The Greenbrier Companies
Annual Report 2013

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KGREENBRIER COMPANIES INC - GBXFiled: October 30, 2014 (period: August 31, 2014)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549-1004FORM 10-Kx ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended August 31, 2014or¨ Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934for the transition period from to Commission File No. 1-13146THE GREENBRIER COMPANIES, INC.(Exact name of Registrant as specified in its charter) Oregon 93-0816972(State of Incorporation) (I.R.S. Employer Identification No.)One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035(Address of principal executive offices)(503) 684-7000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) (Name of Each Exchange on Which Registered)Common Stock without par value New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Act. Yes No X 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 periodthat 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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X Aggregate market value of the Registrant’s Common Stock held by non-affiliates as of February 28, 2014 (based on the closing price of such shares on such date) was $1,065,956,913.The number of shares outstanding of the Registrant’s Common Stock on October 23, 2014 was 27,375,514, without par value.DOCUMENTS INCORPORATED BY REFERENCECertain portions of the Registrant’s definitive Proxy Statement prepared in connection with the Annual Meeting of Stockholders to be held on January 7, 2015 are incorporated by reference into Parts II and III ofthis Report.Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTHE GREENBRIER COMPANIES, INC.FORM 10-KTABLE OF CONTENTS PAGE FORWARD-LOOKING STATEMENTS 1 PART I Item 1. BUSINESS 3 Item 1A. RISK FACTORS 10 Item 1B. UNRESOLVED STAFF COMMENTS 24 Item 2. PROPERTIES 24 Item 3. LEGAL PROCEEDINGS 25 Item 4. MINE SAFTEY DISCLOSURES 25 PART II Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES 26 Item 6. SELECTED FINANCIAL DATA 28 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 29 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 41 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 43 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 85 Item 9A. CONTROLS AND PROCEDURES 85 Item 9B. OTHER INFORMATION 88 PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 88 Item 11. EXECUTIVE COMPENSATION 88 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS 88 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 88 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 88 PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 89 SIGNATURES 94 CERTIFICATIONS 95 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsForward-Looking StatementsFrom time to time, The Greenbrier Companies, Inc. and its subsidiaries (“Greenbrier” or the “Company”) or their representatives have made or may makeforward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of1934, as amended, including, without limitation, statements as to expectations, beliefs and strategies regarding the future. Such forward-looking statementsmay 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 byus with the Securities and Exchange Commission, including this filing on Form 10-K and in the Company’s President’s letter to stockholders that is typicallydistributed to the stockholders in conjunction with this Form 10-K and the Company’s Proxy Statement. 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 assumptionsconcerning future events and include statements relating to:• availability of financing sources and borrowing base for working capital, other business development activities, capital spending and leased railcars forsyndication (sale of railcars with lease attached);• ability to renew, maintain or obtain sufficient credit facilities and financial guarantees on acceptable terms;• ability to utilize beneficial tax strategies;• ability to grow our businesses;• ability to obtain lease and sales contracts which provide adequate protection against changes in interest rates and increased costs of materials andcomponents;• ability to obtain adequate insurance coverage at acceptable rates;• ability to obtain adequate certification and licensing of products; and• short-term and long-term revenue and earnings effects of the above items.The following factors, among others, could cause actual results or outcomes to differ materially from the forward-looking statements:• fluctuations in demand for newly manufactured railcars or marine barges;• fluctuations in demand for wheels, repair & parts;• delays in receipt of orders, risks that contracts may be canceled during their term or not renewed and that customers may not purchase the amount ofproducts or services under the contracts as anticipated;• ability to maintain sufficient availability of credit facilities and to maintain compliance with or to obtain appropriate amendments to covenants undervarious credit agreements;• domestic and global economic conditions including such matters as embargoes or quotas;• U.S., Mexican and other global political or security conditions including such matters as terrorism, war, civil disruption and crime;• growth or reduction in the surface transportation industry;• ability to maintain good relationships with our labor force, third party labor providers and collective bargaining units representing our direct andindirect labor force;• steel and specialty component price fluctuations and availability, scrap surcharges, steel scrap prices and other commodity price fluctuations andavailability and their impact on product demand and margin;• delay or failure of acquired businesses or joint ventures, assets, start-up operations, or new products or services to compete successfully;• changes in product mix and the mix of revenue levels among reporting segments;• labor disputes, energy shortages or operating difficulties that might disrupt operations or the flow of cargo;• production difficulties and product delivery delays as a result of, among other matters, inefficiencies associated with expansion or the start-up ofproduction lines and new facilities or increased production rates, changing technologies, transfer of production between facilities or non-performance ofalliance partners, subcontractors or suppliers;• interruption of our manufacturing operations as a result of lease termination or expiration;• ability to renew or replace expiring customer contracts on satisfactory terms;• ability to obtain and execute suitable contracts for leased railcars for syndication;• lower than anticipated lease renewal rates, earnings on utilization based leases or residual values for leased equipment;• discovery of defects in railcars or services resulting in increased warranty costs or litigation; The Greenbrier Companies 2014 Annual Report 1 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents• physical damage, business interruption or product or service liability claims that exceed our insurance coverage;• commencement of and ultimate resolution or outcome of pending or future litigation and investigations;• natural disasters or severe weather patterns that may affect either us, our suppliers or our customers;• loss of business from, or a decline in the financial condition of, any of the principal customers that represent a significant portion of our total revenues;• competitive factors, including introduction of competitive products, new entrants into certain of our markets, price pressures, limited customer base, andcompetitiveness of our manufacturing facilities and products;• industry overcapacity and our manufacturing capacity utilization;• decreases or write-downs in carrying value of inventory, goodwill, intangibles or other assets due to impairment;• severance or other costs or charges associated with lay-offs, shutdowns, or reducing the size and scope of operations;• changes in future maintenance or warranty requirements;• ability to adjust to the cyclical nature of the industries in which we operate;• changes in interest rates and financial impacts from interest rates;• ability and cost to maintain and renew operating permits;• actions or failures to act by various regulatory agencies including potential environmental remediation obligations or changing tank car or other rail carregulation;• changes in fuel and/or energy prices;• risks associated with our intellectual property rights or those of third parties, including infringement, maintenance, protection, validity, enforcement andcontinued use of such rights;• expansion of warranty and product support terms beyond those which have traditionally prevailed in the rail supply industry;• availability of a trained work force at a reasonable cost and with reasonable terms of employment;• availability and/or price of essential raw materials, specialties or components, including steel castings, to permit manufacture of units on order;• failure to successfully integrate joint ventures or acquired businesses;• discovery of previously unknown liabilities associated with acquired businesses;• failure of or delay in implementing and using new software or other technologies;• the impact of cybersecurity risks and the costs of mitigating and responding to a data security breach;• ability to replace maturing lease and management services revenue and earnings with revenue and earnings from new commercial transactions, includingnew railcar leases, additions to the lease fleet and new management services contracts;• credit limitations upon our ability to maintain effective hedging programs;• financial impacts from currency fluctuations and currency hedging activities in our worldwide operations;• changes in legislation and increased costs related to health care; and• misconduct by employees, including the outcome of the internal investigation into allegations raised by whistleblower complaints concerning a senioremployee at our Concarril facility.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,” “could,” “would,” “will,” “may,” “can,” “designed to,” “foreseeablefuture” and similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance and aresubject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Many ofthe 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 onany forward-looking statements. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements.In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in this Form 10-K,including, without limitation, those contained under the heading, “Risk Factors,” contained in Part I, Item 1A of this Form 10-K.All references to years refer to the fiscal years ended August 31 unless otherwise noted.The Greenbrier Companies is a registered trademark of The Greenbrier Companies, Inc. Gunderson, Maxi-Stack, Auto-Max and YSD are registered trademarks of Gunderson LLC. 2 The Greenbrier Companies 2014 Annual Report stSource: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART I Item 1.BUSINESSIntroductionWe are one of the leading designers, manufacturers and marketers of railroad freight car equipment in North America and Europe, a manufacturer and marketerof marine barges in North America and a leading provider of wheel services, parts, leasing and other services to the railroad and related transportationindustries in North America. In addition, we provide railcar repair, refurbishment and retrofitting services in North America through a joint venturepartnership.We operate an integrated business model in North America that combines freight car manufacturing, wheel services, repair, refurbishment, retrofitting,component parts reconditioning, leasing and fleet management services. Our model is designed to provide customers with a comprehensive set of freight carsolutions utilizing our substantial engineering, mechanical and technical capabilities as well as our experienced commercial personnel. This model allows usto develop cross-selling opportunities and synergies among our various business segments and to enhance our margins. We believe our integrated model isdifficult to duplicate and provides greater value for our customers.Through July 18, 2014, we operated in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services. On July 18, 2014, we andWatco Companies, LLC (“Watco”), our joint venture partner, contributed our respective repair, refurbishment and retrofitting operations to GBW RailcarServices LLC (“GBW”), an unconsolidated 50/50 joint venture which became our fourth reportable segment (GBW Joint Venture) upon formation. Financialinformation about our business segments as well as geographic information for the years ended August 31, 2014, 2013 and 2012 is located in Note 19Segment Information to our Consolidated Financial Statements. The Wheels, Repair & Parts segment included the results of operations for our railcar repair,refurbishment and retrofitting operations through July 18, 2014. After July 18, 2014, the results of operations are included as part of Earnings (loss) fromunconsolidated affiliates as we account for our interest in GBW under the equity method of accounting.The Greenbrier Companies, Inc., which was incorporated in Delaware in 1981, consummated a merger on February 28, 2006 with its affiliate, GreenbrierOregon, Inc., an Oregon corporation, for the sole purpose of changing its state of incorporation from Delaware to Oregon. Greenbrier Oregon survived themerger and assumed the name, The Greenbrier Companies, Inc. Our principal executive offices are located at One Centerpointe Drive, Suite 200, LakeOswego, Oregon 97035, our telephone number is (503) 684-7000 and our Internet website is located at http://www.gbrx.com.Products and ServicesManufacturingNorth American Railcar Manufacturing - We manufacture a broad array of railcar types in North America, which includes most railcar types other than coalcars. We have demonstrated an ability to capture high market shares in many of the car types we produce. The primary products we produce for the NorthAmerican market are:Intermodal Railcars - We manufacture a comprehensive range of intermodal railcars. Our most important intermodal product is our articulated double-stackrailcar. The double-stack railcar is designed to transport containers stacked two-high on a single platform. An articulated double-stack railcar is composed ofup to five platforms, each of which is linked by a common set of wheels and axles. Our comprehensive line of articulated and non-articulated double-stackintermodal railcars offers varying load capacities and configurations. The double-stack railcar provides significant operating and capital savings over othertypes of intermodal railcars. The Greenbrier Companies 2014 Annual Report 3 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTank Cars - We produce a variety of tank cars, including both general and certain pressurized tank cars, which are designed for the transportation of productssuch as crude oil, ethanol, liquefied petroleum gas, caustic soda, urea ammonium nitrate, vegetable oils, bio-diesel and various other products for the NorthAmerican market. We continue to expand our product lines and production rates.Automotive - We manufacture a full line of railcar equipment specifically designed for the transportation of automotive products. Our automotive offeringsinclude our proprietary Auto-Max railcar, Multi-Max auto rack and flat cars for automotive transportation.Conventional Railcars - We produce a wide range of boxcars, which are used in the transport of forest products, perishables, general merchandise andcommodities. We also produce a variety of covered hopper cars for the grain, fertilizer, sand, cement and petrochemical industries as well as gondolas for thesteel and metals markets and various other conventional railcar types. Our flat car products include center partition cars for the forest products industry,bulkhead flat cars and solid waste service flat cars.European Railcar Manufacturing - Our European manufacturing operation produces a variety of railcar (wagon) types, including a comprehensive line ofpressurized tank cars for liquid petroleum gas and ammonia and non-pressurized tank cars for light oil, chemicals and other products. In addition, we produceflat cars, coil cars for the steel and metals market, coal cars for both the continental European and United Kingdom markets, gondolas, sliding wall cars andautomobile transporter cars.Marine Vessel Fabrication - Our Portland, Oregon manufacturing facility, located on a deep-water port on the Willamette River, includes marine vesselfabrication capabilities. The marine facilities also increase utilization of steel plate burning and fabrication capacity providing flexibility for railcarproduction. United States (U.S.) coastwise law, commonly referred to as the Jones Act, requires all commercial vessels transporting merchandise between portsin the U.S. to be built, owned, operated and manned by U.S. citizens and to be registered under the U.S. flag. We manufacture a broad range of Jones Actocean-going and river barges for transporting merchandise between ports within the U.S. including conventional deck barges, double-hull tank barges,railcar/deck barges, barges for aggregates and other heavy industrial products and dump barges. Our primary focus is on the larger ocean-going vesselsalthough the facility has the capability to compete in other marine-related products.Wheels, Repair & PartsWheel Services and Component Parts Manufacturing - We operate a large wheel services and component parts network in North America. Our wheel shops,operating in nine locations, provide complete wheel services including reconditioning of wheels and axles in addition to new axle machining and finishingand axle downsizing. Our component parts facilities, operating in four locations, recondition and manufacture railcar cushioning units, couplers, yokes, sideframes, bolsters and various other parts. We also produce roofs, doors and associated parts for boxcars.Railcar Repair, Refurbishment and Retrofitting - Prior to the formation of GBW on July 28, 2014, we operated 23 railcar repair, refurbishment andretrofitting shops, and the results of these operations were included in our Wheels, Repair & Parts segment. On July 18, 2014, we and Watco, our joint venturepartner, contributed our railcar repair, refurbishment and retrofitting operations to GBW, an unconsolidated 50/50 joint venture which became our fourthreportable segment (GBW Joint Venture) upon formation. The results of the GBW Joint Venture’s operations are included as part of Earnings (loss) fromunconsolidated affiliates as we account for our interest in GBW under the equity method of accounting. This joint venture operates the largest independentrailcar repair shop network in North America consisting of 39 railcar repair, refurbishment, retrofitting and maintenance shops including 14 tank car repairshops certified by the Association of American Railroads (“AAR”) and one location operated exclusively by our company for GBW. This network of railcarrepair, refurbishment, retrofitting and maintenance shops performs heavy railcar repair and refurbishment, as well as routine railcar maintenance. GBW isactively engaged in the repair, refurbishment and retrofitting of railcars for third parties, as well as for our leased and managed fleet. 4 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsLeasing & ServicesLeasing - Our relationships with financial institutions, combined with our ownership of a lease fleet of approximately 8,600 railcars, enables us to offerflexible financing programs including operating leases and “by the mile” leases to our customers. As an equipment owner, we participate principally in theoperating lease segment of the market. The majority of our leases are “full service” leases whereby we are responsible for maintenance and administration.Maintenance of the fleet is provided, in part, through our GBW joint venture. Assets from our owned lease fleet are periodically sold to take advantage ofmarket conditions, manage risk and maintain liquidity.Management Services - Our management services business offers a broad array of software and services that include railcar maintenance management, railcaraccounting services (such as billing and revenue collection, car hire receivable and payable administration), total fleet management (including railcartracking using proprietary software), administration and railcar remarketing. Frequently, we originate leases of railcars, which are either newly built orrefurbished by us, with railroads or shippers, and sell the railcars and attached leases to financial institutions and subsequently provide management servicesunder multi-year agreements. We currently own or provide management services for a fleet of approximately 246,000 railcars for railroads, shippers, carriers,institutional investors and other leasing and transportation companies in North America. Fleet Profile As of August 31, 2014 OwnedUnits ManagedUnits TotalUnits Customer Profile: Leasing Companies 228 109,488 109,716 Class I Railroads 2,912 94,225 97,137 Shipping Companies 3,972 21,652 25,624 Non-Class I Railroads 834 12,387 13,221 En route to Customer Location 454 97 551 Off-lease 150 – 150 Total Units 8,550 237,849 246,399 Each platform of a railcar is treated as a separate unit. Percent of owned units on lease is 98.2% with an average remaining lease term of 2.1 years. The average age of owned units is 15 years.BacklogMulti-year supply agreements are a part of rail industry practice. The following table depicts our reported third party railcar backlog in number of railcars andestimated future revenue value attributable to such backlog, at the dates shown: August 31, 2014 2013 2012 New railcar backlog units 31,500 14,400 10,700 Estimated future revenue value (in millions) $3,330 $1,520 $1,200 Each platform of a railcar is treated as a separate unit. Subject to change based on finalization of product mix.Based on current production plans, at least 17,000 units in the August 31, 2014 backlog are scheduled for delivery in 2015. The balance of the production isscheduled for delivery into 2018. A portion of the orders included in backlog reflects an assumed product mix. Under terms of the orders, the exact mix willbe determined in the future which may impact the dollar amount of backlog. Subsequent to year end we received new railcar orders for 11,400 units valued atnearly $1 billion. The new orders referenced are subject to customary documentation and completion of terms. The Greenbrier Companies 2014 Annual Report 5 (1)(2)(1)(2)(1) (2)(1)(2)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMarine backlog as of August 31, 2014 was approximately $112 million compared to $10 million as of August 31, 2013.Customer orders may be subject to cancellations or modifications and contain terms and conditions customary in the industry. In most cases, little variationhas been experienced between the quantity ordered and the quantity actually delivered. Our railcar and marine backlogs are not necessarily indicative offuture results of operations.CustomersOur customers include railroads, leasing companies, financial institutions, shippers, carriers and transportation companies. We have strong, long-termrelationships with many of our customers. We believe that our customers’ preference for high quality products, our technological leadership in developinginnovative products and competitive pricing of our railcars have helped us maintain our long-standing relationships with our customers.In 2014, revenue from two customers, CIT Company (CIT) and TTX Company (TTX), accounted for approximately 41% of total revenue, 21% of Wheels,Repair & Parts revenue and 49% of Manufacturing revenue. No other customers accounted for greater than 10% of total revenue.Raw Materials and ComponentsOur products require a supply of materials including steel and specialty components such as brakes, wheels and axles. Specialty components purchased fromthird parties represent a significant amount of the cost of most freight cars. Our customers often specify particular components and suppliers of suchcomponents. Although the number of alternative suppliers of certain specialty components has declined in recent years, there are at least two suppliers formost such components.Certain materials and components are periodically in short supply which could potentially impact production at our new railcar and refurbishment facilities.In an effort to mitigate shortages and reduce supply chain costs, we have entered into strategic alliances and multi-year arrangements for the global sourcingof certain materials and components, we operate a replacement parts business and we continue to pursue strategic opportunities to protect and enhance oursupply chain. We periodically make advance purchases to avoid possible shortages of material due to capacity limitations of component suppliers andpossible price increases.In 2014, the top ten suppliers for all inventory purchases accounted for approximately 45% of total purchases. Amsted Rail Company, Inc. accounted for 19%of total inventory purchases in 2014. No other suppliers accounted for more than 10% of total inventory purchases. The Company believes it maintains goodrelationships with its suppliers.CompetitionThere are currently six major railcar manufacturers competing in North America. In addition, a number of small manufacturers have recently entered themarket. We compete on the basis of quality, price, reliability of delivery, product design and innovation, reputation and customer service and support.Competition in the marine industry is dependent on the type of product produced. There are two principal competitors, located in the Gulf States, whichbuild product types similar to ours. We compete on the basis of experienced labor, launch ways capacity, quality, price and reliability of delivery.We believe that we are among the top three European railcar manufacturers, which maintain a combined market share of approximately 80%. Europeanfreight car manufacturers are largely located in central and eastern Europe where labor rates are lower and work rules are more flexible.Competition in the wheels, repair and parts business is dependent on the type of product or service provided. There are many competitors in the railcar repairand refurbishment business and an increasing number of competitors in the wheel services and other parts businesses. We compete primarily on the basis ofquality, timeliness of delivery, customer service, location of shops, price and engineering expertise. 6 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThere are at least twenty institutions that provide railcar leasing and services similar to ours. Many of them are also customers that buy new railcars from ourmanufacturing facilities and used railcars from our lease fleet, as well as utilize our management services. Many of these institutions may have greaterresources than we do on our own balance sheet. We compete primarily on the basis of quality, price, delivery, reputation, service offerings and dealstructuring and syndication ability. We believe our strong servicing capability and our ability to sell railcars with a lease attached (syndicate railcars),integrated with our manufacturing, repair shops, railcar specialization and expertise in particular lease structures provide a strong competitive position.Marketing and Product DevelopmentIn North America, we use an integrated marketing and sales effort to coordinate relationships in our various segments. We provide our customers with adiverse range of equipment and financing alternatives designed to satisfy each customer’s unique needs, whether the customer is buying new equipment,refurbishing existing equipment or seeking to outsource the maintenance or management of equipment. These custom programs may involve a combinationof railcar products, leasing, refurbishing and remarketing services. In addition, we provide customized maintenance management, equipment management,accounting services and proprietary software solutions.In Europe, we maintain relationships with customers through a network of country-specific sales representatives. Our engineering and technical staff worksclosely with their customer counterparts on the design and certification of railcars. Many European railroads are state-owned and are subject to EuropeanUnion regulations covering the tender of government contracts.Through our customer relationships, insights are derived into the potential need for new products and services. Marketing and engineering personnelcollaborate to evaluate opportunities and identify and develop new products. For example, we continue to expand our tank car, automotive and coveredhopper product offerings in North America. Research and development costs incurred during the years ended August 31, 2014, 2013 and 2012 were$3.6 million, $2.0 million and $2.0 million.Patents and TrademarksWe have a number of U.S. and non-U.S. patents of varying duration, and pending patent applications, registered trademarks, copyrights and trade names thatare important to our products and product development efforts. The protection of our intellectual property is important to our business and we have aproactive program aimed at protecting our intellectual property and the results from our research and development.Environmental MattersWe are subject to national, state and local environmental laws and regulations concerning, among other matters, air emissions, wastewater discharge, solidand hazardous waste disposal and employee health and safety. Prior to acquiring facilities, we usually conduct investigations to evaluate the environmentalcondition of subject properties and may negotiate contractual terms for allocation of environmental exposure arising from prior uses. We operate our facilitiesin a manner designed to maintain compliance with applicable environmental laws and regulations. Environmental studies have been conducted on certain ofour owned and leased properties that indicate additional investigation and some remediation on certain properties may be necessary.Our Portland, Oregon manufacturing facility is located adjacent to the Willamette River. We have entered into a Voluntary Clean-up Agreement with theOregon Department of Environmental Quality (“DEQ”) in which we agreed to conduct an investigation of whether, and to what extent, past or presentoperations at the Portland property may have released hazardous substances to the environment. We are also conducting groundwater remediation relating toa historical spill on the property that preceded our ownership.Portland Harbor SiteIn 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 our manufacturing facility, as a federal The Greenbrier Companies 2014 Annual Report 7 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents“National Priority List” or “Superfund” site due to sediment contamination (the “Portland Harbor Site”). We, along with more than 140 other parties, havereceived a “General Notice” of potential liability from the EPA relating to the Portland Harbor Site. The letter advised us that we may be liable for the costs ofinvestigation and remediation (which liability may be joint and several with other potentially responsible parties) as well as for natural resource damagesresulting from releases of hazardous substances to the site. At this time, ten private and public entities, including us (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 Siteunder EPA oversight, and several additional entities have not signed such consent, but are nevertheless contributing money to the effort. The EPA-mandatedRI/FS is being conducted by the LWG and has cost over $110 million during a 14-year period. We have agreed to initially bear a percentage of the total costsincurred by the LWG in connection with the investigation. Our aggregate expenditure has not been material during the 14-year period. Some or all of anysuch outlay may be recoverable from other responsible parties. 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 costsassociated 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 agreementsand 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 draftfeasibility 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 costsranging from $169 million to $1.8 billion for cleanup of the entire Portland Harbor Site, depending primarily on the selected remedial action levels. The draftfeasibility study suggests costs ranging from $9 million to $163 million for cleanup of the area of the Willamette River adjacent to our Portland, Oregonmanufacturing 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 defineprecise boundaries for the cleanup. Responsibility for funding and implementing the EPA’s selected cleanup will be determined after the issuance of theRecord of Decision, currently scheduled by EPA for 2017. Based on the investigation to date, we believe that we did not contribute in any material way tocontamination 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 Siteadjacent to our property precedes our ownership of the Portland, Oregon manufacturing facility. Because these environmental investigations are stillunderway, sufficient information is currently not available to determine our liability, if any, for the cost of any required remediation or restoration of thePortland Harbor Site or to estimate a range of potential loss. Based on the results of the pending investigations and future assessments of natural resourcedamages, we may be required to incur costs associated with additional phases of investigation or remedial action, and may be liable for damages to naturalresources. In addition, we may be required to perform periodic maintenance dredging in order to continue to launch vessels from our launch ways in Portland,Oregon, on the Willamette River, and the river’s classification as a Superfund site could result in some limitations on future dredging and launch activities.Any of these matters could adversely affect our business and Consolidated Financial Statements, or the value of our Portland property.We have also signed an Order on Consent with DEQ to finalize the investigation of potential onsite sources of contamination that may have a releasepathway to the Willamette River. Interim precautionary measures are also required in the order and we are currently discussing with the DEQ potentialremedial actions which may be required. Our aggregate expenditure has not been material during the 14-year period, however we could incur significantexpenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties. 8 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRegulationThe Federal Railroad Administration in the U.S. and Transport Canada in Canada administer and enforce laws and regulations relating to railroad safety.These regulations govern equipment and safety appliance standards for freight cars and other rail equipment used in interstate commerce. The AARpromulgates a wide variety of rules and regulations governing the safety and design of equipment, relationships among railroads and other railcar ownerswith respect to railcars in interchange, and other matters. The AAR also certifies railcar builders and component manufacturers that provide equipment for useon North American railroads. These regulations require us to maintain our certifications with the AAR as a railcar builder and component manufacturer, andproducts sold and leased by us in North America must meet AAR, Transport Canada, and Federal Railroad Administration standards.The primary regulatory and industry authorities involved in the regulation of the ocean-going barge industry are the U.S. Coast Guard, the MaritimeAdministration of the U.S. Department of Transportation, and private industry organizations such as the American Bureau of Shipping.The regulatory environment in Europe consists of a combination of European Union (“EU”) regulations and country specific regulations, including aharmonized set of Technical Standards for Interoperability of freight wagons throughout the EU.U.S., Canadian and railroad industry regulatory authorities are considering various proposals that mandate enhanced safety features for newly manufacturedtank cars, and may also require a range of safety retrofitting to be performed on existing tank cars, in certain hazardous materials service. In addition, theseauthorities are considering stricter operating regulations for trains hauling tank cars that contain certain hazardous materials. We are unable to predict whatregulatory changes may be made, how these changes will be implemented or over what time period any changes may become effective.EmployeesAs of August 31, 2014, we had 9,244 full-time employees, consisting of 7,251 employees in Manufacturing, 594 in Wheels, Repair & Parts, 182 employees inLeasing & Services and corporate and 1,217 employees who were seconded to our GBW joint venture and who are expected to become employees of thejoint venture on January 1, 2015. At our Wheels, Repair & Parts locations, 44 employees are represented by unions and in Manufacturing, 4,065 employeesare represented by unions. In addition to our own employees, as of August 31, 2014, 635 union employees worked at our Sahagun, Mexico railcarmanufacturing facility under our services agreement with Bombardier Transportation, Inc. This service agreement will expire November 30, 2014. We believethat our relations with our employees are generally good.Additional InformationWe are a reporting company and file annual, quarterly, current and special reports, proxy statements and other information with the Securities and ExchangeCommittee (“SEC”). Through a link on the Investor Relations section of our website, http://www.gbrx.com, we make available the following filings as soonas reasonably practicable after they are electronically filed with or furnished to the SEC: our Annual Report on Form 10-K; Quarterly Reports on Form 10-Q;Current Reports on Form 8-K; and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of1934, as amended. All such filings are available free of charge. Copies of our Audit Committee Charter, Compensation Committee Charter, Nominating andCorporate Governance Committee Charter and the Company’s Corporate Governance Guidelines are also available on our web site at http://www.gbrx.com.In addition, each of the reports and documents listed above are available free of charge by contacting our Investor Relations Department at The GreenbrierCompanies, Inc., One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035. The Greenbrier Companies 2014 Annual Report 9 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 1A.RISK FACTORSIn addition to the risks outlined in this annual report under the heading “Forward-Looking Statements,” as well as other comments included herein regardingrisks and uncertainties, the following risk factors should be carefully considered when evaluating our company. Our business, financial condition or financialresults could be materially and adversely affected by any of these risks.During economic downturns or a rising interest rate environment, the cyclical nature of our business results in lower demand for our products and servicesand reduced revenue.Our business is cyclical. Overall economic conditions and the purchasing practices of buyers have a significant effect upon our business due to the impact ondemand for our products and services. As a result, during downturns, we could operate with a lower level of backlog and may temporarily slow down or haltproduction at some or all of our facilities. Economic conditions that result in higher interest rates increase the cost of new leasing arrangements, which couldcause some of our leasing customers to lease fewer of our railcars or demand shorter lease terms. An economic downturn or increase in interest rates mayreduce demand for our products and services, resulting in lower sales volumes, lower prices, lower lease utilization rates and decreased profits.Changes in the credit markets and the financial services industry could negatively impact our business, results of operations, financial condition orliquidity.The credit markets and the financial services industry continue to experience volatility which may result in tighter availability of credit on more restrictiveterms and limit our ability to sell railcar assets. Our liquidity, financial condition and results of operations could be negatively impacted if our ability toborrow money to finance operations, obtain credit from trade creditors, offer leasing products to our customers or sell railcar assets were to be impaired. Inaddition, scarcity of capital could also adversely affect our customers’ ability to purchase or pay for products from us or our suppliers’ ability to provide uswith product, either of which could negatively affect our business and results of operations.Currently, interest rates remain at historically low levels. Higher interest rates could increase the cost of, or potentially deter, new leasing arrangements withour customers or reduce our ability to syndicate railcars under lease to financial institutions, either of which could materially adversely affect our business,financial condition and results of operations.Volatility in the global financial markets may adversely affect our business, financial condition and results of operation.During periods of volatility in the global financial markets, certain of our customers could delay or otherwise reduce their purchases of railcars and otherproducts and services. If volatile conditions in the global credit markets impact our customers’ access to credit, product order volumes may decrease orcustomers may default on payments owed to us.Likewise, if our suppliers face challenges obtaining credit, or otherwise operating their businesses, the supply of materials we purchase from them tomanufacture our products may be interrupted. Any of these conditions or events could result in reductions in our revenues, increased price competition, orincreased operating costs, which could adversely affect our business, financial conditions and results of operations. 10 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe face aggressive competition by a concentrated group of competitors and a number of factors may influence our performance. If we are unable tocompete successfully, our market share, margin and results of operations may be adversely affected.We face aggressive competition by a concentrated group of competitors in all geographic markets and in each area of our business. The railcar manufacturingand repair industry is intensely competitive and we expect it to remain so in the foreseeable future. Competitive factors, including introduction ofcompetitive products, new entrants into certain of our markets, price pressures, limited customer base and the relative competitiveness of our manufacturingfacilities and products affect our ability to compete effectively. In addition, new technologies or the introduction of new railcars or other product offerings byour competitors could render our products obsolete or less competitive. If we do not compete successfully, our market share, margin and results of operationmay be adversely affected.A number of factors may influence our performance, including without limitation: fluctuations in the demand for newly manufactured railcars or marinebarges; fluctuations in demand for wheels, repair and parts; our ability to adjust to the cyclical nature of the industries in which we operate; delays in receiptof orders, risks that contracts may be canceled during their term or not renewed and that customers may not purchase the amount of products or services underthe contracts as anticipated; our customers may be financially unable to pay for products and services already provided; domestic and global economicconditions including such matters as embargoes or quotas; growth or reduction in the surface transportation industry; steel and specialty component pricefluctuations and availability, scrap surcharges, steel scrap prices and other commodity price fluctuations and their impact on product demand and margin;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;industry overcapacity and our manufacturing capacity utilization; and other risks, uncertainties and factors. If we are unfavorably affected by any of thesefactors, our market share, margin and results of operation may be adversely affected.Our actual results may differ significantly from our announced strategic initiatives.From time to time, we have released, and may continue to release information in our quarterly earnings releases, quarterly earnings conference calls, orotherwise, regarding our anticipated future performance and goals. Our actual results may differ significantly and we may not be successful in achieving theobjectives outlined in our announced strategic initiatives. Failure to meet these goals could have a material adverse effect on our trading price or volume ofour stock.A change in our product mix due to shifts in demand could have an adverse effect on our profitability.We manufacture and, through our GBW joint venture, repair a variety of railcars. The demand for specific types of these railcars and mix of refurbishmentwork varies from time to time. These shifts in demand could affect our margins and could have an adverse effect on our profitability. Currently a portion ofour backlog and railcar demand includes a concentrated product mix of covered hoppers and tank cars used in energy related transportation. A suddenchange in these markets could have an adverse effect on our profitability. For example, a change in environmental and governmental regulations,competitive pricing, pipeline capacity, the price of crude oil and related products and other factors could reduce demand for railcars in the energytransportation industry.Our backlog is not necessarily indicative of the level of our future revenues.Our manufacturing backlog represents future production for which we have written orders from our customers in various periods, and estimated potentialrevenue attributable to those orders. Some of this backlog is subject to our fulfillment of certain competitive conditions. Our reported backlog may not beconverted to revenue in any particular period and some of our contracts permit cancellations without financial penalties or with limited compensation thatwould not replace lost revenue or margins. Actual revenue from such contracts may not equal The Greenbrier Companies 2014 Annual Report 11 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsour anticipated revenues based on our backlog, and therefore, our backlog is not necessarily indicative of the level of our future revenues.We rely on limited suppliers for certain components and services needed in our production. If we are not able to procure specialty components or serviceson commercially reasonable terms or on a timely basis, our business, financial condition and results of operations would be adversely affected.Our manufacturing operations depend in part on our ability to obtain timely deliveries of materials, components and services in acceptable quantities andquality from our suppliers. In 2014, the top ten suppliers for all inventory purchases accounted for approximately 45% of total purchases. Amsted RailCompany, Inc. accounted for 19% of total inventory purchases in 2014. No other suppliers accounted for more than 10% of total inventory purchases. Certaincomponents of our products, particularly specialized components like castings, bolsters, trucks, wheels and axles, and certain services, such as liningcapabilities, are currently available from only a limited number of suppliers. Increases in the number of railcars manufactured have increased the demand forsuch components and services and strong demand may cause industry-wide shortages if suppliers are in the process of ramping up production or reachcapacity production. Our dependence on a limited number of suppliers involves risks, including limited control over pricing, availability and deliveryschedules. If any one or more of our suppliers cease to provide us with sufficient quantities of our components or services in a timely manner or on termsacceptable to us, or cease to provide services or manufacture components of acceptable quality, we could incur disruptions or be limited in our production ofour products and we could have to seek alternative sources for these components or services. We could also incur delays while we attempt to locate andengage alternative qualified suppliers and we might be unable to engage acceptable alternative suppliers on favorable terms, if at all. In addition, we areincreasing the number of components and services we manufacture or provide ourselves, directly or through joint ventures. If we are not successful atmanufacturing such components or providing such services or have production problems after transitioning to self-produced supplies, we may not be able toreplace such components or services from third party suppliers in a timely manner. Any such disruption in our supply of specialized components and servicesor increased costs of those components or services could harm our business and adversely affect our results of operations.U.S., Canadian and railroad industry regulatory authorities are considering various proposals concerning tank railcar manufacturing standards. We cannotpredict what regulatory changes may be made in this regard, if any, or when any such regulatory changes may become effective. If adopted, new regulationscould materially affect the tank railcar manufacturing process industry-wide, which could negatively affect the potential availability of certain criticalcomponents and raw materials including, in particular, steel. If we are unable to source critical components and raw materials like steel in a timely mannerand at reasonable cost, we may be unable to manufacture railcars that comply with any new regulations or take advantage of any increase in demand for ourproducts and services as a result of any such new regulations, and our business, financial condition and results of operations could be materially adverselyaffected.We derive a significant amount of our revenue from a limited number of customers, the loss of or reduction of business from one or more of which couldhave an adverse effect on our business.A significant portion of our revenue is generated from a few major customers. Although we have some long-term contractual relationships with our majorcustomers, we cannot be assured that our customers will continue to use our products or services or that they will continue to do so at historical levels. Areduction in the purchase or leasing of our products or a termination of our services by one or more of our major customers could have an adverse effect onour business and operating results. 12 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTrain derailments or other accidents or claims could subject us to legal claims and/or result in regulatory changes that adversely impact our business,financial condition and our results of operations.We provide a number of services which include the manufacture and supply of wheels, components and parts and lease of railcars for our customers thattransport a variety of commodities, including tank railcars that transport hazardous materials such as crude oil, ethanol and other products. We could besubject to various legal claims, including claims for negligence, personal injury, physical damage and product or service liability, as well as potentialpenalties and liability under environmental laws and regulations, in the event of a derailment or other accident involving railcars, including tank railcars. Ifwe become subject to any such claims and are unable successfully to resolve them or have inadequate insurance for such claims, our business, financialcondition and results of operations could be materially adversely affected.On July 6, 2013, a train carrying crude oil and operated by Montreal, Main & Atlantic Railway, Inc. derailed in the town of Lac-Mégantic, Quebec, causingsevere damage and resulting in a number of human fatalities. Some of our competitors and a number of other parties, have been named as a defendant in aclass action lawsuit regarding this derailment alleging wrongful death and negligence claims. While we are not currently aware of circumstances that wouldindicate we are likely to have liability in this matter, the amount of potential damages at issue in the class action could be extremely large. If we were to befound liable for significant damages with respect to this claim, our business, financial condition and results of operations could be materially adverselyaffected.In addition, U.S., Canadian and railroad industry regulatory authorities are considering various proposals that would restrict or even eliminate the use of DOT111 cars for the transportation of certain hazardous materials. We have 312 tank railcars in our lease fleet with a net book value of approximately $26.4million as of August 31, 2014 which could be negatively impacted in the event of regulatory changes and any refurbishment requirements. We are unable topredict what regulatory changes may be made in this regard or even what time period such regulatory changes may become effective.While certain regulatory changes could result in increased levels of repair or refurbishment work for our GBW Railcar Services joint venture and/or new tankcar manufacturing activity, if we are unable to manage to adapt our business successfully to changing regulations, our business and results of operationscould be adversely affected. Delays in issuing definitive regulations or other factors which could prolong or exacerbate uncertainty in the marketplace couldadversely impact orders for new railcars, including orders currently in our backlog. Any such reduction or delay in orders for new railcars could materiallyadversely affect our business, financial condition and results of operations.In addition, certain proposals restrict the operation of trains carrying hazardous materials or reduce train speeds on an already congested rail network. Furthercongestion on the railroads could lead to reduced velocity. This could also lead to an increase in the cost of rail freight transportation and impact availabilitymaking it less competitive compared to alternative modes of freight transportation. It could also lead to reduced demand for our products as railroads limitadditional equipment on their lines.Any failure by us to comply with regulations imposed by federal and foreign agencies could negatively affect our financial results.Our operations and the industry we serve, including our customers, are subject to extensive regulation by governmental, regulatory and industry authoritiesand by federal and foreign agencies. These organizations establish rules and regulations for the railcar industry, including construction specifications andstandards for the design and manufacture of railcars; mechanical, maintenance and related standards; and railroad safety. New regulatory rulings andregulations from these entities could impact our financial results, demand for our products and the economic value of our assets. In addition, if we fail tocomply with the requirements and regulations of these entities, we could face sanctions and penalties that could negatively affect our financial results. The Greenbrier Companies 2014 Annual Report 13 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRisks related to our operations outside of the U.S. could adversely affect our operating results.Our current operations outside of the U.S. and any future expansion of our international operations are subject to the risks associated with cross-borderbusiness transactions and activities. Political, legal, trade, financial market or economic changes or instability could limit or curtail our foreign businessactivities and operations. Some foreign countries in which we operate or may operate have regulatory authorities that regulate railroad safety, railcar designand railcar component part design, performance and manufacturing. If we fail to obtain and maintain certifications of our railcars and railcar parts within thevarious foreign countries where we operate or may operate, we may be unable to market and sell our railcars in those countries. In addition, unexpectedchanges in regulatory requirements, tariffs and other trade barriers, more stringent rules relating to labor or the environment, adverse tax consequences,currency and price exchange controls could limit operations and make the manufacture and distribution of our products difficult. The uncertainty of the legalenvironment or geo-political risks in these and other areas could limit our ability to enforce our rights effectively. Because we have operations outside theU.S., we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws. We operate in parts ofthe world that have experienced governmental corruption to some degree, and in certain circumstances, strict compliance with anti-corruption laws mayconflict with local customs and practices. The failure to comply with laws governing international business practices may result in substantial penalties andfines. Any international expansion or acquisition that we undertake could amplify these risks related to operating outside of the U.S.Risks related to potential misconduct by employees may adversely impact us.We recently received various complaints through our whistleblower hotline concerning alleged misconduct involving a senior employee at our Concarrilmanufacturing facility in Sahagun, Mexico. While an independent investigation is underway, and in its early stages, we currently believe that the allegedmisconduct did not have a material adverse impact on our financial condition or results of operations. However, there can be no assurance that such materialadverse impact will not occur, or that we will succeed in preventing misconduct by employees in the future. Any such events in the future may materially andadversely impact us.If we or our joint ventures fail to complete capital expenditure projects on time and within budget, or if these projects, once completed, fail to operate asanticipated, such failure could adversely affect our business, financial condition and results of operations.From time-to-time, we, or our joint ventures, undertake strategic capital projects in order to enhance, expand and/or upgrade facilities and operationalcapabilities. We are currently enhancing our manufacturing facilities in Mexico to both replace and increase our production capacity and become morevertically integrated. Our ability, and our joint ventures’ ability, to complete these projects on time and within budget, and for us to realize the anticipatedincreased revenues or otherwise realize acceptable returns on these investments or other strategic capital projects that may be undertaken is subject to anumber of risks. Many of these risks are beyond our control, including a variety of market, operational, permitting, and labor related factors. In addition, thecost to implement any given strategic capital project ultimately may prove to be greater than originally anticipated. If we, or our joint ventures, are not ableto achieve the anticipated results from the implementation of any of these strategic capital projects, or if unanticipated implementation costs are incurred, ourbusiness, financial condition and results of operations may be adversely affected.We operate two manufacturing facilities in Sahagun, Mexico, one of which we own and one which is leased. Our lease of the Sahagun, Mexico manufacturingfacility expires in November 2014. We are in the process of replacing this leased capacity with an alternative site in Tlaxcala, Mexico which was purchasedduring 2014. If we are unable to fully vacate the leased manufacturing facility by the expiration of the lease, we may be subject to penalties for overstayingthe lease. In addition, if we are unable to move equipment, startup or produce railcars at our new facility at Tlaxcala on time or on budget this could adverselyaffect our financial condition and results of operations. Any interruption or decrease in our manufacturing operations or penalties in connection withoverstaying our lease could adversely affect our financial condition and results of operations. 14 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur relationships with our joint venture and alliance partners could be unsuccessful, which could adversely affect our business.We have entered into several joint venture agreements and other alliances with other companies to increase our sourcing alternatives, reduce costs, toproduce new railcars and repair and retrofit railcars for the North American marketplace. We may seek to expand our relationships or enter into newagreements with other companies. If our joint venture or alliance partners are unable to fulfill their contractual obligations or if these relationships areotherwise not successful in the future, our manufacturing and other costs could increase, we could encounter production disruptions, growth opportunitiescould fail to materialize, or we could be required to fund such joint venture or alliances in amounts significantly greater than initially anticipated, any ofwhich could adversely affect our business.If any of our joint ventures generate significant losses, including future potential goodwill impairment charges, it could adversely affect our results ofoperations. For example, if our joint venture with Watco is unable to operate as anticipated, incurs significant losses or otherwise is unable to honor itsobligation to us under the GBW joint venture agreements, our financial results could be materially adversely affected.Shortages of skilled labor could adversely affect our operations.We depend on skilled labor in the manufacture of railcars and marine barges, repair, refurbishment, retrofitting and maintenance of railcars and provision ofwheel services and supply of parts. Some of our facilities are located in areas where demand for skilled laborers often exceeds supply. Shortages of some typesof skilled laborers such as welders and machine operators could restrict our ability to maintain or increase production rates, lead to production inefficienciesand increase our labor costs.A failure to design or manufacture products or technologies or to achieve timely certification or market acceptance of new products or technologies couldhave an adverse effect on our profitability.We continue to introduce new railcar products and technologies, and we periodically accept orders prior to receipt of railcar certification or proof of ability tomanufacture a quality product that meets customer standards. We could be unable to successfully design or manufacture these new railcar products andtechnologies. Our inability to develop and manufacture such new products and technologies in a timely fashion and profitable manner, obtain timelycertification, or achieve market acceptance, or the existence of quality problems in our new products, could have a material adverse effect on our revenue andresults of operations and subject us to penalties, cancellation of orders and/or other damages.We could be unable to remarket leased railcars on favorable terms upon lease termination or realize the expected residual values, which could reduce ourrevenue and decrease our overall return.We re-lease or sell railcars we own or manage upon the expiration of existing lease terms. The total rental payments we receive under our operating leases donot fully amortize the acquisition costs of the leased equipment, which exposes us to risks associated with remarketing the railcars. Our ability to remarketleased railcars profitably is dependent upon several factors, including, but not limited to, market and industry conditions, cost of and demand for newermodels, costs associated with the refurbishment of the railcars and interest rates. Our inability to re-lease or sell leased railcars on favorable terms could resultin reduced revenues and margins or net gain on disposition of equipment and decrease our overall returns and affect our ability to syndicate railcars toinvestors. The Greenbrier Companies 2014 Annual Report 15 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe could have difficulty integrating the operations of any companies that we acquire or joint ventures we enter into, which could adversely affect ourresults of operations.The success of our acquisition and joint venture strategy depends upon our ability to successfully complete acquisitions, to enter into joint ventures andintegrate any businesses that we acquire into our existing business. The integration of acquired business operations could disrupt our business by causingunforeseen operating difficulties, diverting management’s attention from day-to-day operations and requiring significant financial resources that wouldotherwise be used for the ongoing development of our business. The difficulties of integration could be increased by the necessity of coordinatinggeographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. Each of thesecircumstances could be more likely to occur or more severe in consequence in the case of an acquisition or joint venture involving a business that is outsideof our core areas of expertise. In addition, we could be unable to retain key employees or customers of the combined businesses. We could face integrationissues pertaining to the internal controls, information systems and operational functions of the acquired companies and we also could fail to realize costefficiencies or synergies that we anticipated when selecting our acquisition candidates and joint ventures. Any of these items could adversely affect ourresults of operations.We depend on our senior management team and other key employees, and significant attrition within our management team or unsuccessful successionplanning could adversely affect our business.Our success depends in part on our ability to attract, retain and motivate senior management and other key employees. Achieving this objective may bedifficult due to many factors, including fluctuations in global economic and industry conditions, competitors’ hiring practices, cost reduction activities, andthe effectiveness of our compensation programs. Competition for qualified personnel can be very intense. We must continue to recruit, retain and motivatesenior management and other key employees sufficient to maintain our current business and support our future projects. We are vulnerable to attrition amongour current senior management team and other key employees. A loss of any such personnel, or the inability to recruit and retain qualified personnel in thefuture, could have an adverse effect on our business, financial condition and results of operations. In addition, certain key members of our senior managementteam are at or nearing retirement age. If we are unsuccessful in our succession planning efforts, the continuity of our business and results of operations couldbe adversely affected.Our product and service warranties could expose us to potentially significant claims.We offer our customers limited warranties for many of our products and services. Accordingly, we may be subject to significant warranty claims in the future,such as multiple claims based on one defect repeated throughout our production or servicing process or claims for which the cost of repairing the defectivepart is highly disproportionate to the original cost of the part. These types of warranty claims could result in costly product recalls, customers seekingmonetary damages, significant repair costs and damage to our reputation.If warranty claims attributable to actions of third party component manufacturers are not recoverable from such parties due to their poor financial condition orother reasons, we could be liable for warranty claims and other risks for using these materials on our products.The timing of our asset sales and related revenue recognition could cause significant differences in our quarterly results and liquidity.We may build railcars or marine barges in anticipation of a customer order, or that are leased to a customer and ultimately planned to be sold to a third party.The difference in timing of production and the ultimate sale is subject to risk. In addition, we periodically sell railcars from our own lease fleet and the timingand volume of such sales is difficult to predict. As a result, comparisons of our manufacturing revenue, deliveries, quarterly net gain on disposition ofequipment, income and liquidity between quarterly periods within one year and between 16 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentscomparable periods in different years may not be meaningful and should not be relied upon as indicators of our future performance.Our financial performance and market value could cause future write-downs of goodwill or intangibles in future periods.We, and our joint ventures accounted for under the equity method of accounting, are required to perform an annual impairment review of goodwill andindefinite lived assets which could result in an impairment charge if it is determined that the carrying value of the asset is in excess of the fair value. Weperform a goodwill impairment test annually during our third fiscal quarter. Goodwill is also tested more frequently if changes in circumstances or theoccurrence 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 ofgoodwill 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, which relate to our Wheels, Repair & Parts segment, include growth of revenue and margins and increasedcash flows over time. If actual operating results were to differ from these assumptions, it may result in an impairment of our goodwill. A non-cash impairmentcharge of $76.9 million ($71.8 million, net of tax) was recorded for the year ended August 31, 2013 which relates to our Wheels, Repair & Parts segment. Asof August 31, 2014, we had $43.3 million of goodwill in our Wheels, Repair & Parts segment, relating to our wheels and parts business. Future write-downs ofgoodwill and intangibles could affect certain of the financial covenants under debt instruments and could restrict our financial flexibility. In the event ofgoodwill impairment, we may have to test other intangible assets for impairment. Impairment charges to our or our joint venture’s goodwill or our indefinitelived assets would impact our results of operations.We have potential exposure to environmental liabilities, which could increase costs or have an adverse effect on results of operations.We are subject to extensive national, state, provincial and local environmental laws and regulations concerning, among other things, air emissions, waterdischarge, solid waste and hazardous substances handling and disposal and employee health and safety. These laws and regulations are complex andfrequently change. We could incur unexpected costs, penalties and other civil and criminal liability if we fail to comply with environmental laws or permitsissued to us pursuant to those laws. We also could incur costs or liabilities related to off-site waste disposal or remediating soil or groundwater contaminationat our properties, including these set forth below and in the “Environmental Matters” section of this Report. In addition, future environmental laws andregulations may require significant capital expenditures or changes to our operations.In addition to environmental, health and safety laws, the transportation of commodities by railcar raises potential risks in the event of a derailment or otheraccident. Generally, liability under existing law in the U.S. and Canada for accidents such as derailments depends on the negligence of the party. However,for certain hazardous commodities being shipped, strict liability concepts may apply.Our Portland, Oregon manufacturing facility is located adjacent to the Willamette River. We have entered into a Voluntary Cleanup Agreement with theOregon Department of Environmental Quality (“DEQ”) in which we agreed to conduct an investigation of whether, and to what extent, past or presentoperations at the Portland property may have released hazardous substances to the environment. We are also conducting groundwater remediation relating toa historical spill on the property which preceded our ownership.The U.S. Environmental Protection Agency (EPA) has classified portions of the river bed of the Portland Harbor, including the portion fronting theCompany’s manufacturing facility, as a federal “National Priority List” or “Superfund” site due to sediment contamination (the “Portland Harbor Site”). We,along with more than 140 other parties, have received a “General Notice” of potential liability from the EPA relating to the Portland Harbor Site. The letteradvised us that we may be liable for the costs of investigation and remediation (which liability The Greenbrier Companies 2014 Annual Report 17 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsmay be joint and several with other potentially responsible parties) as well as for natural resource damages resulting from releases of hazardous substances tothe site. We are part of a group that signed an Administrative Order on Consent (“AOC”) to perform a remedial investigation/feasibility study (“RI/FS”) of thePortland Harbor Site under EPA oversight, and several additional entities have not signed such consent, but are nevertheless contributing money to the effort.We have agreed to initially bear a percentage of the total costs incurred in connection with the investigation. EPA expects the investigation to continue until2017. We cannot assure that any such costs will be recoverable from third parties.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 costsranging from $9 million to $163 million for cleanup of the area of the Willamette River adjacent to our Portland, Oregon manufacturing facility, dependingprimarily on the selected remedial action level. The draft feasibility study does not address responsibility for the costs of clean-up or allocate such costsamong potentially responsible parties, or define precise boundaries for the cleanup. Responsibility for funding and implementing the EPA’s selected cleanupwill be determined after the issuance of the Record of Decision.We have also signed an Order on Consent with DEQ to finalize the investigation of potential onsite sources of contamination that may have a releasepathway to the Willamette River. Interim precautionary measures are also required in the order and we are currently discussing with the DEQ potentialremedial actions which may be required. Our aggregate expenditure has not been material during the 14-year period, however, we could incur significantexpenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties. However, we cannot assure that any such costswill be recoverable from third parties.Because these environmental investigations are still underway, sufficient information is currently not available to determine our liability, if any, for the costof any required remediation of the Portland Harbor Site on our adjacent land or to estimate a range of potential loss. Based on the results of the pendinginvestigations and future assessments of natural resource damages, we may be required to incur costs associated with additional phases of investigation orremedial action, and may be liable for damages to natural resources. In addition, we may be required to perform periodic maintenance dredging in order tocontinue to launch vessels from our launch ways in Portland, Oregon, on the Willamette River, and the river’s classification as a Superfund site could result insome limitations on future dredging and launch activities. Any of these matters could adversely affect our business and Consolidated Financial Statements, orthe value of our Portland property.We are subject to cybersecurity risks and may incur increasing costs in an effort to minimize those risks.Our business employs systems and websites that allow for the storage and transmission of proprietary or confidential information regarding our customers,employees, job applicants and other parties, including financial information, intellectual property and personal identification information. Security breachesand other disruptions could compromise our information, expose us to liability and harm our reputation and business. The steps we take to deter and mitigatethese risks may not be successful. We may not have the resources or technical sophistication to anticipate or prevent current or rapidly evolving types ofcyber-attacks. Attacks may be targeted at us, our customers, or others who have entrusted us with information. Actual or anticipated attacks may cause us toincur increasing costs, including costs to deploy additional personnel and protection technologies, train employees, and engage third-party experts orconsultants. Advances in computer capabilities, or other technological developments may result in the technology and security measures used by us toprotect transaction or other data being breached or compromised. In addition, data and security breaches can also occur as a result of non-technical issues,including intentional or inadvertent breach by our employees or by persons with whom we have commercial relationships. Any compromise or breach of oursecurity could result in a violation of applicable privacy and other laws, legal and financial exposure, negative impacts on our customers’ willingness totransact business with us and a loss of confidence in our security measures, which could have an adverse effect on our results of operations and our reputation. 18 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe have indebtedness, which could have negative consequences to our business or results of operations.As of August 31, 2014, our total debt was approximately $458.2 million, consisting of borrowings under our convertible notes, credit facilities and termloans. Our significant indebtedness could have negative consequences to us, and could place us at a competitive disadvantage compared to our lessleveraged competitors. It may be difficult for us to satisfy our repayment and other obligations with respect to such indebtedness, and we may not be able torefinance our existing indebtedness as it matures. Significant indebtedness may also increase our vulnerability to adverse general economic, industry orcompetitive developments or conditions and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which weoperate. We may be limited in our ability to raise additional capital or obtain additional financing to fund our operations, capital expenditures or othergrowth initiatives, and other general corporate requirements and may be required to dedicate a significant portion of our cash flow from operations to interestand principal payments on our indebtedness. We are more exposed to the risk of increased interest rates as certain of our borrowings are at variable rates ofinterest. As a consequence of our level of indebtedness, a significant portion of our cash flow from operations may be dedicated to debt service requirements.In addition, the terms of our revolving credit facility limit our ability to incur additional indebtedness. If we fail to comply with these covenants, a defaultmay occur, in which case the lender could accelerate the debt. We cannot be assured that we would be able to renegotiate, refinance, restructure or otherwiseobtain the necessary funds to satisfy the indebtedness or these obligations.Fluctuations in foreign currency exchange rates could lead to increased costs and lower profitability.Outside of the U.S., we operate in Mexico, Germany and Poland, and our non-U.S. businesses conduct their operations in local currencies and other regionalcurrencies. We also source materials worldwide. Fluctuations in exchange rates may affect demand for our products in foreign markets or our costcompetitiveness and may adversely affect our profitability. Although we attempt to mitigate a portion of our exposure to changes in currency rates throughcurrency rate hedge contracts and other activities, these efforts cannot fully eliminate the risks associated with the foreign currencies. In addition, some of ourborrowings are in foreign currency, giving rise to risk from fluctuations in exchange rates. A material or adverse change in exchange rates could result insignificant deterioration of profits or in losses for us.Fluctuations in the availability and price of energy, freight transportation, steel and other raw materials, and our fixed price contracts could have anadverse effect on our ability to manufacture and sell our products on a cost-effective basis and could adversely affect our margins and revenue of ourManufacturing and Wheels, Repair & Parts businesses.A significant portion of our business depends upon the adequate supply of steel, components and other raw materials at competitive prices and a smallnumber of suppliers provide a substantial amount of our requirements. The cost of steel and all other materials used in the production of our railcarsrepresents more than half of our direct manufacturing costs per railcar and in the production of our marine barges represents more than 30% of our directmanufacturing costs per marine barge.Our businesses also depend upon the adequate supply of energy at competitive prices. When the price of energy increases, it adversely impacts our operatingcosts and could have an adverse effect upon our ability to conduct our businesses on a cost-effective basis. We cannot be assured that we will continue tohave access to supplies of energy or necessary components for manufacturing railcars and marine barges. Our ability to meet demand for our products couldbe adversely affected by the loss of access to any of these supplies, the inability to arrange alternative access to any materials, or suppliers limiting allocationof materials to us.In some instances, we have fixed price contracts which anticipate material price increases and surcharges, or contracts that contain actual or formulaic pass-through of material price increases and surcharges. However, if the price of steel or other raw materials were to fluctuate in excess of anticipated increases onwhich we have based our fixed price contracts, or if we were unable to adjust our selling prices or have adequate protection in The Greenbrier Companies 2014 Annual Report 19 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsour contracts against changes in material prices, or if we are unable to reduce operating costs to offset any price increases, our margins would be adverselyaffected. The loss of suppliers or their inability to meet our price, quality, quantity and delivery requirements could have an adverse effect on our ability tomanufacture and sell our products on a cost-effective basis.Decreases in the price of scrap adversely impact our Wheels, Repair & Parts margin and revenue. A portion of our Wheels, Repair & Parts business involvesscrapping steel parts and the resulting revenue from such scrap steel increases our margins and revenues. When the price of scrap steel declines, our marginsand revenues in such business therefore decrease.Some of our employees belong to labor unions and strikes or work stoppages could adversely affect our operations.We are a party to collective bargaining agreements with various labor unions at some of our operations. Disputes with regard to the terms of these agreementsor our potential inability to negotiate acceptable contracts with these unions in the future could result in, among other things, strikes, work stoppages or otherslowdowns by the affected workers. We cannot be assured that our relations with our workforce will remain positive. Union organizers are actively working toorganize at some of our other facilities. If our workers were to engage in a strike, work stoppage or other slowdown, or other employees were to becomeunionized or the terms and conditions in future labor agreements were renegotiated, or if union representation is implemented at such sites and we are unableto agree with the union on reasonable employment terms, including wages, benefits, and work rules, we could experience a significant disruption of ouroperations and higher ongoing labor costs. In addition, we could face higher labor costs in the future as a result of severance or other charges associated withlay-offs, shutdowns or reductions in the size and scope of our operations or due to the difficulties of restarting our operations that have been temporarilyshuttered.A prolonged decline in performance of the rail freight industry would have an adverse effect on our financial condition and results of operations.Our future success depends in part upon the performance of the rail freight industry, which in turn depends on the health of the economy. If railcar loadings,railcar and railcar components replacement rates or refurbishment rates or industry demand for our railcar products weaken or otherwise do not materialize,our financial condition and results of operations would be adversely affected.Updates or changes to our information technology systems may result in problems that could negatively impact our business.We have information technology systems, comprising hardware, network, software, people, processes and other infrastructure that are important to theoperation of our businesses. We continue to evaluate and implement upgrades and changes to information technology systems that support substantially allof our operating and financial functions. We could experience problems in connection with such implementations, including compatibility issues, trainingrequirements, higher than expected implementation costs and other integration challenges and delays. A significant problem with an implementation,integration with other systems or ongoing management and operation of our systems could negatively impact our business by disrupting operations. Such aproblem could also have an adverse effect on our ability to generate and interpret accurate management and financial reports and other information on atimely basis, which could have a material adverse effect on our financial reporting system and internal controls and adversely affect our ability to manage ourbusiness. 20 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAn adverse outcome in any pending or future litigation could negatively impact our business and results of operations.We are a defendant in several pending cases in various jurisdictions. If we are unsuccessful in resolving these claims, our business and results of operationscould be adversely affected. In addition, future claims that may arise relating to any pending or new matters, whether brought against us or initiated by usagainst third parties, could distract management’s attention from business operations and increase our legal and related costs, which could also negativelyimpact our business and results of operations.We could be liable for physical damage, business interruption or product liability claims that exceed our insurance coverage.The nature of our business subjects us to physical damage, business interruption and product liability claims, especially in connection with the repair andmanufacture of products that carry hazardous or volatile materials. Although we maintain liability insurance coverage at commercially reasonable levelscompared to similarly-sized heavy equipment manufacturers, an unusually large physical damage, business interruption or product liability claim or a seriesof claims based on a failure repeated throughout our production process could exceed our insurance coverage or result in damage to our reputation.We could be unable to procure adequate insurance on a cost-effective basis in the future.The ability to insure our businesses, facilities and rail assets is an important aspect of our ability to manage risk. As there are only limited providers of thisinsurance to the railcar industry, there is no guarantee that such insurance will be available on a cost-effective basis in the future. In addition, we cannotassure that our insurance carriers will be able to pay current or future claims.Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financialresults.Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Some of these policiesrequire use of estimates and assumptions that may affect the reported value of our assets or liabilities and financial results and are critical because they requiremanagement to make difficult, subjective, and complex judgments about matters that are inherently uncertain. Accounting standard setters and those whointerpret the accounting standards (such as the Financial Accounting Standards Board, the SEC, and our independent registered public accounting firm) mayamend or even reverse their previous interpretations or positions on how these standards should be applied. In some cases, we could be required to apply anew or revised standard retrospectively, resulting in the revision of prior period financial statements. Changes in accounting standards can be hard to predictand can materially impact how we record and report our financial condition and results of operations.From time to time we may take tax positions that the Internal Revenue Service may contest.We have in the past and may in the future take tax positions that the Internal Revenue Service (“IRS”) may contest. We are required by an IRS regulation todisclose particular tax positions to the IRS as part of our tax returns for that year and future years. If the IRS successfully contests a tax position that we take,we may be required to pay additional taxes, interest or fines that may adversely affect our results of operation and financial position. The Greenbrier Companies 2014 Annual Report 21 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsFires, natural disasters, severe weather conditions or public health crisis could disrupt our business and result in loss of revenue or higher expenses. Any serious disruption at any of our facilities due to fire, hurricane, earthquake, flood, or any other natural disaster, or an epidemic or other public healthcrisis, or a panic reaction to a perceived health risk, could impair our ability to use our facilities and have a material adverse impact on our revenues andincrease our costs and expenses. If there is a natural disaster or other serious disruption at any of our facilities, particularly any of our Mexican facilities, itcould impair our ability to adequately supply our customers, cause a significant disruption to our operations, cause us to incur significant costs to relocate orreestablish these functions and negatively impact our operating results. While we insure against certain business interruption risks, such insurance may notadequately compensate us for any losses incurred as a result of natural or other disasters.Repercussions from terrorist activities or armed conflict could harm our business.Terrorist activities, anti-terrorist efforts, and other armed conflict involving the U.S. or its interests abroad may adversely affect the U.S. and globaleconomies, potentially preventing us from meeting our financial and other obligations. In particular, the negative impacts of these events may affect theindustries in which we operate. This could result in delays in or cancellations of the purchase of our products or shortages in raw materials, parts, orcomponents. Any of these occurrences could have a material adverse impact on our financial results.Compliance with recently passed health care legislation and increases in the cost of providing health care plans to our employees may adversely affect ourbusiness.In March 2010, Congress passed the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act(collectively, the “Acts”). Among other things, the Acts contain provisions that affect employer-sponsored health care plans, impose excise taxes on certainplans, and reduce the tax benefits available to employers that receive the Medicare Part D subsidy. Nationally, the cost of providing health care plans to acompany’s employees has increased at annual rates in excess of inflation. There continues to be uncertainty whether the Acts will increase the cost ofemployee health plan coverage. Continued significant annual increases in the cost of providing employee health coverage may adversely affect our businessand results of operations.Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our financial condition and profitability.We are subject to income taxes in both the United States and foreign jurisdictions. Significant judgment is required in determining our worldwide provisionfor income taxes. Changes in estimates of projected future operating results, loss of deductibility of items, recapture of prior deductions (including related tointerest on convertible notes), or changes in assumptions regarding our ability to generate future taxable income could result in significant increases to ourtax expense and liabilities that could adversely affect our financial condition and profitability. 22 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf we are unable to protect our intellectual property and prevent its improper use by third parties or if third parties assert that our products or servicesinfringe their intellectual property rights, our ability to compete in the market may be harmed, and our business and financial condition may be adverselyaffected.The protection of our intellectual property is important to our business. We rely on a combination of trademarks, copyrights, patents and trade secrets toprotect our intellectual property. However, these protections might be inadequate. Our pending or future trademark, copyright and patent applications mightnot be approved or, if allowed, might not be sufficiently broad. If our intellectual property rights are not adequately protected we may not be able tocommercialize our technologies, products or services and our competitors could commercialize our technologies, which could result in a decrease in our salesand market share and could materially adversely affect our business, financial condition and results of operations. Conversely, third parties might assert thatour products, services, or other business activities infringe their patents or other intellectual property rights. Infringement and other intellectual propertyclaims and proceedings brought against us, whether successful or not, could result in substantial costs and harm our reputation. Such claims and proceedingscan also distract and divert our management and key personnel from other tasks important to the success of our business. In addition, intellectual propertylitigation or claims could force us to cease selling or using products that incorporate the asserted intellectual property, which would adversely affect ourrevenues, pay substantial damages for past use of the asserted intellectual property or pay substantial fees to obtain a license from the holder of the assertedintellectual property, which license may not be available on reasonable terms, if at all. In the event of an adverse determination in an intellectual propertysuit or proceeding, or our failure to license essential technology or redesign our products so as not to infringe third party intellectual property rights, our salescould be harmed and our costs could increase, which could materially adversely affect our business, financial condition and results of operations. The Greenbrier Companies 2014 Annual Report 23 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 1B.UNRESOLVED STAFF COMMENTSNone. Item 2.PROPERTIESWe operate at the following primary facilities as of August 31, 2014: Description Location StatusManufacturing Segment Manufacturing facilities: Portland, Oregon Owned 2 locations in Sahagun, Mexico Leased — 1 locationOwned — 1 location Tlaxcala, Mexico Owned — 1 location Frontera, Mexico Leased 3 locations in Poland OwnedAdministrative offices: Colleyville, Texas LeasedWheels, Repair & Parts SegmentWheels, Repair & Parts facilities: 13 locations in the U.S. Leased — 7 locationsOwned — 6 locationsRepair facilities leased to our GBW joint venture: 21 locations in the U.S. 2 locations in Canada Leased — 9 locationsOwned — 5 locationsCustomer premises —7 locationsCustomer premisesAdministrative offices: 1 location in the U.S. LeasedLeasing & Services Segment Corporate offices, railcar marketing and leasingactivities: Lake Oswego, Oregon LeasedWe operate two manufacturing facilities in Sahagun, Mexico, one of which we own and one of which is leased with a lease expiration date of November2014. We are in the process of replacing this leased capacity with an alternative site in Tlaxcala, Mexico that was purchased during 2014 and beganproduction in October 2014.We believe that our facilities are in good condition and that the facilities, together with anticipated capital improvements and additions, are adequate to meetour operating needs for the foreseeable future. We continually evaluate our Manufacturing and Wheels, Repair & Parts facilities in order to remaincompetitive and to take advantage of market opportunities. 24 The Greenbrier Companies 2014 Annual Report 11 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 3.LEGAL PROCEEDINGSThere is hereby incorporated by reference the information disclosed in Note 22 to Consolidated Financial Statements, Part II, Item 8 of this Form 10-K. Item 4.MINE SAFETY DISCLOSURESNot applicable. The Greenbrier Companies 2014 Annual Report 25 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPARTII Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIESOur common stock has been traded on the New York Stock Exchange under the symbol GBX since July 14, 1994. There were approximately 403 holders ofrecord of common stock as of October 23, 2014. The following table shows the reported high and low sales prices of our common stock on the New YorkStock Exchange for the fiscal periods indicated. High Low 2014 Fourth quarter $72.79 $54.00 Third quarter $56.65 $41.40 Second quarter $43.20 $30.46 First quarter $33.20 $22.57 2013 Fourth quarter $25.33 $21.10 Third quarter $25.24 $19.85 Second quarter $22.51 $15.41 First quarter $19.19 $13.25 DividendsIn July 2014, the Board of Directors authorized the reinstatement of our company’s dividend program. Quarterly dividends of $0.15 per share were declaredon July 1, 2014 and October 29, 2014. No other dividends were declared during 2013 or 2014. There is no assurance as to the payment of future dividends asthey are dependent upon future earnings, capital requirements, customary debt covenant restrictions and our financial condition.Issuer Purchases of Equity SecuritiesIn October 2013, the Board of Directors authorized our company to repurchase up to $50 million of our company’s common stock. Under the sharerepurchase program, shares of common stock could be purchased on the open market or through privately negotiated transactions from time-to-time. Thetiming and amount of purchases was based upon market conditions, securities law limitations and other factors. The share repurchase program did notobligate our company to acquire any specific number of shares in any period.Under this program, as of August 31, 2014, we repurchased a total of 764,546 shares for approximately $34.4 million at an average price per share of $45.04.Shares repurchased under our share repurchase program during the three months ended August 31, 2014 were as follows: Period Total Number ofShares Purchased Average PricePaid Per Share(IncludingCommissions) Total Number ofShares Purchasedas Part ofPublicallyAnnounced Plansor Programs ApproximateDollar Value ofShares that MayYet Be PurchasedUnder the Plans orPrograms June 1, 2014 – June 30, 2014 – – – $23,706,605 July 1, 2014 – July 31, 2014 5,000 $66.40 5,000 $23,374,608 August 1, 2014 – August 31, 2014 118,219 $66.09 118,219 $15,561,626 123,219 123,219 26 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSubsequent to August 31, 2014 and through October 23, 2014, we purchased an additional 253,016 shares for approximately $15.6 million. We completedour $50 million 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 company’scommon stock. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiatedtransactions from time-to-time. The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors. Theshare repurchase program does not obligate our company to acquire any specific number of shares in any period. The share repurchase program expiresJune 30, 2016, but may be modified, suspended or discontinued at any time without prior notice.Performance GraphThe following graph demonstrates a comparison of cumulative total returns for the Company’s Common Stock, the Dow Jones US Industrial TransportationIndex and the Standard & Poor’s (S&P) 500 Index. The graph assumes an investment of $100 on August 31, 2009 in each of the Company’s Common Stockand the stocks comprising the indices. Each of the indices assumes that all dividends were reinvested and that the investment was maintained to andincluding August 31, 2014, the end of the Company’s 2014 fiscal year.The comparisons in this table are required by the SEC, and therefore, are not intended to forecast or be indicative of possible future performance of ourCommon Stock. Equity Compensation Plan InformationEquity Compensation Plan Information is hereby incorporated by reference to the “Equity Compensation Plan Information” table in Registrant’s definitiveProxy Statement to be filed pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the Securities and Exchange Commissionwithin 120 days after the end of the Registrant’s year ended August 31, 2014. The Greenbrier Companies 2014 Annual Report 27 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 6.SELECTED FINANCIAL DATAYEARS ENDED AUGUST 31, (In thousands, except unit and per share data) 2014 2013 2012 2011 2010 Statement of Operations Data Revenue: Manufacturing $1,624,916 $1,215,734 $1,253,964 $721,102 $295,566 Wheels, Repair & Parts 495,627 469,222 481,865 452,865 388,434 Leasing & Services 83,419 71,462 71,887 69,323 72,280 $2,203,962 $1,756,418 $1,807,716 $1,243,290 $756,280 Earnings from operations $239,520 $41,651 $118,788 $67,574 $52,107 Net earnings (loss) attributable toGreenbrier $111,919 $(11,048) $58,708 $6,466 $4,277 Basic earnings (loss) per common share attributable toGreenbrier: $3.97 $(0.41) $2.21 $0.27 $0.23 Diluted earnings (loss) per common share attributable toGreenbrier: $3.44 $(0.41) $1.91 $0.24 $0.21 Weighted average common shares outstanding: Basic 28,164 26,678 26,572 24,100 18,585 Diluted 34,209 26,678 33,718 26,501 20,213 Cash dividends paid per share $.15 $.00 $.00 $.00 $.00 Balance Sheet Data Total assets $1,517,168 $1,289,741 $1,384,544 $1,301,655 $1,072,888 Revolving notes and notes payable $458,172 $422,098 $488,834 $519,479 $501,330 Total equity $573,721 $456,827 $453,645 $375,901 $297,407 Other Operating Data New railcar units delivered 16,200 11,600 15,000 9,400 2,500 New railcar backlog (units) 31,500 14,400 10,700 15,400 5,300 New railcar backlog (value in millions) $3,330 $1,520 $1,200 $1,230 $420 Lease fleet: Units managed 237,849 223,911 219,020 215,843 225,223 Units owned 8,550 8,581 10,841 8,684 8,156 Cash Flow Data Capital expenditures: Manufacturing $55,979 $37,017 $33,313 $20,016 $8,715 Wheels, Repair & Parts 8,774 7,492 11,248 20,087 12,215 Leasing & Services 5,474 16,318 73,324 44,199 18,059 $70,227 $60,827 $117,885 $84,302 $38,989 Proceeds from sale of assets $54,235 $75,338 $33,560 $18,730 $22,978 Depreciation and amortization: Manufacturing $15,341 $13,469 $11,754 $9,853 $11,061 Wheels, Repair & Parts 12,582 12,843 13,265 11,853 11,435 Leasing & Services 12,499 15,135 17,352 16,587 15,015 $40,422 $41,447 $42,371 $38,293 $37,511 2014 includes a non-cash gain on contribution to joint venture of $13.6 million net of tax and a restructuring charge of $1.0 million net of tax. The gainrelated to the Company contributing its repair, refurbishment and retrofitting operations to the GBW joint venture. 2013 includes a non-cash goodwill impairment charge of $71.8 million net of tax and a restructuring charge of $1.8 million net of tax. 2011 includes a loss on extinguishment of debt of $9.4 million net of tax for the write-off of unamortized debt issuance costs, prepayment premiums,debt discount and other costs associated with the repayment of senior unsecured notes and certain term loans. 2010 includes non-cash income of $11.9 million net of tax for a special item related to the release of the liability associated with the 2008 de-consolidation of our former Canadian subsidiary and includes a gain on extinguishment of debt of $1.3 million net of tax for the gain associated with theearly retirement of a portion of the convertible senior notes, partially offset by the write-off of loan fees and debt discount. 28 The Greenbrier Companies 2014 Annual Report (1)(2)(3)(4)(1)(2)(3)(4)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONSExecutive SummaryThrough July 18, 2014, we operated in three reportable segments: Manufacturing; Wheels, Repair & Parts; and Leasing & Services. Our segments areoperationally integrated. On July 18, 2014, we and Watco Companies, LLC (“Watco”), our joint venture partner, contributed our respective repair,refurbishment and retrofitting operations to GBW Railcar Services LLC (“GBW”), an unconsolidated 50/50 joint venture which became our fourth reportablesegment (GBW Joint Venture) upon formation. The Manufacturing segment, operating from facilities in the United States, Mexico and Poland, producesdouble-stack intermodal railcars, tank cars, conventional railcars, automotive railcar products and marine vessels. The Wheels, Repair & Parts segmentperforms wheel and axle servicing, as well as production and reconditioning of a variety of parts for the railroad industry in North America. The Leasing &Services segment owns approximately 8,600 railcars and provides management services for approximately 238,000 railcars for railroads, shippers, carriers,institutional investors and other leasing and transportation companies in North America. Our GBW joint venture provides railcar repair, refurbishment,retrofitting and maintenance services through 39 shops throughout North America, 14 of which are currently tank car certified by the Association ofAmerican Railroads (“AAR”) and one location operated exclusively by our company for GBW. We also produce rail castings through an unconsolidatedjoint venture.Multi-year supply agreements are a part of rail industry practice. Customer orders may be subject to cancellations or modifications and contain terms andconditions customary in the industry. In most cases, little variation has been experienced between the quantity ordered and the quantity actually delivered.Our total manufacturing backlog of railcar units as of August 31, 2014 was approximately 31,500 units with an estimated value of $3.33 billion compared to14,400 units with an estimated value of $1.52 billion as of August 31, 2013. Currently, the entire backlog is expected to be sold to third parties, therefore noorders in our backlog are expected to be placed into our owned lease fleet. 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 August 31,2014 was approximately $112 million compared to $10 million as of August 31, 2013. Our backlog of railcar units and marine vessels is not necessarilyindicative of future results of operations. Subsequent to year end we received new railcar orders for 11,400 units valued at nearly $1 billion. The new ordersreferenced are subject to customary documentation and completion of terms.We operate two manufacturing facilities in Sahagun, Mexico, one of which we own and one of which is leased with a lease expiration date in November2014. We are replacing this leased capacity with an alternative site in Tlaxcala, Mexico which was purchased during 2014 and began production in October2014. We expect to incur costs during the first quarter of 2015 related to relocating equipment and startup of lines in the new facility. We are also expandingcapacity, particularly for tank car production, at our manufacturing facilities in Mexico including our joint venture facility in northern Mexico. Inconjunction with these activities, we and our joint venture partner have extended the term of our joint venture through 2029.On July 18, 2014, we completed the formation of GBW, an unconsolidated 50/50 joint venture with Watco. As of August 31, 2014, the GBW joint ventureoperates 38 shops previously part of our company’s and Watco’s networks. The Wheels, Repair & Parts segment included the results of operations for ourrepair, refurbishment and retrofitting operations through July 18, 2014. After July 18, 2014, the results of 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. Upon the formation of GBW, we recognized apre-tax non-cash gain of $29.0 million for the year ended August 31, 2014 attributed to the operations we contributed to GBW.During 2013, we implemented a restructuring plan to sell or close certain Wheels, Repair & Parts facilities to enhance margins and improve capital efficiency.Restructuring charges related to this plan were $1.5 million ($1.0 million, net of tax) and $2.7 million ($1.8 million, net of tax) for the years ended August 31,2014 and 2013. The restructuring plan was completed prior to the formation of GBW. The Greenbrier Companies 2014 Annual Report 29 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsResults of OperationsRevenue, margin and operating profit, presented below, include amounts from external parties and exclude intersegment activity that is eliminated inconsolidation. Performance for our segments is evaluated based on operating profit. Corporate includes selling and administrative costs not directly related togoods and services and certain costs that are intertwined among segments due to our integrated business. Management does not allocate Interest and foreignexchange or Income tax expense for either external or internal reporting purposes.Overview (In thousands) 2014 2013 2012 Revenue: Manufacturing $1,624,916 $1,215,734 $1,253,964 Wheels, Repair & Parts 495,627 469,222 481,865 Leasing & Services 83,419 71,462 71,887 2,203,962 1,756,418 1,807,716 Margin: Manufacturing 250,908 132,845 131,580 Wheels, Repair & Parts 31,689 37,721 48,324 Leasing & Services 39,623 35,807 34,516 322,220 206,373 214,420 Operating profit: Manufacturing 202,555 88,822 87,880 Wheels, Repair & Parts 40,597 (60,966) 31,455 Leasing & Services 41,055 42,411 31,055 Corporate (44,687) (28,616) (31,602) Earnings from operations 239,520 41,651 118,788 Interest and foreign exchange 18,695 22,158 24,809 Earnings before income tax and earnings (loss) from unconsolidated affiliates 220,825 19,493 93,979 Income tax expense (72,401) (25,060) (32,393) Earnings (loss) before earnings (loss) from unconsolidated affiliates 148,424 (5,567) 61,586 Earnings (loss) from unconsolidated affiliates 1,355 186 (416) Net earnings (loss) 149,779 (5,381) 61,170 Net earnings attributable to noncontrolling interest (37,860) (5,667) (2,462) Net earnings (loss) attributable to Greenbrier $111,919 $(11,048) $58,708 Diluted earnings (loss) per common share $3.44 $(0.41) $1.91 The increase in revenue for the year ended August 31, 2014 was primarily the result of a higher volume of deliveries in the Manufacturing segment of ourbusiness. The decrease in revenue for the year ended August 31, 2013 was primarily the result of a lower volume of deliveries in the Manufacturing segmentof our business.The increase in earnings for the year ended August 31, 2014 was primarily attributable to an increase in manufacturing gross margin and a non-cash Gain oncontribution to joint venture of $13.6 million, net of tax. In addition, the prior year included a non-cash goodwill impairment charge of $71.8 million, net oftax. The decrease in net earnings for the year ended August 31, 2013 as compared to the year ended August 31, 2012 was primarily attributable to a non-cashgoodwill impairment charge of $71.8 million, net of tax and restructuring charges of $1.8 million, net of tax. These were partially offset by an increase in gainon disposition of equipment. 30 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsManufacturing SegmentManufacturing revenue was $1.625 billion, $1.216 billion and $1.254 billion for the years ended August 31, 2014, 2013 and 2012. Railcar deliveries, whichare the primary source of manufacturing revenue, were 16,200 units in 2014 compared to 11,600 units in 2013 and 15,000 units in 2012. Manufacturingrevenue increased $409.2 million in 2014 compared to 2013 primarily due to a higher volume of deliveries as compared to the prior year. These higherdeliveries were a result of improved efficiencies and an increase in capacity in response to higher demand. Manufacturing revenue decreased $38.2 million in2013 compared to 2012 primarily due to a lower volume of deliveries as compared to the prior year. These lower deliveries were a result of a change inproduct mix to more labor intensive railcar types and lower demand for certain of our products.Manufacturing margin as a percentage of revenue was 15.4% in 2014, 10.9% in 2013 and 10.5% in 2012. The increase in 2014 compared to 2013 wasprimarily the result of a favorable change in product mix and pricing, higher volumes of new railcars syndicated with leases attached and improvedproduction efficiencies and overhead absorption. The increase in 2013 compared to 2012 was primarily the result of a favorable change in product mix andan increase in marine revenue. These factors were partially offset by certain inefficiencies with ramping up tank car production.Manufacturing operating profit was $202.6 million and 12.5% of revenue for the year ended August 31, 2014, $88.8 million and 7.3% of revenue for the yearended August 31, 2013 and $87.9 million and 7.0% of revenue for the year ended August 31, 2012. The increase in operating profit in 2014 and 2013compared to the prior comparable period was primarily attributed to higher margins.Wheels, Repair & Parts SegmentThe Wheels, Repair & Parts segment included the results of operations for our repair, refurbishment and retrofitting operations (“Repair”) 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 jointventure. 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 GBWunder the equity method of accounting.Wheels, Repair & Parts revenue was $495.6 million, $469.2 million and $481.9 million for the years ended August 31, 2014, 2013 and 2012. The $26.4million increase in revenue in 2014 compared to 2013 was primarily the result of an increase in wheel set and component volumes as a result of increaseddemand and a change in wheel set and component product mix, resulting in a higher average selling price. These were partially offset by a decrease in repairrevenue primarily due to the closure of facilities as part of our previously disclosed restructuring plan to sell or close certain Wheels, Repair & Parts facilitiesto enhance margins and improve capital efficiency. The $12.7 million decrease in revenue in 2013 compared to 2012 was primarily the result of lowerdemand for wheel set replacements and a decrease in scrap metal pricing and volume. These were partially offset by an increase in demand for repair work.Wheels, Repair & Parts margin as a percentage of revenue was 6.4% for 2014, 8.0% for 2013 and 10.0% for 2012. The decrease in margin as a percentage ofrevenue in 2014 compared to 2013 was primarily the result of operating inefficiencies at certain of our repair facilities and a less favorable parts product mix.The decrease in margin as a percentage of revenue in 2013 compared to 2012 was primarily the result of inefficiencies from operating at lower wheel volumesand inefficiencies at certain underperforming facilities. These were partially offset by a favorable change in parts product mix.Wheels, Repair & Parts operating profit was $40.6 million and 8.2% of revenue for the year ended August 31, 2014, an operating loss of $61.0 million for theyear ended August 31, 2013 and an operating profit of $31.5 million and 6.5% of revenue for the year ended August 31, 2012. The increase in operatingprofit in 2014 compared to 2013 was primarily attributed to a $29.0 million pre-tax non-cash gain on contribution to joint venture in 2014 and a pre-tax non-cash goodwill impairment charge of $76.9 million in 2013. The decrease in operating profit in 2013 compared to 2012 was primarily attributed to a pre-taxnon-cash goodwill impairment charge of $76.9 million in 2013. The Greenbrier Companies 2014 Annual Report 31 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsLeasing & Services SegmentLeasing & Services revenue was $83.4 million, $71.5 million and $71.9 million for the years ended August 31, 2014, 2013 and 2012. The $11.9 millionincrease in revenue in 2014 compared to 2013 was primarily the result of a syndication of railcars purchased from a third party. These railcars were notmanufactured by our company, but rather purchased from a third party with a lease attached, with the intent to resell them. The gross proceeds from the sale ofthese 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. Theincrease in revenue as compared to the prior year was also a result of an increase in management services revenue due to the addition of new managementservice agreements and higher average volumes of rent-producing leased railcars for syndication. These were partially offset by a decline in leasing revenueresulting from a smaller average owned lease fleet as compared to the prior year. The $0.4 million decrease in revenue in 2013 compared to 2012 wasprimarily the result of lower average volumes of rent-producing leased railcars for syndication and a decrease in earnings on mileage utilization leases. Thesewere partially offset by an increase in management services revenue primarily due to the addition of new management services agreements.Leasing & Services margin as a percentage of revenue was 47.5% in 2014 compared to 50.1% in 2013 and 48.0% in 2012. The decrease in 2014 compared to2013 was primarily the result of a lower margin syndication of railcars purchased from a third party and the reduction in the maintenance accrual onterminated maintenance management agreements during the prior year. These were partially offset by higher average volumes of rent-producing leasedrailcars for syndication as compared to the prior year. The increase in 2013 compared to 2012 was primarily the result of a reduction in the maintenanceaccrual on terminated maintenance management agreements and a receipt of a settlement on a terminated railcar lease agreement, both in 2013. These werepartially offset by lower average volumes of rent-producing leased railcars for syndication.Leasing & Services operating profit was $41.1 million and 49.2% of revenue for the year ended August 31, 2014, $42.4 million and 59.3% of revenue for theyear ended August 31, 2013 and $31.1 million and 43.2% of revenue for the year ended August 31, 2012. The decrease in operating profit in 2014 comparedto 2013 was primarily attributed to a decrease in Net gain on disposition of equipment. The increase in operating profit in 2013 compared to 2012 wasprimarily attributed to an increase in Net gain on disposition of equipment.The percentage of owned units on lease as of August 31, 2014 was 98.2% compared to 97.4% at August 31, 2013 and 93.5% at August 31, 2012.Selling and AdministrativeSelling and administrative expense was $125.3 million, or 5.7% of revenue for the year ended August 31, 2014, $103.2 million, or 5.9% of revenue for theyear ended August 31, 2013 and $104.6 million, or 5.8% of revenue, for the year ended August 31, 2012. The $22.1 million increase in 2014 compared to2013 was primarily due to increased levels of activity resulting in an increase in employee related costs, including incentive compensation associated withincreased levels of profitability. The increase was also attributed to an increase in legal and consulting costs associated with the formation of the new GBWjoint venture. The $1.4 million decrease in 2013 compared to 2012 was primarily due to a decrease in incentive compensation costs.Net Gain on Disposition of EquipmentNet gain on disposition of equipment was $15.0 million, $18.1 million and $9.0 million for the years ended August 31, 2014, 2013 and 2012.The gain for the year ended August 31, 2014 consists of $14.6 million in gains realized on the disposition of leased assets and $0.4 million on the dispositionof equipment related to our restructuring plan to sell or close certain Wheels, Repair & Parts facilities to enhance margins and improve capital efficiency. Thegain for the year ended August 31, 2013 consists of $19.0 million in gains realized on the disposition of leased assets, a $0.6 million other gain and a $1.5million loss related to the sale of certain assets from our roller bearing operation in Elizabethtown, Kentucky. The entire gain for the year ended August 31,2012 was realized on the disposition of leased assets. 32 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAssets from Greenbrier’s lease fleet are periodically sold in the normal course of business in order to take advantage of market conditions and manage riskand liquidity.Gain on Contribution to Joint VentureOn July 18, 2014, we and Watco contributed our respective Repair operations to a newly formed entity, GBW, an unconsolidated 50/50 joint venture withWatco. As of August 31, 2014, the GBW joint venture operated 38 shops previously part of our company’s and Watco’s networks. As a result of the formationof GBW, we recognized a pre-tax non-cash gain of $29.0 million for the year ended August 31, 2014 which was calculated as the fair value of our 50% sharein GBW, less cash and intangibles contributed to GBW and an allocation in goodwill attributed to the repair, refurbishment and retrofitting businesscontributed to GBW.Goodwill ImpairmentThe results of our annual goodwill impairment test during the third quarter of 2013 indicated that the carrying amount related to Wheels, Repair & Parts wasin excess of fair value. As a result, a non-cash impairment loss was recorded to the extent that the carrying amount of the reporting unit’s goodwill exceededthe implied fair value of that goodwill. A non-cash impairment charge of $76.9 million ($71.8 million, net of tax) was recorded for the year ended August 31,2013. The primary drivers of the impairment charge were lower than expected operating results and changes in forecasted future results, accompanied by areduction in observed market multiples.Restructuring ChargesDuring 2013, we implemented a restructuring plan to sell or close certain Wheels, Repair & Parts facilities to enhance margins and improve capital efficiency.Restructuring charges related to this plan totaled $1.5 million and $2.7 million for the years ended August 31, 2014 and 2013 and consisted of employeerelated termination costs, contract termination expenses and other costs.Interest and Foreign ExchangeInterest and foreign exchange expense was composed of the following: (In thousands) Years ended August 31, Increase(decrease) 2014 2013 Interest and foreign exchange: Interest and other expense $18,306 $19,203 $(897) Accretion of convertible debt discount – 2,455 (2,455) Foreign exchange loss 389 500 (111) $18,695 $22,158 $(3,463) Interest and other expense decreased in 2014 from 2013 primarily due to lower interest expense on reduced levels of average borrowings and the convertiblenote debt discount being fully amortized in the prior year.Interest and foreign exchange expense was composed of the following: (In thousands) Years ended August 31, Increase(decrease) 2013 2012 Interest and foreign exchange: Interest and other expense $19,203 $22,474 $(3,271) Accretion of convertible debt discount 2,455 3,259 (804) Foreign exchange (gain) loss 500 (924) 1,424 $22,158 $24,809 $(2,651) The Greenbrier Companies 2014 Annual Report 33 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsInterest and other expense decreased in 2013 from 2012 primarily due to lower interest expense on reduced levels of average borrowings and a benefit frominterest accruals associated with uncertain tax positions that expired during the year. This was partially offset by a foreign exchange gain in 2012 and aforeign exchange loss in 2013.Income TaxOur effective tax rate is generally decreased by foreign earnings taxed at rates below the domestic 35% rate and by domestic partnership earnings taxed tononcontrolling interest in a consolidated subsidiary. Our rate can also be increased or decreased by discrete items that may occur in any given year, but arenot consistent from one year to the next. Significant discrete items in recent years have included reductions in nondeductible goodwill and reversals ofuncertain tax positions.In 2014 our tax expense was $72.4 million on $220.8 million of pre-tax earnings for an effective tax rate of 32.8%. The rate would have been 29.5% hadnondeductible goodwill not reduced the gain recognized on the contribution of our repair, refurbishment and retrofitting operations to the GBW jointventure.In 2013 our tax expense was $25.1 million on $19.5 million of pre-tax earnings that had been reduced by a goodwill impairment charge of $76.9 million thatwas largely nondeductible. The rate would have been 30.4% without the impairment charge. The rate also benefited from the reversal of uncertain taxpositions.In 2012 our tax expense was $32.4 million on $94.0 million of pre-tax earnings for an effective tax rate of 34.5%. The rate benefitted from the recognition ofdeferred tax assets in certain foreign jurisdictions and from the restructuring of a foreign subsidiary.Earnings (Loss) from Unconsolidated AffiliatesEarnings from unconsolidated affiliates were $1.4 million for the year ended August 31, 2014 and primarily included the results of operations from ourcastings joint venture and our GBW joint venture. Earnings from unconsolidated affiliates were $0.2 million for the year ended August 31, 2013 andprimarily included the results of operations from our castings joint venture. Loss from unconsolidated affiliates was $0.4 million for the year endedAugust 31, 2012 and included the results of operations from our castings joint venture and from WLR–Greenbrier Rail Inc.Net Earnings Attributable to Noncontrolling InterestThe years ended August 31, 2014, 2013 and 2012 include net earnings attributable to noncontrolling interest of $37.9 million, $5.7 million and $2.5 millionwhich primarily represents our joint venture partner’s share in the results of operations of our Mexican railcar manufacturing joint venture, adjusted forintercompany sales. The change in 2014 compared to 2013 is primarily a result of operating at higher production rates, improved manufacturing efficienciesand lower intercompany activity in the current year. The change in 2013 compared to 2012 was due to the result of increased sales to third parties and lowerintercompany activity. 34 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsLiquidity and Capital Resources Years Ended August 31, (In thousands) 2014 2013 2012 Net cash provided by operating activities $135,907 $104,592 $116,056 Net cash provided by (used in) investing activities (30,078) 6,159 (88,947) Net cash used in financing activities (17,561) (65,732) (28,794) Effect of exchange rate changes (787) (1,155) 5,034 Net increase in cash and cash equivalents $87,481 $43,864 $3,349 We have been financed through cash generated from operations and borrowings. At August 31, 2014 cash and cash equivalents was $184.9 million, anincrease of $87.5 million from $97.4 million at the prior year end.Cash provided by operating activities was $135.9 million, $104.6 million and $116.1 million for the years ended August 31, 2014, 2013 and 2012. Theincrease in 2014 was primarily due to higher earnings, a change in the timing of working capital needs, the timing of sales of leased railcars for syndication aswell as billings in excess of costs, which are recorded in deferred revenue, for our marine barges recorded under the percentage of completion method. Thedecrease in 2013 was primarily due to a change in the timing of working capital needs and the timing of sales of leased railcars for syndication.Cash provided by (used in) investing activities primarily related to capital expenditures less proceeds from the sale of assets. Cash used in investing activitieswas $30.1 million for the year ended August 31, 2014 compared to cash provided by investing activities of $6.2 million for the year ended August 31, 2013.Cash used in investing activities was $88.9 million in 2012.Capital expenditures totaled $70.2 million, $60.8 million and $117.9 million for the years ended August 31, 2014, 2013 and 2012. Proceeds from the sale ofassets, which primarily related to sales of railcars from our lease fleet within Leasing & Services, were approximately $54.2 million, $75.3 million and $33.6million for the years ended August 31, 2014, 2013 and 2012.Approximately $56.0 million, $37.0 million and $33.3 million of capital expenditures for the years ended August 31, 2014, 2013 and 2012 were attributableto Manufacturing operations. Capital expenditures for Manufacturing are expected to be approximately $95.0 million in 2015 and primarily relate toenhancements to our manufacturing facilities and replacement of certain leased manufacturing capacity in Mexico with an alternative site and expansion ofcapacity, particularly for tank car production, at our manufacturing facilities in Mexico.Approximately $5.4 million, $16.3 million and $73.3 million for the years ended August 31, 2014, 2013 and 2012 of capital expenditures were attributableto Leasing & Services operations and corporate. Leasing & Services and corporate capital expenditures for 2015 are expected to be approximately $35.0million. Proceeds from sales of leased railcar equipment are expected to be approximately $10.0 million for 2015. We regularly buy and sell assets from ourlease fleet.Wheels, Repair & Parts capital expenditures for the years ended August 31, 2014, 2013 and 2012 were $8.8 million, $7.5 million and $11.2 million and areexpected to be approximately $10.0 million in 2015 for maintenance and improvement of existing facilities.Cash used in financing activities was $17.6 million, $65.7 million and $28.8 million for the years ended August 31, 2014, 2013 and 2012. Cash used infinancing activities primarily related to repurchase of stock and repayments of debt, net of debt proceeds.In October 2013, the Board of Directors authorized our company to repurchase up to $50 million of our common stock. Under the share repurchase program,shares of common stock could be purchased on the open market or through privately negotiated transactions from time-to-time. The timing and amount ofpurchases was based The Greenbrier Companies 2014 Annual Report 35 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsupon market conditions, securities law limitations and other factors. The share repurchase program did not obligate us to acquire any specific number ofshares in any period. During the year ended August 31, 2014, we repurchased a total of 764,546 shares for approximately $34.4 million. Subsequent toAugust 31, 2014 and through October 23, 2014, we purchased an additional 253,016 shares for approximately $15.6 million. We completed our $50 millionshare 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 company’scommon stock. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiatedtransactions from time-to-time. The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors. Theshare repurchase program does not obligate our company to acquire any specific number of shares in any period. The share repurchase program expiresJune 30, 2016, but may be modified, suspended or discontinued at any time without prior notice.In March 2014, we refinanced approximately $125 million of existing senior term debt, due in March 2014 and May 2015, secured by a pool of leasedrailcars with new 6-year $200 million senior term debt also secured by a pool of leased railcars and cash. The new debt bears a floating interest rate of LIBORplus 1.75% with principal of $1.75 million paid quarterly in arrears and a balloon payment of $159.8 million due at maturity. An interest rate swap agreementwas 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%.In July 2014, the Board of Directors authorized the reinstatement of our company’s dividend program. Quarterly dividends of $0.15 per share were declaredon July 1, 2014 and October 29, 2014.Senior secured credit facilities, consisting of three components, aggregated to $359.1 million as of August 31, 2014. We had an aggregate of $321.0 millionavailable to draw down under the committed credit facilities as of August 31, 2014. This amount consists of $265.0 million available on the North Americancredit facility, $19.1 million on the European credit facilities and $36.9 million on the Mexican joint venture credit facilities as of August 31, 2014.As of August 31, 2014 a $290.0 million revolving line of credit, maturing June 2016 and secured by substantially all of our assets in the U.S. not otherwisepledged as security for term loans, was available to provide working capital and interim financing of equipment, principally for the U.S. and Mexicanoperations. Advances under this facility bear interest at LIBOR plus 2.25% or Prime plus 1.25% depending on the type of borrowing. Available borrowingsunder the credit facility are generally based on defined levels of inventory, receivables, property, plant and equipment and leased equipment, as well as totaldebt to consolidated capitalization and fixed charges coverage ratios.As of August 31, 2014, lines of credit totaling $19.1 million secured by certain of our European assets, with various variable rates that range from WarsawInterbank Offered Rate (“WIBOR”) plus 1.2% to WIBOR plus 1.5%, were available for working capital needs of the European manufacturing operation.European credit facilities are continually being renewed. Currently these European credit facilities have maturities that range from December 2014 throughJune 2015.As of August 31, 2014, our Mexican joint venture had two lines of credit totaling $50.0 million. The first line of credit provides up to $20.0 million and issecured by certain of the joint venture’s accounts receivable and inventory. Advances under this facility bear interest at LIBOR plus 2.5%. The Mexican jointventure will be able to draw amounts available under this facility through January 2015. The second line of credit provides up to $30.0 million and is fullyguaranteed by each of the joint venture partners, including our Company. Advances under this facility bear interest at LIBOR plus 2.0%. The Mexican jointventure will be able to draw against this facility through January 2015.As of August 31, 2014 outstanding borrowings under the senior secured credit facilities consisted of $9.6 million in letters of credit under the North Americancredit facility and $13.1 million outstanding under the Mexican joint venture credit facilities. 36 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe revolving and operating lines of credit, along with notes payable, contain covenants with respect to us and our various subsidiaries, the most restrictiveof which, among other things, limit our ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enter into sale leasebacktransactions; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non U.S. subsidiaries, including but not limited toloans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all our assets; and enter into new lines ofbusiness. The covenants also require certain maximum ratios of debt to total capitalization and minimum levels of fixed charges (interest plus rent) coverage.We may from time to time seek to repurchase or otherwise retire or exchange securities, including outstanding borrowings and equity securities, and takeother steps to reduce our debt or otherwise enhance our balance sheet. These actions may include open market repurchases, unsolicited or solicited privatelynegotiated 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 totransactions denominated in currencies other than the functional currency, we enter into foreign currency forward exchange contracts with establishedfinancial institutions to protect the margin on a portion of foreign currency sales in firm backlog primarily in Euro. No provision has been made for credit lossdue to counterparty non-performance.As of August 31, 2014, the Mexican joint venture had $14.6 million of third party debt, of which we and our joint venture partner have each guaranteedapproximately $10.8 million.In accordance with customary business practices in Europe, we have $4.0 million in bank and third party warranty and performance guarantee facilities as ofAugust 31, 2014. To date no amounts have been drawn under these guarantee facilities.On July 18, 2014, we and Watco contributed our respective repair, refurbishment and retrofitting operations to GBW, an unconsolidated 50/50 joint venture.We made a $10 million cash contribution at closing and an additional $2.5 million cash contribution in August 2014. We are likely to make additionalcapital contributions or loans to GBW in the future including an additional $2.5 million capital contribution which has already been committed.We expect existing funds and cash generated from operations, together with proceeds from financing activities including borrowings under existing creditfacilities and long-term financings, to be sufficient to fund dividends, working capital needs, planned capital expenditures and expected debt repayments forthe next twelve months.The following table shows our estimated future contractual cash obligations as of August 31, 2014: Years Ending August 31, (In thousands) Total 2015 2016 2017 2018 2019 Thereafter Notes payable $445,091 $7,720 $22,465 $7,437 $237,219 $7,000 $163,250 Interest 61,541 14,129 13,856 13,229 13,015 4,749 2,563 Revolving notes 13,081 13,081 – – – – – Operating leases 16,799 4,928 2,951 2,835 2,170 1,610 2,305 Railcar leases 10,721 6,007 2,093 1,569 1,052 – – Other 2,908 2,793 90 25 – – – $550,141 $48,658 $41,455 $25,095 $253,456 $13,359 $168,118 A portion of the estimated future cash obligation relates to interest on variable rate borrowings. The Greenbrier Companies 2014 Annual Report 37 (1)(1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDue to uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at August 31, 2014, we are unable to estimatethe period of cash settlement with the respective taxing authority. Therefore, approximately $0.2 million in uncertain tax positions have been excluded fromthe contractual table above. See Note 18 to the Consolidated Financial Statements for a discussion on income taxes.Off Balance Sheet ArrangementsWe do not currently have off balance sheet arrangements that have or are likely to have a material current or future effect on our Consolidated FinancialStatements.Critical Accounting Policies and EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgment on the part of managementto arrive at estimates and assumptions on matters that are inherently uncertain. These estimates may affect the amount of assets, liabilities, revenue andexpenses 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. Thoseanticipated amounts may change from when the financial statements are prepared to when the tax returns are filed. Further, because tax filings are subject toreview 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 issuccessful, differences in tax expense or between current and deferred tax items may arise in future periods. Any material effect of such differences would bereflected in the financial statements when management considers the effect probable of occurring and the amount reasonably estimable. Valuation allowancesreduce deferred tax assets to amounts more likely than not be realized based on information available when the financial statements are prepared. Thisinformation 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 maintenanceobligations defined in the underlying lease or management agreement. The estimated maintenance liability is based on maintenance histories for each typeand 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 wecannot predict with certainty the prices, timing and volume of maintenance needed in the future on railcars under long-term leases, this estimate is uncertainand could be materially different from maintenance requirements. The liability is periodically reviewed and updated based on maintenance trends and knownfuture repair or refurbishment requirements. These adjustments could be material due to the inherent uncertainty in predicting future maintenancerequirements.Warranty accruals - Warranty costs to cover a defined warranty period are estimated and charged to operations. The estimated warranty cost is based onhistorical warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historicalinformation for similar product types. These estimates are inherently uncertain as they are based on historical data for existing products and judgment for newproducts. 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 intoconsideration in establishing the accrual or if claims for issues already considered in establishing the accrual exceed expectations, warranty expense mayexceed the accrual for that particular product. Conversely, there is the possibility that claims may be lower than estimates. The warranty accrual isperiodically reviewed and updated based on warranty trends. However, as we cannot predict future claims, the potential exists for the difference in any onereporting period to be material.Environmental costs - At times we may be involved in various proceedings related to environmental matters. We estimate future costs for knownenvironmental remediation requirements and accrue for them when it is probable that we have incurred a liability and the related costs can be reasonablyestimated based on currently available information. If further developments or resolution of an environmental matter result in facts and circumstances 38 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsthat are significantly different than the assumptions used to develop these reserves, the accrual for environmental remediation could be materiallyunderstated or overstated. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study orremediate any environmental issues or when expenditures for which reserves are established are made. Due to the uncertain nature of estimating potentialenvironmental matters, there can be no assurance that we will not become involved in future litigation or other proceedings or, if we were found to beresponsible or liable in any litigation or proceeding, that such costs would not be material to us.Revenue recognition - Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, theprice 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 whenthese products or services are completed, accepted by an unaffiliated customer and contractual contingencies removed. Certain leases are operated under carhire arrangements whereby revenue is earned based on utilization, car hire rates and terms specified in the lease agreement. Car hire revenue is reported from athird party source two months in arrears; however, such revenue is accrued in the month earned based on estimates of use from historical activity and isadjusted to actual as reported. These estimates are inherently uncertain as they involve judgment as to the estimated use of each railcar. Adjustments to actualhave historically not been significant. Revenues from construction of marine barges are either recognized on the percentage of completion method during theconstruction period or on the completed contract method based on the terms of the contract. Under the percentage of completion method, judgment is used todetermine 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 marketrates for these railcars. Pursuant to the guidance in ASC 840-20-40, we evaluate the terms of any remarketing agreements and any contractual provisions thatrepresent retained risk and the level of retained risk based on those provisions. We determine whether the level of retained risk exceeds 10% of the individualfair 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. Ifobjective and reliable evidence of fair value of any element is not available, we will use the element’s estimated selling price for purposes of allocating thetotal 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 assetsare evaluated for impairment. If the forecast undiscounted future cash flows are less than the carrying amount of the assets, an impairment charge to reduce thecarrying 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 theimpairment and could be materially different if circumstances change. If the forecast undiscounted future cash flows exceeded the carrying amount of theassets 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 mayresult in the recognition of goodwill and other intangible assets. The determination of the value of such intangible assets requires management to makeestimates 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 is also tested more frequently if changesin circumstances or the occurrence of events indicates that a potential impairment exists. When changes in circumstances, such as a decline in the marketprice of our common stock, changes in demand or in the numerous variables associated with the judgments, assumptions and estimates made in assessing theappropriate valuation of goodwill indicate the carrying amount of certain indefinite lived assets may not be recoverable, the assets are evaluated forimpairment. Among other things, our The Greenbrier Companies 2014 Annual Report 39 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsassumptions used in the valuation of goodwill include growth of revenue and margins, market multiples, discount rates and increased cash flows over time. Ifactual operating results were to differ from these assumptions, it may result in an impairment of our goodwill.The provisions of Accounting Standards Codification (ASC) 350, Intangibles - Goodwill and Other, require that we perform a two-step impairment test ongoodwill. 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 ona weighting of income and market approaches. Under the income approach, we calculate the fair value of a reporting unit based on the present value ofestimated future cash flows. Under the market approach, we estimate the fair value based on observed market multiples for comparable businesses. The secondstep 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 thefirst 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 byallocating 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 combinationand 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 amountsassigned 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 thereporting unit goodwill exceeds the implied fair value of that goodwill. The goodwill balance relates to the Wheels, Repair & Parts segment.New Accounting PronouncementsSee Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 40 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency Exchange RiskWe have operations in Mexico and Poland that conduct business in their local currencies as well as other regional currencies. To mitigate the exposure totransactions denominated in currencies other than the functional currency of each entity, we enter into foreign currency forward exchange contracts to protectthe margin on a portion of forecast foreign currency sales. At August 31, 2014, $91.0 million of forecast sales in Europe were hedged by foreign exchangecontracts. Because of the variety of currencies in which purchases and sales are transacted and the interaction between currency rates, it is not possible topredict 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 foreignsubsidiaries. At August 31, 2014, net assets of foreign subsidiaries aggregated $59.4 million and a 10% strengthening of the U.S. dollar relative to the foreigncurrencies would result in a decrease in equity of $5.9 million, or 1.2% of Total equity Greenbrier. This calculation assumes that each exchange rate wouldchange in the same direction relative to the U.S. dollar.Interest Rate RiskWe have managed a portion of our variable rate debt with interest rate swap agreements, effectively converting $99.1 million of variable rate debt to fixedrate 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 August 31,2014, 75% of our outstanding debt has fixed rates and 25% has variable rates. At August 31, 2014, a uniform 10% increase in interest rates would result inapproximately $0.2 million of additional annual interest expense. The Greenbrier Companies 2014 Annual Report 41 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersThe Greenbrier Companies, Inc.We have audited the accompanying consolidated balance sheets of The Greenbrier Companies, Inc. and subsidiaries (the “Company”) as of August 31, 2014and 2013, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the years in the three-yearperiod ended August 31, 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to expressan opinion on these consolidated financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The GreenbrierCompanies, Inc. and subsidiaries as of August 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-yearperiod ended August 31, 2014, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal controlover financial reporting as of August 31, 2014, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO), and our report dated October 30, 2014 expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting./s/ KPMG LLPPortland, OregonOctober 30, 2014 42 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAConsolidated Balance SheetsAS OF AUGUST 31, (In thousands) 2014 2013 Assets Cash and cash equivalents $184,916 $97,435 Restricted cash 20,140 8,807 Accounts receivable, net 199,679 154,848 Inventories 305,656 316,783 Leased railcars for syndication 125,850 68,480 Equipment on operating leases, net 258,848 305,468 Property, plant and equipment, net 243,698 201,533 Investment in unconsolidated affiliates 69,359 10,739 Goodwill 43,265 57,416 Intangibles and other assets, net 65,757 68,232 $1,517,168 $1,289,741 Liabilities and Equity Revolving notes $13,081 $48,209 Accounts payable and accrued liabilities 383,289 315,938 Deferred income taxes 81,383 86,040 Deferred revenue 20,603 8,838 Notes payable 445,091 373,889 Commitments and contingencies (Notes 21 & 22) Equity:Greenbrier Preferred stock - without par value; 25,000 shares authorized; none outstanding – – Common stock - without par value; 50,000 shares authorized; 27,364 and 28,084 outstanding at August 31, 2014 and2013 – – Additional paid-in capital 235,763 259,864 Retained earnings 282,559 174,842 Accumulated other comprehensive loss (6,932) (6,504) Total equity Greenbrier 511,390 428,202 Noncontrolling interest 62,331 28,625 Total equity 573,721 456,827 $1,517,168 $1,289,741 The accompanying notes are an integral part of these financial statements. The Greenbrier Companies 2014 Annual Report 43 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsConsolidated Statements of OperationsYEARS ENDED AUGUST 31, (In thousands, except per share amounts) 2014 2013 2012 Revenue Manufacturing $1,624,916 $1,215,734 $1,253,964 Wheels, Repair & Parts 495,627 469,222 481,865 Leasing & Services 83,419 71,462 71,887 2,203,962 1,756,418 1,807,716 Cost of revenue Manufacturing 1,374,008 1,082,889 1,122,384 Wheels, Repair & Parts 463,938 431,501 433,541 Leasing & Services 43,796 35,655 37,371 1,881,742 1,550,045 1,593,296 Margin 322,220 206,373 214,420 Selling and administrative 125,270 103,175 104,596 Net gain on disposition of equipment (15,039) (18,072) (8,964) Gain on contribution to joint venture (29,006) – – Goodwill impairment – 76,900 – Restructuring charges 1,475 2,719 – Earnings from operations 239,520 41,651 118,788 Other costs Interest and foreign exchange 18,695 22,158 24,809 Earnings before income tax and earnings (loss) from unconsolidated affiliates 220,825 19,493 93,979 Income tax expense (72,401) (25,060) (32,393) Earnings (loss) before earnings (loss) from unconsolidated affiliates 148,424 (5,567) 61,586 Earnings (loss) from unconsolidated affiliates 1,355 186 (416) Net earnings (loss) 149,779 (5,381) 61,170 Net earnings attributable to noncontrolling interest (37,860) (5,667) (2,462) Net earnings (loss) attributable to Greenbrier $111,919 $(11,048) $58,708 Basic earnings (loss) per common share: $3.97 $(0.41) $2.21 Diluted earnings (loss) per common share: $3.44 $(0.41) $1.91 Weighted average common shares: Basic 28,164 26,678 26,572 Diluted 34,209 26,678 33,718 Dividends declared per common share $0.15 $– $– The accompanying notes are an integral part of these financial statements. 44 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsConsolidated Statements of Comprehensive Income (Loss)YEARS ENDED AUGUST 31, (In thousands) 2014 2013 2012 Net earnings (loss) $149,779 $(5,381) $61,170 Other comprehensive income (loss) Translation adjustment 116 1,056 (4,168) Reclassification of derivative financial instruments recognized in net earnings (loss) 471 (561) 4,988 Unrealized gain (loss) on derivative financial instruments (1,019) (399) 708 Other (net of tax effect) 10 (203) (130) (422) (107) 1,398 Comprehensive income (loss) 149,357 (5,488) 62,568 Comprehensive income attributable to noncontrolling interest (37,866) (5,695) (2,334) Comprehensive income (loss) attributable to Greenbrier $111,491 $(11,183) $60,234 Net of tax of effect of $0.5 million, $0.3 million and $1.3 million for the years ended August 31, 2014, 2013 and 2012. Net of tax of effect of $0.7 million, $0.2 million and $0.3 million for the years ended August 31, 2014, 2013 and 2012.The accompanying notes are an integral part of these financial statements. The Greenbrier Companies 2014 Annual Report 45 1212Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsConsolidated Statements of Equity Attributable to Greenbrier (In thousands) CommonStockShares AdditionalPaid-inCapital RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) TotalAttributableto Greenbrier Attributable toNoncontrollingInterest TotalEquity Balance September 1, 2011 25,186 $242,286 $127,182 $(7,895) $361,573 $14,328 $375,901 Net earnings – – 58,708 – 58,708 2,462 61,170 Other comprehensive income (loss), net – – – 1,526 1,526 (128) 1,398 Investment by joint venture partner – – – – – 1,362 1,362 Noncontrolling interest adjustments – – – – – 3,844 3,844 Restricted stock awards (net ofcancellations and expense) 461 9,392 – – 9,392 – 9,392 Unamortized restricted stock – (9,392) – – (9,392) – (9,392) Restricted stock amortization – 8,343 – – 8,343 – 8,343 Warrants exercised 1,496 – – – – – – Excess tax benefit from restricted stock awards – 1,627 – – 1,627 – 1,627 Balance August 31, 2012 27,143 $252,256 $185,890 $(6,369) $431,777 $21,868 $453,645 Net earnings (loss) – – (11,048) – (11,048) 5,667 (5,381) Other comprehensive income (loss), net – – – (135) (135) 28 (107) Noncontrolling interest adjustments – – – – – (2,144) (2,144) Investment by joint venture partner – – – – – 3,206 3,206 Restricted stock awards (net ofcancellations and expense) 27 8,913 – – 8,913 – 8,913 Unamortized restricted stock – (8,921) – – (8,921) – (8,921) Restricted stock amortization – 6,716 – – 6,716 – 6,716 Excess tax benefit from restrictedstock awards – 900 – – 900 – 900 Warrants exercised 914 – – – – – – Balance August 31, 2013 28,084 $259,864 $174,842 $(6,504) $428,202 $28,625 $456,827 Net earnings – – 111,919 – 111,919 37,860 149,779 Other comprehensive income, net – – – (428) (428) 6 (422) Noncontrolling interest adjustments – – – – – 2,774 2,774 Investment by joint venture partner – – – – – 419 419 Joint venture partner distribution declared – – – – – (7,353) (7,353) Restricted stock awards (net ofcancellations and expense) 44 11,303 – – 11,303 – 11,303 Unamortized restricted stock – (12,360) – – (12,360) – (12,360) Restricted stock amortization – 11,285 – – 11,285 – 11,285 Excess tax benefit from restrictedstock awards – 109 – – 109 – 109 Cash dividends – – (4,202) – (4,202) – (4,202) Repurchase of stock (764) (34,438) – – (34,438) – (34,438) Balance August 31, 2014 27,364 $235,763 $282,559 $(6,932) $511,390 $62,331 $573,721 The accompanying notes are an integral part of these financial statements. 46 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsConsolidated Statements of Cash FlowsYEARS ENDED AUGUST 31, (In thousands) 2014 2013 2012 Cash flows from operating activities: Net earnings (loss) $149,779 $(5,381) $61,170 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Deferred income taxes (4,687) (9,662) 11,617 Depreciation and amortization 40,422 41,447 42,371 Net gain on disposition of equipment (15,039) (18,072) (8,964) Accretion of debt discount – 2,455 3,259 Stock based compensation expense 11,285 6,302 8,757 Gain on contribution to joint venture (29,006) – – Goodwill impairment – 76,900 – Other 3,350 (1,055) 4,905 Decrease (increase) in assets: Accounts receivable, net (23,749) (7,323) 37,763 Inventories (9,675) 19,045 3,709 Leased railcars for syndication (57,779) 22,881 (76,071) Other (4,069) 969 – Increase (decrease) in liabilities: Accounts payable and accrued liabilities 63,362 (15,429) 16,236 Deferred revenue 11,713 (8,485) 11,304 Net cash provided by operating activities 135,907 104,592 116,056 Cash flows from investing activities: Proceeds from sales of assets 54,235 75,338 33,560 Capital expenditures (70,227) (60,827) (117,885) Increase in restricted cash (333) (2,530) (4,164) Investment in and advances to unconsolidated affiliates (13,753) (2,240) (506) Other – (3,582) 48 Net cash provided by (used in) investing activities (30,078) 6,159 (88,947) Cash flows from financing activities: Net changes in revolving notes with maturities of 90 days or less – (16,396) (57,302) Proceeds from revolving notes with maturities longer than 90 days 37,819 38,177 63,773 Repayments of revolving notes with maturities longer than 90 days (72,947) (34,966) (33,934) Proceeds from issuance of notes payable 200,000 2,186 2,750 Repayments of notes payable (128,797) (58,831) (7,070) Debt issuance costs (382) – – Increase in restricted cash (11,000) – – Repurchase of stock (33,583) – – Dividends (4,123) Cash distribution to joint venture partner (5,076) – – Investment by joint venture partner 419 3,206 1,362 Excess tax benefit from restricted stock awards 109 900 1,627 Other – (8) – Net cash used in financing activities (17,561) (65,732) (28,794) Effect of exchange rate changes (787) (1,155) 5,034 Increase in cash and cash equivalents 87,481 43,864 3,349 Cash and cash equivalents Beginning of period 97,435 53,571 50,222 End of period $184,916 $97,435 $53,571 Cash paid during the period for: Interest $14,347 $14,964 $12,737 Income taxes, net $69,263 $29,680 $8,601 Non-cash activity Transfer of Inventories to Accounts receivable, net $20,986 $– $– Dividends declared and accrued in Accounts payable and accrued liabilities $79 $– $– Capital expenditures accrued in Accounts payable and accrued liabilities $3,349 $– $– Transfer of Equipment on operating leases to Inventories $– $17,826 $– Transfer of Leased railcars for syndication to Equipment on operating leases $– $6,437 $8,963 Transfer of Property, plant and equipment, net to Intangibles and other assets, net $– $1,856 $– The accompanying notes are an integral part of these financial statements. The Greenbrier Companies 2014 Annual Report 47 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNotes to Consolidated Financial StatementsNote 1 - Nature of OperationsThe Greenbrier Companies, Inc. and its subsidiaries (“Greenbrier” or the “Company”) through July 18, 2014 operated in three reportable segments:Manufacturing; Wheels, Repair & Parts; and Leasing & Services. The three segments are operationally integrated. On July 18, 2014, the Company and WatcoCompanies, LLC (“Watco”), its joint venture partner, contributed its respective repair, refurbishment and retrofitting operations to GBW Railcar ServicesLLC (“GBW”), an unconsolidated 50/50 joint venture which became the Company’s fourth reportable segment (GBW Joint Venture) upon formation. TheManufacturing segment, operating from facilities in the United States, Mexico and Poland, produces double-stack intermodal railcars, tank cars, conventionalrailcars, automotive railcar products and marine vessels. The Wheels, Repair & Parts segment performs wheel and axle servicing in North America andproduction of a variety of parts for the railroad industry. The Leasing & Services segment owns approximately 8,600 railcars and provides managementservices for approximately 238,000 railcars for railroads, shippers, carriers, institutional investors and other leasing and transportation companies in NorthAmerica. The Company’s GBW joint venture provides railcar repair, refurbishment, retrofitting and maintenance services through 39 shops throughout NorthAmerica, 14 of which are currently tank car certified by the Association of American Railroads (“AAR”) and one location operated exclusively by theCompany for GBW. Greenbrier also produces rail castings through an unconsolidated joint venture.The Wheels, Repair & Parts segment included the results of operations for the Company’s repair, refurbishment and retrofitting operations (“Repair”) throughJuly 18, 2014. On July 18, 2014 the Company and Watco, its joint venture partner, contributed its respective Repair operations to GBW, an unconsolidated50/50 joint venture. After July 18, 2014, the results of GBW were included as part of Earnings (loss) from unconsolidated affiliates as the Company accountsfor its interest in GBW under the equity method of accounting. See Note 3 – Gain on Contribution to Joint Venture for additional information.Note 2 - Summary of Significant Accounting PoliciesPrinciples of consolidation - The financial statements include the accounts of the Company and its subsidiaries in which it has a controlling interest. Allintercompany transactions and balances are eliminated upon consolidation.Unclassified Balance Sheet - The balance sheets of the Company are presented in an unclassified format as a result of significant leasing activities for whichthe current or non-current distinction is not relevant. In addition, the activities of the Manufacturing; Wheels, Repair & Parts; and Leasing & Servicessegments are so intertwined that in the opinion of management, any attempt to separate the respective balance sheet categories would not be meaningful andmay lead to the development of misleading conclusions by the reader.Foreign currency translation - Certain operations outside the U.S., primarily in Poland, prepare financial statements in currencies other than the U.S. dollar.Revenues and expenses are translated at average exchange rates for the year, while assets and liabilities are translated at year-end exchange rates. Translationadjustments are accumulated as a separate component of equity in other comprehensive income (loss). The foreign currency translation adjustment balanceswere $4.8 million, $4.9 million and $6.0 million as of August 31, 2014, 2013 and 2012.Cash and cash equivalents - Cash may temporarily be invested primarily in money market funds. All highly-liquid investments with a maturity of threemonths or less at the date of acquisition are considered cash equivalents.Restricted cash - Restricted cash relates to amounts held in restricted accounts to support a target minimum rate of return on certain agreements and a passthrough account for activity related to management services provided for certain third party customers. In addition, restricted cash relates to cash collateralassociated with a term loan. 48 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAccounts receivable - Accounts receivable includes receivables from related parties (see Note 17 – Related Party Transactions) and is stated net of allowancefor doubtful accounts of $2.0 million and $3.9 million as of August 31, 2014 and 2013. As of August 31, (In thousands) 2014 2013 2012 Allowance for doubtful accounts Balance at beginning of period $3,894 $3,525 $3,913 Additions, net of reversals 604 543 641 Usage (2,524) (285) (663) Currency translation effect 59 111 (366) Balance at end of period $2,033 $3,894 $3,525 Inventories - Inventories are valued at the lower of cost or market using the first-in first-out method. Work-in-process includes material, labor and overhead.Leased railcars for syndication - Leased railcars for syndication consist of newly-built railcars manufactured at one of the Company’s facilities or railcarspurchased from a third party, which have been placed on lease to a customer and which the Company intends to sell to an investor with the lease attached.These railcars are generally anticipated to be sold within six months of delivery of the last railcar or six months from when the Company acquires the railcarfrom a third party and are not depreciated during that period. The Company does not believe any economic value of a railcar is lost in the first six months;therefore the Company does not depreciate these assets. In the event the railcars are not sold in the first six months, the railcars are either held in Leasedrailcars for syndication and are depreciated or are transferred to Equipment on operating leases and are depreciated. As of August 31, 2014, Leased railcars forsyndication was $125.9 million compared to $68.5 million as of August 31, 2013.Equipment on operating leases, net - Equipment on operating leases is stated net of accumulated depreciation. Depreciation to estimated salvage value isprovided on the straight-line method over the estimated useful lives of up to thirty-five years. Management periodically reviews salvage value estimatesbased on current scrap prices and what the Company expects to receive upon disposal.Property, plant and equipment - Property, plant and equipment is stated at cost net of accumulated depreciation. Depreciation is provided on the straight-linemethod over estimated useful lives which are as follows: Depreciable Life Buildings and improvements 10 – 25 years Machinery and equipment 3 – 15 years Other 3 – 7 years Goodwill - Goodwill is recorded when the purchase price of an acquisition exceeds the fair market value of the net assets acquired. Goodwill is not amortizedand is tested for impairment at least annually and more frequently if material changes in events or circumstances arise. The provisions of ASC 350,Intangibles – Goodwill and Other, require the Company to perform a two-step impairment test on goodwill. In the first step, the Company compares the fairvalue of each reporting unit with its carrying value. The second step of the goodwill impairment test is required only in situations where the carrying value ofthe reporting unit exceeds its fair value as determined in the first step. In the second step, the Company compares the implied fair value of goodwill to itscarrying value. An impairment loss is recorded to the extent that the carrying amount of the reporting unit goodwill exceeded the implied fair value of thatgoodwill.Intangible and other assets, net - Intangible assets are recorded when a portion of the purchase price of an acquisition is allocated to assets such as customercontracts and relationships, trade names, certifications and backlog. Intangible assets with finite lives are amortized using the straight line method over theirestimated The Greenbrier Companies 2014 Annual Report 49 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsuseful lives and primarily include long-term customer agreements which are amortized over 5 to 20 years. Other assets include loan fees and debt acquisitioncosts which are capitalized and amortized as interest expense over the life of the related borrowings.Impairment of long-lived assets - When changes in circumstances indicate the carrying amount of certain long-lived assets may not be recoverable, the assetsare evaluated for impairment. If the forecasted undiscounted future cash flows are less than the carrying amount of the assets, an impairment charge to reducethe carrying value of the assets to estimated realizable value is recognized in the current period. No impairment was recorded in the years ended August 31,2014, 2013 and 2012.Maintenance obligations - The Company is responsible for maintenance on a portion of the managed and owned lease fleet under the terms of maintenanceobligations defined in the underlying lease or management agreement. The estimated liability is based on maintenance histories for each type and age ofrailcar. The liability, included in Accounts payable and accrued liabilities, is reviewed periodically and updated based on maintenance trends and knownfuture repair or refurbishment requirements.Warranty accruals - Warranty costs are estimated and charged to operations to cover a defined warranty period. The estimated warranty cost is based onhistory of warranty claims for each particular product type. For new product types without a warranty history, preliminary estimates are based on historicalinformation for similar product types. The warranty accruals, included in Accounts payable and accrued liabilities, are reviewed periodically and updatedbased on warranty trends.Income taxes - The liability method is used to account for income taxes. Deferred income taxes are provided for the temporary effects of differences betweenassets and liabilities recognized for financial statement and income tax reporting purposes. Valuation allowances reduce deferred tax assets to an amount thatwill more likely than not be realized. As a result, we recognize liabilities for uncertain tax positions based on whether evidence indicates that it is more likelythan not that the position will be sustained on audit. It is inherently difficult and subjective to estimate such amounts, as this requires us to estimate theprobability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. Changes in assumptions may result inthe recognition of a tax benefit or an additional charge to the tax provision.Noncontrolling interest - The Company has a joint venture with Grupo Industrial Monclova, S.A. (“GIMSA”) that manufactures new railroad freight cars forthe North American marketplace at GIMSA’s existing manufacturing facility located in Frontera, Mexico. Each party owns a 50% interest in the joint venture.The financial results of this operation are consolidated for financial reporting purposes as the Company maintains a controlling interest as evidenced by theright to appoint the majority of the board of directors, control over accounting, financing, marketing and engineering, and approval and design of products.The noncontrolling interest reflected in the Company’s consolidated financial statements primarily represents the joint venture partner’s equity in thisventure.Accumulated other comprehensive loss – Accumulated other comprehensive loss, net of tax as appropriate, consisted of the following: (In thousands) UnrealizedLoss onDerivativeFinancialInstruments ForeignCurrencyTranslationAdjustment Other AccumulatedOtherComprehensiveLoss Balance, August 31, 2013 $(1,053) $(4,923) $(528) $(6,504) 2014 activity (548) 110 10 (428) Balance, August 31, 2014 $(1,601) $(4,813) $(518) $(6,932) Revenue recognition - Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, theprice is fixed or determinable and collectability is reasonably assured. 50 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRailcars are generally manufactured, repaired or refurbished under firm orders from third parties. Revenue is recognized when new, refurbished or repairedrailcars are completed, accepted by an unaffiliated customer and contractual contingencies removed. Marine revenues are either recognized on the percentageof completion method during the construction period or on the completed contract method based on the terms of the contract. Cash payments received priorto meeting revenue recognition criteria are accounted for in Deferred revenue. Operating lease revenue is recognized as earned under the lease terms. Certainleases are operated under car hire arrangements whereby revenue is earned based on utilization, car hire rates and terms specified in the lease agreement.The Company sells railcars with leases attached to financial investors. In addition the Company will often perform management or maintenance services atmarket rates for these railcars. The Company evaluates the terms of any remarketing agreements and any contractual provisions that represent retained riskand the level of retained risk based on those provisions. The Company applies a 10% threshold to determine whether the level of retained risk exceeds 10%of the individual fair value of the rail cars delivered. For any contracts with multiple elements (i.e. railcars, maintenance, management services, etc) theCompany allocates revenue among the deliverables primarily based upon objective and reliable evidence of the fair value of each element in thearrangement. If objective and reliable evidence of fair value of any element is not available, the company will use its estimated selling price for purposes ofallocating the total arrangement consideration among the elements.Interest and foreign exchange - Includes foreign exchange gains and losses, amortization of loan fee expense, accretion of debt discounts and externalinterest expense. Years ended August 31, (In thousands) 2014 2013 2012 Interest and foreign exchange: Interest and other expense $18,306 $19,203 $22,474 Accretion of convertible debt discount – 2,455 3,259 Foreign exchange (gain) loss 389 500 (924) $18,695 $22,158 $24,809 Research and development - Research and development costs are expensed as incurred. Research and development costs incurred for new productdevelopment during the years ended August 31, 2014, 2013 and 2012 were $3.6 million, $2.0 million and $2.0 million.Forward exchange contracts - Foreign operations give rise to risks from changes in foreign currency exchange rates. Forward exchange contracts withestablished financial institutions are used to hedge a portion of such risk. Realized and unrealized gains and losses are deferred in other comprehensiveincome (loss) and recognized in earnings concurrent with the hedged transaction or when the occurrence of the hedged transaction is no longer consideredprobable. Ineffectiveness is measured and any gain or loss is recognized in foreign exchange gain or loss. Even though forward exchange contracts areentered into to mitigate the impact of currency fluctuations, certain exposure remains, which may affect operating results. In addition, there is risk forcounterparty non-performance.Interest rate instruments - Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt. The net cash amounts paidor received under the agreements are accrued and recognized as an adjustment to interest expense.Net earnings per share - Basic earnings per common share (EPS) excludes the potential dilution that would occur if additional shares were issued uponexercise of outstanding warrants or conversion of bonds. Restricted share grants are treated as outstanding when issued and restricted stock units are nottreated as outstanding when issued. Restricted share grants and restricted stock units are included in weighted average basic common shares outstandingwhen calculating EPS when the Company is in a net earnings position. The Greenbrier Companies 2014 Annual Report 51 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDiluted EPS is calculated using the more dilutive of two approaches. The first approach includes the dilutive effect of outstanding warrants and sharesunderlying the 2026 Convertible notes in the share count using the treasury stock method. The second approach supplements the first by including the “ifconverted” effect of the 2018 Convertible notes. Under the “if converted method”, debt issuance and interest costs, both net of tax, associated with theconvertible notes are added back to net earnings and the share count is increased by the shares underlying the convertible notes. The 2026 Convertible noteswould only be included in the calculation of both approaches if the current average stock price is greater than the initial conversion price using the treasurystock method.Stock-based compensation - The value, at the date of grant, of stock awarded under restricted share grants and restricted stock unit grants is amortized ascompensation expense over the vesting period of one to five years or to the recipients eligible retirement date. Compensation expense recognized related torestricted stock for the years ended August 31, 2014, 2013 and 2012 was $11.3 million, $6.3 million and $8.8 million and was recorded in Selling andadministrative on the Consolidated Statements of Operations.Management estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires judgmenton 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 thefinancial statements. Estimates and assumptions are periodically evaluated and may be adjusted in future periods. Actual results could differ from thoseestimates.Initial Adoption of Accounting Policies - In the first quarter of 2014, the Company adopted an accounting standard update regarding the testing of indefinite-lived intangible assets for impairment. This update was intended to reduce the cost and complexity of testing indefinite-lived intangible assets forimpairment by providing entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. Thisupdate impacted testing steps only and therefore the adoption did not have an impact on the Company’s Consolidated Financial Statements.In the first quarter of 2014, the Company adopted an accounting standard update that amended prior reporting requirements with respect to comprehensiveincome by requiring additional disclosures by component about the amounts reclassified out of accumulated other comprehensive loss. The adoption of thisaccounting standard update did require additional disclosures, but did not have an impact on the Company’s financial position, results of operations or cashflows.Prospective Accounting Changes - In May 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board(“IASB”) issued a jointly converged standard on the recognition of revenue from contracts with customers. The issued guidance converges the criteria forreporting revenue, as well as requiring disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows arising fromthese contracts. Companies can transition to the standard either retrospectively or as a cumulative effective adjustment as of the date of adoption. The newstandard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company plans to adopt this guidancebeginning September 1, 2017. The Company is evaluating the impact of this standard on its consolidated financial statements and disclosures.Note 3 - Gain on Contribution to Joint VentureOn July 18, 2014 the Company and Watco (Greenbrier and Watco are referred to collectively as the “Members”) contributed its respective railcar repair,refurbishment, retrofitting and maintenance operations to a newly formed entity, GBW, a 50/50 unconsolidated joint venture. The Company accounts for itsinterest in GBW under the equity method of accounting. As of August 31, 2014, the GBW joint venture operates 38 railcar repair, refurbishment andretrofitting shops previously part of the Company’s and Watco’s networks.Each Member contributed its respective operations, $10 million cash at closing and other assets, including intangible assets, to GBW and agreed to lease toGBW real and personal properties which had been previously 52 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsused by the Member in its railcar repair businesses in exchange for membership interests in GBW. Each Member also sold its repair inventory to GBW at itsbook value. Each Member retained its pre-closing accounts receivable, accounts payable, and other pre-closing liabilities and obligations. In addition, eachMember made an additional $2.5 million capital contribution to GBW during 2014. In addition to the initial contributions described above, each Member isrequired to fund GBW through additional capital contributions and/or loans to GBW as provided for in the annual business plan.GBW is managed by a four member board of managers composed of two managers appointed by Watco and two managers appointed by the Company. Thevoting power of the managers is based on the Members’ relative sharing ratios which is 50/50 as of August 31, 2014. The managers of GBW approve theannual business plan, which is to provide for GBW’s anticipated funding needs for operations and capital expenditures and other matters.Upon formation of GBW, the Company recognized a pre-tax non-cash gain of $29.0 million for the year ended August 31, 2014 which was calculated as thefair value of the Company’s 50% share in GBW, less cash and intangibles contributed to GBW and an allocation of goodwill attributed to the repair businessthe Company contributed to GBW. The gain was included as Gain on Contribution to Joint Venture in the Consolidated Statements of Operations. TheCompany also recorded an investment in unconsolidated affiliates on the Consolidated Balance Sheets. The investment in unconsolidated affiliatesattributed the Company’s interest in GBW was $56.3 million as of August 31, 2014.Note 4 - RestructuringDuring 2013, the Company implemented a restructuring plan to sell or close certain Wheels, Repair & Parts facilities to enhance margins and improve capitalefficiency and completed the restructuring plan during 2014. Restructuring charges related to this plan totaled $1.5 million and $2.7 million for the yearsended August 31, 2014 and 2013 and were included in the Consolidated Statement of Operations. All of the restructuring charges for the years endedAugust 31, 2014 and 2013 and the restructuring reserve related to the Company’s Wheels, Repair & Parts segment. (In thousands) Accrual atAugust 31,2013 Charged toExpense Paid orSettled Accrual atAugust 31,2014 Employee termination costs $1,409 $1,290 $2,699 $ – Other costs 299 185 484 – Balance, August 31, 2014 $1,708 $1,475 $3,183 $ – (In thousands) Accrual atAugust 31,2012 Charged toExpense Paid orSettled Accrual atAugust 31,2013 Employee termination costs $ – $1,610 $201 $1,409 Contract termination costs – 50 50 – Other costs – 1,059 760 299 Balance, August 31, 2013 $ – $2,719 $1,011 $1,708 Note 5 - Inventories As of August 31, (In thousands) 2014 2013 Manufacturing supplies and raw materials $235,903 $217,182 Work-in-process 48,853 48,990 Finished goods 23,766 54,839 Excess and obsolete adjustment (2,866) (4,228) $305,656 $316,783 The Greenbrier Companies 2014 Annual Report 53 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents As of August 31, (In thousands) 2014 2013 2012 Excess and obsolete adjustment Balance at beginning of period $4,228 $5,132 $4,450 Charge to cost of revenue 1,945 2,661 3,042 Disposition of inventory (3,307) (3,614) (2,210) Currency translation effect – 49 (150) Balance at end of period $2,866 $4,228 $5,132 Note 6 - Equipment on Operating Leases, netEquipment on operating leases is reported net of accumulated depreciation of $93.9 million and $97.8 million as of August 31, 2014 and 2013. Depreciationexpense was $9.8 million, $12.0 million and $13.6 million as of August 31, 2014, 2013 and 2012. In addition, certain railcar equipment leased-in by theCompany on operating leases (see Note 21 Lease Commitments) is subleased to customers under non-cancelable operating leases. Aggregate minimum futureamounts receivable under all non-cancelable operating leases and subleases are as follows: (In thousands) Year ending August 31, 2015 $19,272 2016 10,158 2017 6,766 2018 4,013 2019 1,907 Thereafter 941 $43,057 Certain equipment is also operated under daily, monthly or car hire utilization arrangements. Associated revenue amounted to $24.8 million, $24.3 millionand $23.4 million for the years ended August 31, 2014, 2013 and 2012.Note 7 - Property, Plant and Equipment, net As of August 31, (In thousands) 2014 2013 Land and improvements $38,356 $36,132 Machinery and equipment 242,911 233,737 Buildings and improvements 118,795 110,030 Construction in progress 58,164 19,206 Other 38,636 32,888 496,862 431,993 Accumulated depreciation (253,164) (230,460) $243,698 $201,533 Depreciation expense was $25.8 million, $25.1 million and $23.3 million as of August 31, 2014, 2013 and 2012.Note 8 - GoodwillThe Company’s goodwill balance as of August 31, 2014 and 2013 related to our Wheels, Repair & Parts segment. The gross goodwill balance beforeaccumulated goodwill impairment losses and other reductions was $195.8 million as of August 31, 2014. The total accumulated goodwill impairment losseswere $128.2 million and other reductions of $24.3 million as of August 31, 2014. 54 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsChanges in the carrying value of goodwill are as follows: (In thousands) Manufacturing Wheels, Repair& Parts Leasing& Services Total Balance August 31, 2013 $ – $57,416 $ – $57,416 Reductions – (14,151) – (14,151) Balance August 31, 2014 $ – $43,265 $ – $43,265 Relates to the reduction in goodwill associated with the Company’s repair, refurbishment and retrofitting operations contributed to the GBW joint venture in July 2014.The Company performs a goodwill impairment test annually during the third quarter. Goodwill is also tested more frequently if changes in circumstances orthe occurrence of events indicates that a potential impairment exists. The provisions of ASC 350, Intangibles – Goodwill and Other, require the Company toperform a two-step impairment test on goodwill.In the first step, the Company compares the fair value of each reporting unit with its carrying value. The Company determines the fair value of the reportingunit based on a weighting of income and market approaches. Under the income approach, the Company calculates the fair value of a reporting unit based onthe present value of estimated future cash flows. Under the market approach, the Company estimates the fair value based on observed market multiples forcomparable businesses.In the second step, the Company compares the implied fair value of goodwill to its carrying value. The implied fair value of goodwill is determined byallocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combinationand 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 amountsassigned to its assets and liabilities is considered the implied fair value of goodwill. An impairment loss is recorded to the extent that the carrying amount ofthe reporting unit goodwill exceeded the implied fair value of that goodwill.The Company completed its annual goodwill impairment test during the third quarter of 2014 and an interim goodwill impairment test during the fourthquarter of 2014 as a result of contributing its repair, refurbishment and retrofitting operations to the GBW joint venture. See Note 3 – Gain on Contribution toJoint Venture for additional information. The Company concluded in both tests that goodwill was not impaired.The Company completed its annual goodwill impairment test during the third quarter of 2013 and a pre-tax non-cash impairment charge of $76.9 million wasrecorded for the year ended August 31, 2013, related to the Wheels, Repair & Parts segment, as the carrying amount exceeded the implied fair value ofgoodwill.In July 2014, the Company and Watco formed GBW, a 50/50 joint venture. The Company contributed cash at closing and other assets to GBW. As a result,the Company reduced goodwill by $14.2 million during the year ended August 31, 2014, which relates to goodwill associated with the Company’s repair,refurbishment and retrofitting operations contributed to GBW.Note 9 - Intangibles and Other Assets, netIntangible assets that are determined to have finite lives are amortized over their useful lives. Intangible assets with indefinite useful lives are not amortizedand are periodically evaluated for impairment. The Greenbrier Companies 2014 Annual Report 55 (1)(1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table summarizes the Company’s identifiable intangible and other assets balance: As of August 31, (In thousands) 2014 2013 Intangible assets subject to amortization: Customer relationships $65,023 $66,288 Accumulated amortization (30,282) (26,964) Other intangibles 3,699 4,967 Accumulated amortization (3,156) (4,162) 35,284 40,129 Intangible assets not subject to amortization 912 912 Prepaid and other assets 11,347 10,601 Nonqualified savings plan investments 10,223 7,687 Debt issuance costs, net 7,602 7,802 Assets held for sale 389 1,101 $65,757 $68,232 Amortization expense for the years ended August 31, 2014, 2013 and 2012 was $4.5 million, $4.3 million and $5.6 million. Amortization expense for theyears ending August 31, 2015, 2016, 2017, 2018 and 2019 is expected to be $3.7 million, $3.7 million, $3.6 million, $3.4 million and $3.4 million.Note 10 - Revolving NotesSenior secured credit facilities, consisting of three components, aggregated to $359.1 million as of August 31, 2014.As of August 31, 2014, a $290.0 million revolving line of credit, maturing June 2016, secured by substantially all the Company’s assets in the U.S. nototherwise pledged as security for term loans, was available to provide working capital and interim financing of equipment, principally for the U.S. andMexican operations. Advances under this facility bear interest at LIBOR plus 2.25% or Prime plus 1.25% depending on the type of borrowing. Availableborrowings under the credit facility are generally based on defined levels of inventory, receivables, property, plant and equipment and leased equipment, aswell as total debt to consolidated capitalization and fixed charges coverage ratios.As of August 31, 2014, lines of credit totaling $19.1 million secured by certain of the Company’s European assets, with various variable rates that range fromWarsaw Interbank Offered Rate (“WIBOR”) plus 1.2% to WIBOR plus 1.5%, were available for working capital needs of the European manufacturingoperation. European credit facilities are continually being renewed. Currently these European credit facilities have maturities that range from December 2014through June 2015.As of August 31, 2014, the Company’s Mexican joint venture had two lines of credit totaling $50.0 million. The first line of credit provides up to $20.0million and is secured by certain of the joint venture’s accounts receivable and inventory. Advances under this facility bear interest at LIBOR plus 2.5%. TheMexican joint venture will be able to draw amounts available under this facility through January 2015. The second line of credit provides up to $30.0million and is fully guaranteed by each of the joint venture partners, including the Company. Advances under this facility bear interest at LIBOR plus 2.0%.The Mexican joint venture will be able to draw against this facility through January 2015.As of August 31, 2014, outstanding borrowings under the senior secured credit facilities consisted of $9.6 million in letters of credit under the NorthAmerican credit facility and $13.1 million outstanding under the Mexican joint venture credit facilities. 56 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs of August 31, 2013, outstanding borrowings under the senior secured credit facilities consisted of $6.8 million in letters of credit under the NorthAmerican credit facility and $48.2 million outstanding under the Mexican joint venture credit facilities.Note 11 - Accounts Payable and Accrued Liabilities As of August 31, (In thousands) 2014 2013 Trade payables $204,744 $163,490 Other accrued liabilities 66,421 70,691 Accrued payroll and related liabilities 64,959 42,047 Income taxes payable 19,709 13,094 Accrued maintenance 14,329 11,420 Accrued warranty 9,340 12,128 Other 3,787 3,068 $383,289 $315,938 Note 12 - Maintenance and Warranty Accruals As of August 31, (In thousands) 2014 2013 2012 Accrued maintenance Balance at beginning of period $11,420 $11,475 $10,865 Charged to cost of revenue 11,423 9,003 10,750 Payments (8,514) (9,058) (10,140) Balance at end of period $14,329 $11,420 $11,475 Accrued warranty Balance at beginning of period $12,128 $9,221 $8,645 Charged to cost of revenue 2,205 6,157 2,496 Payments (5,122) (3,315) (1,746) Currency translation effect 129 65 (174) Balance at end of period $9,340 $12,128 $9,221 Note 13 - Notes Payable As of August 31, (In thousands) 2014 2013 Convertible senior notes, due 2018 $230,000 $230,000 Convertible senior notes, due 2026 14,856 14,856 Term loans 199,985 128,783 Other notes payable 250 250 $445,091 $373,889 Convertible senior notes, due 2018, bear interest at a fixed rate of 3.5%, paid semi-annually in arrears on April 1and October 1. The convertible notes willmature on April 1, 2018, unless earlier repurchased by the Company or converted in accordance with their terms. Holders may convert at their option at anytime prior to the business day immediately preceding the stated maturity date. The convertible notes are senior unsecured obligations and rank equally withother senior unsecured debt. The convertible notes are convertible into shares of the Company’s common stock, at an initial conversion rate of 26.2838shares per $1,000 principal amount of the notes (which is equal to an initial conversion price of $38.05 per share). The initial conversion rate and conversionprice are subject to adjustment upon the occurrence of certain events, such as distributions, dividends or stock splits. There were $7.9 The Greenbrier Companies 2014 Annual Report 57 st stSource: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsmillion in original debt issuance costs, included in Intangibles and other assets on the Consolidated Balance Sheets, which are being amortized using theeffective interest method. The amortization expense is being included in Interest and foreign exchange on the Consolidated Statements of Operations.Convertible senior notes, due 2026, bear interest at a fixed rate of 2.375%, paid semi-annually in arrears on May 15 and November 15. In May 2013, theCompany retired $52.9 million of its outstanding notes pursuant to a scheduled put option. The Company may be required to also pay contingent interest of0.375% on the notes in certain circumstances. Greenbrier may redeem all or a portion of the notes at a redemption price equal to 100% of the principalamount of the notes plus accrued and unpaid interest. On May 15, 2016 and May 15, 2021 or in the event of certain circumstances or fundamental changes,holders can require the Company to repurchase all or a portion of their notes at a price equal to 100% of the principal amount of the notes plus accrued andunpaid interest. Payment on the convertible notes is guaranteed by substantially all of the Company’s material domestic subsidiaries. The convertible seniornotes are convertible upon the occurrence of specified events into cash and shares, if any, of Greenbrier’s common stock at an initial conversion rate of20.8125 shares per $1,000 principal amount of the notes (which is equal to an initial conversion price of $48.05 per share). The initial conversion rate andconversion price are subject to adjustment upon the occurrence of certain events, such as distributions, dividends or stock splits. The value of the equitycomponent was $14.9 million as of August 31, 2014 and 2013. The debt discount associated with the convertible senior notes was fully accreted using theeffective interest rate method through May 2013 and the accretion expense was included in Interest and foreign exchange on the Consolidated Statements ofOperations. The pre-tax accretion of the debt discount was $2.5 and $3.2 million for the years ended August 31, 2013 and 2012.Term loans are primarily composed of:• In March 2014, the Company refinanced approximately $125 million of existing senior term debt, due in March 2014 and May 2015, secured by a poolof leased railcars with new 6-year $200 million senior term debt also secured by a pool of leased railcars and cash. The new debt bears a floating interestrate of LIBOR plus 1.75% with principal of $1.75 million paid quarterly in arrears and a balloon payment of $159.8 million due at maturity. An interestrate 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%.The principal balance as of August 31, 2014 was $198.3 million.• Other term loans with an aggregate balance of $1.7 million as of August 31, 2014 and maturity dates ranging from June 2015 to February 2018.The notes payable, along with the revolving and operating lines of credit, contain certain covenants with respect to the Company and various subsidiaries,the most restrictive of which, among other things, limit the ability to: incur additional indebtedness or guarantees; pay dividends or repurchase stock; enterinto sale leaseback transactions; create liens; sell assets; engage in transactions with affiliates, including joint ventures and non-U.S. subsidiaries, includingbut not limited to loans, advances, equity investments and guarantees; enter into mergers, consolidations or sales of substantially all the Company’s 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 and rent) coverage.Principal payments on the notes payable are expected as follows: (In thousands) Year ending August 31, 2015 $7,720 2016 22,465 2017 7,437 2018 237,219 2019 7,000 Thereafter 163,250 $445,091 (1)The repayment of the $14.9 million of Convertible senior notes due 2026 is assumed to occur in 2016, which is the next date holders can require the Company to repurchase all or a portion of the notes. 58 The Greenbrier Companies 2014 Annual Report thth(1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNote 14 - Derivative InstrumentsForeign operations give rise to market risks from changes in foreign currency exchange rates. Foreign currency forward exchange contracts with establishedfinancial 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 interestrates on certain debt. The Company’s foreign currency forward exchange contracts and interest rate swap agreements are designated as cash flow hedges, andtherefore the effective portion of unrealized gains and losses is recorded in accumulated other comprehensive income or loss.At August 31, 2014 exchange rates, forward exchange contracts for the purchase of Polish Zloty and the sale of Euro aggregated $91.0 million. The fair valueof the contracts is included in Accounts payable and accrued liabilities when there is a loss, or Accounts receivable when there is a gain, on the ConsolidatedBalance Sheets. As the contracts mature at various dates through December 2015, any such gain or loss remaining will be recognized in manufacturingrevenue 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 theinception of the hedge, the amount classified in accumulated other comprehensive loss would be reclassified to the current year’s results of operations inInterest and foreign exchange.At August 31, 2014, an interest rate swap agreement had a notional amount of $99.1 million and matures March 2020. The fair value of the contract isincluded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets. As interest expense on the underlying debt is recognized, amountscorresponding to the interest rate swap are reclassified from Accumulated other comprehensive loss and charged or credited to interest expense. At August 31,2014 interest rates, approximately $1.8 million would be reclassified to interest expense in the next 12 months.Fair Values of Derivative Instruments Asset Derivatives Liability Derivatives August 31, August 31, 2014 2013 2014 2013 (In thousands) Balance sheetlocation FairValue FairValue Balance sheetlocation FairValue FairValue Derivatives designated as hedging instruments Foreign forward exchange contracts Accounts receivable $129 $819 Accounts payable and accruedliabilities $704 $342 Interest rate swap contracts Other assets – – Accounts payable and accruedliabilities 1,286 1,250 $129 $819 $1,990 $1,592 Derivatives not designated as hedging instruments Foreign forward exchange contracts Accounts receivable $71 $223 Accounts payable and accruedliabilities $5 $40 The Effect of Derivative Instruments on the Statement of Operations Derivatives incash flowhedgingrelationships Location of gain (loss) recognized inincome on derivative Gain (loss) recognized inincome on derivativeYears endedAugust 31, 2014 2013 Foreign forward exchange contract Interest and foreign exchange $87 $(204) Interest rate swap contracts Interest and foreign exchange 17 – $104 $(204) The Greenbrier Companies 2014 Annual Report 59 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDerivatives incash flowhedgingrelationships Gain (loss)recognized in OCI onderivatives (effectiveportion)Yearsended August 31, Location ofgain (loss)reclassifiedfromaccumulatedOCI intoincome Gain (loss)reclassified fromaccumulated OCI intoincome (effectiveportion)Yearsended August 31, Location ofgain (loss)in income onderivative(ineffectiveportion andamountexcluded fromeffectivenesstesting) Gainrecognized onderivative(ineffectiveportion andamountexcluded fromeffectivenesstesting)YearsendedAugust 31, 2014 2013 2014 2013 2014 2013 Foreign forward exchangecontracts $108 $(570) Revenue $741 $1,917 Interest and foreignexchange $1,029 $2,410 Interest rate swap contracts (1,790) (68) Interest and foreignexchange (1,737) (1,679) Interest and foreignexchange – – $(1,682) $(638) $(996) $238 $1,029 $2,410 Note 15 - EquityIn January 2011, the stockholders approved the 2010 Amended and Restated Stock Incentive Plan (formerly known as the 2005 Stock Incentive Plan asamended). This plan provides for the grant of incentive stock options, non-statutory stock options, restricted shares, restricted stock units and stockappreciation rights. There are no stock options or stock appreciation rights outstanding as of August 31, 2014. The Company currently grants restrictedshares and restricted stock units. Restricted share grants are considered outstanding shares of common stock at the time they are issued. The holders ofunvested restricted shares are entitled to voting rights and participation in dividends. The dividends are not forfeitable if the awards are later forfeited prior tovesting. The Company began granting restricted stock units during the year ended August 31, 2013. Shares associated with restricted stock unit awards arenot considered legally outstanding shares of common stock until vested. Restricted stock unit awards, including performance-based awards, are entitled toparticipate in dividends and these awards are considered participating securities and are considered outstanding for earnings per share purposes when theeffect is dilutive.In January 2013, the stockholders approved an amendment to the 2010 Amended and Restated Stock Incentive Plan to increase the total number of sharesreserved for issuance by 1,500,000 shares. As a result, the maximum aggregate number of the Company’s common shares authorized for issuance is4,325,000. On August 31, 2014 there were 1,144,143 shares available for grant compared to 1,384,997 and 259,650 shares available for grant as of the yearsended August 31, 2013 and 2012.During the years ended August 31, 2014, 2013 and 2012, the Company awarded restricted share and restricted stock unit grants totaling 269,665, 387,986and 466,680 shares which include performance-based grants. As of August 31, 2014, there were a total of 495,776 shares associated with unvestedperformance-based grants. The actual number of shares that will vest associated with performance-based grants will vary depending on the Company’sperformance. Approximately 490,752 additional shares may be granted if performance-based restricted share and restricted stock unit awards vest at stretchlevels of performance. These additional shares are associated with restricted share and restricted stock unit awards granted during the years ended August 31,2014, 2013 and 2012. The fair value of awards granted was $13.1 million, $9.2 million and $9.5 million for the years ended August 31, 2014, 2013 and 2012.The value, at the date of grant, of stock awarded under restricted share grants and restricted stock unit grants is amortized as compensation expense over thelesser of the vesting period of one to three years or to the recipients eligible retirement date. Compensation expense recognized related to restricted sharegrants and restricted stock unit grants for the years ended August 31, 2014, 2013 and 2012 was $11.3 million, $6.3 million and $8.8 million and was recordedin Selling and administrative on the Consolidated Statements of Operations. Unamortized compensation cost related to restricted stock grants was $13.6million as of August 31, 2014. 60 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe unvested restricted share and restricted stock unit grants were 816,090 and 913,918 as of August 31, 2014 and 2013. The following table summarizesrestricted share and restricted stock unit grant transactions for shares, both vested and unvested, under the 2010 Amended and Restated Stock Incentive Plan: Shares Balance at August 31, 2011 2,104,953 Granted 466,680 Forfeited (6,283) Balance at August 31, 2012 2,565,350 Granted 387,986 Forfeited (13,333) Balance at August 31, 2013 2,940,003 Granted 269,665 Forfeited (28,811) Balance at August 31, 2014 3,180,857 Balance represents cumulative grants net of forfeitures.Share Repurchase ProgramIn October 2013, the Board of Directors authorized the Company to repurchase up to $50 million of the Company’s common stock. Under the sharerepurchase program, shares of common stock could be purchased on the open market or through privately negotiated transactions from time-to-time. Thetiming and amount of purchases was based upon market conditions, securities law limitations and other factors. The share repurchase program did notobligate the Company to acquire any specific number of shares in any period. During the year ended August 31, 2014, the Company repurchased a total of764,546 shares for approximately $34.4 million. Subsequent to August 31, 2014 and through October 23, 2014, the Company purchased an additional253,016 shares for approximately $15.6 million. The Company completed its $50 million 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 $50 million of the Company’scommon stock. Under the share repurchase program, shares of common stock may be purchased on the open market or through privately negotiatedtransactions from time-to-time. The timing and amount of purchases will be based upon market conditions, securities law limitations and other factors. Theshare repurchase program does not obligate the Company to acquire any specific number of shares in any period. The share repurchase program expiresJune 30, 2016, but may be modified, suspended or discontinued at any time without prior notice.Note 16 - Earnings (Loss) per ShareThe shares used in the computation of the Company’s basic and diluted earnings (loss) per common share are reconciled as follows: Years ended August 31, (In thousands) 2014 2013 2012 Weighted average basic common shares outstanding 28,164 26,678 26,572 Dilutive effect of warrants – – 1,101 Dilutive effect of convertible notes 6,045 – 6,045 Weighted average diluted common shares outstanding 34,209 26,678 33,718 (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 anet earnings position. Weighted average basic common shares outstanding exclude 0.9 million shares of unvested restricted stock and restricted stock units for the year ended August 31, 2013 as they are anti-dilutive due to a net loss. No restricted stock, restricted stock units or warrants were anti-dilutive for the years ended August 31, 2014 and 2012. The Greenbrier Companies 2014 Annual Report 61 (1)(1)(1)(1)(1)(1)(2)(2)(3)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(2)The dilutive effect of common stock equivalents is excluded from the share calculations for the year ended August 31, 2013 due to a net loss.(3)In 2014 and 2012, the dilutive effect of the 2018 Convertible notes are included as they were considered dilutive under the “if converted” method. The dilutive effect of the 2026 Convertible notes wasexcluded from the share calculations as the average stock price for each year presented was less than the initial conversion price of $48.05 and therefore considered anti-dilutive.Dilutive EPS for the years ended August 31, 2014 and 2012 was calculated using the more dilutive of two approaches. The first approach includes thedilutive effect of outstanding warrants and shares underlying the 2026 Convertible notes in the share count using the treasury stock method. The secondapproach 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 theshares underlying the convertible notes. The 2026 Convertible notes would only be included in the calculation of both approaches if the average stock priceis greater than the initial conversion price of $48.05 using the treasury stock method. Years ended August 31, 2014 2012 Net earnings attributable to Greenbrier $111,919 $58,708 Add back: Interest and debt issuance costs on the 2018 Convertible notes, net of tax 5,664 5,677 Earnings before interest and debt issuance costs on convertible notes $117,583 $64,385 Weighted average diluted common shares outstanding 34,209 33,718 Diluted earnings per share $3.44 $1.91 (1)Diluted earnings per share was calculated as follows: Earningsbefore interest and debt issuance costs on convertible notes Weightedaverage diluted common shares outstandingNote 17 - Related Party TransactionsIn July 2014, the Company and Watco completed the formation of GBW, an unconsolidated 50/50 joint venture. The Company accounts for its interest inGBW under the equity method of accounting. The Company leases real and personal property to GBW with lease revenue totaling $0.6 million for the yearended August 31, 2014. The Company sold wheel sets and components to GBW which totaled $1.3 million for the year ended August 31, 2014. GBWprovided repair, refurbishment and retrofitting services to the Company which totaled $0.1 million for the year ended August 31, 2014. The Company had anet receivable of $22.7 million as of August 31, 2014 which consisted primarily of a $21.0 million receivable for the initial sale of inventory to GBW. Underemployee secondment agreements, GBW paid the Company $7.8 million for the year ended August 31, 2014, for reimbursement of employee related costs.In May 2013, the Company purchased an 8% interest in an entity that owns a portfolio of railcar assets that it leases to third parties. The Company accountsfor this investment under the equity method of accounting. The Company sold railcars for a total of $16.0 million and $23.2 million to this entity for the yearended August 31, 2014 and 2013.In March 2012, the Company purchased a 1% interest in three trusts (the “Trusts”). The Company accounts for this investment under the equity method ofaccounting. The Company sold railcars for a total of $38.5 million and $61.1 million to the Trusts for the years ended August 31, 2013 and 2012.In April 2010, WLR–Greenbrier Rail Inc. (“WLR-GBX”) was formed and acquired a lease fleet of nearly 4,000 railcars valued at approximately $256.0million. WLR-GBX is wholly owned by affiliates of WL Ross & Co,, LLC “WL Ross”). The Company performs certain management and advisory servicesand in exchange receives management and other fee income and incentive compensation tied to the performance of WLR-GBX. The Company has also paidcertain incidental fees and agreed to indemnify WLR-GBX and its affiliates against certain liabilities in connection with such advisory services. Under themanagement agreement the Company 62 The Greenbrier Companies 2014 Annual Report (1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsreceived $0.9 million in fees for each of the years ended August 31, 2014, 2013 and 2012. The Company also leases approximately 400 railcars from theWLR-GBX lease fleet. The Company has paid $3.3 million, $3.2 million and $3.1 million in lease expense for the years ended August 31, 2014, 2013 and2012, respectively and has future lease commitments totaling $2.9 million. In addition, Wendy Teramoto, Senior Vice President at WL Ross, is currently adirector of the Company.William Furman, Director, President and Chief Executive Officer of the Company, also serves as director of Schnitzer Steel Industries, Inc. (“Schnitzer”). Inthe normal course of business, the Company sells scrap metal to Schnitzer. During the years ended August 31, 2014, 2013 and 2012, the Company sold scrapmetal to Schnitzer totaling $3.0 million, $8.0 million and $9.2 million, respectively.Mr. Furman is the owner of a private aircraft managed by a private independent management company. From time to time, the Company’s business requirescharter use of privately-owned aircraft. In such instances, it is possible that charters may be placed on Mr. Furman’s aircraft. The Company placed charters onMr. Furman’s aircraft aggregating $0.5 million, $0.2 million and $0.2 million for each of the years ended August 31, 2014, 2013 and 2012.Note 18 - Income TaxesComponents of income tax expense of continuing operations were as follows: Years ended August 31, (In thousands) 2014 2013 2012 Current Federal $49,795 $20,162 $10,750 State 3,791 2,491 2,783 Foreign 23,229 11,465 8,548 76,815 34,118 22,081 Deferred Federal (79) (6,597) 19,426 State (1,142) (2,357) (3,399) Foreign (3,148) (134) (6) (4,369) (9,088) 16,021 Change in valuation allowance (45) 30 (5,710) $72,401 $25,060 $32,392 Income tax expense is computed at rates different from statutory rates. The reconciliation between effective and statutory tax rates on operations is as follows: Years ended August 31, 2014 2013 2012 Federal statutory rate 35.0% 35.0% 35.0% State income taxes, net of federal benefit 1.3 (1.2) (1.9) Impact of foreign operations (0.8) (19.1) (2.1) Change in valuation allowance related to deferred tax asset – 1.3 (6.1) Change in income tax reserve for uncertain tax positions – (7.1) (0.1) Reversal of net deferred tax assets related to foreign restructuring – – 1.9 Noncontrolling interest in flow through entity (5.3) (1.2) (0.4) Permanent differences and other 0.7 1.9 8.2 Non-deductible goodwill 1.9 119.0 – 32.8% 128.6% 34.5% The Greenbrier Companies 2014 Annual Report 63 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities were as follows: As of August 31, (In thousands) 2014 2013 Deferred tax assets: Contract placement $1,938 $2,051 Maintenance and warranty accruals 8,254 7,963 Accrued payroll and related liabilities 12,737 8,616 Deferred revenue 4,496 4,072 Inventories and other 10,709 8,708 Derivative instruments and translation adjustment 413 478 Investment and asset tax credits 1,388 1,324 Net operating loss 1,695 2,168 41,630 35,380 Deferred tax liabilities: Fixed assets 94,424 107,725 Investment in GBW joint venture 16,497 – Original issue discount 3,481 2,962 Intangibles 2,719 4,792 Deferred gain on redemption of debt 3,511 4,430 Other 1,056 31 121,688 119,940 Valuation allowance 1,325 1,480 Net deferred tax liability $81,383 $86,040 As of August 31, 2014 the Company had $15.8 million of state net operating loss (“NOL”) carryforwards that will begin to expire in 2015, $1.4 million ofstate credit carryforwards that will begin to expire in 2017, and $5.8 million of foreign NOL carryforwards that will begin to expire in 2018. The Companyuses tax law ordering for purposes of determining when excess tax benefits have been realized. During the current year the Company also recognized excesstax benefits of $0.1 million from the vesting of restricted stock awards.The net decrease in the valuation allowance on deferred taxes for which no benefit is anticipated was approximately $0.1 million for the year endedAugust 31, 2014.No provision has been made for U.S. income taxes on approximately $80.9 million of cumulative undistributed earnings of certain foreign subsidiariesbecause the Company plans to reinvest these earnings indefinitely in operations outside the U.S. Generally, such amounts become subject to U.S. taxationupon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related toinvestments in foreign subsidiaries.The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years presented: (In thousands) 2014 2013 2012 Unrecognized Tax Benefit – Opening Balance $1,289 $3,720 $3,053 Gross increases – tax positions in prior period 18 511 878 Gross decreases – tax positions in prior period – (2,942) (211) Settlements – – – Lapse of statute of limitations (39) – – Unrecognized Tax Benefit – Ending Balance $1,268 $1,289 $3,720 64 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Company is subject to taxation in the U.S., various states and foreign jurisdictions. The Company is no longer subject to U.S. Federal examination forfiscal years ending before 2011, to state and local examinations before 2010, or to foreign examinations before 2008.Unrecognized tax benefits, excluding interest, at August 31, 2014 were $1.0 million of which $0.3 million, if recognized, would affect the effective tax rate.The unrecognized tax benefits at August 31, 2013 were $1.1 million. Accrued interest on reserves for uncertain tax positions as of August 31, 2014 and 2013were $0.2 million and $0.2 million, respectively. The Company recorded an interest benefit of $0.2 million and $0.8 million for changes in the reservesduring the years ended August 31, 2014 and 2013. The Company had not accrued any penalties on the reserves. Interest and penalties related to income taxesare not classified as a component of income tax expense. Benefits from the realization of unrecognized tax benefits for deductible differences attributable toordinary operations will be recognized as a reduction of income tax expense. The Company does not anticipate a significant decrease in the reserves foruncertain tax positions during the next twelve months.Note 19 - Segment InformationThrough 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 Company’s fourth reportable segment(GBW Joint Venture) upon formation of the joint venture. The accounting policies of the segments are the same as those described in the summary ofsignificant accounting policies. Performance is evaluated based on Earnings from operations. Corporate includes selling and administrative costs not directlyrelated to goods and services and certain costs that are intertwined among segments due to our integrated business. The Company does not allocate Interestand foreign exchange or Income tax expense for either external or internal reporting purposes. Intersegment sales and transfers are valued as if the sales ortransfers were to third parties. Related revenue and margin is eliminated in consolidation and therefore are not included in consolidated results in theCompany’s Consolidated Financial Statements.The Wheels, Repair & Parts segment included the results of operations for its Repair operations through July 18, 2014. On July 18, 2014, the Company andWatco, its joint venture partner, contributed its respective Repair operations to GBW, an unconsolidated 50/50 joint venture. After July 18, 2014, the resultsof GBW were included as part of Earnings (loss) from unconsolidated affiliates as the Company accounts for its interest in GBW under the equity method ofaccounting. Certain assets including real property, personal property and working capital were not contributed to GBW and remain as part of Wheels,Repair & Parts segment as of August 31, 2014.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 ofaccounting. For the period from July 18, 2014 to August 31, 2014, GBW generated total revenue of $38.5 million and operating income of $0.6 million andhad total assets as of August 31, 2014 of $210.6 million. The Company recognized $0.3 million for the period from July 18, 2014 to August 31, 2014representing the Company’s share of earnings in the joint venture.The information in the following table is derived directly from the segments’ internal financial reports used for corporate management purposes.For the year ended August 31, 2014: Revenue Earnings (loss) from operations External Intersegment Total External Intersegment Total Manufacturing $1,624,916 $790 $1,625,706 $202,555 $61 $202,616 Wheels, Repair & Parts 495,627 11,833 507,460 40,597 442 41,039 Leasing & Services 83,419 25,973 109,392 41,055 25,973 67,028 Eliminations – (38,596) (38,596) – (26,476) (26,476) Corporate – – – (44,687) – (44,687) $2,203,962 $– $2,203,962 $239,520 $– $239,520 The Greenbrier Companies 2014 Annual Report 65 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsFor the year ended August 31, 2013: Revenue Earnings (loss) from operations External Intersegment Total External Intersegment Total Manufacturing $1,215,734 $7,244 $1,222,978 $88,822 $(30) $88,792 Wheels, Repair & Parts 469,222 14,958 484,180 (60,966) (291) (61,257) Leasing & Services 71,462 18,740 90,202 42,411 18,737 61,148 Eliminations – (40,942) (40,942) – (18,416) (18,416) Corporate – – – (28,616) – (28,616) $1,756,418 $– $1,756,418 $41,651 $– $41,651 For the year ended August 31, 2012: Revenue Earnings (loss) from operations External Intersegment Total External Intersegment Total Manufacturing $1,253,964 $47,941 $1,301,905 $87,880 $3,603 $91,483 Wheels, Repair & Parts 481,865 16,406 498,271 31,455 316 31,771 Leasing & Services 71,887 18,651 90,538 31,055 18,651 49,706 Eliminations – (82,998) (82,998) – (22,570) (22,570) Corporate – – – (31,602) – (31,602) $1,807,716 $– $1,807,716 $118,788 $– $118,788 Years ended August 31, (In thousands) 2014 2013 2012 Assets: Manufacturing $521,711 $401,630 $402,976 Wheels, Repair & Parts 298,009 318,483 413,013 Leasing & Services 436,075 463,381 508,539 Unallocated 261,373 106,247 60,016 $1,517,168 $1,289,741 $1,384,544 Depreciation and amortization: Manufacturing $15,341 $13,469 $11,754 Wheels, Repair & Parts 12,582 12,843 13,265 Leasing & Services 12,499 15,135 17,352 $40,422 $41,447 $42,371 Capital expenditures: Manufacturing $55,979 $37,017 $33,313 Wheels, Repair & Parts 8,774 7,492 11,248 Leasing & Services 5,474 16,318 73,324 $70,227 $60,827 $117,885 66 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table summarizes selected geographic information. Years ended August 31, (In thousands) 2014 2013 2012 Revenue : U.S. $1,998,579 $1,544,775 $1,642,348 Foreign 205,383 211,643 165,368 $2,203,962 $1,756,418 $1,807,716 Identifiable assets: U.S. $1,115,473 $865,294 $982,078 Canada – 756 718 Mexico 321,391 348,144 323,318 Europe 80,304 75,547 78,430 $1,517,168 $1,289,741 $1,384,544 Revenue is presented on the basis of geographic location of customers.Reconciliation of earnings from operations to earnings before income tax and earnings (loss) from unconsolidated affiliates: Years ended August 31, (In thousands) 2014 2013 2012 Earnings from operations $239,520 $41,651 $118,788 Interest and foreign exchange 18,695 22,158 24,809 Earnings before income tax and earnings (loss) from unconsolidated affiliates $220,825 $19,493 $93,979 Note 20 - Customer ConcentrationCustomer concentration is defined as a single customer that accounts for more than 10% of total revenues or accounts receivable. In 2014, revenue from twocustomers represented 24% and 17% of total revenue, respectively. In 2013, revenue from two customers represented 17% and 10% of total revenue,respectively. In 2012, revenue from three customers represented 26%, 16% and 11% of total revenue, respectively. No other customers accounted for morethan 10% of total revenues for the years ended August 31, 2014, 2013, or 2012. Two customers had balances that individually equaled or exceeded 10% ofaccounts receivable and represented 19% and 12% of the consolidated accounts receivable balance at August 31, 2014. One customer had balances thatindividually equaled or exceeded 10% of accounts receivable and in total represented 18% of the consolidated accounts receivable balance at August 31,2013.Note 21 - Lease CommitmentsLease expense for railcar equipment leased-in under non-cancelable leases was $6.8 million, $6.7 million and $6.0 million for the years ended August 31,2014, 2013 and 2012. Aggregate minimum future amounts payable under these non-cancelable railcar equipment leases are as follows: (In thousands) Year ending August 31, 2015 $6,007 2016 2,093 2017 1,569 2018 1,052 2019 – Thereafter – $10,721 The Greenbrier Companies 2014 Annual Report 67 (1)(1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOperating leases for domestic railcar repair facilities, office space and certain manufacturing and office equipment expire at various dates through September2022. Rental expense for facilities, office space and equipment was $12.3 million, $13.1 million and $14.1 million for the years ended August 31, 2014,2013 and 2012. Aggregate minimum future amounts payable under these non-cancelable operating leases are as follows: (In thousands) Year ending August 31, 2015 $4,928 2016 2,951 2017 2,835 2018 2,170 2019 1,610 Thereafter 2,305 $16,799 Note 22 - Commitments and ContingenciesThe Company’s Portland, Oregon manufacturing facility is located adjacent to the Willamette River. The Company has entered into a Voluntary CleanupAgreement with the Oregon Department of Environmental Quality (“DEQ”) in which the Company agreed to conduct an investigation of whether, and towhat extent, past or present operations at the Portland property may have released hazardous substances into the environment. The Company is alsoconducting groundwater remediation relating to a historical spill on the property which preceded its ownership.In December 2000, the U.S. Environmental Protection Agency (EPA) classified portions of the Willamette River bed known as the Portland Harbor, includingthe portion fronting the Company’s manufacturing facility, as a federal “National Priority List” or “Superfund” site due to sediment contamination (the“Portland Harbor Site”). The Company and more than 140 other parties, have received a “General Notice” of potential liability from the EPA relating to thePortland Harbor Site. The letter advised the Company that it may be liable for the costs of investigation and remediation (which liability may be joint andseveral with other potentially responsible parties) as well as for natural resource damages resulting from releases of hazardous substances to the site. At thistime, 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 havenot 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 theinvestigation. The Company’s aggregate expenditure has not been material during the 14-year period. Some or all of any such outlay may be recoverablefrom other responsible parties. 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 costsassociated 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 agreementsand 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 draftfeasibility 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 costsranging from 68 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents$169 million to $1.8 billion for cleanup of the entire Portland Harbor Site, depending primarily on the selected remedial action levels. The draft feasibilitystudy suggests costs ranging from $9 million to $163 million for cleanup of the area of the Willamette River adjacent to the Company’s Portland, Oregonmanufacturing 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 defineprecise boundaries for the cleanup. Responsibility for funding and implementing the EPA’s selected cleanup will be determined after the issuance of theRecord of Decision, currently scheduled by EPA for 2017. Based on the investigation to date, the Company believes that it did not contribute in any materialway 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 PortlandHarbor Site adjacent to its property precedes its ownership of the Portland, Oregon manufacturing facility. Because these environmental investigations arestill underway, sufficient information is currently not available to determine the Company’s liability, if any, for the cost of any required remediation orrestoration of the Portland Harbor Site or to estimate a range of potential loss. Based on the results of the pending investigations and future assessments ofnatural resource damages, the Company may be required to incur costs associated with additional phases of investigation or remedial action, and may beliable for damages to natural resources. In addition, the Company may be required to perform periodic maintenance dredging in order to continue to launchvessels from its launch ways in Portland, Oregon, on the Willamette River, and the river’s classification as a Superfund site could result in some limitations onfuture dredging and launch activities. Any of these matters could adversely affect the Company’s business and Consolidated Financial Statements, or thevalue of its Portland property.The Company has also signed an Order on Consent with DEQ to finalize the investigation of potential onsite sources of contamination that may have arelease pathway to the Willamette River. Interim precautionary measures are also required in the order and the Company is currently discussing with the DEQpotential remedial actions which may be required. Our aggregate expenditure has not been material during the 14-year period, however the Company couldincur significant expenses for remediation. Some or all of any such outlay may be recoverable from other responsible parties.On October 13, 2014, the Company disclosed that during September 2014, it received various complaints through its whistleblower hotline concerningalleged misconduct involving a senior employee at its Concarril manufacturing facility in Sahagun, Mexico. The Company has retained outside counsel toconduct an independent investigation of the matter, and has placed the employee on a paid leave of absence. In addition, the Company voluntarily contactedthe United States Securities and Exchange Commission and the United States Department of Justice to advise both agencies that an independentinvestigation was underway. The investigation is at an early stage, but information developed to date suggests that there may have been conflicts of interestin connection with procurement of supplies and materials at the Concarril facility, and inappropriate personal use of Company assets and resources. Althoughthe investigation is at an early stage, based on information developed to date, the Company believes that the alleged misconduct does not involve its otheroperations, or executive officers or other senior managers and that the alleged misconduct did not have a material impact on its financial condition or resultsof operations.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 withcertainty. While the ultimate outcome of such legal proceedings cannot be determined at this time, management believes that the resolution of these actionswill not have a material adverse effect on the Company’s Consolidated Financial Statements.In accordance with customary business practices in Europe, the Company has $4.0 million in bank and third party warranty and performance guaranteefacilities, all of which have been utilized as of August 31, 2014. To date no amounts have been drawn under these guarantee facilities.As of August 31, 2014, the Mexican joint venture had $14.6 million of third party debt outstanding, for which the Company and its joint venture partner hadeach guaranteed approximately $10.8 million.As of August 31, 2014, the Company had outstanding letters of credit aggregating $9.6 million associated with performance guarantees, facility leases andworkers compensation insurance. The Greenbrier Companies 2014 Annual Report 69 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOn July 18, 2014, the Company and Watco contributed its respective repair, refurbishment and retrofitting operations to GBW, an unconsolidated 50/50 jointventure. The Company made a $10 million cash contribution at closing and an additional $2.5 million cash contribution in August 2014. The Company islikely to make additional capital contributions or loans to GBW in the future including an additional $2.5 million capital contribution which has alreadybeen committed.Note 23 - Fair Value of Financial InstrumentsThe estimated fair values of financial instruments and the methods and assumptions used to estimate such fair values are as follows: (In thousands) CarryingAmount EstimatedFairValue Notes payable as of August 31, 2014 $445,091 $654,458 Notes payable as of August 31, 2013 $373,889 $324,631 The carrying amount of cash and cash equivalents, accounts and notes receivable, revolving notes, accounts payable and accrued liabilities, foreign currencyforward contracts and interest rate swaps is a reasonable estimate of fair value of these financial instruments. Estimated rates currently available to theCompany for debt with similar terms and remaining maturities are used to estimate the fair value of notes payable.Note 24 - Fair Value MeasuresCertain 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 athree-tier fair value hierarchy which prioritizes the inputs used in measuring a 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; andLevel 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 August 31, 2014 are: (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 $– (1)Level 2 assets include derivative financial instruments which are valued based on significant observable inputs. See Note 14 Derivative Instruments for further discussion.Assets or liabilities measured at fair value on a nonrecurring basis as of August 31, 2014 are: (In thousands) Total Level 1 Level 2 Level 3 Assets: Goodwill $43,265 $ – $ – $43,265 70 The Greenbrier Companies 2014 Annual Report (1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAssets and liabilities measured at fair value on a recurring basis as of August 31, 2013 are: (In thousands) Total Level 1 Level 2 Level 3 Assets: Derivative financial instruments $1,042 $– $1,042 $ – Nonqualified savings plan investments 7,687 7,687 – – Cash equivalents 1,004 1,004 – – $9,733 $8,691 $1,042 $– Liabilities: Derivative financial instruments $1,632 $– $1,632 $– (1)Level 2 assets include derivative financial instruments which are valued based on significant observable inputs. See Note 14 Derivative Instruments for further discussion.Assets or liabilities measured at fair value on a nonrecurring basis as of August 31, 2013 are: (In thousands) Total Level 1 Level 2 Level 3 Assets: Goodwill $57,416 $ – $ – $57,416 Note 25 - Variable Interest EntitiesIn May 2013, the Company purchased an 8% interest in an entity that owns a portfolio of railcar assets that are leased to third parties; the remaining 92% isowned by a third party. During the year ended August 31, 2014, the Company sold 204 railcars to this entity for $16.0 million resulting in a total of 468railcars manufactured by the Company and subject to operating leases sold for $39.2 million to this entity as of August 31, 2014.As of August 31, 2014 and 2013, the carrying amount of the Company’s investment in this entity is $3.1 million and $1.9 million which is recorded inIntangibles and other assets, net on the Consolidated Balance Sheets.Note 26 - Guarantor/Non GuarantorThe convertible senior notes due 2026 (the “Notes”) issued on May 22, 2006 are fully and unconditionally and jointly and severally guaranteed bysubstantially all of Greenbrier’s material 100% owned U.S. subsidiaries: Autostack Company LLC, Greenbrier-Concarril, LLC, Greenbrier Leasing CompanyLLC, 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 GBW Railcar Holdings, LLC. No other subsidiariesguarantee the Notes including Greenbrier Union Holdings I LLC, Greenbrier MUL Holdings I LLC, Greenbrier Leasing Limited, Greenbrier Europe B.V.,Greenbrier Germany GmbH, WagonySwidnica S.A., Zaklad Naprawczy Taboru Kolejowego Olawa sp. z o.o., Zaklad Transportu Kolejowego SIARKOPOL sp.z o.o., Gunderson-Concarril, S.A. de C.V., Greenbrier Rail Services Canada, Inc., Mexico Meridianrail Services, S.A. de C.V., Greenbrier Railcar Services –Tierra Blanca S.A. de C.V., YSD Doors, S.A. de C.V., Gunderson-Gimsa S.A. de C.V., Greenbrier, S.A. de C.V. and Greenbrier-Gimsa, LLC.The following represents the supplemental consolidating condensed financial information of Greenbrier and its guarantor and non guarantor subsidiaries, asof August 31, 2014 and 2013 and for the years ended August 31, 2014, 2013 and 2012. The information is presented on the basis of Greenbrier accountingfor its ownership of its wholly owned subsidiaries using the equity method of accounting. The equity method investment for each subsidiary is recorded bythe parent in intangibles and other assets. Intercompany transactions of goods and services between the guarantor and non guarantor subsidiaries arepresented as if the sales or transfers were at fair value to third parties and eliminated in consolidation. The Greenbrier Companies 2014 Annual Report 71 (1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Balance SheetAs of August 31, 2014 Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries 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 72 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Statement of OperationsFor the year ended August 31, 2014 Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Revenue Manufacturing $– $887,252 $1,419,143 $(681,479) $1,624,916 Wheels, Repair & Parts – 502,210 – (6,583) 495,627 Leasing & Services 1,256 81,546 2 615 83,419 1,256 1,471,008 1,419,145 (687,447) 2,203,962 Cost of revenue Manufacturing – 792,267 1,257,953 (676,212) 1,374,008 Wheels, Repair & Parts – 470,521 – (6,583) 463,938 Leasing & Services – 43,878 – (82) 43,796 – 1,306,666 1,257,953 (682,877) 1,881,742 Margin 1,256 164,342 161,192 (4,570) 322,220 Selling and administrative 45,621 41,001 38,063 585 125,270 Net gain on disposition of equipment – (13,905) (820) (314) (15,039) Gain on contribution to joint venture – (29,006) – – (29,006) Restructuring charges – 1,475 – – 1,475 Earnings (loss) from operations (44,365) 164,777 123,949 (4,841) 239,520 Other costs Interest and foreign exchange 11,654 4,774 2,267 – 18,695 Earnings (loss) before income taxes and earnings(loss) from unconsolidated affiliates (56,019) 160,003 121,682 (4,841) 220,825 Income tax (expense) benefit 7,563 (55,382) (26,170) 1,588 (72,401) Earnings (loss) before earnings (loss) fromunconsolidated affiliates (48,456) 104,621 95,512 (3,253) 148,424 Earnings (loss) from unconsolidated affiliates 160,375 18,739 166 (177,925) 1,355 Net earnings (loss) 111,919 123,360 95,678 (181,178) 149,779 Net (earnings) loss attributable to noncontrollinginterest – – (40,634) 2,774 (37,860) Net earnings (loss) attributable toGreenbrier $111,919 $123,360 $55,044 $(178,404) $111,919 The Greenbrier Companies 2014 Annual Report 73 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Consolidating Statement of Comprehensive Income (Loss)For the year ended August 31, 2014 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Net earnings (loss) $111,919 $123,360 $95,678 $(181,178) $149,779 Other comprehensive income (loss) Translation adjustment – – 116 – 116 Reclassification of derivative financialinstruments recognized in net earnings(loss) – 1,071 (600) – 471 Unrealized gain (loss) on derivative financialinstruments – (1,105) 86 – (1,019) Other (net of tax effect) – – 10 – 10 – (34) (388) – (422) Comprehensive income (loss) 111,919 123,326 95,290 (181,178) 149,357 Comprehensive (income) loss attributable tononcontrolling interest – – (40,640) 2,774 (37,866) Comprehensive income (loss) attributable toGreenbrier $111,919 $123,326 $54,650 $(178,404) $111,491 74 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Statement of Cash FlowsFor the year ended August 31, 2014 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Cash flows from operating activities: Net earnings (loss) $111,919 $123,360 $95,678 $(181,178) $149,779 Adjustments to reconcile net earnings (loss) to net cash provided by(used in) operating activities: Deferred income taxes 4,016 (6,121) (2,582) – (4,687) Depreciation and amortization 1,875 27,259 11,370 (82) 40,422 Net gain on disposition of equipment – (13,905) (820) (314) (15,039) Stock based compensation expense 11,285 – – – 11,285 Gain on contribution to joint venture – (29,006) – – (29,006) Other – 388 189 2,773 3,350 Decrease (increase) in assets: Accounts receivable, net 36,996 (11,493) (11,679) (37,573) (23,749) Inventories – 16,920 (26,595) – (9,675) Leased railcars for syndication – (60,547) – 2,768 (57,779) Other (935) 53,889 (4,424) (52,599) (4,069) Increase (decrease) in liabilities: Accounts payable and accrued liabilities (44,631) 45,953 26,483 35,557 63,362 Deferred revenue (33) 11,355 389 2 11,713 Net cash provided by (used in) operating activities 120,492 158,052 88,009 (230,646) 135,907 Cash flows from investing activities: Proceeds from sales of assets – 53,229 1,006 – 54,235 Capital expenditures (4,125) (16,636) (49,470) 4 (70,227) Increase in restricted cash – (331) (2) – (333) Investment in and net advances to unconsolidated affiliates (169,584) (73,558) (1,253) 230,642 (13,753) Net cash provided by (used in) investing activities (173,709) (37,296) (49,719) 230,646 (30,078) Cash flows from financing activities: Proceeds from revolving notes withmaturities longer than 90 days – – 37,819 – 37,819 Repayment of revolving notes withmaturities longer than 90 days – – (72,947) – (72,947) Proceeds from issuance of notes payable – 200,000 – – 200,000 Repayments of notes payable – (128,157) (640) – (128,797) Debt issuance costs – (382) – – (382) Increase in restricted cash – (11,000) – – (11,000) Intercompany advances 177,395 (181,161) 3,766 – – Repurchase of stock (33,583) – – – (33,583) Dividends (4,123) – – – (4,123) Cash distribution to joint venture partner – – (5,076) (5,076) Investment by joint venture partner 419 419 Excess tax benefit from restricted stock awards 109 – – – 109 Net cash provided by (used in) financing activities 139,798 (120,700) (36,659) – (17,561) Effect of exchange rate changes (7) 31 (811) – (787) Increase in cash and cash equivalents 86,574 87 820 – 87,481 Cash and cash equivalents Beginning of period 63,173 25 34,237 – 97,435 End of period $149,747 $112 $35,057 $– $184,916 The Greenbrier Companies 2014 Annual Report 75 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Balance SheetAs of August 31, 2013 Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Assets Cash and cash equivalents $63,173 $25 $34,237 $– $97,435 Restricted cash – 1,907 6,900 – 8,807 Accounts receivable, net 37,623 217,268 54,412 (154,455) 154,848 Inventories – 151,023 165,855 (95) 316,783 Leased railcars for syndication – 68,827 – (347) 68,480 Equipment on operating leases, net – 304,234 3,809 (2,575) 305,468 Property, plant and equipment, net 2,112 103,315 96,106 – 201,533 Investment in unconsolidated affiliates 700,344 68,728 2,824 (761,157) 10,739 Goodwill – 57,416 – – 57,416 Intangibles and other assets, net 15,685 49,813 10,691 (7,957) 68,232 $818,937 $1,022,556 $374,834 $(926,586) $1,289,741 Liabilities and Equity Revolving notes $– $– $48,209 $– $48,209 Accounts payable and accruedliabilities 137,631 178,662 154,096 (154,451) 315,938 Deferred income taxes 8,093 86,610 – (8,663) 86,040 Deferred revenue 155 8,546 98 39 8,838 Notes payable 244,856 126,863 2,170 – 373,889 Total equity Greenbrier 428,202 621,875 141,945 (763,820) 428,202 Noncontrolling interest – – 28,316 309 28,625 Total equity 428,202 621,875 170,261 (763,511) 456,827 $818,937 $1,022,556 $374,834 $(926,586) $1,289,741 76 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Statement of OperationsFor the year ended August 31, 2013 Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Revenue Manufacturing $– $666,171 $1,001,017 $(451,454) $1,215,734 Wheels, Repair & Parts – 480,849 – (11,627) 469,222 Leasing & Services 806 70,672 1 (17) 71,462 806 1,217,692 1,001,018 (463,098) 1,756,418 Cost of revenue Manufacturing – 610,379 928,461 (455,951) 1,082,889 Wheels, Repair & Parts – 443,337 – (11,836) 431,501 Leasing & Services – 35,754 – (99) 35,655 – 1,089,470 928,461 (467,886) 1,550,045 Margin 806 128,222 72,557 4,788 206,373 Selling and administrative 38,636 30,937 33,602 – 103,175 Net gain on disposition of equipment – (16,238) (1,276) (558) (18,072) Goodwill impairment – 76,900 – – 76,900 Restructuring charges – 2,719 – – 2,719 Earnings (loss) from operations (37,830) 33,904 40,231 5,346 41,651 Other costs Interest and foreign exchange 15,358 3,901 3,100 (201) 22,158 Earnings (loss) before income taxes and earnings(loss) from unconsolidated affiliates (53,188) 30,003 37,131 5,547 19,493 Income tax (expense) benefit 21,367 (36,202) (9,067) (1,158) (25,060) Earnings (loss) before earnings (loss) fromunconsolidated affiliates (31,821) (6,199) 28,064 4,389 (5,567) Earnings (loss) from unconsolidated affiliates 20,773 11,532 45 (32,164) 186 Net earnings (loss) (11,048) 5,333 28,109 (27,775) (5,381) Net (earnings) loss attributable to noncontrollinginterest – – (3,946) (1,721) (5,667) Net earnings (loss) attributable toGreenbrier $(11,048) $5,333 $24,163 $(29,496) $(11,048) The Greenbrier Companies 2014 Annual Report 77 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Consolidating Statement of Comprehensive Income (Loss)For the year ended August 31, 2013 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Net earnings (loss) $(11,048) $5,333 $28,109 $(27,775) $(5,381) Other comprehensive income (loss) Translation adjustment – (34) 1,090 – 1,056 Reclassification of derivative financialinstruments recognized in net earnings(loss) – 1,197 (1,758) – (561) Unrealized loss on derivative financialinstruments – (202) (197) – (399) Other (net of tax effect) – – (203) – (203) – 961 (1,068) – (107) Comprehensive income (loss) (11,048) 6,294 27,041 (27,775) (5,488) Comprehensive (income) loss attributable tononcontrolling interest – – (3,974) (1,721) (5,695) Comprehensive income (loss) attributable toGreenbrier $(11,048) $6,294 $23,067 $(29,496) $(11,183) 78 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Statement of Cash FlowsFor the year ended August 31, 2013 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Cash flows from operating activities: Net earnings (loss) $(11,048) $5,333 $28,109 $(27,775) $(5,381) Adjustments to reconcile net earnings (loss) to net cash providedby (used in) operating activities: Deferred income taxes (1,005) (9,983) (611) 1,937 (9,662) Depreciation and amortization 2,124 29,688 9,734 (99) 41,447 Net gain on disposition of equipment – (16,238) (1,276) (558) (18,072) Accretion of debt discount 2,455 – – – 2,455 Stock based compensation expense 6,196 106 – – 6,302 Goodwill impairment – 76,900 – – 76,900 Other – 1,160 (70) (2,145) (1,055) Decrease (increase) in assets: Accounts receivable, net 15,704 (360) (6,140) (16,527) (7,323) Inventories – 4,975 14,280 (210) 19,045 Leased railcars for syndication – 25,325 – (2,444) 22,881 Other 272 416 28,400 (28,119) 969 Increase (decrease) in liabilities: Accounts payable and accrued liabilities (626) (27,742) (3,200) 16,139 (15,429) Deferred revenue (154) (7,505) (836) 10 (8,485) Net cash provided by (used in) operating activities 13,918 82,075 68,390 (59,791) 104,592 Cash flows from investing activities: Proceeds from sales of assets – 74,545 793 – 75,338 Capital expenditures (515) (28,586) (32,017) 291 (60,827) Decrease (increase) in restricted cash – 139 (2,669) – (2,530) Investment in and advances to unconsolidated affiliates (28,175) (31,325) (2,240) 59,500 (2,240) Other – – (3,582) – (3,582) Net cash provided by (used in) investing activities (28,690) 14,773 (39,715) 59,791 6,159 Cash flows from financing activities: Net changes in revolving notes with maturities of 90 days orless – – (16,396) – (16,396) Proceeds from revolving notes with maturities longer than 90days – – 38,177 – 38,177 Repayment of revolving notes with maturities longer than 90days – – (34,966) – (34,966) Intercompany advances 95,598 (93,991) (1,607) – – Proceeds from issuance of notes payable – – 2,186 – 2,186 Repayments of notes payable (52,868) (4,090) (1,873) – (58,831) Investment by joint venture partner – – 3,206 – 3,206 Excess tax benefit from restricted stock awards 900 – – – 900 Other (8) – – – (8) Net cash provided by (used in) financing activities 43,622 (98,081) (11,273) – (65,732) Effect of exchange rate changes – 964 (2,119) – (1,155) Increase (decrease) in cash and cash equivalents 28,850 (269) 15,283 – 43,864 Cash and cash equivalents Beginning of period 34,323 294 18,954 – 53,571 End of period $63,173 $25 $34,237 $– $97,435 The Greenbrier Companies 2014 Annual Report 79 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Statement of OperationsFor the year ended August 31, 2012 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Revenue Manufacturing $– $809,629 $1,057,996 $(613,661) $1,253,964 Wheels, Repair & Parts – 494,359 – (12,494) 481,865 Leasing & Services 1,102 71,382 – (597) 71,887 1,102 1,375,370 1,057,996 (626,752) 1,807,716 Cost of revenue Manufacturing – 730,850 996,591 (605,057) 1,122,384 Wheels, Repair & Parts – 446,034 – (12,493) 433,541 Leasing & Services – 37,450 – (79) 37,371 – 1,214,334 996,591 (617,629) 1,593,296 Margin 1,102 161,036 61,405 (9,123) 214,420 Selling and administrative 42,486 29,383 32,727 – 104,596 Net gain on disposition of equipment – (8,963) – (1) (8,964) Earnings (loss) from operations (41,384) 140,616 28,678 (9,122) 118,788 Other costs Interest and foreign exchange 18,839 3,754 3,336 (1,120) 24,809 Earnings (loss) before income taxes and earnings(loss) from unconsolidated affiliates (60,223) 136,862 25,342 (8,002) 93,979 Income tax (expense) benefit 21,560 (51,655) (4,362) 2,064 (32,393) (38,663) 85,207 20,980 (5,938) 61,586 Earnings (loss) from unconsolidated affiliates 97,371 (537) (1) (97,249) (416) Net earnings (loss) 58,708 84,670 20,979 (103,187) 61,170 Net loss (earnings) attributable to noncontrollinginterest – – (5,574) 3,112 (2,462) Net earnings (loss) attributable to Greenbrier $58,708 $84,670 $15,405 $(100,075) $58,708 80 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Consolidating Statement of Comprehensive Income (Loss)For the year ended August 31, 2012 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Net earnings (loss) $58,708 $84,670 $20,979 $(103,187) $61,170 Other comprehensive income (loss) Translation adjustment 11 (367) (3,812) – (4,168) Reclassification of derivative financialinstruments recognized in net earnings(loss) – 1,025 3,963 – 4,988 Unrealized gain (loss) on derivative financialinstruments – (122) 830 – 708 Other (net of tax effect) – – (130) – (130) 11 536 851 – 1,398 Comprehensive income (loss) 58,719 85,206 21,830 (103,187) 62,568 Comprehensive (income) loss attributable tononcontrolling interest – – (5,446) 3,112 (2,334) Comprehensive income (loss) attributable toGreenbrier $58,719 $85,206 $16,384 $(100,075) $60,234 The Greenbrier Companies 2014 Annual Report 81 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Greenbrier Companies, Inc.Condensed Consolidating Statement of Cash FlowsFor the year ended August 31, 2012 (In thousands) Parent CombinedGuarantorSubsidiaries CombinedNon-GuarantorSubsidiaries Eliminations Consolidated Cash flows from operating activities: Net earnings (loss) $58,708 $84,670 $20,979 $(103,187) $61,170 Adjustments to reconcile net earnings (loss) to net cash providedby (used in) operating activities: Deferred income taxes 23,749 (7,548) (2,520) (2,064) 11,617 Depreciation and amortization 2,596 31,618 8,236 (79) 42,371 Net gain on disposition of equipment – (8,963) – (1) (8,964) Accretion of debt discount 3,259 – – – 3,259 Stock based compensation expense 8,757 – – – 8,757 Other – 1,024 37 3,844 4,905 Decrease (increase) in assets: Accounts receivable, net 13,197 44,373 (20,223) 416 37,763 Inventories – 3,395 313 1 3,709 Leased railcars for syndication – (78,863) – 2,792 (76,071) Other 1,847 (393) 4,878 (6,332) – Increase (decrease) in liabilities: Accounts payable and accrued liabilities (43,798) 55,609 4,448 (23) 16,236 Deferred revenue (155) 10,711 735 13 11,304 Net cash provided by (used in) operating activities 68,160 135,633 16,883 (104,620) 116,056 Cash flows from investing activities: Proceeds from sales of equipment – 33,560 – – 33,560 Capital expenditures (709) (89,531) (28,684) 1,039 (117,885) Decrease (increase) in restricted cash – 66 (4,230) – (4,164) Investment in and net advances to unconsolidated affiliates (103,703) 230 (614) 103,581 (506) Intercompany advances 19,092 – – (19,092) – Other – 48 – – 48 Net cash provided by (used in) investingActivities (85,320) (55,627) (33,528) 85,528 (88,947) Cash flows from financing activities: Net changes in revolving notes with maturities of 90 days orless (60,000) – 2,698 – (57,302) Proceeds from revolving notes with maturities longer than 90days – – 63,773 – 63,773 Repayment of revolving notes with maturities longer than 90days – – (33,934) – (33,934) Intercompany advances 76,476 (76,936) (18,632) 19,092 – Proceeds from issuance of notes Payable – 250 2,500 – 2,750 Repayments of notes payable – (4,166) (2,904) – (7,070) Investment by joint venture partner – – 1,362 – 1,362 Excess tax benefit from restricted stock awards 1,627 – – – 1,627 Net cash provided by (used in) financingactivities 18,103 (80,852) 14,863 19,092 (28,794) Effect of exchange rate changes 12 611 4,411 – 5,034 Increase (decrease) in cash and cash equivalents 955 (235) 2,629 – 3,349 Cash and cash equivalents Beginning of period 33,368 529 16,325 – 50,222 End of period $34,323 $294 $18,954 $– $53,571 82 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsQuarterly Results of Operations (Unaudited) (In thousands, except per share amount) First Second Third Fourth Total 2014 Revenue Manufacturing $359,473 $347,755 $425,583 $492,105 $1,624,916 Wheels, Repair & Parts 113,401 136,540 140,663 105,023 495,627 Leasing & Services 17,481 17,921 27,039 20,978 83,419 490,355 502,216 593,285 618,106 2,203,962 Cost of revenue Manufacturing 311,440 306,572 351,829 404,167 1,374,008 Wheels, Repair & Parts 107,975 127,940 129,825 98,198 463,938 Leasing & Services 9,381 9,853 14,856 9,706 43,796 428,796 444,365 496,510 512,071 1,881,742 Margin 61,559 57,851 96,775 106,035 322,220 Selling and administrative 26,109 28,125 34,800 36,236 125,270 Net gain on disposition of equipment (3,651) (5,416) (5,619) (353) (15,039) Gain on contribution to joint venture – – – (29,006) (29,006) Restructuring charges 879 540 56 – 1,475 Earnings from operations 38,222 34,602 67,538 99,158 239,520 Other costs Interest and foreign exchange 4,744 4,099 5,437 4,415 18,695 Earnings before income tax and earnings (loss) from unconsolidated affiliates 33,478 30,503 62,101 94,743 220,825 Income tax expense (10,522) (9,883) (16,303) (35,693) (72,401) Earnings (loss) from unconsolidated affiliates 41 (67) 298 1,083 1,355 Net earnings 22,997 20,553 46,096 60,133 149,779 Net earnings attributable to noncontrolling interest (7,609) (4,966) (12,508) (12,777) (37,860) Net earnings attributable to Greenbrier $15,388 $15,587 $33,588 $47,356 $111,919 Basic earnings per common share: $0.54 $0.55 $1.20 $1.69 $3.97 Diluted earnings per common share: $0.49 $0.50 $1.03 $1.43 $3.44 (1)Quarterly amounts do not total to the year to date amount as each period is calculated discretely. Diluted earnings per common share includes the dilutive effect of the 2026 Convertible Notes using thetreasury stock method when dilutive and the dilutive effect of shares underlying the 2018 Convertible Notes using the “if converted” method in which debt issuance and interest costs, net of tax, were addedback to net earnings. The Greenbrier Companies 2014 Annual Report 83 (1) (1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsQuarterly Results of Operations (Unaudited) (In thousands, except per share amount) First Second Third Fourth Total 2013 Revenue Manufacturing $285,368 $294,047 $284,591 $351,728 $1,215,734 Wheels, Repair & Parts 112,100 111,952 131,167 114,003 469,222 Leasing & Services 17,906 17,167 17,905 18,484 71,462 415,374 423,166 433,663 484,215 1,756,418 Cost of revenue Manufacturing 258,492 262,650 253,360 308,387 1,082,889 Wheels, Repair & Parts 101,476 103,134 120,476 106,415 431,501 Leasing & Services 7,627 9,107 9,808 9,113 35,655 367,595 374,891 383,644 423,915 1,550,045 Margin 47,779 48,275 50,019 60,300 206,373 Selling and administrative 26,100 24,942 25,322 26,811 103,175 Net gain on disposition of equipment (1,408) (3,076) (5,131) (8,457) (18,072) Goodwill impairment – – 76,900 – 76,900 Restructuring charges – – – 2,719 2,719 Earnings (loss) from operations 23,087 26,409 (47,072) 39,227 41,651 Other costs Interest and foreign exchange 5,900 6,322 5,905 4,031 22,158 Earnings (loss) before income tax and earnings (loss) from unconsolidatedaffiliates 17,187 20,087 (52,977) 35,196 19,493 Income tax expense (4,586) (5,590) (2,729) (12,155) (25,060) Earnings (loss) from unconsolidated affiliates (40) (105) 82 249 186 Net earnings (loss) 12,561 14,392 (55,624) 23,290 (5,381) Net earnings attributable to noncontrolling interest (2,134) (553) (406) (2,574) (5,667) Net earnings (loss) attributable to Greenbrier $10,427 $13,839 $(56,030) $20,716 $(11,048) Basic earnings (loss) per common share: $0.38 $0.51 $(2.10) $0.74 $(0.41) Diluted earnings (loss) per common share: $0.35 $0.45 $(2.10) $0.64 $(0.41) (1)Quarterly amounts do not total to the year to date amount as each period is calculated discretely. For the first, second and fourth quarters, diluted earnings per common share includes the outstanding warrantsusing the treasury stock method and the dilutive effect of shares underlying the 2018 Convertible Notes using the “if converted” method in which debt issuance and interest costs, net of tax, were added backto net earnings. 84 The Greenbrier Companies 2014 Annual Report (1) (1)Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURENone. Item 9A.CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management has evaluated, under the supervision and with the participation of our President and Chief Executive Officer and Chief Financial Officer, theeffectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the SecuritiesExchange Act of 1934 (the Exchange Act). Based on that evaluation, our President and Chief Executive Officer and Chief Financial Officer have concludedthat, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to bedisclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to ourmanagement, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding requireddisclosure.Changes in Internal ControlsThere have been no changes in our internal control over financial reporting during the quarter ended August 31, 2014 that have materially affected, or arereasonably likely to materially affect, the Company’s internal control over financial reporting.Management’s Report on Internal Control over Financial ReportingManagement of The Greenbrier Companies, Inc. together with its consolidated subsidiaries (the “Company”), is responsible for establishing and maintainingadequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of theCompany’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the UnitedStates of America.As of the end of the Company’s 2014 fiscal year, management conducted an assessment of the effectiveness of the Company’s internal control over financialreporting based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (“COSO”). Based on this assessment, management has determined that the Company’s internal control over financial reporting as ofAugust 31, 2014 is effective.Our independent registered public accounting firm, KPMG LLP, independently assessed the effectiveness of the Company’s internal control over financialreporting, as stated in their attestation report, which is included at the end of Part II, Item 9A of this Form 10-K. The Greenbrier Companies 2014 Annual Report 85 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsInherent Limitations on Effectiveness of ControlsThe Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and proceduresor our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, canprovide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact thatthere are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all controlsystems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues andinstances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can befaulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, bycollusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptionsabout the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential futureconditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate becauseof changes in conditions or deterioration in the degree of compliance with policies or procedures. 86 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and StockholdersThe Greenbrier Companies, Inc.We have audited The Greenbrier Companies, Inc. and subsidiaries (the “Company”) internal control over financial reporting as of August 31, 2014, based oncriteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2014, based on criteriaestablished in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof the Company as of August 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flowsfor each of the years in the three-year period ended August 31, 2014, and our report dated October 30, 2014 expressed an unqualified opinion on thoseconsolidated financial statements./s/ KPMG LLPPortland, OregonOctober 30, 2014 The Greenbrier Companies 2014 Annual Report 87 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsItem 9B.OTHER INFORMATIONNonePART III Item 10.DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThere is hereby incorporated by reference the information under the captions “Election of Directors,” “Board Committees, Meetings and Charters,” “Section16(a) Beneficial Ownership Reporting Compliance” and “Executive Officers of the Company” in the Company’s definitive Proxy Statement to be filedpursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end ofRegistrant’s year ended August 31, 2014. Item 11.EXECUTIVE COMPENSATIONThere is hereby incorporated by reference the information under the caption “Executive Compensation” and “Compensation Committee Report” inRegistrant’s definitive Proxy Statement to be filed pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the Securities andExchange Commission within 120 days after the end of Registrant’s year ended August 31, 2014. Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDERS MATTERSThere is hereby incorporated by reference the information under the captions “Security Ownership of Certain Beneficial Owners and Management” and“Equity Compensation Plan Information” in Registrant’s definitive Proxy Statement to be filed pursuant to Regulation 14A, which Proxy Statement isanticipated to be filed with the Securities and Exchange Commission within 120 days after the end of Registrant’s year ended August 31, 2014. Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORINDEPENDENCEThere is hereby incorporated by reference the information under the caption “Transactions with Related Persons” and “Independence of Directors” inRegistrant’s definitive Proxy Statement to be filed pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the Securities andExchange Commission within 120 days after the end of Registrant’s year ended August 31, 2014. Item 14.PRINCIPAL ACCOUNTING FEES AND SERVICESThere is hereby incorporated by reference the information under the caption “Ratification of Appointment of Auditors” in Registrant’s definitive ProxyStatement to be filed pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the Securities and Exchange Commission within 120days after the end of the Registrant’s year ended August 31, 2014. 88 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART IV Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (1)Financial StatementsSee Consolidated Financial Statements in Item 8 (a)(2) Financial Statements Schedule* *All other schedules have been omitted because they are inapplicable, not required or because the information is given in the Consolidated Financial Statements or notes thereto. This supplemental scheduleshould be read in conjunction with the Consolidated Financial Statements and notes thereto included in this report. (a)(3) The following exhibits are filed herewith and this list is intended to constitute the exhibit index: 3.1Registrant’s Articles of Incorporation are incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 10-Q filed April 5, 2006. 3.2Articles of Merger amending the Registrant’s Articles of Incorporation are incorporated herein by reference to Exhibit 3.2 to the Registrant’sForm 10-Q filed April 5, 2006. 3.3Registrant’s Bylaws, as amended January 11, 2006, are incorporated herein by reference to Exhibit 3.3 to the Registrant’s Form 10-Q filedApril 5, 2006. 3.4Amendment to the Registrant’s Bylaws, dated October 31, 2006, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed November 6, 2006. 3.5Amendment to the Registrant’s Bylaws, dated January 8, 2008, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-Kfiled November 8, 2007. 3.6Amendment to the Registrant’s Bylaws, dated April 8, 2008, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-Kfiled April 11, 2008. 3.7Amendment to the Registrant’s Bylaws, dated April 7, 2009, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-Kfiled April 13, 2009. 3.8Amendment to the Registrant’s Bylaws, dated June 8, 2009, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-Kfiled June 10, 2009. 3.9Amendment to the Registrant’s Bylaws, dated June 10, 2009, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-Kfiled June 12, 2009. 3.10Amendment to the Registrant’s Bylaws, dated October 30, 2012, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed November 5, 2012. 3.11Amendment to the Registrant’s Bylaws, dated January 9, 2013, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-Kfiled January 15, 2013. 3.12Amendment to the Registrant’s Bylaws, dated October 29, 2013, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed October 31, 2013. 4.1Specimen Common Stock Certificate of Registrant is incorporated herein by reference to Exhibit 4.1 to the Registrant’s RegistrationStatement on Form S-3 filed April 7, 2010 (SEC File Number 333-165924). 4.2Indenture between the Registrant, the Guarantors named therein and U.S. Bank National Association as Trustee, dated May 22, 2006, isincorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed May 25, 2006. 4.3Investor Rights and Restrictions Agreement among the Registrant, WLR Recovery Fund IV, L.P., WLR IV Parallel ESC, L.P., WL Ross & Co.LLC and the other holders from time to time party thereto, dated June 10, 2009, is incorporated herein by reference to Exhibit 4.3 to theRegistrant’s Form 8-K filed June 12, 2009. The Greenbrier Companies 2014 Annual Report 89 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 4.4Indenture between the Registrant and U.S. Bank National Association, as Trustee, including the form of Global Note attached as ExhibitA thereto, dated April 5, 2011, is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed April 5, 2011. 10.1Registration Rights Agreement among the Registrant, the Guarantors named therein, Bear, Stearns & Co. Inc. and Banc of AmericaSecurities LLC, dated May 22, 2006, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed May 25, 2006. 10.2Second Amended and Restated Credit Agreement among the Registrant, Bank of America, N.A., as Administrative Agent, Union Bank,National Association, as Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Sole Lead Arranger and Sole BookManager, and the lenders identified therein, dated June 30, 2011, is incorporated herein by reference to Exhibit 10.1 to the Registrant’sForm 8-K filed July 7, 2011. 10.3Lender Joinder Agreement by and among The Private Bank and Trust Company, the Registrant and Bank Of America, N.A., dated as ofNovember 2, 2011, to the Second Amended and Restated Credit Agreement dated as of June 30, 2011 by and among the Registrant, thelenders party thereto and Bank of America, N.A., is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filedJanuary 6, 2012. 10.4Lender Joinder Agreement by and among Wells Fargo Bank, National Association, the Registrant and Bank Of America, N.A., dated as ofDecember 12, 2011, to the Second Amended and Restated Credit Agreement dated as of June 30, 2011 by and among the Registrant, thelenders party thereto and Bank of America, N.A., is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filedJanuary 6, 2012. 10.5Amendment No. 1, dated October 7, 2010 [sic], to the Second Amended and Restated Credit Agreement among the Registrant, Bank ofAmerica, N.A., as Administrative Agent, Union Bank, National Association, as Syndication Agent, Merrill Lynch, Pierce, Fenner & SmithIncorporated, as Sole Lead Arranger and Sole Book Manager, and the lenders identified therein, dated as of June 30, 2011, isincorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 10-Q filed April 4, 2013. 10.6Amendment No. 2, dated February 8, 2013, to the Second Amended and Restated Credit Agreement among the Registrant, Bank ofAmerica, N.A., as Administrative Agent, Union Bank, National Association, as Syndication Agent, Merrill Lynch, Pierce, Fenner & SmithIncorporated, as Sole Lead Arranger and Sole Book Manager, and the lenders identified therein, dated as of June 30, 2011, isincorporated herein by reference to Exhibit 10.4 to the Registrant’s Form 10-Q filed April 4, 2013. 10.7Amendment No. 3, dated March 20, 2014, to the Second Amended and Restated Credit Agreement among the Registrant, Bank ofAmerica, N.A., as Administrative Agent, Union Bank, National Association, as Syndication Agent, Merrill Lynch, Pierce, Fenner & SmithIncorporated, as Sole Lead Arranger and Sole Book Manager, and the lenders identified therein, dated as of June 30, 2011, isincorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 10-Q filed April 3, 2014. 10.8Amendment No. 4, dated July 18, 2014, to the Second Amended and Restated Credit Agreement among the Registrant, Bank of America,N.A., as Administrative Agent, Union Bank, National Association, as Syndication Agent, Merrill Lynch, Pierce, Fenner & SmithIncorporated, as Sole Lead Arranger and Sole Book Manager, and the lenders identified therein, dated as of June 30, 2011, isincorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed July 24, 2014. 10.9*Amended and Restated Employment Agreement between the Registrant and Mr. William A. Furman, dated August 28, 2012, isincorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 10-Q filed January 9, 2013. 10.10*Form of Amended and Restated Employment Agreement between the Registrant and certain of its executive officers, as amended andrestated on August 28, 2012, is incorporated herein by reference to Exhibit 10.8 to the Registrant’s Form 10-K filed November 1, 2012. 90 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 10.11*Amendment No. 1 to Form of Amended and Restated Employment Agreement between the Registrant and certain of its executiveofficers, as amended and restated on August 28, 2012, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10-Qfiled January 8, 2014. 10.12*Form of Agreement concerning Indemnification and Related Matters (Directors) between Registrant and its directors is incorporatedherein by reference to Exhibit 10.15 to the Registrant’s Form 10-K filed November 10, 2008. 10.13*Form of Agreement concerning Indemnification and Related Matters (Officers) between Registrant and its officers is incorporated hereinby reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed April 4, 2013. 10.14*Consulting Agreement between A. Daniel O’Neal Jr. and Greenbrier Leasing Company LLC, dated December 31, 2010, is incorporatedherein by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed April 7, 2011. 10.15*Consulting Agreement between C. Bruce Ward and Greenbrier Leasing Corporation, dated March 31, 2005 and as amended on January 1,2007, is incorporated herein by reference to Exhibit 10.4 to the Registrant’s Form 8-K filed December 13, 2010. 10.16*Consulting Agreement between Timothy A. Stuckey and the Registrant, dated June 30, 2013, is incorporated herein by reference toExhibit 10.13 to the Registrant’s Form 10-K filed October 31, 2013. 10.17*Form of Change of Control Agreement is incorporated herein by reference to Exhibit 10.26 to the Registrant’s Form 10-K filedNovember 10, 2008. 10.18*Form of Change of Control Agreement is incorporated herein by reference to Exhibit 10.5 to the Registrant’s Form 10-Q filed April 4,2013. 10.19*The Greenbrier Companies, Inc. Form of Amendment to Change of Control Agreement, approved on May 28, 2013, is incorporatedherein by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed June 6, 2013. 10.20*Second Amended and Restated Change of Control Agreement between the Registrant and William Glenn, dated August 28, 2012, isincorporated herein by reference to Exhibit 10.17 to the Registrant’s Form 10-K filed November 1, 2012. 10.21*The Greenbrier Companies, Inc. 2010 Amended and Restated Stock Incentive Plan is incorporated herein by reference to Appendix B tothe Registrant’s Proxy Statement on Schedule 14A filed November 24, 2010. 10.22*Amendment No. 1 to The Greenbrier Companies, Inc. 2010 Amended and Restated Stock Incentive Plan is incorporated herein byreference to Exhibit 10.1 to the Registrant’s Form 10-Q filed April 4, 2013. 10.23*Amendment No. 2 to the Greenbrier Companies, Inc. 2010 Amended and Restated Stock Incentive Plan is incorporated herein byreference to Exhibit 10.2 to the Registrant’s Form 10-Q filed January 8, 2014. 10.24*Form of Director Restricted Share Agreement related to the 2010 Amended and Restated Stock Incentive Plan is incorporated herein byreference to Exhibit 10.2 to the Registrant’s Form 10-Q filed April 7, 2011. 10.25*Form of Director Restricted Share Agreement related to the 2010 Amended and Restated Stock Incentive Plan is incorporated herein byreference to Exhibit 10.1 to the Registrant’s Form 10-Q filed April 3, 2014. 10.26*Form of Director Restricted Share Agreement (2014 Discretionary Director Grants Subject to Shareholder Approval) related to the 2010Amended and Restated Stock Incentive Plan is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filedApril 3, 2014. The Greenbrier Companies 2014 Annual Report 91 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 10.27*Form of Employee Restricted Share Agreement (time and performance vesting) related to the 2010 Amended and Restated StockIncentive Plan is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed July 8, 2011. 10.28*Form of Employee Restricted Share Agreement as amended on April 2, 2012 (time and performance vesting) related to the 2010Amended and Restated Stock Incentive Plan is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filedJune 29, 2012. 10.29*The Greenbrier Companies, Inc. Nonqualified Deferred Compensation Plan Basic Plan Document is incorporated herein by reference toExhibit 10.38 to the Registrant’s Form 10-K filed November 4, 2011. 10.30*The Greenbrier Companies Nonqualified Deferred Compensation Plan Adoption Agreement is incorporated herein by reference toExhibit 10.39 to the Registrant’s Form 10-K filed November 4, 2011. 10.31*Amendment No. 1 to the Greenbrier Companies Nonqualified Deferred Compensation Plan Adoption Agreement, dated May 25, 2011, isincorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed July 8, 2011. 10.32*Amendment No. 2 to the Greenbrier Companies Nonqualified Deferred Compensation Plan Adoption Agreement, dated August 28, 2012,is incorporated herein by reference to Exhibit 10.27 to the Registrant’s Form 10-K filed November 1, 2012. 10.33*Updated Rabbi Trust Agreements, dated October 1, 2012, related to The Greenbrier Companies, Inc. Nonqualified DeferredCompensation Plan, are incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed January 9, 2013. 10.34*The Greenbrier Companies Nonqualified Deferred Compensation Plan Adoption Agreement for Directors, dated July 1, 2012, isincorporated herein by reference to Exhibit 10.28 to the Registrant’s Form 10-K filed November 1, 2012. 10.35*Updated Rabbi Trust Agreements, dated October 1, 2012, related to the Greenbrier Companies, Inc. Nonqualified Deferred CompensationPlan for Directors, are incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed January 9, 2013. 10.36*The Greenbrier Companies, Inc. Form of Restricted Stock Unit Agreement, approved on May 28, 2013, is incorporated herein byreference to Exhibit 10.1 of the Registrant’s Form 8-K filed June 3, 2013. 10.37*The Greenbrier Companies, Inc. Form of Restricted Stock Unit Agreement, approved on May 5, 2014, is incorporated herein by referenceto Exhibit 10.1 of the Registrant’s Form 8-K filed May 9, 2014. 10.38Railcar Remarketing and Management Agreement between Greenbrier Management Services, LLC and WL Ross-Greenbrier Rail I LLC,dated as of April 29, 2010, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed May 3, 2010.** 10.39Advisory Services Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of April 29, 2010, isincorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed May 3, 2010.** 10.40Contract Placement Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of April 29, 2010, isincorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed May 3, 2010.** 10.41Syndication Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of April 29, 2010, isincorporated herein by reference to Exhibit 10.4 to the Registrant’s Form 8-K filed May 3, 2010.** 10.42Amendment to Syndication Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as of August 18,2010, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed August 20, 2010. 92 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 10.43Line of Credit Participation Letter Agreement between Greenbrier Leasing Company LLC and WLR-Greenbrier Rail Inc., dated as ofApril 29, 2010, is incorporated herein by reference to Exhibit 10.5 to the Registrant’s Form 8-K filed May 3, 2010.** 10.44Guaranty of Greenbrier Leasing Company LLC, dated as of April 29, 2010, is incorporated herein by reference to Exhibit 10.6 to theRegistrant’s Form 8-K filed May 3, 2010.** 10.45Guaranty of the Greenbrier Companies, Inc., dated as of August 18, 2010, is incorporated herein by reference to Exhibit 10.2 to theRegistrant’s Form 8-K filed August 20, 2010. 10.46Purchase Agreement among The Greenbrier Companies, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs &Co., dated March 30, 2011, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed April 5, 2011. 10.47The Greenbrier Companies, Inc. Executive Stock Ownership Guidelines, adopted as of August 28, 2012, are incorporated herein byreference to Exhibit 10.39 to the Registrant’s Form 10-K filed November 1, 2012. 10.48Contribution Agreement, dated July 18, 2014, by and among Watco Companies, L.L.C., the Registrant, and with respect to Article III andArticle IX only, GBW Railcar Services Holdings, L.L.C., is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-Kfiled July 24, 2014. 10.49Amended and Restated Limited Liability Company Agreement of GBW Railcar Services Holdings, L.L.C., dated July 18, 2014, by andamong the Registrant, Watco Mechanical Services, L.L.C., and Millennium Rail, Inc., is incorporated herein by reference to Exhibit 10.2to the Registrant’s Form 8-K filed July 24, 2014. 10.50Credit Agreement, dated March 20, 2014, by and among Greenbrier Leasing Company LLC, an Oregon limited liability company, Bankof America, N.A., as Administrative Agent, Union Bank, N.A., as Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated,as Sole Lead Arranger and Sole Book Manager, and the lenders identified therein is incorporated herein by reference to Exhibit 10.1 tothe Registrant’s Form 8-K filed March 26, 2014. 14.1Code of Business Conduct and Ethics is incorporated herein by reference to Exhibit 14.1 to the Registrant’s Form 8-K filed January 11,2012. 21.1List of the subsidiaries of the Registrant. 23.1Consent of KPMG LLP, independent auditors. 31.1Certification pursuant to Rule 13(a) – 14(a). 31.2Certification pursuant to Rule 13(a) – 14(a). 32.1Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101The following financial information from the Company’s Annual Report on Form 10-K for the year ended August 31, 2014, formatted inXBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) theConsolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss) (iv) the Consolidated Statementsof Equity (v) the Consolidated Statements of Cash Flows; (vi) the Notes to Condensed Consolidated Financial Statements. *Management contract or compensatory plan or arrangement **Certain confidential information contained in these Exhibits was omitted by means of redacting a portion of the text and replacing it with brackets and asterisks ([***]). These Exhibits have been filedseparately with the SEC without the redaction and have been granted confidential treatment by the Securities and Exchange Commission pursuant to a Confidential Treatment Request under Rule 24b-2 ofthe Securities Exchange Act of 1934, as amended.Note: For all exhibits incorporated by reference, unless otherwise noted above, the SEC file number is 001-13146. The Greenbrier Companies 2014 Annual Report 93 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.THE GREENBRIER COMPANIES, INC.Dated: October 30, 2014 By: /s/ William A. Furman William A. Furman President and Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated. Signature Date/s/ William A. FurmanWilliam A. Furman, President,Chief Executive Officer and Chairman of the Board October 30, 2014/s/ Duane C. McDougallDuane McDougall, Director October 30, 2014/s/ Graeme A. JackGraeme A. Jack, Director October 30, 2014/s/ Victoria McManusVictoria McManus, Director October 30, 2014/s/ A. Daniel O’Neal, Jr.A. Daniel O’Neal, Jr., Director October 30, 2014/s/ Charles J. SwindellsCharles J. Swindells, Director October 30, 2014/s/ Wendy L. TeramotoWendy L. Teramoto, Director October 30, 2014/s/ C. Bruce WardC. Bruce Ward, Director October 30, 2014/s/ Donald A. WashburnDonald A. Washburn, Director October 30, 2014/s/ Mark J. RittenbaumMark J. Rittenbaum, Executive Vice Presidentand Chief Financial Officer (Principal Financial Officer) October 30, 2014/s/ Adrian J. DownesAdrian J. Downes, Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) October 30, 2014 94 The Greenbrier Companies 2014 Annual Report Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCERTIFICATIONSThe Company filed the required 303A.12(a) New York Stock Exchange Certification of its Chief Financial Officer with the New York Stock Exchange withno qualifications following the 2014 Annual Meeting of Shareholders and the Company filed as an exhibit to its Annual Report on Form 10-K for the yearended August 31, 2013, as filed with the Securities and Exchange Commission, a Certification of the Chief Executive Officer and a Certification of the ChiefFinancial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. The Greenbrier Companies 2014 Annual Report 95 Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21.1THE GREENBRIER COMPANIES, INC.LIST OF SUBSIDIARIESAs of August 31, 2014 Name State ofIncorporation Names Under Which Does Business (if otherthan registered name)Alliance Castings Company, LLC DE Autostack Company LLC OR Brandon Railroad LLC OR Green Union Holdings I LLC OR Green Union I Trust DE Green Union II Trust DE Green Union III Trust DE Greenbrier MUL Holdings I LLC OR MUL Greenbrier, LLC DE Greenbrier Europe B.V. Netherlands Greenbrier Germany GmbH Germany Greenbrier – GIMSA, LLC OR Greenbrier Leasing Company LLC OR Greenbrier IntermodalGreenbrier Leasing Limited Nova Scotia, Canada Greenbrier Leasing Limited Partner, LLC DE Greenbrier Leasing, L.P. DE Greenbrier Management Services, LLC DE CIT Rail ServicesGreenbrier Rail Holdings I, LLC OR Greenbrier Rail Holdings II, LLC OR Greenbrier Rail Holdings III, LLC OR Greenbrier Rail Services Canada Inc Ontario, Canada Greenbrier Rail Services Tierra Blanca S.A. de C.V. Mexico Greenbrier Railcar Leasing, Inc. WA Greenbrier Railcar LLC OR Greenbrier-Concarril, LLC DE Gunderson-Concarril S.A. de C.V. Mexico Greenbrier S.A. de C.V. Mexico Gunderson – GIMSA S. A. de C.V. Mexico Gunderson LLC OR Gunderson Marine LLC OR Gunderson Rail Services LLC OR American HydraulicsGMO PartsGreenbrier Rail ServicesYSD IndustriesGreenbrier CastingsGunderson Specialty Products, LLC DE Meridian Rail Acquisition Corp. OR Greenbrier Rail ServicesMeridian Rail Holdings Corp. OR Meridian Rail Mexico City Corp. OR Mexico Meridian Rail Services, S.A. de C.V. Mexico Ohio Castings Company, LLC DE WagonySwidnica S.A. Poland YSD Doors, S.A. de C.V Mexico Zaklad Naprawczy Taboru Kolejowego Olawa sp. z o.o. Poland Zaklad Naprawczy Transportu Kolejowego Siarkopol SpZoo Poland GBW Rail Services Holdings, L.L.C. DE GBW Railcar Services, L.L.C. DE Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsThe Greenbrier Companies, Inc.:We consent to the incorporation by reference in the registration statements (Nos. 333-127922, 333-172933, 333-157593, 333-187887 and 333-195058) onForm S-8 and registration statements (Nos. 333-136014 and 333-165924) on Form S-3 of The Greenbrier Companies, Inc. and subsidiaries (the “Company”)of our reports dated October 30, 2014, with respect to the consolidated balance sheets of the Company as of August 31, 2014 and 2013, and the relatedconsolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended August 31,2014, and the effectiveness of internal control over financial reporting as of August 31, 2014, which reports appear in the August 31, 2014 annual report onForm 10-K of the Company./s/ KPMG LLPPortland, OregonOctober 30, 2014Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.1CERTIFICATIONSI, William A. Furman, certify that: 1I have reviewed this annual report on Form 10-K of the Greenbrier Companies for the annual period ended August 31, 2014; 2Based 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylike to adversely affect the registrant’s 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 registrant’s internal controlover financial reporting. Date: October 30, 2014/s/ William A. FurmanWilliam A. FurmanPresident and Chief Executive Officer Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.2CERTIFICATIONS (cont’d)I, Mark J. Rittenbaum, certify that: 1.I have reviewed this annual report on Form 10-K of the Greenbrier Companies for the annual period ended August 31, 2014; 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylike to adversely affect the registrant’s 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 registrant’s internal controlover financial reporting. Date: October 30, 2014/s/ Mark J. RittenbaumMark J. RittenbaumExecutive Vice President and Chief Financial Officer Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the annual report of The Greenbrier Companies, Inc. (the Company) on Form 10-K for the annual period ended August 31, 2014 as filedwith the Securities and Exchange Commission on the date therein specified (the Report), I, William A. Furman, President and Chief Executive Officer of theCompany, 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 theCompany. Date: October 30, 2014/s/ William A. FurmanWilliam A. FurmanPresident and Chief Executive Officer Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the annual report of The Greenbrier Companies, Inc. (the Company) on Form 10-K for the annual period ended August 31, 2014 as filedwith the Securities and Exchange Commission on the date therein specified (the Report), I, Mark J. Rittenbaum, Executive Vice President and Chief FinancialOfficer 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 theCompany. Date: October 30, 2014/s/ Mark J. RittenbaumMark J. RittenbaumExecutive Vice President and Chief Financial Officer Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: GREENBRIER COMPANIES INC, 10-K, October 30, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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