/2HE  d 1$&%*7'GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES('CONSOLIDATED STATEMENTS OF INCOME7'(Dollars in thousands, except per share amounts)&'For the years ended October 31, "1998 "1997 "1996'Net sales"$801,131"$648,984"$637,368'Other income:'Interest and other "7,466 "12,918 "5,214'Gain on timber sales "21,553 "12,681 "9,626"830,150"674,583"652,208E 'Costs and expenses (including depreciation of $35,585 in 1998,, '$30,660 in 1997 and $26,348 in 1996): 'Cost of products sold "644,892 "562,165 "515,775* 'Selling, general and administrative  "90,282  "74,058  "68,220 'Restructuring costs  "27,461  "6,185  "--'Interest "11,928 "2,670 "517"774,563"645,078"584,512!'Income before income taxes "55,587 "29,505 "67,696'Income taxes "22,483 "11,419 "24,949'Net income"$ 33,104"$ 18,086"$ 42,747,'Basic and diluted earnings per share: "1998 "1997 "1996'Class A Common Stock"$ 1.15"$ .63"$ 1.48'Class B Common Stock"$ 1.71"$ .94"$ 2.22[FN]C'See accompanying Notes to Consolidated Financial Statements.J'Item 8. Financial Statements and Supplementary Data (continued)7'GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES"'CONSOLIDATED BALANCE SHEETS#'(Dollars in thousands)ASSETS'October 31, "1998 "1997'CURRENT ASSETS 'Cash and cash equivalents"$ 41,329"$ 17,719%'Canadian government securities "6,654 "7,5334 'Trade accounts receivable - less allowance of/!'$2,918 for doubtful items ($847 in 1997)!"113,931 !"81,582"'Inventories ""64,851 ""44,892#'Deferred tax asset #"13,355 #"5,719!$'Prepaid expenses and other $"16,626 $"15,473%'Total current assets%"256,746%"172,918&'LONG-TERM ASSETS#''Goodwill - less amortization'"123,677 '"17,352('Other long-term assets ("27,395 ("22,022)"151,072 )"39,3741*'PROPERTIES, PLANTS AND EQUIPMENT - at cost)+'Timber properties - less depletion +"9,067 +"6,884 ,'Land ,"17,294 ,"11,139-'Buildings -"60,839-"139,713.'Machinery and equipment."505,236."424,177#/'Capital projects in progress /"17,045 /"17,5460'Accumulated depreciation0"(287,936)0"(261,662)1"421,5451"337,7972"$829,3632"$550,089[FN]C3'See accompanying Notes to Consolidated Financial Statements.J4'Item 8. Financial Statements and Supplementary Data (continued)75'GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES"6'CONSOLIDATED BALANCE SHEETS7'(Dollars in thousands)+8'LIABILITIES AND SHAREHOLDERS' EQUITY9'October 31, 9"1998 9"1997C:'CURRENT LIABILITIES Outstanding checks in excess of funds on;'deposit;"$ 6,951;"$ 5,122<'Accounts payable <"38,410 <"30,589/='Current portion of long-term obligations ="-- ="8,504->'Accrued payrolls and employee benefits >"9,859 >"9,502?'Restructuring reserves ?"32,411 ?"4,319 @'Other current liabilities @"10,604 @"2,372 A'Total current liabilities A"98,235 A"60,408B'LONG-TERM LIABILITIESC'Long-term obligationsC"235,000 C"43,648D'Deferred tax liability D"36,412 D"29,740'E'Postretirement benefit liability E"25,554 E"--"F'Other long-term liabilities F"17,230 F"16,155"G'Total long-term liabilitiesG"314,196 G"89,543H'SHAREHOLDERS' EQUITY'I'Capital stock, without par value I"9,936 I"9,739TJ'Class A Common Stock: Authorized 32,000,000 shares; issued 21,140,960 shares;NK'outstanding 10,909,672 shares (10,900,672 in 1997)Class B Common Stock:ML'Authorized and issued 17,280,000 shares; outstanding 12,001,793 sharesM'Treasury stock, at costM"(41,858)M"(41,868)CN'Class A Common Stock: 10,231,288 shares (10,240,288 in 1997)-O'Class B Common Stock: 5,278,207 sharesP'Retained earningsP"456,898P"437,550(Q'Cumulative translation adjustmentQ"(8,044)Q"(5,283)R"416,932R"400,138S"$829,363S"$550,089[FN]CT'See accompanying Notes to Consolidated Financial Statements.JU'Item 8. Financial Statements and Supplementary Data (continued)7V'GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES,W'CONSOLIDATED STATEMENTS OF CASH FLOWSX'(Dollars in thousands)&Y'For the years ended October 31, Y"1998 Y"1997 Y"1996,Z'Cash flows from operating activities:['Net income["$ 33,104["$ 18,086["$ 42,747-\'Adjustments to reconcile net income to1]'net cash provided by operating activities:/^'Depreciation, depletion and amortization ^"39,686 ^"31,926 ^"26,420_'Deferred income taxes _"(964) _"4,703 _"9,308.`'Gain on disposals of properties, plantsa'and equipment, neta"(1,747)a"(7,023) a"(412)/b'Increase (decrease) in cash from changesKc'in certain assets and liabilities, net of effects from acquisitions: d'Trade accounts receivabled"(4,271) d"(769) d"4,831e'Inventoriese"(2,794) e"9,660 e"6,356!f'Prepaid expenses and otherf"(1,367)f"(2,563) f"420g'Other long-term assetsg"(5,447)g"(11,719) g"(75)/h'Outstanding checks in excess of funds oni'deposit i"1,829 i"3,979i"(1,840)j'Accounts payable j"(467)j"(2,170)j"(3,641)-k'Accrued payrolls and employee benefitsk"(2,729) k"130k"(1,904)l'Restructuring reserves l"17,858 l"4,319 l"-- m'Other current liabilities m"6,288m"(6,989) m"5,412'n'Postretirement benefit liabilityn"(1,765) n"-- n"--"o'Other long-term liabilities o"(352)o"(1,455)o"(5,716)0p'Net cash provided by operating activities p"76,862 p"40,115 p"81,906Tq'Cash flows from investing activities: Acquisitions of companies, net of cashr'acquiredr"(186,472)r"(41,121) r"(284)-s'Disposals of investments in governmentt'securities t"-- t"12,585 t"1,481-u'Purchases of investments in governmentv'securities v"-- v"(639)v"(1,979)*w'Purchases of properties, plants andx'equipmentx"(38,093)x"(36,193)x"(74,395)+y'Proceeds on disposals of properties,z'plants and equipment z"3,041 z"7,634 z"851,{'Net cash used in investing activities{"(221,524){"(57,734){"(74,326)H|'Cash flows from financing activities: Proceeds from is suance of}'long-term obligations}"271,000 }"52,753 }"11,329(~'Payments on long-term obligations~"(88,152)~"(25,804)~"(3,692))'Payments on short-term obligations "-- "--"(6,668)'Debt issuance costs "(410) "-- "--%'Acquisitions of treasury stock "-- "(31) "-- 'Exercise of stock options "207 "735 "--'Dividends paid"(13,756)"(17,208)"(13,740)/'Net cash provided by (used in) financing'activities"168,889 "10,445"(12,771)('Effects of exchange rates on cash "(617)"(1,667) "139/'Net increase (decrease) in cash and cash'equivalents "23,610"(8,841)"(5,052)-'Cash and cash equivalents at beginning'of year "17,719 "26,560 "31,612/'Cash and cash equivalents at end of year"$ 41,329"$ 17,719"$ 26,560G'[FN]See accompanying notes to Consolidated Financial Statements.