-----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, WLpl9bSG6QmkBuOByR/g0NgG/FEAlWAdB6oEtmiVec+GhfRFd9RGf1dTDukd6S8y GShuLZbGorsXzVk5ka05Hw== 0000923120-98-000011.txt : 19980716 0000923120-98-000011.hdr.sgml : 19980716 ACCESSION NUMBER: 0000923120-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980715 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: 98666410 BUSINESS ADDRESS: STREET 1: ONE CENTERPOINTE 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 5/31/98 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, 1998 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, 1998 was 14,244,635 shares. 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, 1998 1997 --------- --------- Assets Cash and cash equivalents $ 36,395 $ 14,384 Restricted cash and investments 15,348 7,360 Accounts and notes receivable 63,300 61,024 Manufacturing inventories 53,845 87,233 Leasing equipment held for refurbishment or sale 2,538 64,358 Investment in direct finance leases 165,348 182,421 Equipment on operating leases 95,722 102,120 Property, plant and equipment 47,983 44,925 Prepaid expenses and other 14,792 16,693 --------- --------- $ 495,271 $ 580,518 ========= ========= Liabilities and Stockholders' Equity Revolving notes $ - $ 57,709 Accounts payable and accrued liabilities 121,872 107,738 Deferred participation 43,771 39,032 Deferred income taxes 12,052 13,909 Notes payable 154,348 201,786 Subordinated debt 37,932 38,089 Minority interest 9,348 18,183 Commitments and contingencies (Note 6) Stockholders' equity Preferred stock - $0.001 par value, 25,000 shares authorized, none issued - - Common stock - $0.001 par value, 50,000 shares authorized, 14,241 outstanding at May 31, 1998 14 14 Additional paid-in capital 50,245 49,135 Retained earnings 66,079 54,689 Foreign currency translation adjustment (390) 234 --------- --------- 115,948 104,072 --------- --------- $ 495,271 $ 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 Nine Months Ended May 31, May 31, ------------------ ------------------ 1998 1997 1998 1997 -------- -------- -------- -------- Revenues Manufacturing $129,899 $ 55,481 $348,874 $231,918 Leasing and services 20,759 27,101 66,786 80,350 -------- -------- -------- -------- Total revenues 150,658 82,582 415,660 312,268 Costs and expenses Cost of manufacturing sales 116,385 52,084 319,573 214,487 Leasing and services 8,169 11,865 26,418 34,692 Selling and administrative expense: Manufacturing 5,268 3,696 13,323 11,465 Leasing and services 2,609 4,106 7,141 11,374 Corporate 2,725 1,169 6,840 4,704 -------- -------- -------- -------- 10,602 8,971 27,304 27,543 Interest expense: Manufacturing 584 745 1,945 1,987 Leasing and services 4,475 6,410 14,389 18,215 -------- -------- -------- -------- 5,059 7,155 16,334 20,202 Minority interest: Manufacturing 991 221 1,551 971 Leasing and services - 190 279 933 -------- -------- -------- -------- 991 411 1,830 1,904 -------- -------- -------- -------- Total costs and expenses 141,206 80,486 391,459 298,828 Earnings before income tax expense Manufacturing 6,671 (1,265) 12,482 3,008 Leasing and services 5,506 4,530 18,559 15,136 Corporate (2,725) (1,169) (6,840) (4,704) -------- -------- -------- -------- 9,452 2,096 24,201 13,440 Income tax expense (3,944) (864) (10,257) (5,187) -------- -------- -------- -------- Earnings from continuing operations 5,508 1,232 13,944 8,253 Discontinued operations: Loss on operations (net of tax benefit of $382 and $1,537 in 1997) - (452) - (2,376) -------- -------- -------- -------- Net earnings $ 5,508 $ 780 $ 13,944 $ 5,877 ======== ======== ======== ======== Basic earnings per share: From continuing operations $ 0.39 $ 0.09 $ 0.98 $ 0.58 Discontinued operations - (0.03) - (0.16) -------- -------- -------- -------- Net earnings $ 0.39 $ 0.06 $ 0.98 $ 0.42 ======== ======== ======== ======== Diluted earnings per share: From continuing operations $ 0.38 $ 0.09 $ 0.97 $ 0.58 Discontinued operations - (0.03) - (0.16) -------- -------- -------- -------- Net earnings $ 0.38 $ 0.06 $ 0.97 $ 0.42 ======== ======== ======== ======== Dividends declared per share $ 0.06 $ 0.06 $ 0.18 $ 0.18 Weighted average shares outstanding: Basic 14,219 14,160 14,189 14,160 Diluted 14,379 14,160 14,333 14,160 The accompanying notes are an integral part of these statements. THE GREENBRIER COMPANIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Nine Months Ended May 31, ----------------------- 1998 1997 --------- --------- Cash flows from operating activities Net earnings $ 13,944 $ 5,877 Adjustments to reconcile net earnings to net cash provided by operating activities: Deferred income taxes (1,857) 149 Deferred participation 4,739 5,438 Depreciation and amortization 11,459 21,470 Gain on sales of equipment (6,666) (7,436) Other 844 (335) Decrease (increase) in assets: Accounts and notes receivable (2,566) 43,460 Inventories 29,904 (14,582) Prepaid expenses and other 1,450 (5,590) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 8,059 (12,889) --------- --------- Net cash provided by operating activities 59,310 35,562 --------- --------- Cash flows from investing activities Principal payments received under direct finance leases 11,254 9,546 Investment in direct finance leases (574) (11,525) Proceeds from sales of equipment 112,889 35,074 Purchase of property and equipment (38,411) (58,137) Investment in restricted cash and investments (7,988) (11,770) --------- --------- Net cash provided by (used in) investing activities 77,170 (36,812) --------- --------- Cash flows from financing activities Proceeds from borrowings 1,436 39,408 Repayments of borrowings (106,644) (20,610) Purchase of minority interest (7,772) (16,333) Dividends (2,554) (2,549) Proceeds from stock options 1,065 - --------- --------- Net cash used in financing activities (114,469) (84) --------- --------- Increase (decrease) in cash and cash equivalents 22,011 (1,334) Cash and cash equivalents Beginning of period 14,384 6,083 --------- --------- End of period $ 36,395 $ 4,749 ========= ========= Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 16,563 $ 17,275 Income taxes 9,600 2,876 Supplemental schedule of noncash investing and financing activities Purchase of minority interest $ 1,580 $ 2,024 Equipment obtained through borrowings - 4,024 Repayment of borrowings through return of railcars held for refurbishment or sale 96 11,574 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 May 31, 1998 and for the nine months ended May 31, 1998 and 1997 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 nine months ended May 31, 1998 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 - MANUFACTURING INVENTORIES May 31, August 31, 1998 1997 ---------- ---------- Supplies and raw materials $ 6,503 $ 5,999 Work-in-process 43,131 42,582 Held for sale 4,211 38,652 ---------- ---------- $ 53,845 $ 87,233 ========== ========== Note 3 - DISCONTINUED OPERATIONS AND DIVESTITURES During 1997 a plan was adopted to focus on core business operations of railcar manufacturing and refurbishment, and related leasing and services. Under the plan, the third-party transportation logistics segment was to be discontinued and accordingly, the results of operations for logistics have been excluded from continuing operations in the Consolidated Statements of Operations for all applicable periods. In December 1997 the sale of a majority of the assets of this segment was completed. The remainder of the logistics operation is anticipated to be disposed of during 1998. The plan also included selling the trailer and container leasing operation. A portion of the trailer and container fleet was sold during the fourth quarter of 1997. In October 1997 the sale of substantially all of the remaining trailer and container fleet, which was included in Leasing equipment held for refurbishment or sale as of August 31, 1997, was completed. Note 4 - SEGMENT INFORMATION Cash and borrowings are managed on a consolidated basis. Leasing and services interest income and manufacturing interest expense eliminated upon consolidation was $428 and $264 for the three months ended May 31, 1998 and 1997, and $1,190 and $849 for the nine months ended May 31, 1998 and 1997. Note 5 - EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, Earnings Per Share, which is effective for periods ending after December 15, 1997. Greenbrier adopted SFAS No. 128 during the quarter ended February 28, 1998 and all earnings per share amounts for all periods have been restated to conform to the new requirements. The difference between the number of shares used to compute basic and diluted earnings per share is the dilutive effect, if any, of stock options, calculated using the treasury stock method. THE GREENBRIER COMPANIES, INC. Note 6 - COMMITMENTS AND CONTINGENCIES Purchase commitments of approximately $17,500 for leasing and services operating equipment were outstanding as of May 31, 1998. Greenbrier is involved as a defendant in litigation in the ordinary course of business, the outcome of which cannot be predicted with certainty. Recently Greenbrier has been named a defendant in litigation initiated by former shareholders of Interamerican Logistics Inc. ("Interamerican"), which was acquired by Greenbrier in the fall of 1996. The plaintiffs allege that Greenbrier violated the agreements pursuant to which it acquired ownership of Interamerican and seek damages aggregating $4 million. Management believes the claim to be without merit and intends to vigorously defend its position. Management believes that any ultimate liability resulting from litigation will not materially affect the financial position or results of operations of the company. In May 1998, Greenbrier entered into a letter of intent with Bombardier Inc. ("Bombardier") to form a joint venture to build railroad freight cars at Bombardier's existing Concarril manufacturing facility in Sahugun, Mexico. Greenbrier and Bombardier will each maintain a 50% interest in the joint venture. Operations are expected to commence in the first quarter of fiscal 1999 and capacity is anticipated to grow to 3,000 new cars annually. Required capital expenditures and working capital needs are expected to be funded by existing operating cash flow and cash balances. In March 1998, Greenbrier executed an agreement to acquire a majority interest in Fabryka Wagonow Swidnica S.A., a railcar and specialty container manufacturer located in Swidnica, Poland. Polish investors will maintain a significant ownership interest in the manufacturer. The acquisition is subject to final approval by Polish governmental agencies, which is expected by August 31, 1998. The acquisition, if consummated, will establish a European manufacturing base and is expected to provide access to the European markets, particularly the market in Poland. Initially, the Polish facility is not expected to have a material impact on Greenbrier's overall financial condition and the investment will be funded through working capital. 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 Nine Months Ended May 31, May 31, ------------------ ------------------ 1998 1997 1998 1997 -------- -------- -------- -------- Manufacturing: Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 89.6 93.9 91.6 92.5 Selling and administrative expense 4.1 6.7 3.8 4.9 Interest expense 0.4 1.3 0.6 0.9 Minority interest 0.8 0.4 0.4 0.4 Earnings before income tax expense 5.1 (2.3) 3.6 1.3 Leasing and services: Revenues 100.0% 100.0% 100.0% 100.0% Operating expense 39.3 43.8 39.6 43.2 Selling and administrative expense 12.6 15.1 10.7 14.1 Interest expense 21.6 23.7 21.5 22.7 Minority interest - 0.7 0.4 1.2 Earnings before income tax expense 26.5 16.7 27.8 18.8 Corporate expense as a percentage of total revenues 1.8 1.4 1.6 1.5 Income tax expense as a percentage of pre-tax earnings 41.7 41.2 42.4 38.6 Net earnings as a percentage of total revenues 3.7 0.9 3.4 1.9 Three Months Ended May 31, 1998 Compared to Three Months Ended May 31, 1997 Revenues. Manufacturing revenue for the three-month period ended May 31, 1998 amounted to $130 million on deliveries of 2,200 railcars compared to $55 million on deliveries of 660 railcars in the corresponding prior period, an increase of $75 million, or 136%. Increased deliveries in the current period were the primary reason for the improvement in revenue and reflect the increased market demand for both intermodal and conventional railcars. The majority of the railcar deliveries in the current period were double-stack railcars compared to substantially all conventional railcars in the prior period. The manufacturing backlog of railcars for sale and lease as of May 31, 1998 was approximately 5,300 railcars with an estimated value of $289 million compared to 6,700 railcars valued at $335 million as of February 28, 1998. Leasing and services revenue decreased $6 million, or 22%, to $21 million for the quarter ended May 31, 1998 compared to $27 million for the quarter ended May 31, 1997. The decrease is primarily a result of the sale of the trailer and container leasing operation in October 1997 which contributed $6.6 million to revenue in the prior year. Pre-tax earnings realized on the disposition of leased equipment during the quarter amounted to $2.7 million compared to $1.8 million for the corresponding prior period. THE GREENBRIER COMPANIES, INC. Cost of Manufacturing Sales. Cost of sales as a percentage of manufacturing revenue decreased in the quarter ended May 31, 1998 to 89.6% from 93.9% in the quarter ended May 31, 1997. The margins in the current quarter benefited from the efficiencies of longer production runs and the strong market demand for railcars. Leasing and Services Expense. Leasing and services expense as a percentage of revenue was 39.3% for the three-month period ended May 31, 1998 compared to 43.8% in the prior period. The decreased ratio is primarily due to the sale of the trailer and container leasing assets, which typically operated at a higher expense ratio than railcar leasing assets, offset somewhat by higher vehicle transportation operating costs associated with a recent contract. Selling and Administrative Expense. Total selling and administrative expense increased $2 million, or 22%, to $11 million for the three months ended May 31, 1998 compared to $9 million for the comparable prior period. This increase is primarily due to international business development, sales and marketing expenses and incentive compensation commensurate with improved earnings offset to a degree by the winding down of the trailer and container leasing operations. Interest Expense. Due to increased liquidity resulting from equipment sales and improved earnings, borrowings were reduced resulting in lower interest expense. Minority Interest. Manufacturing minority interest increased as a result of improved earnings of the Canadian operation. Income Tax Expense. The effective U.S. tax rate was slightly less than 42% in the current period and 42% in the prior period. The effective Canadian tax rate was 44% in the current period. In the prior period, the Canadian operations benefited from operating loss carryforwards. Nine Months Ended May 31, 1998 Compared to Nine Months Ended May 31, 1997 Revenues. Manufacturing revenue for the nine-month period ended May 31, 1998 amounted to $349 million on deliveries of 5,800 railcars compared to $232 million on deliveries of 3,100 railcars in the corresponding prior period, an increase of $117 million, or 50%. Increased deliveries are due to a rebound in the intermodal transportation industry and an overall strong market demand for conventional freightcars. In the period ended May 31, 1998, over 50% of total new railcar deliveries were double-stack railcars while virtually all of the deliveries in the prior period were conventional railcars. Leasing and services revenue decreased $14 million, or 17%, for the nine months ended May 31, 1998 compared to the nine months ended May 31, 1997. 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. The decrease was partially offset by an increase in revenue from automobile transportation services. Pre-tax earnings realized on the disposition of leased equipment in the normal course of operations during the nine-month period amounted to $6 million compared to $5.6 million in the corresponding prior period. Cost of Manufacturing Sales. Cost of sales as a percentage of manufacturing revenue decreased for the nine-month period ended May 31, 1998 to 91.6% from 92.5% in the comparable prior period. Improved margins for the current period are primarily due to the efficiencies of longer production runs. The improvements were offset somewhat by lower margins on production early in the year due to the highly competitive market environment at the time orders for that production were received and higher costs of certain raw materials acquired from a substitute supplier on a temporary basis. Leasing and Services Expense. Leasing and services expense as a percentage of revenue was 39.6% for the period ended May 31, 1998 compared to 43.2% for the corresponding prior period. This reduction results primarily from the sale of trailer and container leasing assets during the current period, as these assets generally operated at a higher expense ratio than railcar leasing assets, offset somewhat by higher vehicle transportation operating costs. THE GREENBRIER COMPANIES, INC. Selling and Administrative Expense. Total selling and administrative expense for the nine months ended May 31, 1998 decreased slightly compared to the corresponding prior period primarily due to the winding down of the trailer and container leasing operations. The decrease was offset somewhat by international business development, sales and marketing expenses and incentive compensation commensurate with improved earnings. The prior period also included a $700,000 provision for potential loss associated with receivables from a lessee of marine equipment. Interest Expense. Due to increased liquidity resulting from equipment sales and improved earnings, borrowings were reduced resulting in lower interest expense. Minority Interest. Manufacturing minority interest increased as a result of improved earnings of the Canadian operation. Leasing and services minority interest decreased as all of the minority investors ownership interests were acquired in previous periods. Income Tax Expense. The effective U.S. tax rate was 42% in the current and prior period. The effective Canadian tax rate was 44% in the current period. In the prior period, the Canadian operations benefited from operating loss carryforwards. Liquidity and Capital Resources Cash provided by operations totaled $59 million for the nine- month period ended May 31, 1998 compared to $36 million for the corresponding prior period. Overall liquidity has improved as a result 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 $113 million in proceeds from sales of equipment. Credit facilities aggregated $121 million as of May 31, 1998. 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. 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 May 31, 1998. A $30 million operating line of credit to be used for working capital 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 under the line of credit bear interest at rates which vary depending on the type of borrowing and certain defined ratios. There were no borrowings outstanding under the operating line or the term facility as of May 31, 1998. A $17 million (at the May 31, 1998 exchange rate) operating line of credit, bearing interest at Canadian prime plus .75%, is available through March 1999 for working capital and certain capital expenditures for Canadian operations. An additional $4 million five-year term loan facility is available for capital expenditures. There were no borrowings outstanding under the operating line or the term facility as of May 31, 1998. Capital expenditures totaled $39 million for the nine months ended May 31, 1998 compared to $74 million for the nine months ended May 31, 1997. Of these capital expenditures, approximately $31 million and $67 million, respectively, were attributable to leasing and services operations. Leasing and services capital expenditures for the remainder of 1998 are expected to be approximately $6 million. Approximately $8 million and $7 million of the total capital expenditures for the nine months ended May 31, 1998 and 1997 were attributable to manufacturing operations. Manufacturing capital expenditures for the remainder of 1998 are expected to be approximately $3 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 May 31, 1998 forward exchange contracts outstanding for the purchase of Canadian dollars were $68 million, maturing at various dates through February 1999. Realized and unrealized gains and losses from such off-balance sheet contracts are deferred and recognized in income concurrent with the hedged transaction. THE GREENBRIER COMPANIES, INC. Dividends of $.06 per share have been paid quarterly beginning in 1995. The most recent quarterly dividend of $.06 per share was declared in July 1998 to be paid in August 1998. In May 1998, Greenbrier entered into a letter of intent with Bombardier Inc. ("Bombardier") to form a joint venture to build railroad freight cars at Bombardier's existing Concarril manufacturing facility in Sahugun, Mexico. Greenbrier and Bombardier will each maintain a 50% interest in the joint venture. Operations are expected to commence in the first quarter of fiscal 1999 and capacity is anticipated to grow to 3,000 new cars annually. Required capital expenditures and working capital needs are expected to be funded by existing operating cash flow and cash balances. In March 1998, Greenbrier executed an agreement to acquire a majority interest in Fabryka Wagonow Swidnica S.A., a railcar and specialty container manufacturer located in Swidnica, Poland. Polish investors will maintain a significant ownership interest in the manufacturer. The acquisition is subject to final approval by Polish governmental agencies, which is expected by August 31, 1998. The acquisition, if consummated, will establish a European manufacturing base and is expected to provide access to the European markets, particularly the market in Poland. Initially, the Polish facility is not expected to have a material impact on Greenbrier's overall financial condition and the investment will be funded through working capital. 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. Year 2000 Various computer systems and applications are utilized in daily operations. As part of the normal course of business, these systems are evaluated and upgraded as necessary. The ability to accommodate the year 2000 century date change is part of the evaluation process. The financial impact of any change is not anticipated to be material to the financial position or results of operations. 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; 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; transportation labor disputes or operating difficulties 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; 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. 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. 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 15, 1998 By: /s/ Larry G. Brady ------------------ ------------------------ Larry G. Brady Senior 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 May 31, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS AUG-31-1998 MAY-31-1998 51,743 0 63,300 0 53,845 0 47,983 0 495,271 0 0 0 0 14 115,934 495,271 0 415,660 345,991 391,459 0 0 16,334 24,201 10,257 13,944 0 0 0 13,944 0.98 0.97 Of this amount, $15,348 is restricted.
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