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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

or

Commission File No. 1-13146

THE GREENBRIER COMPANIES, INC.

One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035

(503) 684-7000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

     The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding on July 7, 2003 was 14,127,132 shares.

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THE GREENBRIER COMPANIES, INC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets
(In thousands, except per share amounts, unaudited)

The accompanying notes are an integral part of these statements.

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THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)

The accompanying notes are an integral part of these statements.

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THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Cash Flows
(In thousands, unaudited)

The accompanying notes are an integral part of these statements.

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Notes to Consolidated Financial Statements
(Unaudited)

Note 1 – Interim Financial Statements

     The Consolidated Financial Statements of The Greenbrier Companies, Inc. and Subsidiaries (Greenbrier or the Company) as of May 31, 2003 and for the three and nine months ended May 31, 2003 and 2002 have been prepared without audit and reflect all adjustments (consisting of normal recurring accruals except for special charges) which, in the opinion of management, are necessary for a fair presentation of the financial position and operating results for the periods indicated. The results of operations for the three and nine months ended May 31, 2003 are not necessarily indicative of the results to be expected for the entire year ending August 31, 2003. Certain reclassifications have been made to the prior year’s Consolidated Financial Statements to conform to the 2003 presentation.

     Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s 2002 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 management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include warranty accruals, maintenance accruals, evaluation of the remaining life and recoverability of long-lived assets, intangible asset valuation, contingency accruals, and income tax related accruals. Actual results could differ from those estimates.

     Revenue recognition policy – Revenue from manufacturing operations is recognized at the time products are completed, accepted by an unaffiliated customer and contractual contingencies removed. Payments received in advance are deferred until earned. Direct finance lease revenue is recognized over the lease term in a manner that produces a constant rate of return on the net investment in the lease. Operating lease revenue is recognized as earned under the lease terms. 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 an estimate of use from historical activity and is adjusted to actual car hire earned as reported.

     Initial Adoption of Accounting Policies – The Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets as of September 1, 2002. The statement requires discontinuing the amortization of goodwill and other intangible assets with indefinite useful lives. Instead, these assets are to be tested periodically for impairment and written down to their fair market value as necessary. Other than the cessation of amortization of goodwill, which was not significant, the adoption of SFAS No. 142 had no effect on the Company’s results of operations or cash flows for the nine months ended May 31, 2003.

     Goodwill is tested for impairment in two phases. The first phase, completed in February 2003, screens for impairment. The second phase, required to be completed by August 31, 2003, measures the impairment. The first phase analysis found no instances of impairment of its recorded goodwill or indefinite life intangibles. Goodwill was tested in the third quarter of 2003 as part of an annual test, and no impairment was indicated. Goodwill will be tested at least annually for impairment and more frequently if material changes in events or circumstances arise. Impairment would result in a write down to fair market value as necessary.

     The Company adopted SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities as of December 31, 2002. This statement addresses the financial accounting and reporting issues associated with exit and disposal activities and generally requires that costs associated with such exit or disposal activities are recognized as incurred rather than at the date a company commits to an exit or disposal activity. The adoption of SFAS No. 146 as of December 31, 2002 had no effect on the Company’s results of operations for the nine months ended May 31, 2003.

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THE GREENBRIER COMPANIES, INC.

     The Company adopted the disclosure provisions of SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, in the third quarter of 2003. This statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, this statement amends Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting, to require disclosure about those effects in interim financial information. Since the Company has not changed to a fair value method of stock-based compensation and reports under APB Opinion No. 25, Accounting for Stock Issued to Employees, the applicable portion of SFAS No. 148 only affects the Company’s disclosures.

     In accordance with APB Opinion No. 25, Greenbrier does not recognize compensation expense relating to employee stock options because it only grants options with an exercise price equal to the fair value of the stock on the effective date of grant. If the Company had elected to recognize compensation expense using a fair value approach, the pro forma net earnings (loss) and earnings (loss) per share would have been as follows:

⁽¹⁾ Compensation expense was determined based on the Black-Scholes option pricing model.

     Prospective Accounting Changes – In May 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and generally requires an entity to classify a financial instrument that falls within this scope as a liability. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective beginning September 1, 2003 for the Company. Management is currently evaluating this statement and does not expect it to have a material effect on the Company’s Consolidated Financial Statements.

Note 2 – Inventories