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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

or

Commission File No. 1-13146

THE GREENBRIER COMPANIES, INC.

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

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

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

     The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding on December 31, 2003 was 14,475,292 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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Consolidated Statements of Cash Flows
(In thousands, unaudited)

The accompanying notes are an integral part of these statements.

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THE GREENBRIER COMPANIES, INC.

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 November 30, 2003 and for the three months ended November 30, 2003 and 2002 have been prepared without audit and reflect all adjustments (consisting of normal recurring accruals) 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 months ended November 30, 2003 are not necessarily indicative of the results to be expected for the entire year ending August 31, 2004. Certain reclassifications have been made to the prior year’s consolidated financial statements to conform to the current year 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 2003 Annual Report on Form 10-K.

     Management estimates – The preparation of financial statements in accordance with generally accepted accounting principles requires judgement on the part of management to arrive at estimates and assumptions on matters that are inherently uncertain, including evaluating the remaining life and recoverability of long-lived assets. These estimates may affect the amount of assets, liabilities, revenue and expenses reported in the financial statements and accompanying notes. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from those estimates.

     Stock Based Compensation — 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:

     Initial Adoption of Accounting Policies – The Company adopted Statement of Financial Accounting Standards (SFAS) No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity as of September 1, 2003. The 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. Other than the change in description of a preferred stock interest in a subsidiary that had been previously described as “Minority interest” to “Subsidiary’s shares

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subject to mandatory redemption”, the adoption of SFAS No. 150 had no effect on the Company’s Consolidated Financial Statements as of November 30, 2003, August 31, 2003 or the quarters ended November 30, 2003 and 2002.

     Prospective Accounting Changes – In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation (FIN) 46, Consolidation of Variable Interest Entities. This interpretation requires consolidation where there is a controlling financial interest in a variable interest entity, previously referred to as a special purpose entity. The implementation of FIN 46 has been delayed and will be effective for the Company during the third quarter of 2004. Management is currently evaluating the impact of this interpretation on the Company’s Consolidated Financial Statements, which could affect the presentation of the joint ventures in the unconsolidated subsidiaries and other consolidated subsidiaries, and believes the adoption of FIN 46 will not have a material effect on the Company’s Results of Operations.

     Warranty accrual activity for the three months ended November 30, 2003:

Note 2 – Inventories

(In thousands)

Note 3 — Discontinued Operations

     In August 2002, the Company’s Board of Directors committed to a plan to recapitalize operations in Europe, which consist of a railcar manufacturing plant in Swidnica, Poland and a railcar sales, design and engineering operation in Siegen, Germany. The European operations have not met expectations for profitability or return on capital invested resulting in the decision to recapitalize these operations and refocus resources on North American operations. European operations are treated as discontinued operations for financial reporting purposes and, accordingly, have been removed from the Company’s results of continuing operations for all periods presented.

     In September 2003, the Company signed a letter of intent with a private equity group to recapitalize the European operations. In December 2003, this letter of intent was updated. Some of the investors in the private equity group issuing the letter of intent are part of an investment group which has a preferred stock ownership interest in and representation on the Board of Directors of the Company’s Canadian manufacturing subsidiary. The letter of intent is subject to satisfactory third party debt financing, obtaining necessary governmental clearances, negotiation of final documentation and other conditions. The Company expects to complete the recapitalization during the second quarter.

     Greenbrier will also invest additional funds and convert into equity existing loans to the European operations, currently estimated to aggregate $6.0 million, to repay indebtedness of the recapitalized operation and will retain a minority interest and assume a passive role.

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     Management expects that the completion of the recapitalization contemplated by the current letter of intent will not have a material effect on the Consolidated Results of Operations.

     Under the terms of the letter of intent, the Company expects to be relieved of its guarantee obligations related to revolving credit facilities for discontinued operations of $16.6 million. The Company anticipates it will continue to guarantee notes payable of $7.7 million and bank and third party performance, advance payment and warranty guarantees amounting to $19.0 million as of November 30, 2003. The Company may be required to guarantee performance, advance payment and warranty guarantees for orders received by the European operations prior to closing of the recapitalization.

     If the Company is unsuccessful in closing a transaction to recapitalize these operations, financial results may be restated as part of continuing operations.

Summarized results of operations of the discontinued operations are:

The following assets and liabilities of the European operation are classified as discontinued operations: