10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended February 28, 2014

 

¨ 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)

 

Oregon   93-0816972

(State of

Incorporation)

 

(I.R.S. Employer

Identification No.)

One Centerpointe Drive, Suite 200, Lake Oswego, OR   97035
(Address of principal executive offices)   (Zip Code)

(503) 684-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨    No  x

The number of shares of the registrant’s common stock, without par value, outstanding on March 28, 2014 was 27,586,915 shares.


THE GREENBRIER COMPANIES, INC.

 

Forward-Looking Statements

From time to time, The Greenbrier Companies, Inc. and its subsidiaries (Greenbrier or the Company) or their representatives have made or may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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, including this filing on Form 10-Q. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. 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 leased railcars for syndication (sale of railcars with lease attached);

 

   

ability to renew, maintain or obtain sufficient credit facilities and financial guarantees on acceptable terms;

 

   

ability to utilize beneficial tax strategies;

 

   

ability to grow our businesses;

 

   

ability to obtain lease and sales contracts which provide adequate protection against changes in interest rates and increased costs of materials and components;

 

   

ability to obtain adequate insurance coverage at acceptable rates;

 

   

ability to obtain adequate certification and licensing of products; and

 

   

short-term and long-term revenue and earnings effects of the above items.

The following factors, among others, could cause actual results or outcomes to differ materially from the forward-looking statements:

 

   

fluctuations in demand for newly manufactured railcars or marine barges;

 

   

fluctuations in demand for wheels, repair & parts;

 

   

delays in receipt of orders, risks that contracts may be canceled during their term or not renewed and that customers may not purchase the amount of products or services under the contracts as anticipated;

 

   

ability to maintain sufficient availability of credit facilities and to maintain compliance with or to obtain appropriate amendments to covenants under various credit agreements;

 

   

domestic and global economic conditions including such matters as embargoes or quotas;

 

   

U.S., Mexican and other global political or security conditions including such matters as terrorism, war, civil disruption and crime;

 

   

growth or reduction in the surface transportation industry;

 

   

ability to maintain good relationships with our labor force, third party labor providers and collective bargaining units representing our direct and indirect labor force;

 

   

steel and specialty component price fluctuations and availability, scrap surcharges, steel scrap prices and other commodity price fluctuations and availability and their impact on product demand and margin;

 

   

delay or failure of acquired businesses, assets, start-up operations, or new products or services to compete successfully;

 

   

changes in product mix and the mix of revenue levels among reporting segments;

 

   

labor disputes, energy shortages or operating difficulties that might disrupt operations or the flow of cargo;

 

   

production difficulties and product delivery delays as a result of, among other matters, inefficiencies associated with expansion or the start-up of production lines or increased production rates, changing technologies, transfer of production between facilities or non-performance of alliance partners, subcontractors or suppliers;

 

   

interruption of our manufacturing operations as a result of lease termination or expiration;

 

   

ability to renew or replace expiring customer contracts on satisfactory terms;

 

   

ability to obtain and execute suitable contracts for leased railcars for syndication;

 

2


THE GREENBRIER COMPANIES, INC.

 

   

lower than anticipated lease renewal rates, earnings on utilization based leases or residual values for leased equipment;

 

   

discovery of defects in railcars or services resulting in increased warranty costs or litigation;

 

   

physical damage or product or service liability claims that exceed our insurance coverage;

 

   

commencement of and ultimate resolution or outcome of pending or future litigation and investigations;

 

   

natural disasters or severe weather patterns that may affect either us, our suppliers or our customers;

 

   

loss of business from, or a decline in the financial condition of, any of the principal customers that represent a significant portion of our total revenues;

 

   

competitive factors, including introduction of competitive products, new entrants into certain of our markets, price pressures, limited customer base, and competitiveness of our manufacturing facilities and products;

 

   

industry overcapacity and our manufacturing capacity utilization;

 

   

decreases or write-downs in carrying value of inventory, goodwill, intangibles or other 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 or warranty requirements;

 

   

ability to adjust to the cyclical nature of the industries in which we operate;

 

   

changes in interest rates and financial impacts from interest rates;

 

   

ability and cost to maintain and renew operating permits;

 

   

actions by various regulatory agencies including potential environmental remediation obligations or changing tank car or other rail car regulation;

 

   

changes in fuel and/or energy prices;

 

   

risks associated with our intellectual property rights or those of third parties, including infringement, maintenance, protection, validity, enforcement and continued use of such rights;

 

   

expansion of warranty and product support terms beyond those which have traditionally prevailed in the rail supply industry;

 

   

availability of a trained work force at a reasonable cost and with reasonable terms of employment;

 

   

availability and/or price of essential raw materials, specialties or components, including steel castings, to permit manufacture of units on order;

 

   

failure to successfully integrate acquired businesses;

 

   

discovery of previously unknown liabilities associated with acquired businesses;

 

   

failure of or delay in implementing and using new software or other technologies;

 

   

the impact of cybersecurity risks and the costs of mitigating and responding to a data security breach;

 

   

ability to replace maturing lease and management services revenue and earnings with revenue and earnings from new commercial transactions, including new railcar leases, additions to the lease fleet and new management services contracts;

 

   

credit limitations upon our ability to maintain effective hedging programs;

 

   

financial impacts from currency fluctuations and currency hedging activities in our worldwide operations; and

 

   

changes in legislation and increased costs related to health care.

Any forward-looking statements should be considered in light of these factors. Words such as “anticipates,” “believes,” “forecast,” “potential,” “goal,” “contemplates,” “expects,” “intends,” “plans,” “projects,” “hopes,” “seeks,” “estimates,” “strategy,” “could,” “would,” “should,” “likely,” “will,” “may,” “can,” “designed to,” “future,” “foreseeable future” and similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Many of the important factors that will determine these results and values are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statements. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements.

All references to years refer to the fiscal years ended August 31st unless otherwise noted.

 

3


THE GREENBRIER COMPANIES, INC.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Consolidated Balance Sheets

(In thousands, unaudited)

 

     February 28,
2014
    August 31,
2013
 

Assets

    

Cash and cash equivalents

   $ 143,929      $ 97,435   

Restricted cash

     8,964        8,807   

Accounts receivable, net

     148,810        154,848   

Inventories

     306,394        316,783   

Leased railcars for syndication

     84,657        68,480   

Equipment on operating leases, net

     282,328        305,468   

Property, plant and equipment, net

     204,804        201,533   

Goodwill

     57,416        57,416   

Intangibles and other assets, net

     77,173        78,971   
  

 

 

   

 

 

 
   $ 1,314,475      $ 1,289,741   
  

 

 

   

 

 

 

Liabilities and Equity

    

Revolving notes

   $ 26,738      $ 48,209   

Accounts payable and accrued liabilities

     319,611        315,938   

Deferred income taxes

     84,848        86,040   

Deferred revenue

     14,272        8,838   

Notes payable

     371,427        373,889   

Commitments and contingencies (Note 13)

    

Equity:

    

Greenbrier

    

Preferred stock - without par value; 25,000 shares authorized; none outstanding

     —          —     

Common stock - without par value; 50,000 shares authorized; 27,807 and 28,084 shares outstanding at February 28, 2014 and August 31, 2013

     —          —     

Additional paid-in capital

     252,564        259,864   

Retained earnings

     205,817        174,842   

Accumulated other comprehensive loss

     (1,812     (6,504
  

 

 

   

 

 

 

Total equity - Greenbrier

     456,569        428,202   

Noncontrolling interest

     41,010        28,625   
  

 

 

   

 

 

 

Total equity

     497,579        456,827   
  

 

 

   

 

 

 
   $ 1,314,475      $ 1,289,741   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements

 

4


THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Income

(In thousands, except per share amounts, unaudited)

 

     Three Months Ended
February 28,
    Six Months Ended
February 28,
 
     2014     2013     2014     2013  

Revenue

        

Manufacturing

   $ 347,755      $ 294,047      $ 707,228      $ 579,416   

Wheels, Repair & Parts

     136,540        111,952        249,941        224,051   

Leasing & Services

     17,921        17,167        35,402        35,073   
  

 

 

   

 

 

   

 

 

   

 

 

 
     502,216        423,166        992,571        838,540   

Cost of revenue

        

Manufacturing

     306,572        262,650        618,012        521,142   

Wheels, Repair & Parts

     127,940        103,134        235,915        204,610   

Leasing & Services

     9,853        9,107        19,234        16,735   
  

 

 

   

 

 

   

 

 

   

 

 

 
     444,365        374,891        873,161        742,487   

Margin

     57,851        48,275        119,410        96,053   

Selling and administrative expense

     28,125        24,942        54,234        51,042   

Net gain on disposition of equipment

     (5,416     (3,076     (9,067     (4,484

Restructuring charges

     540        —          1,419        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from operations

     34,602        26,409        72,824        49,495   

Other costs

        

Interest and foreign exchange

     4,099        6,322        8,843        12,222   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes and loss from unconsolidated affiliates

     30,503        20,087        63,981        37,273   

Income tax expense

     (9,883     (5,590     (20,405     (10,176
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before loss from unconsolidated affiliates

     20,620        14,497        43,576        27,097   

Loss from unconsolidated affiliates

     (67     (105     (26     (145
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

     20,553        14,392        43,550        26,952   

Net earnings attributable to noncontrolling interest

     (4,966     (553     (12,575     (2,686
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings attributable to Greenbrier

   $ 15,587      $ 13,839      $ 30,975      $ 24,266   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per common share

   $ 0.55      $ 0.51      $ 1.09      $ 0.89   

Diluted earnings per common share

   $ 0.50      $ 0.45      $ 0.98      $ 0.80   

Weighted average common shares:

        

Basic

     28,300        27,210        28,359        27,177   

Diluted

     34,345        34,044        34,404        34,018   

The accompanying notes are an integral part of these financial statements

 

5


THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Comprehensive Income

(In thousands, unaudited)

 

     Three Months Ended
February 28,
    Six Months Ended
February 28,
 
     2014     2013     2014     2013  

Net earnings

   $ 20,553      $ 14,392      $ 43,550      $ 26,952   

Other comprehensive income (loss)

        

Translation adjustment

     811        (95     3,322        2,040   

Reclassification of derivative financial instruments recognized in net earnings 1

     180        (279     317        (895

Unrealized gain (loss) on derivative financial instruments 2

     352        (791     1,114        508   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,343        (1,165     4,753        1,653   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

     21,896        13,227        48,303        28,605   

Comprehensive income attributable to noncontrolling interest

     (4,986     (549     (12,636     (2,728
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Greenbrier

   $ 16,910      $ 12,678      $ 35,667      $ 25,877   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1 

Net of tax of effect of $0.1 million and $0.03 million for the three months ended February 28, 2014 and 2013 and $0.3 million and $0.01 million for the six months ended February 28, 2014 and 2013.

2 

Net of tax of effect of $0.1 million and $0.2 million for the three months ended February 28, 2014 and 2013 and $0.3 million and $0.1 million for the six months ended February 28, 2014 and 2013.

The accompanying notes are an integral part of these financial statements

 

6


THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Equity

(In thousands, unaudited)

 

     Attributable to Greenbrier              
     Common
Stock
Shares
    Additional
Paid-in Capital
    Retained
Earnings
     Accumulated
Other
Comprehensive
Income (Loss)
    Total
Attributable to
Greenbrier
    Attributable to
Noncontrolling
Interest
    Total Equity  

Balance September 1, 2013

     28,084      $ 259,864      $ 174,842       $ (6,504   $ 428,202      $ 28,625      $ 456,827   

Net earnings

     —          —          30,975         —          30,975        12,575        43,550   

Other comprehensive income, net

     —          —          —           4,692        4,692        61        4,753   

Noncontrolling interest adjustments

     —          —          —           —          —          2,439        2,439   

Investment by joint venture partner

     —          —          —           —          —          419        419   

Joint venture partner distribution declared

     —          —          —           —          —          (3,109     (3,109

Restricted stock awards (net of cancellations)

     12        458        —           —          458        —          458   

Unamortized restricted stock

     —          (458     —           —          (458     —          (458

Restricted stock amortization

     —          2,862        —           —          2,862        —          2,862   

Excess tax benefit from restricted stock awards

     —          110        —           —          110        —          110   

Repurchase of stock

     (289     (10,272     —           —          (10,272     —          (10,272
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance February 28, 2014

     27,807      $ 252,564      $ 205,817       $ (1,812   $ 456,569      $ 41,010      $ 497,579   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

     Attributable to Greenbrier              
     Common
Stock
Shares
     Additional
Paid-in Capital
    Retained
Earnings
     Accumulated
Other
Comprehensive
Income (Loss)
    Total
Attributable to
Greenbrier
    Attributable to
Noncontrolling
Interest
    Total Equity  

Balance September 1, 2012

     27,143       $ 252,256      $ 185,890       $ (6,369   $ 431,777      $ 21,868      $ 453,645   

Net earnings

     —           —          24,266         —          24,266        2,686        26,952   

Other comprehensive income, net

     —           —          —           1,611        1,611        42        1,653   

Noncontrolling interest adjustments

     —           —          —           —          —          (1,735     (1,735

Investment by joint venture partner

     —           —          —           —          —          1,949        1,949   

Restricted stock awards (net of cancellations)

     27         310        —           —          310        —          310   

Unamortized restricted stock

     —           (310     —           —          (310     —          (310

Restricted stock amortization

     —           3,301        —           —          3,301        —          3,301   

Excess tax benefit from restricted stock awards

     —           181        —           —          181        —          181   

Warrants exercised

     52         —          —           —          —          —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance February 28, 2013

     27,222       $ 255,738      $ 210,156       $ (4,758   $ 461,136      $ 24,810      $ 485,946   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements

 

7


THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Cash Flows

(In thousands, unaudited)

 

     Six Months Ended
February 28,
 
     2014     2013  

Cash flows from operating activities

    

Net earnings

   $ 43,550      $ 26,952   

Adjustments to reconcile net earnings to net cash provided by operating activities:

    

Deferred income taxes

     (1,448     4,203   

Depreciation and amortization

     20,753        21,398   

Net gain on disposition of equipment

     (9,067     (4,484

Accretion of debt discount

     —          1,725   

Stock based compensation expense

     2,862        2,887   

Other

     2,768        (1,612

Decrease (increase) in assets:

    

Accounts receivable

     6,900        3,079   

Inventories

     9,147        (27,208

Leased railcars for syndication

     (13,603     56,960   

Other

     68        245   

Increase (decrease) in liabilities:

    

Accounts payable and accrued liabilities

     (487     (56,493

Deferred revenue

     5,377        5,936   
  

 

 

   

 

 

 

Net cash provided by operating activities

     66,820        33,588   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Proceeds from sales of assets

     28,671        22,301   

Capital expenditures

     (16,529     (35,525

Increase in restricted cash

     (157     (2,622

Investment in and net advances to unconsolidated affiliates

     (1,253     (386

Other

     —          (3,582
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     10,732        (19,814
  

 

 

   

 

 

 

Cash flows from financing activities

    

Net change in revolving notes with maturities of 90 days or less

     —          (16,579

Proceeds from revolving notes with maturities longer than 90 days

     31,738        19,968   

Repayments of revolving notes with maturities longer than 90 days

     (53,209     (14,998

Repayments of notes payable

     (2,462     (2,251

Repurchase of stock

     (8,889     —     

Investment by joint venture partner

     419        1,949   

Cash distribution to joint venture partner

     (1,604     —     

Excess tax benefit from restricted stock awards

     110        181   
  

 

 

   

 

 

 

Net cash used in financing activities

     (33,897     (11,730
  

 

 

   

 

 

 

Effect of exchange rate changes

     2,839        22   

Increase in cash and cash equivalents

     46,494        2,066   

Cash and cash equivalents

    

Beginning of period

     97,435        53,571   
  

 

 

   

 

 

 

End of period

   $ 143,929      $ 55,637   
  

 

 

   

 

 

 

Cash paid during the period for

    

Interest

   $ 6,610      $ 7,867   

Income taxes, net

   $ 29,283      $ 8,288   

Non-cash activity

    

Transfer of Inventories to Leased railcars for syndication

   $ 2,776      $ —     

Repurchase of stock accrued in Accounts payable and accrued liabilities

   $ 1,383      $ —     

Transfer of Leased railcars for syndication to Equipment on operating leases

   $ —        $ 4,640   

Transfer of Equipment on operating leases to Inventories

   $ —        $ 17,762   

The accompanying notes are an integral part of these financial statements

 

8


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 February 28, 2014, for the three and six months ended February 28, 2014 and 2013 have been prepared without audit and reflect all adjustments (consisting of normal recurring accruals) that, in the opinion of management, are necessary for a fair presentation of the financial position and operating results and cash flows for the periods indicated. The results of operations for the three and six months ended February 28, 2014 are not necessarily indicative of the results to be expected for the entire year ending August 31, 2014.

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 2013 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 – In the first quarter of 2014, the Company adopted an accounting standard update regarding the testing of indefinite-lived intangible assets for impairment. This update was intended to reduce the cost and complexity of testing indefinite-lived intangible assets for impairment by providing entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This update impacted testing steps only and therefore the adoption did not have an impact on the Company’s Consolidated Financial Statements.

In the first quarter of 2014, the Company adopted an accounting standard update that amended prior reporting requirements with respect to comprehensive income by requiring additional disclosures by component about the amounts reclassified out of accumulated other comprehensive loss. The adoption of this accounting standard update did require additional disclosures, but did not have an impact on the Company’s financial position, results of operations or cash flows.

Share Repurchase Program – In October 2013, the Board of Directors authorized the Company to repurchase up to $50 million of the Company’s common stock. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time-to-time. The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors. The share repurchase program does not obligate the Company to acquire any specific number of shares in any period. The share repurchase program expires April 30, 2015, but may be modified, suspended or discontinued at any time without prior notice. During the three and six months ended February 28, 2014, the Company repurchased a total of 260,717 shares and 289,327 shares for approximately $9.4 million and $10.3 million. Subsequent to February 28, 2014 and through April 1, 2014, the Company purchased an additional 242,000 shares for approximately $11.1 million.

 

9


THE GREENBRIER COMPANIES, INC.

 

Note 2 – Restructuring

During 2013, the Company implemented a restructuring plan to sell or close certain Wheels, Repair & Parts facilities to enhance margins and improve capital efficiency and anticipates completing the restructuring plan during 2014. Restructuring charges related to this plan, associated with the Company’s Wheels, Repair & Parts segment, totaled $0.5 million and $1.4 million for the three and six months ended February 28, 2014 and were included in the Consolidated Statement of Income. The Company continues to evaluate the operations and currently estimates it may incur up to an additional $1.0 million in pre-tax cash restructuring charges in 2014. This amount does not include future non-cash gains or losses from facilities reductions, as these amounts are not presently determinable.

 

(In thousands)    Accrual at
August 31,
2013
     Charged to
Expense
     Paid or
Settled
     Accrual at
February 28,

2014
 

Employee termination costs

   $ 1,409       $ 1,234       $ 2,626       $ 17   

Other costs

     299         185         484         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,708       $ 1,419       $ 3,110       $ 17   
  

 

 

    

 

 

    

 

 

    

 

 

 

Note 3 – Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market. Work-in-process includes material, labor and overhead. The following table summarizes the Company’s inventory balance:

 

(In thousands)    February 28,
2014
    August 31,
2013
 

Manufacturing supplies and raw materials

   $ 206,929      $ 217,182   

Work-in-process

     55,647        48,990   

Finished goods

     48,578        54,839   

Excess and obsolete adjustment

     (4,760     (4,228
  

 

 

   

 

 

 
   $ 306,394      $ 316,783   
  

 

 

   

 

 

 

 

10


THE GREENBRIER COMPANIES, INC.

 

Note 4 – Intangibles and Other Assets, net

Intangible assets that are determined to have finite lives are amortized over their useful lives. Intangible assets with indefinite useful lives are not amortized and are periodically evaluated for impairment.

The following table summarizes the Company’s identifiable intangible and other assets balance:

 

(In thousands)    February 28,
2014
    August 31,
2013
 

Intangible assets subject to amortization:

    

Customer relationships

   $ 66,288      $ 66,288   

Accumulated amortization

     (29,449     (26,964

Other intangibles

     5,082        4,967   

Accumulated amortization

     (4,359     (4,162
  

 

 

   

 

 

 
     37,562        40,129   

Intangible assets not subject to amortization

     912        912   

Investment in unconsolidated affiliates

     11,753        10,739   

Nonqualified savings plan investments

     9,957        7,687   

Prepaid and other assets

     9,772        10,601   

Debt issuance costs, net

     6,714        7,802   

Assets held for sale

     503        1,101   
  

 

 

   

 

 

 

Total intangible and other assets

   $ 77,173      $ 78,971   
  

 

 

   

 

 

 

Amortization expense for the three and six months ended February 28, 2014 was $1.0 million and $2.6 million and for the three and six months ended February 28, 2013 was $1.1 million and $2.3 million. Amortization expense for the years ending August 31, 2014, 2015, 2016, 2017 and 2018 is expected to be $4.5 million, $3.8 million, $3.8 million, $3.7 million and $3.4 million.

 

11


THE GREENBRIER COMPANIES, INC.

 

Note 5 – Revolving Notes

Senior secured credit facilities, consisting of three components, aggregated to $360.2 million as of February 28, 2014.

As of February 28, 2014, a $290.0 million revolving line of credit secured by substantially all the Company’s assets in the U.S. not otherwise pledged as security for term loans and maturing June 2016, was available to provide working capital and interim financing of equipment, principally for the U.S. and Mexican operations. Advances under this facility bear interest at LIBOR plus 2.25% or Prime plus 1.25% depending on the type of borrowing. Available borrowings under the credit facility are generally based on defined levels of inventory, receivables, property, plant and equipment and leased equipment, as well as total debt to consolidated capitalization and fixed charges coverage ratios.

As of February 28, 2014, lines of credit totaling $20.2 million secured by certain of the Company’s European assets, with various variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.5%, were available for working capital needs of the European manufacturing operation. European credit facilities are continually being renewed. Currently these European credit facilities have maturities that range from December 2014 through June 2015.

As of February 28, 2014, the Company’s Mexican joint venture had two lines of credit totaling $50.0 million. The first line of credit provides up to $20.0 million and is secured by certain of the joint venture’s accounts receivable and inventory. Advances under this facility bear interest at LIBOR plus 2.5%. The Mexican joint venture will be able to draw amounts available under this facility through January 2015. The second line of credit provides up to $30.0 million and is fully guaranteed by each of the joint venture partners, including the Company. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican joint venture will be able to draw against this facility through January 2015.

As of February 28, 2014, outstanding borrowings under the senior secured credit facilities consisted of $6.2 million in letters of credit under the North American credit facility and $26.7 million outstanding under the Mexican joint venture credit facilities.

As of August 31, 2013, outstanding borrowings under the senior secured credit facilities consisted of $6.8 million in letters of credit under the North American credit facility and $48.2 million outstanding under the Mexican joint venture credit facilities.

Note 6 – Accounts Payable and Accrued Liabilities

 

(In thousands)    February 28,
2014
     August 31,
2013
 

Trade payables

   $ 186,286       $ 163,490   

Other accrued liabilities

     59,276         70,691   

Accrued payroll and related liabilities

     42,445         42,047   

Accrued maintenance

     13,617         11,420   

Accrued warranty

     10,673         12,128   

Income taxes payable

     4,077         13,094   

Other

     3,237         3,068   
  

 

 

    

 

 

 
   $ 319,611       $ 315,938   
  

 

 

    

 

 

 

 

12


THE GREENBRIER COMPANIES, INC.

 

Note 7 – Warranty Accruals

Warranty costs are estimated and charged to operations to cover a defined warranty period. The estimated warranty cost is based on the history of 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. The warranty accruals, included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets, are reviewed periodically and updated based on warranty trends and expirations of warranty periods.

Warranty accrual activity:

 

     Three Months Ended
February 28,
    Six Months Ended
February 28,
 
(In thousands)    2014     2013     2014     2013  

Balance at beginning of period

   $ 11,479      $ 10,102      $ 12,128      $ 9,221   

Charged to cost of revenue, net

     625        1,028        1,247        2,612   

Payments

     (1,511     (835     (2,983     (1,636

Currency translation effect

     80        (6     281        92   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 10,673      $ 10,289      $ 10,673      $ 10,289   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note 8 – Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following:

 

(In thousands)    Unrealized
Income
(Loss) on
Derivative
Financial
Instruments
    Foreign
Currency
Translation
Adjustment
    Other     Accumulated
Other
Comprehensive
Income (Loss)
 

Balance, August 31, 2013

   $ (1,053   $ (4,923   $ (528   $ (6,504

Other comprehensive income before reclassifications

     1,114        3,260        1        4,375   

Amounts reclassified from accumulated other comprehensive income

     317        —          —          317   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, February 28, 2014

   $ 378      $ (1,663   $ (527   $ (1,812
  

 

 

   

 

 

   

 

 

   

 

 

 

The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with presentation location, was as follows:

 

(In thousands)

  Three Months Ended
February 28, 2014
    Six Months Ended
February 28, 2014
   

Location

Gain (loss) on derivative financial instruments:

     

Foreign exchange contracts

  $ (89   $ (240   Revenue

Interest rate swap contracts

    409        829      Interest and foreign exchange
 

 

 

   

 

 

   
    320        589      Total before tax
    (140     (272   Tax expense
 

 

 

   

 

 

   
  $ 180      $ 317      Net of tax
 

 

 

   

 

 

   

 

13


THE GREENBRIER COMPANIES, INC.

 

Note 9 – 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
February 28,
     Six Months Ended
February 28,
 
(In thousands)    2014      2013      2014      2013  

Weighted average basic common shares outstanding (1)

     28,300         27,210         28,359         27,177   

Dilutive effect of warrants

     —           789         —           796   

Dilutive effect of convertible notes (2)

     6,045         6,045         6,045         6,045   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average diluted common shares outstanding

     34,345         34,044         34,404         34,018   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Restricted stock grants and restricted stock units, including some grants subject to certain performance criteria, are included in weighted average basic common shares outstanding when the Company is in a net earnings position.
(2) The dilutive effect of the 2018 Convertible notes are included as they were considered dilutive under the “if converted” method as further discussed below. The dilutive effect of the 2026 Convertible notes was excluded from the share calculations as the stock price for each period presented was less than the initial conversion price of $48.05 and therefore considered anti-dilutive.

Dilutive EPS for the three and six months ended February 28, 2014 and 2013 was calculated using the more dilutive of two approaches. The first approach includes the dilutive effect of outstanding warrants and shares underlying the 2026 Convertible notes in the share count using the treasury stock method. The second approach supplements the first by including the “if converted” effect of the 2018 Convertible notes issued in March 2011. Under the “if converted method” debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes. The 2026 Convertible notes would only be included in the calculation of both approaches if the current stock price is greater than the initial conversion price of $48.05 using the treasury stock method.

 

     Three Months Ended
February 28,
     Six Months Ended
February 28,
 
     2014      2013      2014      2013  

Net earnings attributable to Greenbrier

   $ 15,587       $ 13,839       $ 30,975       $ 24,266   

Add back:

           

Interest and debt issuance costs on the 2018 Convertible notes, net of tax

     1,416         1,416         2,832         2,846   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings before interest and debt issuance costs on convertible notes

   $ 17,003       $ 15,255       $ 33,807       $ 27,112   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average diluted common shares outstanding

     34,345         34,044         34,404         34,018   

Diluted earnings per share (1)

   $ 0.50       $ 0.45       $ 0.98       $ 0.80   

 

(1) Diluted earnings per share was calculated as follows:

Earnings before interest and debt issuance costs (net of tax) on convertible notes

Weighted average diluted common shares outstanding

 

14


THE GREENBRIER COMPANIES, INC.

 

Note 10 – Stock Based Compensation

The value of restricted stock and restricted stock unit awards is amortized as compensation expense from the date of grant through the earlier of the vesting period or the recipient’s eligible retirement date. Awards are expensed upon grant when the recipient’s eligible retirement date precedes the grant date.

For the three and six months ended February 28, 2014, $1.5 million and $2.9 million in compensation expense was recorded for restricted stock and restricted stock unit grants. For the three and six months ended February 28, 2013, $1.0 million and $2.9 million in compensation expense was recorded for restricted stock grants. Compensation expense related to restricted stock and restricted stock unit grants is recorded in Selling and administrative expense on the Consolidated Statements of Income.

Note 11 – 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 in Euro. 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 effective portion of unrealized gains and losses are recorded in accumulated other comprehensive income or loss.

At February 28, 2014 exchange rates, forward exchange contracts for the purchase of Polish Zloty and the sale of Euro aggregated $75.4 million. Adjusting the foreign currency exchange contracts to the fair value of the cash flow hedges at February 28, 2014 resulted in an unrealized pre-tax gain of $0.8 million that was recorded in accumulated other comprehensive loss. The fair value of the contracts is included in Accounts payable and accrued liabilities when there is a loss, or Accounts receivable when there is a gain, on the Consolidated Balance Sheets. As the contracts mature at various dates through October 2015, 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 loss would be reclassified to the current year’s results of operations in Interest and foreign exchange.

At February 28, 2014, an interest rate swap agreement had a notional amount of $40.9 million and matures March 2014. The fair value of this cash flow hedge at February 28, 2014 resulted in an unrealized pre-tax loss of $0.4 million. The loss is included in Accumulated other comprehensive loss and the fair value of the contract is included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets. As interest expense on the underlying debt is recognized, amounts corresponding to the interest rate swap are reclassified from Accumulated other comprehensive loss and charged or credited to interest expense. At February 28, 2014 interest rates, approximately $0.1 million would be reclassified to interest expense in the next 12 months.

Fair Values of Derivative Instruments

 

     Asset Derivatives      Liability Derivatives  
     Balance sheet    February 28,
2014
     August 31,
2013
     Balance sheet    February 28,
2014
     August 31,
2013
 
(In thousands)    location    Fair Value      Fair Value      location    Fair Value      Fair Value  

Derivatives designated as hedging instruments

              

Foreign forward exchange contracts

   Accounts
receivable
   $ 919       $ 819       Accounts payable
and accrued liabilities
   $ 27       $ 342   

Interest rate swap contracts

   Other assets      —           —         Accounts payable
and accrued liabilities
     408         1,250   
     

 

 

    

 

 

       

 

 

    

 

 

 
      $ 919       $ 819          $ 435       $ 1,592   
     

 

 

    

 

 

       

 

 

    

 

 

 

Derivatives not designated as hedging instruments

     

Foreign forward exchange contracts

   Accounts
receivable
   $ 493       $ 223       Accounts payable
and accrued liabilities
   $ —         $ 40   

 

15


THE GREENBRIER COMPANIES, INC.

 

The Effect of Derivative Instruments on the Statement of Income

 

Derivatives in cash flow hedging

relationships

   Location of gain recognized in
income on derivative
     Gain recognized in income on derivative
six months ended February 28,
 
            2014      2013  

Foreign forward exchange contract

     Interest and foreign exchange       $ 196       $ 148   

 

Derivatives in

cash flow

hedging

relationships

   Gain (loss) recognized
in  OCI on derivatives
(effective portion)

six months ended
February 28,
   

Location of

gain (loss)

reclassified

from

accumulated

OCI into

income

   Gain (loss) reclassified
from accumulated OCI
into income
(effective portion)
six months ended
February 28,
   

Location of

gain in income

on derivative

(ineffective

portion and

amount

excluded from

effectiveness

testing)

   Gain recognized on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
six months ended
February 28,
 
     2014      2013          2014     2013          2014      2013  

Foreign forward exchange contracts

   $ 1,388       $ 534      Revenue    $ 239      $ 1,735      Interest and foreign exchange    $ 384       $ 1,481   

Interest rate swap contracts

     13         (21   Interest and foreign exchange      (828     (828   Interest and foreign exchange      —           —     
  

 

 

    

 

 

      

 

 

   

 

 

      

 

 

    

 

 

 
   $ 1,401       $ 513         $ (589   $ 907         $ 384       $ 1,481   
  

 

 

    

 

 

      

 

 

   

 

 

      

 

 

    

 

 

 

Note 12 – Segment Information

Greenbrier operates in three reportable segments: Manufacturing; Wheels, Repair & Parts; 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 2013 Annual Report on Form 10-K. Performance for each of these segments is evaluated based on earnings (loss) from operations. Corporate includes selling and administrative costs not directly related to goods and services and certain costs that are intertwined among segments due to the Company’s integrated business. Greenbrier’s management does not allocate Interest and foreign exchange or Income tax benefit (expense) for either external or internal reporting purposes. Intersegment sales and transfers are valued as if the sales or transfers were to third parties. Related revenue and margin are eliminated in consolidation and therefore are not included in consolidated results in the Company’s Consolidated Financial Statements.

The information in the following table is derived directly from the segments’ internal financial reports used for corporate management purposes.

 

                                                                                         
For the three months ended February 28, 2014:              
     Revenue     Earnings (loss) from operations  
     External      Intersegment     Total     External     Intersegment     Total  

Manufacturing

   $ 347,755       $ —        $ 347,755      $ 30,112      $ —        $ 30,112   

Wheels, Repair & Parts

     136,540         2,307        138,847        3,574        42        3,616   

Leasing & Services

     17,921         5,414        23,335        9,636        5,420        15,056   

Eliminations

     —           (7,721     (7,721     —          (5,462     (5,462

Corporate

     —           —          —          (8,720     —          (8,720
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 502,216       $ —        $ 502,216      $  34,602      $ —        $ 34,602   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

16


THE GREENBRIER COMPANIES, INC.

 

For the six months ended February 28, 2014:

                                                                                         
     Revenue     Earnings (loss) from operations  
     External      Intersegment     Total     External     Intersegment     Total  

Manufacturing

   $ 707,228       $ —        $ 707,228      $ 68,426      $ —        $ 68,426   

Wheels, Repair & Parts

     249,941         3,960        253,901        3,201        73        3,274   

Leasing & Services

     35,402         8,289        43,691        18,305        8,289        26,594   

Eliminations

     —           (12,249     (12,249     —          (8,362     (8,362

Corporate

     —           —          —          (17,108     —          (17,108
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 992,571       $ —        $ 992,571      $ 72,824      $ —        $ 72,824   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
For the three months ended February 28, 2013:              
     Revenue     Earnings (loss) from operations  
     External      Intersegment     Total     External     Intersegment     Total  

Manufacturing

   $ 294,047       $ 253      $ 294,300      $ 21,542      $ 15      $ 21,557   

Wheels, Repair & Parts

     111,952         3,698        115,650        3,247        (191     3,056   

Leasing & Services

     17,167         2,455        19,622        9,036        2,454        11,490   

Eliminations

     —           (6,406     (6,406     —          (2,278     (2,278

Corporate

     —           —          —          (7,416     —          (7,416
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 423,166       $ —        $ 423,166      $ 26,409      $ —        $ 26,409   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
For the six months ended February 28, 2013:              
     Revenue     Earnings (loss) from operations  
     External      Intersegment     Total     External     Intersegment     Total  

Manufacturing

   $ 579,415       $ 7,202      $ 586,617      $ 37,044      $ (30   $ 37,014   

Wheels, Repair & Parts

     224,052         9,084        233,136        9,383        (254     9,129   

Leasing & Services

     35,073         6,847        41,920        17,737        6,846        24,583   

Eliminations

     —           (23,133     (23,133     —          (6,562     (6,562

Corporate

     —           —          —          (14,669     —          (14,669
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 838,540       $ —        $ 838,540      $ 49,495      $ —        $ 49,495   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     Total assets  
     February 28,      August 31,  
     2014      2013  

Manufacturing

   $ 406,620       $ 401,630   

Wheels, Repair & Parts

     317,921         318,483   

Leasing & Services

     437,043         463,381   

Unallocated

     152,891         106,247   
  

 

 

    

 

 

 
   $ 1,314,475       $ 1,289,741   
  

 

 

    

 

 

 

 

17


THE GREENBRIER COMPANIES, INC.

 

Note 13 – Commitments and Contingencies

The Company’s Portland, Oregon manufacturing facility is located adjacent to the Willamette River. The Company has entered into a Voluntary Cleanup Agreement with the Oregon Department of Environmental Quality (“DEQ”) 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 into the environment. The Company is also conducting groundwater remediation relating to a historical spill on the property which preceded its ownership.

In December 2000, the U.S. Environmental Protection Agency (EPA) has classified portions of the river bed of the Portland Harbor, including the portion fronting the Company’s manufacturing facility, as a federal “National Priority List” or “Superfund” site due to sediment contamination (the “Portland Harbor Site”). The Company and more than 140 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 it 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, including the Company (the “Lower Willamette Group” or “LWG”), have signed an Administrative Order on Consent (“AOC”) to perform a remedial investigation/feasibility study (“RI/FS”) of the Portland Harbor Site under EPA oversight, and several additional entities have not signed such consent, but are nevertheless contributing money to the effort. The EPA-mandated RI/FS is being conducted by the LWG and has cost over $100 million during a 13-year period. The Company has agreed to initially bear a percentage of the total costs incurred by the LWG in connection with the investigation. The Company’s aggregate expenditure has not been material during the 13-year period. Some or all of any such outlay may be recoverable from other responsible parties. The investigation is expected to continue for at least one more year.

Eighty-three parties, including the State of Oregon and the federal government, have entered into a non-judicial mediation process to try to allocate costs associated with the Portland Harbor site. Approximately 110 additional parties have signed tolling agreements related to such allocations. On April 23, 2009, the Company and the other AOC signatories filed suit against 69 other parties due to a possible limitations period for some such claims; Arkema Inc. et al v. A & C Foundry Products, Inc.et al, US District Court, District of Oregon, Case #3:09-cv-453-PK. All but 12 of these parties elected to sign tolling agreements and be dismissed without prejudice, and the case has now been stayed by the court, pending completion of the RI/FS. Although, as described below, the draft feasibility study has been submitted, the RI/FS will not be complete until the EPA approves it, which is not likely to occur until at least 2015.

A draft of the remedial investigation study was submitted to the EPA on October 27, 2009. The draft feasibility study was submitted to the EPA on March 30, 2012. The draft feasibility study evaluates several alternative cleanup approaches. The approaches submitted would take from 2 to 28 years with costs ranging from $169 million to $1.8 billion for cleanup of the entire Portland Harbor Site, depending primarily on the selected remedial action levels. The draft feasibility study suggests costs ranging from $9 million to $163 million for cleanup of the area of the Willamette River adjacent to the Company’s Portland, Oregon manufacturing facility, depending primarily on the selected remedial action level.

The draft feasibility study does not address responsibility for the costs of clean-up or allocate such costs among the potentially responsible parties, or define precise boundaries for the cleanup. Responsibility for funding and implementing the EPA’s selected cleanup will be determined after the issuance of the Record of Decision. Based on the investigation to date, the Company believes that it did not contribute in any material way to the damage of natural resources in the Portland Harbor Site and that the damage in the area of the Portland Harbor Site adjacent to its property precedes its ownership of the Portland, Oregon manufacturing facility. Because these environmental investigations are still underway, sufficient information is currently not available to determine the Company’s liability, if any, for the cost of any required remediation of the Portland Harbor Site or to estimate a range of potential loss. Based on the results of the pending investigations and future assessments of natural resource damages, the Company 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 Consolidated Financial Statements, or the value of its Portland property.

 

18


THE GREENBRIER COMPANIES, INC.

 

We have also signed an Order on Consent with DEQ to finalize the investigation of potential onsite sources of contamination that may have a release pathway to the Willamette River. Interim precautionary measures are also required in the order and those are in the process of being completed. Our aggregate expenditure has not been material during the 13-year period. Some or all of any such outlay may be recoverable from other responsible parties.

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. 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.

In accordance with customary business practices in Europe, the Company has $2.7 million in bank and third party warranty guarantee facilities, all of which have been utilized as of February 28, 2014. To date no amounts have been drawn under these guarantee facilities.

As of February 28, 2014, the Mexican joint venture had $28.5 million of third party debt outstanding, for which the Company had guaranteed approximately $20.2 million.

As of February 28, 2014, the Company had outstanding letters of credit aggregating $6.2 million associated with facility leases and workers compensation insurance.

 

19


THE GREENBRIER COMPANIES, INC.

 

Note 14 – Fair Value Measures

Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value, for this disclosure, is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

Level 1 -    observable inputs such as unadjusted quoted prices in active markets for identical instruments;
Level 2 -    inputs, other than the quoted market prices in active markets for similar instruments, which are observable, either directly or indirectly; and
Level 3 -    unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value on a recurring basis as of February 28, 2014 were:

 

(In thousands)    Total      Level 1      Level 2 (1)      Level 3  

Assets:

           

Derivative financial instruments

   $ 1,412       $ —         $ 1,412       $ —     

Nonqualified savings plan

investments

     9,957         9,957         —           —     

Cash equivalents

     15,007         15,007         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 26,376       $ 24,964       $ 1,412       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Derivative financial instruments

   $ 435       $ —         $ 435       $ —     

 

(1) Level 2 assets and liabilities include derivative financial instruments which are valued based on observable inputs. See Note 11 Derivative Instruments for further discussion.

Assets and liabilities measured at fair value on a recurring basis as of August 31, 2013 were:

 

(In thousands)    Total      Level 1      Level 2      Level 3  

Assets:

           

Derivative financial instruments

   $ 1,042       $ —         $ 1,042       $ —     

Nonqualified savings plan

investments

     7,687         7,687         —           —     

Cash equivalents

     1,004         1,004         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 9,733       $ 8,691       $ 1,042       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Derivative financial instruments

   $ 1,632       $ —         $ 1,632       $ —     

 

20


THE GREENBRIER COMPANIES, INC.

 

Note 15 – Variable Interest Entities

March 2012 Agreement

In March 2012, the Company purchased a 1% interest in three trusts (the “Trusts”) which are 99% owned by a third party. As of August 31, 2013, the Company had completed the sale of railcars to the Trusts for an aggregate value of $99.6 million.

As of February 28, 2014, the carrying amount of the Company’s investment in the Trusts is $1.0 million, which is recorded in Intangibles and other assets, net on the Consolidated Balance Sheets.

May 2013 Agreement

In May 2013, the Company purchased an 8% interest in an entity that owns a portfolio of railcar assets that are leased to third parties, the remaining 92% is owned by a third party. In the first quarter of 2014, the Company sold 204 railcars to this entity for $16.0 million resulting in a total of 468 railcars manufactured by the Company and subject to operating leases sold for $39.2 million to this entity as of February 28, 2014.

As of February 28, 2014, the carrying amount of the Company’s investment in this entity is $3.1 million which is recorded in Intangibles and other assets, net on the Consolidated Balance Sheets.

 

21


THE GREENBRIER COMPANIES, INC.

 

Note 16 – Guarantor/Non-Guarantor

The convertible senior notes due 2026 (the Notes) issued on May 22, 2006 are fully and unconditionally and jointly and severally guaranteed by substantially all of Greenbrier’s material 100% owned U.S. 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, Meridian Rail Holding Corp., Meridian Rail Acquisition Corp., Meridian Rail Mexico City Corp., Brandon Railroad LLC, Gunderson Specialty Products, LLC and Greenbrier Railcar Leasing, Inc. No other subsidiaries guarantee the Notes including Greenbrier Union Holdings I LLC, Greenbrier MUL Holdings I LLC, Greenbrier Leasing Limited, Greenbrier Europe B.V., Greenbrier Germany GmbH, WagonySwidnica S.A., Zaklad Naprawczy Taboru Kolejowego Olawa sp. z o.o., Zaklad Transportu Kolejowego SIARKOPOL sp. z o.o., Gunderson-Concarril, S.A. de C.V., Greenbrier Rail Services Canada, Inc., Mexico Meridianrail Services, S.A. de C.V., Greenbrier Railcar Services – Tierra Blanca S.A. de C.V., YSD Doors, S.A. de C.V., Gunderson-Gimsa S.A. de C.V., Greenbrier, S.A. de C.V. and Greenbrier-Gimsa, LLC.

The following represents the supplemental consolidating condensed financial information of Greenbrier and its guarantor and non-guarantor subsidiaries, as of February 28, 2014 and August 31, 2013, for the three and six months ended February 28, 2014 and 2013. The information is presented on the basis of Greenbrier accounting for its ownership of its wholly owned subsidiaries using the equity method of accounting. The equity method investment for each subsidiary is recorded by the parent in intangibles and other assets. Intercompany transactions of goods and services between the guarantor and non-guarantor subsidiaries are presented as if the sales or transfers were at fair value to third parties and eliminated in consolidation.

 

22


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Balance Sheet

February 28, 2014

(In thousands, unaudited)

 

     Parent      Combined
Guarantor
Subsidiaries
     Combined
Non-
Guarantor
Subsidiaries
     Eliminations     Consolidated  

Assets

             

Cash and cash equivalents

   $ 111,679       $ 33       $ 32,217       $ —        $ 143,929   

Restricted cash

     —           2,063         6,901         —          8,964   

Accounts receivable, net

     819         293,440         41,213         (186,662     148,810   

Inventories

     —           127,886         178,633         (125     306,394   

Leased railcars for syndication

     —           87,441         —           (2,784     84,657   

Equipment on operating leases, net

     —           280,654         3,896         (2,222     282,328   

Property, plant and equipment, net

     5,907         98,834         100,063         —          204,804   

Goodwill

     —           57,416         —           —          57,416   

Intangibles and other assets, net

     767,490         115,391         15,842         (821,550     77,173   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   $ 885,895       $ 1,063,158       $ 378,765       $ (1,013,343   $ 1,314,475   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Liabilities and Equity

             

Revolving notes

   $ —         $ —         $ 26,738       $ —        $ 26,738   

Accounts payable and accrued

liabilities

     176,002         182,254         149,654         (188,299     319,611   

Deferred income taxes

     8,390         85,421         —           (8,963     84,848   

Deferred revenue

     78         13,292         859         43        14,272   

Notes payable

     244,856         124,822         1,749         —          371,427   

Total equity - Greenbrier

     456,569         657,369         159,546         (816,915     456,569   

Noncontrolling interest

     —           —           40,219         791        41,010   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total equity

     456,569         657,369         199,765         (816,124     497,579   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   $ 885,895       $ 1,063,158       $ 378,765       $ (1,013,343   $ 1,314,475   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

23


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Statement of Income

For the three months ended February 28, 2014

(In thousands, unaudited)

 

     Parent     Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenue

          

Manufacturing

   $ —        $ 219,195      $ 305,328      $ (176,768   $ 347,755   

Wheels, Repair & Parts

     —          138,191        —          (1,651     136,540   

Leasing & Services

     367        17,395        1        158        17,921   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     367        374,781        305,329        (178,261     502,216   

Cost of revenue

          

Manufacturing

     —          200,464        278,474        (172,366     306,572   

Wheels, Repair & Parts

     —          129,570        —          (1,630     127,940   

Leasing & Services

     —          9,874        —          (21     9,853   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —          339,908        278,474        (174,017     444,365   

Margin

     367        34,873        26,855        (4,244     57,851   

Selling and administrative

     9,111        9,944        8,920        150        28,125   

Net gain on disposition of equipment

     —          (4,971     (272     (173     (5,416

Restructuring charges

     —          540        —          —          540   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) from operations

     (8,744     29,360        18,207        (4,221     34,602   

Other costs

          

Interest and foreign exchange

     2,899        959        241        —          4,099   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before income taxes

and earnings (loss) from unconsolidated affiliates

     (11,643     28,401        17,966        (4,221     30,503   

Income tax (expense) benefit

     4,281        (10,100     (5,405     1,341        (9,883
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before earnings (loss) from unconsolidated affiliates

     (7,362     18,301        12,561        (2,880     20,620   

Earnings (loss) from unconsolidated affiliates

     22,949        1,643        45        (24,704     (67
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss)

     15,587        19,944        12,606        (27,584     20,553   

Net (earnings) loss attributable to noncontrolling interest

     —          —          (7,269     2,303        (4,966
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) attributable to Greenbrier

   $ 15,587      $ 19,944      $ 5,337      $ (25,281   $ 15,587   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

24


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Statement of Income

For the six months ended February 28, 2014

(In thousands, unaudited)

 

     Parent     Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenue

          

Manufacturing

   $ —        $ 405,199      $ 617,639      $ (315,610   $ 707,228   

Wheels, Repair & Parts

     —          252,912        —          (2,971     249,941   

Leasing & Services

     757        34,330        1        314        35,402   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     757        692,441        617,640        (318,267     992,571   

Cost of revenue

          

Manufacturing

     —          368,001        560,997        (310,986     618,012   

Wheels, Repair & Parts

     —          238,857        —          (2,942     235,915   

Leasing & Services

     —          19,276        —          (42     19,234   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —          626,134        560,997        (313,970     873,161   

Margin

     757        66,307        56,643        (4,297     119,410   

Selling and administrative

     17,711        19,157        17,067        299        54,234   

Net gain on disposition of equipment

     —          (8,145     (615     (307     (9,067

Restructuring charges

     —          1,419        —          —          1,419   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) from operations

     (16,954     53,876        40,191        (4,289     72,824   

Other costs

          

Interest and foreign exchange

     5,833        1,763        1,247        —          8,843   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before income taxes

and earnings (loss) from unconsolidated affiliates

     (22,787     52,113        38,944        (4,289     63,981   

Income tax (expense) benefit

     7,435        (19,553     (9,656     1,369        (20,405
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before earnings (loss) from unconsolidated affiliates

     (15,352     32,560        29,288        (2,920     43,576   

Earnings (loss) from unconsolidated affiliates

     46,327        2,445        77        (48,875     (26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss)

     30,975        35,005        29,365        (51,795     43,550   

Net (earnings) loss attributable to noncontrolling interest

     —          —          (14,532     1,957        (12,575
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) attributable to Greenbrier

   $ 30,975      $ 35,005      $ 14,833      $ (49,838   $ 30,975   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

25


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Consolidating Statement of Comprehensive Income (Loss)

For the three months ended February 28, 2014

 

(In thousands)    Parent      Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Net earnings (loss)

   $ 15,587       $ 19,944      $ 12,606      $ (27,584   $ 20,553   

Other comprehensive income (loss)

           

Translation adjustment

     —           (33     844        —          811   

Reclassification of

derivative financial

instruments recognized in

net earnings (loss)

     —           253        (73     —          180   

Unrealized gain on

derivative financial

instruments

     —           345        7        —          352   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     —           565        778        —          1,343   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     15,587         20,509        13,384        (27,584     21,896   

Comprehensive (income) loss attributable to noncontrolling interest

     —           —          (7,289     2,303        (4,986
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Greenbrier

   $ 15,587       $ 20,509      $ 6,095      $ (25,281   $ 16,910   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

26


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Consolidating Statement of Comprehensive Income (Loss)

For the six months ended February 28, 2014

 

(In thousands)    Parent      Combined
Guarantor
Subsidiaries
     Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Net earnings (loss)

   $ 30,975       $ 35,005       $ 29,365      $ (51,795   $ 43,550   

Other comprehensive income (loss)

            

Translation adjustment

     —           12         3,310        —          3,322   

Reclassification of

derivative financial

instruments recognized in

net earnings (loss)

     —           511         (194     —          317   

Unrealized gain on

derivative financial

instruments

     —           1,106         8        —          1,114   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     —           1,629         3,124        —          4,753   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     30,975         36,634         32,489        (51,795     48,303   

Comprehensive (income) loss attributable to noncontrolling interest

     —           —           (14,593     1,957        (12,636
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Greenbrier

   $ 30,975       $ 36,634       $ 17,896      $ (49,838   $ 35,667   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

27


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Statement of Cash Flows

For the six months ended February 28, 2014

(In thousands, unaudited)

 

(In thousands)    Parent     Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Cash flows from operating activities:

          

Net earnings (loss)

   $ 30,975      $ 35,005      $ 29,365      $ (51,795   $ 43,550   

Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:

          

Deferred income taxes

     296        (1,189     (555     —          (1,448

Depreciation and amortization

     965        14,113        5,717        (42     20,753   

Net gain on disposition of equipment

     —          (8,145     (615     (307     (9,067

Stock based compensation expense

     2,862        —          —          —          2,862   

Other

     —          313        17        2,438        2,768   

Decrease (increase) in assets:

          

Accounts receivable

     36,804        (76,172     14,061        32,207        6,900   

Inventories

     —          20,361        (11,244     30        9,147   

Leased railcars for syndication

     —          (16,040     —          2,437        (13,603

Other

     (1,466     2,160        (557     (69     68   

Increase (decrease) in liabilities:

          

Accounts payable and accrued liabilities

     (19,558     62,844        (9,923     (33,850     (487

Deferred revenue

     (78     4,697        755        3        5,377   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     50,800        37,947        27,021        (48,948     66,820   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

          

Proceeds from sales of assets

     —          27,897        774        —          28,671   

Capital expenditures

     (2,902     (5,101     (8,526     —          (16,529

Decrease (increase) in restricted cash

     —          (156     (1     —          (157

Investment in and net advances to unconsolidated affiliates

     (46,396     (2,552     (1,253     48,948        (1,253
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (49,298     20,088        (9,006     48,948        10,732   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

          

Proceeds from revolving notes with maturities longer than 90 days

     —          —          31,738        —          31,738   

Repayment of revolving notes with maturities longer than 90 days

     —          —          (53,209     —          (53,209

Repayments of notes payable

     —          (2,041     (421     —          (2,462

Intercompany advances

     55,783        (56,474     691        —          —     

Repurchase of stock

     (8,889     —          —          —          (8,889

Investment by joint venture partner

     —          —          419        —          419   

Cash distribution to joint venture partner

     —          —          (1,604     —          (1,604

Excess tax benefit from restricted stock awards

     110        —          —          —          110   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     47,004        (58,515     (22,386     —          (33,897
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes

     —          488        2,351        —          2,839   

Increase (decrease) in cash and cash equivalents

     48,506        8        (2,020     —          46,494   

Cash and cash equivalents

          

Beginning of period

     63,173        25        34,237        —          97,435   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

   $ 111,679      $ 33      $ 32,217      $ —        $ 143,929   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

28


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Balance Sheet

August 31, 2013

(In thousands)

 

     Parent      Combined
Guarantor
Subsidiaries
     Combined
Non-
Guarantor
Subsidiaries
     Eliminations     Consolidated  

Assets

             

Cash and cash equivalents

   $ 63,173       $ 25       $ 34,237       $ —        $ 97,435   

Restricted cash

     —           1,907         6,900         —          8,807   

Accounts receivable, net

     37,623         217,268         54,412         (154,455     154,848   

Inventories

     —           151,023         165,855         (95     316,783   

Leased railcars for syndication

     —           68,827         —           (347     68,480   

Equipment on operating leases, net

     —           304,234         3,809         (2,575     305,468   

Property, plant and equipment, net

     2,112         103,315         96,106         —          201,533   

Goodwill

     —           57,416         —           —          57,416   

Intangibles and other assets, net

     716,029         118,541         13,515         (769,114     78,971   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   $ 818,937       $ 1,022,556       $ 374,834       $ (926,586   $ 1,289,741   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Liabilities and Equity

             

Revolving notes

   $ —         $ —         $ 48,209       $ —        $ 48,209   

Accounts payable and accrued liabilities

     137,631         178,662         154,096         (154,451     315,938   

Deferred income taxes

     8,093         86,610         —           (8,663     86,040   

Deferred revenue

     155         8,546         98         39        8,838   

Notes payable

     244,856         126,863         2,170         —          373,889   

Total equity - Greenbrier

     428,202         621,875         141,945         (763,820     428,202   

Noncontrolling interest

     —           —           28,316         309        28,625   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total equity

     428,202         621,875         170,261         (763,511     456,827   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   $ 818,937       $ 1,022,556       $ 374,834       $ (926,586   $ 1,289,741   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

29


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Statement of Income

For the three months ended February 28, 2013

(In thousands, unaudited)

 

     Parent     Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenue

          

Manufacturing

   $ —        $ 196,291      $ 209,691      $ (111,935   $ 294,047   

Wheels, Repair & Parts

     —          114,506        —          (2,554     111,952   

Leasing & Services

     386        16,789        1        (9     17,167   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     386        327,586        209,692        (114,498     423,166   

Cost of revenue

          

Manufacturing

     —          177,488        197,364        (112,202     262,650   

Wheels, Repair & Parts

     —          105,848        —          (2,714     103,134   

Leasing & Services

     —          9,137        —          (30     9,107   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —          292,473        197,364        (114,946     374,891   

Margin

     386        35,113        12,328        448        48,275   

Selling and administrative expense

     10,325        7,407        7,210        —          24,942   

Net gain on disposition of equipment

     —          (2,523     (553     —          (3,076
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) from operations

     (9,939     30,229        5,671        448        26,409   

Other costs

          

Interest and foreign exchange

     4,467        967        973        (85     6,322   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates

     (14,406     29,262        4,698        533        20,087   

Income tax (expense) benefit

     6,916        (11,289     (973     (244     (5,590
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before earnings (loss) from unconsolidated affiliates

     (7,490     17,973        3,725        289        14,497   

Earnings (loss) from unconsolidated affiliates

     21,329        402        7        (21,843     (105
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss)

     13,839        18,375        3,732        (21,554     14,392   

Net (earnings) loss attributable to noncontrolling interest

     —          —          (652     99        (553
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) attributable to Greenbrier

   $ 13,839      $ 18,375      $ 3,080      $ (21,455   $ 13,839   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

30


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Condensed Consolidating Statement of Operations

For the six months ended February 28, 2013

(In thousands)

 

     Parent     Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenue

          

Manufacturing

   $ —        $ 329,802      $ 439,199      $ (189,585   $ 579,416   

Wheels, Repair & Parts

     —          230,730        —          (6,679     224,051   

Leasing & Services

     477        34,612        1        (17     35,073   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     477        595,144        439,200        (196,281     838,540   

Cost of revenue

          

Manufacturing

     —          301,873        412,534        (193,265     521,142   

Wheels, Repair & Parts

     —          211,507        —          (6,897     204,610   

Leasing & Services

     —          16,787        —          (52     16,735   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —          530,167        412,534        (200,214     742,487   

Margin

     477        64,977        26,666        3,933        96,053   

Selling and administrative expense

     20,111        15,538        15,393        —          51,042   

Net gain on disposition of equipment

     —          (3,567     (553     (364     (4,484
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) from operations

     (19,634     53,006        11,826        4,297        49,495   

Other costs

          

Interest and foreign exchange

     8,083        1,869        2,471        (201     12,222   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates

     (27,717     51,137        9,355        4,498        37,273   

Income tax (expense) benefit

     12,685        (19,370     (2,396     (1,095     (10,176
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) before earnings (loss) from unconsolidated affiliates

     (15,032     31,767        6,959        3,403        27,097   

Earnings (loss) from unconsolidated affiliates

     39,298        438        16        (39,897     (145
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss)

     24,266        32,205        6,975        (36,494     26,952   

Net (earnings) loss attributable to noncontrolling interest

     —          —          (1,187     (1,499     (2,686
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) attributable to Greenbrier

   $ 24,266      $ 32,205      $ 5,788      $ (37,993   $ 24,266   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

31


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Consolidating Statement of Comprehensive Income (Loss)

For the three months ended February 28, 2013

 

(In thousands)    Parent      Combined
Guarantor
Subsidiaries
     Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Net earnings (loss)

   $ 13,839       $ 18,375       $ 3,732      $ (21,554   $ 14,392   

Other comprehensive income (loss)

            

Translation adjustment

     —           55         (150     —          (95

Reclassification of derivative financial instruments recognized in net earnings (loss)

     —           252         (531     —          (279

Unrealized gain (loss) on derivative financial instruments

     —           4         (795     —          (791
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     —           311         (1,476     —          (1,165
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     13,839         18,686         2,256        (21,554     13,227   

Comprehensive (income) loss attributable to noncontrolling interest

     —           —           (648     99        (549
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Greenbrier

   $ 13,839       $ 18,686       $ 1,608      $ (21,455   $ 12,678   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

32


THE GREENBRIER COMPANIES, INC.

 

The Greenbrier Companies, Inc.

Consolidating Statement of Comprehensive Income (Loss)

For the six months ended February 28, 2013

 

(In thousands)    Parent      Combined
Guarantor
Subsidiaries
    Combined
Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  

Net earnings (loss)

   $ 24,266       $ 32,205      $ 6,975      $ (36,494   $ 26,952   

Other comprehensive income (loss)

           

Translation adjustment

     —           222        1,818        —          2,040   

Reclassification of derivative financial instruments recognized in net earnings (loss)

     —           511        (1,406     —          (895

Unrealized loss on derivative financial instruments

     —           (13     521        —          508   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     —           720        933        —          1,653   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     24,266         32,925        7,908        (36,494     28,605   

Comprehensive (income) loss attributable to noncontrolling interest

     —           —