Investment in Unconsolidated Affiliates

12 Months Ended

Aug. 31, 2012

Note 27 - Investment in Unconsolidated Affiliates

In April 2010, WLR-Greenbrier Rail Inc. (WLR-GBX) was formed and acquired a lease fleet of nearly 4,000 railcars valued at approximately $256.0 million. WLR-GBX is wholly owned by affiliates of WL Ross & Co., LLC (WL Ross). The Company paid a $6.1 million contract placement fee to WLR-GBX for the right to perform certain management and advisory services and in exchange will receive management and other fee income and incentive compensation tied to the performance of WLR-GBX. The contract placement fee is accounted for under the equity method and was recorded in Intangibles and other assets on the Consolidated Balance Sheet. The Company recorded its share of losses of $2.1 million, $2.5 million and $1.4 million for the years ended August 31, 2012, 2011 and 2010 against the investment, reducing the investment balance to zero at August 31, 2012. While the Company acts as asset manager to WLR-GBX, it is not the primary beneficiary. The Company has no authority to make decisions regarding key business activities that most significantly impact the entity’s economic performance, such as asset re-marketing and disposition activities, which requires the approval of affiliates of WL Ross.

In June 2003, the Company acquired a 33% minority ownership interest in Ohio Castings LLC, a joint venture which produces castings for freight cars. This joint venture is accounted for under the equity method and the investment is included in Intangibles and other assets on the Consolidated Balance Sheets. The investment balance as of August 31, 2012 was $7.7 million. The facility was temporarily idled during the economic downturn, but was re-opened during the third quarter of 2011.

Summarized financial data for the castings joint venture is as follows:


	Years ended August 31,
(In thousands)	2012		2011
Current assets	$	16,758	$	7,887
Total assets	$	26,323	$	18,532
Current liabilities	$	7,625	$	5,104
Equity	$	18,698	$	12,934


	Years ended August 31,
(In thousands)	2012		2011			2010
Revenue	$	82,698	$	5,813		$	–
Net income (loss)	$	5,823	$	(5,648	)	$	(2,897	)

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References+ Details