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 May 31, 2015
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the transition period from
to
Commission File No. 1-13146
THE
GREENBRIER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
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Oregon |
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93-0816972 |
(State of
Incorporation) |
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(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
(Registrants 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):
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Large accelerated filer |
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x |
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Accelerated filer |
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¨ |
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Non-accelerated filer |
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¨ |
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Smaller reporting company |
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¨ |
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 registrants common stock, without par value, outstanding on June 25, 2015 was 29,400,115 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 Quarterly Report 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:
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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);
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ability to renew, maintain or obtain sufficient credit facilities and financial guarantees on acceptable terms; |
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ability to utilize beneficial tax strategies; |
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ability to grow our businesses; |
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ability to obtain lease and sales contracts which provide adequate protection against changes in interest rates and increased costs of materials and components; |
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ability to obtain adequate insurance coverage at acceptable rates; |
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ability to convert backlog of railcar orders and lease commitments; |
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ability to obtain adequate certification and licensing of products; and |
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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:
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fluctuations in demand for newly manufactured railcars or marine barges; |
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fluctuations in demand for wheels, repair & parts; |
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delays in receipt of orders, risks that contracts may be canceled or modified during their term, not renewed, may be unenforceable or breached by the customer and that customers may not purchase the amount of products
or services under the contracts as anticipated; |
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ability to maintain sufficient availability of credit facilities and to maintain compliance with or to obtain appropriate amendments to covenants under various credit agreements; |
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domestic and global economic conditions including such matters as embargoes or quotas; |
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U.S., Mexican and other global political or security conditions including such matters as terrorism, war, civil disruption and crime; |
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sovereign risk related to international governments that includes, but is not limited to, governments stopping payments or repudiating their contracts, nationalizing private businesses and assets or altering foreign
exchange regulations; |
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growth or reduction in the surface transportation industry; |
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ability to maintain good relationships with our labor force, third party labor providers and collective bargaining units representing our direct and indirect labor force; |
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ability to maintain good relationships with our customers and suppliers; |
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ability to renew or replace expiring customer contracts on satisfactory terms; |
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ability to obtain and execute suitable contracts for leased railcars for syndication; |
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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;
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delay or failure of acquired businesses or joint ventures, assets, start-up operations, or new products or services to compete successfully; |
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changes in product mix and the mix of revenue levels among reporting segments; |
2
THE GREENBRIER COMPANIES, INC.
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labor disputes, energy shortages or operating difficulties that might disrupt operations or the flow of cargo; |
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production difficulties and product delivery delays as a result of, among other matters, inefficiencies associated with expansion or the start-up of production lines and new facilities or increased production rates,
equipment failures, changing technologies, transfer of production between facilities or non-performance of alliance partners, subcontractors or suppliers; |
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lower than anticipated lease renewal rates, earnings on utilization based leases or residual values for leased equipment; |
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discovery of defects in railcars or services resulting in increased warranty costs or litigation; |
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physical damage, business interruption or product or service liability claims that exceed our insurance coverage; |
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commencement of and ultimate resolution or outcome of pending or future litigation and investigations; |
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natural disasters or severe weather patterns that may affect either us, our suppliers or our customers; |
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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; |
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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;
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industry overcapacity and our manufacturing capacity utilization; |
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decreases or write-downs in carrying value of inventory, goodwill, intangibles or other assets due to impairment; |
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severance or other costs or charges associated with lay-offs, shutdowns, or reducing the size and scope of operations; |
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changes in future maintenance or warranty requirements; |
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ability to adjust to the cyclical nature of the industries in which we operate; |
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changes in interest rates and financial impacts from interest rates; |
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ability and cost to maintain and renew operating permits; |
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actions or failures to act by various regulatory agencies including potential environmental remediation obligations or changing tank car or other rail car regulation; |
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changes in commodity prices, including oil and gas; |
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risks associated with our intellectual property rights or those of third parties, including infringement, maintenance, protection, validity, enforcement and continued use of such rights; |
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expansion of warranty and product support terms beyond those which have traditionally prevailed in the rail supply industry; |
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availability of a trained work force at a reasonable cost and with reasonable terms of employment; |
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availability and/or price of essential raw materials, specialties or components, including steel castings, to permit manufacture of units on order; |
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failure to successfully integrate joint ventures or acquired businesses; |
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discovery of previously unknown liabilities associated with acquired businesses; |
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failure of or delay in implementing and using new software or other technologies; |
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the impact of cybersecurity risks and the costs of mitigating and responding to a data security breach; |
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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; |
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credit limitations upon our ability to maintain effective hedging programs; |
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financial impacts from currency fluctuations and currency hedging activities in our worldwide operations; |
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changes in legislation and increased costs related to health care; and |
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fraud, misconduct by employees and potential exposure to liabilities under the Foreign Corrupt Practices Act and other anti-corruption laws and regulations. |
3
THE GREENBRIER COMPANIES, INC.
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.
4
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. |
Condensed Financial Statements |
Consolidated Balance Sheets
(In thousands, unaudited)
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May 31, 2015 |
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August 31, 2014 |
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Assets |
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Cash and cash equivalents |
|
$ |
122,783 |
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$ |
184,916 |
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Restricted cash |
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8,912 |
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20,140 |
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Accounts receivable, net |
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214,890 |
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199,679 |
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Inventories |
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426,655 |
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305,656 |
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Leased railcars for syndication |
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213,197 |
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125,850 |
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Equipment on operating leases, net |
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257,962 |
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258,848 |
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Property, plant and equipment, net |
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285,570 |
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243,698 |
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Investment in unconsolidated affiliates |
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91,217 |
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69,359 |
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Goodwill |
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43,265 |
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43,265 |
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Intangibles and other assets, net |
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62,664 |
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65,757 |
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$ |
1,727,115 |
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$ |
1,517,168 |
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Liabilities and Equity |
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Revolving notes |
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$ |
92,507 |
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$ |
13,081 |
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Accounts payable and accrued liabilities |
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405,544 |
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383,289 |
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Deferred income taxes |
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|
75,572 |
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81,383 |
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Deferred revenue |
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|
24,209 |
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20,603 |
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Notes payable |
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346,279 |
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445,091 |
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Commitments and contingencies (Note 13) |
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Equity: |
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Greenbrier |
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Preferred stock - without par value; 25,000 shares authorized; none outstanding |
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Common stock - without par value; 50,000 shares authorized; 28,925 and 27,364 shares outstanding at May 31, 2015 and
August 31, 2014 |
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Additional paid-in capital |
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293,407 |
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|
235,763 |
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Retained earnings |
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|
396,250 |
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|
282,559 |
|
Accumulated other comprehensive loss |
|
|
(17,261 |
) |
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|
(6,932 |
) |
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Total equity Greenbrier |
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672,396 |
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511,390 |
|
Noncontrolling interest |
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|
110,608 |
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|
62,331 |
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Total equity |
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783,004 |
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573,721 |
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$ |
1,727,115 |
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$ |
1,517,168 |
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The accompanying notes are an integral part of these financial statements
5
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Income
(In thousands, except per share amounts, unaudited)
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Three Months Ended May 31, |
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Nine Months Ended May 31, |
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2015 |
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2014 |
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2015 |
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2014 |
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Revenue |
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Manufacturing |
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$ |
593,376 |
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$ |
425,583 |
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$ |
1,478,566 |
|
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$ |
1,132,811 |
|
Wheels & Parts |
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|
97,407 |
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|
140,663 |
|
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286,671 |
|
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390,604 |
|
Leasing & Services |
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23,823 |
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27,039 |
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74,576 |
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62,441 |
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714,606 |
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593,285 |
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|
1,839,813 |
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1,585,856 |
|
Cost of revenue |
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Manufacturing |
|
|
465,658 |
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351,829 |
|
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1,184,922 |
|
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|
969,841 |
|
Wheels & Parts |
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|
89,645 |
|
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|
129,825 |
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259,285 |
|
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|
365,740 |
|
Leasing & Services |
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|
10,017 |
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|
14,856 |
|
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|
32,942 |
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34,090 |
|
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565,320 |
|
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496,510 |
|
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1,477,149 |
|
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|
1,369,671 |
|
Margin |
|
|
149,286 |
|
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|
96,775 |
|
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|
362,664 |
|
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|
216,185 |
|
Selling and administrative expense |
|
|
45,595 |
|
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|
34,800 |
|
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|
112,223 |
|
|
|
89,034 |
|
Net gain on disposition of equipment |
|
|
(720 |
) |
|
|
(5,619 |
) |
|
|
(924 |
) |
|
|
(14,686 |
) |
Restructuring charges |
|
|
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|
56 |
|
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|
1,475 |
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Earnings from operations |
|
|
104,411 |
|
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|
67,538 |
|
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|
251,365 |
|
|
|
140,362 |
|
Other costs |
|
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Interest and foreign exchange |
|
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4,285 |
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|
5,437 |
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|
9,355 |
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|
14,280 |
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Earnings before income taxes and earnings from unconsolidated affiliates |
|
|
100,126 |
|
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|
62,101 |
|
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|
242,010 |
|
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|
126,082 |
|
Income tax expense |
|
|
(30,783 |
) |
|
|
(16,303 |
) |
|
|
(76,209 |
) |
|
|
(36,708 |
) |
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Earnings before earnings from unconsolidated affiliates |
|
|
69,343 |
|
|
|
45,798 |
|
|
|
165,801 |
|
|
|
89,374 |
|
Earnings from unconsolidated affiliates |
|
|
982 |
|
|
|
298 |
|
|
|
1,552 |
|
|
|
272 |
|
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Net earnings |
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|
70,325 |
|
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|
46,096 |
|
|
|
167,353 |
|
|
|
89,646 |
|
Net earnings attributable to noncontrolling interest |
|
|
(27,514 |
) |
|
|
(12,508 |
) |
|
|
(41,405 |
) |
|
|
(25,083 |
) |
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Net earnings attributable to Greenbrier |
|
$ |
42,811 |
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|
$ |
33,588 |
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|
$ |
125,948 |
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$ |
64,563 |
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Basic earnings per common share |
|
$ |
1.54 |
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$ |
1.20 |
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$ |
4.58 |
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$ |
2.29 |
|
Diluted earnings per common share |
|
$ |
1.33 |
|
|
$ |
1.03 |
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$ |
3.91 |
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$ |
2.01 |
|
Weighted average common shares: |
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Basic |
|
|
27,842 |
|
|
|
27,956 |
|
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|
27,514 |
|
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|
28,223 |
|
Diluted |
|
|
33,000 |
|
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|
34,001 |
|
|
|
33,262 |
|
|
|
34,268 |
|
Dividends declared per common share |
|
$ |
0.15 |
|
|
$ |
|
|
|
$ |
0.45 |
|
|
$ |
|
|
The accompanying notes are an integral part of these financial statements
6
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Comprehensive Income
(In thousands, unaudited)
|
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Three Months Ended May 31, |
|
|
Nine Months Ended May 31, |
|
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|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net earnings |
|
$ |
70,325 |
|
|
$ |
46,096 |
|
|
$ |
167,353 |
|
|
$ |
89,646 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
|
(1,299 |
) |
|
|
80 |
|
|
|
(10,990 |
) |
|
|
3,402 |
|
Reclassification of derivative financial instruments recognized in net earnings
1 |
|
|
(254 |
) |
|
|
4 |
|
|
|
417 |
|
|
|
321 |
|
Unrealized gain (loss) on derivative financial instruments 2 |
|
|
107 |
|
|
|
(659 |
) |
|
|
(7 |
) |
|
|
454 |
|
Other (net of tax effect) |
|
|
93 |
|
|
|
(4 |
) |
|
|
99 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,353 |
) |
|
|
(579 |
) |
|
|
(10,481 |
) |
|
|
4,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
68,972 |
|
|
|
45,517 |
|
|
|
156,872 |
|
|
|
93,820 |
|
Comprehensive income attributable to noncontrolling interest |
|
|
(27,497 |
) |
|
|
(12,501 |
) |
|
|
(41,253 |
) |
|
|
(25,137 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Greenbrier |
|
$ |
41,475 |
|
|
$ |
33,016 |
|
|
$ |
115,619 |
|
|
$ |
68,683 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
1 |
Net of tax of effect of $0.04 million and $0.1 million for the three months ended May 31, 2015 and 2014 and $0.4 million and $0.4 million for the nine months ended May 31, 2015 and 2014. |
2 |
Net of tax of effect of $0.1 million and $0.5 million for the three months ended May 31, 2015 and 2014 and $0.6 million and $0.2 million for the nine months ended May 31, 2015 and 2014. |
The accompanying notes are an integral part of these financial statements
7
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 Loss |
|
|
Total Attributable to Greenbrier |
|
|
Attributable to Noncontrolling Interest |
|
|
Total Equity |
|
Balance September 1, 2014 |
|
|
27,364 |
|
|
$ |
235,763 |
|
|
$ |
282,559 |
|
|
$ |
(6,932 |
) |
|
$ |
511,390 |
|
|
$ |
62,331 |
|
|
$ |
573,721 |
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
125,948 |
|
|
|
|
|
|
|
125,948 |
|
|
|
41,405 |
|
|
|
167,353 |
|
Other comprehensive loss, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,329 |
) |
|
|
(10,329 |
) |
|
|
(152 |
) |
|
|
(10,481 |
) |
Noncontrolling interest adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,371 |
|
|
|
20,371 |
|
Purchase of noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(80 |
) |
|
|
(80 |
) |
Joint venture partner distribution declared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,267 |
) |
|
|
(13,267 |
) |
Restricted stock awards (net of cancellations) |
|
|
(19 |
) |
|
|
22,600 |
|
|
|
|
|
|
|
|
|
|
|
22,600 |
|
|
|
|
|
|
|
22,600 |
|
Unamortized restricted stock |
|
|
|
|
|
|
(24,394 |
) |
|
|
|
|
|
|
|
|
|
|
(24,394 |
) |
|
|
|
|
|
|
(24,394 |
) |
Restricted stock amortization |
|
|
|
|
|
|
13,176 |
|
|
|
|
|
|
|
|
|
|
|
13,176 |
|
|
|
|
|
|
|
13,176 |
|
Excess tax benefit from restricted stock awards |
|
|
|
|
|
|
2,964 |
|
|
|
|
|
|
|
|
|
|
|
2,964 |
|
|
|
|
|
|
|
2,964 |
|
Conversion of convertible notes, net of debt issuance costs |
|
|
2,471 |
|
|
|
91,749 |
|
|
|
|
|
|
|
|
|
|
|
91,749 |
|
|
|
|
|
|
|
91,749 |
|
Cash dividends |
|
|
|
|
|
|
|
|
|
|
(12,257 |
) |
|
|
|
|
|
|
(12,257 |
) |
|
|
|
|
|
|
(12,257 |
) |
Repurchase of stock |
|
|
(891 |
) |
|
|
(48,451 |
) |
|
|
|
|
|
|
|
|
|
|
(48,451 |
) |
|
|
|
|
|
|
(48,451 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance May 31, 2015 |
|
|
28,925 |
|
|
$ |
293,407 |
|
|
$ |
396,250 |
|
|
$ |
(17,261 |
) |
|
$ |
672,396 |
|
|
$ |
110,608 |
|
|
$ |
783,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
64,563 |
|
|
|
|
|
|
|
64,563 |
|
|
|
25,083 |
|
|
|
89,646 |
|
Other comprehensive income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,120 |
|
|
|
4,120 |
|
|
|
54 |
|
|
|
4,174 |
|
Noncontrolling interest adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,953 |
|
|
|
2,953 |
|
Investment by joint venture partner |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
419 |
|
|
|
419 |
|
Joint venture partner distribution declared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,077 |
) |
|
|
(5,077 |
) |
Restricted stock awards (net of cancellations and expense) |
|
|
46 |
|
|
|
11,599 |
|
|
|
|
|
|
|
|
|
|
|
11,599 |
|
|
|
|
|
|
|
11,599 |
|
Unamortized restricted stock |
|
|
|
|
|
|
(12,610 |
) |
|
|
|
|
|
|
|
|
|
|
(12,610 |
) |
|
|
|
|
|
|
(12,610 |
) |
Restricted stock amortization |
|
|
|
|
|
|
6,455 |
|
|
|
|
|
|
|
|
|
|
|
6,455 |
|
|
|
|
|
|
|
6,455 |
|
Excess tax benefit from restricted stock awards |
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
109 |
|
Repurchase of stock |
|
|
(641 |
) |
|
|
(26,293 |
) |
|
|
|
|
|
|
|
|
|
|
(26,293 |
) |
|
|
|
|
|
|
(26,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance May 31, 2014 |
|
|
27,489 |
|
|
$ |
239,124 |
|
|
$ |
239,405 |
|
|
$ |
(2,384 |
) |
|
$ |
476,145 |
|
|
$ |
52,057 |
|
|
$ |
528,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
8
THE GREENBRIER COMPANIES, INC.
Consolidated Statements of Cash Flows
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
|
2015 |
|
|
2014 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
167,353 |
|
|
$ |
89,646 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
(5,245 |
) |
|
|
(6,745 |
) |
Depreciation and amortization |
|
|
33,258 |
|
|
|
30,824 |
|
Net gain on disposition of equipment |
|
|
(924 |
) |
|
|
(14,686 |
) |
Stock based compensation expense |
|
|
13,176 |
|
|
|
6,454 |
|
Noncontrolling interest adjustments |
|
|
20,371 |
|
|
|
2,953 |
|
Other |
|
|
1,008 |
|
|
|
388 |
|
Increase in assets: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(8,769 |
) |
|
|
(26,226 |
) |
Inventories |
|
|
(124,906 |
) |
|
|
(21,722 |
) |
Leased railcars for syndication |
|
|
(90,914 |
) |
|
|
(25,420 |
) |
Other |
|
|
(1,666 |
) |
|
|
(2,491 |
) |
Increase in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
23,135 |
|
|
|
36,507 |
|
Deferred revenue |
|
|
3,680 |
|
|
|
12,258 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
29,557 |
|
|
|
81,740 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
|
4,628 |
|
|
|
39,515 |
|
Capital expenditures |
|
|
(75,892 |
) |
|
|
(34,522 |
) |
Decrease (increase) in restricted cash |
|
|
228 |
|
|
|
(661 |
) |
Investment in and advances to unconsolidated affiliates |
|
|
(29,923 |
) |
|
|
(1,253 |
) |
Other |
|
|
715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(100,244 |
) |
|
|
3,079 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net change in revolving notes with maturities of 90 days or less |
|
|
73,000 |
|
|
|
|
|
Proceeds from revolving notes with maturities longer than 90 days |
|
|
42,563 |
|
|
|
34,674 |
|
Repayments of revolving notes with maturities longer than 90 days |
|
|
(36,137 |
) |
|
|
(64,801 |
) |
Proceeds from issuance of notes payable |
|
|
|
|
|
|
200,000 |
|
Repayments of notes payable |
|
|
(5,504 |
) |
|
|
(126,821 |
) |
Debt issuance costs |
|
|
|
|
|
|
(382 |
) |
Repurchase of stock |
|
|
(48,451 |
) |
|
|
(26,293 |
) |
Dividends |
|
|
(12,069 |
) |
|
|
|
|
Decrease in restricted cash |
|
|
11,000 |
|
|
|
|
|
Cash distribution to joint venture partner |
|
|
(12,489 |
) |
|
|
(3,109 |
) |
Investment by joint venture partner |
|
|
|
|
|
|
419 |
|
Excess tax benefit from restricted stock awards |
|
|
2,964 |
|
|
|
109 |
|
Other |
|
|
(248 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
14,629 |
|
|
|
13,796 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
(6,075 |
) |
|
|
2,442 |
|
Increase (decrease) in cash and cash equivalents |
|
|
(62,133 |
) |
|
|
101,057 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Beginning of period |
|
|
184,916 |
|
|
|
97,435 |
|
|
|
|
|
|
|
|
|
|
End of period |
|
$ |
122,783 |
|
|
$ |
198,492 |
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for |
|
|
|
|
|
|
|
|
Interest |
|
$ |
13,509 |
|
|
$ |
12,816 |
|
Income taxes, net |
|
$ |
87,829 |
|
|
$ |
41,643 |
|
Non-cash activity |
|
|
|
|
|
|
|
|
Conversion of convertible notes, net of debt issuance costs |
|
$ |
91,749 |
|
|
$ |
|
|
Dividends declared and accrued in Accounts payable and accrued liabilities |
|
$ |
188 |
|
|
$ |
|
|
Transfer from Leased railcars for syndication to Equipment on operating leases, net |
|
$ |
3,313 |
|
|
$ |
|
|
Capital expenditures accrued in Accounts payable and accrued liabilities |
|
$ |
2,304 |
|
|
$ |
|
|
Transfer of Inventories to Leased railcars for syndication |
|
$ |
|
|
|
$ |
2,691 |
|
The accompanying notes are an integral part of these financial statements
9
THE GREENBRIER COMPANIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 Interim Financial Statements
The Condensed Consolidated Financial Statements of The Greenbrier Companies, Inc. and Subsidiaries (Greenbrier or the Company) as of
May 31, 2015 and for the three and nine months ended May 31, 2015 and 2014 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, operating results and cash flows for the periods indicated. The results of operations for the three and nine months ended May 31, 2015 are not necessarily indicative of the results to be expected for the
entire year ending August 31, 2015.
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 Companys 2014 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.
Prospective Accounting Changes In May 2014, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board
(IASB) jointly issued a converged standard on the recognition of revenue from contracts with customers. The issued guidance converges the criteria for reporting revenue, as well as requiring disclosures sufficient to describe the nature, amount,
timing, and uncertainty of revenue and cash flows arising from these contracts. Companies can transition to the standard either retrospectively or as a cumulative effective adjustment as of the date of adoption. The Company plans to adopt this
guidance beginning September 1, 2017. The Company is evaluating the impact of this standard as well as its method of adoption on its consolidated financial statements and disclosures.
In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03). The FASB issued
this update to simplify the presentation of debt issuance costs related to a recognized debt liability to present the debt issuance costs as a direct deduction from the carrying value of the debt liability rather than showing the debt issuance costs
as an asset. The guidance is limited to the presentation of debt issuance costs and does not impact the recognition and measurement. The new guidance is effective for fiscal years and interim periods within those years beginning after
December 15, 2015 with early adoption permitted and is required to be applied on a retrospective basis. The Company plans to adopt ASU 2015-03 beginning September 1, 2016. As the adoption of this new accounting standard will only amend
presentation and disclosure requirements, the adoption will not affect the Companys financial position or results of operations.
Share
Repurchase Programs In October 2013, the Board of Directors authorized the Company to repurchase up to $50 million of the Companys common stock. The Company completed this share repurchase program in October 2014. In October
2014, the Board of Directors authorized a new share repurchase program for the Company to repurchase up to an additional $50 million of the Companys common stock. In January 2015, the Board of Directors authorized a $25 million increase to the
October 2014 share repurchase program, bringing the total to $75 million. The new share repurchase program expires June 30, 2016, but may be modified, suspended or discontinued at any time without prior notice. Under the share repurchase
programs, 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 programs do not obligate the Company to acquire any specific number of shares in any period.
10
THE GREENBRIER COMPANIES, INC.
During the three and nine months ended May 31, 2015, the Company purchased a total of 28,363 and 891,041
shares for approximately $1.5 million and $48.5 million, respectively, under these share repurchase programs. As of May 31, 2015 the Company had $42.1 million available under the $75 million share repurchase program.
Note 2 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 Companys inventory balance:
|
|
|
|
|
|
|
|
|
(In thousands) |
|
May 31, 2015 |
|
|
August 31, 2014 |
|
Manufacturing supplies and raw materials |
|
$ |
323,164 |
|
|
$ |
235,903 |
|
Work-in-process |
|
|
62,668 |
|
|
|
48,853 |
|
Finished goods |
|
|
44,143 |
|
|
|
23,766 |
|
Excess and obsolete adjustment |
|
|
(3,320 |
) |
|
|
(2,866 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
426,655 |
|
|
$ |
305,656 |
|
|
|
|
|
|
|
|
|
|
Note 3 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 Companys identifiable intangible and
other assets balance:
|
|
|
|
|
|
|
|
|
(In thousands) |
|
May 31, 2015 |
|
|
August 31, 2014 |
|
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
Customer relationships |
|
$ |
65,023 |
|
|
$ |
65,023 |
|
Accumulated amortization |
|
|
(32,886 |
) |
|
|
(30,282 |
) |
Other intangibles |
|
|
3,426 |
|
|
|
3,699 |
|
Accumulated amortization |
|
|
(3,084 |
) |
|
|
(3,156 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
32,479 |
|
|
|
35,284 |
|
Intangible assets not subject to amortization |
|
|
912 |
|
|
|
912 |
|
Nonqualified savings plan investments |
|
|
12,666 |
|
|
|
10,223 |
|
Prepaid and other assets |
|
|
12,063 |
|
|
|
11,736 |
|
Debt issuance costs, net |
|
|
4,544 |
|
|
|
7,602 |
|
|
|
|
|
|
|
|
|
|
Total Intangible and other assets, net |
|
$ |
62,664 |
|
|
$ |
65,757 |
|
|
|
|
|
|
|
|
|
|
Amortization expense for the three and nine months ended May 31, 2015 was $0.9 million and $2.7 million and for the three
and nine months ended May 31, 2014 was $1.0 million and $3.6 million. Amortization expense for the years ending August 31, 2015, 2016, 2017, 2018 and 2019 is expected to be $3.6 million, $3.6 million, $3.6 million, $3.4 million and $3.4
million.
11
THE GREENBRIER COMPANIES, INC.
Note 4 Revolving Notes
Senior secured credit facilities, consisting of three components, aggregated to $346.2 million as of May 31, 2015.
As of May 31, 2015, a $290.0 million revolving line of credit, maturing June 2016, secured by substantially all the Companys assets in the U.S. not
otherwise pledged as security for term loans, 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 May 31, 2015, lines of credit totaling $16.2 million secured by certain of the
Companys European assets, with various variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.3%, 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 February 2016 through June 2017.
The Companys Mexican joint venture has two lines of credit totaling $40.0 million. The first line of credit provides up to $10.0 million and is secured
by certain of the joint ventures 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 June 2016. 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 2019.
As of May 31, 2015, outstanding commitments under the senior secured credit facilities consisted of
$49.8 million in letters of credit and $73.0 million in revolving notes under the North American credit facility and $19.5 million outstanding in revolving notes under the Mexican joint venture credit facilities.
As of August 31, 2014, outstanding commitments under the senior secured credit facilities consisted of $9.6 million in letters of credit under the North
American credit facility and $13.1 million outstanding in revolving notes under the Mexican joint venture credit facilities.
12
THE GREENBRIER COMPANIES, INC.
Note 5 Accounts Payable and Accrued Liabilities
|
|
|
|
|
|
|
|
|
(In thousands) |
|
May 31, 2015 |
|
|
August 31, 2014 |
|
Trade payables |
|
$ |
251,634 |
|
|
$ |
204,744 |
|
Other accrued liabilities |
|
|
64,189 |
|
|
|
66,421 |
|
Accrued payroll and related liabilities |
|
|
57,839 |
|
|
|
64,959 |
|
Accrued maintenance |
|
|
17,965 |
|
|
|
14,329 |
|
Accrued warranty |
|
|
10,198 |
|
|
|
9,340 |
|
Income taxes payable |
|
|
163 |
|
|
|
19,709 |
|
Other |
|
|
3,556 |
|
|
|
3,787 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
405,544 |
|
|
$ |
383,289 |
|
|
|
|
|
|
|
|
|
|
Note 6 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 May 31, |
|
|
Nine Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Balance at beginning of period |
|
$ |
9,188 |
|
|
$ |
10,673 |
|
|
$ |
9,340 |
|
|
$ |
12,128 |
|
Charged to cost of revenue, net |
|
|
2,036 |
|
|
|
170 |
|
|
|
3,982 |
|
|
|
1,418 |
|
Payments |
|
|
(994 |
) |
|
|
(1,208 |
) |
|
|
(2,797 |
) |
|
|
(4,191 |
) |
Currency translation effect |
|
|
(32 |
) |
|
|
83 |
|
|
|
(327 |
) |
|
|
363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
10,198 |
|
|
$ |
9,718 |
|
|
$ |
10,198 |
|
|
$ |
9,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7 Notes Payable
The Companys 3.5% convertible senior notes will mature on April 1, 2018, unless repurchased earlier by the Company or converted
in accordance with their terms. Holders may convert at their option at any time prior to the business day immediately preceding the stated maturity date. During 2015, $93.1 million in principal of the original $230.0 million was converted into
2.5 million shares of the Companys common stock which resulted in a principal balance of $136.9 million as of May 31, 2015. Associated debt issuance costs of $1.3 million were removed from Intangibles and other assets, net and
charged against additional paid in capital.
In March 2014, the Company refinanced approximately $125 million of existing senior term debt, due in March
2014 and May 2015, secured by a pool of leased railcars with new 6-year $200 million senior term debt also secured by a pool of leased railcars. The new debt bears a floating interest rate of LIBOR plus 1.75% with principal of $1.75 million paid
quarterly in arrears and a balloon payment of $160 million due at maturity. An interest rate swap agreement was entered into on 50% of the initial balance to swap the floating interest rate of LIBOR plus 1.75% to a fixed rate of 3.7375%.
13
THE GREENBRIER COMPANIES, INC.
Note 8 Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of tax effect as appropriate, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Unrealized Loss on Derivative Financial Instruments |
|
|
Foreign Currency Translation Adjustment |
|
|
Other |
|
|
Accumulated Other Comprehensive Loss |
|
Balance, August 31, 2014 |
|
$ |
(1,601 |
) |
|
$ |
(4,813 |
) |
|
$ |
(518 |
) |
|
$ |
(6,932 |
) |
Other comprehensive income (loss) before reclassifications |
|
|
(7 |
) |
|
|
(10,838 |
)1 |
|
|
99 |
|
|
|
(10,746 |
) |
Amounts reclassified from accumulated other comprehensive loss |
|
|
417 |
|
|
|
|
|
|
|
|
|
|
|
417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2015 |
|
$ |
(1,191 |
) |
|
$ |
(15,651 |
) |
|
$ |
(419 |
) |
|
$ |
(17,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Primarily relates to the foreign currency translation of the Companys Zloty functional currency operations in Poland to US Dollars. |
The amounts reclassified out of Accumulated other comprehensive loss into the Consolidated Statements of Income, with presentation location, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Nine Months Ended May 31, |
|
|
Financial Statement Location |
(In thousands) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
(Gain) loss on derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
$ |
(652 |
) |
|
$ |
(335 |
) |
|
$ |
(518 |
) |
|
$ |
(575 |
) |
|
Revenue |
Interest rate swap contracts |
|
|
442 |
|
|
|
446 |
|
|
|
1,349 |
|
|
|
1,275 |
|
|
Interest and foreign exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(210 |
) |
|
|
111 |
|
|
|
831 |
|
|
|
700 |
|
|
Total before tax |
|
|
|
(44 |
) |
|
|
(107 |
) |
|
|
(414 |
) |
|
|
(379 |
) |
|
Tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(254 |
) |
|
$ |
4 |
|
|
$ |
417 |
|
|
$ |
321 |
|
|
Net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
THE GREENBRIER COMPANIES, INC.
Note 9 Earnings Per Share
The shares used in the computation of the Companys basic and diluted earnings per common share are reconciled as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Nine Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Weighted average basic common shares outstanding (1) |
|
|
27,842 |
|
|
|
27,956 |
|
|
|
27,514 |
|
|
|
28,223 |
|
Dilutive effect of 2018 Convertible notes (2) |
|
|
5,155 |
|
|
|
6,045 |
|
|
|
5,745 |
|
|
|
6,045 |
|
Dilutive effect of 2026 Convertible notes (3) |
|
|
3 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding |
|
|
33,000 |
|
|
|
34,001 |
|
|
|
33,262 |
|
|
|
34,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 was included for the three and nine months ended May 31, 2015 and 2014 as they were considered dilutive under the if converted method as further
discussed below. |
(3) |
The dilutive effect of the 2026 Convertible notes was included for the three and nine months ended May 31, 2015 as the average stock price was greater than $48.05, as further described below. The effect of
the 2026 Convertible notes was excluded for the three and nine months ended May 31, 2014 as the average stock price was less than $48.05 and therefore was considered anti-dilutive. |
Dilutive EPS for the three and nine months ended May 31, 2015 and 2014 was calculated using the more dilutive of two approaches. The first approach
includes the dilutive effect of 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 are included in the calculation of both approaches using the treasury stock method when the average stock price is greater than the initial conversion price of $48.05.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Nine Months Ended May 31, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net earnings attributable to Greenbrier |
|
$ |
42,811 |
|
|
$ |
33,588 |
|
|
$ |
125,948 |
|
|
$ |
64,563 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and debt issuance costs on the 2018 Convertible notes, net of tax |
|
|
1,234 |
|
|
|
1,416 |
|
|
|
4,066 |
|
|
|
4,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest and debt issuance costs on convertible notes |
|
$ |
44,045 |
|
|
$ |
35,004 |
|
|
$ |
130,014 |
|
|
$ |
68,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding |
|
|
33,000 |
|
|
|
34,001 |
|
|
|
33,262 |
|
|
|
34,268 |
|
Diluted earnings per share (1) |
|
$ |
1.33 |
|
|
$ |
1.03 |
|
|
$ |
3.91 |
|
|
$ |
2.01 |
|
(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
15
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 recipients eligible retirement date. Awards are expensed upon grant when the recipients eligible retirement date precedes the grant date.
Compensation expense for restricted stock and restricted stock unit grants was $6.0 million and $13.2 million for the three and nine months ended May 31,
2015 and $3.6 million and $6.5 million for the three and nine months ended May 31, 2014. Compensation expense related to restricted stock and restricted stock unit grants is recorded in Selling and administrative expense and Cost of revenue 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 used to reduce the impact of changes in interest rates on certain debt. The Companys 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 is recorded in accumulated other comprehensive income or loss.
At May 31, 2015 exchange rates, forward exchange contracts for the purchase of Polish Zloty and the sale of Euro aggregated $73.7 million. The fair value
of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when there is a loss, or as Accounts receivable, net when there is a gain. As the contracts mature at various dates through February 2017,
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 years results of operations in Interest and foreign exchange.
At May 31, 2015, an interest rate swap agreement maturing in March 2020 had a notional amount of $96.5 million. 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 May 31, 2015 interest rates, approximately $1.7 million would be reclassified to interest expense in the next 12 months.
Fair Values of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
|
|
|
|
May 31, 2015 |
|
|
August 31, 2014 |
|
|
|
|
May 31, 2015 |
|
|
August 31, 2014 |
|
(In thousands) |
|
Balance sheet location |
|
Fair Value |
|
|
Fair Value |
|
|
Balance sheet location |
|
Fair Value |
|
|
Fair Value |
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
Foreign forward exchange contracts |
|
Accounts receivable, net |
|
$ |
1,271 |
|
|
$ |
129 |
|
|
Accounts payable and accrued liabilities |
|
$ |
177 |
|
|
$ |
704 |
|
Interest rate swap contracts |
|
Intangibles and other assets, net |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
2,525 |
|
|
|
1,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,271 |
|
|
$ |
129 |
|
|
|
|
$ |
2,702 |
|
|
$ |
1,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
Foreign forward exchange contracts |
|
Accounts receivable, net |
|
$ |
256 |
|
|
$ |
71 |
|
|
Accounts payable and accrued liabilities |
|
$ |
|
|
|
$ |
5 |
|
16
THE GREENBRIER COMPANIES, INC.
The Effect of Derivative Instruments on the Statements of Income
|
|
|
|
|
|
|
|
|
|
|
Derivatives in cash flow hedging relationships |
|
Location of gain (loss) recognized in income on derivatives |
|
Gain (loss) recognized in income on derivatives nine months ended May 31, |
|
|
|
|
|
2015 |
|
|
2014 |
|
Foreign forward exchange contract |
|
Interest and foreign exchange |
|
$ |
(22 |
) |
|
$ |
230 |
|
Interest rate swap contracts |
|
Interest and foreign exchange |
|
|
69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
47 |
|
|
$ |
230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives in cash flow hedging relationships |
|
Gain (loss) recognized in OCI on derivatives (effective portion) nine months ended May 31, |
|
|
Location of gain (loss) reclassified from accumulated OCI into income |
|
Gain (loss) reclassified from accumulated OCI into income (effective portion) nine months ended May 31, |
|
|
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) nine months ended May 31, |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
2015 |
|
|
2014 |
|
Foreign forward exchange contracts |
|
$ |
1,867 |
|
|
$ |
1,558 |
|
|
Revenue |
|
$ |
518 |
|
|
$ |
575 |
|
|
Interest and foreign exchange |
|
$ |
1,024 |
|
|
$ |
684 |
|
Interest rate swap contracts |
|
|
(2,640 |
) |
|
|
(1,281 |
) |
|
Interest and foreign exchange |
|
|
(1,349 |
) |
|
|
(1,275 |
) |
|
Interest and foreign exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(773 |
) |
|
$ |
277 |
|
|
|
|
$ |
(831 |
) |
|
$ |
(700 |
) |
|
|
|
$ |
1,024 |
|
|
$ |
684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 12 Segment Information
Through July 18, 2014, Greenbrier operated in three reportable segments: Manufacturing; Wheels, Repair & Parts; and
Leasing & Services. On July 18, 2014, the Company completed the formation of GBW, an unconsolidated 50/50 joint venture with Watco which became the Companys fourth reportable segment (GBW Joint Venture) upon formation. The
Wheels & Parts segment (previously known as Wheels, Repair & Parts through 2014) included the results of operations for its repair, refurbishment, maintenance and retrofitting (Repair) operations through July 18,
2014. After July 18, 2014, the results of GBW were included as part of Earnings (loss) from unconsolidated affiliates as the Company accounts for its interest in GBW under the equity method of accounting. Certain assets including real property,
personal property, accounts receivable and accounts payable were not contributed or sold to GBW and remained as part of the Wheels & Parts segment.
The results of operations for the GBW Joint Venture are not reflected in the tables below as the investment is accounted for under the equity method of
accounting. For the three and nine months ended May 31, 2015, GBW generated total revenue of $88.8 million and $254.7 million. GBW had total assets of $230.1 million and $210.6 million as of May 31, 2015 and August 31, 2014. The
Company recorded earnings of $0.4 million in Earnings from unconsolidated affiliates associated with GBW for both the three and nine months ended May 31, 2015. The Companys total investment in GBW at May 31, 2015 was $57.6 million
which is included in unallocated assets in the tables below.
The accounting policies of the segments are described in the summary of significant
accounting policies in the Consolidated Financial Statements contained in the Companys 2014 Annual Report on Form 10-K. Performance is evaluated based on Earnings 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 our integrated business. The Company does not allocate Interest and foreign exchange or Income tax 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 Companys
Consolidated Financial Statements.
17
THE GREENBRIER COMPANIES, INC.
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 May 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
Earnings (loss) from operations |
|
|
|
External |
|
|
Intersegment |
|
|
Total |
|
|
External |
|
|
Intersegment |
|
|
Total |
|
Manufacturing |
|
$ |
593,376 |
|
|
$ |
33 |
|
|
$ |
593,409 |
|
|
$ |
115,675 |
|
|
$ |
|
|
|
$ |
115,675 |
|
Wheels & Parts |
|
|
97,407 |
|
|
|
7,605 |
|
|
|
105,012 |
|
|
|
5,078 |
|
|
|
607 |
|
|
|
5,685 |
|
Leasing & Services |
|
|
23,823 |
|
|
|
11,722 |
|
|
|
35,545 |
|
|
|
10,824 |
|
|
|
11,722 |
|
|
|
22,546 |
|
Eliminations |
|
|
|
|
|
|
(19,360 |
) |
|
|
(19,360 |
) |
|
|
|
|
|
|
(12,329 |
) |
|
|
(12,329 |
) |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,166 |
) |
|
|
|
|
|
|
(27,166 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
714,606 |
|
|
$ |
|
|
|
$ |
714,606 |
|
|
$ |
104,411 |
|
|
$ |
|
|
|
$ |
104,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended May 31, 2015: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
Earnings (loss) from operations |
|
|
|
External |
|
|
Intersegment |
|
|
Total |
|
|
External |
|
|
Intersegment |
|
|
Total |
|
Manufacturing |
|
$ |
1,478,566 |
|
|
$ |
7,534 |
|
|
$ |
1,486,100 |
|
|
$ |
258,602 |
|
|
$ |
795 |
|
|
$ |
259,397 |
|
Wheels & Parts |
|
|
286,671 |
|
|
|
20,450 |
|
|
|
307,121 |
|
|
|
20,986 |
|
|
|
2,044 |
|
|
|
23,030 |
|
Leasing & Services |
|
|
74,576 |
|
|
|
43,533 |
|
|
|
118,109 |
|
|
|
31,677 |
|
|
|
43,533 |
|
|
|
75,210 |
|
Eliminations |
|
|
|
|
|
|
(71,517 |
) |
|
|
(71,517 |
) |
|
|
|
|
|
|
(46,372 |
) |
|
|
(46,372 |
) |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(59,900 |
) |
|
|
|
|
|
|
(59,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,839,813 |
|
|
$ |
|
|
|
$ |
1,839,813 |
|
|
$ |
251,365 |
|
|
$ |
|
|
|
$ |
251,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended May 31, 2014: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
Earnings (loss) from operations |
|
|
|
External |
|
|
Intersegment |
|
|
Total |
|
|
External |
|
|
Intersegment |
|
|
Total |
|
Manufacturing |
|
$ |
425,583 |
|
|
$ |
|
|
|
$ |
425,583 |
|
|
$ |
61,116 |
|
|
$ |
|
|
|
$ |
61,116 |
|
Wheels, Repair & Parts |
|
|
140,663 |
|
|
|
3,783 |
|
|
|
144,446 |
|
|
|
5,524 |
|
|
|
473 |
|
|
|
5,997 |
|
Leasing & Services |
|
|
27,039 |
|
|
|
9,334 |
|
|
|
36,373 |
|
|
|
14,582 |
|
|
|
9,334 |
|
|
|
23,916 |
|
Eliminations |
|
|
|
|
|
|
(13,117 |
) |
|
|
(13,117 |
) |
|
|
|
|
|
|
(9,807 |
) |
|
|
(9,807 |
) |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,684 |
) |
|
|
|
|
|
|
(13,684 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
593,285 |
|
|
$ |
|
|
|
$ |
593,285 |
|
|
$ |
67,538 |
|
|
$ |
|
|
|
$ |
67,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended May 31, 2014: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
Earnings (loss) from operations |
|
|
|
External |
|
|
Intersegment |
|
|
Total |
|
|
External |
|
|
Intersegment |
|
|
Total |
|
Manufacturing |
|
$ |
1,132,811 |
|
|
$ |
|
|
|
$ |
1,132,811 |
|
|
$ |
129,542 |
|
|
$ |
|
|
|
$ |
129,542 |
|
Wheels, Repair & Parts |
|
|
390,604 |
|
|
|
7,743 |
|
|
|
398,347 |
|
|
|
8,724 |
|
|
|
546 |
|
|
|
9,270 |
|
Leasing & Services |
|
|
62,441 |
|
|
|
17,623 |
|
|
|
80,064 |
|
|
|
32,888 |
|
|
|
17,623 |
|
|
|
50,511 |
|
Eliminations |
|
|
|
|
|
|
(25,366 |
) |
|
|
(25,366 |
) |
|
|
|
|
|
|
(18,169 |
) |
|
|
(18,169 |
) |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,792 |
) |
|
|
|
|
|
|
(30,792 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,585,856 |
|
|
$ |
|
|
|
$ |
1,585,856 |
|
|
$ |
140,362 |
|
|
$ |
|
|
|
$ |
140,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
May 31, |
|
|
August 31, |
|
|
|
2015 |
|
|
2014 |
|
Manufacturing |
|
$ |
697,342 |
|
|
$ |
521,711 |
|
Wheels & Parts |
|
|
290,363 |
|
|
|
298,009 |
|
Leasing & Services |
|
|
538,896 |
|
|
|
436,075 |
|
Unallocated |
|
|
200,514 |
|
|
|
261,373 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,727,115 |
|
|
$ |
1,517,168 |
|
|
|
|
|
|
|
|
|
|
18
THE GREENBRIER COMPANIES, INC.
Note 13 Commitments and Contingencies
The Companys 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.
In December 2000, the U.S. Environmental Protection Agency (EPA) classified portions of the
Willamette River bed known as the Portland Harbor, including the portion fronting the Companys 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 $110 million during a 14-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 Companys aggregate expenditure has not been material
during the 14-year period. Some or all of any such outlay may be recoverable from other responsible parties. The EPA expects the investigation to continue until 2017.
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 2016.
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 Companys 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 EPAs
selected cleanup will be determined after the issuance of the Record of Decision, currently scheduled by the EPA for 2017. Based on the investigation to date, the Company believes that it did not contribute in any material way to contamination in
the river sediments or 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 Companys liability, if any, for the cost of any required remediation or restoration 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 rivers classification as a Superfund site could result in some limitations on future dredging and launch activities. Any of these matters could adversely affect the Companys business and Consolidated Financial Statements, or the
value of its Portland property.
19
THE GREENBRIER COMPANIES, INC.
The Company has also signed an Order on Consent with the 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 the Company is currently discussing with the DEQ potential remedial actions which may be
required. Our aggregate expenditure has not been material, however the Company could incur significant expenses for remediation. 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 Companys Consolidated Financial
Statements.
In accordance with customary business practices in Europe, the Company has $3.5 million in third party warranty guarantee facilities. To date
no amounts have been drawn under these guarantee facilities.
As of May 31, 2015, the Mexican joint venture had $20.8 million of third party debt
outstanding, for which the Company and its joint venture partner had each guaranteed approximately $18.8 million.
As of May 31, 2015, the Company
had outstanding letters of credit aggregating $49.8 million associated with performance guarantees, facility leases and workers compensation insurance.
On July 18, 2014, the Company and Watco contributed its respective Repair operations to GBW, an unconsolidated 50/50 joint venture. The Company made
$12.5 million in cash contributions in 2014 and $3.2 million in cash contributions and $7.5 million in loans during the nine months ended May 31, 2015. The Company expects to loan additional amounts, up to $7.0 million, during the fourth
quarter of 2015. The Company is likely to make additional capital contributions or loans to GBW in the future. As of May 31, 2015, the Company had a $7.5 million note receivable and a $21.0 million account receivable from GBW. The account
receivable from GBW was for the initial sale of inventory to GBW which may be converted into a note receivable during the year. The Company receives approximately $5 million annually from GBW in lease payments for the Companys owned facilities
and equipment leased to GBW as well as quarterly distributions of a portion of GBWs earnings. During the nine months ended May 31, 2015, the Company received $0.7 million in quarterly distributions from GBW.
20
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 May 31, 2015 were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 (1) |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
$ |
1,527 |
|
|
$ |
|
|
|
$ |
1,527 |
|
|
$ |
|
|
Nonqualified savings plan investments |
|
|
12,666 |
|
|
|
12,666 |
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
|
5,068 |
|
|
|
5,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
19,261 |
|
|
$ |
17,734 |
|
|
$ |
1,527 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
$ |
2,702 |
|
|
$ |
|
|
|
$ |
2,702 |
|
|
$ |
|
|
(1) |
Level 2 assets and liabilities include derivative financial instruments that 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, 2014 were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
$ |
200 |
|
|
$ |
|
|
|
$ |
200 |
|
|
$ |
|
|
Nonqualified savings plan investments |
|
|
10,223 |
|
|
|
10,223 |
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
|
35,036 |
|
|
|
35,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
45,459 |
|
|
$ |
45,259 |
|
|
$ |
200 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
$ |
1,995 |
|
|
$ |
|
|
|
$ |
1,995 |
|
|
$ |
|
|
21
THE GREENBRIER COMPANIES, INC.
Note 15 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 Greenbriers 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; Greenbrier Railcar Leasing, Inc. and Greenbrier Rail Services Holdings, LLC. 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 Europe Holdings 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.; 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.; Greenbrier do Brasil Participações Ltda; Greenbrier Tank Components, LLC; Gunderson-Gimsa S.A. de
C.V., Greenbrier; S.A. de C.V.; Greenbrier Industries, 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 May 31, 2015 and August 31, 2014, for the three and nine months ended May 31, 2015 and 2014. 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
May 31, 2015
(In
thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
55,896 |
|
|
$ |
487 |
|
|
$ |
66,400 |
|
|
$ |
|
|
|
$ |
122,783 |
|
Restricted cash |
|
|
|
|
|
|
2,009 |
|
|
|
6,903 |
|
|
|
|
|
|
|
8,912 |
|
Accounts receivable, net |
|
|
576 |
|
|
|
474,518 |
|
|
|
15,268 |
|
|
|
(275,472 |
) |
|
|
214,890 |
|
Inventories |
|
|
|
|
|
|
152,396 |
|
|
|
275,883 |
|
|
|
(1,624 |
) |
|
|
426,655 |
|
Leased railcars for syndication |
|
|
|
|
|
|
234,560 |
|
|
|
|
|
|
|
(21,363 |
) |
|
|
213,197 |
|
Equipment on operating leases, net |
|
|
|
|
|
|
257,653 |
|
|
|
2,973 |
|
|
|
(2,664 |
) |
|
|
257,962 |
|
Property, plant and equipment, net |
|
|
7,116 |
|
|
|
104,124 |
|
|
|
174,330 |
|
|
|
|
|
|
|
285,570 |
|
Investment in unconsolidated affiliates |
|
|
1,116,076 |
|
|
|
166,455 |
|
|
|
23,099 |
|
|
|
(1,214,413 |
) |
|
|
91,217 |
|
Goodwill |
|
|
|
|
|
|
43,265 |
|
|
|
|
|
|
|
|
|
|
|
43,265 |
|
Intangibles and other assets, net |
|
|
17,035 |
|
|
|
41,625 |
|
|
|
12,186 |
|
|
|
(8,182 |
) |
|
|
62,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,196,699 |
|
|
$ |
1,477,092 |
|
|
$ |
577,042 |
|
|
$ |
(1,523,718 |
) |
|
$ |
1,727,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving notes |
|
$ |
73,000 |
|
|
$ |
|
|
|
$ |
19,507 |
|
|
$ |
|
|
|
$ |
92,507 |
|
Accounts payable and accrued liabilities |
|
|
287,539 |
|
|
|
247,506 |
|
|
|
192,335 |
|
|
|
(321,836 |
) |
|
|
405,544 |
|
Deferred income taxes |
|
|
11,971 |
|
|
|
72,489 |
|
|
|
|
|
|
|
(8,888 |
) |
|
|
75,572 |
|
Deferred revenue |
|
|
|
|
|
|
24,028 |
|
|
|
137 |
|
|
|
44 |
|
|
|
24,209 |
|
Notes payable |
|
|
151,792 |
|
|
|
193,175 |
|
|
|
1,312 |
|
|
|
|
|
|
|
346,279 |
|
Total equity Greenbrier |
|
|
672,397 |
|
|
|
939,894 |
|
|
|
253,236 |
|
|
|
(1,193,131 |
) |
|
|
672,396 |
|
Noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
110,515 |
|
|
|
93 |
|
|
|
110,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
672,397 |
|
|
|
939,894 |
|
|
|
363,751 |
|
|
|
(1,193,038 |
) |
|
|
783,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,196,699 |
|
|
$ |
1,477,092 |
|
|
$ |
577,042 |
|
|
$ |
(1,523,718 |
) |
|
$ |
1,727,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Income
For the three months ended May 31, 2015
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
|
|
|
$ |
280,928 |
|
|
$ |
492,302 |
|
|
$ |
(179,854 |
) |
|
$ |
593,376 |
|
Wheels & Parts |
|
|
|
|
|
|
98,746 |
|
|
|
|
|
|
|
(1,339 |
) |
|
|
97,407 |
|
Leasing & Services |
|
|
(90 |
) |
|
|
23,762 |
|
|
|
|
|
|
|
151 |
|
|
|
23,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90 |
) |
|
|
403,436 |
|
|
|
492,302 |
|
|
|
(181,042 |
) |
|
|
714,606 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
|
|
|
|
230,143 |
|
|
|
418,273 |
|
|
|
(182,758 |
) |
|
|
465,658 |
|
Wheels & Parts |
|
|
|
|
|
|
91,131 |
|
|
|
|
|
|
|
(1,486 |
) |
|
|
89,645 |
|
Leasing & Services |
|
|
|
|
|
|
10,041 |
|
|
|
|
|
|
|
(24 |
) |
|
|
10,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
331,315 |
|
|
|
418,273 |
|
|
|
(184,268 |
) |
|
|
565,320 |
|
Margin |
|
|
(90 |
) |
|
|
72,121 |
|
|
|
74,029 |
|
|
|
3,226 |
|
|
|
149,286 |
|
Selling and administrative expense |
|
|
24,851 |
|
|
|
10,688 |
|
|
|
9,912 |
|
|
|
144 |
|
|
|
45,595 |
|
Net (gain) loss on disposition of equipment |
|
|
|
|
|
|
(724 |
) |
|
|
7 |
|
|
|
(3 |
) |
|
|
(720 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
|
(24,941 |
) |
|
|
62,157 |
|
|
|
64,110 |
|
|
|
3,085 |
|
|
|
104,411 |
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange |
|
|
3,240 |
|
|
|
1,649 |
|
|
|
(604 |
) |
|
|
|
|
|
|
4,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates |
|
|
(28,181 |
) |
|
|
60,508 |
|
|
|
64,714 |
|
|
|
3,085 |
|
|
|
100,126 |
|
Income tax (expense) benefit |
|
|
4,215 |
|
|
|
(26,025 |
) |
|
|
(7,888 |
) |
|
|
(1,085 |
) |
|
|
(30,783 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before earnings (loss) from unconsolidated affiliates |
|
|
(23,966 |
) |
|
|
34,483 |
|
|
|
56,826 |
|
|
|
2,000 |
|
|
|
69,343 |
|
Earnings (loss) from unconsolidated affiliates |
|
|
66,777 |
|
|
|
5,142 |
|
|
|
47 |
|
|
|
(70,984 |
) |
|
|
982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
|
42,811 |
|
|
|
39,625 |
|
|
|
56,873 |
|
|
|
(68,984 |
) |
|
|
70,325 |
|
Net earnings attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(26,415 |
) |
|
|
(1,099 |
) |
|
|
(27,514 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to Greenbrier |
|
$ |
42,811 |
|
|
$ |
39,625 |
|
|
$ |
30,458 |
|
|
$ |
(70,083 |
) |
|
$ |
42,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Income
For the nine months ended May 31, 2015
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
|
|
|
$ |
877,405 |
|
|
$ |
1,285,603 |
|
|
$ |
(684,442 |
) |
|
$ |
1,478,566 |
|
Wheels & Parts |
|
|
|
|
|
|
290,917 |
|
|
|
|
|
|
|
(4,246 |
) |
|
|
286,671 |
|
Leasing & Services |
|
|
83 |
|
|
|
74,064 |
|
|
|
1 |
|
|
|
428 |
|
|
|
74,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83 |
|
|
|
1,242,386 |
|
|
|
1,285,604 |
|
|
|
(688,260 |
) |
|
|
1,839,813 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
|
|
|
|
735,414 |
|
|
|
1,091,498 |
|
|
|
(641,990 |
) |
|
|
1,184,922 |
|
Wheels & Parts |
|
|
|
|
|
|
263,755 |
|
|
|
|
|
|
|
(4,470 |
) |
|
|
259,285 |
|
Leasing & Services |
|
|
|
|
|
|
33,014 |
|
|
|
|
|
|
|
(72 |
) |
|
|
32,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,032,183 |
|
|
|
1,091,498 |
|
|
|
(646,532 |
) |
|
|
1,477,149 |
|
Margin |
|
|
83 |
|
|
|
210,203 |
|
|
|
194,106 |
|
|
|
(41,728 |
) |
|
|
362,664 |
|
Selling and administrative expense |
|
|
55,116 |
|
|
|
26,905 |
|
|
|
30,169 |
|
|
|
33 |
|
|
|
112,223 |
|
Net (gain) loss on disposition of equipment |
|
|
|
|
|
|
(927 |
) |
|
|
7 |
|
|
|
(4 |
) |
|
|
(924 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
|
(55,033 |
) |
|
|
184,225 |
|
|
|
163,930 |
|
|
|
(41,757 |
) |
|
|
251,365 |
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange |
|
|
9,345 |
|
|
|
4,998 |
|
|
|
(4,988 |
) |
|
|
|
|
|
|
9,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates |
|
|
(64,378 |
) |
|
|
179,227 |
|
|
|
168,918 |
|
|
|
(41,757 |
) |
|
|
242,010 |
|
Income tax (expense) benefit |
|
|
(4,476 |
) |
|
|
(62,438 |
) |
|
|
(22,559 |
) |
|
|
13,264 |
|
|
|
(76,209 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before earnings (loss) from unconsolidated affiliates |
|
|
(68,854 |
) |
|
|
116,789 |
|
|
|
146,359 |
|
|
|
(28,493 |
) |
|
|
165,801 |
|
Earnings (loss) from unconsolidated affiliates |
|
|
194,802 |
|
|
|
21,377 |
|
|
|
142 |
|
|
|
(214,769 |
) |
|
|
1,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
|
125,948 |
|
|
|
138,166 |
|
|
|
146,501 |
|
|
|
(243,262 |
) |
|
|
167,353 |
|
Net (earnings) loss attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(61,992 |
) |
|
|
20,587 |
|
|
|
(41,405 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to Greenbrier |
|
$ |
125,948 |
|
|
$ |
138,166 |
|
|
$ |
84,509 |
|
|
$ |
(222,675 |
) |
|
$ |
125,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Comprehensive Income (Loss)
For the three months ended May 31, 2015
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Net earnings (loss) |
|
$ |
42,811 |
|
|
$ |
39,625 |
|
|
$ |
56,873 |
|
|
$ |
(68,984 |
) |
|
$ |
70,325 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
|
|
|
|
|
(18 |
) |
|
|
(1,281 |
) |
|
|
|
|
|
|
(1,299 |
) |
Reclassification of derivative financial instruments recognized in net earnings (loss) |
|
|
|
|
|
|
275 |
|
|
|
(529 |
) |
|
|
|
|
|
|
(254 |
) |
Unrealized gain (loss) on derivative financial instruments |
|
|
|
|
|
|
(443 |
) |
|
|
550 |
|
|
|
|
|
|
|
107 |
|
Other (net of tax effect) |
|
|
|
|
|
|
|
|
|
|
93 |
|
|
|
|
|
|
|
93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(186 |
) |
|
|
(1,167 |
) |
|
|
|
|
|
|
(1,353 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
42,811 |
|
|
|
39,439 |
|
|
|
55,706 |
|
|
|
(68,984 |
) |
|
|
68,972 |
|
Comprehensive income attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(26,398 |
) |
|
|
(1,099 |
) |
|
|
(27,497 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Greenbrier |
|
$ |
42,811 |
|
|
$ |
39,439 |
|
|
$ |
29,308 |
|
|
$ |
(70,083 |
) |
|
$ |
41,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Comprehensive Income (Loss)
For the nine months ended May 31, 2015
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Net earnings (loss) |
|
$ |
125,948 |
|
|
$ |
138,166 |
|
|
$ |
146,501 |
|
|
$ |
(243,262 |
) |
|
$ |
167,353 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
|
|
|
|
|
(137 |
) |
|
|
(10,853 |
) |
|
|
|
|
|
|
(10,990 |
) |
Reclassification of derivative financial instruments recognized in net earnings (loss) |
|
|
|
|
|
|
837 |
|
|
|
(420 |
) |
|
|
|
|
|
|
417 |
|
Unrealized gain (loss) on derivative financial instruments |
|
|
|
|
|
|
(1,640 |
) |
|
|
1,633 |
|
|
|
|
|
|
|
(7 |
) |
Other (net of tax effect) |
|
|
|
|
|
|
|
|
|
|
99 |
|
|
|
|
|
|
|
99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(940 |
) |
|
|
(9,541 |
) |
|
|
|
|
|
|
(10,481 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
125,948 |
|
|
|
137,226 |
|
|
|
136,960 |
|
|
|
(243,262 |
) |
|
|
156,872 |
|
Comprehensive (income) loss attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(61,840 |
) |
|
|
20,587 |
|
|
|
(41,253 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Greenbrier |
|
$ |
125,948 |
|
|
$ |
137,226 |
|
|
$ |
75,120 |
|
|
$ |
(222,675 |
) |
|
$ |
115,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Cash Flows
For the nine months ended May 31, 2015
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
125,948 |
|
|
$ |
138,166 |
|
|
$ |
146,501 |
|
|
$ |
(243,262 |
) |
|
$ |
167,353 |
|
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
(138 |
) |
|
|
(8,000 |
) |
|
|
2,893 |
|
|
|
|
|
|
|
(5,245 |
) |
Depreciation and amortization |
|
|
1,484 |
|
|
|
19,909 |
|
|
|
11,936 |
|
|
|
(71 |
) |
|
|
33,258 |
|
Net (gain)loss on disposition of equipment |
|
|
|
|
|
|
(927 |
) |
|
|
7 |
|
|
|
(4 |
) |
|
|
(924 |
) |
Stock based compensation expense |
|
|
13,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,176 |
|
Noncontrolling interest adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,371 |
|
|
|
20,371 |
|
Other |
|
|
43 |
|
|
|
105 |
|
|
|
860 |
|
|
|
|
|
|
|
1,008 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
50 |
|
|
|
(10,046 |
) |
|
|
37,034 |
|
|
|
(35,807 |
) |
|
|
(8,769 |
) |
Inventories |
|
|
|
|
|
|
(39,279 |
) |
|
|
(87,156 |
) |
|
|
1,529 |
|
|
|
(124,906 |
) |
Leased railcars for syndication |
|
|
|
|
|
|
(109,324 |
) |
|
|
|
|
|
|
18,410 |
|
|
|
(90,914 |
) |
Other |
|
|
20,641 |
|
|
|
763 |
|
|
|
(33,634 |
) |
|
|
10,564 |
|
|
|
(1,666 |
) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
(3,824 |
) |
|
|
25,612 |
|
|
|
9,112 |
|
|
|
(7,765 |
) |
|
|
23,135 |
|
Deferred revenue |
|
|
(122 |
) |
|
|
4,078 |
|
|
|
(276 |
) |
|
|
|
|
|
|
3,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
157,258 |
|
|
|
21,057 |
|
|
|
87,277 |
|
|
|
(236,035 |
) |
|
|
29,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
|
|
|
|
|
4,623 |
|
|
|
5 |
|
|
|
|
|
|
|
4,628 |
|
Capital expenditures |
|
|
(2,424 |
) |
|
|
(18,807 |
) |
|
|
(55,059 |
) |
|
|
398 |
|
|
|
(75,892 |
) |
Decrease (increase) in restricted cash |
|
|
|
|
|
|
229 |
|
|
|
(1 |
) |
|
|
|
|
|
|
228 |
|
Investment in and net advances to unconsolidated affiliates |
|
|
(245,594 |
) |
|
|
(19,966 |
) |
|
|
|
|
|
|
235,637 |
|
|
|
(29,923 |
) |
Other |
|
|
715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(247,303 |
) |
|
|
(33,921 |
) |
|
|
(55,055 |
) |
|
|
236,035 |
|
|
|
(100,244 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net changes in revolving notes with maturities of 90 days or less |
|
|
73,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,000 |
|
Proceeds from revolving notes with maturities longer than 90 days |
|
|
|
|
|
|
|
|
|
|
42,563 |
|
|
|
|
|
|
|
42,563 |
|
Repayments of revolving notes with maturities longer than 90 days |
|
|
|
|
|
|
|
|
|
|
(36,137 |
) |
|
|
|
|
|
|
(36,137 |
) |
Repayments of notes payable |
|
|
(5 |
) |
|
|
(5,280 |
) |
|
|
(219 |
) |
|
|
|
|
|
|
(5,504 |
) |
Intercompany advances |
|
|
(18,997 |
) |
|
|
9,788 |
|
|
|
9,209 |
|
|
|
|
|
|
|
|
|
Repurchase of stock |
|
|
(48,451 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,451 |
) |
Dividends |
|
|
(12,069 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,069 |
) |
Decrease in restricted cash |
|
|
|
|
|
|
11,000 |
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
Cash distributions to joint venture partner |
|
|
|
|
|
|
|
|
|
|
(12,489 |
) |
|
|
|
|
|
|
(12,489 |
) |
Excess tax benefit from restricted stock awards |
|
|
2,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,964 |
|
Other |
|
|
(248 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(248 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
(3,806 |
) |
|
|
15,508 |
|
|
|
2,927 |
|
|
|
|
|
|
|
14,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
|
|
|
|
(2,269 |
) |
|
|
(3,806 |
) |
|
|
|
|
|
|
(6,075 |
) |
Increase (decrease) in cash and cash equivalents |
|
|
(93,851 |
) |
|
|
375 |
|
|
|
31,343 |
|
|
|
|
|
|
|
(62,133 |
) |
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
149,747 |
|
|
|
112 |
|
|
|
35,057 |
|
|
|
|
|
|
|
184,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
$ |
55,896 |
|
|
$ |
487 |
|
|
$ |
66,400 |
|
|
$ |
|
|
|
$ |
122,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Balance Sheet
August 31, 2014
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non-Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
149,747 |
|
|
$ |
112 |
|
|
$ |
35,057 |
|
|
$ |
|
|
|
$ |
184,916 |
|
Restricted cash |
|
|
|
|
|
|
13,238 |
|
|
|
6,902 |
|
|
|
|
|
|
|
20,140 |
|
Accounts receivable, net |
|
|
626 |
|
|
|
474,409 |
|
|
|
62,421 |
|
|
|
(337,777 |
) |
|
|
199,679 |
|
Inventories |
|
|
|
|
|
|
113,117 |
|
|
|
192,634 |
|
|
|
(95 |
) |
|
|
305,656 |
|
Leased railcars for syndication |
|
|
|
|
|
|
128,965 |
|
|
|
|
|
|
|
(3,115 |
) |
|
|
125,850 |
|
Equipment on operating leases, net |
|
|
|
|
|
|
257,415 |
|
|
|
3,613 |
|
|
|
(2,180 |
) |
|
|
258,848 |
|
Property, plant and equipment, net |
|
|
6,220 |
|
|
|
102,972 |
|
|
|
134,506 |
|
|
|
|
|
|
|
243,698 |
|
Investment in unconsolidated affiliates |
|
|
910,732 |
|
|
|
143,768 |
|
|
|
3,961 |
|
|
|
(989,102 |
) |
|
|
69,359 |
|
Goodwill |
|
|
|
|
|
|
43,265 |
|
|
|
|
|
|
|
|
|
|
|
43,265 |
|
Intangibles and other assets, net |
|
|
17,031 |
|
|
|
45,013 |
|
|
|
14,221 |
|
|
|
(10,508 |
) |
|
|
65,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,084,356 |
|
|
$ |
1,322,274 |
|
|
$ |
453,315 |
|
|
$ |
(1,342,777 |
) |
|
$ |
1,517,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving notes |
|
$ |
|
|
|
$ |
|
|
|
$ |
13,081 |
|
|
$ |
|
|
|
$ |
13,081 |
|
Accounts payable and accrued liabilities |
|
|
315,879 |
|
|
|
221,863 |
|
|
|
185,335 |
|
|
|
(339,788 |
) |
|
|
383,289 |
|
Deferred income taxes |
|
|
12,109 |
|
|
|
80,489 |
|
|
|
|
|
|
|
(11,215 |
) |
|
|
81,383 |
|
Deferred revenue |
|
|
122 |
|
|
|
19,950 |
|
|
|
487 |
|
|
|
44 |
|
|
|
20,603 |
|
Notes payable |
|
|
244,856 |
|
|
|
198,705 |
|
|
|
1,530 |
|
|
|
|
|
|
|
445,091 |
|
Total equity Greenbrier |
|
|
511,390 |
|
|
|
801,267 |
|
|
|
190,861 |
|
|
|
(992,128 |
) |
|
|
511,390 |
|
Noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
62,021 |
|
|
|
310 |
|
|
|
62,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
511,390 |
|
|
|
801,267 |
|
|
|
252,882 |
|
|
|
(991,818 |
) |
|
|
573,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,084,356 |
|
|
$ |
1,322,274 |
|
|
$ |
453,315 |
|
|
$ |
(1,342,777 |
) |
|
$ |
1,517,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Income
For the three months ended May 31, 2014
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
|
|
|
$ |
211,921 |
|
|
$ |
363,401 |
|
|
$ |
(149,739 |
) |
|
$ |
425,583 |
|
Wheels, Repair & Parts |
|
|
|
|
|
|
142,625 |
|
|
|
|
|
|
|
(1,962 |
) |
|
|
140,663 |
|
Leasing & Services |
|
|
108 |
|
|
|
26,771 |
|
|
|
|
|
|
|
160 |
|
|
|
27,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108 |
|
|
|
381,317 |
|
|
|
363,401 |
|
|
|
(151,541 |
) |
|
|
593,285 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
|
|
|
|
184,870 |
|
|
|
315,398 |
|
|
|
(148,439 |
) |
|
|
351,829 |
|
Wheels, Repair & Parts |
|
|
|
|
|
|
131,769 |
|
|
|
|
|
|
|
(1,944 |
) |
|
|
129,825 |
|
Leasing & Services |
|
|
|
|
|
|
14,876 |
|
|
|
|
|
|
|
(20 |
) |
|
|
14,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
331,515 |
|
|
|
315,398 |
|
|
|
(150,403 |
) |
|
|
496,510 |
|
Margin |
|
|
108 |
|
|
|
49,802 |
|
|
|
48,003 |
|
|
|
(1,138 |
) |
|
|
96,775 |
|
Selling and administrative |
|
|
13,987 |
|
|
|
10,645 |
|
|
|
10,016 |
|
|
|
152 |
|
|
|
34,800 |
|
Net gain on disposition of equipment |
|
|
|
|
|
|
(5,411 |
) |
|
|
(205 |
) |
|
|
(3 |
) |
|
|
(5,619 |
) |
Restructuring charges |
|
|
|
|
|
|
56 |
|
|
|
|
|
|
|
|
|
|
|
56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
|
(13,879 |
) |
|
|
44,512 |
|
|
|
38,192 |
|
|
|
(1,287 |
) |
|
|
67,538 |
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange |
|
|
2,918 |
|
|
|
1,417 |
|
|
|
1,102 |
|
|
|
|
|
|
|
5,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates |
|
|
(16,797 |
) |
|
|
43,095 |
|
|
|
37,090 |
|
|
|
(1,287 |
) |
|
|
62,101 |
|
Income tax (expense) benefit |
|
|
3,337 |
|
|
|
(11,506 |
) |
|
|
(8,388 |
) |
|
|
254 |
|
|
|
(16,303 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before earnings (loss) from unconsolidated affiliates |
|
|
(13,460 |
) |
|
|
31,589 |
|
|
|
28,702 |
|
|
|
(1,033 |
) |
|
|
45,798 |
|
Earnings (loss) from unconsolidated affiliates |
|
|
47,048 |
|
|
|
5,412 |
|
|
|
44 |
|
|
|
(52,206 |
) |
|
|
298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
|
33,588 |
|
|
|
37,001 |
|
|
|
28,746 |
|
|
|
(53,239 |
) |
|
|
46,096 |
|
Net (earnings) loss attributable to
noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(12,830 |
) |
|
|
322 |
|
|
|
(12,508 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to Greenbrier |
|
$ |
33,588 |
|
|
$ |
37,001 |
|
|
$ |
15,916 |
|
|
$ |
(52,917 |
) |
|
$ |
33,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Income
For the nine months ended May 31, 2014
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
|
|
|
$ |
617,120 |
|
|
$ |
981,040 |
|
|
$ |
(465,349 |
) |
|
$ |
1,132,811 |
|
Wheels, Repair & Parts |
|
|
|
|
|
|
395,537 |
|
|
|
|
|
|
|
(4,933 |
) |
|
|
390,604 |
|
Leasing & Services |
|
|
865 |
|
|
|
61,101 |
|
|
|
1 |
|
|
|
474 |
|
|
|
62,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
865 |
|
|
|
1,073,758 |
|
|
|
981,041 |
|
|
|
(469,808 |
) |
|
|
1,585,856 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing |
|
|
|
|
|
|
552,871 |
|
|
|
876,395 |
|
|
|
(459,425 |
) |
|
|
969,841 |
|
Wheels, Repair & Parts |
|
|
|
|
|
|
370,626 |
|
|
|
|
|
|
|
(4,886 |
) |
|
|
365,740 |
|
Leasing & Services |
|
|
|
|
|
|
34,152 |
|
|
|
|
|
|
|
(62 |
) |
|
|
34,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
957,649 |
|
|
|
876,395 |
|
|
|
(464,373 |
) |
|
|
1,369,671 |
|
Margin |
|
|
865 |
|
|
|
116,109 |
|
|
|
104,646 |
|
|
|
(5,435 |
) |
|
|
216,185 |
|
Selling and administrative |
|
|
31,698 |
|
|
|
29,802 |
|
|
|
27,083 |
|
|
|
451 |
|
|
|
89,034 |
|
Net gain on disposition of equipment |
|
|
|
|
|
|
(13,556 |
) |
|
|
(820 |
) |
|
|
(310 |
) |
|
|
(14,686 |
) |
Restructuring charges |
|
|
|
|
|
|
1,475 |
|
|
|
|
|
|
|
|
|
|
|
1,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
|
(30,833 |
) |
|
|
98,388 |
|
|
|
78,383 |
|
|
|
(5,576 |
) |
|
|
140,362 |
|
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange |
|
|
8,751 |
|
|
|
3,180 |
|
|
|
2,349 |
|
|
|
|
|
|
|
14,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and earnings (loss) from unconsolidated affiliates |
|
|
(39,584 |
) |
|
|
95,208 |
|
|
|
76,034 |
|
|
|
(5,576 |
) |
|
|
126,082 |
|
Income tax (expense) benefit |
|
|
10,772 |
|
|
|
(31,059 |
) |
|
|
(18,044 |
) |
|
|
1,623 |
|
|
|
(36,708 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before earnings (loss) from unconsolidated affiliates |
|
|
(28,812 |
) |
|
|
64,149 |
|
|
|
57,990 |
|
|
|
(3,953 |
) |
|
|
89,374 |
|
Earnings (loss) from unconsolidated affiliates |
|
|
93,375 |
|
|
|
7,857 |
|
|
|
121 |
|
|
|
(101,081 |
) |
|
|
272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
|
64,563 |
|
|
|
72,006 |
|
|
|
58,111 |
|
|
|
(105,034 |
) |
|
|
89,646 |
|
Net (earnings) loss attributable to
noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(27,362 |
) |
|
|
2,279 |
|
|
|
(25,083 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to Greenbrier |
|
$ |
64,563 |
|
|
$ |
72,006 |
|
|
$ |
30,749 |
|
|
$ |
(102,755 |
) |
|
$ |
64,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Comprehensive Income (Loss)
For the three months ended May 31, 2014
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Net earnings (loss) |
|
$ |
33,588 |
|
|
$ |
37,001 |
|
|
$ |
28,746 |
|
|
$ |
(53,239 |
) |
|
$ |
46,096 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
|
|
|
|
|
73 |
|
|
|
7 |
|
|
|
|
|
|
|
80 |
|
Reclassification of derivative financial instruments recognized in net earnings (loss) |
|
|
|
|
|
|
276 |
|
|
|
(272 |
) |
|
|
|
|
|
|
4 |
|
Unrealized gain (loss) on derivative financial instruments |
|
|
|
|
|
|
139 |
|
|
|
(798 |
) |
|
|
|
|
|
|
(659 |
) |
Other (net of tax effect) |
|
|
|
|
|
|
|
|
|
|
(4 |
) |
|
|
|
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
488 |
|
|
|
(1,067 |
) |
|
|
|
|
|
|
(579 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
33,588 |
|
|
|
37,489 |
|
|
|
27,679 |
|
|
|
(53,239 |
) |
|
|
45,517 |
|
Comprehensive (income) loss attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(12,823 |
) |
|
|
322 |
|
|
|
(12,501 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Greenbrier |
|
$ |
33,588 |
|
|
$ |
37,489 |
|
|
$ |
14,856 |
|
|
$ |
(52,917 |
) |
|
$ |
33,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Comprehensive Income (Loss)
For the nine months ended May 31, 2014
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Net earnings (loss) |
|
$ |
64,563 |
|
|
$ |
72,006 |
|
|
$ |
58,111 |
|
|
$ |
(105,034 |
) |
|
$ |
89,646 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
|
|
|
|
|
86 |
|
|
|
3,316 |
|
|
|
|
|
|
|
3,402 |
|
Reclassification of derivative financial instruments recognized in net earnings (loss) |
|
|
|
|
|
|
787 |
|
|
|
(466 |
) |
|
|
|
|
|
|
321 |
|
Unrealized gain (loss) on derivative financial instruments |
|
|
|
|
|
|
1,245 |
|
|
|
(791 |
) |
|
|
|
|
|
|
454 |
|
Other (net of tax effect) |
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,118 |
|
|
|
2,056 |
|
|
|
|
|
|
|
4,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
64,563 |
|
|
|
74,124 |
|
|
|
60,167 |
|
|
|
(105,034 |
) |
|
|
93,820 |
|
Comprehensive (income) loss attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(27,416 |
) |
|
|
2,279 |
|
|
|
(25,137 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Greenbrier |
|
$ |
64,563 |
|
|
$ |
74,124 |
|
|
$ |
32,751 |
|
|
$ |
(102,755 |
) |
|
$ |
68,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
THE GREENBRIER COMPANIES, INC.
The Greenbrier Companies, Inc.
Condensed Consolidating Statement of Cash Flows
For the nine months ended May 31, 2014
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Parent |
|
|
Combined Guarantor Subsidiaries |
|
|
Combined Non- Guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
64,563 |
|
|
$ |
72,006 |
|
|
$ |
58,111 |
|
|
$ |
(105,034 |
) |
|
$ |
89,646 |
|
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
(4,194 |
) |
|
|
(1,789 |
) |
|
|
(762 |
) |
|
|
|
|
|
|
(6,745 |
) |
Depreciation and amortization |
|
|
1,427 |
|
|
|
20,713 |
|
|
|
8,746 |
|
|
|
(62 |
) |
|
|
30,824 |
|
Net gain on disposition of equipment |
|
|
|
|
|
|
(13,556 |
) |
|
|
(820 |
) |
|
|
(310 |
) |
|
|
(14,686 |
) |
Stock based compensation expense |
|
|
6,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,454 |
|
Noncontrolling interest adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,953 |
|
|
|
2,953 |
|
Other |
|
|
|
|
|
|
372 |
|
|
|
16 |
|
|
|
|
|
|
|
388 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
36,573 |
|
|
|
(43,867 |
) |
|
|
694 |
|
|
|
(19,626 |
) |
|
|
(26,226 |
) |
Inventories |
|
|
|
|
|
|
20,456 |
|
|
|
(42,225 |
) |
|
|
47 |
|
|
|
(21,722 |
) |
Leased railcars for syndication |
|
|
|
|
|
|
(28,371 |
) |
|
|
|
|
|
|
2,951 |
|
|
|
(25,420 |
) |
Other |
|
|
(1,220 |
) |
|
|
81 |
|
|
|
(2,788 |
) |
|
|
1,436 |
|
|
|
(2,491 |
) |
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
(22,404 |
) |
|
|
9,143 |
|
|
|
31,774 |
|
|
|
17,994 |
|
|
|
36,507 |
|
Deferred revenue |
|
|
(116 |
) |
|
|
10,798 |
|
|
|
1,574 |
|
|
|
2 |
|
|
|
12,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
81,083 |
|
|
|
45,986 |
|
|
|
54,320 |
|
|
|
(99,649 |
) |
|
|
81,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
|
|
|
|
|
38,509 |
|
|
|
1,006 |
|
|
|
|
|
|
|
39,515 |
|
Capital expenditures |
|
|
(3,543 |
) |
|
|
(9,929 |
) |
|
|
(21,050 |
) |
|
|
|
|
|
|
(34,522 |
) |
Decrease (increase) in restricted cash |
|
|
|
|
|
|
(660 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
(661 |
) |
Investment in and net advances to unconsolidated affiliates |
|
|
(91,939 |
) |
|
|
(7,710 |
) |
|
|
(1,253 |
) |
|
|
99,649 |
|
|
|
(1,253 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing Activities |
|
|
(95,482 |
) |
|
|
20,210 |
|
|
|
(21,298 |
) |
|
|
99,649 |
|
|
|
3,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net changes in revolving notes with maturities of 90 days or less |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from revolving notes with maturities longer than 90 days |
|
|
|
|
|
|
|
|
|
|
34,674 |
|
|
|
|
|
|
|
34,674 |
|
Repayment of revolving notes with maturities longer than 90 days |
|
|
|
|
|
|
|
|
|
|
(64,801 |
) |
|
|
|
|
|
|
(64,801 |
) |
Intercompany advances |
|
|
137,633 |
|
|
|
(139,741 |
) |
|
|
2,108 |
|
|
|
|
|
|
|
|
|
Proceeds from notes payable |
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
Repayments of notes payable |
|
|
|
|
|
|
(126,400 |
) |
|
|
(421 |
) |
|
|
|
|
|
|
(126,821 |
) |
Debt issuance costs |
|
|
|
|
|
|
(382 |
) |
|
|
|
|
|
|
|
|
|
|
(382 |
) |
Repurchase of stock |
|
|
(26,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,293 |
) |
Cash distribution to joint venture partner |
|
|
|
|
|
|
|
|
|
|
(3,109 |
) |
|
|
|
|
|
|
(3,109 |
) |
Investment by joint venture partner |
|
|
|
|
|
|
|
|
|
|
419 |
|
|
|
|
|
|
|
419 |
|
Excess tax benefit from restricted stock Awards |
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing Activities |
|
|
111,449 |
|
|
|
(66,523 |
) |
|
|
(31,130 |
) |
|
|
|
|
|
|
13,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
|
|
|
|
362 |
|
|
|
2,080 |
|
|
|
|
|
|
|
2,442 |
|
Increase in cash and cash equivalents |
|
|
97,050 |
|
|
|
35 |
|
|
|
3,972 |
|
|
|
|
|
|
|
101,057 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
63,173 |
|
|
|
25 |
|
|
|
34,237 |
|
|
|
|
|
|
|
97,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
$ |
160,223 |
|
|
$ |
60 |
|
|
$ |
38,209 |
|
|
$ |
|
|
|
$ |
198,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
THE GREENBRIER COMPANIES, INC.
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
Executive
Summary
Through July 18, 2014, we operated in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing &
Services. Our segments are operationally integrated. On July 18, 2014, we and Watco Companies, LLC (Watco), our joint venture partner, contributed our respective Repair operations to GBW Railcar Services LLC (GBW), an
unconsolidated 50/50 joint venture that became our fourth reportable segment (GBW Joint Venture) upon formation. The Manufacturing segment, operating from facilities in the United States, Mexico and Poland, produces double-stack intermodal railcars,
tank cars, conventional railcars, automotive railcar products and marine vessels. The Wheels & Parts segment (previously known as Wheels, Repair & Parts through 2014) performs wheel and axle servicing, as well as production and
reconditioning of a variety of parts for the railroad industry in North America and included the results of operations for our Repair operations through July 18, 2014. After July 18, 2014, the results of these operations were included as
part of Earnings (loss) from unconsolidated affiliates as we account for our interest in GBW under the equity method of accounting. The Leasing & Services segment owns approximately 8,800 railcars (6,300 railcars held as equipment on
operating leases and 2,500 held as leased railcars for syndication) and provides management services for approximately 245,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in
North America. The GBW Joint Venture segment provides railcar repair, refurbishment, retrofitting and maintenance services through 33 shops throughout North America, 12 of which are currently tank car certified by the Association of American
Railroads (AAR). We also produce rail castings through an unconsolidated joint venture.
Our total manufacturing backlog of railcar units as of
May 31, 2015 was approximately 45,100 units with an estimated value of $4.86 billion of which 37,500 units with a value of $4.21 billion are for direct sales and 7,600 units with a value of $0.65 billion are intended for syndications to third
parties with a lease attached. Backlog as of May 31, 2014 was 26,400 units with an estimated value of $2.75 billion. Currently no orders in our backlog are intended to be placed into our owned lease fleet. Multi-year supply agreements are a
part of rail industry practice. A portion of the orders included in backlog reflects an assumed product mix. Under terms of the orders, the exact mix will be determined in the future which may impact the dollar amount of backlog. Marine backlog as
of May 31, 2015 was $70 million compared to $110 million as of May 31, 2014.
Our backlog of railcar units and marine vessels is not necessarily
indicative of future results of operations. Certain orders in backlog are subject to customary documentation and completion of terms. Customer orders contain terms and conditions customary in the industry. In most cases, little variation has been
experienced between the quantity ordered and the quantity actually delivered, though the timing of deliveries may be modified from time to time.
On
May 6, 2015, we announced that we have closed on the previously reported acquisition of a 19.5% ownership stake in Amsted-Maxion Hortolândia, the leading railcar manufacturer in South America, for approximately $15 million. We have an
option to acquire an additional 40.5% ownership interest, to be exercised no later than September 30, 2017.
35
THE GREENBRIER COMPANIES, INC.
Three Months Ended May 31, 2015 Compared to Three Months Ended May 31, 2014
Overview
Revenue, cost of revenue, margin and operating
profit presented below, include amounts from external parties and exclude intersegment activity that is eliminated in consolidation.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
Revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
593,376 |
|
|
$ |
425,583 |
|
Wheels & Parts |
|
|
97,407 |
|
|
|
140,663 |
|
Leasing & Services |
|
|
23,823 |
|
|
|
27,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
714,606 |
|
|
|
593,285 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
|
465,658 |
|
|
|
351,829 |
|
Wheels & Parts |
|
|
89,645 |
|
|
|
129,825 |
|
Leasing & Services |
|
|
10,017 |
|
|
|
14,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
565,320 |
|
|
|
496,510 |
|
Margin: |
|
|
|
|
|
|
|
|
Manufacturing |
|
|
127,718 |
|
|
|
73,754 |
|
Wheels & Parts |
|
|
7,762 |
|
|
|
10,838 |
|
Leasing & Services |
|
|
13,806 |
|
|
|
12,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
149,286 |
|
|
|
96,775 |
|
Selling and administrative |
|
|
45,595 |
|
|
|
34,800 |
|
Net gain on disposition of equipment |
|
|
(720 |
) |
|
|
(5,619 |
) |
Restructuring charges |
|
|
|
|
|
|
56 |
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
|
|
104,411 |
|
|
|
67,538 |
|
Interest and foreign exchange |
|
|
4,285 |
|
|
|
5,437 |
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes and earnings from unconsolidated affiliates |
|
|
100,126 |
|
|
|
62,101 |
|
Income tax expense |
|
|
(30,783 |
) |
|
|
(16,303 |
) |
|
|
|
|
|
|
|
|
|
Earnings before earnings from unconsolidated affiliates |
|
|
69,343 |
|
|
|
45,798 |
|
Earnings from unconsolidated affiliates |
|
|
982 |
|
|
|
298 |
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
70,325 |
|
|
|
46,096 |
|
Net earnings attributable to noncontrolling interest |
|
|
(27,514 |
) |
|
|
(12,508 |
) |
|
|
|
|
|
|
|
|
|
Net earnings attributable to Greenbrier |
|
$ |
42,811 |
|
|
$ |
33,588 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
1.33 |
|
|
$ |
1.03 |
|
Performance for our segments is evaluated based on operating profit. Corporate includes selling and administrative costs not
directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal
reporting purposes.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
Operating profit (loss): |
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
115,675 |
|
|
$ |
61,116 |
|
Wheels & Parts |
|
|
5,078 |
|
|
|
5,524 |
|
Leasing & Services |
|
|
10,824 |
|
|
|
14,582 |
|
Corporate |
|
|
(27,166 |
) |
|
|
(13,684 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
104,411 |
|
|
$ |
67,538 |
|
|
|
|
|
|
|
|
|
|
36
THE GREENBRIER COMPANIES, INC.
Consolidated Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
714,606 |
|
|
$ |
593,285 |
|
|
$ |
121,321 |
|
|
|
20.4 |
% |
Cost of revenue |
|
$ |
565,320 |
|
|
$ |
496,510 |
|
|
$ |
68,810 |
|
|
|
13.9 |
% |
Margin (%) |
|
|
20.9 |
% |
|
|
16.3 |
% |
|
|
4.6 |
% |
|
|
* |
|
Net earnings attributable to Greenbrier |
|
$ |
42,811 |
|
|
$ |
33,588 |
|
|
$ |
9,223 |
|
|
|
27.5 |
% |
Through our integrated business model, we provide a broad range of custom products and
services in each of our segments which have various average selling prices and margins. The demand for and mix of products and services delivered changes from period to period which causes fluctuations in our results of operations.
Revenue was $714.6 million and $593.3 million for the three months ended May 31, 2015 and 2014, respectively. The 20.4% increase in revenue was primarily
due to a 39.4% increase in Manufacturing revenue as a result of a 33% higher volume of deliveries due to strong demand in the freight car market. These were partially offset by a decrease of 30.8% in Wheels & Parts revenue. On July 18,
2014 we contributed our Repair operations to GBW, an unconsolidated 50/50 joint venture. After July 18, 2014, the results of GBW were included as part of Earnings (loss) from unconsolidated affiliates as we account for our interest in GBW under
the equity method of accounting. The decrease in Wheels & Parts revenue was primarily due to the three months ended May 31, 2015 excluding repair revenue as a result of contributing our repair business to GBW, while the three months
ended May 31, 2014 included repair revenue. In addition, the increase in revenue was partially offset by a decrease of 11.9% in Leasing & Services revenue primarily the result of revenue recognized on the sale of railcars we purchased
from a third party in the prior year.
Cost of revenue was $565.3 million and $496.5 million for the three months ended May 31, 2015 and 2014,
respectively. The 13.9% increase in cost of revenue was primarily due to a 32.4% increase in Manufacturing cost of revenue primarily due to a 33% increase in railcar deliveries partially offset by improved production efficiencies and favorable
foreign currency exchange rates. The increase in cost of revenue was partially offset by a decrease in cost of revenue of 30.9% in Wheels & Parts primarily due to the three months ended May 31, 2015 excluding repair cost of revenue as
a result of contributing our repair business to an unconsolidated joint venture, GBW, in July 2014. The three months ended May 31, 2014 included repair cost of revenue. In addition, the increase in cost of revenue was partially offset by a
decrease of 32.6% in Leasing & Services cost of revenue primarily due to the cost of purchasing railcars from a third party that were sold in the prior year.
Margin as a percentage of revenue was 20.9% and 16.3% for the three months ended May 31, 2015 and 2014, respectively. The overall 4.6% increase in margin
was due to an increase in margin in all three of our segments. Manufacturing margin increased to 21.5% for the three months ended May 31, 2015 compared to 17.3% for the three months ended May 31, 2014 primarily due to a favorable change in
pricing, improved production efficiencies and favorable foreign currency exchange rates. In addition, the three months ended May 31, 2015 had higher volumes of new railcar sales with leases attached which typically result in higher sales prices
and margins. Wheels & Parts margin increased to 8.0% for the three months ended May 31, 2015 compared to 7.7% for the three months ended May 31, 2014. The three months ended May 31, 2015 excluded the results of our repair
operations which in the recent past have had lower margins as a percentage of revenue than the rest of the segment. The increase in Wheels & Parts margin was partially offset by the adverse effect of declines in scrap metal pricing on wheel
margins during the three months ended May 31, 2015. Leasing & Services margin increased to 58.0% for the three months ended May 31, 2015 compared to 45.1% for the three months ended May 31, 2014 primarily due to a higher
average volume of rent-producing leased railcars for syndication.
Net earnings attributable to Greenbrier were $42.8 million and $33.6 million for the
three months ended May 31, 2015 and May 31, 2014, respectively. The $9.2 million increase in net earnings was primarily attributable to an increase in margin as compared to the prior comparable period partially offset by an increase in
selling and administrative expense.
37
THE GREENBRIER COMPANIES, INC.
Manufacturing Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
593,376 |
|
|
$ |
425,583 |
|
|
$ |
167,793 |
|
|
|
39.4 |
% |
Cost of revenue |
|
$ |
465,658 |
|
|
$ |
351,829 |
|
|
$ |
113,829 |
|
|
|
32.4 |
% |
Margin (%) |
|
|
21.5 |
% |
|
|
17.3 |
% |
|
|
4.2 |
% |
|
|
* |
|
Operating profit ($) |
|
$ |
115,675 |
|
|
$ |
61,116 |
|
|
$ |
54,559 |
|
|
|
89.3 |
% |
Operating profit (%) |
|
|
19.5 |
% |
|
|
14.4 |
% |
|
|
5.1 |
% |
|
|
* |
|
Deliveries |
|
|
5,700 |
|
|
|
4,300 |
|
|
|
1,400 |
|
|
|
32.6 |
% |
Manufacturing revenue was $593.4 million and $425.6 million for the three months ended
May 31, 2015 and 2014, respectively. Manufacturing revenue increased $167.8 million or 39.4% primarily due to a 33% increase in the volume of deliveries with a mix which had a higher average selling price as compared to the prior comparable
period as a result of favorable pricing and a change in product mix. These higher deliveries were in response to strong demand in the freight car market. In addition, the increase in Manufacturing revenue was attributed to an increase in marine
activity as compared to the prior comparable period.
Manufacturing cost of revenue was $465.7 million and $351.8 million for the three months ended
May 31, 2015 and 2014, respectively. Cost of revenue increased $113.8 million or 32.4% primarily due to an increase of 33% in the volume of railcar deliveries. This was partially offset by improved production efficiencies and favorable foreign
currency exchange rates. In addition, the increase in Manufacturing cost of revenue was attributed to an increase in marine activity as compared to the prior comparable period.
Manufacturing margin as a percentage of revenue for the three months ended May 31, 2015 was 21.5% compared to 17.3% for the three months ended
May 31, 2014. The 4.2% increase in margin was primarily due to favorable pricing, improved production efficiencies and favorable foreign currency exchange rates. In addition, the three months ended May 31, 2015 had higher volumes of new
railcar sales with leases attached which typically result in higher sales prices and margins.
Manufacturing operating profit was $115.7 million or 19.5%
of revenue for the three months ended May 31, 2015 and $61.1 million or 14.4% of revenue for the three months ended May 31, 2014. The $54.6 million or 89.3% increase in operating profit was primarily attributed to higher margins.
38
THE GREENBRIER COMPANIES, INC.
Wheels & Parts Segment
This segment included the results of operations for our Repair operations through July 18, 2014. On July 18, 2014 we and Watco, our joint venture
partner, contributed our respective Repair operations to GBW, an unconsolidated 50/50 joint venture. After July 18, 2014, the results of GBW were included as part of Earnings (loss) from unconsolidated affiliates as we account for our interest
in GBW under the equity method of accounting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
97,407 |
|
|
$ |
140,663 |
|
|
$ |
(43,256 |
) |
|
|
(30.8 |
%) |
Cost of revenue |
|
$ |
89,645 |
|
|
$ |
129,825 |
|
|
$ |
(40,180 |
) |
|
|
(30.9 |
%) |
Margin (%) |
|
|
8.0 |
% |
|
|
7.7 |
% |
|
|
0.3 |
% |
|
|
* |
|
Operating profit ($) |
|
$ |
5,078 |
|
|
$ |
5,524 |
|
|
$ |
(446 |
) |
|
|
(8.1 |
%) |
Operating profit (%) |
|
|
5.2 |
% |
|
|
3.9 |
% |
|
|
1.3 |
% |
|
|
* |
|
Wheels & Parts revenue was $97.4 million and $140.7 million for the three months
ended May 31, 2015 and 2014, respectively. The $43.3 million or 30.8% decrease in revenue was primarily due to the three months ended May 31, 2015 excluding repair revenue as a result of contributing our repair business to GBW, while the
three months ended May 31, 2014 included $42.1 million of repair revenue. The decrease in revenue was also attributed to an 8.2% decrease in wheel set and component volumes due to a decrease in demand and a decrease in scrap metal pricing.
These were partially offset by 11.9% increase in parts revenue.
Wheels & Parts cost of revenue was $89.6 million and $129.8 million for the
three months ended May 31, 2015 and 2014, respectively. Cost of revenue decreased $40.2 million or 30.9% primarily due to the three months ended May 31, 2015 excluding repair cost of revenue as a result of contributing our repair business
to GBW, while the three months ended May 31, 2014 included repair cost of revenue. In addition, the decrease in cost of revenue was due to lower wheel set and component costs associated with decreased volumes.
Wheels & Parts margin as a percentage of revenue for the three months ended May 31, 2015 was 8.0% compared to 7.7% for the three months ended
May 31, 2014. The three months ended May 31, 2015 excluded the results of our repair operations which in the recent past have had lower margins as a percentage of revenue than the rest of the segment. In addition, the increase in margin
was due to a more favorable parts product mix. These were partially offset by the adverse effect of declines in scrap metal pricing on wheel margins during the three months ended May 31, 2015.
Wheels & Parts operating profit was $5.1 million or 5.2% of revenue for the three months ended May 31, 2015 and $5.5 million or 3.9% of revenue
for the three months ended May 31, 2014. The $0.4 million or 8.1% decrease in operating profit was primarily attributed to a decrease in margin in the current year partially offset by restructuring charges of $0.1 million in the prior year.
39
THE GREENBRIER COMPANIES, INC.
Leasing & Services Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
23,823 |
|
|
$ |
27,039 |
|
|
$ |
(3,216 |
) |
|
|
(11.9 |
%) |
Cost of revenue |
|
$ |
10,017 |
|
|
$ |
14,856 |
|
|
$ |
(4,839 |
) |
|
|
(32.6 |
%) |
Margin (%) |
|
|
58.0 |
% |
|
|
45.1 |
% |
|
|
12.9 |
% |
|
|
* |
|
Operating profit ($) |
|
$ |
10,824 |
|
|
$ |
14,582 |
|
|
$ |
(3,758 |
) |
|
|
(25.8 |
%) |
Operating profit (%) |
|
|
45.4 |
% |
|
|
53.9 |
% |
|
|
(8.5 |
%) |
|
|
* |
|
Leasing & Services revenue was $23.8 million and $27.0 million for the three months
ended May 31, 2015 and 2014, respectively. The $3.2 million or 11.9% decrease in revenue was primarily the result of revenue recognized on the sale of railcars we purchased from a third party in the prior year. These railcars were not
manufactured by our company, but rather purchased from a third party with a lease attached, with the intent to resell them. The gross proceeds of $7.8 million from the sale of these railcars with leases attached were recorded as revenue and the cost
of purchasing these railcars from a third party was recorded in cost of sales. This was partially offset by a higher average volume of rent-producing leased railcars for syndication held short-term, which is classified as Leased railcars for
syndication on our Consolidated Balance Sheet.
Leasing & Services cost of revenue was $10.0 million and $14.9 million for the three months ended
May 31, 2015 and 2014, respectively. Cost of revenue decreased $4.8 million or 32.6% primarily due to the cost of purchasing railcars from a third party that were sold in the prior year.
Leasing & Services margin as a percentage of revenue for the three months ended May 31, 2015 was 58.0% compared to 45.1% for the three months
ended May 31, 2014. The 12.9% increase was primarily the result of a higher average volume of rent-producing leased railcars for syndication as compared to the prior year. In addition the increase was attributed to a lower margin percentage on
the syndication of railcars purchased from a third party in the prior year.
Leasing & Services operating profit was $10.8 million or 45.4% of
revenue for the three months ended May 31, 2015 and $14.6 million or 53.9% of revenue for the three months ended May 31, 2014. The $3.8 million or 25.8% decrease in operating profit was primarily attributed to a $4.9 million decrease in
Net gain on disposition of equipment partially offset by a $1.6 million increase in gross margin.
The percentage of owned units on lease at May 31,
2015 was 97.6% compared to 97.9% at May 31, 2014.
40
THE GREENBRIER COMPANIES, INC.
GBW Joint Venture Segment
On July 18, 2014, we and Watco, our joint venture partner, contributed our respective Repair operations to GBW, an unconsolidated 50/50 joint venture
which became our fourth reportable segment (GBW Joint Venture) upon formation. The results of operations for the GBW Joint Venture are not consolidated in our financial statements as the investment is accounted for under the equity method of
accounting.
For the three months ended May 31, 2015, GBW generated total revenue of $88.8 million from its 33 railcar repair, refurbishment and
retrofitting shops. For the three months ended May 31, 2015, GBW margin as a percentage of revenue was 7.4%.
To reflect our 50% share of GBWs
results, we recorded earnings of $0.4 million in Earnings from unconsolidated affiliates associated with GBW for the three months ended May 31, 2015.
Selling and Administrative Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Selling and administrative expense |
|
$ |
45,595 |
|
|
$ |
34,800 |
|
|
$ |
10,795 |
|
|
|
31.0 |
% |
Selling and administrative expense was $45.6 million or 6.4% of revenue for the three months ended May 31, 2015 compared
to $34.8 million or 5.9% of revenue for the prior comparable period. The $10.8 million increase was primarily attributed to $5.8 million in professional fees and other transaction costs in the current quarter in connection with a potential
acquisition, a $3.3 million increase in employee related costs including an increase in long term incentive compensation and additional headcount based on current levels of activity, $1.7 million in costs in the current quarter associated with our
advocacy of new tank car regulations and a $0.5 million increase in travel and entertainment expenses primarily for new business development. These were partially offset by our repair operations being excluded from the three months ended
May 31, 2015. Subsequent to quarter end, discussions related to the potential acquisition were terminated.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment was $0.7 million for the three months ended May 31, 2015, compared to $5.6 million for the prior comparable
period. Assets from our lease fleet are periodically sold in the normal course of business in order to take advantage of market conditions and to manage risk and liquidity. All of the current years gain and prior years gain was realized
on the disposition of leased assets.
Restructuring Charges
During the fourth quarter of 2013, we implemented a restructuring plan to sell or close certain wheels, repair and parts facilities to enhance margins and
improve capital efficiency. Restructuring charges related to this plan totaled $0.1 million for the three months ended May 31, 2014 and consisted of employee related termination costs and other expenses.
41
THE GREENBRIER COMPANIES, INC.
Other Costs
Interest and foreign exchange expense was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Increase |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
(Decrease) |
|
Interest and foreign exchange: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense |
|
$ |
5,151 |
|
|
$ |
4,861 |
|
|
$ |
290 |
|
Foreign exchange (gain) loss |
|
|
(866 |
) |
|
|
576 |
|
|
|
(1,442 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,285 |
|
|
$ |
5,437 |
|
|
$ |
(1,152 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The $1.2 million decrease in interest and foreign exchange expense from the prior comparable period was primarily attributed
to the strengthening of the US Dollar against the Mexican Peso which resulted in a $0.9 million foreign exchange gain in the current year compared to a $0.6 million foreign exchange loss in the prior year. This was partially offset by an increase of
$0.3 million due to higher interest expense on increased levels of average borrowings as compared to the prior comparable period.
Income Tax
The tax rate for the three months ended May 31, 2015 was 30.7%, compared to 26.3% for the three months ended May 31, 2014. The tax rate for the prior
period was lower primarily due to a discrete tax benefit booked last year to reflect a change in the state tax rate at which deferred tax items are projected to reverse.
The tax rate can fluctuate period-to-period due to changes in the projected mix of foreign and domestic pre-tax earnings and due to discrete tax items booked
within the interim period. It can also fluctuate with changes in the proportion of projected pre-tax earnings attributable to our Mexican railcar manufacturing joint venture because the joint venture is predominantly treated as a partnership for tax
purposes and, as a result, the partnerships entire pre-tax earnings are included in Earnings before income taxes and earnings from unconsolidated affiliate, whereas only our 50% share of the tax is included in Income tax expense.
Earnings From Unconsolidated Affiliates
Earnings from
unconsolidated affiliates was $1.0 million for the three months ended May 31, 2015 and primarily included our share of after-tax earnings from our castings joint venture and our share of after-tax results from our GBW Joint Venture including
eliminations associated with GBW transactions with other Greenbrier entities. Earnings from unconsolidated affiliates was $0.3 million for the three months ended May 31, 2014 and primarily included our share of after-tax earnings from our
castings joint venture.
Noncontrolling Interest
Net
earnings attributable to noncontrolling interest was $27.5 million for the three months ended May 31, 2015 compared to $12.5 million in the prior comparable period. These amounts primarily represent our joint venture partners share in the
results of operations of our Mexican railcar manufacturing joint venture, adjusted for intercompany sales. The increase of $15.0 million from the prior year is primarily a result of operating at higher production rates and lower intercompany
activity.
42
THE GREENBRIER COMPANIES, INC.
Nine Months Ended May 31, 2015 Compared to Nine Months Ended May 31, 2014
Overview
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
Revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
1,478,566 |
|
|
$ |
1,132,811 |
|
Wheels & Parts |
|
|
286,671 |
|
|
|
390,604 |
|
Leasing & Services |
|
|
74,576 |
|
|
|
62,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,839,813 |
|
|
|
1,585,856 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Manufacturing |
|
|
1,184,922 |
|
|
|
969,841 |
|
Wheels & Parts |
|
|
259,285 |
|
|
|
365,740 |
|
Leasing & Services |
|
|
32,942 |
|
|
|
34,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,477,149 |
|
|
|
1,369,671 |
|
Margin: |
|
|
|
|
|
|
|
|
Manufacturing |
|
|
293,644 |
|
|
|
162,970 |
|
Wheels & Parts |
|
|
27,386 |
|
|
|
24,864 |
|
Leasing & Services |
|
|
41,634 |
|
|
|
28,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
362,664 |
|
|
|
216,185 |
|
Selling and administrative |
|
|
112,223 |
|
|
|
89,034 |
|
Net gain on disposition of equipment |
|
|
(924 |
) |
|
|
(14,686 |
) |
Restructuring charges |
|
|
|
|
|
|
1,475 |
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
|
|
251,365 |
|
|
|
140,362 |
|
|
|
|
|
|
|
|
|
|
Interest and foreign exchange |
|
|
9,355 |
|
|
|
14,280 |
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes and earnings from unconsolidated affiliates |
|
|
242,010 |
|
|
|
126,082 |
|
Income tax expense |
|
|
(76,209 |
) |
|
|
(36,708 |
) |
|
|
|
|
|
|
|
|
|
Earnings before earnings from unconsolidated affiliates |
|
|
165,801 |
|
|
|
89,374 |
|
Earnings from unconsolidated affiliates |
|
|
1,552 |
|
|
|
272 |
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
167,353 |
|
|
|
89,646 |
|
Net earnings attributable to noncontrolling interest |
|
|
(41,405 |
) |
|
|
(25,083 |
) |
|
|
|
|
|
|
|
|
|
Net earnings attributable to Greenbrier |
|
$ |
125,948 |
|
|
$ |
64,563 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
3.91 |
|
|
$ |
2.01 |
|
Performance for our segments is evaluated based on operating profit. Corporate includes selling and administrative costs not
directly related to goods and services and certain costs that are intertwined among segments due to our integrated business model. Management does not allocate Interest and foreign exchange or Income tax expense for either external or internal
reporting purposes.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
Operating profit (loss): |
|
|
|
|
|
|
|
|
Manufacturing |
|
$ |
258,602 |
|
|
$ |
129,542 |
|
Wheels & Parts |
|
|
20,986 |
|
|
|
8,724 |
|
Leasing & Services |
|
|
31,677 |
|
|
|
32,888 |
|
Corporate |
|
|
(59,900 |
) |
|
|
(30,792 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
251,365 |
|
|
$ |
140,362 |
|
|
|
|
|
|
|
|
|
|
43
THE GREENBRIER COMPANIES, INC.
Consolidated Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
1,839,813 |
|
|
$ |
1,585,856 |
|
|
$ |
253,957 |
|
|
|
16.0 |
% |
Cost of revenue |
|
$ |
1,477,149 |
|
|
$ |
1,369,671 |
|
|
$ |
107,478 |
|
|
|
7.8 |
% |
Margin (%) |
|
|
19.7 |
% |
|
|
13.6 |
% |
|
|
6.1 |
% |
|
|
* |
|
Net earnings attributable to Greenbrier |
|
$ |
125,948 |
|
|
$ |
64,563 |
|
|
$ |
61,385 |
|
|
|
95.1 |
% |
Through our integrated business model, we provide a broad range of custom products and
services in each of our segments which have various average selling prices and margins. The demand for and mix of products and services delivered changes from period to period which causes fluctuations in our results of operations.
Revenue was $1.8 billion and $1.6 billion for the nine months ended May 31, 2015 and 2014, respectively. The 16.0% increase in revenue was primarily due
to a 30.5% increase in Manufacturing revenue as a result of a 31% higher volume of deliveries due to strong demand in the freight car market. The increase in revenue was also attributed to a 19.4% increase in Leasing & Services revenue
primarily the result of a higher average volume of rent-producing leased railcars for syndication. These were partially offset by a decrease of 26.6% in Wheels & Parts revenue. On July 18, 2014 we contributed our Repair operations to
GBW, an unconsolidated 50/50 joint venture. After July 18, 2014, the results of GBW were included as part of Earnings (loss) from unconsolidated affiliates as we account for our interest in GBW under the equity method of accounting. The
decrease in Wheels & Parts revenue was primarily due to the nine months ended May 31, 2015 excluding repair revenue as a result of contributing our repair business to GBW, while the nine months ended May 31, 2014 included repair
revenue.
Cost of revenue was $1.5 billion and $1.4 billion for the nine months ended May 31, 2015 and 2014, respectively. The 7.8% increase in cost
of revenue was primarily due to a 22.2% increase in Manufacturing cost of revenue primarily due to a 31% increase in railcar deliveries with a mix which had a lower average labor and material content. The increase in cost of revenue for
Manufacturing was partially offset by improved production efficiencies and favorable foreign currency exchange rates. The increase in cost of revenue was partially offset by a decrease in cost of revenue of 29.1% in Wheels & Parts primarily
due to the nine months ended May 31, 2015 excluding repair cost of revenue as a result of contributing our repair business to an unconsolidated joint venture, GBW, in July 2014. The nine months ended May 31, 2014 included repair cost of
revenue. The increase in cost of revenue was partially offset by a 3.4% decrease in Leasing & Services cost of revenue primarily due to lower transportation costs and a decrease in the cost of purchasing railcars from a third party that
were sold in the prior year.
Margin as a percentage of revenue was 19.7% and 13.6% for the nine months ended May 31, 2015 and 2014, respectively.
The overall 6.1% increase in margin was due to an increase in margin in all three of our segments. Manufacturing margin increased to 19.9% for the nine months ended May 31, 2015 compared to 14.4% for the nine months ended May 31, 2014
primarily due to favorable pricing, improved production efficiencies and favorable foreign currency exchange rates. In addition, the nine months ended May 31, 2015 had higher volumes of new railcar sales with leases attached which typically
result in higher sales prices and margins. Wheels & Parts margin increased to 9.6% for the nine months ended May 31, 2015 compared to 6.4% for the nine months ended May 31, 2014. The nine months ended May 31, 2015 excluded
the results of our repair operations which historically have had lower margins as a percentage of revenue than the rest of the segment. The increase in Wheels & Parts margin was partially offset by the adverse effect of declines in scrap
metal pricing on wheel margins during the nine months ended May 31, 2015. Leasing & Services margin increased to 55.8% for the nine months ended May 31, 2015 compared to 45.4% for the nine months ended May 31, 2014 primarily
the result of a higher average volume of rent-producing leased railcars for syndication.
Net earnings attributable to Greenbrier was $125.9 million and
$64.6 million for the nine months ended May 31, 2015 and May 31, 2014, respectively. The $61.4 million increase in net earnings was primarily attributable to an increase in margin as compared to the prior comparable period partially offset
by an increase in selling and administrative expense.
44
THE GREENBRIER COMPANIES, INC.
Manufacturing Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
1,478,566 |
|
|
$ |
1,132,811 |
|
|
$ |
345,755 |
|
|
|
30.5 |
% |
Cost of revenue |
|
$ |
1,184,922 |
|
|
$ |
969,841 |
|
|
$ |
215,081 |
|
|
|
22.2 |
% |
Margin (%) |
|
|
19.9 |
% |
|
|
14.4 |
% |
|
|
5.5 |
% |
|
|
* |
|
Operating profit ($) |
|
$ |
258,602 |
|
|
$ |
129,542 |
|
|
$ |
129,060 |
|
|
|
99.6 |
% |
Operating profit (%) |
|
|
17.5 |
% |
|
|
11.4 |
% |
|
|
6.1 |
% |
|
|
* |
|
Deliveries |
|
|
14,900 |
|
|
|
11,400 |
|
|
|
3,500 |
|
|
|
30.7 |
% |
Manufacturing revenue was $1.5 billion and $1.1 billion for the nine months ended May 31,
2015 and 2014, respectively. Manufacturing revenue increased $345.8 million or 30.5% primarily due to a 31% increase in the volume of deliveries in response to strong demand in the freight car market and an increase in marine activity as compared to
the prior comparable period.
Manufacturing cost of revenue was $1.2 billion and $1.0 billion for the nine months ended May 31, 2015 and 2014,
respectively. Cost of revenue increased $215.1 million or 22.2% primarily due to an increase of 31% in the volume of railcar deliveries with a mix which had a lower average labor and material content. This was partially offset by improved production
efficiencies and favorable foreign currency exchange rates. In addition, the increase in Manufacturing cost of revenue was attributed to an increase in marine activity as compared to the prior comparable period.
Manufacturing margin as a percentage of revenue for the nine months ended May 31, 2015 was 19.9% compared to 14.4% for the nine months ended May 31,
2014. The 5.5% increase in margin was primarily due to favorable pricing, improved production efficiencies and favorable foreign currency exchange rates. In addition, the nine months ended May 31, 2015 had higher volumes of new railcar sales
with leases attached which typically result in higher sales prices and margins.
Manufacturing operating profit was $258.6 million or 17.5% of revenue for
the nine months ended May 31, 2015 and $129.5 million or 11.4% of revenue for the nine months ended May 31, 2014. The $129.1 million or 99.6% increase in operating profit was primarily attributed to higher margins.
45
THE GREENBRIER COMPANIES, INC.
Wheels & Parts Segment
This segment included the results of operations for our Repair operations through July 18, 2014. On July 18, 2014 we and Watco, our joint venture
partner, contributed our respective Repair operations to GBW, an unconsolidated 50/50 joint venture. After July 18, 2014, the results of GBW were included as part of Earnings (loss) from unconsolidated affiliates as we account for our interest
in GBW under the equity method of accounting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
286,671 |
|
|
$ |
390,604 |
|
|
$ |
(103,933 |
) |
|
|
(26.6 |
%) |
Cost of revenue |
|
$ |
259,285 |
|
|
$ |
365,740 |
|
|
$ |
(106,455 |
) |
|
|
(29.1 |
%) |
Margin (%) |
|
|
9.6 |
% |
|
|
6.4 |
% |
|
|
3.2 |
% |
|
|
* |
|
Operating profit ($) |
|
$ |
20,986 |
|
|
$ |
8,724 |
|
|
$ |
12,262 |
|
|
|
140.6 |
% |
Operating profit (%) |
|
|
7.3 |
% |
|
|
2.2 |
% |
|
|
5.1 |
% |
|
|
* |
|
Wheels & Parts revenue was $286.7 million and $390.6 million for the nine months
ended May 31, 2015 and 2014, respectively. The $103.9 million or 26.6% decrease in revenue was primarily due to the nine months ended May 31, 2015 excluding repair revenue as a result of contributing our repair business to GBW, while the
nine months ended May 31, 2014 included $117.0 million of repair revenue. The decrease in revenue was also attributed to a decrease in scrap metal pricing. This was partially offset by an increase in wheel set and component volumes as a result
of increased demand.
Wheels & Parts cost of revenue was $259.3 million and $365.7 million for the nine months ended May 31, 2015 and 2014,
respectively. Cost of revenue decreased $106.5 million or 29.1% primarily due to the nine months ended May 31, 2015 excluding repair cost of revenue as a result of contributing our repair business to GBW, while the nine months ended
May 31, 2014 included repair cost of revenue. This was partially offset by an increase in wheel set and component costs associated with increased volumes as a result of increased demand.
Wheels & Parts margin as a percentage of revenue for the nine months ended May 31, 2015 was 9.6% compared to 6.4% for the nine months ended
May 31, 2014. The nine months ended May 31, 2015 excluded the results of our repair operations which in the recent past have had lower margins as a percentage of revenue than the rest of the segment. In addition, the increase in margin was
due to a favorable change in wheel pricing and a more favorable parts product mix. These were partially offset by the adverse effect of declines in scrap metal pricing on wheel margins during the nine months ended May 31, 2015.
Wheels & Parts operating profit was $21.0 million or 7.3% of revenue for the nine months ended May 31, 2015 and $8.7 million or 2.2% of revenue
for the nine months ended May 31, 2014. The $12.3 million or 140.6% increase in operating profit was primarily attributed to an increase in margin in the current year and restructuring charges of $1.5 million in the prior year.
46
THE GREENBRIER COMPANIES, INC.
Leasing & Services Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Revenue |
|
$ |
74,576 |
|
|
$ |
62,441 |
|
|
$ |
12,135 |
|
|
|
19.4 |
% |
Cost of revenue |
|
$ |
32,942 |
|
|
$ |
34,090 |
|
|
$ |
(1,148 |
) |
|
|
(3.4 |
%) |
Margin (%) |
|
|
55.8 |
% |
|
|
45.4 |
% |
|
|
10.4 |
% |
|
|
* |
|
Operating profit ($) |
|
$ |
31,677 |
|
|
$ |
32,888 |
|
|
$ |
(1,211 |
) |
|
|
(3.7 |
%) |
Operating profit (%) |
|
|
42.5 |
% |
|
|
52.7 |
% |
|
|
(10.2 |
%) |
|
|
* |
|
Leasing & Services revenue was $74.6 million and $62.4 million for the nine months
ended May 31, 2015 and 2014, respectively. The $12.1 million or 19.4% increase in revenue was primarily the result of a higher average volume of rent-producing leased railcars for syndication held short-term, which is classified as Leased
railcars for syndication on our Consolidated Balance Sheet. The increase in revenue was also attributed to a 32% increase in management services revenue due to the addition of new management service agreements.
Leasing & Services cost of revenue was $32.9 million and $34.1 million for the nine months ended May 31, 2015 and 2014, respectively. Cost of
revenue decreased $1.1 million or 3.4% primarily due to lower transportation costs and a decrease in the cost of purchasing railcars from a third party that were sold in the prior year.
Leasing & Services margin as a percentage of revenue for the nine months ended May 31, 2015 was 55.8% compared to 45.4% for the nine months
ended May 31, 2014. The 10.4% increase was primarily the result of a higher average volume of rent-producing leased railcars for syndication as compared to the prior year and lower transportation costs.
Leasing & Services operating profit was $31.7 million or 42.5% of revenue for the nine months ended May 31, 2015 and $32.9 million and 52.7% of
revenue for the nine months ended May 31, 2014. The $1.2 million or 3.7% decrease in operating profit was primarily attributed to a $13.4 decrease in Net gain on disposition of equipment partially offset by a $13.3 million increase in gross
margin.
47
THE GREENBRIER COMPANIES, INC.
GBW Joint Venture Segment
On July 18, 2014, we and Watco, our joint venture partner, contributed our respective Repair operations to GBW, an unconsolidated 50/50 joint venture
which became our fourth reportable segment (GBW Joint Venture) upon formation. The results of operations for the GBW Joint Venture are not consolidated in our financial statements as the investment is accounted for under the equity method of
accounting.
For the nine months ended May 31, 2015, GBW generated total revenue of $254.7 million from its 33 railcar repair, refurbishment and
retrofitting shops. For the nine months ended May 31, 2015, GBW margin as a percentage of revenue was 6.0%.
To reflect our 50% share of GBWs
results, we recorded earnings of $0.4 million in Earnings from unconsolidated affiliates associated with GBW for the nine months ended May 31, 2015.
Selling and Administrative Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
Increase (Decrease) |
|
|
% Change |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
|
Selling and administrative expense |
|
$ |
112,223 |
|
|
$ |
89,034 |
|
|
$ |
23,189 |
|
|
|
26.0 |
% |
Selling and administrative expense was $112.2 million or 6.1% of revenue for the nine months ended May 31, 2015 compared
to $89.0 million or 5.6% of revenue for the prior comparable period. The $23.2 million increase was primarily attributed to a $10.8 million increase in employee related costs including long term and short term incentive compensation and additional
headcount based on current levels of activity, $5.8 million in professional fees and other transaction costs in the current year in connection with a potential acquisition, a $2.6 million increase in travel and entertainment expenses primarily for
new business development, $2.4 million in costs in the current year associated with our advocacy of new tank car regulations and $1.9 million in legal, accounting and consulting costs in the current year associated with the previously disclosed
investigation at our Concarril manufacturing facility. These were partially offset by our repair operations being excluded from the three months ended May 31, 2015. Subsequent to quarter end, discussions related to the potential acquisition
were terminated.
Net Gain on Disposition of Equipment
Net gain on disposition of equipment was $0.9 million for the nine months ended May 31, 2015, compared to $14.7 million for the prior comparable period.
Assets from our lease fleet are periodically sold in the normal course of business in order to take advantage of market conditions and to manage risk and liquidity.
All of the current years gain of $0.9 million was realized on the disposition of leased assets. The prior years gain included $14.3 million that
was realized on the disposition of leased assets and $0.4 million on the disposition of equipment related to our restructuring plan to sell or close certain wheels, repair and parts facilities to enhance margins and improve capital efficiency.
Restructuring Charges
During the fourth quarter of 2013,
we implemented a restructuring plan to sell or close certain wheels, repair and parts facilities to enhance margins and improve capital efficiency. Restructuring charges related to this plan totaled $1.5 million for the nine months ended
May 31, 2014 and consisted of employee related termination costs and other expenses.
48
THE GREENBRIER COMPANIES, INC.
Other Costs
Interest and foreign exchange expense was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
|
Increase |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
|
(Decrease) |
|
Interest and foreign exchange: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense |
|
$ |
14,917 |
|
|
$ |
13,522 |
|
|
$ |
1,395 |
|
Foreign exchange (gain) loss |
|
|
(5,562 |
) |
|
|
758 |
|
|
|
(6,320 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,355 |
|
|
$ |
14,280 |
|
|
$ |
(4,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The $4.9 million decrease in interest and foreign exchange expense from the prior comparable period was primarily attributed
to the strengthening of the US Dollar against the Mexican Peso which resulted in a $5.6 million foreign exchange gain in the current year compared to a $0.8 million foreign exchange loss in the prior year. This was partially offset by an increase of
$1.4 million due to higher interest expense on increased levels of average borrowings as compared to the prior comparable period.
Income Tax
The tax rate for the nine months ended May 31, 2015 was 31.5%, compared to 29.1% for the nine months ended May 31, 2014. The tax rate for the prior
period was lower primarily due to a discrete tax benefit booked last year to reflect a change in the state tax rate at which deferred tax items are projected to reverse.
The tax rate can fluctuate period-to-period due to changes in the projected mix of foreign and domestic pre-tax earnings and due to discrete tax items booked
within the interim period. It can also fluctuate with changes in the proportion of projected pre-tax earnings attributable to our Mexican railcar manufacturing joint venture because the joint venture is predominantly treated as a partnership for tax
purposes and, as a result, the partnerships entire pre-tax earnings are included in Earnings before income taxes and earnings from unconsolidated affiliate, whereas only our 50% share of the tax is included in Income tax expense.
Earnings From Unconsolidated Affiliates
Earnings from
unconsolidated affiliates was $1.6 million for the nine months ended May 31, 2015 and primarily included our share of after-tax earnings from our castings joint venture and our share of after-tax results from our GBW Joint Venture including
eliminations associated with GBW transactions with other Greenbrier entities. Earnings from unconsolidated affiliates was $0.3 million for the nine months ended May 31, 2014 and primarily included our share of after-tax earnings from our
castings joint venture.
Noncontrolling Interest
Net
earnings attributable to noncontrolling interest was $41.4 million for the nine months ended May 31, 2015 compared to $25.1 million in the prior comparable period. These amounts primarily represent our joint venture partners share in the
results of operations of our Mexican railcar manufacturing joint venture, adjusted for intercompany sales. The increase of $16.3 million from the prior year is primarily a result of operating at higher production rates partially offset by higher
intercompany activity.
49
THE GREENBRIER COMPANIES, INC.
Liquidity and Capital Resources
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended May 31, |
|
(In thousands) |
|
2015 |
|
|
2014 |
|
Net cash provided by operating activities |
|
$ |
29,557 |
|
|
$ |
81,740 |
|
Net cash provided by (used in) investing activities |
|
|
(100,244 |
) |
|
|
3,079 |
|
Net cash provided by financing activities |
|
|
14,629 |
|
|
|
13,796 |
|
Effect of exchange rate changes |
|
|
(6,075 |
) |
|
|
2,442 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
(62,133 |
) |
|
$ |
101,057 |
|
|
|
|
|
|
|
|
|
|
We have been financed through cash generated from operations and borrowings. At May 31, 2015, cash and cash equivalents
were $122.8 million, a decrease of $62.1 million from $184.9 million at August 31, 2014.
Cash provided by operating activities was $29.6 million for
the nine months ended May 31, 2015 compared to $81.7 million for the nine months ended May 31, 2014. The change from the prior year was primarily due to a change in working capital needs and increased volume of leased railcars for
syndication due to operating at higher levels of production through our lease syndication model.
Cash provided by or used in investing activities
primarily related to capital expenditures net of proceeds from the sale of assets. Cash used in investing activities for the nine months ended May 31, 2015 was $100.2 million compared to cash provided by investing activities of $3.1 million for
the nine months ended May 31, 2014.
Capital expenditures totaled $75.9 million and $34.5 million for the nine months ended May 31, 2015 and
2014. Proceeds from the sale of assets, which primarily related to sales of railcars from our lease fleet within Leasing & Services, were approximately $4.6 million and $39.5 million for the nine months ended May 31, 2015 and 2014.
Approximately $60.6 million and $24.7 million of capital expenditures for the nine months ended May 31, 2015 and 2014 were attributable to
Manufacturing operations. Capital expenditures for Manufacturing are expected to be approximately $95.0 million in 2015 and primarily relate to enhancements to our manufacturing facilities and replacement of certain leased manufacturing capacity in
Mexico with an alternative site and expansion of capacity, with the capability for tank car production, at our manufacturing facilities in Mexico.
Approximately $10.2 million and $4.0 million of capital expenditures for the nine months ended May 31, 2015 and 2014 were attributable to
Leasing & Services operations. Leasing & Services and corporate capital expenditures for 2015 are expected to be approximately $11.0 million. Proceeds from sales of leased railcar equipment are expected to be approximately $5.0
million for 2015. Assets from our lease fleet are periodically sold in the normal course of business in order to take advantage of market conditions and to manage risk and liquidity.
Wheels & Parts capital expenditures for the nine months ended May 31, 2015 and 2014 were $5.1 million and $5.8 million and are expected to be
approximately $10.0 million in 2015 for maintenance and improvement of existing facilities.
Cash provided by financing activities was $14.6 million for
the nine months ended May 31, 2015 compared to $13.8 million for the nine months ended May 31, 2014. The change in cash provided by financing activities was primarily attributed to an increase in proceeds from debt, net of repayments, a
$22.2 million increase in the repurchase of stock and $12.1 million in dividend payments during the nine months ended May 31, 2015.
50
THE GREENBRIER COMPANIES, INC.
A quarterly dividend of $0.15 per share was declared on June 30, 2015.
Our 3.5% convertible senior notes will mature on April 1, 2018, unless earlier repurchased by us or converted in accordance with their terms. Holders may
convert at their option at any time prior to the business day immediately preceding the stated maturity date. During 2015, $93.1 million in principal of the original $230.0 million was converted into 2.5 million shares of our common stock which
resulted in a principal balance of $136.9 million as of May 31, 2015. Associated debt issuance costs of $1.3 million were removed from Intangibles and other assets, net and charged against additional paid in capital.
In October 2013, the Board of Directors authorized our company to repurchase up to $50 million of our common stock. We completed this share repurchase program
in October 2014. In October 2014, the Board of Directors authorized a new share repurchase program for our company to repurchase up to $50 million of our common stock. In January 2015, the Board of Directors authorized a $25 million increase to the
October 2014 share repurchase program, bringing the total to $75 million. During the three and nine months ended May 31, 2015, we repurchased a total of 28,363 and 891,041 shares for approximately $1.5 million and $48.5 million under our share
repurchase programs. As of May 31, 2015 we had $42.1 million available under the $75 million share repurchase program.
Senior secured credit
facilities, consisting of three components, aggregated to $346.2 million as of May 31, 2015. We had an aggregate of $203.9 million available to draw down under committed credit facilities as of May 31, 2015. This amount consists of $167.2
million available on the North American credit facility, $16.2 million on the European credit facilities and $20.5 million on the Mexican joint venture credit facilities as of May 31, 2015.
As of May 31, 2015, a $290.0 million revolving line of credit secured by substantially all of our assets in the U.S. not otherwise pledged as security
for term loans, 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 May 31, 2015, lines of credit totaling $16.2 million secured by certain of our European
assets, with various variable rates that range from Warsaw Interbank Offered Rate (WIBOR) plus 1.2% to WIBOR plus 1.3%, 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 February 2016 through June 2017.
Our Mexican joint venture has
two lines of credit totaling $40.0 million. The first line of credit provides up to $10.0 million and is secured by certain of the joint ventures 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 June 2016. The second line of credit provides up to $30.0 million and is fully guaranteed by each of the joint venture partners, including our 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 2019.
As of May 31, 2015, outstanding commitments under the senior secured credit facilities consisted of $49.8 million in letters of credit and $73.0 million
in revolving notes under the North American credit facility and $19.5 million outstanding in revolving notes under the Mexican joint venture credit facilities.
The revolving and operating lines of credit, along with notes payable, contain covenants with respect to us and our various subsidiaries, the most restrictive
of which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into sale leaseback transactions; create liens; sell assets; engage in transactions with affiliates, including
joint ventures and non U.S. subsidiaries, including but not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines of business. The
covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage.
51
THE GREENBRIER COMPANIES, INC.
We may from time to time seek to repurchase or otherwise retire or exchange securities, including
outstanding borrowings and equity securities, and take other steps to reduce our debt or otherwise improve our balance sheet. These actions may include open market repurchases, unsolicited or solicited privately negotiated
transactions or other retirements, repurchases or exchanges. Such repurchases or exchanges, if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, trading levels of our debt, our liquidity
requirements and contractual restrictions, if applicable.
We have operations in Mexico and Poland that conduct business in their local currencies as well
as other regional currencies. To mitigate the exposure to transactions denominated in currencies other than the functional currency, we enter into foreign currency forward exchange contracts with established financial institutions to protect the
margin on a portion of foreign currency sales in firm backlog, primarily in Euro. Given the strong credit standing of the counterparties, no provision has been made for credit loss due to counterparty non-performance.
As of May 31, 2015, the Mexican joint venture had $20.8 million of third party debt, of which we and our joint venture partner have each guaranteed
approximately $18.8 million.
In accordance with customary business practices in Europe, we have $3.5 million in third party warranty guarantee facilities
as of May 31, 2015. To date no amounts have been drawn under these guarantee facilities.
On July 18, 2014, we and Watco contributed our
respective Repair operations to GBW, an unconsolidated 50/50 joint venture. We made $12.5 million in cash contributions in 2014 and $3.2 million in cash contributions and $7.5 million in loans during the nine months ended May 31, 2015. We
expect to loan additional amounts, up to $7.0 million, during the fourth quarter of 2015. We are likely to make additional capital contributions or loans to GBW in the future. As of May 31, 2015, we had a $7.5 million note receivable and a
$21.0 million account receivable from GBW. The account receivable from GBW was for the initial sale of inventory to GBW which may be converted into a note receivable during the year. We receive approximately $5 million annually from GBW in lease
payments for our owned facilities and equipment leased to GBW as well as quarterly distributions of a portion of GBWs earnings. During the nine months ended May 31, 2015, we received $0.7 million in quarterly distributions from GBW.
We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing credit
facilities and long-term financings, to be sufficient to fund dividends, working capital needs, additional investments in GBW, planned capital expenditures and expected debt repayments during the next twelve months.
Off Balance Sheet Arrangements
We do not currently have
off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated Financial Statements.
52
THE GREENBRIER COMPANIES, INC.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of management to
arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenue and expenses reported in the financial statements and accompanying notes and disclosure of contingent
assets and liabilities within the financial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.
Income taxes - For financial reporting purposes, income tax expense is estimated based on amounts anticipated to be reported on tax return
filings. Those anticipated amounts may change from when the financial statements are prepared to when the tax returns are filed. Further, because tax filings are subject to review by taxing authorities, there is risk that a position taken in
preparation of a tax return may be challenged by a taxing authority. If a challenge is successful, differences in tax expense or between current and deferred tax items may arise in future periods. Any material effect of such differences would be
reflected in the financial statements when management considers the effect probable of occurring and the amount reasonably estimable. Valuation allowances reduce deferred tax assets to amounts more likely than not that will be realized based on
information available when the financial statements are prepared. This information may include estimates of future income and other assumptions that are inherently uncertain.
Maintenance obligations - We are responsible for maintenance on a portion of the managed and owned lease fleet under the terms of
maintenance obligations defined in the underlying lease or management agreement. The estimated maintenance liability is based on maintenance histories for each type and age of railcar. These estimates involve judgment as to the future costs of
repairs and the types and timing of repairs required over the lease term. As we cannot predict with certainty the prices, timing and volume of maintenance needed in the future on railcars under long-term leases, this estimate is uncertain and could
be materially different from maintenance requirements. The liability is periodically reviewed and updated based on maintenance trends and known future repair or refurbishment requirements. These adjustments could be material due to the inherent
uncertainty in predicting future maintenance requirements.
Warranty accruals - Warranty costs to cover a defined warranty period are
estimated and charged to operations. The estimated warranty cost is based on historical warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historical information for
similar product types. These estimates are inherently uncertain as they are based on historical data for existing products and judgment for new products. If warranty claims are made in the current period for issues that have not historically been
the subject of warranty claims and were not taken into consideration in establishing the accrual or if claims for issues already considered in establishing the accrual exceed expectations, warranty expense may exceed the accrual for that particular
product. Conversely, there is the possibility that claims may be lower than estimates. The warranty accrual is periodically reviewed and updated based on warranty trends. However, as we cannot predict future claims, the potential exists for the
difference in any one reporting period to be material.
Environmental costs - At times we may be involved in various proceedings related to
environmental matters. We estimate future costs for known environmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonably estimated based on currently available
information. If further developments or resolution of an environmental matter result in facts and circumstances that are significantly different than the assumptions used to develop these reserves, the accrual for environmental remediation could be
materially understated or overstated. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which
reserves are established are made. Due to the uncertain nature of estimating potential environmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to be responsible
or liable in any litigation or proceeding, that such costs would not be material to us.
53
THE GREENBRIER COMPANIES, INC.
Revenue recognition - Revenue is recognized when persuasive evidence of an arrangement exists,
delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured.
Railcars are generally
manufactured, repaired or refurbished and wheels and parts produced under firm orders from third parties. Revenue is recognized when these products or services are completed, accepted by an unaffiliated customer and contractual contingencies
removed. Certain leases are operated under car hire arrangements whereby revenue is earned based on utilization, car hire rates and terms specified in the lease agreement. Car hire revenue is reported from a third party source two months in arrears;
however, such revenue is accrued in the month earned based on estimates of use from historical activity and is adjusted to actual as reported. These estimates are inherently uncertain as they involve judgment as to the estimated use of each railcar.
Adjustments to actual have historically not been significant. Revenues from construction of marine barges are either recognized on the percentage of completion method during the construction period or on the completed contract method based on the
terms of the contract. Under the percentage of completion method, judgment is used to determine a definitive threshold against which progress towards completion can be measured to determine timing of revenue recognition.
We will periodically sell railcars with leases attached to financial investors. In addition we will often perform management or maintenance services at market
rates for these railcars. Pursuant to the guidance in Accounting Standards Codification (ASC) 840-20-40, we evaluate the terms of any remarketing agreements and any contractual provisions that represent retained risk and the level of retained risk
based on those provisions. We determine whether the level of retained risk exceeds 10% of the individual fair value of the railcars with leases attached that are delivered. For any contracts with multiple elements (i.e. railcars, maintenance,
management services, etc.) we allocate revenue among the deliverables primarily based upon objective and reliable evidence of the fair value of each element in the arrangement. If objective and reliable evidence of fair value of any element is
not available, we will use the elements estimated selling price for purposes of allocating the total arrangement consideration among the elements.
Impairment of long-lived assets - When changes in circumstances indicate the carrying amount of certain long-lived assets may not be
recoverable, the assets are evaluated for impairment. If the forecast undiscounted future cash flows are less than the carrying amount of the assets, an impairment charge to reduce the carrying value of the assets to fair value is recognized in the
current period. These estimates are based on the best information available at the time of the impairment and could be materially different if circumstances change. If the forecast undiscounted future cash flows exceeded the carrying amount of the
assets it would indicate that the assets were not impaired.
Goodwill and acquired intangible assets - We periodically acquire
businesses in purchase transactions in which the allocation of the purchase price may result in the recognition of goodwill and other intangible assets. The determination of the value of such intangible assets requires management to make estimates
and assumptions. These estimates affect the amount of future period amortization and possible impairment charges.
Goodwill and indefinite-lived
intangible assets are tested for impairment annually during the third quarter. Goodwill and indefinite-lived intangible assets are also tested more frequently if changes in circumstances or the occurrence of events indicates that a potential
impairment exists. When changes in circumstances, such as a decline in the market price of our common stock, changes in demand or in the numerous variables associated with the judgments, assumptions and estimates made in assessing the appropriate
valuation of goodwill indicate the carrying amount of certain indefinite lived assets may not be recoverable, the assets are evaluated for impairment. Among other things, our assumptions used in the valuation of goodwill include growth of revenue
and margins, market multiples, discount rates and increased cash flows over time. If actual operating results were to differ from these assumptions, it may result in an impairment of our goodwill.
54
THE GREENBRIER COMPANIES, INC.
The provisions of ASC 350, Intangibles - Goodwill and Other, require that we perform a two-step impairment
test on goodwill. In the first step, we compare the fair value of each reporting unit with its carrying value. We determine the fair value of our reporting units based on a weighting of income and market approaches. Under the income approach,
we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. Under the market approach, we estimate the fair value based on observed market multiples for comparable businesses. The second step of the
goodwill impairment test is required only in situations where the carrying value of the reporting unit exceeds its fair value as determined in the first step. In the second step, we would compare the implied fair value of goodwill to its carrying
value. The implied fair value of goodwill is determined by allocating the fair value of a reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the
reporting unit was the price paid to acquire the reporting unit. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recorded to the
extent that the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill. The goodwill balance relates to the Wheels & Parts segment. Goodwill was tested during the third quarter of 2015 and we
concluded that goodwill was not impaired.
55
THE GREENBRIER COMPANIES, INC.
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Foreign Currency Exchange Risk
We have operations in Mexico and Poland that conduct business in their local currencies as well as other regional currencies. To mitigate the exposure to
transactions denominated in currencies other than the functional currency of each entity, we enter into foreign currency forward exchange contracts to protect the margin on a portion of forecast foreign currency sales. At May 31, 2015, $73.7
million of forecast sales in Europe were hedged by foreign exchange contracts. Because of the variety of currencies in which purchases and sales are transacted and the interaction between currency rates, it is not possible to predict the impact a
movement in a single foreign currency exchange rate would have on future operating results.
In addition to exposure to transaction gains or losses, we
are also exposed to foreign currency exchange risk related to the net asset position of our foreign subsidiaries. At May 31, 2015, net assets of foreign subsidiaries aggregated $56.7 million and a 10% strengthening of the United States dollar
relative to the foreign currencies would result in a decrease in equity of $5.7 million, or 0.8% of Total equityGreenbrier. This calculation assumes that each exchange rate would change in the same direction relative to the United States
dollar.
Interest Rate Risk
We have managed a
portion of our variable rate debt with interest rate swap agreements, effectively converting $96.5 million of variable rate debt to fixed rate debt. As a result, we are exposed to interest rate risk relating to our revolving debt and a portion of
term debt, which are at variable rates. At May 31, 2015, 57% of our outstanding debt had fixed rates and 43% had variable rates. At May 31, 2015, a uniform 10% increase in variable interest rates would result in approximately $0.5 million
of additional annual interest expense.
56
THE GREENBRIER COMPANIES, INC.
Item 4. |
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer,
the effectiveness of the Companys disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our
President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be
disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended May 31, 2015 that have materially affected,
or are reasonably likely to materially affect, the Companys internal control over financial reporting.
57
THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 1. |
Legal Proceedings |
There is hereby incorporated by reference the information disclosed in Note 13 to
Consolidated Financial Statements, Part I of this quarterly report.
This Form 10-Q should be read in conjunction with the risk factors and information
disclosed in our Annual Report on Form 10-K for the year ended August 31, 2014. There have been no material changes in the risk factors described in our Annual Report on Form 10-K for the year ended August 31, 2014.
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
In October 2013, the Board of Directors
authorized the Company to repurchase up to $50 million of the Companys common stock. The Company completed this share repurchase program in October 2014. In October 2014, the Board of Directors authorized a new share repurchase program for the
Company to repurchase up to an additional $50 million of the Companys common stock. In January 2015, the Board of Directors authorized a $25 million increase to the October 2014 share repurchase program, bringing the total to $75 million. The
new share repurchase program expires June 30, 2016, but may be modified, suspended or discontinued at any time without prior notice. Under the share repurchase programs, 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 programs do not obligate the Company to acquire any
specific number of shares in any period.
Shares repurchased under these share repurchase programs in aggregate during the three months ended May 31,
2015 were as follows:
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Period |
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Total Number of Shares Purchased |
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Average Price Paid Per Share (Including Commissions) |
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Total Number of Shares Purchased as Part of Publically Announced Plans or Programs |
|
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
|
March 1, 2015 March 31, 2015 |
|
|
28,363 |
|
|
$ |
53.09 |
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|
|
28,363 |
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$ |
42,130,010 |
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April 1, 2015 April 30, 2015 |
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$ |
42,130,010 |
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May 1, 2015 May 31, 2015 |
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|
|
|
|
|
|
$ |
42,130,010 |
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|
|
|
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|
|
|
|
|
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28,363 |
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28,363 |
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58
THE GREENBRIER COMPANIES, INC.
(a) List of Exhibits:
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|
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10.1* |
|
The Greenbrier Companies, Inc. Form of Restricted Stock Unit Agreement, approved on May 22, 2015. |
|
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10.2* |
|
Form of Agreement concerning Indemnification and Related Matters (Directors) between Registrant and its directors. |
|
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10.3 |
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Railcar Remarketing and Management Agreement between Greenbrier Management Services, LLC and WL Ross-Greenbrier Rail I LLC, dated as of April 29, 2010.** |
|
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10.4 |
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Advisory Services Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of April 29, 2010.** |
|
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10.5 |
|
Contract Placement Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of April 29, 2010.** |
|
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10.6 |
|
Line of Credit Participation Letter Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of April 29, 2010.** |
|
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31.1 |
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Certification pursuant to Rule 13a 14 (a). |
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31.2 |
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Certification pursuant to Rule 13a 14 (a). |
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32.1 |
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2 |
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
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101 |
|
The following financial information from the Companys Quarterly Report on Form 10-Q for the period ended May 31, 2015, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the
Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to
Condensed Consolidated Financial Statements. |
* |
Management contract or compensatory plan or arrangement. |
** |
The Company is filing full and unredacted versions of these Exhibits following the expiration of a confidential treatment order previously granted by the Securities and Exchange Commission with respect to certain
information contained in such Exhibits. |
59
THE GREENBRIER COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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THE GREENBRIER COMPANIES, INC. |
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Date: July 1, 2015 |
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By: |
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/s/ Mark J. Rittenbaum |
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Mark J. Rittenbaum |
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Executive Vice President and |
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Chief Financial Officer |
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(Principal Financial Officer) |
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Date: July 1, 2015 |
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By: |
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/s/ Adrian J. Downes |
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Adrian J. Downes |
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Senior Vice President and |
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Chief Accounting Officer |
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(Principal Accounting Officer) |
60
Exhibit 10.1
THE GREENBRIER COMPANIES, INC.
2014 AMENDED AND RESTATED STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to Article 10 of the 2014 Amended and Restated Stock Incentive Plan (the Plan) of The Greenbrier Companies, Inc.,
an Oregon corporation (the Company), on , 2015 (the Grant Date) the Compensation Committee of the Board of Directors of the Company
(the Committee) authorized and granted to (the Recipient) an award of restricted
stock units (RSUs) with respect to the Companys common stock (Common Stock), subject to the terms and conditions of this agreement between the Company and the Recipient (this Agreement).
By accepting this award, the Recipient agrees to all of the terms and conditions of this Agreement. Capitalized terms not otherwise defined in this Agreement shall have the meanings as defined in the Plan.
1. |
Award and Terms of Restricted Stock Units. |
(a) Number of RSUs Awarded. The
Company awards to the Recipient RSUs (the Award), subject to the restrictions, terms and conditions
set forth in this Agreement and the Plan.
(b) Rights under Restricted Stock Units. An RSU obligates the Company to issue to the
Recipient one share of Common Stock for each vested RSU, upon the later of (i) vesting in accordance with this Agreement, or (ii) the distribution date or dates elected by the Recipient, if the Recipient elects to defer receipt of the
shares otherwise issuable upon vesting, pursuant to the terms of the Companys Nonqualified Deferred Compensation Plan (the Deferred Compensation Plan).
2. |
Vesting and Forfeiture of RSUs. |
(a) The RSUs awarded under this Agreement shall
initially be 100% unvested and subject to forfeiture. One-half of the RSUs, covering shares of Common Stock, will vest in equal installments over
a period of three years (the Time-Based RSUs) and one-half of the RSUs, covering shares of Common Stock, will vest, in whole
or in part, on the Vesting Date based upon achievement of performance criteria during the Measurement Period, as described in subsection 2(c) (the Performance-Based RSUs). To the extent that
any partial vesting would result in the issuance of fractional shares, such shares shall be rounded up to the nearest whole number of shares.
(b) Vesting of Time-Based RSUs. The Time-Based RSUs shall vest in equal annual installments over a period of three years, on the first,
second and third anniversaries of the Grant Date, provided the Recipient remains in Service with the Company, subject to subsections 2(b)(i) and (ii), below:
(i) Termination of Service Due to Death, Disability or Retirement. If the Recipients Service terminates due to
death, Disability or Retirement, any unvested
Restricted Stock Unit
Agreement
Page 1
Time-Based RSUs shall immediately become fully vested. If Recipient is or becomes eligible for Retirement prior to the date any Time-Based RSUs would
otherwise vest, the Time-Based RSUs will no longer be subject to a substantial risk of forfeiture for tax purposes, and will be deemed a deferral of compensation as defined under Internal Revenue Code §409A
(§409A), and any dividends accrued on such Time-Based RSUs pursuant to subsection 5(a) of this Agreement shall also be deemed deferred compensation subject to §409A.
(ii) Change of Control. In the event of a Change of Control, acceleration of vesting of Time-Based Shares shall be
governed by the terms of the individual agreement between the Company and the Recipient, if any.
(c) Vesting of Performance-Based
RSUs. Within 90 days of the end of the Measurement Period, the Committee shall determine the extent to which the Performance-Based RSUs have vested based upon achievement of the performance goals set forth in this subsection 2(c).
Up to 50% of the Performance-Based RSUs shall vest based upon achievement of Adjusted EBITDA goals (the Adjusted EBITDA Performance RSUs), and up to 50% of the Performance-Based RSUs shall vest based upon
achievement of Return on Equity (ROE) goals (the ROE Performance RSUs), during the Measurement Period, as set forth in subsections 2(c)(i) and (ii), below:
(i) Adjusted EBITDA Performance RSUs.
(1) 100% of the Adjusted EBITDA Performance RSUs (50% of the total number of Performance-Based RSUs) will vest on the Vesting
Date if the Companys Adjusted EBITDA equals the Adjusted EBITDA Target Level.
(2) 50% of the Adjusted EBITDA
Performance RSUs (25% of the total number of Performance-Based RSUs) will vest on the Vesting Date if the Companys Adjusted EBITDA equals the Adjusted EBITDA Threshold Level.
(3) If the Companys Adjusted EBITDA is greater than the Threshold Level but less than the Target Level, vesting of the
Adjusted EBITDA Performance RSUs will be interpolated between 50% and 100%.
(4) If the Companys Adjusted EBITDA is
less than the Threshold Level, none of the Adjusted EBITDA Performance RSUs will vest.
(ii) ROE Performance RSUs.
(1) 100% of the ROE Performance RSUs (50% of the total number of Performance-Based RSUs) will vest on the Vesting Date if
the Company achieves its ROE Target Level.
(2) 50% of the ROE Performance RSUs (25% of the total number of
Performance-Based RSUs) will vest on the Vesting Date if the Company achieves its ROE Threshold Level.
Restricted Stock Unit
Agreement
Page 2
(3) If the Companys ROE performance is greater than the Threshold Level but
less than the Target Level, vesting of the ROE Performance RSUs will be interpolated between 50% and 100%.
(4) If the
Companys ROE performance is less than the Threshold Level, no ROE Performance RSUs will vest.
(iii) Termination
of Service due to Death or Disability. If the Recipients Service terminates prior to the end of the Measurement Period due to death or Disability, any unvested Performance-Based RSUs shall immediately become fully vested.
(iv) Retirement. If the Recipients Service terminates prior to the end of the Measurement Period due to
Retirement, the Recipients Performance-Based RSUs will continue to vest based on performance during the Measurement Period. Upon vesting of the Performance-Based RSUs, Recipient will be entitled to receive a prorated number of shares, equal to
the number of vested RSUs (if any), multiplied by a fraction, the numerator of which is the number of full and partial months in the Measurement Period during which Recipient remained in Service with the Company and the denominator of which is 30.
(v) Change of Control. In the event of a Change of Control prior to the end of the Measurement Period, vesting of
the Performance-Based RSUs shall be as set forth in Appendix A to this Agreement.
(d) Issuance of Additional Shares upon Achievement
in Excess of Target Goals. Subject to a determination by the Committee that the Company has achieved greater than its Adjusted EBITDA Target Level and/or ROE Target Level during the Measurement Period, the RSUs will be settled for a number of
shares in excess of 100% of the number of Performance RSUs awarded pursuant to this Agreement, as described in subsections 2(d)(i) and (ii) below:
(i) If the Company achieves its Adjusted EBITDA Stretch Level during the Measurement Period, the Adjusted EBITDA Performance
RSUs will be settled for 200% of the number of shares underlying the Adjusted EBITDA Performance RSUs. If the Companys Adjusted EBITDA during the Measurement Period exceeds the Adjusted EBITDA Target Level but is below the Adjusted EBITDA
Stretch Level, the number of shares for which the Adjusted EBITDA Performance RSUs will be settled will be interpolated between 100% and 200% of the number of shares underlying the Adjusted EBITDA Performance RSUs at the Target level, based on the
level of Adjusted EBITDA performance achieved.
(ii) If the Company achieves its ROE Stretch Level during the Measurement
Period, the ROE Performance RSUs will be settled for 200% of the number of shares underlying the ROE Performance RSUs. If the Companys ROE during the Measurement Period exceeds the ROE Target Level but is below the ROE Stretch Level, the
number of shares for which the ROE Performance RSUs will be settled will be interpolated between 100% and 200% of the number of shares underlying the ROE Performance RSUs at the Target level, based on the level of ROE performance achieved.
Restricted Stock Unit
Agreement
Page 3
(e) Forfeiture of RSUs on Termination of Service. Except as expressly provided in this
Agreement, or except to the extent that there exists a separate individual agreement between the Recipient and the Company, the terms of which provide otherwise, if the Recipient ceases to be an employee of the Company or a subsidiary of the Company
for any reason, the Recipient shall immediately forfeit all outstanding but unvested RSUs awarded pursuant to this Agreement and the Recipient shall have no right to receive the related Common Stock.
3. |
Delivery Date for the Shares Underlying the RSUs. |
(a) As soon as practicable
following a date on which any RSUs vest, (or, if applicable, the distribution date or dates in accordance with the Recipients deferral election pursuant to the Deferred Compensation Plan, or the distribution date specified in subsection (b),
below) the Company will issue the Recipient the Common Stock underlying the then vested RSUs in the form of uncertificated shares in book entry form. The shares of Common Stock will be issued in the Recipients name or, in the event of the
Recipients death, in the name of either (i) the beneficiary designated by the Recipient on a form supplied by the Company or (ii) if the Recipient has not designated a beneficiary, the person or persons establishing rights of
ownership by will or under the laws of descent and distribution.
(b) To the extent that any Time-Based RSUs and any related accrued
dividends provided for in this Agreement constitute a deferral of compensation within the meaning of Treas. Reg. §1.409A-1(b) and the underlying shares and any accrued dividends become payable as a result of
Recipients termination of employment, such payment shall be payable within one day of the date of the Recipients separation from service within the meaning of Treas. Reg. §1.409A-1(h). The
foregoing notwithstanding, in the event that Recipient is determined to be a specified employee within the meaning of Treas. Reg. § 1.409A-1(i), then to the extent any
payment under this Agreement payable upon a separation from service constitutes a deferral of compensation within the meaning of §409A, such payment shall not be made and such benefit shall not be provided until the earlier of
(A) the first business day occurring after the date that is six months after Recipients separation of service as that term is defined in Treas. Reg. §1.409A-1(h), and (B) Recipients death.
4. |
Income and Payroll Taxes. |
(a) Taxes and Tax Withholding. The Recipient
acknowledges and agrees that no election under Section 83(b) of the Internal Revenue Code can or will be made with respect to the RSUs. The Recipient acknowledges that, if no deferral election pursuant to the Companys Deferred
Compensation Plan has been made with respect to receipt of the shares of Common Stock underlying the RSUs, then on each date that shares of Common Stock underlying the RSUs vest (the Payment Date), the Value (as defined below) of
the vested shares will be treated as ordinary compensation for federal and state income and FICA tax purposes, and that the Company will be required to withhold taxes on these income amounts. To satisfy the required minimum withholding amounts, the
Company shall withhold from the shares of Common Stock otherwise issuable the number of shares having a Value equal to the minimum statutory withholding amount. For purposes of this Section 4, the Value of a share shall be equal to
the closing market price for the Common Stock on the last trading day preceding the Payment Date. Alternatively, the Recipient may, at his or her option, pay such withholding
Restricted Stock Unit
Agreement
Page 4
amount in cash or cash equivalents promptly upon vesting, provided the Recipient has delivered a withholding tax election in the form attached as Exhibit A to the Company sufficiently in advance
of the vesting date to permit timely administration of the withholding obligation. If the Recipient does not timely deliver an executed tax withholding form to the Company, the Company shall withhold shares to satisfy the required minimum
withholding amounts.
(b) Payment of FICA Upon Vesting of RSUs Subject to Deferral Election. The Recipient acknowledges that FICA
payroll taxes become due upon vesting of the RSUs, even if a deferral election under the Deferred Compensation Plan has been made with respect to receipt of the shares underlying the RSUs. FICA taxes that become due upon vesting of RSUs that are
subject to a deferral election may not be paid by share withholding. Recipient agrees to pay to the Company in cash or cash equivalents, on or before each vesting date, the amount of FICA taxes due and owing as a result of vesting of the RSUs. If
Recipient does not make such payment timely, the Company will deduct FICA taxes from other wages payable in cash to Recipient.
(c)
Payment of FICA on Time-Based RSUs Held by Retirement-Eligible Recipients. The Recipient further acknowledges that FICA payroll taxes become due upon Recipient being or becoming eligible for Retirement, even if Recipient does not terminate
employment. FICA taxes that become due as a result of Recipient being or becoming eligible for Retirement may not be paid by share withholding. Recipient agrees to pay to the Company in cash or cash equivalents the amount of FICA taxes due and
owing. If Recipient does not make such payment timely, the Company will deduct FICA taxes from other wages payable in cash to Recipient.
5. |
Other Rights and Restrictions. |
(a) Cash Dividends. The Recipient will be
entitled to receive any cash dividends declared on the Common Stock underlying the RSUs after the RSUs have vested and the Common Stock has been issued. The Company shall accrue and pay to the Recipient an amount in cash equal to dividends that
would have been paid on the Common Stock underlying the RSUs after the date of the issuance of the RSUs, which amount shall be payable as soon as practicable following the date the underlying RSUs vest in accordance with this Agreement, subject to
required withholding taxes. No interest shall be paid by the Company on accrued amounts. Receipt of cash dividends may not be deferred under the Deferred Compensation Plan. The foregoing notwithstanding, any dividends accrued on Time-Based RSUs that
are deferred compensation as described in subsection 2(b)(i) of this Agreement shall be subject to the payment timing rules set forth in subsection 3(b).
(b) Adjustments. The number of shares of Common Stock issuable with respect to each RSU is subject to adjustment as determined by the
Committee as to the number and kind of shares of stock deliverable in the event of any merger, reorganization, consolidation, recapitalization, stock dividend, spin-off or other change in the corporate structure affecting the Common Stock generally.
Restricted Stock Unit
Agreement
Page 5
(c) No Voting Rights. The Recipient shall have no rights as a shareholder with respect to
the RSUs or the Common Stock underlying the RSUs until the underlying Common Stock is issued to the Recipient.
(d) Certain
Transactions. To the extent not otherwise governed by the Change of Control provisions of this Agreement or any other individual agreement between the Company and the Recipient, in the event of dissolution of the Company or a merger,
consolidation or plan of exchange affecting the Company, the Committee may, in its sole discretion and to the extent possible under the structure of the applicable transaction, select one or a combination of the following alternatives for treating
this award of RSUs:
(i) The RSUs shall remain in effect in accordance with the terms of this Agreement; or
(ii) The RSUs shall be converted into restricted stock units or restricted stock of one or more of the corporations that are
the surviving or acquiring corporations in the applicable transaction. The amount and type of converted restricted stock units or restricted stock shall be determined by the Company, taking into account the relative values of the companies involved
in the applicable transaction and the exchange rate, if any, used in determining shares of the surviving corporation(s) to be held by holders of shares of the Company following the applicable transaction.
The foregoing notwithstanding, Time-Based RSUs that are deferred compensation subject to §409A shall be treated in accordance with the
requirements of §409A, including without limitation the prohibition on subsequent deferrals.
(e) Restrictions on Transfer.
The Recipient may not sell, transfer, assign, pledge or otherwise encumber or dispose of the RSUs subject to this Agreement. The Recipient may designate beneficiaries to receive the shares of Common Stock underlying the RSUs subject to this
Agreement if the Recipient dies before delivery of the shares of Common Stock by so indicating on a form supplied by the Company. If the Recipient fails to designate a beneficiary, such Common Stock will be delivered to the person or persons
establishing rights of ownership by will or under the laws of descent and distribution.
(f) Not a Contract of Employment. Nothing
in the Plan or this Agreement shall confer upon Recipient any right to be continued in the employment of the Company or any parent or subsidiary of the Company, or to interfere in any way with the right of the Company or any parent or subsidiary by
whom Recipient is employed to terminate Recipients employment at any time or for any reason, with or without cause, or to decrease Recipients compensation or benefits, subject to the Recipients rights under any applicable
individual employment agreement.
Initially capitalized terms not otherwise defined herein shall have the
meanings as defined in the Plan.
(a) Agreement shall mean this Restricted Stock Unit Agreement.
Restricted Stock Unit
Agreement
Page 6
(b) Adjusted EBITDA shall mean the Companys EBITDA as reported in
quarterly financial disclosures, as adjusted for Extraordinary Items by the Committee in its sole discretion.
(c) Adjusted
EBITDA Stretch Level shall mean cumulative Adjusted EBITDA during the Measurement Period of $ million.
(d) Adjusted EBITDA Target Level shall mean cumulative Adjusted EBITDA during the Measurement Period of
$ million.
(e) Adjusted EBITDA Threshold Level shall mean
cumulative Adjusted EBITDA during the Measurement Period of $ million.
(f)
Deferred Compensation Plan shall mean The Greenbrier Companies, Inc. Nonqualified Deferred Compensation Plan.
(g)
Extraordinary Items shall mean extraordinary, unusual and/or non-recurring items, including but not limited to (i) restructuring or restructuring-related charges, (ii) gains or losses on the disposition of a business or
major asset, (iii) the effect of changes in tax laws and other laws, accounting principles, or provisions affecting reported results, (iv) resolution and/or settlement of litigation and other legal proceedings, (v) extraordinary,
nonrecurring items as described in Accounting Principles Board Opinion No. 30 or in managements discussion and analysis of financial condition and results of operations appearing in the Companys annual report to shareholders for the
applicable year, (vi) the effect of a merger or acquisition, or (vii) foreign exchange gains and losses, provided that an adjustment for any such item(s) would not cause the performance-based portion of this Award to fail to comply with
the requirements of Section 162(m) of the Internal Revenue Code, or any successor provision thereto, and the regulations there under.
(h) Measurement Period shall mean the thirty-month period beginning March 1, 2015 and ending August 31, 2017.
(i) Recipient shall mean the individual named in the first paragraph of this Agreement.
(j) Retirement shall mean the termination of the Recipients Service within the Company or its subsidiaries as an
employee either (i) on or after attainment of age 65, or (ii) prior to age 65, with the permission of the Chief Executive Officer of the Company.
(k) Return on Equity or ROE shall mean the quarterly Net earnings (loss) attributable to the Company, as
reported in quarterly financial disclosures, divided by the quarterly Total Equity of the Company, the results of which are averaged over the Measurement Period, and annualized. Net earnings (loss) attributable to the Company and ROE shall be
adjusted for Extraordinary Items, as determined by the Committee in its sole discretion.
(l) ROE Stretch Level shall
mean ROE of %.
(m) ROE Target Level shall mean ROE of %.
Restricted Stock Unit
Agreement
Page 7
(n) ROE Threshold Level shall mean ROE of %.
(o) Vesting Date shall mean the date that the Committee makes an affirmative determination that the vesting criteria
applicable to Performance-Based RSUs, as set forth in subsection 2(c)(i) or (ii), have been met.
(a) Entire Agreement; Amendment. This Agreement, the Plan and the
Companys Umbrella Performance-Based Plan for Executive Officers, to the extent applicable, constitute the entire agreement of the parties with regard to the subjects hereof.
(b) Interpretation of the Plan and the Agreement. The Committee shall have the sole authority to interpret the provisions of this
Agreement and the Plan and all determinations by it shall be final and conclusive. With respect to awards made to executive officers of the Company, the Committee shall interpret and administer this Agreement in accordance with the terms of the
Companys Umbrella Performance-Based Plan for Executive Officers, with the intent that the Performance-Based RSUs shall qualify as performance-based compensation for purposes of Internal Revenue Code Section 162(m).
(c) Electronic Delivery. The Recipient consents to the electronic delivery of notices and any prospectus and any other documents
relating to this Award in lieu of mailing or other form of delivery.
(d) Rights and Benefits. The rights and benefits of this
Agreement shall inure to the benefit of and be enforceable by the Companys successors and assigns and, subject to the restrictions on transfer of this Agreement, be binding upon the Recipients heirs, executors, administrators, successors
and assigns.
(e) Further Action. The parties agree to execute such instruments and to take such action as may reasonably be
necessary to carry out the intent of this Agreement.
(f) Governing Law. This Agreement and the Plan will be interpreted under the
laws of the state of Oregon, exclusive of choice of law rules.
[Signature page follows.]
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RECIPIENT: |
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THE GREENBRIER COMPANIES, INC.: |
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By: |
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Restricted Stock Unit
Agreement
Page 8
APPENDIX A
VESTING OF PERFORMANCE-BASED RSUs
FOLLOWING A CHANGE OF CONTROL
In the event that a Change of Control of the Company occurs prior to August 31, 2017 (the end of the Measurement Period) vesting of
Performance-Based RSUs and issuance of additional shares based on achievement in excess of target goals shall be governed by this Appendix A:
1. Conversion of Performance-Based RSUs into Time-Vested RSUs. As of the effective date of the Change of Control, all Performance-Based
RSUs shall automatically convert into and become time-vested RSUs (the Converted RSUs), which shall vest in full on August 31, 2017, provided Participant remains employed by the Company through that date.
2. Award of Additional Shares for Performance Above Target Levels. The Compensation Committee shall evaluate the Companys
financial performance from March 1, 2015 until the date immediately preceding the effective date of the Change of Control, and shall determine whether the Company was performing above the target level of performance on its Adjusted EBITDA
and/or ROE goals as of such date. If the Compensation Committee determines that the Company was performing above the target level on either or both of its Adjusted EBITDA and/or ROE goals as of the date of the Change of Control, the Compensation
Committee shall determine the number of additional shares above 100% of the number of Performance-Based RSUs awarded (the Stretch Shares) that the Participant would have been entitled to receive pursuant to Section 2(d)(i) and/or
(ii) of the Agreement if the Company had performed during the entire Measurement Period at the level achieved through the date of the Change of Control. Participant shall be entitled to receive a grant of additional shares equal to the number
of Stretch Shares. The Stretch Shares shall be time-vested shares and shall vest in full on August 31, 2017, provided Participant remains employed by the Company.
Restricted Stock Unit
Agreement
Page 9
Exhibit A to RSU Agreement
RESTRICTED STOCK UNIT
TAX WITHHOLDING ELECTION FORM
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Name of Recipient: |
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Grant Date: |
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Number of RSUs: |
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I hereby elect to pay all withholding taxes due upon vesting of the above-referenced RSUs by check rather than by share
withholding, and promise to deliver such payment to the Company promptly upon vesting of the RSUs.
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Signature of Recipient |
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Date Signed |
Restricted Stock Unit
Agreement
Page 10
Exhibit 10.2
THE GREENBRIER COMPANIES, INC.
AGREEMENT CONCERNING INDEMNIFICATION AND RELATED MATTERS
(Directors)
This
Agreement is made as of , 20 , by and between THE GREENBRIER COMPANIES, INC., an Oregon corporation (the Corporation), and
(the Director), a director of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as directors of the Corporation the most capable persons available and
persons who have significant experience in business, corporate and financial matters; and
WHEREAS, the Corporation has identified the
Director as a person possessing the background and abilities desired by the Corporation and desires the Director to serve as a director of the Corporation; and
WHEREAS, the substantial increase in corporate litigation may, from time to time, subject directors to burdensome litigation, the risks of
which frequently far outweigh the advantages of serving in such capacity; and
WHEREAS, in recent times the cost of liability insurance
has increased and the availability of such insurance is, from time to time, severely limited; and
WHEREAS, the Corporation and the
Director recognize that serving as a director of a corporation at times calls for subjective evaluations and judgments upon which reasonable persons may differ and that, in that context, it is anticipated and expected that directors of corporations
will and do from time to time commit actual or alleged errors or omissions in the good faith exercise of their corporate duties and responsibilities; and
WHEREAS, it is the express policy of the Corporation to indemnify its directors to the fullest extent permitted by law; and
WHEREAS, the Articles of Incorporation of the Corporation permit, and the Bylaws of the Corporation require, indemnification of the directors
of the Corporation to the fullest extent permitted by law, including but not limited to the Oregon Business Corporation Act (the OBCA), and the OBCA expressly provides that the indemnification provisions set forth therein are not
exclusive, and thereby contemplates that contracts may be entered into between the Corporation and its directors with respect to indemnification; and
WHEREAS, the Corporation and the Director desire to articulate clearly in contractual form their respective rights and obligations with regard
to the Directors service on behalf of the Corporation as a director and with regard to claims for loss, liability, expense or damage which, directly or indirectly, may arise out of or relate to such service;
WHEREAS, this Agreement expresses the entire understanding of the parties hereto with respect to
the subject matter hereof and it supersedes and replaces any and all former or contemporaneous agreements, understandings, representations or warranties relating to such subject matter and contains all of the terms, conditions, understandings,
representations, warranties, and promises of the parties hereto in connection therewith.
NOW THEREFORE, the Corporation and the Director
agree as follows:
The Director shall serve as a director of the Corporation for so
long as the Director is duly elected or until the Director tenders a resignation in writing. This Agreement creates no obligation on either party to continue the service of the Director for a particular term or any term.
As used in this Agreement:
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(a) |
The term Proceeding shall include any threatened, pending or completed action, suit or proceeding, whether brought in the right of the Corporation or otherwise, and whether of a civil, criminal,
administrative or investigative nature, whether formal or informal, in which the Director may be or may have been involved as a party, witness or otherwise, by reason of the fact that the Director is or was a director of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, partner, trustee, manager, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, whether or not serving in
such capacity at the time any liability or expense is incurred for which exculpation, indemnification or reimbursement can be provided under this Agreement. |
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(b) |
The term Expenses includes, without limitation thereto, expenses of investigations, judicial or administrative proceedings or appeals, attorney, accountant and other professional fees and disbursements and
any expenses of establishing a right to indemnification under Section 12 of this Agreement, but shall not include amounts paid in settlement by the Director or the amount of judgments or fines against the Director. |
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(c) |
References to other enterprise include, without limitation, employee benefit plans; references to fines include, without
limitation, any excise taxes assessed on a person with respect to any employee benefit plan; references to serving at the request of the Corporation include, without limitation, any service as a director, officer, partner, trustee,
manager, employee or agent which imposes duties on, or involves services by, such director, officer, partner, trustee, manager, employee or agent with respect to an employee benefit plan, its participants, or its
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beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner not opposed to the best interests of the Corporation as referred to in this Agreement. |
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(d) |
References to the Corporation shall include, in addition to the resulting entity, any constituent corporation or other entity (including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, partners, trustees, managers, employees or agents, so that any person who is or was a director, officer, partner,
trustee, manager, employee or agent of such constituent entity, or is or was serving at the request of such constituent entity as a director, officer, partner, trustee, manager, employee or agent of another corporation, limited liability company,
partnership, joint venture, trust or other enterprise, shall stand in the same position under this Agreement with respect to the resulting or surviving entity as such person would have with respect to such constituent entity if its separate
existence had continued. |
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(e) |
For purposes of this Agreement, the meaning of the phrase to the fullest extent permitted by law shall include, but not be limited to: |
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(i) |
to the fullest extent authorized or permitted by any amendments to or replacements of the OBCA adopted after the date of this Agreement that increase the extent to which a corporation may indemnify or exculpate its
directors; and |
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(ii) |
to the fullest extent permitted by the provision of the OBCA that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the OBCA.
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3. |
Limitation of Liability |
To the fullest extent permitted by law, the Director shall have
no monetary liability of any kind or nature whatsoever in respect of the Directors errors or omissions (or alleged errors or omissions) in serving the Corporation or any of its subsidiaries, their respective shareholders or any other
enterprise at the request of the Corporation, so long as such errors or omissions (or alleged errors or omissions), if any, are not shown by clear and convincing evidence to have involved:
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(i) |
any breach of the Directors duty of loyalty to such entities, shareholders or enterprises; |
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(ii) |
any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law; |
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(iii) |
any transaction from which the Director derived an improper personal benefit; |
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(iv) |
any unlawful distribution (including, without limitation, dividends, stock repurchases and stock redemptions), as defined in the OBCA or, as applicable, in the limited liability company act of the state where the
Companys subsidiary is organized; or |
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(v) |
profits made from the purchase and sale by the Director of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provision of any state
statutory law or common law. |
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(b) |
Without limiting the generality of subparagraph (a) above and to the fullest extent permitted by law, the Director shall have no personal liability to the Corporation or any of its subsidiaries, their respective
shareholders or any other person claiming derivatively through the Corporation, regardless of the theory or principle under which such liability may be asserted, for: |
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(i) |
punitive, exemplary or consequential damages; |
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(ii) |
treble or other damages computed based upon any multiple of damages actually and directly proved to have been sustained; |
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(iii) |
fees of attorneys, accountants, expert witnesses or professional consultants; or |
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(iv) |
civil fines or penalties of any kind or nature whatsoever. |
4. |
Indemnity in Third Party Proceedings. |
The Corporation shall indemnify the Director in
accordance with the provisions of this Section 4 if the Director was or is a party to, or is threatened to be made a party to, any Proceeding (other than a Proceeding by or in the right of the Corporation to procure a judgment in its favor),
against all Expenses, judgments, fines and amounts paid in settlement, actually and reasonably incurred by the Director in connection with such Proceeding if the Director acted in good faith and in a manner the Director reasonably believed was in or
not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, the Director, in addition, had no reasonable cause to believe that the Directors conduct was unlawful. However, the Director shall
not be entitled to indemnification under this Section 4 in connection with any Proceeding charging improper personal benefit to the Director in which the Director is adjudged liable on the basis that personal benefit was improperly received by
the Director unless and only to the extent that the court conducting such Proceeding, or any other court of competent jurisdiction, determines upon application that, despite the adjudication of liability, the Director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances.
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5. |
Indemnity in Proceedings by or in the Right of the Corporation. |
The Corporation shall
indemnify the Director in accordance with the provisions of this Section 5 if the Director was or is a party to, or is threatened to be made a party to, any Proceeding by or in the right of the Corporation to procure a judgment in its favor,
against all Expenses actually and reasonably incurred by the Director in connection with the defense or settlement of such Proceeding if the Director acted in good faith and in a manner the Director reasonably believed was in or not opposed to the
best interests of the Corporation. However, the Director shall not be entitled to indemnification under this Section 5 in connection with any Proceeding in which the Director has been adjudged liable to the Corporation unless and only to the
extent that the court conducting such Proceeding, or any other court of competent jurisdiction, determines upon application that, despite the adjudication of liability, the Director is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances.
6. |
Indemnification of Expenses of Successful Party. |
Notwithstanding any other provisions
of this Agreement other than Section 8, to the extent that the Director has been successful, on the merits or otherwise, in defense of any Proceeding or in defense of any claim, issue or matter therein, including the dismissal of an action
without prejudice, the Corporation shall indemnify the Director against all Expenses actually and reasonably incurred in connection therewith.
7. |
Additional Indemnification. |
Notwithstanding any limitation in Sections 4, 5 or 6, the
Corporation shall indemnify the Director to the fullest extent permitted by law with respect to any Proceeding (including a Proceeding by or in the right of the Corporation to procure a judgment in its favor), against all Expenses, judgments, fines
and amounts paid in settlement, actually and reasonably incurred by the Director in connection with such Proceeding.
Notwithstanding any provision in this Agreement, the Corporation shall not
be obligated under this Agreement to make any indemnification in connection with any claim made against the Director:
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(a) |
for which payment is required to be made to or on behalf of the Director under any insurance policy, except with respect to any excess amount to which the Director is entitled under this Agreement beyond the amount of
payment under such insurance policy; |
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(b) |
if a court having jurisdiction in the matter finally determines that such indemnification is not lawful under any applicable statute or public policy; |
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(c) |
in connection with any Proceeding (or part of any Proceeding) initiated by the Director, or any Proceeding by the Director against the Corporation or its directors, officers, employees or other persons entitled to be
indemnified by the Corporation, unless: |
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(i) |
the Corporation is expressly required by law to make the indemnification; |
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(ii) |
the Proceeding was authorized by the Board of Directors of the Corporation; or |
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(iii) |
the Director initiated the Proceeding pursuant to Section 12 of this Agreement and the Director is successful in whole or in part in such Proceeding; or |
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(d) |
for an accounting of profits made from the purchase and sale by the Director of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provision of any state statutory law or common law. |
The Corporation shall pay the Expenses incurred by the Director
in any Proceeding (other than a Proceeding brought for an accounting of profits made from the purchase and sale by the Director of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provision of any state statutory law or common law) in advance of the final disposition of the Proceeding at the written request of the Director, if the Director:
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(a) |
furnishes the Corporation a written affirmation of the Directors good faith belief that the Director is entitled to be indemnified under this Agreement; and |
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(b) |
furnishes the Corporation a written undertaking to repay the advance to the extent that it is ultimately determined that the Director is not entitled to be indemnified by the Corporation. Such undertaking shall be an
unlimited general obligation of the Director but need not be secured. |
Advances pursuant to this Section 9 shall be
made no later than 10 days after receipt by the Corporation of the affirmation and undertaking described in Sections 9(a) and 9(b) above, and shall be made without regard to the Directors ability to repay the amount advanced and without regard
to the Directors ultimate entitlement to indemnification under this Agreement. The Corporation may establish a trust, escrow account or other secured funding source for the payment of advances made and to be made pursuant to this
Section 9 or of other liability incurred by the Director in connection with any Proceeding.
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10. |
Nonexclusivity and Continuity of Rights. |
The indemnification, advancement of Expenses,
and exculpation from liability provided by this Agreement shall not be deemed exclusive of any other rights to which the Director may be entitled under any other agreement, any articles of incorporation, bylaws, or vote of shareholders or directors,
the OBCA, or otherwise, both as to action in the Directors official capacity and as to action in another capacity while holding such office or occupying such position. The indemnification under this Agreement shall continue as to the Director
even though the Director may have ceased to be a director of the Corporation or a director, officer, partner, trustee, manager, employee or agent of an enterprise related to the Corporation and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of the Director.
11. |
Procedure Upon Application for Indemnification. |
Any indemnification under Sections 4,
5, 6 or 7 shall be made no later than 45 days after receipt of the written request of the Director, unless a determination that the Director is not entitled to indemnification under this Agreement is made within such 45 day period:
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(a) |
by the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to the applicable Proceeding; |
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(b) |
if a quorum cannot be obtained under paragraph (a) of this Section 11, then by a majority vote of a committee of the Board of Directors that is (i) duly designated by the Board of Directors, with the
participation of directors who are parties to the applicable Proceeding and (ii) consists solely of two or more directors not parties to the applicable Proceeding; |
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(c) |
by independent legal counsel in a written opinion, which counsel shall be appointed (i) by a majority vote of the Board of Directors or its committee in the manner prescribed by paragraph (a) or paragraph
(b) of this Section 11, or (ii) if a quorum of the Board of Directors cannot be obtained under paragraph (a) of this Section 11 or a committee cannot be designated under paragraph (b) of this Section 11, then by a
majority vote of the full Board of Directors, including directors who are parties to the applicable Proceeding; or |
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(d) |
by the shareholders of the Corporation. |
The Director may enforce any right to indemnification, advances or
exculpation provided by this Agreement in any court of competent jurisdiction in compliance with Section 23 if:
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(a) |
the Corporation denies the claim for indemnification, advances or exculpation, in whole or in part; or |
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(b) |
the Corporation does not dispose of such claim within the time period required by this Agreement. |
It shall be a defense to any such enforcement action (other than an action brought to enforce a claim for advancement of Expenses pursuant to,
and in compliance with, Section 9 of this Agreement) that the Director is not entitled to indemnification or exculpation under this Agreement. However, except as provided in Section 13 of this Agreement, the Corporation shall not assert
any defense to an action brought to enforce a claim for advancement of Expenses pursuant to Section 9 of this Agreement if the Director has tendered to the Corporation the affirmation and undertaking required thereunder. The burden of proving
by clear and convincing evidence that indemnification or exculpation is not appropriate shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, a committee thereof, or independent legal counsel) to have
made a determination prior to the commencement of such action that indemnification or exculpation is proper in the circumstances because the Director has met the applicable standard of conduct nor an actual determination by the Corporation
(including its Board of Directors, a committee thereof, or independent legal counsel) that indemnification or exculpation is improper because the Director has not met such applicable standard of conduct, shall be asserted as a defense to the action
or create a presumption that the Director is not entitled to indemnification or exculpation under this Agreement or otherwise. The Directors expenses incurred in connection with successfully establishing the Directors right to
indemnification, advances or exculpation, in whole or in part, in any Proceeding shall also be paid or reimbursed by the Corporation.
The
termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that:
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the Director is not entitled to indemnification under Sections 4, 5 or 7 of this Agreement because the Director did not act in good faith and in a manner which the Director reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the Directors conduct was unlawful; or |
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(ii) |
the Director is not entitled to exculpation under Section 3 of this Agreement. |
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13. |
Notification and Defense of Claim. |
As a condition precedent to indemnification under
this Agreement, not later than 30 days after receipt by the Director of notice of the commencement of any Proceeding the Director shall, if a claim in respect of the Proceeding is to be made against the Corporation under this Agreement, notify the
Corporation in writing of the commencement of the Proceeding. The failure to properly notify the Corporation shall not relieve the Corporation from any liability which it may have to the Director otherwise than under this Agreement. With respect to
any Proceeding as to which the Director so notifies the Corporation of the commencement:
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(a) |
The Corporation shall be entitled to participate in the Proceeding at its own expense. |
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(b) |
Except as otherwise provided in this Section 13, the Corporation may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense of the
Proceeding, with legal counsel reasonably satisfactory to the Director. The Director shall have the right to use separate legal counsel in the Proceeding, but the Corporation shall not be liable to the Director under this Agreement, including
Section 9 above, for the fees and expenses of separate legal counsel incurred after notice from the Corporation of its assumption of the defense, unless (i) the Director reasonably concludes that there may be a conflict of interest between
the Corporation and the Director in the conduct of the defense of the Proceeding, or (ii) the Corporation does not use legal counsel to assume the defense of such Proceeding. The Corporation shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Corporation or as to which the Director has made the conclusion provided for in (i) above. |
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If two or more persons who may be entitled to indemnification from the Corporation, including the Director, are parties to any Proceeding, the Corporation may require the Director to use the same legal counsel as the
other parties. The Director shall have the right to use separate legal counsel in the Proceeding, but the Corporation shall not be liable to the Director under this Agreement, including Section 9 above, for the fees and expenses of separate
legal counsel incurred after notice from the Corporation of the requirement to use the same legal counsel as the other parties, unless the Director reasonably concludes that there may be a conflict of interest between the Director and any of the
other parties required by the Corporation to be represented by the same legal counsel. |
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The Corporation shall not be liable to indemnify the Director under this Agreement for any amounts paid in settlement of any Proceeding effected without its written consent, which shall not be unreasonably withheld. The
Director shall permit the Corporation to settle any Proceeding that the Corporation assumes the defense of, except that the Corporation shall not settle any action or claim in any manner that would impose any penalty or limitation on the Director
without the Directors written consent. |
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14. |
Partial Indemnification. |
If the Director is entitled under any provision of this
Agreement to indemnification by the Corporation for some or a portion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred by the Director in connection with such Proceeding, but not, however, for the
total amount thereof, the Corporation shall nevertheless indemnify the Director for the portion of such Expenses, judgments, fines or amounts paid in settlement to which the Director is entitled.
15. |
Interpretation and Scope of Agreement. |
Nothing in this Agreement shall be interpreted
to constitute a contract of service for any particular period or pursuant to any particular terms or conditions. The Corporation retains the right, in its discretion, to terminate the service relationship of the Director, with or without cause, or
to alter the terms and conditions of the Directors service all without prejudice to any rights of the Director which may have accrued or vested prior to such action by the Corporation.
If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, the remainder of this Agreement shall continue to be valid and the Corporation shall nevertheless indemnify the Director as to Expenses, judgments, fines and amounts paid in settlement with respect to
any Proceeding to the fullest extent permitted by any applicable portion of this Agreement that shall not have been invalidated.
In the event of payment under this Agreement, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the Director. The Director shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Corporation effectively
to bring suit to enforce such rights.
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given upon delivery by hand to the party to whom the notice or other communication shall have been directed, or on the third business day after the date on which it is mailed by United States
mail with first-class postage prepaid, addressed as follows:
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If to the Director, to the address indicated on the signature page of this Agreement. |
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(b) |
If to the Corporation, to |
The Greenbrier Companies, Inc.
One Centerpointe Drive, Suite 200
Lake Oswego, Oregon 97035 USA
Attention: President
With a
copy to:
General Counsel
The Greenbrier Companies, Inc.
One Centerpointe Drive, Suite 200
Lake Oswego, Oregon 97035 USA
or to any other
address as either party may designate to the other in writing.
This Agreement may be executed in any number of counterparts, each of
which shall constitute the original.
This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Oregon without regard to the principles of conflict of laws.
21. |
Successors and Assigns. |
This Agreement shall be binding upon the Corporation and its
successors and assigns.
If any suit, action (including, without limitation, any bankruptcy
proceeding) or arbitration is instituted to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover from the party not prevailing, in addition to other relief that may be provided by law, an amount
determined reasonable as attorney fees at trial and on any appeal of such suit or action.
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23. |
Jurisdiction and Venue. |
Each party hereto expressly and irrevocably consents and
submits to the jurisdiction and venue of any state or federal court sitting in Multnomah County, Oregon, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in such court and to the appellate courts in connection with any appeal. The parties expressly waive all defenses of lack of personal jurisdiction, improper venue and forum non-conveniens with respect to such federal and
state courts sitting within Multnomah County, Oregon. The parties expressly consent to (i) service of process being effected upon them by certified mail sent to the addresses set forth in this Agreement and (ii) any final judgment rendered
against a party in any action or proceeding being enforceable in other jurisdictions in any manner provided by law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written
above.
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CORPORATION: |
THE GREENBRIER COMPANIES, INC. |
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DIRECTOR: |
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By: |
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Title: |
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Exhibit 10.3
RAILCAR
REMARKETING
AND MANAGEMENT AGREEMENT
Dated as of April 29, 2010
Among
GREENBRIER MANAGEMENT
SERVICES, LLC,
as the Manager
WL ROSS-GREENBRIER RAIL I LLC,
as
the Owner
TABLE OF CONTENTS
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PAGE |
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SECTION 1. DEFINITIONS. |
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1 |
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Section 1.1. |
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Definitions |
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1 |
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Section 1.2. |
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Rules of Usage |
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6 |
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SECTION 2. EXCLUSIVE APPOINTMENT OF THE MANAGER. |
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6 |
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Section 2.1. |
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Appointment of the Manager |
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6 |
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Section 2.2. |
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Confirming Agency |
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6 |
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SECTION 3. TERM. |
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6 |
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SECTION 4. DUTIES AND COVENANTS OF THE MANAGER. |
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7 |
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Section 4.1. |
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Administrative Duties Generally |
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7 |
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Section 4.2. |
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Administrative Duties for Off-Lease Equipment |
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9 |
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Section 4.3. |
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Administrative Duties Following a Lease Default |
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10 |
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Section 4.4. |
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Remarketing of Equipment |
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10 |
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Section 4.5. |
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Replacement Lease; Replacement Lessee |
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Section 4.6. |
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Additional Services; Lockbox Account |
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Section 4.7. |
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Financial Statements, Advisors and Tax Returns. |
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Section 4.8. |
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No Authority to Make Binding Agreement |
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Section 4.9. |
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Purchase by Manager |
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Section 4.10. |
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Railcar Service Agreements |
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Section 4.11. |
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Delivery of Equipment Records |
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Section 4.12. |
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Performance Standards/Force Majeure Events. |
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SECTION 5. ACCOUNTS, MANAGERS FEES AND EXPENSES. |
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Section 5.1. |
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Accounts |
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Section 5.2. |
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Manager Fees |
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Section 5.3. |
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Managers Costs and Expenses |
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SECTION 6. INDEMNITY. |
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SECTION 7. ASSIGNMENT. |
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SECTION 8. INSPECTION OF EQUIPMENT; WARRANTIES. |
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SECTION 9. TERMINATION. |
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Section 9.1. |
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Termination by the Owner |
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Section 9.2. |
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Termination by the Manager |
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Section 9.3. |
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Actions Upon Termination |
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SECTION 10. REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT. |
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Section 10.1. |
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Representations and Warranties |
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Section 10.2. |
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Conditions Precedent |
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SECTION 11. ENTIRE AGREEMENT. |
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SECTION 12. SEVERABILITY |
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SECTION 13. NOTICES. |
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SECTION 14. GOVERNING LAW AND JURISDICTION. |
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Section 14.1. |
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Applicable Law |
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Section 14.2. |
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Submission to Jurisdiction |
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SECTION 15. CONFIDENTIALITY. |
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SECTION 16. CONFLICTS. |
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SECTION 17. COUNTERPARTS. |
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23 |
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SECTION 18. WAIVER OF JURY TRIAL. |
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SECTION 19. ASSIGNMENT. |
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23 |
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SECTION 20. THIRD-PARTY BENEFICIARIES. |
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23 |
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EXHIBIT A - |
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FORM OF SUPPLEMENT |
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ii
This RAILCAR REMARKETING AND MANAGEMENT AGREEMENT dated as of April 29, 2010 (this
Agreement) is between Greenbrier Management Services, LLC, a Delaware limited liability company (the Manager) and WL Ross-Greenbrier Rail I LLC, a Delaware limited liability company (Owner).
Capitalized terms used without definition have the meanings set forth in Section 1 below.
PREMISES:
1. Owner has acquired or will acquire interests in railcars from time to time pursuant to certain acquisition and financing transactions.
2. It is a condition to Owners acquisition of Equipment that the Manager act as Owners exclusive agent in providing remarketing
services in respect of the applicable Equipment and in respect of certain other lease administration services in relation to such Equipment, with guidance and direction from the Management Committee as provided herein.
3. The Manager has agreed to perform the obligations herein, in consideration for which Owner agrees to pay to the Manager the Management Fee.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Manager and Owner agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1. Definitions. The following terms shall have the meanings indicated below:
AAR means American Association of Railroads or any replacement or successor thereto.
Affiliate of any Person means any other Person directly or indirectly controlling, directly or indirectly controlled by, or
under direct or indirect common control with, such Person, or if such Person is a partnership, any general partner of such Person or a Person controlling such general partner. For purposes of this definition, control (including
controlled by and under common control with) means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or by
contract or otherwise.
Agreed Value has the meaning set forth in the applicable Supplement to this Agreement.
Applicable Laws means all applicable laws, ordinances, treaties, judgments, decrees, injunctions, writs, orders, rules,
regulations, interpretations, directives, licenses and permits of any Government Entity or arbitrator.
Appraisal means
a written desktop appraisal as contemplated under the Operative Documents.
1
Business Day means a day that is not a Saturday or Sunday and a day on which
banks are not required or authorized to be closed , (a) in the case of payments, in Salt Lake City, Utah and New York, New York, and (b) for all other purposes, in New York, New York and Portland, Oregon.
Canadian Taxes means any Taxes imposed on or calculated by reference to gross lease rent by any government or other taxing
authority in Canada other than Canadian federal goods and services tax and Canadian provincial sales Taxes.
Disposition means, with respect to any Unit, the disposition for cash of the legal or beneficial right, title and interest
of Owner in such Unit, by way of sale, transfer, assignment or otherwise (other than in the case of an Event of Loss), but shall not include the leasing of any Unit under a Replacement Lease.
Dollars and $ means the lawful currency of the United States of America.
Equipment means the Units described in each Supplement, collectively.
Event of Loss means, with respect to any Unit, that such Unit has suffered a casualty occurrence or event of loss as
described in the applicable Lease, if any, or otherwise that Settlement Value (as described in clause (b) of the definition thereof) is received in respect of such Unit.
Financing Requirements means the Financing Requirements as defined in the applicable Supplement.
FRA means the Federal Railroad Administration or any replacement or successor thereto.
Government Entity means any international or multi-national authority, organization or agency or any national, state or
local government, political subdivision thereof or local jurisdiction therein or any board, commission, department, division, organ, instrumentality, court or agency of any thereof of any country or political subdivision having jurisdiction.
Guarantor means Greenbrier Leasing Company LLC, a Delaware limited liability company.
Initial Lease means each lease described in Schedule I to the applicable Supplement.
Initial Lessee means each lessee party to an Initial Lease.
Interchange Rules means, collectively, as set out in the Field Manual of the AAR Rules of Interchange and the Office Manual
of the AAR Rules of Interchange adopted by the AAR Mechanical Division, Operations, and Maintenance Department, as the same may from time to time be amended, modified or supplemented. References herein to the Interchange Rules provide performance
standards and criteria for the condition of the Units and their maintenance and repair. However, as between any Owner and any Lessee, the applicable Lease, not the Interchange Rules, governs who is responsible for performing Maintenance.
2
Lease means an Initial Lease or a Replacement Lease.
Lease Default means an event of default (or like term) under any Lease, the consequence of which would permit
the Owner, as the lessor, to terminate such Lease and/or exercise remedies thereunder.
Lessee means each lessee under
a Lease.
Lockbox Account means the Lockbox Account as defined in the applicable Supplement.
Lockbox Bank means the Lockbox Bank as defined in the applicable Supplement.
Maintenance means all repairs, servicing, maintenance, replacement or furnishing of parts, mechanisms and devices (other
than Mandatory Modifications) as are needed to keep any Unit in good condition and working order and repair, suitable for loading of relevant commodities and in accordance with the Interchange Rules, the FRA rules and the applicable rules of any
other regulatory body having jurisdiction over the Units, as the same may be amended from time to time.
Management
Committee means a committee of one or more persons to be designated by Owner to receive information, reports and recommendations from Manager, and to provide direction to Manager as contemplated in Section 4 of this Agreement.
Management Fee has the meaning set forth in Section 5.2.
Manager Sale Fee means a fee equal to five percent (5%) of the gross proceeds, payable to Manager, in connection with
the sale of any Unit of Equipment.
Mandatory Modification means with respect to any Unit, (a) any equipment or
appliance on any Unit which is required to be changed or replaced, (b) any additional equipment or appliance which is required to be installed on any Unit or (c) any required modification or alteration to any Unit, in each case in order to
comply with changes to any applicable law, regulation, requirement or rule of the AAR or the FRA.
Mexican Taxes means
any Taxes imposed on or calculated by reference to gross lease rent by any government or other taxing authority in Mexico other than Mexican value added taxes.
Monthly Management Fee means the fee payable by Owner to Manager as provided in any Supplement, it being understood and
agreed that the Monthly Management Fee payable shall be pro-rated in the case of periods less than one month.
Off-Lease
Equipment means any Unit that is not On-Lease Equipment.
On-Lease Equipment means any Unit that is subject
to a Lease.
Operating Expenses means all expenses, costs and outlays made or incurred by the Manager in connection
with the marketing, remarketing, management, use, lease, ownership,
3
operation, maintenance, inspection, repair or storage of all or any Units (to the extent not the responsibility of the applicable Lessee or any Railcar Service Provider or other third party who
pays such expenses, costs or outlays), including, but not limited to (a) fees and disbursements of attorneys retained by the Manager in connection with Lease Defaults or incipient Lease Defaults, repossession of Equipment, or protecting and/or
enforcing any rights or other contractual arrangements with respect to the operation or lease of the Equipment, including, without limitation, the cost of copying or providing any material or information to the Owner or such attorney in connection
with the foregoing, (b) fees and disbursements of attorneys retained by the Manager in connection with the proposed or actual sale or re-lease of any Equipment, (c) charges, assessments or levies imposed upon or against the Equipment of
whatever kind or nature, or such as are levied by a railroad, government or governmental agency or are incurred on a basis arising out of the leasing, storage, maintenance, use or operation of the Equipment, (d) expenses arising in connection
with the transportation, storage, Re-Marking, Maintenance, Mandatory Modification, refurbishment and inspection of the Equipment, (e) the costs of alterations, modifications, improvements or additions to
the Equipment made with the Owners prior consent, (f) insurance premiums and charges in connection with policies obtained pursuant hereto, (g) costs of inspections related to the Equipment obtained at the Owners request,
(h) all costs associated with repossessing any Units, (i) all Canadian Taxes or Mexican Taxes on rentals or other amounts payable by the Owner under any Lease whether imposed by withholding or otherwise, (j) all costs, expenses and
fees payable to any Railcar Service Provider under any Railcar Service Agreement, (k) UMLER and Official Railway Equipment Register (ORER) costs and expenses and any filing and reporting required by the AAR, FRA or other applicable authority
with respect to the Equipment, and (l) any other costs or expenses in connection with the Leases or the Equipment incurred upon a direct request of the Owner.
Operative Documents means the Loan Documents or Operative Documents or any similar term as defined
in any applicable security agreement.
Person means an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.
Property Tax or Property Taxes means any recurring tax (other than a sales tax, use tax, value added
tax, goods and services tax, or other similar tax) on the Units that is imposed by any government or any taxing authority within the United States or Canada and is calculated by any of the following: (a) reference to the value of the personal
property subject to the tax; (b) use in the applicable taxing authoritys jurisdiction; (c) a mileage calculation; (d) the type of property; (e) the leasing of the Units; or (1) such other calculation or minimum amount
imposed by the applicable taxing authority (whether called an ad valorem tax, a railcar tax, a mileage tax or otherwise) plus any and all fines, penalties, additions to tax and/or interest relating thereto.
Railcar Service Agreement means any Railcar Marks Management Agreement and any other agreement entered into by
the Manager, the Owner or a Lessee with any Railcar Service Provider whereby such Railcar Service Provider provides any services in relation to Maintenance, car marks, Property Tax or other services with respect to a specific Lease or specific
Units.
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Railcar Service Provider means (a) with respect to any Lease, any Person
utilized by the Lessee to provide services in respect of the Units if the Lessee remains responsible to the Owner for performance of such services pursuant to the Lease or otherwise and (b) any Person who provides services in relation to
Maintenance, car marks, Property Tax or other services in respect of any Lease or Units.
Remarketing Activities means
activities intended to achieve (a) the re-lease of all or any number of the Units, including (but not limited to) soliciting offers for the lease of such Units and publicizing the availability of such Units for re-lease, and/or (b) the
sale of all or any number of the Units, including (but not limited to) soliciting offers for the purchase of such Units and publicizing the availability of such Units for re-sale.
Re-Marking means, in respect of any Unit, the re-marking of such Unit, by decal or otherwise, of the railcar initials and
numbers and replacing the Automatic Equipment Identifier tags.
Replacement Lease means any lease of any Units with a
Lessee pursuant to a Lease that is in respect of Units that have come off an Initial Lease.
Scheduled Expiry Date
means the Scheduled Expiry Date as defined in the applicable Supplement.
Security Trustee has the meaning
set forth in the applicable Supplement.
Senior Lender has the meaning set forth in the applicable Supplement.
Settlement Value means, with respect to any Unit, (a) in the case of On-Lease Equipment, the Stipulated Loss
Value, Settlement Value, Casualty Value, Rule 107 Value or similar term used in the applicable Lease or Railcar Service Agreement or otherwise payable to the registered owner of such Unit under
Interchange Rule 107 or (b) in the case of Off-Lease Equipment, the amount payable to the registered owner of such Unit under Interchange Rule 107 and/or under any insurance policy then in effect. As to any Units, the applicable
Settlement Values under the applicable Initial Lease are as set forth in Schedule I to the applicable Supplement.
Supplement means any Supplement to this Agreement, substantially in the form of Exhibit A hereto, or else in such form
as the parties thereto may agree.
Taxes means any and all present or future fees, taxes, levies, imposts, duties,
deductions, excises, assessments, charges or withholdings of any nature, together with any penalties, fines, additions to tax or interest thereon howsoever levied or imposed by any governmental entity.
Term has the meaning set forth in Section 3.
Termination Date means the earliest to occur of (a) the date of Disposition of all of the applicable Equipment,
(b) the date of termination of the Managers appointment with respect thereto pursuant to Section 9.1, (c) the date of termination by Manager under Section 9.2 and (d) the Scheduled Expiry Date in the applicable
Supplement, including any extensions thereof as set out in an amendment to such Supplement.
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Termination Event has the meaning set forth in Section 9.1.
Transaction has the meaning ascribed to it in the First Premise.
Unit means a freight railcar listed in Schedule I to the applicable Supplement.
Section 1.2. Rules of Usage. The definitions stated herein shall equally apply to both the singular and plural forms of the terms
defined. Any agreement defined or referred to means such agreement as amended, supplemented or modified from time to time, and includes all exhibits, supplements and appendices thereto. Any Person defined or referred to includes such Persons
successors, permitted transferees and assigns. The word including is deemed to be followed by without limitation, whether or not such words appear. Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the applicable Supplement hereto.
SECTION 2. EXCLUSIVE APPOINTMENT OF THE MANAGER.
Section 2.1. Appointment of the Manager. The Owner hereby appoints the Manager and the Manager hereby accepts such appointment as
the exclusive agent of the Owner for (a) managing the Equipment, including, without limitation, administering the Leases and all Railcar Service Agreements in effect to which Owner or Manager is a party as indicated in each Supplement,
(b) either directly or through an Affiliate, remarketing the Equipment (provided that no such delegation to an Affiliate will relieve the Manager of its remarketing obligations hereunder) and (c) performing other services relating to the
Equipment in accordance with the terms and provisions of this Agreement.
Section 2.2. Confirming Agency. If requested by the
Manager, so long as the Manager is not in default of its obligations hereunder, the Owner agrees to provide the Manager with a letter confirming that the Manager is the Owners exclusive agent with respect to the management and remarketing of
the Equipment. During the period of the Managers appointment as exclusive remarketing and/or management agent under this Agreement (and subject to the terms hereof) the Owner undertakes that it will neither:
(a) appoint any other Person to manage, lease, or to undertake to manage or lease all or any part of the Equipment; nor
(b) engage itself in Remarketing Activities.
SECTION 3. TERM.
Any Units shall become subject
to the terms of this Agreement upon execution and delivery of a Supplement in respect thereof. The term of this Agreement (the Term) as to such Units shall commence on the date of such Supplement and shall terminate on the
Termination Date for such Units.
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SECTION 4. DUTIES AND COVENANTS OF THE MANAGER.
Section 4.1. Administrative Duties Generally. Manager will perform the duties and services set forth in this Section 4, in
each case at Owners expense unless otherwise expressly stated herein. The Management Committee will direct Manager with respect to its performance of certain services hereunder as may be required from time to time, including but not limited to
records management, remarketing parameters and budgets, insurance coverage undertaken on behalf of Owner, preferred Lease default and enforcement procedures, and retention of advisors.
(a) Management of Marks.
Owner- or Third-party Controlled Reporting Marks. In the event Manager is managing reporting marks on behalf of Owner pursuant to
any Supplement to this Agreement, during the term of the Supplement Manager shall be the manager of the reporting mark(s) identified in such Supplement. Additional reporting marks may be added from time to time by mutual agreement of the parties.
Owner shall provide appropriate authorization letters, authorizing Manager to receive and provide information to the Association of American Railroads (AAR), railroads and other necessary parties to facilitate Managers management
of the reporting marks. Owner shall be responsible for all fees assessed by the AAR, FRA, Railinc and otherwise based upon the registration and/or control of the reporting marks.
Upon termination of this Agreement, the management of Owner-controlled reporting marks shall revert to Owner, or another party designated by
Owner.
Manager-Controlled Reporting Marks. In the event Manager or Guarantor controls the reporting marks on the Equipment,
Manager shall be responsible for all fees assessed by the AAR, FRA, Railinc and otherwise based upon the registration and/or control of the reporting marks, except as may otherwise be agreed by the parties.
(b) General Management Services. The Manager shall provide equipment hire, maintenance and other services consistent with those
Manager provides in connection with equipment owned by its Affiliates.
(c) Lease Administration Services. The Manager shall
direct that all rental payments and other amounts due under the Leases (including, without limitation, Settlement Value due in the case of an Event of Loss) are paid to the Lockbox Account. The Manager shall invoice the Lessees at least fifteen
(15) days prior to the date all scheduled amounts are due with instructions to the Lessees to pay to the aforementioned account. In the event that any payments due from the Lessees become overdue, the Manager shall issue late payment notices
and engage in follow up actions.
(d) Casualty Processing. In the event the Manager receives notice that an Event of Loss
has occurred in respect of any Unit, the Manager shall direct payment of the Settlement Value due from the Lessee or responsible third party to the Lockbox Account, shall adjust invoicing accordingly, and shall verify that the Settlement Value
received is correct and in accordance with the terms of the applicable Lease and/or Railcar Service Agreement.
7
(e) Records Management Services. Manager shall provide documentation and records
management relating to its duties to Owners reasonable satisfaction, and shall work with Owner to develop such reports and reporting processes as may reasonably be required to accurately and efficiently address Owners financial and
managerial reporting needs. Such reports and processes may include, but will not be limited to:
(i) Portfolio
Information. The Manager shall, on an annual basis, provide the Owner with a review of the Equipment portfolios operation during the preceding year and its current status. Such review shall consist of the following:
(a) in respect of On-Lease Equipment and Off-Lease Equipment, (i) Equipment types by percentage of portfolio and Equipment
age profile, (ii) details of all current Lessees by type and general credit information, (iii) review of collections history, (iv) review of insurance, if any, maintained by or on behalf of the Owner, (v) Lease time lines,
including termination dates, early termination options, purchase options and renewal options, (vi) casualty history, (vii) appraisal requirements, (viii) compliance and status of Railcar Service Agreements, (ix) a summary of
railcar rental results for the preceding year including rental rates for each lease and (x) review of Operating Expense expenditures and forecasts; and
(b) in respect of Off-Lease Equipment:(i) current location of Equipment, (ii) to the extent not covered in
clause (a)(iv) above, status of insurance on Off-Lease Equipment, (iii) status of claims against defaulting Lessees, if applicable, and (iv) remarketing activities related to Off-Lease Equipment.
(ii) A report detailing the Lessee credit/industry concentrations.
(iii) A report reflecting Managers remarketing analysis.
(iv) A report with Owners projected budget.
f) Insurance.
(i) In the case of any Lease which requires that the Lessee provide insurance certificates in respect of any insurance required
to be carried by the Lessee, the Manager shall communicate with the Lessee to arrange such certificates in accordance with the applicable Lease. Manager shall advise Owner on options for insurance against loss or damage to any Units, and, at the
Owners direction and expense and to the extent commercially available, without regard to cost, the Manager shall, subject to the terms of the applicable Lease, arrange for insurance against loss or damage to any Units in addition to that
maintained by the applicable Lessee on behalf of the Owner.
(ii) Manager shall advise Owner on options for general
liability insurance and, at Owners direction and expense and to the extent commercially available, without
8
regard to cost, Manager shall, arrange for general liability insurance with reputable insurance underwriters insuring the Owner, including contractual coverage for the liabilities assumed under
this Agreement and without exclusion for hazardous materials transportation (other than asbestos, lead, nuclear waste and silica), against liability and claims for injuries to persons (including injuries resulting in death), pollution clean-up from
spills or derailments and property damage in a combined single limit of not less than Two Million Dollars ($2,000,000) per occurrence, Ten Million Dollars ($10,000,000) in the aggregate, or such greater amount as the Owner deems prudent and with
such deductibles or insured retentions as are customary. If commercially available, without regard to cost, and not inherent in the general liability policy referenced above, the Owner may elect to pay an additional premium to secure liability
coverage which will respond in the event a Lessees primary coverage is no longer in place in accordance with the coverage outlined in Section 4.2(b). In the case of any Units that may be subject to a full service Lease, the Manager shall,
at Owners direction and expense, arrange for such specific type or types of additional liability insurance coverage as would be maintained by a prudent railcar operating lessor in such circumstances.
(iii) To the extent insurance under this Section or Section 4.2(b) is provided through Managers insurance programs, (a) Manager
retains sole authority regarding claims management; (b) Owner will pay (or at Managers option reimburse Manager for) all applicable deductibles or self-insured retentions applicable to insurance claims; and (c) Owner will comply with
all duties and responsibilities under the policies in a manner consistent with those of the policy owner.
Section 4.2.
Administrative Duties for Off-Lease Equipment.
(a) Delivery; Storage. Upon expiration or termination of any Lease,
the Manager shall, as appropriate, co-ordinate any required Re-Marking of the applicable Units and Manager shall arrange for storage of such Units (including, as appropriate, coordinating with the prior Lessee in the event such Lease contains
provisions for the Lessee to store such Units for a period of time). If such Units are not being stored by such Lessee, the Manager shall select a storage facility for such Units with a view to minimizing the cost of such storage, while taking into
account the fees charged by the facility, the transportation costs to the facility and the location of the facility in relation to the most likely location or operating requirements of a Lessee under a Replacement Lease for such Units.
(b) Insurance.
(i) The Manager shall advise Owner on options for insurance against loss or damage to any Off-Lease Equipment, and at
Owners direction and expense and to the extent commercially available (without regard to cost), procure such insurance. In the event such Off-Lease Equipment is no longer covered by primary liability coverage under a Lease, the Manager shall
advise Owner on options for insurance for primary liability coverage, and at Owners direction and expense and to the extent commercially available (without regard to cost), procure such insurance. If the Manager has knowledge of the occurrence
of an Event of Loss to any Off-Lease Equipment, the Manager shall promptly notify the Owner of such Event of Loss.
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(ii) The Manager shall, advise Owner on options for the following coverage, and
at Owners direction and expense and to the extent the same is commercially available (without regard to cost), procure: (x) general liability insurance, including contractual coverage for the liabilities assumed under this Agreement, with
reputable insurance underwriters insuring the Owner, without exclusion for hazardous materials transportation or otherwise (other than asbestos, lead, nuclear waste and silica), against liability and claims for injuries to persons (including
injuries resulting in death), pollution clean-up from spills or derailments and property damage in a combined single limit of not less than Two Million Dollars ($2,000,000) per occurrence, Ten Million Dollars ($10,000,000) in the aggregate, or such
greater amount as the Owner deems prudent and with such deductibles or insured retentions (y) all-risk physical damage insurance relating to loss or damage, including earthquake and flood risks, to the applicable Units in an amount no less than
the greater of (1) the AAR Settlement Value (as defined by AAR Interchange Rule 107) of the applicable Units or (2) an amount equal to the Agreed Value of the applicable Units and with such deductibles as are customary.
Section 4.3. Administrative Duties Following a Lease Default.
(a) Return of Equipment. Upon the occurrence of a Lease Default, the Manager shall consult with and advise the Owner in respect
thereof, and upon the direction of the Owner and its legal counsel and at the Owners cost and expense, the Manager shall coordinate the return (including legal repossession) of the applicable Units with such third parties as may be needed to
effect such return. Upon return of such Units, the Manager shall arrange for Re-Marking and storage as set forth in Section 4.2(a) and shall market such Units for re-lease in accordance with the terms hereof.
(b) Legal Matters. If the Owner notifies the Manager that it shall be enforcing its rights under a Lease due to a Lease Default
thereunder or would otherwise wish to consult with an attorney prior to declaring a Lease Default, the Manager shall provide copies of all documents in the Managers possession (or other information held by the Manager in connection with such
Lease) to any attorney or attorneys retained by the Owner. In addition, the Manager shall make itself reasonably available, at the reasonable cost and expense of the Owner, to meet with the Owners counsel or otherwise consult in connection
with enforcement of the Owners rights under any Lease.
Section 4.4. Remarketing of Equipment.
(a) Scheduled Lease Expiration. Prior to expiration of any Lease, (i) the Manager shall negotiate with the applicable Lessee
regarding (x) renewal of such Lease as to any or all of the applicable Units, including determination of fair market rental, if so required under such Lease and (y) determining the purchase price for any or all of the applicable Units in
accordance with the terms of such Lease if such Lessee intends to exercise a purchase option thereunder and (ii) if such Lessee does not intend to exercise a purchase option under such Lease, the Manager also shall commence Remarketing
Activities in respect of re-leasing such Units to a new Lessee or selling such Units. The Manager shall use commercially reasonable efforts to arrange a Replacement Lease or sale for such Units, taking into account then-prevailing market conditions.
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(b) Lease Default, Early Termination of a Lease, and Stored Units. If the Manager
has received notice that a Lease Default has occurred and is continuing in respect of any Lease and a default has been declared or remedies are being taken thereunder, or that any Lease has terminated prior to its scheduled expiry date for any
reason, or that Units are stored, the Manager shall, upon the Owners request, commence Remarketing Activities in respect of re-leasing the applicable Equipment to a new Lessee or selling such Equipment. The Manager shall use commercially
reasonable efforts to arrange a Replacement Lease or sale for such Units, taking into account then-prevailing market conditions.
(c)
Return of Equipment. Upon the expiration or termination of any Lease, the Manager shall co-ordinate the return of applicable Units and retain such third parties as may be needed to co-ordinate and effect such return, including
inspectors who shall determine whether such Units are being returned in accordance with the return provisions of the applicable Lease before such Units are accepted by the Manager on behalf of the Owner or its designee.
(d) Prevailing Market Conditions. Upon reasonable request by the Owner, the Manager shall advise the Owner as to the
then-prevailing market conditions in the railcar operating lease business.
Section 4.5. Replacement Lease; Replacement
Lessee.
(a) Upon the Owners acceptance of an offer to lease any Unit (whether to the existing Lessee or a new Lessee), the
Manager shall use commercially reasonable efforts to negotiate the terms of the applicable Replacement Lease and, if applicable, any Railcar Service Agreement. The Manager shall provide advice to the Owner in respect of the terms of such Replacement
Lease and shall assist the Owner in negotiating and closing such transaction including, without limitation, coordinating with the Owners legal counsel.
(b) Any new Lessee shall meet the Owners Financing Requirements.
(c) The Manager shall co-ordinate any required Re-Marking of the applicable Units and transfer of such Units to the new Lessee under the
Replacement Lease at an interchange point convenient to the prior Lessee (if applicable) and the new Lessee.
Section 4.6.
Additional Services; Lockbox Account.
(a) At any time when any Units are not subject to a Lease or Railcar Service Agreement that
requires the Lessee or Railcar Service Provider, as the case maybe, to do the following, the Manager shall, upon request by, and at the expense of, the Owner: (a) perform, or arrange for performance of, inspections, Maintenance and Mandatory
Modifications for the applicable Units (and, if applicable, rebill any third party responsible therefor) and (b) prepare, or arrange for, appropriate records and documentation in respect of the foregoing, copies of which will be provided to the
Owner on request.
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(b) The Manager shall, on the Owners behalf, upon becoming aware of an unidentified payment
made to the Lockbox Account, instruct the Lockbox Bank as to the proper application of such payment. The Owner shall provide to the Manager all information received from the Lockbox Bank with respect to amounts received, unidentified payments or
otherwise, to enable Manager to perform its duties hereunder.
Section 4.7. Financial Statements, Advisors and Tax Returns.
a) Owners Financial Statements. The Manager shall arrange for preparation for the Owners accounts as at
December 31 each year during the Term, commencing December 31, 2010, comprised of the following:
(i) a
consolidated statement of financial position;
(ii) a consolidated income statement for the preceding year (or, in the case
of the initial such statement, such shorter period as may be appropriate);
(iii) a consolidated statement of sources and
uses of funds for the preceding year (or, in the case of the initial such statement, such shorter period as may be appropriate); and
(iv) cash flow projections for the railcar portfolio for the period from the date of such accounts to the Scheduled Expiry
Date.
The foregoing accounts will be delivered to the Owner within one hundred twenty (120) days after December 31 each
applicable year.
b) Tax Returns. At Owners request and direction, Manager shall consolidate information necessary for
Owners preparation and filing of all United States federal income and withholding tax returns and any state, local, and foreign income, withholding, franchise, and capital stock tax returns, and will assist Owner in providing information as
required if any of the above described tax filings are selected for audit by the relevant tax authorities. Manager will not provide tax advice or tax document preparation, and any discussion by Manager of U.S. federal tax issues is not intended or
written to be relied upon, and cannot be relied upon, by any person for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction
or matter addressed herein or therein.
c) Advisors. The Manager shall engage auditors as necessary and may engage other
professional advisors, specialist consultants and other experts as the Manager considers reasonably necessary in connection with providing the services and performing its obligations hereunder.
d) Guarantors Financial Statements. Guarantors financial statements will be made available to Owner and the Security
Trustee each year within one hundred twenty (120) days of Guarantors fiscal year end.
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Section 4.8. No Authority to Make Binding Agreement. With respect to the conclusion
of any re-lease or sale contemplated hereunder, the Manager shall only act upon direction received from the Owner, it being understood that this Agreement does not confer upon the Manager any power to conclude any re-lease contemplated in this
Agreement or any sale of any Unit.
Section 4.9. Purchase by Manager. Nothing contained in this Agreement shall prevent the
Manager or any Affiliate thereof from making an offer to purchase or lease any Units for its own account or from purchasing or leasing such Units if such offer is accepted by the Owner.
Section 4.10. Railcar Service Agreements. Under no circumstances shall the Manager be obligated (a) to perform any
obligations of any Railcar Service Provider under the applicable Railcar Service Agreement (except if the Manager is the Railcar Service Provider) or (b) to make any payments on behalf of the Owner or any other Person to any Railcar Service
Provider or any other Person pursuant to any Railcar Service Agreement or otherwise.
Section 4.11. Delivery of Equipment
Records. The Owner shall, upon acquisition of any Units, instruct the seller thereof to deliver to the Manager all mechanical records and summaries, Equipment drawings, electronic maintenance detail history, sample car inspection reports, the
manufacturers warranties, electronic spreadsheets of all Equipment marks and numbers, original Equipment invoices, certificates of acceptance and original bills of sale as to the Equipment that such seller has in its possession. In addition,
the Owner shall deliver to the Manager any such records or information that may be, or come into, the Owners possession.
Section 4.12. Performance Standards/Force Majeure Events.
(a) Manager will perform its duties hereunder in conformance with all applicable rules and regulations of the AAR, U.S. Department of
Transportation (DOT), or any other regulatory authority having jurisdiction over the Equipment and regulating the Managers services. While Managers duties will be rendered in good faith and in accordance with industry
standards, Manager does not warrant or guarantee the services will be error-free.
(b) Manager shall not be liable for nonperformance or
delay in performance due to any cause beyond its control (Force Majeure). If affected by Force Majeure, Manager shall give notice to Owner as promptly as possible of the nature and probable duration of such Force Majeure. If Manager is
unable to carry out any of its obligations under this Agreement because of Force Majeure, the obligations of Manager shall be suspended only to the extent made necessary by Force Majeure. Force Majeure shall include, without limitation, acts of God;
legislation or regulations of any governmental body; court decrees; acts of the public enemy; riots; strikes; labor disputes affecting maintenance facilities used or prospectively used by Manager; fires; explosions; floods; and breakdown of or
damage to plants, equipment or facilities. Manager shall endeavor to counter the effects of any act of Force Majeure as promptly as possible.
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SECTION 5. ACCOUNTS, MANAGERS FEES AND EXPENSES.
Section 5.1 Accounts. Manager will direct Lessees and Railcar Service Providers with respect to the Leases and Equipment to remit
payments due and to become due under any Lease, or otherwise derived from the Equipment, directly to the Lockbox Account, and Manager shall use reasonable efforts to obtain written acknowledgments from each such Person. To the extent Manager
receives payments relating to any Lease or otherwise derived from the Equipment and owed to Owner, Manager will promptly remit such amounts to the Lockbox.
Section 5.2 Manager Fees. In respect of each month during the Term Owner agrees to pay to the Manager a fee as specified in each
Supplement (the Management Fee), in consideration of Managers services. The Management Fee shall be payable monthly in arrears with the first payment due on the Initial Fee Payment Date in the applicable
Supplement and thereafter on the corresponding day of each month thereafter. Management Fees due to Manager will be sent to Manager using the following wire instructions:
|
|
|
Beneficiary Name |
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Greenbrier Management Services |
Bank |
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Bank of America |
Bank Address |
|
Oregon |
ABA No: |
|
026 009 593 |
Account No: |
|
00454 229 4574 |
Upon termination of this Agreement with respect to any Supplement, whether at the end of its Term, in connection with a
Termination Event, or otherwise, Manager will receive an administrative fee in the amount of $10.00 per Unit per month in lieu of the Management Fee, which will be payable each month thereafter until the reporting marks on the Units are changed to
reporting marks not controlled by Manager, or in the case of Owner or third-party reporting marks, until such time as Manager is no longer reflected as the reporting mark manager. During any such period Operating Expenses will continue to be payable
by Owner as provided under this Agreement and the applicable Supplement, and Managers duties hereunder and under the applicable Supplement will be limited to those which must of necessity, as a result of industry rules and procedures, be borne
or performed by the party who controls the reporting mark on the Units or is designated as the reporting mark manager.
The Management Fee does not
include the Manager Sale Fee applicable to any sale of Units of Equipment, which fee will be payable by Owner at the time of sale. Manager and Owner acknowledge that sale of Equipment requires the approval of the Senior Lenders as contemplated under
the Operative Documents.
Section 5.3 Managers Costs and Expenses. Owner shall pay or cause to be paid, promptly upon
receipt of an invoice therefor, all Operating Expenses. In the case of any individual Operating Expenses that exceed One Thousand Dollars ($1,000), the Manager shall produce supporting documentation if so requested by the Owner. All payments of
Operating Expenses shall be made directly to the third-party providers, or shall be paid to the Manager as reimbursement, as appropriate, provided that the Owner shall pay or cause to be paid (a) in the
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case of amounts payable to third-party providers, all fees or penalties charged by such Person in respect of late payments and (b) in the case of amounts payable to the Manager as
reimbursement, interest on any amount not paid within seven (7) days of receipt of the invoice therefor, calculated at the interest rate quoted as prime by JPMorgan Chase Bank plus two percent (2.0%) per annum, computed on the
basis of a 360-day year of twelve 30-day months from the date such payment is due to the date such payment is received.
SECTION 6.
INDEMNITY.
The Owner hereby agrees to defend, indemnify and hold harmless the Manager, its Affiliates and the respective directors,
officers and employees of each of them (collectively, the Indemnitees) from and against all claims, actions, demands, costs, expenses (including attorneys fees), losses, settlements and liabilities (each, a
Claim) incurred by or asserted against such Indemnitee related to, arising out of or in any way either connected with the use, operation, possession, control, storage, management, maintenance, leasing, remarketing or sale of any
Equipment or with this Agreement or any Lease or Railcar Service Agreement and the transactions contemplated herein or therein, except to the extent that it is finally determined that such Claims directly resulted from the Managers gross
negligence, willful misconduct or breach of its obligations under this Agreement. Neither the Manager nor any Affiliate of the Manager guarantees or is in any other way responsible for the credit or performance of the Owner, any Lessee, any Railcar
Service Provider, the Lockbox Bank or any other Person, and the Manager shall disclaim any such guarantee or responsibility.
The Owner
shall have the right, so long as the Owner is not in default of any of its obligations hereunder or under any Operative Document, to defend or compromise in good faith in a commercially reasonable manner and with counsel reasonably satisfactory to
the relevant Indemnitee, any Claim for which indemnification is sought under this Section 6, and such Indemnitee shall, at the Owners cost, cooperate with all reasonable requests of the Owner in connection therewith, provided that
no such Claim shall be compromised on a basis that admits any criminal violation, gross negligence or willful misconduct on the part of such Indemnitee without such Indemnitees express written consent (which consent may be withheld in its sole
discretion). The Owners rights to defend or compromise a Claim pursuant hereto shall not apply in any situation where, in the good faith opinion of such Indemnitee, there exists a bona fide conflict of interest between the Owner and the
Indemnitee in relation to such Claim, in which case such Indemnitee, with respect to such Claim, may retain separate counsel reasonably acceptable to, and at the cost and expense of, the Owner. An Indemnitee may participate at its own expense in any
judicial proceeding controlled by the Owner pursuant to the preceding provisions, provided that such partys participation does not, in the opinion of the independent counsel appointed by the Owner to conduct such proceedings, interfere
with such control, provided further that such participation shall not constitute a waiver of the indemnification provided herein. Nothing contained in this Section 6 shall be deemed to require an Indemnitee to contest any Claim or
to assume responsibility for or control of any judicial proceeding with respect thereto. The Owner hereby agrees to defend, indemnify and hold harmless each Indemnitee from and against all Claims incurred by or asserted against such Indemnitee
related to, arising out of, or in any way connected with, any action by or on behalf of the Owner under this Section 6. All amounts payable by the Owner with respect to Claims pursuant to this Section 6, including any costs and expenses
relating thereto, shall be paid promptly following demand therefor.
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The obligations of the Owner under this Section 6 shall survive expiration or termination of
this Agreement and any transfer by the Manager pursuant to Section 7 or 9.3.
SECTION 7. ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No
party to this Agreement may assign its rights or obligations under this Agreement without the prior written consent of the other parties hereto. Each reference in this Agreement to a party to this Agreement shall include a reference to its
successors and permitted assigns.
SECTION 8. INSPECTION OF EQUIPMENT; WARRANTIES.
If a prospective lessee is interested in inspecting any Units and records relating to such Units prior to entering into a Lease with respect to
such Units, the Owner shall work with the Manager to obtain such consents and directions as may be necessary and shall take such other actions as may be necessary to permit such prospective lessee to make such inspection (subject to the rights, if a
Lease is still in effect, of the applicable Lessee) and the Manager shall co-ordinate such inspection and related technical matters. If the Owner requests an inspection or appraisal of any Unit at any time,
the Manager shall, on behalf of Owner, co-ordinate such inspection or appraisal (subject to the rights, if a Lease is still in effect, of the applicable Lessee).
In connection with coordinating maintenance and repair of the Equipment, the Manager shall to the extent permitted claim, in its name or on
the Owners behalf, under any applicable manufacturers warranties as may be available to it or its Affiliates, or the Owner, as the case may be, in respect of any such maintenance and repair.
SECTION 9. TERMINATION.
Section 9.1.
Termination by the Owner. The parties hereto agree that their obligations under this Agreement, the Managers appointment as exclusive agent hereunder and (except as provided below) the Managers right to receive any Management Fee
or future commission as exclusive agent or otherwise may, at Owners option (or Security Trustees option, in the case of Termination Events (a), (b) (c) and (e) below), terminate if a Termination Event shall occur,
provided that the Manager shall not have remedied such Termination Event within the period, if any, stated in clauses (a) through (f) below (or such reasonable additional period as Owner shall agree). Notwithstanding any other
provision hereof, the Owner shall not be entitled to terminate this Agreement pursuant to clause (f) below if such failure was caused by or related to failure by Owner to pay any amount payable by it hereunder, failure by Owner to provide
information required in order for Manager to perform its services and duties, or failure by Owner to perform any other obligation hereunder or failure by any Railcar Service Provider
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to perform its obligations under any Railcar Service Agreement. For purposes of this Section 9, each of the events described in clauses 9.1 (a) through (f) below, and clauses
9.2(a) through (d) shall constitute a Termination Event:
(a) the insolvency of the Manager or Guarantor, or the
commencement of any bankruptcy, insolvency, liquidation, winding-up or similar proceedings in relation to the Manager or Guarantor by the Manager or Guarantor or any other Persons which, if initiated by any Person other than the Manager or
Guarantor, shall not have been stayed or dismissed within sixty (60) days;
(b) as a result of a foreclosure on Owner or Units by the
Security Trustee or a secured party under a security agreement or a pledge, the Security Trustee or such secured party becomes the Owner of Units or the owner of the membership interest in Owner; provided, however, that in such event termination
will be at the Security Trustees or the secured partys option, and only with respect to Units then owned by such secured party;
(c) Managers ultimate parent, The Greenbrier Companies, Inc. or its successor or assignee (the Company) ceases to be a
publicly traded company;
(d) The Company experiences a Change of Control event. For purposes of this provision, a Change of
Control shall mean the occurrence of any of the following:
(i) The acquisition by any individual entity or group
(within the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of the stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of the Company (irrespective of whether at the time stock of any class or classes of the Company shall
have or might have voting power by reason of the happening of any contingency); provided, however, that for purposes of this subsection (i), the following acquisitions will not constitute a Change of Control: (a) any acquisition directly from
the Company; (b) any acquisition by the Company or a subsidiary of the Company; (c) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or
(d) any acquisition by WL Ross or an entity affiliated with WL Ross, or one or more individuals of Managers or the Companys management team.
(ii) The consummation of a merger or consolidation involving the Company if the stockholders owning the capital and profits
(ownership interests) of the Company immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power or
ownership interests of the Company or the entity resulting from such merger or consolidation, in substantially the same proportion as their ownership of the combined voting power or ownership interests outstanding immediately before such merger or
consolidation; provided however that in the event such change in voting power or ownership interests is the result of an acquisition by WL Ross or an entity affiliated with WL Ross, or one or more individuals of Managers or the Companys
management team, such change shall not constitute a Change of Control;
(e) the Manager shall have breached in any material respect any of
its representations or warranties hereunder and the same is not remedied to the reasonable satisfaction of the Owner and the Security Trustee within 90 days of the earlier of knowledge of such breach or notice from the Owner or Security Trustee; or
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(f) if, within ninety (90) days of having received notice from Owner that the Manager has
failed to comply in any material respect with its obligations under Section 4, the Manager shall have failed to cure such non-compliance to the reasonable satisfaction of the Owner.
Each of the Owner and Manager hereby acknowledge the Security Trustees right to terminate this Agreement as set forth in this
Section 9.1.
Section 9.2. Termination by the Manager. At any time during the Term, the Manager shall be entitled to
terminate this Agreement upon notice to Owner as follows:
(a) if any amounts of Management Fee, or any other amounts payable hereunder
are not paid when due and a period of fourteen (14) days has elapsed following receipt by Owner of written notice from the Manager of such failure to pay; or
(b) the Owner is dissolved or becomes insolvent or any bankruptcy, insolvency, liquidation or similar proceedings is commenced by any Person
which, if initiated by any Person other than the Owner shall not have been stayed or dismissed within sixty (60) days; or
(c) if the
Owner acts or fails to act, in each case in a manner that impairs or frustrates the Managers ability to perform its duties hereunder, if such act or failure to act continues for a period of thirty (30) days after notice thereof from the
Manager; or
(e) if, as a result of a foreclosure on Owner or Units by the Security Trustee or a secured party under a security agreement
or a pledge, the Security Trustee or such secured party becomes the Owner of Units (or the owner of the membership interest in Owner); provided, however, that in such event termination will be only with respect to Units then owned (directly or
indirectly) by such secured party.
Section 9.3 Actions Upon Termination. Upon termination of this Agreement as to any or all
Units, subject to (a) receipt of all amounts then due and payable to the Manager hereunder and (b) execution and delivery of documentation satisfactory to the Manager in its sole discretion that (i) transfers to another Person the
obligations of Owner under the applicable Leases, Railcar Service Agreements and other Operative Documents, or (ii) releases Owner from any obligations under such Leases, Railcar Service Agreements and Operative Documents, the Manager shall
cooperate with Owner and/or any new manager of the applicable Units in respect of transferring the lease administration, car marks and maintenance records to such Person. Upon termination of this Agreement as to any or all Units, no new manager
shall be appointed for such Units until the conditions of this Section 9.3 have been met.
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SECTION 10. REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT.
Section 10.1 Representations and Warranties. Each of the Manager and the Owner hereby represents and warrants, as to itself, as of
the date hereof that:
(a) it is a limited liability company duly formed, validly existing and in good standing under the laws of the
State of Delaware, and it has all requisite power, authority and legal right under the laws of the State of Delaware to enter into and perform its obligations under this Agreement;
(b) neither the execution and delivery of this Agreement nor the performance by it of its obligations hereunder requires any consent or
approval of, or the giving of notice to, the registration or filing with, or the taking of any other action in respect of, any Government Entity of the U.S.A. governing its powers as a limited liability company or to its continued existence and
authorization to do business other than periodic filings relating to the transactions contemplated by this Agreement , if any, other than consents, approvals, notices, registrations or filings that have been made or obtained;
(c) neither the execution and delivery of this Agreement nor the performance by it of its obligations hereunder contravenes the provisions of,
or constitutes a default under, or results in the creation or imposition of any lien upon the Units under, any Applicable Laws of the U.S.A. not related to the Ownership, operation or maintenance of the Units, its constituent documents, any
indenture, charge, debenture, mortgage, deed, contract or other agreement to which it is a party or by which it or its properties may be bound or affected;
(d) the execution and delivery of this Agreement, and the performance by it of its obligations hereunder, have been duly authorized by all
necessary action on its part; this Agreement has been duly executed and delivered by it, and assuming due authorization, execution and delivery by the other parties hereto, this Agreement constitutes the legal, valid and binding obligation of it,
enforceable against it in accordance with its terms, subject to the rights of creditors generally, to equitable principles of general application and to bankruptcy, insolvency and liquidation and other similar laws of general application; and
(e) there are no pending or, to its knowledge, threatened actions, suits or proceedings against it or affecting it or its properties before
any court or administrative agency which, if adversely determined, would adversely affect its ability to perform its obligations under this Agreement, with the exception of those threatened by Babcock & Brown Rail Management LLC and related
entities relating to an existing railcar service agreement and reporting mark ownership.
Section 10.2 Conditions Precedent.
(a) It is a condition precedent to the Managers obligations hereunder that on the date hereof, the Manager shall have received from
the Owner the following:
(i) a certificate of an authorized representative of the Owner certifying (A) that all
necessary action has been taken to authorize the Owner to enter into and perform its obligations under this Agreement, and (B) as to the incumbency and authority of the representatives of the Owner executing this Agreement on behalf of the
Owner and the documents executed and delivered by it in connection herewith;
(ii) an opinion of counsel to the Owner, in
form and substance reasonably satisfactory to the Manager;
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(b) It is a condition precedent to the Owners obligations hereunder that on the date
hereof, the Owner shall have received from the Manager the following, a copy of which shall also be delivered to the Security Trustee:
(i) a certificate of an authorized representative of the Manager certifying (A) that all necessary action has been taken
to authorize the Manager to enter into and perform its obligations under this Agreement and (B) as to the incumbency and authority of the representatives of the Manager executing this Agreement on behalf of the Manager and the documents
executed and delivered by it in connection herewith;
(ii) an opinion of counsel to the Manager, in form and substance
reasonably satisfactory to the Owner; and
(iii) a duly executed copy of a satisfactory guaranty from the Guarantor of
Managers obligations hereunder.
SECTION 11. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, and may be amended only by a written
instrument executed by or on behalf of the parties hereto and all other parties to any Supplement hereto, and only with the prior written consent of the Security Trustee; provided that this Agreement may be amended as it applies to any
Supplement by the parties to such Supplement, provided, further, that any such amendment as to any Supplement will have no effect on this Agreement as it applies to any other Supplement.
SECTION 12. SEVERABILITY.
If any provision of
this Agreement, or the application of such provision to any Person, entity or circumstance, is held invalid, the remainder of this Agreement, or the application of such provision to Persons, entities or circumstances other than those as to which it
is held to be invalid, shall not be affected thereby.
SECTION 13. NOTICES.
All notices or other communications provided for under this Agreement shall be given in writing and shall be delivered personally or by
courier, or sent by post, or facsimile transmission to the other parties hereto at the addresses set forth below or, in the case of any other Owner, as set forth in the applicable Supplement.
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|
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If to Owner: |
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WL Ross-Greenbrier Rail I LLC |
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Attn: Wendy L. Teramoto |
|
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1166 Avenue of the Americas |
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New York, NY 10036 |
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Telephone: (212) 826-2041 |
|
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Facsimile: (212) 317 4892 |
|
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If to Manager: |
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Greenbrier Management Services, LLC |
|
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One Centerpointe Drive, Suite 400 |
|
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Lake Oswego, OR 97035 |
|
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Attention: Equipment Accounting |
|
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Facsimile: 503-968-4375 |
|
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With a copy to: |
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The Greenbrier Companies, Inc. |
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One Centerpointe Drive, Suite 200 |
|
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Lake Oswego, OR 97035 |
|
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Attention: General Counsel |
|
|
Facsimile: 503-684-7553 |
or to such other address or facsimile number as is notified by any party to the others in writing under this Agreement by no
less than three (3) Business Days notice. Any such notice shall only be effective upon actual receipt by the addressees.
SECTION 14.
GOVERNING LAW AND JURISDICTION.
Section 14.1. Applicable Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN TITLE 14 OF ARTICLE 5
OF THE GENERAL OBLIGATIONS LAW).
Section 14.2. Submission to Jurisdiction.
(a) Each of the parties hereto agrees that the federal or state courts in the County of New York , State of New York are to have non-exclusive
jurisdiction to settle any disputes which may arise in connection with the legal relationships established by this Agreement (including, without limitation, claims for set-off or counterclaim) or otherwise arising in connection with this Agreement.
(b) Each of the parties hereto irrevocably waives any objections to the federal or state courts in the County of New York, State of New
York on the ground of venue or forum non conveniens or any similar grounds.
(c) Each of the parties hereto irrevocably consents to service
of process by registered or certified mail or in any other manner permitted by relevant law.
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SECTION 15. CONFIDENTIALITY.
Except to the extent necessary for the exercise of its rights and remedies and the performance of its obligations hereunder, neither party
hereto will, in a way known to such party to be detrimental to the other party, itself use or intentionally disclose (and will not permit such use or disclosure by any of its Affiliates of), directly or indirectly, any information obtained from the
other party hereunder or in connection herewith or any portion of this Agreement and each party will use all reasonable efforts to have all such information known or which ought reasonably to be known by it to be confidential or proprietary kept
confidential and not used in any way known to such party to be detrimental to any other, provided that (a) such party may use, retain and disclose any such information to its Affiliates, or to its (or its Affiliates) officers,
directors, employees, counsel, technical advisors and public accountants and any governmental agency or instrumentality or other supervisory body requesting or requiring such disclosure, including in connection with preparation of the tax returns of
the Owner or any member or parent of the Owner or any tax audit of the Owner or any member or parent of the Owner or any of their respective Affiliates, (b) such party may use, retain and disclose any such information that has been publicly
disclosed (other than by such party or any Affiliate thereof in breach of this Section 15) or has rightfully come into the possession of such party or any Affiliate thereof other than from any other party hereto or a Person acting on such other
partys behalf in breach of this Section 15, (c) to the extent that such party or any Affiliate thereof may have received a subpoena or other written demand under color of legal right for such information, such party or such Affiliate
may disclose such information, but such party shall first, as soon as practicable upon receipt of such demand, if permitted by Applicable Law, furnish a copy thereof to each affected party and afford each such party reasonable opportunity to the
extent it can do so under Applicable Law by reasonable efforts, at such other partys cost and expense, to obtain a protective order or other reasonably satisfactory assurance of confidential treatment for the information required to be
disclosed, (d) such party may disclose any such information as may be agreed in any applicable security agreement and (e) such party may disclose to any Railcar Service Provider or its officers, directors, employees, counsel, technical
advisors and public accountants any such information as may be necessary or advisable in connection with the performance by such Railcar Service Provider or Owner under the applicable Railcar Service Agreement.
Notwithstanding anything to the contrary contained in this Agreement or in any other Operative Document, each party may disclose to any and
all Persons, without limitation of any kind, the United States federal income tax treatment of the transactions contemplated by this Agreement and the Operative Documents (the Overall Transaction), and any fact relevant to
understanding the United States federal income tax treatment or tax structure of the Overall Transaction, and all materials of any kind (including opinions or other tax analyses) relating to such United States federal income tax treatment or tax
structure. This waiver is effective from the commencement of discussions with respect to the Overall Transaction.
SECTION 16. CONFLICTS.
It is expressly understood and agreed by the Owner that nothing in this Agreement shall be construed to prevent or prohibit the Manager or its
Affiliates from providing the same or similar services as those provided hereunder to any other Person. In particular, the Manager and
22
its Affiliates shall be entitled to own, lease and operate for their respective accounts, equipment identical to the Equipment and/or to manage and/or remarket for sale or re-lease such equipment
under a management and/or lease and/or remarketing agreement with another party. In the event that the Manager or any of its Affiliates owns, leases or remarkets for re-lease or sale (for its own account or for the account of others), equipment
substantially similar in size and specifications to, and competitive with, the Equipment, subject to the business needs of prospective lessees (including, without limitation, the re-leasing of equipment to existing lessees under a new lease or a
lease renewal or extension) or purchasers (Competitive Equipment) the Manager, except in the case of equipment that is being leased pursuant to extension or renewal of an existing lease thereof, shall remarket first and shall
cause Affiliates of the Manager to remarket first, the equipment (including the Equipment) which has been off lease and available for the longest period of time, provided that for the avoidance of doubt, the Manager also shall continue to
remarket the Equipment. The Manager will promptly notify the Owner if there is Competitive Equipment and as to what the ranking of the Equipment is relative to any Competitive Equipment at that time and each month thereafter so long as there is
Competitive Equipment. If the Manager agrees to provide a better ranking to any other Person than the Manager has agreed to provide hereunder, the Manager will provide an equivalent ranking to the Owner for so long as it provides such ranking to
another Person. No violation of this Section 16 shall occur if the Competitive Equipment is equipment subject to any acquisition and/or financing transaction in which the Manager (or any Affiliate thereof) and any party to the Transaction (or
any Affiliate thereof) are participants in any capacity.
SECTION 17. COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same instrument.
SECTION 18. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AS AGAINST THE OTHER PARTY HERETO ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL
ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT.
SECTION 19. ASSIGNMENT.
No assignment of this Agreement (or the rights or obligations of the parties hereunder) may be made by either party without the consent of the
other party and the Security Trustee, which consent will not be unreasonably withheld.
SECTION 20. THIRD-PARTY BENEFICIARIES.
The Security Trustee and the Senior Lenders are express third-party beneficiaries under this Agreement;
provided, however, that they shall not have rights of enforcement in connection with a Termination Event until such time as any cure period pertaining to the Termination Event has passed without cure having been effected.
23
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Railcar Remarketing and
Management Agreement as of the date first above written.
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GREENBRIER MANAGEMENT SERVICES, LLC, as Manager |
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By: |
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Greenbrier Leasing Company LLC, Sole Member |
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By: |
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/s/ James T. Sharp |
Name: |
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James T. Sharp |
Title: |
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President |
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WL ROSS-GREENBRIER RAIL I LLC, as Owner |
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By: |
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/s/ Wendy Teramoto |
Name: |
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Wendy Teramoto |
Title: |
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Vice President |
24
Exhibit A
FORM OF SUPPLEMENT
Managers Identifier:
SUPPLEMENT NO. TO RAILCAR REMARKETING
AND MANAGEMENT AGREEMENT
THIS SUPPLEMENT NO. TO RAILCAR REMARKETING AND MANAGEMENT AGREEMENT dated as of
, (this Supplement) supplements that certain Railcar Remarketing and Management Agreement dated
as of , 2010 (as amended, modified or supplemented, the Management Agreement), between Greenbrier Management Services LLC (the
Manager) and WL Ross-Greenbrier Rail I LLC (the Owner). Capitalized terms used herein without definition shall have the meaning ascribed thereto in Section 1 below.
PREMISES:
1. The Owner
and the Manager are parties to the Management Agreement.
2. The Management Agreement provides for the execution of Supplements thereto.
3. The Owner desires that the Manager act as the Owners exclusive agent in providing certain lease administration and remarketing
for lease services in relation to the railcars described on Schedule I hereto (for purposes hereof, the Units).
NOW THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1. Definitions. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the
Management Agreement (which also contains rules of usage that shall apply to terms defined therein and herein). The following terms shall have the following meanings:
Agreed Value means, as at any time as to any Unit an amount equal to
[ ].
Financing Requirements means [ i.e. describe
concentration limits ].
Initial Fee Payment Date means
[ ].
Lockbox Account means
[ ].
Lockbox Bank means
[ ].
Management Fee means
[ ].
25
Scheduled Expiry Date means
[ ].
Security Trustee means
[ ].
Senior Lenders means
[ ].
SECTION 2. AGREEMENTS.
Section 2.1.
Agreements of the Parties. The parties hereto agree that effective as of the date of this Supplement, the Owner shall be an Owner under the Management Agreement and the Owner hereby agrees to be bound by all of the terms
thereof. The Management Agreement shall in all respects apply to the Units described on Schedule I hereto and the Leases with respect thereto. To the extent any provisions of this Supplement conflict or are inconsistent with the provisions of
the Management Agreement, the provisions of this Supplement shall apply in respect of the Units and the Leases with respect thereto.
Section 2.2. Notices. For purposes of Section 13 of the Management Agreement, the Owners address is:
[
]
[
]
[
]
[
]
Attn:
[ ]
Tel:
[ ]
Fax:
[ ]
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Each
of the Manager and the Owner hereby represents and warrants, as to itself, that the representations and warranties made in Section 10.1 of the Management Agreement are true and correct as of the date hereof, provided that all references
therein to this Agreement shall be replaced by the Management Agreement as supplemented by this Supplement.
SECTION 4. CONDITIONS
PRECEDENT.
Section 4.1. Conditions Precedent to Obligations of the Owner. It is a condition precedent to the Owners
obligations hereunder that on the date hereof, the Owner shall have received from the Manager the certificates, documents and opinions described in Section 10.2(b) of the Management Agreement.
Section 4.2. Conditions Precedent to Obligations of the Manager. It is a condition precedent to the Managers obligations
hereunder that on the date hereof, the Manager shall have received from the Owner the certificates, documents and opinions described in Section 10.2(a) of the Management Agreement.
26
SECTION 5. MISCELLANEOUS.
Section 5.1. Governing Law. THIS SUPPLEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, UNITED STATES OF AMERICA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN TITLE 14 OF ARTICLE 5 OF THE GENERAL OBLIGATIONS LAW).
Section 5.2. Counterparts. This Supplement may be executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.
Section 5.3. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AS AGAINST EACH OTHER PARTY HERETO ANY RIGHTS IT
MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION ARISING UNDER THE MANAGEMENT AGREEMENT OR THIS SUPPLEMENT.
[Signature Page
Follows]
27
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Supplement to Railcar
Remarketing and Management Agreement as of the date first above written.
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GREENBRIER MANAGEMENT SERVICES, LLC as Manager |
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By: |
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[
] |
Name: |
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Title: |
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[
] |
as Owner |
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By: |
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[
] |
Name: |
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Title: |
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28
Schedule I
to
Supplement
EQUIPMENT
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Lease # |
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Initial Lessee (and Railcar Service Provider, if
any) |
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Number of
Units |
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Unit Type |
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Year Built/ Manufacturer |
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Description |
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Current
Reporting Marks |
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Settlement
Value |
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Schedule 2
to
Supplement
[AGREED VALUES]
Exhibit 10.4
EXECUTION COPY
ADVISORY
SERVICES AGREEMENT
This ADVISORY SERVICES AGREEMENT (this Agreement) is entered into as of April 29, 2010, by
and among WLR-Greenbrier Rail Inc., a Delaware corporation (the Company) and Greenbrier Leasing Company LLC, an Oregon limited liability company (GLC).
Background
WHEREAS, GLC
has staff skilled in strategy development, strategic planning, corporate development, marketing, remarketing, financial modeling, financing capabilities, structuring experience and knowledge, engineering, back office capabilities and other advisory
skills, services and knowledge of and in the railcar industry, including, but not limited to, the railcar leasing industry (the Advisory Services);
WHEREAS, GLC has provided the Company with the Advisory Services in connection with the closing of a railcar leasing opportunity for WL
Ross-Greenbrier Rail Holdings I LLC (Holdings) and WL Ross-Greenbrier Rail I LLC (WLRGR), both affiliates of the Company;
WHEREAS, the Company desires to, pursuant to this Agreement, compensate GLC for the Advisory Services it and its affiliates have provided to
the Company to date;
WHEREAS, the Company desires to exclusively hire GLC to provide the Advisory Services in the future in connection
with future business opportunities and the Companys general business operations; and
WHEREAS, GLC has provided Advisory Services,
and is willing to provide Advisory Services to the Company, all upon the terms and conditions set forth in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Engagement. Upon the terms and conditions herein set forth, the Company hereby engages GLC on an
exclusive basis for the Term (as defined below) to provide Advisory Services to the Company as requested from time to time by the Company in consideration for the compensation provided for in Section 3 below (provided nothing herein
shall prevent any investor or owner of the Company from pursuing other rail opportunities). The Advisory Services shall be performed under the direction of the Companys Board of Directors. In consideration of the remuneration herein specified,
GLC accepts such engagement and agrees to perform the Advisory Services specified herein. Upon written agreement of the parties, the provision of Advisory Services may also include GLC assisting the Company with refinancing indebtedness of the
Company and/or its subsidiaries, in which case, GLC shall be appointed as the exclusive advisor in connection with such refinancing and Exhibit A (referenced below) shall be updated to reflect mutually agreed upon fees customary in the industry
payable for the provision of such services.
Page 1 of 8ADVISORY SERVICES
AGREEMENT
2. Term. This Agreement shall commence on the date hereof and shall terminate upon the
sale, liquidation or dissolution of Holdings and WLRGR (the Term).
3. Advisory Fee; Success Fee; Deferred Fee.
(a) In consideration of GLCs providing Advisory Services hereunder, the Company shall pay GLC an advisory fee, success fee and
deferred fee for any refinancing, each as described in Exhibit A attached hereto (collectively, the Fees).
(b) In
addition to the Fees, the Company shall reimburse GLC promptly upon request for all reasonable out-of-pocket fees and expenses incurred by GLC in connection with GLCs obligations hereunder, provided that such out-of-pocket fees and expenses
have been approved by the Company, with such approval not to be unreasonably withheld.
(c) On or before the expiration of the Term of
this Agreement (the Expiration Date), the Company will pay GLC any unpaid fees due through the Expiration Date.
(d) With
the prior written consent of the Company not to be unreasonably withheld, GLC may assign to an affiliate of GLC any fees or reimbursable costs and expenses due to GLC from the Company.
4. Additional Rights and Obligations of the Parties.
(a) During the Term, GLC shall maintain in its employ, or otherwise have available to it through affiliates or otherwise, personnel in its
judgment sufficient in number and adequate in ability to perform all Advisory Services that GLC is required to perform under this Agreement.
(b) The Company shall at all times cooperate with GLC.
(c) GLC shall diligently and faithfully perform its obligations under this Agreement.
(d) The Company covenants and agrees that at all times during the Term Holdings shall have no operations and shall not engage in any business
other than as a holding company owning 100% of WLRGR.
(e) A New Owner Event shall mean the issuance, sale or other transfer
of any interests, including any membership interests, securities, participations or otherwise, in Holdings or WLRGR, to a third-party. The Company covenants and agrees that at all times during the Term that the Company, Holdings and WLRGR shall not
engage in a New Owner Event without the written consent of GLC which consent shall not be unreasonably withheld; provided, however, such prior written consent shall not be required if and to the extent that following consummation of such New Owner
Event, the percentage of distributions to the
Page 2 of 8ADVISORY SERVICES
AGREEMENT
Company payable to GLC hereunder is adjusted in a manner that is not unfavorable to GLC so that, following the occurrence of such New Owner Event, the aggregate Advisory Fees expected to be
earned by GLC during the remaining Term would be not less than the aggregate Advisory Fees expected to be earned by GLC during the remaining Term had such New Owner Event not occurred (i.e. such New Owner Event is economically neutral to GLC).
5. Indemnification.
(a)
Indemnification. Each party agrees to indemnify and hold harmless the other party (the Indemnified Party) (including its affiliates and its and their respective principals, officers, directors, shareholders, partners, members,
managers and employees) from and against, and pay or reimburse the Indemnified Party and such other indemnified persons for, any and all actions, claims, demands, proceedings, investigations, inquiries, liabilities, obligations, fines, deficiencies,
costs, expenses, royalties, losses and damages (whether or not resulting from third party claims) related to or arising out such partys breach of this Agreement, gross negligence, willful misconduct, bad faith or knowing violation of
applicable law, and to reimburse the Indemnified Party and any other indemnified person for out-of-pocket expenses and reasonable legal and accounting expenses incurred by it in connection with or relating to investigating, preparing to defend or
defending any actions, claims or other proceedings (including any investigation or inquiry) arising in any manner out of or in connection with such partys breach of this Agreement, gross negligence, willful misconduct, bad faith or knowing
violation of applicable law (whether or not such indemnified person is a named party in such proceeding); provided, however, that no party shall not be responsible under this Section 5(a) for any claims, liabilities,
losses, damages or expenses to the extent that they are agreed by the parties or finally determined in arbitration or judicially (without right of further appeal) to result from actions taken by the Indemnified Person (or by any other indemnified
person) due to the Indemnified Partys (or by any other indemnified persons) gross negligence, willful misconduct, bad faith or knowing violation of applicable law.
(b) Limitation on Liability. Except as expressly set forth herein, neither party makes any representations or warranties, express or
implied, in respect of the Advisory Services, itself or its business. The Company further acknowledges that GLCs role under this Agreement is as an advisor only, that GLC does not and will not have or exercise control over the Companys
affairs and/or governance, that GLC will have no liability for the actions of its affiliates in the absence of gross negligence or willful misconduct, and that the Company waives any claims based on assertions that GLC exercises control or influence
over the Companys affairs. In no event will any party to this Agreement be liable under this Agreement for any punitive, exemplary, indirect, special, incidental or consequential damages, including lost profits or savings, whether or not such
damages are foreseeable, or in respect of any liabilities relating to any third party claims (whether based in contract, tort or otherwise), unless such damages are owed and paid by such party to a third party.
(c) Contribution. If and to the extent that the indemnification provided for in Section 5(a) is not enforceable for any
reason, the applicable indemnifying party agrees to make the maximum contribution possible pursuant to applicable law to the payment and satisfaction of any actions, claims, liabilities, losses and damages incurred by the other party or the other
indemnified persons for which they would have otherwise been entitled to be indemnified hereunder.
Page 3 of 8ADVISORY SERVICES
AGREEMENT
6. Miscellaneous.
(a) Confidentiality. The terms and conditions of this Agreement are confidential, and except as otherwise required by law, neither party
shall disclose this Agreement or any portion hereof to any person other than its legal counsel and accountants without prior written consent of the other party.
(b) Marketing Authorization. With the prior consent of the Company not to be unreasonably withheld, the Company agrees that GLC may use
the Companys name and logo, and general information concerning the Companys relationship with GLC, on GLCs website and firm brochures, in press releases, advertisements, and in other related marketing materials. This authorization
will extend to reissues of the advertisements and other marketing tools which GLC may utilize in its marketing activities.
(c)
Notices. All notices, demands and other communications given or delivered under this Agreement shall be in writing and shall be deemed to have been given (i) when personally delivered, (ii) 3 business days after being mailed by
first class mail, certified with return receipt requested, or (iii) 1 business day after delivery to a reputable overnight courier for next business day delivery, to the following addresses (or such other address as is specified in writing):
Greenbrier Leasing Company LLC
One Centerpointe Drive, Suite 200
Lake Oswego, Oregon 97035
Attn:
General Counsel
WLR-Greenbrier Rail Inc.
1166 Avenue of the Americas
New
York, New York 10036
Attn: Wendy L. Teramoto
(d) Entire Agreement; Amendment and Modification. This Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof, superseding all prior understandings and agreements whether written or oral. This Agreement may not be amended or revised except by a writing signed by GLC and the Company.
(e) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns but may not be assigned (and no duties may be delegated) by any party without the prior written consent of the other parties hereto. GLC may assign this Agreement, or the right to receive any amounts due from the Company to
GLC hereunder, to any of its affiliates, in each case, with the prior consent of the Company not to be unreasonably withheld.
(f)
Governing Law; Venue. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
Page 4 of 8ADVISORY SERVICES
AGREEMENT
OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN TITLE 14 OF
ARTICLE 5 OF THE GENERAL OBLIGATIONS LAW).
(g) Waiver of Jury Trial. Each party hereby irrevocably waives any right it may have,
and agrees not to request, a jury trial for the adjudication of any dispute hereunder or in connection herewith or arising out of this Agreement or any transaction contemplated hereby.
(h) Survival. Upon expiration or termination of this Agreement, all liabilities and obligations hereunder automatically shall terminate
except (i) liability for breaches by any party prior thereto, (ii) the Companys obligations under Section 3 and Exhibit A (with respect to any fees payable or incurred either prior to or at the termination of this
Agreement or following termination), and (iii) the obligations under Section 5, each of which shall survive the termination of this Agreement.
(i) Independent Contractor. The parties acknowledge and agree that GLC is and shall act as an independent contractor of the Company in
the performance of its duties hereunder. GLC is not, and in the performance of its duties will not hold itself out as, an employee, agent or partner of the Company or any of its subsidiaries and no party to this Agreement shall take any position
inconsistent with the foregoing.
(j) Counterparts. This Agreement may be signed and delivered in multiple counterparts (including
delivery by means of facsimile), each of which shall be deemed an original but which together shall constitute one and the same instrument.
[signature page follows]
Page 5 of 8ADVISORY SERVICES
AGREEMENT
IN WITNESS WHEREOF, the parties have duly executed this Advisory Services Agreement as of the
date first above written.
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WLR-GREENBRIER RAIL INC. |
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By: |
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/s/ Wendy Teramoto |
Name: |
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Wendy Teramoto |
Title: |
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Vice President |
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GREENBRIER LEASING COMPANY LLC |
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By: |
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/s/ Larry Stanley |
Name: |
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Larry Stanley |
Title: |
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Vice President |
SIGNATURE PAGE ADVISORY SERVICES
AGREEMENT
EXHIBIT A
Fees
1. The Company shall pay GLC
advisory fees (the Advisory Fee) for services under the Agreement as follows:
(i) Subject to Section 1(ii) below, the Company agrees to
pay to GLC, within two business days following its receipt of any distribution from Holdings (including any distribution received by the Company in connection with any refinancing of the indebtedness of WLRGR or from any New Owner Event, a fee equal
to [25]% of such distribution until the total of such distributions from Holdings to the Company to date, together with any monies the Company received in a New Owner Event pursuant to Section 2, equals $[24,198,170], plus the amount of any
subsequent capital contributions from the Company to Holdings made prior to the date of such distribution (collectively, the Companys Capital Contributions), plus an internal annual rate of return of [20]% on the Companys
Notional Capital Contribution. Thereafter, the Company agrees to pay to GLC, within two business days following its receipt of any distribution from Holdings, a fee equal to [49]% of such distribution.
(ii) The fee payable to GLC under Section 1(i) above or Section 2(i) below, as the case may be, may be adjusted in good faith by the Company so that
the Company receives an internal rate of return of [20]% on its Notional Capital Contribution at the same time as GLC receives its proportionate share of fees hereunder (as adjusted for any participation interests in the Line of Credit (as defined
below) held by GLC or its affiliates).
The Companys Notional Capital Contribution shall equal the Companys Capital
Contributions plus all amounts advanced from time to time by the Company (excluding amounts funded through participations) under the Line of Credit Agreement, dated as of April 29, 2010 (the Line of Credit ), among WLRGR, the
Company and the other parties thereto.
2. The Company shall pay, or cause to be paid, to GLC a success fee (Success Fee) upon a New Owner
Event. Such Success Fee shall be paid as follows:
After payment of any commission or fee owed under that certain Syndication Agreement dated as of
April 29, 2010 plus reimbursement to the Company (and, on a pro-rata basis, to GLC or its affiliate in respect of any participation interests) for any outstanding amounts under the Line of Credit (the Expenses), the Company
agrees to pay to GLC, within two business days following its receipt of consideration received in connection with the New Owner Event (the Payment), (i) a fee equal to [25]% of an amount equal to (x) the Payment minus
(y) the Expenses (with (x) minus (y) referred to herein as the Net Payment), until the total of the Net Payment received by Company to date, together with any monies the Company received as a distribution from Holdings
under Section 1 above, equals the Companys Capital Contributions to Holdings plus an internal annual rate of return of [20]% on the Companys Notional Capital Contribution; and thereafter, (ii) a fee equal to [49]% of the Net
Payment and the payments under subsection (i) of this paragraph.
3. Limitations on Distributions. The parties agree that, except as expressly
provided herein, nothing in this Exhibit A shall be interpreted to require Holdings to make any distributions and in no event shall GLC be entitled to any fee pursuant to this Exhibit A unless and until distributions are made by Holdings to the
Company in accordance with and pursuant to the terms of the
limited liability company agreement of Holdings. For the avoidance of doubt, prior to making any distribution to the Company using the Payment or the proceeds of a New Owner Event or refinancing
of WLRGR debt, Holdings shall pay directly to GLC or other applicable person entitled thereto any agreed arrangement fees.
3. Example calculations of
selected provisions under this Exhibit A are attached hereto as Exhibit A-1.
Exhibit 10.5
Execution Copy
CONTRACT PLACEMENT
AGREEMENT
This Contract Placement Agreement (this Agreement), dated April 29, 2010 (the Effective
Date), is between WLR-Greenbrier Rail Inc. (Parent) and Greenbrier Leasing Company LLC (GLC).
WHEREAS, Parent is the owner of 100% of the outstanding equity interests in WL Ross-Greenbrier Rail Holdings I LLC
(Holdings), and Holdings is the owner of 100% of the outstanding equity interests in WL Ross-Greenbrier Rail I LLC (Owner);
WHEREAS, provided that Holdings is sufficiently capitalized by Parent, GLC wishes to be, or to have its affiliate, contractually appointed as
the: (a) exclusive manager of certain rail cars owned by Owner; (b) exclusive agent for the placement of the sale of certain interests in Holdings; and (c) consultant to provide certain advisory services to Parent;
WHEREAS, Parent is willing, in exchange for the Contract Placement Fee (defined below) to contractually appoint, or cause the appointment of,
GLC or its affiliate, as the: (a) exclusive manager of certain rail car assets owned by Owner; (b) exclusive agent for the placement of the sale of certain interests in Holdings; and (c) exclusive consultant to provide certain
advisory services to Parent;
NOW THEREFORE, Parent and GLC expressly acknowledge and agree to as follows:
1. Contract Placement Fee.
(a) In accordance with Section 1(b), GLC will pay Parent as compensation a fee equal to $6,049,543 (the Contract Placement
Fee) in exchange for Parent:
(i) Appointing GLC as its exclusive consultant to perform the services set forth in the Advisory
Services Agreement (ASA) executed by Parent and GLC as of the Effective Date;
(ii) Appointing GLC as its exclusive
placement agent to perform the services set forth in the Syndication Agreement (SA) executed by Parent and GLC as of the Effective Date; and
(iii) Causing Owner to appoint GLC or its affiliate as the exclusive manager of certain rail car assets owned by Owner as set forth in the
Railcar Remarketing and Management Agreement (RCMA) executed by Owner and GLC or its affiliate as of the Effective Date.
CONTRACT
PLACEMENT AGREEMENT
PAGE 1 OF 4
(b) GLC will pay the Contract Placement Fee to Parent by wire transfer of immediately available
U.S. funds to an account designated in writing by Parent upon:
(i) execution and delivery of the ASA and SA by Parent;
(ii) execution and delivery of the RCMA by Owner; and
(iii) delivery to GLC of written evidence in a form satisfactory to GLC that Parent has made a capital contribution to Holdings
of at least $[18,148,628].
Once paid, the fee will not be refundable in any circumstances, including without limitation, upon any termination of the ASA,
SA or RCMA.
2. Confidentiality. The terms and conditions of this Agreement are confidential, and except as otherwise required by
law, neither party shall disclose this Agreement or any portion hereof to any person other than its legal counsel, affiliates, representatives, owners, agents and accountants (who shall each be under an obligation to maintain such confidentiality)
without the prior written consent of the other party.
3. No Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns but may not be assigned (and no duties may be delegated) by any party without the prior written consent of the other parties hereto not to be unreasonably withheld.
4. Waiver or Modification. No waiver or modification of any of the terms of this Agreement shall be valid unless in writing and signed
by the party to be charged. No waiver by any party of a breach hereof or a default hereunder shall be deemed a waiver by such party of a subsequent breach or default of like or unlike or similar or dissimilar nature.
5. Severability. If any term or provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining terms and provisions shall not in any way be affected or impaired thereby and shall be valid and enforced to the fullest extent permitted by law.
6. Governing Law, Jurisdiction and Venue. This Agreement and all matters collateral hereto shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made and to be performed solely in New York (without giving effect to any conflict of law principles under New York law). The parties agree that the sole and exclusive
jurisdiction of any action or suit in connection with this Agreement or any claim, dispute or controversy arising therefrom or in connection therewith will lie in the Federal Court located in the County of New York, State of New York, and if that
court lacks jurisdiction, in the State Court in the same county. EACH OF GLC AND PARENT (ON THEIR OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF THEIR EQUITY HOLDERS) IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
CONTRACT
PLACEMENT AGREEMENT
PAGE 2 OF 4
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THE PERFORMANCE BY GLC, HOLDINGS OR PARENT OF THE ACTIONS CONTEMPLATED BY, THIS
AGREEMENT.
7. Counterparts. The parties hereto agree that this Agreement may be executed in counterparts with the same effect as
if all parties had signed the same document. Facsimile counterparts shall be deemed to be original execution copies. All counterparts shall be construed together and shall constitute one Agreement.
8. Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be
deemed effectively given upon personal delivery or delivery by courier to the party to be notified, or upon deposit with the United States Post Office, to be sent by registered or certified mail, postage prepaid and addressed to the party to be
notified at the following address:
Greenbrier Leasing Company LLC
One Centerpointe Drive, Suite 200
Lake Oswego, Oregon 97035
Attn: General Counsel
WLR-Greenbrier Rail Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Wendy L. Teramoto
or at such other address as such party
may designate by advance written notice to the other party.
9. Relationship of Parties. GLC is an independent contractor of Parent
and Owner, and nothing in this Agreement, the ASA, SA or the RCMA will create a joint venture or partnership, or establish a relationship of principal and agent, or any other relationship of a similar nature, between the parties, and no party to
this Agreement shall take any position inconsistent with the foregoing.
10. Entire Agreement; Binding Effect. This Agreement
contains the sole and entire agreement and understanding of the parties with respect to the subject matter hereof, superseding all prior communications, agreements and understandings, whether written or oral. This Agreement shall not be amended or
modified except in a writing signed by both parties. This Agreement shall be binding both parties legal representatives, successors and assigns.
CONTRACT
PLACEMENT AGREEMENT
PAGE 3 OF 4
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WLR-GREENBRIER RAIL INC. |
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By: |
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/s/ Wendy Teramoto |
Name: |
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Wendy Teramoto |
Title: |
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Vice President |
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GREENBRIER LEASING COMPANY LLC |
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By: |
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/s/ Larry Stanley |
Name: |
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Larry D. Stanley |
Title: |
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Vice President |
CONTRACT
PLACEMENT AGREEMENT
SIGNATURE PAGE
Exhibit 10.6
EXECUTION COPY
WLR-GREENBRIER
RAIL INC.
April 29, 2010
Greenbrier Leasing Company LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon 97035
To Whom It May Concern:
This letter references the Line of Credit Agreement, dated as of April 29, 2010 (the LOC Agreement), among WL ROSS-GREENBRIER RAIL I LLC, a Delaware limited liability company (Borrower), WLR-GREENBRIER RAIL INC., a Delaware corporation (WLR), AUSTRALIA AND NEW ZEALAND BANKING GROUP
LIMITED, a limited liability company incorporated under the laws of the Commonwealth of Australia (ANZ) and LANDESBANK BADEN-WÜRTTEMBERG, a German public law banking institution (LBBW). Each
initially-capitalized term used but not defined in this letter agreement (this Agreement) will have the meaning assigned to it in the LOC Agreement.
WLR agrees that:
1. It will notify Greenbrier
Leasing Company LLC (GLC) in writing within two Business Days after WLR receives a notice that Borrower wishes to draw an LOC Advance under Section 2.2 of the LOC Agreement. The WLR notice to GLC will include: (a) the
total amount of the requested LOC Advance; (b) WLRs ratable share of the requested LOC Advance (the Share); (c) the LOC Drawing Date requested by Borrower.
2. For 30 days after the LOC Drawing Date, GLC will have the right to participate in up to [25] percent of the Share of the LOC Advance made
to Borrower on the LOC Drawing Date (Participation Right). GLCs total aggregate Participation Rights shall only apply to the Commitment of WLR under the LOC Agreement as of the date hereof, without effect of any future
amendments increasing such amount. WLRs initial Commitment under the LOC Agreement as of the date hereof is $[5,250,000] and pursuant to Section 2.4(d) of the LOC Agreement as of the date hereof may reach a maximum of $[10,500,000], such
that GLC may at most participate in up to [25]% of the $[10,500,000].
3. If GLC exercises its Participation Right within the 30-day
period by written notice to WLR (the Election Notice), then: (a) WLR hereby grants GLC a right to participate in all of WLRs rights in that percentage of the Share that is specified by GLC (up to [25] percent of the
Share) (the Participation Interest).
4. The purchase price for the Participation Interest will be the dollar amount of
the Participation Interest loaned to Borrower by WLR (i.e., dollar for dollar). WLR and GLC will close on the Participation Interest on a date agreed to by the parties, but not later than 10
Business Days after GLC delivers the Election Notice. From and after the date funds are delivered to WLR pursuant to participation of the Participation Interest, all interest, principal, fees and
other amounts pertaining to such Participation Interest shall be for the account of GLC.
5. The relationship between WLR and GLC
evidenced by the Participation Interest is and shall be that of a seller and purchaser of a participation interest in the LOC Advance. GLC agrees that WLR will retain in WLRs name, but to the extent of the Participation Interest, as trustee
for GLC, all of the obligations of the Borrower to WLR arising out of the LOC Agreements. To the extent of the Participation Interest, WLR is and shall be a trustee for GLC in administering, servicing and taking actions under the LOC Agreement and
all rights, remedies and benefits thereunder. WLR agrees to promptly deliver to GLC copies of all notices, statements, filings, certificates and other documents received by WLR under the LOC Agreement. WLR agrees to pay and otherwise account for to
GLC, within five days of WLRs receipt of any payments on any LOC Advance, such amounts due to GLC in respect of all Participation Interests. WLR hereby agrees that WLR shall not, without the prior written consent of GLC (with such consent not
to be unreasonably withheld) (i) carry out the provisions of the LOC Agreement with Borrower, or exercise any rights or privileges accruing to WLR by reason of the provisions thereof, or enforce rights thereunder; (ii) modify, alter or
amend in any material respect the LOC Agreement, nor waive or release any material rights thereunder against Borrower, or in or to any collateral, or in or to any material rights against any guarantor, surety or other entity in respect of the
Borrowers obligations; or (iii) offset any claim or demand in favor of WLR pertaining to indebtedness or obligations of Borrower wherein GLC does not participate, against or to the detriment of GLC.
6. WLR represents and warrants that this Agreement constitutes a legal, valid and binding obligation of WLR, enforceable against WLR in
accordance with its terms.
7. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, UNITED STATES OF AMERICA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN TITLE 14 OF ARTICLE 5 OF THE GENERAL OBLIGATIONS LAW).
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]
If the foregoing accurately reflects our mutual understanding regarding GLCs Participation Right, please
indicate this on the appropriate signature line below.
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Sincerely, |
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WLR-GREENBRIER RAIL INC. |
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By: |
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/s/ Wendy Teramoto |
Name: |
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Wendy Teramoto |
Title: |
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Vice President |
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Agreed and Accepted: |
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Dated: April 29, 2010 |
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GREENBRIER LEASING COMPANY LLC |
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By: |
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/s/ James T. Sharp |
Name: |
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James T. Sharp |
Title: |
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President |
THE GREENBRIER COMPANIES, INC.
Exhibit 31.1
CERTIFICATIONS
I, William A. Furman, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of The Greenbrier Companies, Inc. for the quarterly period ended May 31, 2015; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and |
|
(d) |
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: July 1, 2015
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/s/ William A. Furman |
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William A. Furman President and Chief Executive
Officer |
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THE GREENBRIER COMPANIES, INC.
Exhibit 31.2
CERTIFICATIONS (contd)
I,
Mark J. Rittenbaum, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of The Greenbrier Companies, Inc. for the quarterly period ended May 31, 2015; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and |
|
(d) |
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: July 1, 2015
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/s/ Mark J. Rittenbaum |
Mark J. Rittenbaum |
Executive Vice President and |
Chief Financial Officer |
THE GREENBRIER COMPANIES, INC.
Exhibit 32.1
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of The Greenbrier Companies, Inc. (the Company) on
Form 10-Q for the quarterly period ended May 31, 2015, as filed with the Securities and Exchange Commission on the date therein specified (the Report), I, William A. Furman, President and Chief Executive Officer of the Company,
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 1, 2015
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/s/ William A. Furman |
William A. Furman |
President and Chief Executive Officer |
|
THE GREENBRIER COMPANIES, INC.
Exhibit 32.2
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of The Greenbrier Companies, Inc. (the Company) on
Form 10-Q for the quarterly period ended May 31, 2015, as filed with the Securities and Exchange Commission on the date therein specified (the Report), I, Mark J. Rittenbaum, Executive Vice President and Chief Financial Officer of
the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 1, 2015
|
/s/ Mark J. Rittenbaum |
Mark J. Rittenbaum |
Executive Vice President and |
Chief Financial Officer |
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