sale of trailer and container leasing assets during in the current period, as these assets operated at a higher expense ratio than railcars. In addition, lower depreciation of vehicle transportation equipment as a result of a reduction in carrying value recorded in the fourth quarter of 1997 contributed to the improved ratio. Selling and Administrative Expense. Total selling and administrative expense for the three months ended November 30, 1997 decreased compared to the corresponding prior period primarily due to the winding down of the trailer and container leasing operations offset somewhat by international business development expenses. Interest Expense. Total interest expense declined due to lower working capital borrowings and paydowns of term debt associated with the trailer and container leasing operation in the current period. Minority Interest. Manufacturing minority interest decreased as a result of reduced earnings of the Canadian operation. Leasing and services minority interest decreased due to the acquisition of a minority investor's interest in a consolidated subsidiary in the second quarter of 1997. Income Tax Expense. The income tax provision for the quarter ended November 30, 1997 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 greater than 42% as a result of the tax rate used on Canadian operations. In the prior period, the Canadian operation utilized operating loss carryforwards to offset earnings which resulted in a consolidated income tax rate of less than 42%. Liquidity and Capital Resources Cash provided by operations totaled $32 million for the three- month period ended November 30, 1997 compared to $51 million for the corresponding prior period. The decrease in cash from operations is primarily due to the increase in accounts receivable of $5 million in the current period compared to the decrease of $44 million in the prior comparable period. The accounts receivable activity in the prior period resulted from collections on receivables related to significant sales of newly manufactured railcars completed prior to August 31, 1996. This decrease was offset somewhat by increased accounts payable and a larger decrease in inventory compared to the prior period resulting from increased railcar deliveries. Overall liquidity improved in the current period due to the completion of the sale of substantially all of the remaining trailer and container fleet and the sale, in the normal course of business, of a significant group of railcars on operating lease. These transactions contributed $87 million of the $93 million in proceeds from sales of equipment during the current quarter. Revolving credit facilities aggregated $118 million as of November 30, 1997. A $60 million revolving line of credit is available through May 1999 to provide working capital and interim financing of equipment for the leasing and services operations. Advances under this facility bear interest at rates which vary depending on the type of borrowing and certain defined ratios. There were no borrowings outstanding under this line of credit as of November 30, 1997. A $30 million operating line of credit to be used for working capital, bearing interest primarily at prime, and a $10 million five-year term loan facility to be used for certain manufacturing capital expenditures are available through February 2000 and December 1998 for U.S. manufacturing operations. Borrowings outstanding under the operating line were $6 million as of November 30, 1997 and there were no borrowings outstanding under the term facility. An $18 million (at the November 30, 1997 exchange rate) operating line of credit, bearing interest at Canadian prime plus 1.125%, is available through March 1998 for working capital and certain capital expenditures for Canadian operations. An additional $10 million temporary borrowing facility, bearing interest at Canadian prime plus 1.125% is available through December 1997 for financing certain Canadian receivables. Borrowings outstanding under these operating lines were $21 million as of November 30, 1997. THE GREENBRIER COMPANIES, INC. Capital expenditures totaled $7 million for the three months ended November 30, 1997 compared to $25 million for the three months ended November 30, 1996. Of these capital expenditures, approximately $5 million and $23 million, respectively, were attributable to leasing and services operations. Leasing and services capital expenditures for the remainder of 1998 are expected to be approximately $24 million. Approximately $2 million of the total capital expenditures for the three months ended November 30, 1997 and November 30, 1996 were attributable to manufacturing operations. Manufacturing capital expenditures for the remainder of 1998 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, 1997 forward exchange contracts outstanding for the purchase of Canadian dollars were $99 million and for the purchase of U.S. dollars were $71 million, maturing at various dates through May 1998. 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 1998 to be paid in February 1998. 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. 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; business conditions and growth in the surface transportation industry, both domestic and international; lower than expected customer orders; the ability to consummate expected sales; delays in receipt of orders or cancellation of orders; transportation labor disputes which might disrupt 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; labor disputes; changes in product mix and the mix between manufacturing and leasing and services revenue; a delay or failure of products or services to compete successfully; shifts in market demand; changes in interest rates; financial condition of principal customers; and production difficulties and product delivery delays in the future as a result of, among other matters, changing process technologies and increasing production. Any forward-looking statements should be considered in light of these factors. 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. 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 13,1998 By:/s/Larry G. Brady --------------- ------------------------ Larry G. Brady Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the company's consolidated financial statements for the quarter ended November 30, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS AUG-31-1998 NOV-30-1997 74,684 0 66,136 0 68,305 0 44,989 0 530,344 0 0 0 0 14 107,080 530,344 0 138,020 116,370 130,979 0 0 5,936 7,041 2,965 4,076 0 0 0 4,076 .29 .29 Of this amount, $19,637 is restricted.
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