##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 for the quarterly period ended May 31, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 for the transition period from  to
 Commission File No. 1-13146
 THE GREENBRIER COMPANIES, INC.
  Oregon
(State of Incorporation)
    
    93-0816972
(I.R.S. Employer Identification No.)
  (Address of principal executive offices)
    
    (Zip Code)
 
 Autostack Company, LLC
    
    Oregon
    
    
    3743
    
    
    93-0981840Greenbrier-Concarril, LLC
    
    Oregon
    
    
    3743
    
    
    93-1262344Greenbrier Leasing Company, LLC
    
    Oregon
    
    
    3743
    
    
    31-0789836Greenbrier Leasing, L.P.
    
    Oregon
    
    
    3743
    
    
    91-1960693Greenbrier Leasing Limited Partner, LLC
    
    Oregon
    
    
    3743
    
    
    93-1266038Greenbrier Management Services, LLC
    
    Oregon
    
    
    3743
    
    
    93-1266040Greenbrier Railcar, LLC
    
    Oregon
    
    
    3743
    
    
    93-0971066Gunderson, LLC
    
    Oregon
    
    
    3743
    
    
    93-0180205Gunderson Marine, LLC
    
    Oregon
    
    
    3743
    
    
    93-1127982Gunderson Rail Services, LLC
    
    Oregon
    
    
    3743
    
    
    93-1123815Gunderson Specialty Products, LLC
    
    Oregon
    
    
    3743
    
    
    93-0180205
 The Greenbrier Companies, Inc.
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Autostack Company, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Greenbrier Concarril, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Greenbrier Leasing Company,
LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000Greenbrier Leasing, L.P.
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Greenbrier Leasing
Limited Partner, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Greenbrier Management
Services, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Greenbrier Railcar, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000Gunderson, LLC
4350 NW Front Avenue
Portland, Oregon 97210
(503) 972-5700
    
    Gunderson Marine, LLC
4350 NW Front Avenue
Portland, Oregon 97210
(503) 972-5700
    
    Gunderson Rail Services, LLC
One Centerpointe Drive, Suite
200
Lake Oswego, Oregon
97035-8612
(503) 684-7000
    
    Gunderson Specialty Products,
LLC
4350 NW Front Avenue
Portland, Oregon 97210
(503) 972-5700
 þ o
  o þ o
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Condensed Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKItem 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 6. ExhibitsSIGNATURESExhibit IndexEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents  THE GREENBRIER COMPANIES, INC.
 
 PART I. FINANCIAL INFORMATION
 
 Item 1. Condensed Financial Statements
 Consolidated Balance Sheets
 May 31,
    
    
    August 31,(In thousands, except per share amounts, unaudited)
    
    2006
    
    
    2005AssetsCash and cash equivalents
    
    $
    186,660
    
    
    $
    73,204Restricted cash
    
    
    2,059
    
    
    
    93Accounts and notes receivable
    
    
    94,947
    
    
    
    122,957Inventories
    
    
    148,662
    
    
    
    121,698Railcars held for sale
    
    
    60,675
    
    
    
    59,421Equipment on operating leases
    
    
    242,380
    
    
    
    183,155Investment in direct finance leases
    
    
    4,968
    
    
    
    9,974Property, plant and equipment
    
    
    78,755
    
    
    
    73,203Other
    
    
    32,755
    
    
    
    27,502$
    851,861
    
    
    $
    671,207Liabilities and Stockholders EquityRevolving notes
    
    $
    21,313
    
    
    $
    12,453Accounts payable and accrued liabilities
    
    
    188,478
    
    
    
    195,258Participation
    
    
    11,086
    
    
    
    21,900Deferred income taxes
    
    
    34,626
    
    
    
    31,629Deferred revenue
    
    
    14,395
    
    
    
    6,910Notes payable
    
    
    369,789
    
    
    
    214,635Subordinated debt
    
    
    5,003
    
    
    
    8,617Subsidiary shares subject to mandatory redemption
    
    
    
    
    
    
    3,746Commitments and contingencies (Note 12)
    
    
    
    
    
    
    Stockholders equity:Preferred stock  without par value; 25,000
shares authorized; none outstanding
    
    
    
    
    
    
    Common stock  without par value; 50,000 shares
authorized; 15,934 and 15,479 shares
outstanding at May 31, 2006 and August 31,
2005
    
    
    16
    
    
    
    15Additional paid-in capital
    
    
    69,726
    
    
    
    62,768Retained earnings
    
    
    137,479
    
    
    
    113,987Accumulated other comprehensive loss
    
    
    (50
    )
    
    
    (711
    )207,171
    
    
    
    176,059$
    851,861
    
    
    $
    671,207
 The accompanying notes are an integral part of these statements
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THE GREENBRIER COMPANIES, INC.
 Consolidated Statements of Operations
 Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,(In thousands, except per share amounts, unaudited)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005RevenueManufacturing
    
    $
    236,052
    
    
    $
    266,090
    
    
    $
    609,570
    
    
    $
    700,295Leasing & services
    
    
    30,036
    
    
    
    19,944
    
    
    
    79,094
    
    
    
    58,701266,088
    
    
    
    286,034
    
    
    
    688,664
    
    
    
    758,996Cost of revenueManufacturing
    
    
    211,444
    
    
    
    241,491
    
    
    
    539,835
    
    
    
    642,149Leasing & services
    
    
    10,172
    
    
    
    9,561
    
    
    
    31,281
    
    
    
    30,512221,616
    
    
    
    251,052
    
    
    
    571,116
    
    
    
    672,661Margin
    
    
    44,472
    
    
    
    34,982
    
    
    
    117,548
    
    
    
    86,335Other costsSelling and administrative
    
    
    18,082
    
    
    
    15,276
    
    
    
    51,025
    
    
    
    41,392Interest and foreign exchange
    
    
    5,963
    
    
    
    2,285
    
    
    
    17,406
    
    
    
    9,639Special charges
    
    
    
    
    
    
    2,913
    
    
    
    
    
    
    
    2,91324,045
    
    
    
    20,474
    
    
    
    68,431
    
    
    
    53,944Earnings before income taxes and
equity in unconsolidated
subsidiaries
    
    
    20,427
    
    
    
    14,508
    
    
    
    49,117
    
    
    
    32,391Income tax expense
    
    
    (9,866
    )
    
    
    (5,881
    )
    
    
    (22,266
    )
    
    
    (12,833
    )Earnings before equity in
unconsolidated subsidiaries
    
    
    10,561
    
    
    
    8,627
    
    
    
    26,851
    
    
    
    19,558Equity in earnings (loss) of
unconsolidated subsidiaries
    
    
    119
    
    
    
    417
    
    
    
    409
    
    
    
    (322
    )Net earnings
    
    $
    10,680
    
    
    $
    9,044
    
    
    $
    27,260
    
    
    $
    19,236Basic earnings per common share
    
    $
    0.67
    
    
    $
    0.60
    
    
    $
    1.74
    
    
    $
    1.29Diluted earnings per common share
    
    $
    0.67
    
    
    $
    0.58
    
    
    $
    1.71
    
    
    $
    1.24Weighted average common shares:Basic
    
    
    15,887
    
    
    
    15,020
    
    
    
    15,685
    
    
    
    14,957Diluted
    
    
    15,979
    
    
    
    15,605
    
    
    
    15,918
    
    
    
    15,564
 The
accompanying notes are an integral part of these statements
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THE GREENBRIER COMPANIES, INC.
 Consolidated Statements of Cash Flows
 Nine Months EndedMay 31,(In thousands, unaudited)
    
    2006
    
    
    2005Cash flows from operating activitiesNet earnings
    
    $
    27,260
    
    
    $
    19,236Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:Deferred income taxes
    
    
    3,049
    
    
    
    679Tax benefit of stock options exercised and dividends on
restricted stock awards
    
    
    1,949
    
    
    
    1,941Depreciation and amortization
    
    
    19,170
    
    
    
    16,840Gain on sales of equipment
    
    
    (10,606
    )
    
    
    (4,300
    )Other
    
    
    59
    
    
    
    499Decrease (increase) in assets:Accounts and notes receivable
    
    
    29,633
    
    
    
    (34,535
    )Inventories
    
    
    (22,959
    )
    
    
    7,969Railcars held for sale
    
    
    (25,523
    )
    
    
    (27,558
    )Other
    
    
    (147
    )
    
    
    (3,656
    )Increase (decrease) in liabilities:Accounts payable and accrued liabilities
    
    
    (10,671
    )
    
    
    (5
    )Participation
    
    
    (10,814
    )
    
    
    (15,660
    )Deferred revenue
    
    
    7,242
    
    
    
    1,148Net cash provided by (used in) operating activities
    
    
    7,642
    
    
    
    (37,402
    )Cash flows from investing activitiesPrincipal payments received under direct finance leases
    
    
    1,710
    
    
    
    4,524Proceeds from sales of equipment
    
    
    23,665
    
    
    
    23,125Investment in and net advances to unconsolidated subsidiary
    
    
    517
    
    
    
    (49
    )Acquisition of joint venture interest
    
    
    
    
    
    
    8,435Decrease (increase) in restricted cash
    
    
    (1,961
    )
    
    
    624Capital expenditures
    
    
    (67,146
    )
    
    
    (49,478
    )Net cash used in investing activities
    
    
    (43,215
    )
    
    
    (12,819
    )Cash flows from financing activitiesChanges in revolving notes
    
    
    7,858
    
    
    
    6,541Proceeds from issuance of notes payable net of issuance cost
    
    
    154,933
    
    
    
    170,028Repayments of notes payable
    
    
    (5,740
    )
    
    
    (66,334
    )Repayment of subordinated debt
    
    
    (3,615
    )
    
    
    (5,157
    )Dividends
    
    
    (3,766
    )
    
    
    (2,692
    )Net proceeds from sale of common stock
    
    
    
    
    
    
    127,466Purchase and retirement of common stock
    
    
    
    
    
    
    (127,538
    )Proceeds from exercise of stock options
    
    
    5,010
    
    
    
    1,727Purchase of subsidiary shares subject to mandatory redemption
    
    
    (4,636
    )
    
    
    Net cash provided by financing activities
    
    
    150,044
    
    
    
    104,041Effect of exchange rate changes
    
    
    (1,015
    )
    
    
    1,358Increase in cash and cash equivalents
    
    
    113,456
    
    
    
    55,178Cash and cash equivalentsBeginning of period
    
    
    73,204
    
    
    
    12,110End of period
    
    $
    186,660
    
    
    $
    67,288Cash paid during the period forInterest
    
    $
    22,176
    
    
    $
    8,367Income taxes
    
    $
    13,855
    
    
    $
    9,444Non-cash activityTransfer of railcars held for sale to equipment on operating leases
    
    $
    23,954
    
    
    $
    Supplemental disclosure of subsidiary acquiredAssets acquired, net of cash
    
    $
    
    
    
    $
    (19,051
    )Liabilities assumed
    
    
    
    
    
    
    19,529Investment previously booked for unconsolidated joint venture
    
    
    
    
    
    
    7,957Cash acquired
    
    $
    
    
    
    $
    8,435
 The
accompanying notes are an integral part of these statements
 4




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THE GREENBRIER COMPANIES, INC.
 Notes to Condensed Consolidated Financial Statements  (Unaudited)
 Note 1  Interim Financial Statements
   Management estimates 
 Initial Adoption of Accounting Policies  Share Based Payment.
 Prospective Accounting Changes  Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in
Interim Financial Statements
 Note 2  Acquisitions
  5




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THE GREENBRIER COMPANIES, INC.
  ProformaNine Months EndedMay 31,(In thousands, except per share amounts)
    
    2005Revenue
    
    $
    787,682Net earnings
    
    $
    18,736Basic earnings per share
    
    $
    1.25Diluted earnings per share
    
    $
    1.20
   Note 3
 Special Charges
  Note 4  Inventories
 May 31,
    
    
    August 31,(In thousands)
    
    2006
    
    
    2005Manufacturing supplies and raw materials
    
    $
    38,664
    
    
    $
    33,653Work-in-process
    
    
    113,817
    
    
    
    91,637Lower of cost or market adjustment
    
    
    (3,819
    )
    
    
    (3,592
    )$
    148,662
    
    
    $
    121,698
 Note 5  Warranty Accruals
  6




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THE GREENBRIER COMPANIES, INC.
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Balance at beginning of period
    
    $
    11,860
    
    
    $
    14,149
    
    
    $
    15,037
    
    
    $
    12,691Charged to cost of revenue
    
    
    1,198
    
    
    
    887
    
    
    
    1,114
    
    
    
    2,867Payments
    
    
    (1,287
    )
    
    
    (722
    )
    
    
    (4,685
    )
    
    
    (2,527
    )Currency translation effect
    
    
    248
    
    
    
    (563
    )
    
    
    553
    
    
    
    552Acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168Balance at end of period
    
    $
    12,019
    
    
    $
    13,751
    
    
    $
    12,019
    
    
    $
    13,751
 Note 6
 Notes Payable
 May 31,
    
    
    August 31,(In thousands)
    
    2006
    
    
    2005Senior unsecured notes
    
    $
    235,000
    
    
    $
    175,000Convertible senior notes
    
    
    100,000
    
    
    
    Term loans
    
    
    34,757
    
    
    
    39,479Other
    
    
    32
    
    
    
    156$
    369,789
    
    
    $
    214,635
 3 8 th th
 3 8 3 8
  7




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THE GREENBRIER COMPANIES, INC.
     (In thousands)Year Ending August 31,2006 (Remaining three months)
    
    $
    7,4502007
    
    
    4,5172008
    
    
    3,9782009
    
    
    4,1692010
    
    
    5,375Thereafter
    
    
    344,300$
    369,789
 Note 7  Accumulated Other Comprehensive Loss
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Net earnings
    
    $
    10,680
    
    
    $
    9,044
    
    
    $
    27,260
    
    
    $
    12,767Reclassification of
derivative financial
instruments recognized in
net earnings (net of tax)
    
    
    (508
    )
    
    
    (1,302
    )
    
    
    (2,526
    )
    
    
    (2,789
    )Unrealized gain (loss) on
derivative financial
instruments (net of tax)
    
    
    (181
    
    
    
    (1,480
    
    
    
    1,440
    
    
    
    4,072Foreign currency
translation adjustment
(net of tax)
    
    
    269
    
    
    
    (1,706
    )
    
    
    1,747
    
    
    
    (391
    )Comprehensive income (loss)
    
    $
    10,260
    
    
    $
    4,556
    
    
    $
    27,921
    
    
    $
    13,659
 8




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THE GREENBRIER COMPANIES, INC.
  UnrealizedGains (Losses)
    
    
    Foreign
    
    
    Accumulatedon Derivative
    
    
    Currency
    
    
    OtherFinancial
    
    
    Translation
    
    
    Comprehensive(In thousands)
    
    Instruments
    
    
    Adjustment
    
    
    Income (Loss)Balance, August 31, 2005
    
    $
    1,241
    
    
    $
    (1,952
    )
    
    $
    (711
    )Nine month activity
    
    
    (1,086
    )
    
    
    1,747
    
    
    
    661Balance, May 31, 2006
    
    $
    155
    
    
    $
    (205
    )
    
    $
    (50
    )
 Note 8  Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted average basic common shares outstanding
    
    
    15,887
    
    
    
    15,020
    
    
    
    15,685
    
    
    
    14,957Dilutive effect of employee stock options
    
    
    92
    
    
    
    585
    
    
    
    233
    
    
    
    607Weighted average diluted common shares outstanding
    
    
    15,979
    
    
    
    15,605
    
    
    
    15,918
    
    
    
    15,564
  Note 9  Stock Based Compensation
 Accounting for Stock Issued
to Employees
 Three Months
    
    
    Nine MonthsEnded
    
    
    Ended(In thousands, except per share amounts)
    
    May 31, 2005Net earnings, as reported
    
    $
    9,044
    
    
    $
    19,236Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of tax (1)
    
    
    (31
    )
    
    
    (114
    )Net earnings, pro forma
    
    $
    9,013
    
    
    $
    19,122Basic earnings per shareAs reported
    
    $
    0.60
    
    
    $
    1.29Pro forma
    
    $
    0.60
    
    
    $
    1.28Diluted earnings per shareAs reported
    
    $
    0.58
    
    
    $
    1.24Pro forma
    
    $
    0.58
    
    
    $
    1.23
 
 (1)
    
    Compensation expense was determined based on the Black-Scholes-Merton option pricing
model which was developed to estimate the value of publicly traded options. Greenbriers
options are not publicly traded. 9




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THE GREENBRIER COMPANIES, INC.
  Note 10  Derivative Instruments
    Note 11  Segment Information
  10




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THE GREENBRIER COMPANIES, INC.
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue:Manufacturing
    
    $
    205,693
    
    
    $
    278,736
    
    
    $
    663,215
    
    
    $
    733,973Leasing & services
    
    
    34,680
    
    
    
    26,252
    
    
    
    94,661
    
    
    
    71,376Intersegment eliminations
    
    
    25,715
    
    
    
    (18,954
    )
    
    
    (69,212
    )
    
    
    (46,353
    )$
    266,088
    
    
    $
    286,034
    
    
    $
    688,664
    
    
    $
    758,996Margin:Manufacturing
    
    $
    24,608
    
    
    $
    24,599
    
    
    $
    69,735
    
    
    $
    58,146Leasing & services
    
    
    19,864
    
    
    
    10,383
    
    
    
    47,813
    
    
    
    28,189$
    44,472
    
    
    $
    34,982
    
    
    $
    117,548
    
    
    $
    86,335
 Note 12  Commitments and Contingencies
       11




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THE GREENBRIER COMPANIES, INC.
        12




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THE GREENBRIER COMPANIES, INC.
       Note 13  Guarantor/Non-Guarantor
   13




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THE GREENBRIER COMPANIES, INC.
 
 CombinedCombined
    
    
    Non-Guarantor
    
    
    Guarantor(In thousands, unaudited)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    175,409
    
    
    $
    162
    
    
    $
    11,089
    
    
    $
    
    
    
    $
    186,660Restricted cash
    
    
    
    
    
    
    
    
    
    
    2,059
    
    
    
    
    
    
    
    2,059Accounts and notes receivable
    
    
    3,062
    
    
    
    63,269
    
    
    
    28,456
    
    
    
    160
    
    
    
    94,947Inventories
    
    
    
    
    
    
    108,296
    
    
    
    40,366
    
    
    
    
    
    
    
    148,662Railcars held for sale
    
    
    
    
    
    
    50,374
    
    
    
    10,591
    
    
    
    (290
    )
    
    
    60,675Equipment on operating leases
    
    
    
    
    
    
    244,381
    
    
    
    
    
    
    
    (2,001
    )
    
    
    242,380Investment in direct finance leases
    
    
    
    
    
    
    4,968
    
    
    
    
    
    
    
    
    
    
    
    4,968Property, plant and equipment
    
    
    
    
    
    
    55,472
    
    
    
    23,283
    
    
    
    
    
    
    
    78,755Other
    
    
    357,654
    
    
    
    25,172
    
    
    
    3,116
    
    
    
    (353,187
    )
    
    
    32,755$
    536,125
    
    
    $
    552,094
    
    
    $
    118,960
    
    
    $
    (355,318
    )
    
    $
    851,861Liabilities and Stockholders EquityRevolving notes
    
    $
    
    
    
    $
    
    
    
    $
    21,313
    
    
    $
    
    
    
    $
    21,313Accounts payable and accrued
liabilities
    
    
    (13,985
    )
    
    
    158,797
    
    
    
    43,506
    
    
    
    160
    
    
    
    188,478Participation
    
    
    
    
    
    
    11,086
    
    
    
    
    
    
    
    
    
    
    
    11,086Deferred income taxes
    
    
    1,280
    
    
    
    35,393
    
    
    
    (1,748
    )
    
    
    (299
    )
    
    
    34,626Deferred revenue
    
    
    1,280
    
    
    
    7,241
    
    
    
    5,874
    
    
    
    
    
    
    
    14,395Notes payable
    
    
    342,224
    
    
    
    13,618
    
    
    
    13,947
    
    
    
    
    
    
    
    369,789Subordinated debt
    
    
    
    
    
    
    5,003
    
    
    
    
    
    
    
    
    
    
    
    5,003Minority interest
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    76
    
    
    
    Stockholders Equity
    
    
    205,326
    
    
    
    321,032
    
    
    
    36,068
    
    
    
    (355,255
    )
    
    
    207,171$
    536,125
    
    
    $
    552,094
    
    
    $
    118,960
    
    
    $
    (355,318
    )
    
    $
    851,861
 14




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 CombinedCombined
    
    
    Non-Guarantor
    
    
    Guarantor(In thousands, unaudited)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenueManufacturing
    
    $
    
    
    
    $
    155,383
    
    
    $
    62,532
    
    
    $
    18,137
    
    
    $
    236,052Leasing & services
    
    
    380
    
    
    
    29,736
    
    
    
    
    
    
    
    (80
    )
    
    
    30,036380
    
    
    
    185,119
    
    
    
    62,532
    
    
    
    18,057
    
    
    
    266,088Cost of revenueManufacturing
    
    
    
    
    
    
    134,704
    
    
    
    59,011
    
    
    
    17,729
    
    
    
    211,444Leasing & services
    
    
    
    
    
    
    10,189
    
    
    
    
    
    
    
    (17
    )
    
    
    10,172
    
    
    
    144,893
    
    
    
    59,011
    
    
    
    17,712
    
    
    
    221,616Margin
    
    
    380
    
    
    
    40,226
    
    
    
    3,521
    
    
    
    345
    
    
    
    44,472Other costsSelling and administrative
    
    
    4,550
    
    
    
    11,077
    
    
    
    2,455
    
    
    
    
    
    
    
    18,082Interest and foreign exchange
    
    
    6,204
    
    
    
    126
    
    
    
    (287
    )
    
    
    (80
    )
    
    
    5,96310,754
    
    
    
    11,203
    
    
    
    2,168
    
    
    
    (80
    )
    
    
    24,045Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated
subsidiaries
    
    
    (10,374
    )
    
    
    29,023
    
    
    
    1,353
    
    
    
    425
    
    
    
    20,427Income tax (expense) benefit
    
    
    1,735
    
    
    
    (10,835
    )
    
    
    (598
    )
    
    
    (168
    )
    
    
    (9,866
    )(8,639
    )
    
    
    18,188
    
    
    
    755
    
    
    
    257
    
    
    
    10,561Minority interest
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    11
    
    
    
    Equity in earnings (loss) of
unconsolidated subsidiaries
    
    
    19,319
    
    
    
    119
    
    
    
    
    
    
    
    (19,319
    )
    
    
    119Net earnings (loss)
    
    $
    10,680
    
    
    $
    18,296
    
    
    $
    755
    
    
    $
    (19,051
    )
    
    $
    10,680
 15




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 CombinedCombined
    
    
    Non-Guarantor
    
    
    Guarantor(In thousands, unaudited)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenueManufacturing
    
    $
    11,250
    
    
    $
    418,313
    
    
    $
    195,676
    
    
    $
    (15,669
    )
    
    $
    609,570Leasing & services
    
    
    3,036
    
    
    
    78,110
    
    
    
    
    
    
    
    (2,052
    )
    
    
    79,09414,286
    
    
    
    496,423
    
    
    
    195,676
    
    
    
    (17,721
    )
    
    
    688,664Cost of revenueManufacturing
    
    
    10,207
    
    
    
    359,867
    
    
    
    185,233
    
    
    
    (15,472
    )
    
    
    539,835Leasing & services
    
    
    
    
    
    
    31,331
    
    
    
    
    
    
    
    (50
    )
    
    
    31,28110,207
    
    
    
    391,198
    
    
    
    185,233
    
    
    
    (15,522
    )
    
    
    571,116Margin
    
    
    4,079
    
    
    
    105,225
    
    
    
    10,443
    
    
    
    (2,199
    )
    
    
    117,548Other costsSelling and administrative
    
    
    12,888
    
    
    
    31,441
    
    
    
    6,697
    
    
    
    (1
    )
    
    
    51,025Interest and foreign exchange
    
    
    16,714
    
    
    
    2,930
    
    
    
    226
    
    
    
    (2,464
    )
    
    
    17,40629,602
    
    
    
    34,371
    
    
    
    6,923
    
    
    
    (2,465
    )
    
    
    68,431Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated subsidiaries
    
    
    (25,523
    )
    
    
    70,854
    
    
    
    3,520
    
    
    
    266
    
    
    
    49,117Income tax (expense) benefit
    
    
    7,797
    
    
    
    (28,199
    )
    
    
    (1,764
    )
    
    
    (100
    )
    
    
    (22,266
    )(17,726
    )
    
    
    42,655
    
    
    
    1,756
    
    
    
    166
    
    
    
    26,851Minority interest
    
    
    
    
    
    
    (35
    )
    
    
    
    
    
    
    35
    
    
    
    Equity in earnings (loss) of
unconsolidated subsidiaries
    
    
    44,986
    
    
    
    409
    
    
    
    
    
    
    
    (44,986
    )
    
    
    409Net earnings (loss)
    
    $
    27,260
    
    
    $
    43,029
    
    
    $
    1,756
    
    
    $
    (44,785
    )
    
    $
    27,260
 16




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 Combined
    
    
    CombinedGuarantor
    
    
    Non-Guarantor(In thousands, unaudited)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net earnings (loss)
    
    $
    27,260
    
    
    $
    43,029
    
    
    $
    1,756
    
    
    $
    (44,785
    )
    
    $
    27,260Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities:Deferred income taxes
    
    
    328
    
    
    
    3,833
    
    
    
    (1,212
    )
    
    
    100
    
    
    
    3,049Tax benefit of options exercised and
dividends on restricted stock awards
    
    
    1,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,949Depreciation and amortization
    
    
    540
    
    
    
    16,214
    
    
    
    2,466
    
    
    
    (50
    )
    
    
    19,170Gain on sales of equipment
    
    
    
    
    
    
    (10,602
    )
    
    
    
    
    
    
    (4
    )
    
    
    (10,606
    )Other
    
    
    
    
    
    
    80
    
    
    
    15
    
    
    
    (36
    )
    
    
    59Decrease (increase) in assets:Accounts and notes receivable
    
    
    24,263
    
    
    
    11,975
    
    
    
    (6,489
    )
    
    
    (116
    )
    
    
    29,633Inventories
    
    
    
    
    
    
    (31,187
    )
    
    
    8,228
    
    
    
    
    
    
    
    (22,959
    )Railcars held for sale
    
    
    
    
    
    
    (20,483
    )
    
    
    (4,728
    )
    
    
    (312
    )
    
    
    (25,523
    )Other
    
    
    (77,047
    )
    
    
    26,958
    
    
    
    320
    
    
    
    49,622
    
    
    
    (147
    )Increase (decrease) in liabilities:Accounts payable and accrued liabilities
    
    
    (23,572
    )
    
    
    13,939
    
    
    
    (1,114
    )
    
    
    76
    
    
    
    (10,671
    )Participation
    
    
    
    
    
    
    (10,814
    )
    
    
    
    
    
    
    
    
    
    
    (10,814
    )Deferred revenue
    
    
    (116
    )
    
    
    1,854
    
    
    
    5,504
    
    
    
    
    
    
    
    7,242Net cash provided by (used in) operating
activities
    
    
    (46,395
    )
    
    
    44,796
    
    
    
    4,746
    
    
    
    4,495
    
    
    
    7,642Cash flows from investing activities:Principal payments received under
direct finance leases
    
    
    
    
    
    
    1,710
    
    
    
    
    
    
    
    
    
    
    
    1,710Proceeds from sales of equipment
    
    
    
    
    
    
    23,665
    
    
    
    
    
    
    
    
    
    
    
    23,665Investment in and net advances to
unconsolidated subsidiary
    
    
    
    
    
    
    517
    
    
    
    
    
    
    
    
    
    
    
    517Increase in restricted cash
    
    
    
    
    
    
    
    
    
    
    (1,961
    )
    
    
    
    
    
    
    (1,961
    )Capital expenditures
    
    
    
    
    
    
    (64,886
    )
    
    
    (2,360
    )
    
    
    100
    
    
    
    (67,146
    )Net cash provided by (used in) investing
activities
    
    
    
    
    
    
    (38,994
    )
    
    
    (4,321
    )
    
    
    100
    
    
    
    (43,215
    )Cash flows from financing activitiesChanges in revolving notes
    
    
    
    
    
    
    
    
    
    
    7,858
    
    
    
    
    
    
    
    7,858Proceeds from issuance of notes payable net
of issuance cost
    
    
    154,933
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,933Repayments of notes payable
    
    
    (848
    )
    
    
    (4,153
    )
    
    
    (739
    )
    
    
    
    
    
    
    (5,740
    )Repayments of subordinated debt
    
    
    
    
    
    
    (3,615
    )
    
    
    
    
    
    
    
    
    
    
    (3,615
    )Dividends
    
    
    (3,766
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,766
    )Proceeds from exercise of stock options
    
    
    5,010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,010Purchase of subsidiarys shares subject
to mandatory redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,636
    )
    
    
    (4,636
    )Net cash provided by (used in)
financing activities
    
    
    155,329
    
    
    
    (7,768
    )
    
    
    7,119
    
    
    
    (4,636
    )
    
    
    150,044Effect of exchange rate changes
    
    
    (285
    )
    
    
    75
    
    
    
    (805
    )
    
    
    
    
    
    
    (1,015
    )Increase (decrease) in cash and cash
equivalents
    
    
    108,649
    
    
    
    (1,891
    )
    
    
    6,739
    
    
    
    (41
    )
    
    
    113,456Cash and cash equivalentsBeginning of period
    
    
    66,760
    
    
    
    2,053
    
    
    
    4,350
    
    
    
    41
    
    
    
    73,204End of period
    
    $
    175,409
    
    
    $
    162
    
    
    $
    11,089
    
    
    $
    
    
    
    $
    186,660
 17




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 CombinedCombined
    
    
    Non-Guarantor
    
    
    Guarantor(In thousands)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    66,760
    
    
    $
    2,053
    
    
    $
    4,350
    
    
    $
    41
    
    
    $
    73,204Restricted cash
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    93Accounts and notes receivable
    
    
    27,325
    
    
    
    75,762
    
    
    
    19,827
    
    
    
    43
    
    
    
    122,957Inventories
    
    
    
    
    
    
    77,110
    
    
    
    44,588
    
    
    
    
    
    
    
    121,698Railcars held for sale
    
    
    
    
    
    
    54,165
    
    
    
    5,863
    
    
    
    (607
    )
    
    
    59,421Equipment on operating leases
    
    
    
    
    
    
    185,104
    
    
    
    
    
    
    
    (1,949
    )
    
    
    183,155Investment in direct finance leases
    
    
    
    
    
    
    9,974
    
    
    
    
    
    
    
    
    
    
    
    9,974Property, plant and equipment
    
    
    8
    
    
    
    51,381
    
    
    
    21,814
    
    
    
    
    
    
    
    73,203Other
    
    
    276,072
    
    
    
    24,788
    
    
    
    2,635
    
    
    
    (275,993
    )
    
    
    27,502$
    370,165
    
    
    $
    480,337
    
    
    $
    99,170
    
    
    $
    (278,465
    )
    
    $
    671,207Liabilities and Stockholders EquityRevolving notes
    
    $
    
    
    
    $
    
    
    
    $
    12,453
    
    
    $
    
    
    
    $
    12,453Accounts payable and accrued
liabilities
    
    
    9,586
    
    
    
    144,672
    
    
    
    40,916
    
    
    
    84
    
    
    
    195,258Participation
    
    
    
    
    
    
    21,900
    
    
    
    
    
    
    
    
    
    
    
    21,900Deferred income taxes
    
    
    952
    
    
    
    31,560
    
    
    
    (484
    )
    
    
    (399
    )
    
    
    31,629Deferred revenue
    
    
    1,396
    
    
    
    5,387
    
    
    
    127
    
    
    
    
    
    
    
    6,910Notes payable
    
    
    183,072
    
    
    
    17,772
    
    
    
    13,791
    
    
    
    
    
    
    
    214,635Subordinated debt
    
    
    
    
    
    
    8,617
    
    
    
    
    
    
    
    
    
    
    
    8,617Minority
    
    
    
    
    
    
    (111
    )
    
    
    
    
    
    
    111
    
    
    
    Subsidiary shares subject to
mandatory
redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,746
    
    
    
    3,746Stockholders Equity
    
    
    175,159
    
    
    
    250,540
    
    
    
    32,367
    
    
    
    (282,007
    )
    
    
    176,059$
    370,165
    
    
    $
    480,337
    
    
    $
    99,170
    
    
    $
    (278,465
    )
    
    $
    671,207
 18




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 CombinedCombined
    
    
    Non-Guarantor
    
    
    Guarantor(In thousands)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenueManufacturing
    
    $
    21,455
    
    
    $
    168,314
    
    
    $
    81,483
    
    
    $
    (5,162
    )
    
    $
    266,090Leasing & services
    
    
    99
    
    
    
    20,554
    
    
    
    
    
    
    
    (709
    )
    
    
    19,94421,554
    
    
    
    188,868
    
    
    
    81,483
    
    
    
    (5,871
    )
    
    
    286,034Cost of revenueManufacturing
    
    
    19,685
    
    
    
    150,209
    
    
    
    76,122
    
    
    
    (4,525
    )
    
    
    241,491Leasing & services
    
    
    
    
    
    
    9,577
    
    
    
    
    
    
    
    (16
    )
    
    
    9,56119,685
    
    
    
    159,786
    
    
    
    76,122
    
    
    
    (4,541
    )
    
    
    251,052Margin
    
    
    1,869
    
    
    
    29,082
    
    
    
    5,361
    
    
    
    (1,330
    )
    
    
    34,982Other costsSelling and administrative
    
    
    4,019
    
    
    
    8,673
    
    
    
    2,584
    
    
    
    
    
    
    
    15,276Interest and foreign exchange
    
    
    1,636
    
    
    
    1,836
    
    
    
    (430
    )
    
    
    (757
    )
    
    
    2,285Special charges
    
    
    
    
    
    
    2,913
    
    
    
    
    
    
    
    
    
    
    
    2,9135,655
    
    
    
    13,422
    
    
    
    2,154
    
    
    
    (757
    )
    
    
    20,474Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated subsidiaries
    
    
    (3,786
    )
    
    
    15,660
    
    
    
    3,207
    
    
    
    (573
    )
    
    
    14,508Income tax (expense) benefit
    
    
    1,351
    
    
    
    (6,409
    )
    
    
    (1,055
    )
    
    
    232
    
    
    
    (5,881
    )(2,435
    )
    
    
    9,251
    
    
    
    2,152
    
    
    
    (341
    )
    
    
    8,627Minority interest
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    9
    
    
    
    Equity in earnings (loss) of
unconsolidated subsidiaries
    
    
    11,479
    
    
    
    417
    
    
    
    
    
    
    
    (11,479
    )
    
    
    417Net earnings (loss)
    
    $
    9,044
    
    
    $
    9,659
    
    
    $
    2,152
    
    
    $
    (11,811
    )
    
    $
    9,044
 19




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 Combined
    
    
    CombinedGuarantor
    
    
    Non-Guarantor(In thousands)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenueManufacturing
    
    $
    62,065
    
    
    $
    391,979
    
    
    $
    258,417
    
    
    $
    (12,166
    )
    
    $
    700,295Leasing & services
    
    
    416
    
    
    
    59,875
    
    
    
    
    
    
    
    (1,590
    )
    
    
    58,70162,481
    
    
    
    451,854
    
    
    
    258,417
    
    
    
    (13,756
    )
    
    
    758,996Cost of revenueManufacturing
    
    
    57,686
    
    
    
    352,736
    
    
    
    243,029
    
    
    
    (11,302
    )
    
    
    642,149Leasing & services
    
    
    
    
    
    
    30,564
    
    
    
    
    
    
    
    (52
    )
    
    
    30,51257,686
    
    
    
    383,300
    
    
    
    243,029
    
    
    
    (11,354
    )
    
    
    672,661Margin
    
    
    4,795
    
    
    
    68,554
    
    
    
    15,388
    
    
    
    (2,402
    )
    
    
    86,335Other costsSelling and administrative
    
    
    10,635
    
    
    
    23,597
    
    
    
    7,160
    
    
    
    
    
    
    
    41,392Interest and foreign exchange
    
    
    3,307
    
    
    
    5,724
    
    
    
    2,681
    
    
    
    (2,073
    )
    
    
    9,639Special charges
    
    
    
    
    
    
    2,913
    
    
    
    
    
    
    
    
    
    
    
    2,91313,942
    
    
    
    32,234
    
    
    
    9,841
    
    
    
    (2,073
    )
    
    
    53,944Earnings (loss) before income taxes,
minority interest and equity in
unconsolidated subsidiaries
    
    
    (9,147
    )
    
    
    36,320
    
    
    
    5,547
    
    
    
    (329
    )
    
    
    32,391Income tax (expense) benefit
    
    
    3,689
    
    
    
    (15,304
    )
    
    
    (1,356
    )
    
    
    138
    
    
    
    (12,833
    )(5,458
    )
    
    
    21,016
    
    
    
    4,191
    
    
    
    (191
    )
    
    
    19,558Minority interest
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    6
    
    
    
    Equity in earnings (loss) of
unconsolidated subsidiaries
    
    
    24,694
    
    
    
    328
    
    
    
    
    
    
    
    (25,344
    )
    
    
    (322
    )Net earnings (loss)
    
    $
    19,236
    
    
    $
    21,338
    
    
    $
    4,191
    
    
    $
    (25,529
    )
    
    $
    19,236
 20




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 Combined
    
    
    CombinedGuarantor
    
    
    Non-Guarantor(In thousands)
    
    Parent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net earnings (loss)
    
    $
    19,236
    
    
    $
    21,338
    
    
    $
    4,191
    
    
    $
    (25,529
    )
    
    $
    19,236Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities:Deferred income taxes
    
    
    2,176
    
    
    
    (198
    )
    
    
    (1,161
    )
    
    
    (138
    )
    
    
    679Tax benefit of stock options exercised
    
    
    1,941
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,941Depreciation and amortization
    
    
    57
    
    
    
    14,184
    
    
    
    2,653
    
    
    
    (54
    )
    
    
    16,840Gain on sales of equipment
    
    
    
    
    
    
    (3,942
    )
    
    
    
    
    
    
    (358
    )
    
    
    (4,300
    )Other
    
    
    
    
    
    
    206
    
    
    
    300
    
    
    
    (7
    )
    
    
    499Decrease (increase) in assets:Accounts and notes receivable
    
    
    (103,192
    )
    
    
    61,531
    
    
    
    7,229
    
    
    
    (103
    )
    
    
    (34,535
    )Inventories
    
    
    
    
    
    
    7,712
    
    
    
    257
    
    
    
    
    
    
    
    7,969Railcars held for sale
    
    
    
    
    
    
    (25,461
    )
    
    
    (2,837
    )
    
    
    740
    
    
    
    (27,558
    )Other
    
    
    (24,852
    )
    
    
    (3,260
    )
    
    
    (888
    )
    
    
    25,344
    
    
    
    (3,656
    )Increase (decrease) in liabilities:Accounts payable and accrued liabilities
    
    
    (14,967
    )
    
    
    27,571
    
    
    
    (12,713
    )
    
    
    104
    
    
    
    (5
    )Participation
    
    
    
    
    
    
    (15,660
    )
    
    
    
    
    
    
    
    
    
    
    (15,660
    )Deferred revenue
    
    
    1,435
    
    
    
    (1,313
    )
    
    
    1,025
    
    
    
    1
    
    
    
    1,148Net cash provided by (used in) operating
activities
    
    
    (118,166
    )
    
    
    82,708
    
    
    
    (1,944
    )
    
    
    
    
    
    
    (37,402
    )Cash flows from investing activities:Principal payments received under
direct finance leases
    
    
    
    
    
    
    4,524
    
    
    
    
    
    
    
    
    
    
    
    4,524Proceeds from sales of equipment
    
    
    
    
    
    
    23,125
    
    
    
    
    
    
    
    
    
    
    
    23,125Investment in and net advances to
unconsolidated subsidiaries
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    
    
    
    
    (49
    )Acquisition of joint venture interest
    
    
    
    
    
    
    8,435
    
    
    
    
    
    
    
    
    
    
    
    8,435Decrease in restricted cash
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    
    
    
    
    624Capital expenditures
    
    
    
    
    
    
    (47,129
    )
    
    
    (2,349
    )
    
    
    
    
    
    
    (49,478
    )Net cash used in investing activities
    
    
    
    
    
    
    (11,094
    )
    
    
    (1,725
    )
    
    
    
    
    
    
    (12,819
    )Cash flows from financing activities:Changes in revolving notes
    
    
    
    
    
    
    
    
    
    
    6,541
    
    
    
    
    
    
    
    6,541Proceeds from the issuance of notes payable
net of issuance cost
    
    
    170,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170,028Repayments of notes payable
    
    
    (781
    )
    
    
    (64,880
    )
    
    
    (673
    )
    
    
    
    
    
    
    (66,334
    )Repayments of subordinated debt
    
    
    
    
    
    
    (5,157
    )
    
    
    
    
    
    
    
    
    
    
    (5,157
    )Dividends
    
    
    (2,692
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,692
    )Net proceeds from sale of common stock
    
    
    127,466
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127,466Purchase and retirement of common stock
    
    
    (127,538
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127,538
    )Proceeds from exercise of stock options
    
    
    1,727
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,727Net cash provided by (used in)
financing activities
    
    
    168,210
    
    
    
    (70,037
    )
    
    
    5,868
    
    
    
    
    
    
    
    104,041Effect of exchange rate changes
    
    
    (109
    )
    
    
    2,652
    
    
    
    (1,185
    )
    
    
    
    
    
    
    1,358Increase (decrease) in cash and cash
equivalents
    
    
    49,935
    
    
    
    4,229
    
    
    
    1,014
    
    
    
    
    
    
    
    55,178Cash and cash equivalentsBeginning of period
    
    
    
    
    
    
    10,454
    
    
    
    1,656
    
    
    
    
    
    
    
    12,110End of period
    
    $
    49,935
    
    
    $
    14,683
    
    
    $
    2,670
    
    
    $
    
    
    
    $
    67,288
 21




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Summary
      3 8
 22




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
   Critical Accounting Policies
  Income taxes
 Maintenance obligations
 Warranty accruals
 23




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 Results of Operations
 Three Months Ended May 31, 2006 Compared to Three Months Ended May 31, 2005
 Overview
  Manufacturing Segment
    Leasing & Services Segment
   Other Costs
  24




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
   Income Tax
  Equity in Earnings (Loss) of Unconsolidated Subsidiaries
  Nine Months Ended May 31, 2006 Compared to Nine Months Ended May 31, 2005
 Overview
  Manufacturing Segment
   25




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
  Leasing & Services Segment
   Other Costs
    Income Tax
  26




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 Equity in Earnings (Loss) of Unconsolidated Subsidiaries
   Liquidity and Capital Resources
        27




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
         Off Balance Sheet Arrangements
  Forward-Looking Statements
  
    
    availability of financing sources and borrowing base for working capital, other business development activities,
capital spending and railcar warehousing activities;
 
    
    ability to renew or obtain sufficient lines of credit and performance guarantees on acceptable terms;
 
    
    ability to utilize beneficial tax strategies;
 28




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
    
    ability to grow our railcar services and lease fleet and management services business;
 
    
    ability to obtain sales contracts which contain provisions for the escalation of prices due to increased costs of
materials and components;
 
    
    ability to obtain adequate certification and licensing of products; and
 
    
    short- and long-term revenue and earnings effects of the above items.
  
    
    a delay or failure of acquired businesses, products or services to compete successfully;
 
    
    decreases in carrying value of assets due to impairment;
 
    
    severance or other costs or charges associated with lay-offs, shutdowns, or reducing the size and scope of operations;
 
    
    changes in future maintenance requirements;
 
    
    effects of local statutory accounting conventions on compliance with covenants in certain loan agreements;
 
    
    domestic and global business conditions and growth or reduction in the surface transportation industry;
 
    
    actual future costs and the availability of materials and a trained workforce;
 
    
    ability to maintain good relationships with third party labor providers or collective bargaining units;
 
    
    availability of subcontractors;
 
    
    ability to adequately pass through steel price increases, scrap surcharges and other commodity price fluctuations and
their related impact on railcar demand and margin;
 
    
    changes in product mix and the mix between the manufacturing and leasing & services segments;
 
    
    ability to deliver railcars in accordance with customer specifications;
 
    
    labor disputes or strikes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of
cargo;
 
    
    production difficulties, product delivery delays and warranty issues as a result of, among other matters, changing
technologies or non-performance of partners, subcontractors or suppliers;
 
    
    ability to obtain suitable contracts for railcars held for sale;
 
    
    lower than anticipated residual values for leased equipment;
 
    
    discovery of defects in manufactured railcars resulting in increased warranty costs or litigation;
 
    
    resolution or outcome of investigations or pending litigation;
 
    
    the ability to consummate expected sales;
 
    
    delays in receipt of orders, risks that contracts may be canceled during their term or not renewed and that customers
may not purchase as much equipment under the contracts as anticipated;
 
    
    financial condition of principal customers;
 
    
    market acceptance of products;
 
    
    ability to determine and obtain adequate levels of insurance at acceptable rates;
 
    
    competitive factors, including introduction of competitive products, price pressures, limited customer base and
competitiveness of our manufacturing facilities and products;
 
    
    industry over-capacity and our manufacturing capacity utilization;
 
    
    continued industry demand at current and anticipated levels for railcar products;
 
    
    domestic and global political, regulatory or economic conditions including such matters as terrorism, war, embargoes or
quotas;
 
    
    ability to adjust to the cyclical nature of the railcar industry;
 
    
    the effects of car hire deprescription on leasing revenue;
 
    
    changes in interest rates;
 
    
    actions by various regulatory agencies;
 
    
    changes in fuel and/or energy prices;
 
    
    availability and price of essential raw materials, specialties or components, including steel castings, to permit
manufacture of units on order;
 
    
    ability to replace lease revenue and earnings from maturing and terminating leases with revenue and earnings from
additions to the lease fleet, lease renewals and management services; and
 
    
    financial impacts from currency fluctuations in our worldwide operations.
 29




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Risk
   Interest Rate Risk
  30




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls over Financial Reporting
  31




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 Item 5. OTHER INFORMATION
  Consolidated Earnings Statement  (In thousands, except per share amounts, unaudited)
 RevenueManufacturing
    
    $
    850,436Leasing & services
    
    
    103,455953,891Cost of revenueManufacturing
    
    
    755,636Leasing & services
    
    
    41,869797,505Margin
    
    
    156,386Other costsSelling and administrative
    
    
    67,058Interest and foreign exchange
    
    
    22,60289,660Earnings before income taxes and equity in
unconsolidated subsidiaries
    
    
    66,726Income tax expense
    
    
    (29,345
    )Earnings before equity in unconsolidated
subsidiaries
    
    
    37,381Equity in earnings (loss) of unconsolidated
subsidiaries
    
    
    465Net earnings
    
    $
    37,846Basic earnings per common share
    
    $
    2.43Diluted earnings per common share
    
    $
    2.39Weighted average common shares:Basic
    
    
    15,544Diluted
    
    
    15,834
 32




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 6. Exhibits
  31.1
    
    Certification pursuant to Rule 13 (a)  14 (a)31.2
    
    Certification pursuant to Rule 13 (a)  14 (a)32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 33




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 SIGNATURES
  THE GREENBRIER COMPANIES, INC.Date: June 29, 2006
    
    By:
    
    /s/ Joseph K. WilstedJoseph K. WilstedSenior Vice President andChief Financial Officer(Principal Financial and Accounting
Officer)
 34




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##### Table of Contents



SIGNATURES
  GREENBRIER-CONCARRIL, LLCDated: June 29, 2006
    By:
    /s/ Joseph K. WilstedJoseph K. WilstedVice President  Signature
    
    Title/s/ William A. Furman
    
    Chairman of the Board of DirectorsWilliam A. Furman
    
    (Principal Executive Officer)/s/ Joseph K. Wilsted
    
    Vice PresidentJoseph K. Wilsted
    
    (Principal Financial and Accounting Officer)




---



##### Table of Contents



SIGNATURES
  GREENBRIER LEASING LIMITEDPARTNER, LLCDated: June 29, 2006
    
    By: Greenbrier Leasing Company LLCSole Member and ManagerBy:

    /s/ Joseph K. Wilsted

Joseph K. WilstedVice President
  Signature
    
    Title/s/ William A. Furman

William A. Furman
    
    Principal Executive Officer/s/ Joseph K. Wilsted

Joseph K. Wilsted
    
    Principal Financial and Accounting Officer




---



##### Table of Contents



SIGNATURES
  GREENBRIER LEASING COMPANY, LLCDated: June 29, 2006
    
    By:
    
    /s/ Joseph K. Wilsted

Joseph K. Wilsted
Vice President
  Signature
    
    Title/s/ William A. Furman
    
    Chief Executive Officer and ManagerWilliam A. Furman
    
    (Principal Executive Officer)/s/ Joseph K. Wilsted
    
    Vice PresidentJoseph K. Wilsted
    
    (Principal Financial and Accounting Officer)




---



##### Table of Contents



SIGNATURES
  GREENBRIER LEASING, L.P.Dated: June 29, 2006
    
    By: Greenbrier Management Services LLCGeneral PartnerBy: Greenbrier Leasing Company LLCSole Member and ManagerBy:

    /s/ Joseph K. Wilsted

Joseph K. WilstedVice President
  Signature
    
    Title/s/ William A. Furman
    
    Principal Executive OfficerWilliam A. Furman/s/ Joseph K. Wilsted
    
    Principal Financial and Accounting OfficerJoseph K. Wilsted




---



##### Table of Contents



SIGNATURES
  GREENBRIER MANAGEMENT SERVICES LLCDated: June 29, 2006
    
    By: Greenbrier Leasing Company LLCSole Member and ManagerBy:

    /s/ Joseph K. Wilsted

Joseph K. Wilsted
Vice President
  Signature
    
    Title/s/ William A. Furman
    
    Principal Executive OfficerWilliam A. Furman/s/ Joseph K. Wilsted
    
    Principal Financial and Accounting OfficerJoseph K. Wilsted




---



##### Table of Contents



SIGNATURES
  GREENBRIER RAILCAR LLCDated: June 29, 2006
    
    By:
    
    /s/ Joseph K. WilstedJoseph K. Wilsted
Vice President
  Signature
    
    Title/s/ William A. Furman
    
    ManagerWilliam A. Furman
    
    (Principal Executive Officer)/s/ Joseph K. Wilsted
    
    Vice PresidentJoseph K. Wilsted
    
    (Principal Financial and Accounting Officer)




---



##### Table of Contents



SIGNATURES
  GUNDERSON LLCDated: June 29, 2006
    
    By:

    /s/ Joseph K. Wilsted

Joseph K. WilstedVice President
  Signature
    
    Title/s/ William A. Furman
    
    ManagerWilliam A. Furman
    
    (Principal Executive Officer)/s/ Joseph K. Wilsted
    
    Vice PresidentJoseph K. Wilsted
    
    (Principal Financial and Accounting Officer)




---



##### Table of Contents



SIGNATURES
  GUNDERSON MARINE LLCDated: June 29, 2006
    
    By:
    
    /s/ Joseph K. Wilsted

Joseph K. WilstedVice President
  Signature
    
    Title/s/ William A. Furman
    
    ManagerWilliam A. Furman
    
    (Principal Executive Officer)/s/ Joseph K. Wilsted
    
    Vice PresidentJoseph K. Wilsted
    
    (Principal Financial and Accounting Officer)




---



##### Table of Contents



SIGNATURES
  GUNDERSON RAIL SERVICES LLCDated: June 29, 2006
    By:
    /s/ Joseph K. WilstedJoseph K. WilstedVice President   Signature
    
    Title/s/ William A. Furman

William A. Furman
    
    Manager
(Principal Executive Officer)/s/ Joseph K. Wilsted

Joseph K. Wilsted
    
    Vice President
(Principal Financial and Accounting Officer)




---



##### Table of Contents



SIGNATURES
  GUNDERSON SPECIALTY PRODUCTS LLCDated: June 29, 2006
    
    By: Gunderson LLC, Sole Member and Sole ManagerBy:
    
    /s/ Joseph K. Wilsted

Joseph K. WilstedVice President
  Signature
    
    Title/s/ William A. Furman

William A. Furman
    
    Principal Executive Officer/s/ Joseph K. Wilsted

Joseph K. Wilsted
    
    Principal Financial and Accounting Officer




---



##### Table of Contents



SIGNATURES
  AUTOSTACK COMPANY LLCDated: June 29, 2006
    By:

/s/
Joseph K. WilstedJoseph K. WilstedVice President  Signature
    
    Title/s/ William A. Furman
    
    Chief Executive Officer and ManagerWilliam A. Furman
    
    (Principal Executive Officer)/s/
Joseph K. Wilsted
    
    Vice PresidentJoseph K. Wilsted
    
    (Principal Financial and Accounting Officer)




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##### Table of Contents



THE GREENBRIER COMPANIES, INC.
 
 Exhibit Index
 31.1
    
    Certification pursuant to Rule 13 (a)  14 (a)31.2
    
    Certification pursuant to Rule 13 (a)  14 (a)32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.