e10vq
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
for the quarterly period ended May 31, 2006
or
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o |
|
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)
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|
Oregon
(State of Incorporation)
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93-0816972
(I.R.S. Employer Identification No.) |
One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035
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|
(Address of principal executive offices)
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(Zip Code) |
(503) 684-7000
(Registrant’s telephone number, including area code)
CO-REGISTRANTS AND SUBSIDIARY GUARANTORS
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Autostack Company, LLC
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Oregon
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3743 |
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93-0981840 |
Greenbrier-Concarril, LLC
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Oregon
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3743 |
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93-1262344 |
Greenbrier Leasing Company, LLC
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Oregon
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3743 |
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31-0789836 |
Greenbrier Leasing, L.P.
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Oregon
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3743 |
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91-1960693 |
Greenbrier Leasing Limited Partner, LLC
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Oregon
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3743 |
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93-1266038 |
Greenbrier Management Services, LLC
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Oregon
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3743 |
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93-1266040 |
Greenbrier Railcar, LLC
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Oregon
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3743 |
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93-0971066 |
Gunderson, LLC
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Oregon
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3743 |
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93-0180205 |
Gunderson Marine, LLC
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Oregon
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|
3743 |
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93-1127982 |
Gunderson Rail Services, LLC
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Oregon
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|
|
3743 |
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93-1123815 |
Gunderson Specialty Products, LLC
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Oregon
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3743 |
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93-0180205 |
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The Greenbrier Companies, Inc.
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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|
Autostack Company, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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|
Greenbrier Concarril, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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|
Greenbrier Leasing Company,
LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000 |
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|
Greenbrier Leasing, L.P.
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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|
Greenbrier Leasing
Limited Partner, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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|
Greenbrier Management
Services, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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Greenbrier Railcar, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000 |
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Gunderson, LLC
4350 NW Front Avenue
Portland, Oregon 97210
(503) 972-5700
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Gunderson Marine, LLC
4350 NW Front Avenue
Portland, Oregon 97210
(503) 972-5700
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|
Gunderson Rail Services, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
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|
Gunderson Specialty Products,
LLC
4350 NW Front Avenue
Portland, Oregon 97210
(503) 972-5700 |
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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in
Rule 12b-2 of the Exchange Act.. (Check one):
Large accelerated filer o Accelerated filer þ Non–accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act) Yes o No þ
The number of shares of the registrant’s common stock, without par value, outstanding on June 21,
2006 was 15,933,535 shares.
TABLE OF CONTENTS
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Consolidated Balance Sheets
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May 31, |
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August 31, |
|
(In thousands, except per share amounts, unaudited) |
|
2006 |
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|
2005 |
|
Assets |
|
|
|
|
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|
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|
Cash and cash equivalents |
|
$ |
186,660 |
|
|
$ |
73,204 |
|
Restricted cash |
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|
2,059 |
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|
93 |
|
Accounts and notes receivable |
|
|
94,947 |
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|
122,957 |
|
Inventories |
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|
148,662 |
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|
121,698 |
|
Railcars held for sale |
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|
60,675 |
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59,421 |
|
Equipment on operating leases |
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|
242,380 |
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|
183,155 |
|
Investment in direct finance leases |
|
|
4,968 |
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|
9,974 |
|
Property, plant and equipment |
|
|
78,755 |
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|
73,203 |
|
Other |
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32,755 |
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27,502 |
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|
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$ |
851,861 |
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|
$ |
671,207 |
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Liabilities and Stockholders’ Equity |
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Revolving notes |
|
$ |
21,313 |
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|
$ |
12,453 |
|
Accounts payable and accrued liabilities |
|
|
188,478 |
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|
|
195,258 |
|
Participation |
|
|
11,086 |
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|
|
21,900 |
|
Deferred income taxes |
|
|
34,626 |
|
|
|
31,629 |
|
Deferred revenue |
|
|
14,395 |
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|
6,910 |
|
Notes payable |
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|
369,789 |
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|
214,635 |
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Subordinated debt |
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|
5,003 |
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8,617 |
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Subsidiary shares subject to mandatory redemption |
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— |
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3,746 |
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Commitments and contingencies (Note 12) |
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— |
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— |
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Stockholders’ equity: |
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Preferred stock — without par value; 25,000
shares authorized; none outstanding |
|
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— |
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|
— |
|
Common stock — without par value; 50,000 shares
authorized; 15,934 and 15,479 shares
outstanding at May 31, 2006 and August 31,
2005 |
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|
16 |
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|
15 |
|
Additional paid-in capital |
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|
69,726 |
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|
62,768 |
|
Retained earnings |
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|
137,479 |
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|
113,987 |
|
Accumulated other comprehensive loss |
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|
(50 |
) |
|
|
(711 |
) |
|
|
|
|
|
|
|
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|
207,171 |
|
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|
176,059 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$ |
851,861 |
|
|
$ |
671,207 |
|
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|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
2
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Operations
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Three Months Ended |
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Nine Months Ended |
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|
May 31, |
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|
May 31, |
|
(In thousands, except per share amounts, unaudited) |
|
2006 |
|
|
2005 |
|
|
2006 |
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|
2005 |
|
Revenue |
|
|
|
|
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|
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Manufacturing |
|
$ |
236,052 |
|
|
$ |
266,090 |
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|
$ |
609,570 |
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|
$ |
700,295 |
|
Leasing & services |
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|
30,036 |
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|
19,944 |
|
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|
79,094 |
|
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|
58,701 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
266,088 |
|
|
|
286,034 |
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|
688,664 |
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|
758,996 |
|
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Cost of revenue |
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Manufacturing |
|
|
211,444 |
|
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|
241,491 |
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|
539,835 |
|
|
|
642,149 |
|
Leasing & services |
|
|
10,172 |
|
|
|
9,561 |
|
|
|
31,281 |
|
|
|
30,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221,616 |
|
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|
251,052 |
|
|
|
571,116 |
|
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|
672,661 |
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|
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|
|
|
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|
|
|
|
|
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Margin |
|
|
44,472 |
|
|
|
34,982 |
|
|
|
117,548 |
|
|
|
86,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Other costs |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Selling and administrative |
|
|
18,082 |
|
|
|
15,276 |
|
|
|
51,025 |
|
|
|
41,392 |
|
Interest and foreign exchange |
|
|
5,963 |
|
|
|
2,285 |
|
|
|
17,406 |
|
|
|
9,639 |
|
Special charges |
|
|
— |
|
|
|
2,913 |
|
|
|
— |
|
|
|
2,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,045 |
|
|
|
20,474 |
|
|
|
68,431 |
|
|
|
53,944 |
|
Earnings before income taxes and
equity in unconsolidated
subsidiaries |
|
|
20,427 |
|
|
|
14,508 |
|
|
|
49,117 |
|
|
|
32,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(9,866 |
) |
|
|
(5,881 |
) |
|
|
(22,266 |
) |
|
|
(12,833 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before equity in
unconsolidated subsidiaries |
|
|
10,561 |
|
|
|
8,627 |
|
|
|
26,851 |
|
|
|
19,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (loss) of
unconsolidated subsidiaries |
|
|
119 |
|
|
|
417 |
|
|
|
409 |
|
|
|
(322 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
10,680 |
|
|
$ |
9,044 |
|
|
$ |
27,260 |
|
|
$ |
19,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
0.67 |
|
|
$ |
0.60 |
|
|
$ |
1.74 |
|
|
$ |
1.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.67 |
|
|
$ |
0.58 |
|
|
$ |
1.71 |
|
|
$ |
1.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
15,887 |
|
|
|
15,020 |
|
|
|
15,685 |
|
|
|
14,957 |
|
Diluted |
|
|
15,979 |
|
|
|
15,605 |
|
|
|
15,918 |
|
|
|
15,564 |
|
The
accompanying notes are an integral part of these statements.
3
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
May 31, |
|
(In thousands, unaudited) |
|
2006 |
|
|
2005 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
27,260 |
|
|
$ |
19,236 |
|
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
3,049 |
|
|
|
679 |
|
Tax benefit of stock options exercised and dividends on
restricted stock awards |
|
|
1,949 |
|
|
|
1,941 |
|
Depreciation and amortization |
|
|
19,170 |
|
|
|
16,840 |
|
Gain on sales of equipment |
|
|
(10,606 |
) |
|
|
(4,300 |
) |
Other |
|
|
59 |
|
|
|
499 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
Accounts and notes receivable |
|
|
29,633 |
|
|
|
(34,535 |
) |
Inventories |
|
|
(22,959 |
) |
|
|
7,969 |
|
Railcars held for sale |
|
|
(25,523 |
) |
|
|
(27,558 |
) |
Other |
|
|
(147 |
) |
|
|
(3,656 |
) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
(10,671 |
) |
|
|
(5 |
) |
Participation |
|
|
(10,814 |
) |
|
|
(15,660 |
) |
Deferred revenue |
|
|
7,242 |
|
|
|
1,148 |
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
7,642 |
|
|
|
(37,402 |
) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Principal payments received under direct finance leases |
|
|
1,710 |
|
|
|
4,524 |
|
Proceeds from sales of equipment |
|
|
23,665 |
|
|
|
23,125 |
|
Investment in and net advances to unconsolidated subsidiary |
|
|
517 |
|
|
|
(49 |
) |
Acquisition of joint venture interest |
|
|
— |
|
|
|
8,435 |
|
Decrease (increase) in restricted cash |
|
|
(1,961 |
) |
|
|
624 |
|
Capital expenditures |
|
|
(67,146 |
) |
|
|
(49,478 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(43,215 |
) |
|
|
(12,819 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Changes in revolving notes |
|
|
7,858 |
|
|
|
6,541 |
|
Proceeds from issuance of notes payable net of issuance cost |
|
|
154,933 |
|
|
|
170,028 |
|
Repayments of notes payable |
|
|
(5,740 |
) |
|
|
(66,334 |
) |
Repayment of subordinated debt |
|
|
(3,615 |
) |
|
|
(5,157 |
) |
Dividends |
|
|
(3,766 |
) |
|
|
(2,692 |
) |
Net proceeds from sale of common stock |
|
|
— |
|
|
|
127,466 |
|
Purchase and retirement of common stock |
|
|
— |
|
|
|
(127,538 |
) |
Proceeds from exercise of stock options |
|
|
5,010 |
|
|
|
1,727 |
|
Purchase of subsidiary shares subject to mandatory redemption |
|
|
(4,636 |
) |
|
|
— |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
150,044 |
|
|
|
104,041 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
(1,015 |
) |
|
|
1,358 |
|
Increase in cash and cash equivalents |
|
|
113,456 |
|
|
|
55,178 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Beginning of period |
|
|
73,204 |
|
|
|
12,110 |
|
|
|
|
|
|
|
|
End of period |
|
$ |
186,660 |
|
|
$ |
67,288 |
|
|
|
|
|
|
|
|
Cash paid during the period for |
|
|
|
|
|
|
|
|
Interest |
|
$ |
22,176 |
|
|
$ |
8,367 |
|
Income taxes |
|
$ |
13,855 |
|
|
$ |
9,444 |
|
Non-cash activity |
|
|
|
|
|
|
|
|
Transfer of railcars held for sale to equipment on operating leases |
|
$ |
23,954 |
|
|
$ |
— |
|
Supplemental disclosure of subsidiary acquired |
|
|
|
|
|
|
|
|
Assets acquired, net of cash |
|
$ |
— |
|
|
$ |
(19,051 |
) |
Liabilities assumed |
|
|
— |
|
|
|
19,529 |
|
Investment previously booked for unconsolidated joint venture |
|
|
— |
|
|
|
7,957 |
|
|
|
|
|
|
|
|
Cash acquired |
|
$ |
— |
|
|
$ |
8,435 |
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these statements.
4
THE GREENBRIER COMPANIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 — Interim Financial Statements
The Condensed Consolidated Financial Statements of The Greenbrier Companies, Inc. and Subsidiaries
(Greenbrier or the Company) as of May 31, 2006 and for the three months and nine months ended May
31, 2006 and 2005 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 months ended May 31, 2006 are not necessarily indicative of
the results to be expected for the entire year ending August 31, 2006. Certain reclassifications
have been made to the prior period’s Consolidated Financial Statements to conform to the current
year 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 contained in the Company’s
2005 Annual Report on Form 10-K.
Management estimates — The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires judgment on the part of management to
arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may
affect the amount of assets, liabilities, revenue and expenses reported in the financial statements
and accompanying notes and disclosure of contingent assets and liabilities within the financial
statements. Estimates and assumptions are periodically evaluated and may be adjusted in future
periods. Actual results could differ from those estimates.
Initial Adoption of Accounting Policies — On September 1, 2005, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 123R, Share Based Payment. This statement requires all
entities to recognize compensation expense in an amount equal to the fair value of share-based
payments (stock options and restricted stock) granted to employees. The implementation did not
have a material effect on the Company’s Consolidated Financial Statements as all stock options were
vested prior to August 31, 2005. Restricted stock grants are currently being recorded as
compensation expense over the vesting period, consistent with prior periods.
Prospective Accounting Changes — In May 2005, the Financial Accounting Standards Board (FASB)
issued SFAS No. 154, Accounting Changes and Error Corrections which replaces Accounting Principles
Board (APB) opinion No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in
Interim Financial Statements. This statement requires retrospective application, unless
impracticable, for changes in accounting principles in the absence of transition requirements
specific to newly adopted accounting principles. This statement is effective for any accounting
changes and corrections of errors made by the Company beginning September 1, 2006.
Note 2 — Acquisitions
In September 1998, Greenbrier entered into a joint venture with Bombardier Transportation
(Bombardier) to build railroad freight cars at a portion of Bombardier’s existing manufacturing
facility in Sahagun, Mexico. Each party held a 50% non-controlling interest in the joint venture.
In December 2004, Greenbrier acquired Bombardier’s interest and will pay Bombardier a purchase
price of $9.0 million over five years and, as a result of the allocation of the purchase price
among assets and liabilities, recorded $1.3 million in goodwill. Greenbrier leases a portion of
the plant from Bombardier and has entered into a service agreement under which Bombardier provides
labor and other services. These operations, previously accounted for under the equity method, were
consolidated for financial reporting purposes beginning in December 2004.
5
THE GREENBRIER COMPANIES, INC.
The following unaudited pro forma consolidated financial information for Greenbrier was prepared as
if the transaction to acquire Bombardier’s equity in the Mexican operations had occurred at the
beginning of the period presented:
|
|
|
|
|
|
|
Proforma |
|
|
Nine Months Ended |
|
|
May 31, |
(In thousands, except per share amounts) |
|
2005 |
Revenue |
|
$ |
787,682 |
|
Net earnings |
|
$ |
18,736 |
|
Basic earnings per share |
|
$ |
1.25 |
|
Diluted earnings per share |
|
$ |
1.20 |
|
The unaudited pro forma financial information is not necessarily indicative of what actual results
would have been had the transaction occurred at the beginning of the period presented.
In December 2005, all of the Canadian subsidiary shares subject to mandatory redemption of $3.7
million were redeemed for $5.3 million. The redemption resulted in a $0.9 million decrease in
accumulated other comprehensive income and interest expense of $0.7 million.
Note 3
— Special Charges
The results of operations for the three and nine months ended May 31, 2005 include special charges
of $2.9 million for debt prepayment penalties and costs associated with settlement of interest rate
swap agreements on $55.7 million of notes payable that were refinanced during the quarter through a
$175.0 million senior unsecured note offering.
Note 4 — Inventories
|
|
|
|
|
|
|
|
|
|
|
May 31, |
|
|
August 31, |
|
(In thousands) |
|
2006 |
|
|
2005 |
|
Manufacturing supplies and raw materials |
|
$ |
38,664 |
|
|
$ |
33,653 |
|
Work-in-process |
|
|
113,817 |
|
|
|
91,637 |
|
Lower of cost or market adjustment |
|
|
(3,819 |
) |
|
|
(3,592 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
148,662 |
|
|
$ |
121,698 |
|
|
|
|
|
|
|
|
Note 5 — Warranty Accruals
Warranty costs are estimated and charged to operations to cover a defined warranty period. The
estimated warranty cost is based on historical warranty claims for each particular product type.
For new product types without a warranty history, estimates are based on historical information for
similar product types. The accrual, included in accounts payable and accrued liabilities on the
Consolidated Balance Sheet, is periodically reviewed and updated based on warranty trends.
6
THE GREENBRIER COMPANIES, INC.
Warranty accrual activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
May 31, |
|
|
May 31, |
|
(In thousands) |
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Balance at beginning of period |
|
$ |
11,860 |
|
|
$ |
14,149 |
|
|
$ |
15,037 |
|
|
$ |
12,691 |
|
Charged to cost of revenue |
|
|
1,198 |
|
|
|
887 |
|
|
|
1,114 |
|
|
|
2,867 |
|
Payments |
|
|
(1,287 |
) |
|
|
(722 |
) |
|
|
(4,685 |
) |
|
|
(2,527 |
) |
Currency translation effect |
|
|
248 |
|
|
|
(563 |
) |
|
|
553 |
|
|
|
552 |
|
Acquisition |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
12,019 |
|
|
$ |
13,751 |
|
|
$ |
12,019 |
|
|
$ |
13,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6
— Notes Payable
|
|
|
|
|
|
|
|
|
|
|
May 31, |
|
|
August 31, |
|
(In thousands) |
|
2006 |
|
|
2005 |
|
Senior unsecured notes |
|
$ |
235,000 |
|
|
$ |
175,000 |
|
Convertible senior notes |
|
|
100,000 |
|
|
|
— |
|
Term loans |
|
|
34,757 |
|
|
|
39,479 |
|
Other |
|
|
32 |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
369,789 |
|
|
$ |
214,635 |
|
|
|
|
|
|
|
|
On November 21, 2005, the Company issued, at par, through a private placement, $60.0 million
aggregate principal amount of 83/8% senior unsecured notes due 2015. In January 2006, Greenbrier
filed a registration statement with respect to an offer to exchange these senior unsecured notes
for a new issue of identical notes registered with the Securities and Exchange Commission. In
March 2006, the exchange for the registered notes was completed. The transaction is an additional
offering under the indenture entered into in connection with the Company’s sale of $175.0 million
of senior unsecured notes in May 2005. The $235.0 million combined senior unsecured notes (the
Notes) have identical terms. Payment on the Notes is guaranteed by substantially all of the
Company’s domestic subsidiaries. Interest is paid in arrears on May 15th and November
15th of each year.
On May 22, 2006, the Company issued, at par, through a private placement, $100.0 million aggregate
principal amount of 23/8% convertible senior notes due 2026. Interest will be paid semiannually in
arrears commencing November 15, 2006. Greenbrier also will pay contingent interest of 3/8% on the
notes in certain circumstances commencing with the six month period beginning May 15, 2013.
Greenbrier is obligated to file a registration statement with respect to an offer to exchange the
convertible notes for a new issue of identical notes registered with the Securities and Exchange
Commission prior to August 16, 2006 and is also obligated to cause the registration statement to be
effective before November 14, 2006. Payment on the convertible notes is guaranteed by
substantially all of the Company’s domestic subsidiaries.
The convertible senior notes will be convertible upon the occurrence of specified events into cash
and shares, if any, of Greenbrier’s common stock at an initial conversion rate of 20.8125 shares
per $1,000 principal amount of the notes (which is equal to an initial conversion price of $48.05
per share). The initial conversion rate is subject to adjustment upon the occurrence of certain
events, as defined. On or after May 15, 2013, Greenbrier may redeem all or a portion of the notes
at a redemption price equal to 100% of the principal amount of the notes plus accrued and unpaid
interest. On May 15, 2013, May 15, 2016 and May 15, 2021 and in the event of certain fundamental
changes, holders may require the Company to repurchase all or a portion of their notes at a price
equal to 100% of the principal amount of the notes plus accrued and unpaid interest.
7
THE GREENBRIER COMPANIES, INC.
Term loans are due in varying installments through August 2017 and are generally collateralized by
certain property, plant and equipment. As of May 31, 2006, the effective interest rates on the term
loans ranged from 4.4% to 8.4%.
The revolving and operating lines of credit, along with notes payable, contain covenants with
respect to the Company and various subsidiaries, the most restrictive of which, among other things,
limit the ability to: incur additional indebtedness or guarantees; pay dividends; enter into sale
leaseback transactions; create liens; sell assets; engage in transactions with affiliates; enter
into mergers, consolidations or sales of substantially all the Company’s assets; and enter into new
lines of business. The covenants also require certain minimum levels of tangible net worth,
maximum ratios of debt to equity or total capitalization and minimum levels of interest coverage.
Interest rate swap agreements are utilized to reduce the impact of changes in interest rates on
certain term loans. At May 31, 2006, such agreements had a notional amount of $21.0 million and
mature between August 2006 and March 2011.
The remaining principal payments on the notes payable are due as follows:
|
|
|
|
|
(In thousands) |
|
|
|
Year Ending August 31, |
|
|
|
|
2006 (Remaining three months) |
|
$ |
7,450 |
|
2007 |
|
|
4,517 |
|
2008 |
|
|
3,978 |
|
2009 |
|
|
4,169 |
|
2010 |
|
|
5,375 |
|
Thereafter |
|
|
344,300 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
369,789 |
|
|
|
|
|
Note 7 — Accumulated Other Comprehensive Loss
The following is a reconciliation of net earnings to comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
May 31, |
|
|
May 31, |
|
(In thousands) |
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Net earnings |
|
$ |
10,680 |
|
|
$ |
9,044 |
|
|
$ |
27,260 |
|
|
$ |
12,767 |
|
Reclassification of
derivative financial
instruments recognized in
net earnings (net of tax) |
|
|
(508 |
) |
|
|
(1,302 |
) |
|
|
(2,526 |
) |
|
|
(2,789 |
) |
Unrealized gain (loss) on
derivative financial
instruments (net of tax) |
|
|
(181 |
|
|
|
(1,480 |
|
|
|
1,440 |
|
|
|
4,072 |
|
Foreign currency
translation adjustment
(net of tax) |
|
|
269 |
|
|
|
(1,706 |
) |
|
|
1,747 |
|
|
|
(391 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
$ |
10,260 |
|
|
$ |
4,556 |
|
|
$ |
27,921 |
|
|
$ |
13,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
THE GREENBRIER COMPANIES, INC.
Accumulated other comprehensive loss, net of tax effect, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
|
|
|
Gains (Losses) |
|
|
Foreign |
|
|
Accumulated |
|
|
|
on Derivative |
|
|
Currency |
|
|
Other |
|
|
|
Financial |
|
|
Translation |
|
|
Comprehensive |
|
(In thousands) |
|
Instruments |
|
|
Adjustment |
|
|
Income (Loss) |
|
Balance, August 31, 2005 |
|
$ |
1,241 |
|
|
$ |
(1,952 |
) |
|
$ |
(711 |
) |
Nine month activity |
|
|
(1,086 |
) |
|
|
1,747 |
|
|
|
661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2006 |
|
$ |
155 |
|
|
$ |
(205 |
) |
|
$ |
(50 |
) |
|
|
|
|
|
|
|
|
|
|
Note 8 — Earnings Per Share
The shares used in the computation of the Company’s basic and diluted earnings per common share are
reconciled as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
May 31, |
|
|
May 31, |
|
(In thousands) |
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Weighted average basic common shares outstanding |
|
|
15,887 |
|
|
|
15,020 |
|
|
|
15,685 |
|
|
|
14,957 |
|
Dilutive effect of employee stock options |
|
|
92 |
|
|
|
585 |
|
|
|
233 |
|
|
|
607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding |
|
|
15,979 |
|
|
|
15,605 |
|
|
|
15,918 |
|
|
|
15,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding includes the incremental shares that would be
issued upon the assumed exercise of stock options as calculated using the treasury stock method.
No options were anti-dilutive for the three and nine months ended May 31, 2006 and 2005.
Note 9 — Stock Based Compensation
Prior to the adoption of SFAS 123R on September 1, 2005, compensation expense for employee stock
options was measured using the method prescribed by APB Opinion No. 25, Accounting for Stock Issued
to Employees. In accordance with APB Opinion No. 25, Greenbrier did not recognize compensation
expense for employee stock options because options were only granted with an exercise price equal
to the fair value of the stock on the effective date of grant. If the Company had elected to
recognize compensation expense using a fair value approach, the pro forma net earnings and earnings
per share would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Nine Months |
|
|
|
Ended |
|
|
Ended |
|
(In thousands, except per share amounts) |
|
May 31, 2005 |
|
Net earnings, as reported |
|
$ |
9,044 |
|
|
$ |
19,236 |
|
Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of tax (1) |
|
|
(31 |
) |
|
|
(114 |
) |
|
|
|
|
|
|
|
Net earnings, pro forma |
|
$ |
9,013 |
|
|
$ |
19,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
|
|
|
|
|
|
|
As reported |
|
$ |
0.60 |
|
|
$ |
1.29 |
|
|
|
|
|
|
|
|
Pro forma |
|
$ |
0.60 |
|
|
$ |
1.28 |
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
As reported |
|
$ |
0.58 |
|
|
$ |
1.24 |
|
|
|
|
|
|
|
|
Pro forma |
|
$ |
0.58 |
|
|
$ |
1.23 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Compensation expense was determined based on the Black-Scholes-Merton option pricing
model which was developed to estimate the value of publicly traded options. Greenbrier’s
options are not publicly traded. |
9
THE GREENBRIER COMPANIES, INC.
All stock options were vested prior to September 1, 2005 and accordingly no compensation
expense was recognized for stock options for the three and nine months ended May 31, 2006. The
value, at the date of grant, of stock awarded under restricted stock grants is amortized as
compensation expense over the vesting period of two to five years. For the three and nine months
ended May 31, 2006, $0.7 million and $2.1 million in compensation expense was recognized related to
restricted stock grants. Minimal expense was recognized for the three and nine months ended May
31, 2005.
Note 10 — Derivative Instruments
Foreign operations give rise to market risks from changes in foreign currency exchange rates.
Foreign currency forward exchange contracts with established financial institutions are utilized to
hedge a portion of that risk. Interest rate swap agreements are utilized to reduce the impact of
changes in interest rates on certain debt. The Company’s foreign currency forward exchange
contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the
unrealized gains and losses are recorded in accumulated other comprehensive income (loss).
At May 31, 2006 exchange rates, forward exchange contracts for the sale of United States dollars
aggregated $23.0 million, Pound Sterling aggregated $8.5 million and Euro aggregated $5.2 million.
Adjusting these contracts to the fair value of these cash flow hedges at May 31, 2006 resulted in
an unrealized pre-tax gain of $0.9 million that was recorded in the line item accumulated other
comprehensive income and the fair value of the contracts is included in accounts payable and
accrued liabilities on the Consolidated Balance Sheet. As these contracts mature at various dates
through September 2006, any such gain or loss remaining will be recognized in manufacturing revenue
along with the related transactions. In the event that the underlying sales transaction does not
occur or does not occur in the period designated at the inception of the hedge, the amount
classified in accumulated other comprehensive income (loss) would be reclassified to the current
year’s results of operations.
At May 31, 2006 exchange rates, interest rate swap agreements had a notional amount of $21.0
million and mature between August 2006 and March 2011. The fair value of these cash flow hedges at
May 31, 2006 resulted in an unrealized pre-tax loss of $0.7 million. The loss is included in
accumulated other comprehensive loss and the fair value of the contracts is included in accounts
payable and accrued liabilities on the Consolidated Balance Sheet. As interest expense on the
underlying debt is recognized, amounts corresponding to the interest rate swaps are reclassified
from accumulated other comprehensive income (loss) and charged or credited to interest expense. At
May 31, 2006 interest rates, approximately $0.2 million would be reclassified to interest expense
in the next 12 months.
Note 11 — Segment Information
Greenbrier has two reportable segments: manufacturing and leasing & services. The accounting
policies of the segments are described in the summary of significant accounting policies in the
Consolidated Financial Statements contained in the Company’s 2005 Annual Report on Form 10-K.
Performance is evaluated based on margin. Intersegment sales and transfers are accounted for as if
the sales or transfers were to third parties.
10
THE GREENBRIER COMPANIES, INC.
The information in the following table is derived directly from the segments’ internal financial
reports used for corporate management purposes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
May 31, |
|
|
May 31, |
|
(In thousands) |
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
205,693 |
|
|
$ |
278,736 |
|
|
$ |
663,215 |
|
|
$ |
733,973 |
|
Leasing & services |
|
|
34,680 |
|
|
|
26,252 |
|
|
|
94,661 |
|
|
|
71,376 |
|
Intersegment eliminations |
|
|
25,715 |
|
|
|
(18,954 |
) |
|
|
(69,212 |
) |
|
|
(46,353 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
266,088 |
|
|
$ |
286,034 |
|
|
$ |
688,664 |
|
|
$ |
758,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
24,608 |
|
|
$ |
24,599 |
|
|
$ |
69,735 |
|
|
$ |
58,146 |
|
Leasing & services |
|
|
19,864 |
|
|
|
10,383 |
|
|
|
47,813 |
|
|
|
28,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
44,472 |
|
|
$ |
34,982 |
|
|
$ |
117,548 |
|
|
$ |
86,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 12 — Commitments and Contingencies
From time to time, Greenbrier is involved as a defendant in litigation in the ordinary course of
business, the outcome of which cannot be predicted with certainty. The most significant litigation
is as follows:
On April 20, 2004, BC Rail Partnership initiated litigation against the Company in the Supreme
Court of Nova Scotia, alleging breach of contract and negligent manufacture and design of railcars
which were involved in a 1999 derailment. No trial date has been set.
On November 3, 2004, and November 4, 2004, in the District Court of Tarrant County, Texas, and in
the District Court of Lancaster County, Nebraska, respectively, litigation was initiated against
the Company by Burlington Northern Santa Fe Railway (BNSF). BNSF alleges the failure of a
supplier-provided component part on a railcar manufactured by Greenbrier in 1988, resulted in a
derailment and a chemical spill. On June 21, 2006, the District Court of Tarrant County, Texas,
issued a letter ruling indicating the Company’s motion for summary judgment would be granted as to
all claims.
On September 23, 2004, two current employees and one former employee of the Company filed a civil
complaint in Multnomah County Circuit Court, State of Oregon, alleging that the Company failed to
comply with Oregon wage and hour laws. Greenbrier agreed to a settlement on February 24, 2006 in
an amount that was fully accrued in the prior year and paid during the current quarter.
On June 27, 2005, an individual initiated litigation against Union Pacific Railroad alleging
general and economic damages in the amount of $1.5 million, for personal injuries incurred while
operating a handbrake on a railcar operating on Union Pacific’s lines. On September 16, 2005,
Union Pacific initiated litigation against Greenbrier claiming indemnity and contribution. A
settlement was agreed to among the parties on May 12, 2006 with Greenbrier agreeing to pay $20,000
in return for a full release.
Greenbrier and a customer, SEB Finans AB (SEB), have raised performance concerns related to a
component that the Company installed on 372 railcar units with an aggregate sales value of
approximately $20.0 million produced under a contract with SEB. On December 9, 2005, SEB filed a
Statement of Claim in an arbitration proceeding in Stockholm, Sweden, against Greenbrier alleging
that the cars are defective and cannot be used for their intended purpose. SEB seeks damages in an
undisclosed amount. In a Statement of Defense and Counterclaim filed with the Arbitral Tribunal
11
THE GREENBRIER COMPANIES, INC.
on February 1, 2006, Greenbrier denied that there were defects in the railcar units delivered for
which Greenbrier is liable and filed Counterclaims against SEB in total amounting to approximately
$11.0 million plus interest representing payments in default under the contract. No hearing date
has been set. Greenbrier believes that applicable law provides an opportunity to remedy the
performance issues and that an engineering solution is likely. The component supplier has
effectively filed for the United Kingdom equivalent of bankruptcy protection. Accordingly,
Greenbrier’s recourse against the supplier may be of limited or no value.
Management intends to vigorously defend its position in each of the open foregoing cases and
believes that any ultimate liability resulting from the above litigation will not materially affect
the Company’s Consolidated Financial Statements.
The Company is involved as a defendant in other litigation initiated in the ordinary course of
business. While the ultimate outcome of such legal proceedings cannot be determined at this time,
management believes that the resolution of these actions will not have a material adverse effect on
the Company’s Consolidated Financial Statements.
The Internal Revenue Service (IRS) has conducted an audit of the Company’s federal income tax
returns for the years ended 1999 through 2002. In connection with the audit, the IRS has reviewed
the Company’s decision to take a tax deduction in the amount of $52.6 million on its 2002 federal
tax return relating to European operations. The Company has been in settlement discussion with the
staff of the IRS and has reached a tentative settlement regarding the amount and timing of the tax
deductions to be taken. As a result of the tentative settlement, the Company has recorded a $3.0
million after-tax charge, which consists of accrued interest of $0.8
million and taxes of $2.2 million, in its Consolidated Statement of Operations in the third quarter ended May
31, 2006. The agreement remains subject to final documentation and the final approval of the
Internal Revenue Service. It is also subject, as required by law, to the approval of the
Congressional Joint Committee on Taxation. The Joint Committee review is expected to be completed
no earlier than the Fall of 2006.
Environmental studies have been conducted of the Company’s owned and leased properties that
indicate additional investigation and some remediation on certain properties may be necessary. The
Company’s Portland, Oregon manufacturing facility is located adjacent to the Willamette River. The
United States Environmental Protection Agency (EPA) has classified portions of the river bed,
including the portion fronting Greenbrier’s facility, as a federal “National Priority List” or
“Superfund” site due to sediment contamination (the Portland Harbor Site). Greenbrier and more than
60 other parties, have received a “General Notice” of potential liability from the EPA relating to
the Portland Harbor Site. The letter advised the Company that they may be liable for the costs of
investigation and remediation (which liability may be joint and several with other potentially
responsible parties) as well as for natural resource damages resulting from releases of hazardous
substances to the site. At this time, ten private and public entities have signed an Administrative
Order on Consent to perform a remedial investigation/feasibility study of the Portland Harbor Site
under EPA oversight, and four additional entities have not signed such consent, but are
nevertheless contributing money to the effort. The study is expected to be completed in 2009. In May 2006, the EPA notified several additional entities, including other
federal agencies that it is prepared to issue unilateral orders compelling additional participation
in the remedial investigation. In addition, the Company has entered into a Voluntary Clean-Up
Agreement with the Oregon Department of Environmental Quality in which the Company agreed to
conduct an investigation of whether, and to what extent, past or present operations at the Portland
property may have released hazardous substances to the environment. The Company is also conducting
groundwater remediation relating to a historical spill on the property.
Because these environmental investigations are still underway, the Company is unable to determine
the amount of ultimate liability relating to these matters. Based on the results of the pending
investigations and future assessments of natural resource damages, Greenbrier may be required to
incur costs associated with additional phases of investigation or remedial action, and may be
liable for damages to natural resources. In addition, the Company may be required to perform
periodic maintenance dredging in order to continue to launch vessels from its launch ways in
Portland Oregon, on the Willamette river, and the river’s classification as a Superfund site could
result in some limitations on future dredging and launch activities. Any of these matters could
adversely affect the Company’s business and results of operations, or the value of its Portland
property.
The Company has entered into contingent rental assistance agreements, aggregating a maximum of
$11.9 million, on certain railcars subject to leases that have been sold to third parties. These
agreements guarantee the purchasers a minimum lease rental, subject to a maximum defined rental
assistance amount, over periods that range from one to six years. A liability is established and
revenue is reduced in the period during which a determination can be made that it is
12
THE GREENBRIER COMPANIES, INC.
probable that a rental shortfall will occur and the amount can be estimated. For the three and nine months ended
May 31, 2006 and 2005, no accruals were made to cover estimated future obligations as rental
shortfalls were not considered probable. There is no liability accrued as of May 31, 2006. All of
these agreements were entered into prior to December 31, 2002 and have not been modified since.
The accounting for any future rental assistance agreements will comply with the guidance required
by FASB Interpretation (FIN) 45 which pertains to contracts entered into or modified subsequent to
December 31, 2002.
A portion of leasing & services revenue is derived from “car hire” which is a fee that a railroad
pays for the use of railcars owned by other railroads or third parties. Car hire earned by a
railcar is usually made up of hourly and mileage components. Until 1992, the Interstate Commerce
Commission directly regulated car hire rates by prescribing a formula for calculating these rates.
Government regulation of car hire rates continues, but the system of prescribed rates has been
superseded by a system known as deprescription. A ten-year period used to phase in this new system
ended on January 1, 2003. Deprescription is a system whereby railcar owners and users have the
right to negotiate car hire rates. If the railcar owner and railcar user cannot come to an
agreement on a car hire rate then either party has the right to call for arbitration. In
arbitration either the owner’s or user’s rate is selected and that rate becomes effective for a
one-year period. There is some risk that car hire rates could be negotiated or arbitrated to lower
levels in the future. This could reduce future car hire revenue which amounted to $5.8 million and
$18.2 million for the three and nine months ended May 31, 2006 and $6.7 million and $18.9 million
for the three and nine months ended May 31, 2005.
In accordance with customary business practices in Europe, the Company has $15.0 million in bank
and third party performance, advance payment, and warranty guarantee facilities, all of which have
been utilized as of May 31, 2006. To date, no amounts have been drawn against these guarantee
facilities.
The Company has outstanding letters of credit aggregating $3.3 million associated with facility
leases and payroll.
At May 31, 2006, an unconsolidated subsidiary had $6.9 million of third party debt, for which the
Company has guaranteed 33%, or approximately $2.3 million. In the event there is a change in
control or insolvency by any of the three 33% investors that have guaranteed the debt, the
remaining investor’s share of the guarantee will increase proportionately.
Greenbrier has jointly committed with Babcock & Brown Rail Management, LLC to purchase new railcars
from unaffiliated manufacturers to be leased to third party customers. Greenbrier’s remaining
portion of this commitment is $36.8 million. All purchases are estimated to be complete by the end
of December 2006.
Note 13 — Guarantor/Non-Guarantor
The senior unsecured notes and convertible senior notes (see Note 6) issued on May 11, 2005,
November 21, 2005 and May 17, 2006 are fully and unconditionally and jointly and severally
guaranteed by certain of Greenbrier’s wholly owned subsidiaries: Autostack Company, LLC,
Greenbrier-Concarril, LLC, Greenbrier Leasing Company, LLC, Greenbrier Leasing Limited Partner,
LLC, Greenbrier Management Services, LLC, Greenbrier Leasing, L.P., Greenbrier Railcar, LLC,
Gunderson, LLC, Gunderson Marine, LLC, Gunderson Rail Services, LLC, and Gunderson Specialty
Products, LLC. No other subsidiaries guarantee the Notes and convertible senior notes.
The following supplemental consolidated condensed financial information of Greenbrier and its
guarantor and non guarantor subsidiaries, as of May 31, 2006 and August 31, 2005 and for the three
and nine months ended May 31, 2006 and 2005 is presented on the basis of Greenbrier accounting for
its ownership of its wholly owned subsidiaries using the equity method of accounting. Intercompany
transactions of goods and services between the guarantor and non guarantor subsidiaries are
presented as if the sales or transfers were to third parties.
13
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Balance Sheet
May 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
(In thousands, unaudited) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
175,409 |
|
|
$ |
162 |
|
|
$ |
11,089 |
|
|
$ |
— |
|
|
$ |
186,660 |
|
Restricted cash |
|
|
— |
|
|
|
— |
|
|
|
2,059 |
|
|
|
— |
|
|
|
2,059 |
|
Accounts and notes receivable |
|
|
3,062 |
|
|
|
63,269 |
|
|
|
28,456 |
|
|
|
160 |
|
|
|
94,947 |
|
Inventories |
|
|
— |
|
|
|
108,296 |
|
|
|
40,366 |
|
|
|
— |
|
|
|
148,662 |
|
Railcars held for sale |
|
|
— |
|
|
|
50,374 |
|
|
|
10,591 |
|
|
|
(290 |
) |
|
|
60,675 |
|
Equipment on operating leases |
|
|
— |
|
|
|
244,381 |
|
|
|
— |
|
|
|
(2,001 |
) |
|
|
242,380 |
|
Investment in direct finance leases |
|
|
— |
|
|
|
4,968 |
|
|
|
— |
|
|
|
— |
|
|
|
4,968 |
|
Property, plant and equipment |
|
|
— |
|
|
|
55,472 |
|
|
|
23,283 |
|
|
|
— |
|
|
|
78,755 |
|
Other |
|
|
357,654 |
|
|
|
25,172 |
|
|
|
3,116 |
|
|
|
(353,187 |
) |
|
|
32,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
536,125 |
|
|
$ |
552,094 |
|
|
$ |
118,960 |
|
|
$ |
(355,318 |
) |
|
$ |
851,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
21,313 |
|
|
$ |
— |
|
|
$ |
21,313 |
|
Accounts payable and accrued
liabilities |
|
|
(13,985 |
) |
|
|
158,797 |
|
|
|
43,506 |
|
|
|
160 |
|
|
|
188,478 |
|
Participation |
|
|
— |
|
|
|
11,086 |
|
|
|
— |
|
|
|
— |
|
|
|
11,086 |
|
Deferred income taxes |
|
|
1,280 |
|
|
|
35,393 |
|
|
|
(1,748 |
) |
|
|
(299 |
) |
|
|
34,626 |
|
Deferred revenue |
|
|
1,280 |
|
|
|
7,241 |
|
|
|
5,874 |
|
|
|
— |
|
|
|
14,395 |
|
Notes payable |
|
|
342,224 |
|
|
|
13,618 |
|
|
|
13,947 |
|
|
|
— |
|
|
|
369,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt |
|
|
— |
|
|
|
5,003 |
|
|
|
— |
|
|
|
— |
|
|
|
5,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
— |
|
|
|
(76 |
) |
|
|
— |
|
|
|
76 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
205,326 |
|
|
|
321,032 |
|
|
|
36,068 |
|
|
|
(355,255 |
) |
|
|
207,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
536,125 |
|
|
$ |
552,094 |
|
|
$ |
118,960 |
|
|
$ |
(355,318 |
) |
|
$ |
851,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Statement of Operations
For the three months ended May 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
(In thousands, unaudited) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
— |
|
|
$ |
155,383 |
|
|
$ |
62,532 |
|
|
$ |
18,137 |
|
|
$ |
236,052 |
|
Leasing & services |
|
|
380 |
|
|
|
29,736 |
|
|
|
— |
|
|
|
(80 |
) |
|
|
30,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380 |
|
|
|
185,119 |
|
|
|
62,532 |
|
|
|
18,057 |
|
|
|
266,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
— |
|
|
|
134,704 |
|
|
|
59,011 |
|
|
|
17,729 |
|
|
|
211,444 |
|
Leasing & services |
|
|
— |
|
|
|
10,189 |
|
|
|
— |
|
|
|
(17 |
) |
|
|
10,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
144,893 |
|
|
|
59,011 |
|
|
|
17,712 |
|
|
|
221,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
|
|
380 |
|
|
|
40,226 |
|
|
|
3,521 |
|
|
|
345 |
|
|
|
44,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative |
|
|
4,550 |
|
|
|
11,077 |
|
|
|
2,455 |
|
|
|
— |
|
|
|
18,082 |
|
Interest and foreign exchange |
|
|
6,204 |
|
|
|
126 |
|
|
|
(287 |
) |
|
|
(80 |
) |
|
|
5,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,754 |
|
|
|
11,203 |
|
|
|
2,168 |
|
|
|
(80 |
) |
|
|
24,045 |
|
Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated
subsidiaries |
|
|
(10,374 |
) |
|
|
29,023 |
|
|
|
1,353 |
|
|
|
425 |
|
|
|
20,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit |
|
|
1,735 |
|
|
|
(10,835 |
) |
|
|
(598 |
) |
|
|
(168 |
) |
|
|
(9,866 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,639 |
) |
|
|
18,188 |
|
|
|
755 |
|
|
|
257 |
|
|
|
10,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
— |
|
|
|
(11 |
) |
|
|
— |
|
|
|
11 |
|
|
|
— |
|
Equity in earnings (loss) of
unconsolidated subsidiaries |
|
|
19,319 |
|
|
|
119 |
|
|
|
— |
|
|
|
(19,319 |
) |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
10,680 |
|
|
$ |
18,296 |
|
|
$ |
755 |
|
|
$ |
(19,051 |
) |
|
$ |
10,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Statement of Operations
For the nine months ended May 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
(In thousands, unaudited) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
11,250 |
|
|
$ |
418,313 |
|
|
$ |
195,676 |
|
|
$ |
(15,669 |
) |
|
$ |
609,570 |
|
Leasing & services |
|
|
3,036 |
|
|
|
78,110 |
|
|
|
— |
|
|
|
(2,052 |
) |
|
|
79,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,286 |
|
|
|
496,423 |
|
|
|
195,676 |
|
|
|
(17,721 |
) |
|
|
688,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
10,207 |
|
|
|
359,867 |
|
|
|
185,233 |
|
|
|
(15,472 |
) |
|
|
539,835 |
|
Leasing & services |
|
|
— |
|
|
|
31,331 |
|
|
|
— |
|
|
|
(50 |
) |
|
|
31,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,207 |
|
|
|
391,198 |
|
|
|
185,233 |
|
|
|
(15,522 |
) |
|
|
571,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
|
|
4,079 |
|
|
|
105,225 |
|
|
|
10,443 |
|
|
|
(2,199 |
) |
|
|
117,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative |
|
|
12,888 |
|
|
|
31,441 |
|
|
|
6,697 |
|
|
|
(1 |
) |
|
|
51,025 |
|
Interest and foreign exchange |
|
|
16,714 |
|
|
|
2,930 |
|
|
|
226 |
|
|
|
(2,464 |
) |
|
|
17,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,602 |
|
|
|
34,371 |
|
|
|
6,923 |
|
|
|
(2,465 |
) |
|
|
68,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated subsidiaries |
|
|
(25,523 |
) |
|
|
70,854 |
|
|
|
3,520 |
|
|
|
266 |
|
|
|
49,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit |
|
|
7,797 |
|
|
|
(28,199 |
) |
|
|
(1,764 |
) |
|
|
(100 |
) |
|
|
(22,266 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,726 |
) |
|
|
42,655 |
|
|
|
1,756 |
|
|
|
166 |
|
|
|
26,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
— |
|
|
|
(35 |
) |
|
|
|
|
|
|
35 |
|
|
|
— |
|
Equity in earnings (loss) of
unconsolidated subsidiaries |
|
|
44,986 |
|
|
|
409 |
|
|
|
— |
|
|
|
(44,986 |
) |
|
|
409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
27,260 |
|
|
$ |
43,029 |
|
|
$ |
1,756 |
|
|
$ |
(44,785 |
) |
|
$ |
27,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Statement of Cash Flows
For the nine months ended May 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
(In thousands, unaudited) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
27,260 |
|
|
$ |
43,029 |
|
|
$ |
1,756 |
|
|
$ |
(44,785 |
) |
|
$ |
27,260 |
|
Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
328 |
|
|
|
3,833 |
|
|
|
(1,212 |
) |
|
|
100 |
|
|
|
3,049 |
|
Tax benefit of options exercised and
dividends on restricted stock awards |
|
|
1,949 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,949 |
|
Depreciation and amortization |
|
|
540 |
|
|
|
16,214 |
|
|
|
2,466 |
|
|
|
(50 |
) |
|
|
19,170 |
|
Gain on sales of equipment |
|
|
— |
|
|
|
(10,602 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
(10,606 |
) |
Other |
|
|
— |
|
|
|
80 |
|
|
|
15 |
|
|
|
(36 |
) |
|
|
59 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes receivable |
|
|
24,263 |
|
|
|
11,975 |
|
|
|
(6,489 |
) |
|
|
(116 |
) |
|
|
29,633 |
|
Inventories |
|
|
— |
|
|
|
(31,187 |
) |
|
|
8,228 |
|
|
|
— |
|
|
|
(22,959 |
) |
Railcars held for sale |
|
|
— |
|
|
|
(20,483 |
) |
|
|
(4,728 |
) |
|
|
(312 |
) |
|
|
(25,523 |
) |
Other |
|
|
(77,047 |
) |
|
|
26,958 |
|
|
|
320 |
|
|
|
49,622 |
|
|
|
(147 |
) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
(23,572 |
) |
|
|
13,939 |
|
|
|
(1,114 |
) |
|
|
76 |
|
|
|
(10,671 |
) |
Participation |
|
|
— |
|
|
|
(10,814 |
) |
|
|
— |
|
|
|
— |
|
|
|
(10,814 |
) |
Deferred revenue |
|
|
(116 |
) |
|
|
1,854 |
|
|
|
5,504 |
|
|
|
— |
|
|
|
7,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities |
|
|
(46,395 |
) |
|
|
44,796 |
|
|
|
4,746 |
|
|
|
4,495 |
|
|
|
7,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments received under
direct finance leases |
|
|
— |
|
|
|
1,710 |
|
|
|
— |
|
|
|
— |
|
|
|
1,710 |
|
Proceeds from sales of equipment |
|
|
— |
|
|
|
23,665 |
|
|
|
— |
|
|
|
— |
|
|
|
23,665 |
|
Investment in and net advances to
unconsolidated subsidiary |
|
|
— |
|
|
|
517 |
|
|
|
— |
|
|
|
— |
|
|
|
517 |
|
Increase in restricted cash |
|
|
— |
|
|
|
— |
|
|
|
(1,961 |
) |
|
|
— |
|
|
|
(1,961 |
) |
Capital expenditures |
|
|
— |
|
|
|
(64,886 |
) |
|
|
(2,360 |
) |
|
|
100 |
|
|
|
(67,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
— |
|
|
|
(38,994 |
) |
|
|
(4,321 |
) |
|
|
100 |
|
|
|
(43,215 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in revolving notes |
|
|
— |
|
|
|
— |
|
|
|
7,858 |
|
|
|
— |
|
|
|
7,858 |
|
Proceeds from issuance of notes payable net
of issuance cost |
|
|
154,933 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
154,933 |
|
Repayments of notes payable |
|
|
(848 |
) |
|
|
(4,153 |
) |
|
|
(739 |
) |
|
|
— |
|
|
|
(5,740 |
) |
Repayments of subordinated debt |
|
|
— |
|
|
|
(3,615 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,615 |
) |
Dividends |
|
|
(3,766 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,766 |
) |
Proceeds from exercise of stock options |
|
|
5,010 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,010 |
|
Purchase of subsidiary’s shares subject
to mandatory redemption |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,636 |
) |
|
|
(4,636 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
155,329 |
|
|
|
(7,768 |
) |
|
|
7,119 |
|
|
|
(4,636 |
) |
|
|
150,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
(285 |
) |
|
|
75 |
|
|
|
(805 |
) |
|
|
— |
|
|
|
(1,015 |
) |
Increase (decrease) in cash and cash
equivalents |
|
|
108,649 |
|
|
|
(1,891 |
) |
|
|
6,739 |
|
|
|
(41 |
) |
|
|
113,456 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
66,760 |
|
|
|
2,053 |
|
|
|
4,350 |
|
|
|
41 |
|
|
|
73,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
$ |
175,409 |
|
|
$ |
162 |
|
|
$ |
11,089 |
|
|
$ |
— |
|
|
$ |
186,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Balance Sheet
August 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
66,760 |
|
|
$ |
2,053 |
|
|
$ |
4,350 |
|
|
$ |
41 |
|
|
$ |
73,204 |
|
Restricted cash |
|
|
— |
|
|
|
— |
|
|
|
93 |
|
|
|
— |
|
|
|
93 |
|
Accounts and notes receivable |
|
|
27,325 |
|
|
|
75,762 |
|
|
|
19,827 |
|
|
|
43 |
|
|
|
122,957 |
|
Inventories |
|
|
— |
|
|
|
77,110 |
|
|
|
44,588 |
|
|
|
— |
|
|
|
121,698 |
|
Railcars held for sale |
|
|
— |
|
|
|
54,165 |
|
|
|
5,863 |
|
|
|
(607 |
) |
|
|
59,421 |
|
Equipment on operating leases |
|
|
— |
|
|
|
185,104 |
|
|
|
— |
|
|
|
(1,949 |
) |
|
|
183,155 |
|
Investment in direct finance leases |
|
|
— |
|
|
|
9,974 |
|
|
|
— |
|
|
|
— |
|
|
|
9,974 |
|
Property, plant and equipment |
|
|
8 |
|
|
|
51,381 |
|
|
|
21,814 |
|
|
|
— |
|
|
|
73,203 |
|
Other |
|
|
276,072 |
|
|
|
24,788 |
|
|
|
2,635 |
|
|
|
(275,993 |
) |
|
|
27,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
370,165 |
|
|
$ |
480,337 |
|
|
$ |
99,170 |
|
|
$ |
(278,465 |
) |
|
$ |
671,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
12,453 |
|
|
$ |
— |
|
|
$ |
12,453 |
|
Accounts payable and accrued
liabilities |
|
|
9,586 |
|
|
|
144,672 |
|
|
|
40,916 |
|
|
|
84 |
|
|
|
195,258 |
|
Participation |
|
|
— |
|
|
|
21,900 |
|
|
|
— |
|
|
|
— |
|
|
|
21,900 |
|
Deferred income taxes |
|
|
952 |
|
|
|
31,560 |
|
|
|
(484 |
) |
|
|
(399 |
) |
|
|
31,629 |
|
Deferred revenue |
|
|
1,396 |
|
|
|
5,387 |
|
|
|
127 |
|
|
|
— |
|
|
|
6,910 |
|
Notes payable |
|
|
183,072 |
|
|
|
17,772 |
|
|
|
13,791 |
|
|
|
— |
|
|
|
214,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt |
|
|
— |
|
|
|
8,617 |
|
|
|
— |
|
|
|
— |
|
|
|
8,617 |
|
Minority |
|
|
— |
|
|
|
(111 |
) |
|
|
— |
|
|
|
111 |
|
|
|
— |
|
Subsidiary shares subject to
mandatory
redemption |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,746 |
|
|
|
3,746 |
|
Stockholders’ Equity |
|
|
175,159 |
|
|
|
250,540 |
|
|
|
32,367 |
|
|
|
(282,007 |
) |
|
|
176,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
370,165 |
|
|
$ |
480,337 |
|
|
$ |
99,170 |
|
|
$ |
(278,465 |
) |
|
$ |
671,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Statement of Operations
For the three months ended May 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
21,455 |
|
|
$ |
168,314 |
|
|
$ |
81,483 |
|
|
$ |
(5,162 |
) |
|
$ |
266,090 |
|
Leasing & services |
|
|
99 |
|
|
|
20,554 |
|
|
|
— |
|
|
|
(709 |
) |
|
|
19,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,554 |
|
|
|
188,868 |
|
|
|
81,483 |
|
|
|
(5,871 |
) |
|
|
286,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
19,685 |
|
|
|
150,209 |
|
|
|
76,122 |
|
|
|
(4,525 |
) |
|
|
241,491 |
|
Leasing & services |
|
|
— |
|
|
|
9,577 |
|
|
|
— |
|
|
|
(16 |
) |
|
|
9,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,685 |
|
|
|
159,786 |
|
|
|
76,122 |
|
|
|
(4,541 |
) |
|
|
251,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
|
|
1,869 |
|
|
|
29,082 |
|
|
|
5,361 |
|
|
|
(1,330 |
) |
|
|
34,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative |
|
|
4,019 |
|
|
|
8,673 |
|
|
|
2,584 |
|
|
|
— |
|
|
|
15,276 |
|
Interest and foreign exchange |
|
|
1,636 |
|
|
|
1,836 |
|
|
|
(430 |
) |
|
|
(757 |
) |
|
|
2,285 |
|
Special charges |
|
|
— |
|
|
|
2,913 |
|
|
|
— |
|
|
|
— |
|
|
|
2,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,655 |
|
|
|
13,422 |
|
|
|
2,154 |
|
|
|
(757 |
) |
|
|
20,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated subsidiaries |
|
|
(3,786 |
) |
|
|
15,660 |
|
|
|
3,207 |
|
|
|
(573 |
) |
|
|
14,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit |
|
|
1,351 |
|
|
|
(6,409 |
) |
|
|
(1,055 |
) |
|
|
232 |
|
|
|
(5,881 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,435 |
) |
|
|
9,251 |
|
|
|
2,152 |
|
|
|
(341 |
) |
|
|
8,627 |
|
Minority interest |
|
|
— |
|
|
|
(9 |
) |
|
|
|
|
|
|
9 |
|
|
|
— |
|
Equity in earnings (loss) of
unconsolidated subsidiaries |
|
|
11,479 |
|
|
|
417 |
|
|
|
— |
|
|
|
(11,479 |
) |
|
|
417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
9,044 |
|
|
$ |
9,659 |
|
|
$ |
2,152 |
|
|
$ |
(11,811 |
) |
|
$ |
9,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Statement of Operations
For the nine months ended May 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
62,065 |
|
|
$ |
391,979 |
|
|
$ |
258,417 |
|
|
$ |
(12,166 |
) |
|
$ |
700,295 |
|
Leasing & services |
|
|
416 |
|
|
|
59,875 |
|
|
|
— |
|
|
|
(1,590 |
) |
|
|
58,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,481 |
|
|
|
451,854 |
|
|
|
258,417 |
|
|
|
(13,756 |
) |
|
|
758,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
57,686 |
|
|
|
352,736 |
|
|
|
243,029 |
|
|
|
(11,302 |
) |
|
|
642,149 |
|
Leasing & services |
|
|
— |
|
|
|
30,564 |
|
|
|
— |
|
|
|
(52 |
) |
|
|
30,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,686 |
|
|
|
383,300 |
|
|
|
243,029 |
|
|
|
(11,354 |
) |
|
|
672,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
|
|
4,795 |
|
|
|
68,554 |
|
|
|
15,388 |
|
|
|
(2,402 |
) |
|
|
86,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative |
|
|
10,635 |
|
|
|
23,597 |
|
|
|
7,160 |
|
|
|
— |
|
|
|
41,392 |
|
Interest and foreign exchange |
|
|
3,307 |
|
|
|
5,724 |
|
|
|
2,681 |
|
|
|
(2,073 |
) |
|
|
9,639 |
|
Special charges |
|
|
— |
|
|
|
2,913 |
|
|
|
— |
|
|
|
— |
|
|
|
2,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,942 |
|
|
|
32,234 |
|
|
|
9,841 |
|
|
|
(2,073 |
) |
|
|
53,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated subsidiaries |
|
|
(9,147 |
) |
|
|
36,320 |
|
|
|
5,547 |
|
|
|
(329 |
) |
|
|
32,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit |
|
|
3,689 |
|
|
|
(15,304 |
) |
|
|
(1,356 |
) |
|
|
138 |
|
|
|
(12,833 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,458 |
) |
|
|
21,016 |
|
|
|
4,191 |
|
|
|
(191 |
) |
|
|
19,558 |
|
Minority interest |
|
|
— |
|
|
|
(6 |
) |
|
|
|
|
|
|
6 |
|
|
|
— |
|
Equity in earnings (loss) of
unconsolidated subsidiaries |
|
|
24,694 |
|
|
|
328 |
|
|
|
— |
|
|
|
(25,344 |
) |
|
|
(322 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
19,236 |
|
|
$ |
21,338 |
|
|
$ |
4,191 |
|
|
$ |
(25,529 |
) |
|
$ |
19,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidated Statement of Cash Flows
For the nine months ended May 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
19,236 |
|
|
$ |
21,338 |
|
|
$ |
4,191 |
|
|
$ |
(25,529 |
) |
|
$ |
19,236 |
|
Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
2,176 |
|
|
|
(198 |
) |
|
|
(1,161 |
) |
|
|
(138 |
) |
|
|
679 |
|
Tax benefit of stock options exercised |
|
|
1,941 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,941 |
|
Depreciation and amortization |
|
|
57 |
|
|
|
14,184 |
|
|
|
2,653 |
|
|
|
(54 |
) |
|
|
16,840 |
|
Gain on sales of equipment |
|
|
— |
|
|
|
(3,942 |
) |
|
|
— |
|
|
|
(358 |
) |
|
|
(4,300 |
) |
Other |
|
|
— |
|
|
|
206 |
|
|
|
300 |
|
|
|
(7 |
) |
|
|
499 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes receivable |
|
|
(103,192 |
) |
|
|
61,531 |
|
|
|
7,229 |
|
|
|
(103 |
) |
|
|
(34,535 |
) |
Inventories |
|
|
— |
|
|
|
7,712 |
|
|
|
257 |
|
|
|
— |
|
|
|
7,969 |
|
Railcars held for sale |
|
|
— |
|
|
|
(25,461 |
) |
|
|
(2,837 |
) |
|
|
740 |
|
|
|
(27,558 |
) |
Other |
|
|
(24,852 |
) |
|
|
(3,260 |
) |
|
|
(888 |
) |
|
|
25,344 |
|
|
|
(3,656 |
) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
(14,967 |
) |
|
|
27,571 |
|
|
|
(12,713 |
) |
|
|
104 |
|
|
|
(5 |
) |
Participation |
|
|
— |
|
|
|
(15,660 |
) |
|
|
— |
|
|
|
— |
|
|
|
(15,660 |
) |
Deferred revenue |
|
|
1,435 |
|
|
|
(1,313 |
) |
|
|
1,025 |
|
|
|
1 |
|
|
|
1,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities |
|
|
(118,166 |
) |
|
|
82,708 |
|
|
|
(1,944 |
) |
|
|
— |
|
|
|
(37,402 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments received under
direct finance leases |
|
|
— |
|
|
|
4,524 |
|
|
|
— |
|
|
|
— |
|
|
|
4,524 |
|
Proceeds from sales of equipment |
|
|
— |
|
|
|
23,125 |
|
|
|
— |
|
|
|
— |
|
|
|
23,125 |
|
Investment in and net advances to
unconsolidated subsidiaries |
|
|
— |
|
|
|
(49 |
) |
|
|
— |
|
|
|
— |
|
|
|
(49 |
) |
Acquisition of joint venture interest |
|
|
— |
|
|
|
8,435 |
|
|
|
— |
|
|
|
— |
|
|
|
8,435 |
|
Decrease in restricted cash |
|
|
— |
|
|
|
— |
|
|
|
624 |
|
|
|
— |
|
|
|
624 |
|
Capital expenditures |
|
|
— |
|
|
|
(47,129 |
) |
|
|
(2,349 |
) |
|
|
— |
|
|
|
(49,478 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
— |
|
|
|
(11,094 |
) |
|
|
(1,725 |
) |
|
|
— |
|
|
|
(12,819 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in revolving notes |
|
|
— |
|
|
|
— |
|
|
|
6,541 |
|
|
|
— |
|
|
|
6,541 |
|
Proceeds from the issuance of notes payable
net of issuance cost |
|
|
170,028 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
170,028 |
|
Repayments of notes payable |
|
|
(781 |
) |
|
|
(64,880 |
) |
|
|
(673 |
) |
|
|
— |
|
|
|
(66,334 |
) |
Repayments of subordinated debt |
|
|
— |
|
|
|
(5,157 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,157 |
) |
Dividends |
|
|
(2,692 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,692 |
) |
Net proceeds from sale of common stock |
|
|
127,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,466 |
|
Purchase and retirement of common stock |
|
|
(127,538 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(127,538 |
) |
Proceeds from exercise of stock options |
|
|
1,727 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
168,210 |
|
|
|
(70,037 |
) |
|
|
5,868 |
|
|
|
— |
|
|
|
104,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
(109 |
) |
|
|
2,652 |
|
|
|
(1,185 |
) |
|
|
— |
|
|
|
1,358 |
|
Increase (decrease) in cash and cash
equivalents |
|
|
49,935 |
|
|
|
4,229 |
|
|
|
1,014 |
|
|
|
— |
|
|
|
55,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
— |
|
|
|
10,454 |
|
|
|
1,656 |
|
|
|
— |
|
|
|
12,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
$ |
49,935 |
|
|
$ |
14,683 |
|
|
$ |
2,670 |
|
|
$ |
— |
|
|
$ |
67,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
THE GREENBRIER COMPANIES, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
We currently operate in two primary business segments: manufacturing and leasing & services. These
two business segments are operationally integrated. With operations in the United States, Canada,
Mexico and Europe the manufacturing segment produces double-stack intermodal railcars, conventional
railcars, tank cars, marine vessels and performs railcar repair, refurbishment and maintenance
activities. We produce rail castings through an unconsolidated joint venture and may also
manufacture new freight cars through the use of unaffiliated subcontractors. The leasing &
services segment owns approximately 9,000 railcars and provides management services for
approximately 135,000 railcars owned by railroads, shippers, carriers, and other leasing and
transportation companies. Segment performance is evaluated based on margins.
Our manufacturing backlog of railcars for sale and lease as of May 31, 2006 was approximately
16,900 railcars with an estimated value of $1.14 billion compared to 11,500 railcars valued at
$650.0 million as of May 31, 2005. Current period backlog includes approximately 13,000 units that
will be delivered to the customer over a five year period. Approximately 7,700 units under this
contract are for delivery beyond calendar year 2007 and are subject to our fulfillment of certain
competitive conditions. Substantially all of the current backlog has been priced to cover
anticipated material price increases and surcharges. As these sales prices include an anticipated
pass-through of vendor material price increases and surcharges, they are not necessarily indicative
of increased margins on future production. There is still risk that material prices could increase
beyond amounts used to price our sale contracts which would adversely impact margins in our
backlog.
Certain materials and components continue to be in short supply, including castings, wheels, axles
and couplers, which could potentially impact production at our new railcar and refurbishment
facilities. In an effort to mitigate shortages and reduce supply chain costs, we have entered into
strategic alliances for the global sourcing of certain components.
The Internal Revenue Service (IRS) has conducted an audit of our federal income tax returns for the
years ended 1999 through 2002. In connection with the audit, the IRS has reviewed our decision to
take a tax deduction in the amount of $52.6 million on our 2002 federal tax return relating to
European operations. We have been in settlement discussion with the staff of the IRS and have
reached a tentative settlement regarding the amount and timing of the tax deductions to be taken.
As a result of the tentative settlement, we have recorded a $3.0 million after-tax charge, which
consists of accrued interest of $0.8 million and taxes of $2.2
million, on our Consolidated Statement of Operations in the third
quarter ended May 31, 2006. The agreement remains subject to final documentation and the final
approval of the Internal Revenue Service. It is also subject, as required by law, to the approval
of the Congressional Joint Committee on Taxation. The Joint Committee review is expected to be
completed no earlier than the Fall of 2006.
On May 22, 2006, we issued, at par, through a private placement, $100.0 million aggregate principal
amount of 2.375% convertible senior notes due 2026. Interest will be paid semiannually in arrears
commencing November 15, 2006. We are obligated to file a registration statement with respect to an
offer to exchange the convertible notes for a new issue of identical notes registered with the
Securities and Exchange Commission prior to August 16, 2006 and are also obligated to cause the
registration statement to be effective before November 14, 2006. Proceeds from the notes are
intended to be used for working capital, general corporate purposes, capital expenditures and
potential acquisitions.
On November 21, 2005, we issued, at par, through a private placement, $60.0 million aggregate
principal amount of
83/8
% senior unsecured notes due 2015 which were subsequently exchanged for a new
issue of identical notes registered with the Securities and Exchange Commission. The transaction
was an additional offering under the indenture entered into in connection with our sale of $175.0
million of senior unsecured notes in May 2005. The $235.0 million combined senior unsecured notes
(the Notes) have identical terms. Payment on the Notes is guaranteed by substantially all of our
domestic subsidiaries. Interest is paid in arrears on May 15th and November 15th of each year. Proceeds of the Notes are intended to be used for working capital, general
corporate purposes, capital expenditures and potential acquisitions.
22
THE GREENBRIER COMPANIES, INC.
In December 2005, all of the Canadian subsidiary shares subject to mandatory redemption of $3.7
million were redeemed for $5.3 million. The redemption resulted in a $0.9 million decrease in
accumulated other comprehensive income and a $0.7 million increase in interest expense.
In September 1998, we entered into a joint venture with Bombardier Transportation (Bombardier) to
build railroad freight cars at a portion of Bombardier’s existing manufacturing facility in
Sahagun, Mexico. Each party held a 50% non-controlling interest in the joint venture. In December
2004, we acquired Bombardier’s interest for $9.0 million payable over five years. We lease a
portion of the plant from Bombardier and have entered into a service agreement under which
Bombardier provides labor and other services. The Mexican operations, previously accounted for
under the equity method, were consolidated for financial reporting purposes beginning in December
2004.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires judgment on the part of management to arrive at estimates and
assumptions on matters that are inherently uncertain. These estimates may affect the amount of
assets, liabilities, revenue and expenses reported in the financial statements and accompanying
notes and disclosure of contingent assets and liabilities within the financial statements.
Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual
results could differ from those estimates.
Income taxes — For financial reporting purposes, income tax expense is estimated based on planned
tax return filings. The amounts anticipated to be reported in those filings may change between the
time the financial statements are prepared and the time the tax returns are filed. Further, because
tax filings are subject to review by taxing authorities, there is also the risk that a position
taken in preparation of a tax return may be challenged by a taxing authority. If the taxing
authority is successful in asserting a position different than that taken by us, differences in tax
expense or between current and deferred tax items may arise in future periods. Such differences,
which could have a material impact on our financial statements, would be reflected in the financial
statements when management considers them probable of occurring and the amount reasonably
estimable. Valuation allowances reduce deferred tax assets to an amount that will more likely than
not be realized. Our estimates of the realization of deferred tax assets is based on the
information available at the time the financial statements are prepared and may include estimates
of future income and other assumptions that are inherently uncertain.
Maintenance obligations — We are responsible for maintenance on a portion of the managed and owned
lease fleet under the terms of maintenance obligations defined in the underlying lease or
management agreements. The estimated maintenance liability is based on maintenance histories for
each type and age of railcar. These estimates involve judgment as to the future costs of repairs
and the types and timing of repairs required over the lease term. As we cannot predict with
certainty the prices, timing and volume of maintenance needed in the future on railcars under
long-term leases, this estimate is uncertain and could be materially different from maintenance
requirements. The liability is periodically reviewed and updated based on maintenance trends and
known future repair or refurbishment requirements. Historically, we have not had material
adjustments to these estimates as they are reviewed frequently and cover long-term contracts.
However, these adjustments could be material in the future due to the inability to predict future
maintenance requirements.
Warranty accruals — Warranty costs are estimated and charged to operations to cover a defined
warranty period. The estimated warranty cost is based on historical warranty claims for each
particular product type. For new product types without a warranty history, preliminary estimates
are based on historical information for similar product types. These estimates are inherently
uncertain as they are based on historical data for existing products and judgment for new products.
If warranty claims are made in the current period for issues that have not historically been the
subject of warranty claims and were not taken into consideration in establishing the accrual or if
claims for issues already considered in establishing the accrual exceed expectations, warranty
expense may exceed the accrual for that particular product. Conversely, there is the possibility that claims
may be lower than estimates. The warranty accrual is periodically reviewed and updated based on
warranty trends. In aggregate, historical warranty costs have not been materially different from
the estimates. However, as we cannot predict the amount or timing of future claims, the potential
exists for the difference in any one reporting period to be material.
23
THE GREENBRIER COMPANIES, INC.
Results of Operations
Three Months Ended May 31, 2006 Compared to Three Months Ended May 31, 2005
Overview
Total revenue for the three months ended May 31, 2006 was $266.1 million, a decrease of $19.9
million from revenue of $286.0 million in the prior comparable period. Net earnings were $10.7
million and $9.0 million for the three months ended May 31, 2006 and 2005.
Manufacturing Segment
Manufacturing revenue includes results from new railcar, marine, refurbishment and maintenance
activities. New railcar delivery and backlog information includes all facilities and orders that
may be manufactured by unaffiliated subcontractors.
Manufacturing revenue for the three months ended May 31, 2006 was $236.1 million compared to $266.1
million in the corresponding prior period, a decrease of $30.0 million. The decrease is primarily
the result of lower railcar deliveries. New railcar deliveries were approximately 3,000 units in
the current period compared to 3,600 units in the prior comparable period. Lower current period
railcar deliveries were the result of changes in production rates to meet customer delivery
requirements, a slower European freight car market over the past year and the prior period
including deliveries under a subcontract arrangement.
Manufacturing margin percentage, which includes new railcar, marine, refurbishment and maintenance
activities, for the three months ended May 31, 2006 was 10.4% compared to a margin of 9.2% for the
three months ended May 31, 2005. The increase was primarily due to lower costs on certain
materials and efficiencies of long production runs. In addition, the prior period was adversely
impacted by production issues in Europe on two contracts.
Leasing & Services Segment
Leasing & services revenue increased $10.1 million, or 50.8%, to $30.0 million for the three months
ended May 31, 2006 compared to $19.9 million for the three months ended May 31, 2005. The change
is primarily a result of a $7.0 million increase in gains on disposition of assets from the lease
fleet, a $1.8 million increase in lease revenue from new lease additions and a $1.4 million
increase in interim lease revenue on railcars held for sale. Pre-tax earnings of $7.8 million were
realized on the disposition of leased equipment, compared to $0.8 million in the prior comparable
period. Assets from Greenbrier’s lease fleet are periodically sold in the normal course of business
in order to take advantage of market conditions, manage risk and maintain liquidity.
Leasing & services margin, as a percentage of revenue, was 66.1% and 52.1% for the three-month
periods ended May 31, 2006 and 2005. The increase was primarily a result of increases in gains on
sale and interim rental on assets held for sale both of which have no associated cost of sales. In
addition, renewal of leases at higher lease rates, diversification of railcar types in the lease
fleet and newer lease equipment with lower maintenance costs also contributed to the margin
increase.
Other Costs
Selling and administrative expense was $18.1 million for the three months ended May 31, 2006
compared to $15.3 million for the comparable prior period, an increase of $2.8 million. The change
is primarily due to increases in employee costs which include new employees, compensation and benefit increases and incentive
compensation for both salaried and hourly employees, $0.7 million in amortization of the value of
restricted stock grants, increases in professional fees for audit and consulting, partially offset
by a $0.5 million reduction in legal expense and a prior period accrual for bad debt.
24
THE GREENBRIER COMPANIES, INC.
Interest and foreign exchange increased $3.7 million to $6.0 million for the three months ended May
31, 2006, compared to $2.3 million in the prior comparable period. The increase is due to higher
outstanding debt levels and $0.8 million in interest accrued on the tentative IRS settlement,
partially offset by foreign exchange fluctuations. Current period results include foreign exchange
gains of $1.3 million, as compared to gains of $0.9 million in the prior comparable period.
The results of operations for the three months ended May 31, 2005 include special charges of $2.9
million for debt prepayment penalties and costs associated with settlement of interest rate swap
agreements on $55.7 million of notes payable that were refinanced through a $175.0 million senior
unsecured note offering.
Income Tax
Our effective tax rate was 48.2% and 40.5% for the three months ended May 31, 2006 and 2005. Tax
expense for the quarter includes $2.2 million associated with a tentative settlement with the IRS
in conjunction with completion of an audit of our tax returns for the years 1999-2002. The
effective tax rate prior to this adjustment for the three months ended May 31, 2006 was 36.1%. The
fluctuations in effective tax rate are due to the geographical mix of pre-tax earnings and losses,
minimum tax requirements in certain local jurisdictions and operating losses for certain operations
with no related accrual of tax benefit. Our tax rate in the United States for the three months
ended May 31, 2006 represents a tax rate of 40.5% as compared to 42.0% in the prior comparable
period. The decline in United States tax rate is due to reduced state income tax rates and the
current year implementation of the manufacturing tax deduction included in the American Jobs
Creation Act of 2004. Both periods include varying tax rates on foreign operations.
Equity in Earnings (Loss) of Unconsolidated Subsidiaries
Equity in earnings of the castings joint venture was $0.1 million for the three months ended May
31, 2006 compared to $0.4 million for the three months ended May 31, 2005. The decline is primarily
associated with closure costs at one of the two joint venture foundries which operated on a
temporary basis until the second more efficient facility was fully operational.
Nine Months Ended May 31, 2006 Compared to Nine Months Ended May 31, 2005
Overview
Total revenues for the nine months ended May 31, 2006 were $688.7 million, a decrease of $70.3
million from revenues of $759.0 million in the prior comparable period. Net earnings were $27.3
million and $19.2 million for the nine months ended May 31, 2006 and 2005.
Manufacturing Segment
Our purchase on December 1, 2004 of Bombardier’s equity interest in the railcar manufacturing joint
venture located in Mexico brought our ownership percentage to 100%. As a result the financial
results of the subsidiary, formerly accounted for under the equity method, were consolidated
beginning December 1, 2004.
Manufacturing revenue for the nine months ended May 31, 2006 was $609.6 million compared to $700.3
million in the corresponding prior period, a decrease of $90.7 million, or 13.0%. In addition, the
prior comparable period excludes $28.7 million in revenue from our Mexican manufacturing facility
that was accounted for under the equity method through November 30, 2004. Revenue decreases were
primarily due to lower new railcar deliveries which were approximately 8,200 units in the current
period compared to 9,900 units in the prior comparable
period. Lower current period railcar deliveries were the result of changes in production rates to
meet customer delivery requirements, a slower European freight car market over the past year and
more units delivered under a subcontract arrangement in the prior comparable period.
25
THE GREENBRIER COMPANIES, INC.
Manufacturing margin percentage for the nine months ended May 31, 2006 was 11.4% compared to 8.3%
for the nine months ended May 31, 2005. The increase was primarily due to lower costs on certain
materials, operating efficiency improvements at certain of our facilities and a $1.8 million
reduction in warranty accruals associated with expiration of warranty periods and the settlement of
an outstanding warranty claim. In addition, the prior period was adversely impacted by production
issues in Europe, surcharges and price increases on materials that could not be passed onto the
customer, temporary production issues at one facility and inclement weather related closures.
Leasing & Services Segment
Leasing & services revenue increased $20.4 million, or 34.8%, to $79.1 million for the nine months
ended May 31, 2006 compared to $58.7 million for the nine months ended May 31, 2005. The change is
primarily a result of a $6.3 million increase in gains on sale of equipment from the lease fleet,
an $8.2 million increase in lease revenue from net new lease additions, and a $5.0 million increase
in interim lease rental on railcars held for sale. Pre-tax earnings of $10.6 million were realized
on the disposition of leased equipment, compared to $4.3 million in the prior comparable period.
Leasing & services operating margin percentage increased to 60.5% for the nine months ended May 31,
2006 compared to 48.0% for the nine months ended May 31, 2005. The increase was primarily a result
of increases in gains on sale and interim rental on assets held for sale, both of which have no
associated cost of sales. In addition, renewal of leases at higher lease rates, diversification of
railcar types in the lease fleet and newer lease equipment with lower maintenance costs also
contributed to the margin increase.
Other Costs
Selling and administrative costs were $51.0 million for the nine months ended May 31, 2006 compared
to $41.4 million for the comparable prior period, an increase of $9.6 million, or 23.2%. The
change is primarily due to increases in employee costs which include new employees, compensation
and benefit increases and incentive compensation for both salaried and hourly employees, $2.1
million in amortization of the value of restricted stock grants, increases in professional fees for
audit and consulting, partially offset by a $1.9 million reduction in legal expense.
Interest and foreign exchange increased $7.8 million to $17.4 million for the nine months ended May
31, 2006, compared to $9.6 million in the prior comparable period. The increase is due to higher
outstanding debt levels, $0.8 million in interest accrued on the tentative IRS settlement and $0.7
million in interest paid on the purchase of subsidiary shares subject to mandatory redemption,
partially offset by foreign exchange fluctuations. Current period results include foreign exchange
gains of $1.9 million as compared to foreign exchange losses of $0.7 million in the prior
comparable period.
The results of operations for the nine months ended May 31, 2005 include special charges of $2.9
million for debt prepayment penalties and costs associated with settlement of interest rate swap
agreements on $55.7 million of notes payable that were refinanced through a $175.0 million senior
unsecured note offering.
Income Tax
Our effective tax rate was 45.3% and 39.6% for the nine months ended May 31, 2006 and 2005.
Current period tax expense includes $2.2 million associated with a tentative settlement with the
IRS in conjunction with completion of an audit of our tax returns for the years 1999-2002. The
effective tax rate prior to this adjustment for the nine months ended May 31, 2006 was 40.2%. The
fluctuations in effective tax rate are due to the geographical mix of pre-tax earnings and losses,
minimum tax requirements in certain local jurisdictions and operating losses
for certain operations with no related accrual of tax benefit. Our tax rate in the United States
for the six months ended May 31, 2006 represents a tax rate of 40.5% as compared to 42.0% in the
prior comparable period. The decline in United States tax rate is due to reduced state income tax
rates and the current period implementation of the manufacturing tax deduction included in the
American Jobs Creation Act of 2004. Both periods include varying tax rates on foreign operations
26
THE GREENBRIER COMPANIES, INC.
Equity in Earnings (Loss) of Unconsolidated Subsidiaries
Equity in earnings (loss) of unconsolidated subsidiaries was $0.4 million for the nine months ended
May 31, 2006 compared to a loss of $0.3 million for the nine months ended May 31, 2005. The nine
months ended May 31, 2005 included a loss of $0.6 million from the Mexican joint venture. As a
result of the buyout of our joint venture partner’s interest in the venture, the financial results
of the entity were consolidated beginning on December 1, 2004.
Equity in earnings of the castings joint venture was $0.4 million for the nine months ended May 31,
2006 compared to $0.3 million for the nine months ended May 31, 2005. Improved results are due to
efficiencies associated with higher production, partially offset by closure costs at one of the two
joint venture foundries which operated on a temporary basis until the second more efficient
facility was fully operational.
Liquidity and Capital Resources
During the nine months ended May 31, 2006, cash increased $113.5 million to $186.7 million from
$73.2 million at August 31, 2005. Cash increases were primarily due to proceeds received from the
issuance of $100.0 million of convertible debt in May 2006 and $60.0 million in senior unsecured
notes in November 2005, partially offset by the purchases of equipment for the lease fleet and
assets held for sale and payment of participation under an agreement with Union Pacific Railroad.
Cash provided by operations for the nine months ended May 31, 2006 was $7.6 million compared to
cash used by operations of $37.4 million for the nine months ended May 31, 2005. The change is due
primarily to timing of working capital needs including purchases of railcars held for sale,
inventory for start-up of production lines for different car types and varying customer payment
terms.
Cash used in investing activities was $43.2 million for the nine months ended May 31, 2006 compared
to $12.8 million in the prior comparable period. The increased cash utilization was primarily due
to increased capital expenditures.
Capital expenditures totaled $67.1 million and $49.5 million for the nine months ended May 31, 2006
and 2005. Of these capital expenditures, approximately $53.4 million and $39.3 million were
attributable to leasing & services operations. Leasing & services capital expenditures for 2006
are expected to be approximately $108.0 million We regularly sell assets from our lease fleet, some
of which may have been purchased within the current year and included in capital expenditures.
Proceeds from the sale of equipment are expected to be approximately $40.0 million in 2006.
Approximately $13.7 million and $10.2 million of capital expenditures for the nine months ended May
31, 2006 and 2005 were attributable to manufacturing operations. Capital expenditures for
manufacturing operations are expected to be approximately $25.0 million in 2006, a portion of which
is associated with expansion and improvement of our marine facilities.
Cash provided by financing activities was $150.0 million for the nine months ended May 31, 2006
compared to $104.0 million in the nine months ended May 31, 2005. During the nine months ended May
31, 2006 we received $60.0 million in proceeds from a senior unsecured note offering and $100.0
million in proceeds from a convertible debt offering. In the prior period, cash proceeds were
primarily from $175.0 million in proceeds from a senior unsecured note offering, partially offset
by debt paydowns of $71.5 million.
All amounts originating in foreign currency have been translated into United States dollars at the
May 31, 2006 exchange rate for the purpose of the following discussion. Credit facilities
aggregated $175.1 million as of May 31, 2006. Available borrowings are based upon defined levels of
inventory, receivables, leased equipment and property, plant and equipment, as well as total debt
to consolidated capitalization, tangible net worth and interest coverage
27
THE GREENBRIER COMPANIES, INC.
ratios which at May 31,2006 levels would provide for maximum borrowing of $108.3 million, of which $21.3 million is
outstanding. A $125.0 million revolving line of credit is available through June 2010 to provide
working capital and interim financing of equipment for the United States and Mexican operations. A
$27.3 million line of credit is available through June 2010 for working capital for Canadian
manufacturing operations. Lines of credit totaling $22.8 million are available principally through
June 2008 to provide working capital for the European manufacturing operation. Advances bear
interest at rates that depend on the type of borrowing and the defined ratio of debt to total
capitalization. At May 31, 2006, there were no borrowings outstanding under the North American
credit facilities. The European manufacturing credit lines had $21.3 million outstanding.
In accordance with customary business practices in Europe, we have $15.0 million in bank and third
party performance, advance payment and warranty guarantee facilities all of which has been utilized
as of May 31, 2006. To date, no amounts have been drawn under these performance, advance payment
and warranty guarantees.
We have advanced $1.7 million in long term advances to an unconsolidated subsidiary which are
secured by accounts receivable and inventory. As of May 31, 2006, this same unconsolidated
subsidiary had $6.9 million in third party debt for which we have guaranteed 33% or approximately
$2.3 million.
We have outstanding letters of credit aggregating $3.3 million associated with facility leases and
payroll.
Foreign operations give rise to risks from changes in foreign currency exchange rates. Greenbrier
utilizes foreign currency forward exchange contracts with established financial institutions to
hedge a portion of that risk. No provision has been made for credit loss due to counterparty
non-performance.
Quarterly dividends have been paid since the 4th quarter of 2004 when dividends of $.06 per share
were reinstated. The dividend was increased to $.08 per share in the 4th quarter of 2005.
The issuance of $160.0 million in debt in the current year has resulted in an increase in our
estimated future contractual cash obligations for interest from what was reported in our 2005
Annual Report on Form 10K. Future cash obligations related to interest associated with this debt
are $7.4 million in 2007, $7.4 million in 2008, $7.4 million in 2009, $7.4 million in 2010 and
$63.3 million thereafter.
We expect existing funds and cash generated from operations, together with proceeds from financing
activities including borrowings under existing credit facilities and long-term financing, to be
sufficient to fund dividends, working capital needs, planned capital expenditures and expected debt
repayments for the foreseeable future.
Off Balance Sheet Arrangements
We do not currently have off balance sheet arrangements that have or are likely to have a material
current or future effect on our Consolidated Financial Statements.
Forward-Looking Statements
From time to time, Greenbrier or its representatives have made or may make 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.
Such forward-looking statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in various filings made by
us with the Securities and Exchange Commission. These forward-looking statements rely on a number
of assumptions concerning future events and include statements relating to:
• |
|
availability of financing sources and borrowing base for working capital, other business development activities,
capital spending and railcar warehousing activities; |
• |
|
ability to renew or obtain sufficient lines of credit and performance guarantees on acceptable terms; |
• |
|
ability to utilize beneficial tax strategies; |
28
THE GREENBRIER COMPANIES, INC.
• |
|
ability to grow our railcar services and lease fleet and management services business; |
• |
|
ability to obtain sales contracts which contain provisions for the escalation of prices due to increased costs of
materials and components; |
• |
|
ability to obtain adequate certification and licensing of products; and |
• |
|
short- and long-term revenue and earnings effects of the above items. |
Forward-looking statements are subject to a number of uncertainties and other factors outside
Greenbrier’s control. The following are among the factors that could cause actual results or
outcomes to differ materially from the forward-looking statements:
• |
|
a delay or failure of acquired businesses, products or services to compete successfully; |
• |
|
decreases in carrying value of assets due to impairment; |
• |
|
severance or other costs or charges associated with lay-offs, shutdowns, or reducing the size and scope of operations; |
• |
|
changes in future maintenance requirements; |
• |
|
effects of local statutory accounting conventions on compliance with covenants in certain loan agreements; |
• |
|
domestic and global business conditions and growth or reduction in the surface transportation industry; |
• |
|
actual future costs and the availability of materials and a trained workforce; |
• |
|
ability to maintain good relationships with third party labor providers or collective bargaining units; |
• |
|
availability of subcontractors; |
• |
|
ability to adequately pass through steel price increases, scrap surcharges and other commodity price fluctuations and
their related impact on railcar demand and margin; |
• |
|
changes in product mix and the mix between the manufacturing and leasing & services segments; |
• |
|
ability to deliver railcars in accordance with customer specifications; |
• |
|
labor disputes or strikes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of
cargo; |
• |
|
production difficulties, product delivery delays and warranty issues as a result of, among other matters, changing
technologies or non-performance of partners, subcontractors or suppliers; |
• |
|
ability to obtain suitable contracts for railcars held for sale; |
• |
|
lower than anticipated residual values for leased equipment; |
• |
|
discovery of defects in manufactured railcars resulting in increased warranty costs or litigation; |
• |
|
resolution or outcome of investigations or pending litigation; |
• |
|
the ability to consummate expected sales; |
• |
|
delays in receipt of orders, risks that contracts may be canceled during their term or not renewed and that customers
may not purchase as much equipment under the contracts as anticipated; |
• |
|
financial condition of principal customers; |
• |
|
market acceptance of products; |
• |
|
ability to determine and obtain adequate levels of insurance at acceptable rates; |
• |
|
competitive factors, including introduction of competitive products, price pressures, limited customer base and
competitiveness of our manufacturing facilities and products; |
• |
|
industry over-capacity and our manufacturing capacity utilization; |
• |
|
continued industry demand at current and anticipated levels for railcar products; |
• |
|
domestic and global political, regulatory or economic conditions including such matters as terrorism, war, embargoes or
quotas; |
• |
|
ability to adjust to the cyclical nature of the railcar industry; |
• |
|
the effects of car hire deprescription on leasing revenue; |
• |
|
changes in interest rates; |
• |
|
actions by various regulatory agencies; |
• |
|
changes in fuel and/or energy prices; |
• |
|
availability and price of essential raw materials, specialties or components, including steel castings, to permit
manufacture of units on order; |
• |
|
ability to replace lease revenue and earnings from maturing and terminating leases with revenue and earnings from
additions to the lease fleet, lease renewals and management services; and |
• |
|
financial impacts from currency fluctuations in our worldwide operations. |
29
THE GREENBRIER COMPANIES, INC.
Any forward-looking statements should be considered in light of these factors. Greenbrier assumes
no obligation to update or revise any forward-looking statements to reflect actual results, changes
in assumptions or changes in other factors affecting such forward-looking statements or if
Greenbrier later becomes aware that these assumptions are not likely to be achieved, except as
required under securities laws.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We have operations in Canada, Mexico, Germany and Poland that conduct business in their local
currencies as well as other regional currencies. To mitigate the exposure to transactions
denominated in currencies other than the functional currency of each entity, we enter into foreign
currency forward exchange contracts to protect the margin on a portion of forecast foreign currency
sales. At May 31, 2006, $36.7 million of forecast sales were hedged by foreign exchange contracts.
Because of the variety of currencies in which purchases and sales are transacted and the
interaction between currency rates, it is not possible to predict the impact a movement in a single
foreign currency exchange rate would have on future operating results. We believe the exposure to
foreign exchange risk is not material.
In addition to exposure to transaction gains or losses, we are also exposed to foreign currency
exchange risk related to the net asset position of our foreign subsidiaries. At May 31, 2006, net
assets of foreign subsidiaries aggregated $36.6 million and a uniform 10% strengthening of the
United States dollar relative to the foreign currencies would result in a decrease in stockholders’
equity of $3.7 million, 1.8% of total stockholders’ equity. This calculation assumes that each
exchange rate would change in the same direction relative to the United States dollar.
Interest Rate Risk
We have managed our floating rate debt with interest rate swap agreements, effectively converting
$21.0 million of variable rate debt to fixed rate debt. At May 31, 2006, the exposure to interest
rate risk is limited since 93% of our debt has fixed rates. As a result, we are only exposed to
interest rate risk relating to our revolving debt and a portion of term debt. At May 31, 2006, a
uniform 10% increase in interest rates would result in approximately $0.2 million of additional
annual interest expense.
30
THE GREENBRIER COMPANIES, INC.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our President and
Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by this report pursuant to Rule
13a-15(b) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation,
our President and Chief Executive Officer and Chief Financial Officer have concluded that, as of
the end of the period covered by this report, our disclosure controls and procedures were effective
in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded,
processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our
management, including our President and Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the
quarter ended May 31, 2006 that has materially affected, or is reasonably likely to materially
affect, the Company’s internal controls over financial reporting.
31
THE GREENBRIER COMPANIES, INC.
Item 5. OTHER INFORMATION
The following Consolidated Earnings Statement (Unaudited) for the twelve month period ended May 31,
2006 covers a period of twelve months beginning 26 days after the effective date of the Company’s
Registration Statement (File No. 333-121181) for its May 5, 2006 public offering, and it is hereby
made available to security holders pursuant to Rule 158 of the Securities Act of 1933, as amended.
The Greenbrier Companies, Inc.
Twelve month period ending May 31, 2006
Consolidated Earnings Statement
(In thousands, except per share amounts, unaudited)
|
|
|
|
|
Revenue |
|
|
|
|
Manufacturing |
|
$ |
850,436 |
|
Leasing & services |
|
|
103,455 |
|
|
|
|
|
|
|
|
953,891 |
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
Manufacturing |
|
|
755,636 |
|
Leasing & services |
|
|
41,869 |
|
|
|
|
|
|
|
|
797,505 |
|
|
|
|
|
|
Margin |
|
|
156,386 |
|
|
|
|
|
|
Other costs |
|
|
|
|
Selling and administrative |
|
|
67,058 |
|
Interest and foreign exchange |
|
|
22,602 |
|
|
|
|
|
|
|
|
89,660 |
|
|
|
|
|
|
Earnings before income taxes and equity in
unconsolidated subsidiaries |
|
|
66,726 |
|
|
|
|
|
|
Income tax expense |
|
|
(29,345 |
) |
|
|
|
|
Earnings before equity in unconsolidated
subsidiaries |
|
|
37,381 |
|
|
|
|
|
|
Equity in earnings (loss) of unconsolidated
subsidiaries |
|
|
465 |
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
37,846 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
2.43 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
15,544 |
|
Diluted |
|
|
15,834 |
|
32
THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There is hereby incorporated by reference the information disclosed in Note 12 to Consolidated
Financial Statements, Part I of this quarterly report.
Item 6. Exhibits
(a) List of Exhibits:
|
|
|
31.1
|
|
Certification pursuant to Rule 13 (a) — 14 (a) |
|
|
|
31.2
|
|
Certification pursuant to Rule 13 (a) — 14 (a) |
|
|
|
32.1
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. |
33
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: June 29, 2006
|
|
By:
|
|
/s/ Joseph K. Wilsted |
|
|
|
|
|
|
Joseph K. Wilsted
|
|
|
|
|
|
|
Senior Vice President and |
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Principal Financial and Accounting
Officer) |
|
|
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
GREENBRIER-CONCARRIL, LLC
|
|
Dated: June 29, 2006 |
By: |
/s/ Joseph K. Wilsted
|
|
|
|
Joseph K. Wilsted |
|
|
|
Vice President |
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
|
|
Chairman of the Board of Directors
|
|
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
|
|
Vice President |
|
|
|
|
(Principal Financial and Accounting Officer) |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GREENBRIER LEASING LIMITED |
|
|
|
|
PARTNER, LLC |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006 |
|
By: Greenbrier Leasing Company LLC |
|
|
|
|
Sole Member and Manager |
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
|
|
|
|
|
Vice President |
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
William A. Furman
|
|
Principal Executive Officer
|
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
Principal Financial and Accounting Officer |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GREENBRIER LEASING COMPANY, LLC |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006
|
|
By:
|
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
Vice President
|
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
|
|
Chief Executive Officer and Manager
|
|
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
|
|
Vice President |
|
|
|
|
(Principal Financial and Accounting Officer) |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GREENBRIER LEASING, L.P. |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006 |
|
By: Greenbrier Management Services LLC |
|
|
|
|
General Partner |
|
|
|
|
|
|
|
|
|
|
|
By: Greenbrier Leasing Company LLC |
|
|
|
|
Sole Member and Manager |
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
|
|
|
|
|
Vice President |
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman |
|
Principal Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted |
|
Principal Financial and Accounting Officer |
|
|
|
|
|
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GREENBRIER MANAGEMENT SERVICES LLC |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006 |
|
By: Greenbrier Leasing Company LLC |
|
|
|
|
Sole Member and Manager |
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
Vice President
|
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
|
|
Principal Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
|
|
Principal Financial and Accounting Officer |
|
|
|
|
|
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
GREENBRIER RAILCAR LLC |
|
|
|
|
|
Dated: June 29, 2006
|
|
By:
|
|
/s/ Joseph K. Wilsted |
|
|
|
|
|
|
|
|
|
Joseph K. Wilsted
Vice President |
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
|
|
Manager |
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
|
|
Vice President |
|
|
|
|
(Principal Financial and Accounting Officer) |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GUNDERSON LLC |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006
|
|
By:
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
|
|
|
|
|
Vice President |
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
|
|
Manager |
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
|
|
Vice President |
|
|
|
|
(Principal Financial and Accounting Officer) |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GUNDERSON MARINE LLC |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006
|
|
By:
|
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
|
|
|
|
|
Vice President |
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
|
|
Manager
|
|
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
|
|
Vice President |
|
|
|
|
(Principal Financial and Accounting Officer) |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
GUNDERSON RAIL SERVICES LLC
|
|
Dated: June 29, 2006 |
By: |
/s/ Joseph K. Wilsted
|
|
|
|
Joseph K. Wilsted |
|
|
|
Vice President |
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
William A. Furman
|
|
Manager
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
Vice President
(Principal Financial and Accounting Officer) |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
GUNDERSON SPECIALTY PRODUCTS LLC |
|
|
|
|
|
|
|
|
|
Dated: June 29, 2006 |
|
By: Gunderson LLC, Sole Member and Sole Manager |
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
|
|
|
|
|
Vice President |
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
|
|
|
|
|
Signature |
|
Title |
|
|
|
/s/ William A. Furman
William A. Furman
|
|
Principal Executive Officer |
|
|
|
|
|
|
|
/s/ Joseph K. Wilsted
Joseph K. Wilsted
|
|
Principal Financial and Accounting Officer |
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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AUTOSTACK COMPANY LLC
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Dated: June 29, 2006 |
By: |
/s/
Joseph K. Wilsted |
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Joseph K. Wilsted |
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Vice President |
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Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities indicated on
June 29, 2006:
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Signature |
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Title |
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/s/ William A. Furman
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Chief Executive Officer and Manager
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(Principal Executive Officer) |
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/s/
Joseph K. Wilsted
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Vice President |
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(Principal Financial and Accounting Officer) |
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THE GREENBRIER COMPANIES, INC.
Exhibit Index
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31.1
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Certification pursuant to Rule 13 (a) — 14 (a) |
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31.2
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Certification pursuant to Rule 13 (a) — 14 (a) |
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32.1
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. |