U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-K
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended October 31, 2002
Commission File Number 1-566
 
 
GREIF BROS. CORPORATION
(Exact name of Registrant as specified in its charter)
 
State of Delaware
 
31-4388903
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
425 Winter Road, Delaware, Ohio
 
43015
(Address of principal executive offices)
 
(Zip Code)
 
740-549-6000
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
Class A Common Stock
 
New York Stock Exchange
Class B Common Stock
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
 
Title of Each Class
8 7/8% Senior Subordinated Notes due 2012
 
 
Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. 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 the Registrants knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ¨ .
 
The aggregate market value of voting stock held by non-affiliates of the Registrant as of January 9, 2003 was $76,194,222.
 
The number of shares outstanding of each of the Registrant’s classes of common stock, as of January 9, 2003 was as follows:
 
Class A Common Stock - 10,562,366
Class B Common Stock - 11,757,859
 
Listed hereunder are the documents, portions of which are incorporated by reference, and the parts of this Form 10-K into which such portions are incorporated:
 
 
1.
 
The Registrant’s Proxy Statement for use in connection with the Annual Meeting of Shareholders to be held on February 24, 2003, portions of which are incorporated by reference into Part III of this Form 10-K, which Proxy Statement will be filed within 120 days of October 31, 2002.
 

IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
 
All statements other than statements of historical facts included in this Form 10-K of Greif Bros. Corporation and subsidiaries (the “Company”) or incorporated herein, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected costs, goals and plans and objectives of management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Forward-looking statements speak only as the date the statements were made. Although the Company believes that the expectations reflected in forward-looking statements have a reasonable basis, it can give no assurance that these expectations will prove to be correct. Forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. For a discussion of the most significant risks and uncertainties that could cause the Company’s actual results to differ materially from those projected, see Item 7—Forward-Looking Statements; Certain Factors Affecting Future Results. Except to the limited extent required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
 

PART I
 
Item 1.      Business
 
(a)
 
General Development of Business
 
General
 
The Company is a leading global producer of industrial shipping containers with manufacturing facilities located in over 40 countries. The Company offers a comprehensive line of industrial shipping container products, such as steel, fibre and plastic drums, intermediate bulk containers, closure systems for industrial shipping containers, and polycarbonate water bottles, which are complemented with a variety of value-added services. The Company’s global presence and full range of products uniquely position it to offer its customers a single source for their packaging needs and to be responsive to global market changes. The Company also produces containerboard and value-added corrugated products for niche markets in the United States and Canada. The Company owns timberland in the southeastern United States and Canada which it cuts and sells to third parties, as well as manages to maximize long-term value. The Company’s customers range from Fortune 500 companies to medium and small-sized companies in a cross section of industries.

2

Item 1.      Business (continued)
 
The Company’s history goes back to 1877 when its predecessor manufactured wooden barrels, casks and kegs to transport post-Civil War U.S. goods nationally and internationally. The Company was incorporated as a Delaware corporation in 1926.
 
Recent Acquisitions and Joint Ventures
 
Van Leer Industrial Packaging .    In March 2001, the Company acquired Royal Packaging Industries Van Leer N.V., a Dutch company, Huhtamaki Holdings do Brasil Ltda., a Brazilian company, Van Leer France Holding S.A.S., a French company, Van Leer Containers, Inc., a U.S. company, and American Flange & Manufacturing Co., Inc., a U.S. company, which are collectively referred to as “Van Leer Industrial Packaging.” The Company acquired Van Leer Industrial Packaging for $555.0 million less the amount of certain of its debt and other obligations ($206.4 million) that were assumed by the Company as of the closing date. Van Leer Industrial Packaging was a worldwide provider of industrial packaging and components, including steel, fibre and plastic drums, polycarbonate water bottles, IBCs and closure systems for industrial shipping containers.
 
In connection with the Van Leer Industrial Packaging acquisition, the Company acquired a 25% interest in Socer-Embalagens, Lda. and a 40.06% interest in Balmer Lawrie-Van Leer. Socer-Embalagens reconditions used drums at its facility in Portugal and resells them to customers. Balmer Lawrie-Van Leer manufactures closure systems for industrial shipping containers at its two facilities in India.
 
Great Lakes and Trend Pak .    In April 1999, the Company purchased Great Lakes Corrugated Corp. (“Great Lakes”) and Trend Pak, Inc. (“Trend Pak”) for $20.8 million. Great Lakes manufactures corrugated containers in Toledo, Ohio. Trend Pak adds foam and other packaging materials to corrugated containers manufactured by Great Lakes.
 
Intermediate Bulk Container Business .    In January 1999, the Company purchased the assets constituting the IBC business of Sonoco Products Company (“Sonoco”) for $38.0 million. This business included one location in Lavonia, Georgia.
 
CorrChoice Joint Venture .    In November 1998, the Company entered into a joint venture agreement to form CorrChoice, Inc. (“CorrChoice”) with the then two shareholders of RDJ Holdings Inc. (“RDJ”), which owned one-half of the outstanding stock of Ohio Packaging Corporation (“OPC”), and the then minority shareholder (the “Minority Shareholder”) of a subsidiary of OPC. CorrChoice manufactures corrugated sheets at seven locations in Georgia, Kentucky, Michigan, North Carolina and Ohio. The Company sells containerboard to CorrChoice, which it uses to produce corrugated sheets, and the Company purchases corrugated sheets from CorrChoice, with all transactions effected at prevailing market prices. Under the terms of the joint venture agreement, the Company contributed to CorrChoice all of its

3

Item 1.      Business (continued)
 
stock of Michigan Packaging Company and OPC in exchange for 63.24% of the outstanding stock of CorrChoice. In addition, under the terms of that joint venture agreement, the two shareholders of RDJ contributed all of their stock of RDJ and the Minority Shareholder contributed his stock in the subsidiary of OPC in exchange for an aggregate 36.76% of the outstanding stock of CorrChoice. In connection with the joint venture agreement, the Company entered into a voting agreement under which it can elect one-half of CorrChoice’s board of directors, and therefore, the Company does not control CorrChoice. CorrChoice has been, and is expected to continue to be, self-supporting. Under certain circumstances, the Company may purchase, or be required to purchase, the other parties’ interest in CorrChoice, or the Company may be required to sell its interest to the other parties, at a price determined in the manner described in the relevant agreement.
 
The joint venture agreement and related agreements contain certain covenants and restrictions on certain business activities. These restrictions have not affected the Company’s business or operations in any material respect and have not prevented the Company from pursuing any business opportunities that it desired to pursue.
 
Industrial Containers Business.     In March 1998, the Company acquired the industrial containers business of Sonoco by purchasing all of the outstanding shares of KMI Continental Fibre Drum, Inc., a Delaware corporation (“KMI”), Sonoco Plastic Drum, Inc., an Illinois corporation (“SPD”), GBC Holding Co., a Delaware corporation (“GBC Holding”) and Fibro Tambor, S.A. de C.V., a Mexican corporation (“Fibro Tambor”), and the membership interest of Sonoco in Total Packaging Systems of Georgia, LLC, a Delaware limited liability company (“TPS”), for $182.9 million. KMI, SPD, GBC Holding, Fibro Tambor, TPS and their respective subsidiaries were in the business of manufacturing and selling plastic and fibre drums principally in the United States and Mexico and refurbishing and reconditioning plastic drums principally in the United States and Mexico.
 
(b)
 
Financial Information about Segments
 
The Company operates in three business segments: Industrial Packaging & Services (formerly Industrial Shipping Containers); Paper, Packaging & Services (formerly Containerboard & Corrugated Products); and Timber. Information related to each of these segments is included in Note 14 to the Consolidated Financial Statements on pages 77-80 of this Form 10-K, which Note is part of the consolidated financial statements contained in Item 8 of this Form 10-K, and which is incorporated herein by reference.
 
(c)
 
Narrative Description of Business
 
Products and Services
 
In the Industrial Packaging & Services segment, the Company offers a comprehensive line of industrial shipping container products,

4

Item 1.      Business (continued)
 
such as steel, fibre and plastic drums, intermediate bulk containers (“IBCs”), closure systems for industrial shipping containers, and polycarbonate water bottles. The Company sells its industrial shipping container products to customers in industries such as chemicals, paints and pigments, food and beverage, petroleum, industrial coatings, agricultural, pharmaceutical and mineral, among others.
 
In the Paper, Packaging & Services segment, the Company sells containerboard, corrugated sheets and other corrugated products and multiwall bags to customers in North America in industries such as packaging, automotive, food and building products. The Company’s corrugated container products are used to ship such diverse products as home appliances, small machinery, grocery products, building products, automotive components, books and furniture, as well as numerous other applications. The Company’s full line of industrial and consumer multiwall bag products is used to ship a wide range of industrial and consumer products, such as fertilizers, chemicals, concrete, flour, sugar, feed, seed, pet foods, popcorn, charcoal and salt, primarily for the agricultural, chemical, building products and food industries.
 
The Company also provides its customers with a variety of value-added packaging services to complement its industrial containers and corrugated products, such as total supply chain management services (including warehousing, outgoing logistics, inventory management, vendor management, on-site labor management and contract filling), as well as research and development, engineering and design and testing services.
 
In the Timber segment, the Company is focused on the active harvesting and regeneration of its timber properties to achieve sustainable long-term yields on its timberland. While timber sales are subject to fluctuations, the Company seeks to maintain a consistent cutting schedule, within the limits of market and weather conditions. As of October 31, 2002, the Company owned approximately 276,000 acres of timberland in the southeastern United States and approximately 40,000 acres of timberland in Canada.
 
Customers
 
Due to the variety of its products, the Company has many customers buying different types of its products and, due to the scope of the Company’s sales, no one customer is considered principal in the total operation of the Company.
 
Backlog
 
The business of the Company is not seasonal to any significant extent. Because the Company supplies a cross section of industries, such as chemicals, food products, petroleum products, pharmaceuticals and metal products, and must make spot deliveries on a day-to-day basis as its products are required by its customers, the Company does not operate on a backlog to any significant extent and maintains only

5

Item 1.      Business (continued)
 
limited levels of finished goods. Many customers place their orders weekly for delivery during the week.
 
Competition
 
The markets in which the Company sells its products are highly competitive and comprised of many participants. Although no single company dominates, the Company faces significant competitors in each of its businesses. The Company’s competitors include large vertically integrated companies as well as numerous smaller companies. The industries in which the Company competes are particularly sensitive to price fluctuations caused by shifts in industry capacity and other cyclical industry conditions. Other competitive factors include design, quality and service, with varying emphasis depending on product line.
 
In the industrial shipping containers industry, the Company competes by offering a comprehensive line of products on a global basis. In the paper, packaging and services industry, the Company competes by concentrating on providing value-added, higher-margin corrugated products to niche markets. In addition, over the past several years the Company has closed higher cost facilities and otherwise restructured its operations, which it believes has significantly improved its cost competitiveness.
 
Environmental Matters; Governmental Regulations
 
The Company’s operations are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, the protection of the environment, the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials and numerous other environmental laws and regulations. In the ordinary course of business, the Company is subject to periodic environmental inspections and monitoring by governmental enforcement authorities. In addition, the Company’s production facilities require environmental permits that are subject to revocation, modification and renewal.
 
Based on current information, the Company believes that the probable costs of the remediation of company-owned property and response costs under the Comprehensive Environmental Response, Compensation and Liability Acts of 1980 and similar state laws will not have a material adverse effect on its financial condition or results of operations. The Company believes that its liability for these matters was adequately reserved as of October 31, 2002.
 
The Company does not believe that compliance with federal, state, local and foreign provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had or will have a material effect upon the capital expenditures, earnings, or competitive position of the Company. The Company does not anticipate any material capital expenditures for environmental control facilities for its 2002 fiscal year.

6

 
Item 1.      Business (concluded)
 
Raw Materials
 
Steel, resin and paper are the principal raw materials for the Industrial Packaging & Services segment, and pulpwood, waste paper for recycling, and paper are the principal raw materials for the Paper, Packaging & Services segment. The Company satisfies virtually all of its needs for these raw materials through purchases on the open market or under short-term supply agreements. All of these raw materials are purchased in highly competitive, price-sensitive markets, which have historically exhibited price and demand cyclicality. From time to time, some of these raw materials have been in short supply, but to date these shortages have not had a significant effect on the Company’s operations.
 
Research and Development
 
While research and development projects are important to the Company’s continued growth, the amount expended in any year is not material in relation to the results of operations of the Company.
 
The Company’s business is not materially dependent upon patents, trademarks, licenses or franchises.
 
Employees
 
As of October 31, 2002, the Company had approximately 9,800 employees. A majority of the Company’s North American employees are represented by collective bargaining units. The Company believes that its employee relations are generally good.
 
(d)
 
Financial Information about Geographic Areas
 
The Company’s operations are primarily located in North America, Europe and various other regions. Information related to each of these areas is included in Note 14 to the Consolidated Financial Statements, on pages 78-80 of this Form 10-K, which Note is part of the consolidated financial statements contained in Item 8 of this Form 10-K, and which Note is incorporated herein by reference. Quantitative and Qualitative Disclosures about Market Risk, included in Item 7A of this Form 10-K, is incorporated herein by reference.

7

 

 
Item 2.      Properties
 
The following are the Company’s principal locations and the products manufactured at such facilities or the use of such facilities. The Company considers its operating properties to be in satisfactory condition and adequate to meet its present needs. However, the Company expects to make further additions, improvements and consolidations of its properties as the Company’s business continues to expand.
 
Location
  
Products Manufactured
INDUSTRIAL PACKAGING & SERVICES:
    
Argentina:
    
San Juan
  
Plastic drums
San Fernando del Valle
  
Steel drums
Tigre
  
Steel drums, plastic drums and other
Australia:
    
Altona North
  
Steel drums, plastic drums, intermediate
    bulk containers and other
Brisbane
  
Steel drums and other
Eagle Farm (1)
  
Life cycle services
Marayong
  
Plastic drums and other
Penrith (2)
  
Closures
Perth
  
Steel drums, plastic drums and other
Seven Hills
  
Steel drums and other
Belgium:
    
Lier (22)
  
Steel drums, plastic drums and other
Brazil:
    
Aratu
  
Steel drums
Araucaria
  
Closures
Esteio
  
Steel drums
Manaus (3)
  
Plastic drums
Rio de Janeiro
  
Steel drums
São Paulo
  
Steel drums, plastic drums and other
Canada:
    
Alberta:
    
Lloydminster
  
Fibre drums, steel drums and plastic drums
Ontario:
    
Belleville
  
Plastic drums
Milton
  
Fibre drums
Oakville
  
Steel drums
Stoney Creek
  
Fibre drum parts
Stoney Creek
  
Steel drums
Stoney Creek
  
Fibre drum parts
Quebec:
    
La Salle
  
Fibre drums
Maple Grove
  
Wooden pallets

8

 
Item 2.      Properties (continued)
 
Location
  
Products Manufactured
Chile:
    
Santiago
  
Steel drums
China:
    
Ningbo
  
Steel drums
Liu Jia Gang Town
  
Steel drums
Columbia:
    
Bogotá (4)
  
Steel drums, plastic drums and other
Cartagena
  
Steel drums and plastic drums
Costa Rica:
    
San José (5)
  
Steel drums
Czech Republic:
    
Usi nad Labem
  
Steel drums
Denmark:
    
Roskilde
  
Fibre drums
Egypt:
    
Sadat City
  
Steel drums
France:
    
Autheuil Authouilet (38)
  
Fibre drums, plastic drums and distribution center
Gare de Corréze
  
Distribution Center
Le Grand-Quevilly Cedex (6)
  
Other
Le Grand-Quevilly Cedex (12)
  
Steel drums, intermediate bulk containers,
    closures and distribution center
Germany:
    
Attendorn
  
Steel drums
Haan (7)
  
Closures distribution center
Hamburg-Freihafen (8)
  
Steel drums
Köln-Lövenich
  
Fibre drums, steel drums and other
Monzingen
  
Plastic drums
Greece:
    
Mandra-Attikis
  
Steel drums
Guatemala:
    
Amatitlán
  
Steel drums
Hungary:
    
Almásfüsitö
  
Steel drums
Italy:
    
Melzo
  
Fibre drums, steel drums and plastic drums
Salzano
  
Steel drums

9

 
Item 2.      Properties (continued)
 
Location
 
Products Manufactured
Jamaica:
   
Kingston
 
Distribution center
Kenya:
   
Mombasa (9)
 
Steel drums, plastic drums and other
Malaysia:
   
Petaling Jaya
 
Steel drums, plastic drums and other
Mexico:
   
Cuernavaca
 
Steel drums, fibre drums
Naucalpan de Juarez
 
Plastic drums
Morocco:
   
Casablanca
 
Steel drums and plastic bottles
Mozambique:
   
Maputo (38)
 
Steel drums, plastic bottles and other
Netherlands:
   
Amstelveen
 
General office
Amsterdam
 
Closures
Europoort (10)
 
Steel drums and research center
Vreeland
 
Fibre drums, steel drums and other
New Zealand:
   
Auckland (38)
 
Intermediate bulk containers
Nigeria:
   
Kaduna
 
Steel drums
Koko
 
Steel drums
Lagos (11)
 
Steel drums, plastic drums and other
Philippines:
   
Rizal (14)
 
Steel drums, plastic drums
Poland:
   
Rybnik
 
Steel drums and other
Portugal:
   
Póvoa de Santa Iria
 
Steel drums
Russia:
   
Beloyarsk (14)
 
Steel drums
Moscow
 
Other
Volgograd
 
Steel drums
Singapore:
   
Singapore
 
Steel drums
Singapore (15)
 
Distribution center

10

 
Item 2.      Properties (continued)
 
Location
 
Products Manufactured
South Africa:
   
Eppingdust
 
Steel drums
Ladysmith
 
Plastic drums
Mobeni
 
Steel drums, closures and other
Port Elizabeth (38)
 
Distribution center
Vanderbijlpark
 
Steel drums and other
Spain:
   
Reus (Tarragona)
 
Steel drums, distribution center and other
Sweden:
   
Perstorp
 
Fibre drums and warehouse
Västerhäninge (16)
 
Steel drums
Turkey:
   
Kocaeli
 
Steel drums and other
United Kingdom:
   
Burton-on-Trent
 
Steel drums and other
Deeside (17)
 
Closures and other
Ellesmere Port
 
Steel drums
Ellesmere Port
 
Fibre drums, plastic drums and other
Hull
 
Steel drums
Kingston-Upon-Hull (38)
 
Plastic drums
Uruguay:
   
Las Piedras (18)
 
Steel drums and plastic drums
Venezuela:
   
Punto Fijo
 
Steel drums
Valencia
 
Steel drums, plastic drums and other
Zimbabwe:
   
Harare
 
Steel drums, plastic drums and other
United States:
   
Alabama:
   
Creola (39)
 
Fibre drums
Arkansas:
   
Batesville (38)
 
Fibre drums
California:
   
Fontana (39)
 
Steel drums
La Palma (39)
 
Fibre drums
Merced (39)
 
Steel drums
Morgan Hill (39)
 
Fibre drums
Ontario (13)
 
Distribution center

11

 
Item 2.      Properties (continued)
 
Location
 
Products Manufactured
Colorado:
   
Denver (19)
 
Distribution center
Connecticut:
   
Windsor Locks (20)
 
Fibre drums
Georgia:
   
Lawrenceville (39)
 
Intermediate bulk containers
Lavonia (39)
 
Intermediate bulk containers
Lithonia (39)
 
Fibre drums and laminator
Illinois:
   
Alsip (39)
 
Steel drums
Bradley (21)
 
Plastic drums
Bradley (38)
 
Other
Carol Stream (39)
 
Closures
Lockport (39)
 
Plastic drums
Lombard (23)
 
Research center
Naperville (24)
 
Fibre drums
Kansas:
   
Kansas City (25)
 
Fibre drums
Winfield
 
Steel drums
Kentucky:
   
Florence (39)
 
Steel drums
Mount Sterling (39)
 
Plastic drums
Massachusetts:
   
Mansfield
 
Fibre drums and plastic drums
Michigan:
   
Midland (26)
 
Distribution center
Taylor
 
Fibre drums
Minnesota:
   
Minneapolis
 
Fibre drums
Mississippi:
   
Canton (38)
 
Steel drums
Missouri:
   
Wright City (27)
 
Fibre drums
New Jersey:
   
Englishtown (28)
 
Fibre drums
Spotswood
 
Fibre drums
Teterboro
 
Fibre drums

12

 
Item 2.      Properties (continued)
 
Location
 
Products Manufactured
New York:
   
Tonawanda (39)
 
Fibre drums
North Carolina:
   
Bladenboro
 
Steel drums
Charlotte (29)
 
Fibre drums
Ohio:
   
Greenville (39)
 
Steel drums
Van Wert (39)
 
Fibre drums
Pennsylvania:
   
Aston (39)
 
Fibre drums
Stroudsburg
 
Steel parts
Warminster (32)
 
Steel drums
West Hazleton (31)
 
Plastic drums
Tennessee:
   
Kingsport
 
Fibre drums
Texas:
   
Haltom City (39)
 
Fibre drums
Houston (33)(39)
 
Fibre drums
Houston (34)(39)
 
Plastic drums
La Porte (39)
 
Steel drums
La Porte (39)
 
Steel drums
West Virginia:
   
Culloden (35)
 
Fibre drums
PAPER, PACKAGING & SERVICES: