UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended January 31, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-566
GREIF, INC.
(Exact name of registrant as specified in its charter)
| 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) | |
Registrant’s telephone number, including area code (740) 549-6000
Not Applicable
Former name, former address and former fiscal year, if changed since last report.
Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of each of the issuer’s classes of common stock at the close of business on January 31, 2005 was as follows:
|
Class A Common Stock |
11,248,336 shares | |
|
Class B Common Stock |
11,561,189 shares |
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except per share amounts)
|
Three months ended January 31, |
||||||||
|
2005 |
2004 |
|||||||
|
Net sales |
$ | 582,564 | $ | 468,860 | ||||
|
Cost of products sold |
493,838 | 399,410 | ||||||
|
|
|
|
|
|
|
|||
|
Gross profit |
88,726 | 69,450 | ||||||
|
Selling, general and administrative expenses |
59,721 | 51,025 | ||||||
|
Restructuring charges |
7,186 | 15,259 | ||||||
|
Gain on sale of assets |
10,344 | 4,109 | ||||||
|
|
|
|
|
|
|
|||
|
Operating profit |
32,163 | 7,275 | ||||||
|
Interest expense, net |
10,093 | 12,247 | ||||||
|
Other income (expense), net |
(766 | ) | 222 | |||||
|
|
|
|
|
|
|
|||
|
Income (loss) before income tax expense (benefit) and equity in earnings of affiliates and minority interests |
21,304 | (4,750 | ) | |||||
|
Income tax expense (benefit) |
5,965 | (1,463 | ) | |||||
|
Equity in earnings of affiliates and minority interests |
(203 | ) | (79 | ) | ||||
|
|
|
|
|
|
|
|||
|
Net income (loss) |
$ | 15,136 | $ | (3,366 | ) | |||
|
|
|
|
|
|
|
|||
|
Basic earnings (loss) per share: |
||||||||
|
Class A Common Stock |
$ | 0.53 | $ | (0.12 | ) | |||
|
Class B Common Stock |
$ | 0.79 | $ | (0.18 | ) | |||
|
Diluted earnings (loss) per share: |
||||||||
|
Class A Common Stock |
$ | 0.52 | $ | (0.12 | ) | |||
|
Class B Common Stock |
$ | 0.79 | $ | (0.18 | ) | |||
See accompanying Notes to Consolidated Financial Statements
2
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
|
January 31,
2005 |
October 31,
2004 |
|||||||
| (Unaudited) | ||||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ | 56,138 | $ | 38,109 | ||||
|
Trade accounts receivable – less allowance of $10,039 in 2005 and $11,454 in 2004 |
263,020 | 307,750 | ||||||
|
Inventories |
212,503 | 191,457 | ||||||
|
Net assets held for sale |
12,511 | 14,753 | ||||||
|
Deferred tax assets |
5,489 | 6,636 | ||||||
|
Prepaid expenses and other |
56,629 | 53,977 | ||||||
|
|
|
|
|
|
|
|||
| 606,290 | 612,682 | |||||||
|
|
|
|
|
|
|
|||
|
Long-term assets |
||||||||
|
Goodwill – less accumulated amortization |
237,211 | 237,803 | ||||||
|
Other intangible assets – less accumulated amortization |
26,503 | 27,524 | ||||||
|
Other long-term assets |
53,277 | 54,547 | ||||||
|
|
|
|
|
|
|
|||
| 316,991 | 319,874 | |||||||
|
|
|
|
|
|
|
|||
|
Properties, plants and equipment |
||||||||
|
Timber properties – less depletion |
128,968 | 129,141 | ||||||
|
Land |
69,855 | 68,349 | ||||||
|
Buildings |
325,224 | 321,183 | ||||||
|
Machinery and equipment |
864,556 | 851,800 | ||||||
|
Capital projects in progress |
40,653 | 37,192 | ||||||
|
|
|
|
|
|
|
|||
| 1,429,256 | 1,407,665 | |||||||
|
Accumulated depreciation |
(554,124 | ) | (526,983 | ) | ||||
|
|
|
|
|
|
|
|||
| 875,132 | 880,682 | |||||||
|
|
|
|
|
|
|
|||
| $ | 1,798,413 | $ | 1,813,238 | |||||
|
|
|
|
|
|
|
|||
See accompanying Notes to Consolidated Financial Statements
3
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
January 31, 2005 |
October 31, 2004 |
|||||||
| (Unaudited) | ||||||||
|
Current liabilities |
||||||||
|
Accounts payable |
$ | 244,950 | $ | 281,265 | ||||
|
Accrued payrolls and employee benefits |
35,704 | 49,633 | ||||||
|
Restructuring reserves |
17,112 | 17,283 | ||||||
|
Short-term borrowings |
9,036 | 11,621 | ||||||
|
Other current liabilities |
77,207 | 77,416 | ||||||
|
|
|
|
|
|
|
|||
| 384,009 | 437,218 | |||||||
|
|
|
|
|
|
|
|||
|
Long-term liabilities |
||||||||
|
Long-term debt |
477,056 | 457,415 | ||||||
|
Deferred tax liability |
149,897 | 148,639 | ||||||
|
Pension liability |
50,288 | 44,036 | ||||||
|
Postretirement benefit liability |
49,734 | 48,667 | ||||||
|
Other long-term liabilities |
32,198 | 46,444 | ||||||
|
|
|
|
|
|
|
|||
| 759,173 | 745,201 | |||||||
|
|
|
|
|
|
|
|||
|
Minority interest |
1,988 | 1,725 | ||||||
|
|
|
|
|
|
|
|||
|
Shareholders’ equity |
||||||||
|
Common stock, without par value |
33,245 | 27,382 | ||||||
|
Treasury stock, at cost |
(70,121 | ) | (65,360 | ) | ||||
|
Retained earnings |
722,597 | 711,919 | ||||||
|
Accumulated other comprehensive loss: |
||||||||
|
- foreign currency translation |
16,343 | 5,655 | ||||||
|
- interest rate derivatives |
(5,416 | ) | (7,097 | ) | ||||
|
- minimum pension liability |
(43,405 | ) | (43,405 | ) | ||||
|
|
|
|
|
|
|
|||
| 653,243 | 629,094 | |||||||
|
|
|
|
|
|
|
|||
| $ | 1,798,413 | $ | 1,813,238 | |||||
|
|
|
|
|
|
|
|||
See accompanying Notes to Consolidated Financial Statements
4
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
|
For the three months ended January 31, |
2005
|
2004
|
||||||
|
Cash flows from operating activities: |
||||||||
|
Net income (loss) |
$ | 15,136 | $ | (3,366 | ) | |||
|
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
|
Depreciation, depletion and amortization |
24,982 | 26,710 | ||||||
|
Asset impairments |
57 | 2,177 | ||||||
|
Deferred income taxes |
3,282 | 8,250 | ||||||
|
Gain on disposals of properties, plants and equipment |
(10,344 | ) | (4,109 | ) | ||||
|
Equity in earnings of affiliates, net of dividends received, and minority interests |
203 | (1,413 | ) | |||||
|
Increase (decrease) in cash from changes in certain assets and liabilities: |
||||||||
|
Trade accounts receivable |
48,713 | 28,456 | ||||||
|
Inventories |
(17,081 | ) | (831 | ) | ||||
|
Prepaid expenses and other |
(1,235 | ) | (4,851 | ) | ||||
|
Other long-term assets |
1,836 | (3,316 | ) | |||||
|
Accounts payable |
(41,402 | ) | (34,851 | ) | ||||
|
Accrued payroll and employee benefits |
(13,929 | ) | (12,366 | ) | ||||
|
Restructuring reserves |
(171 | ) | 3,412 | |||||
|
Other current liabilities |
(2,340 | ) | (1,541 | ) | ||||
|
Pension liability |
6,252 | 5,565 | ||||||
|
Postretirement benefit liability |
1,067 | 683 | ||||||
|
Other long-term liabilities |
(17,272 | ) | (10,888 | ) | ||||
|
|
|
|
|
|
|
|||
|
Net cash used in operating activities |
(2,246 | ) | (2,279 | ) | ||||
|
|
|
|
|
|
|
|||
|
Cash flows from investing activities: |
||||||||
|
Purchases of properties, plants and equipment |
(8,685 | ) | (9,771 | ) | ||||
|
Proceeds on disposals of properties, plants and equipment |
12,934 | 4,200 | ||||||
|
|
|
|
|
|
|
|||
|
Net cash provided by (used in) investing activities |
4,249 | (5,571 | ) | |||||
|
|
|
|
|
|
|
|||
|
Cash flows from financing activities: |
||||||||
|
Proceeds (payments) for long-term debt |
21,535 | (8,451 | ) | |||||
|
(Payments) proceeds for short-term borrowings |
(3,731 | ) | 2,854 | |||||
|
Dividends paid |
(4,458 | ) | (3,816 | ) | ||||
|
Acquisitions of treasury stock |
(5,291 | ) | (2 | ) | ||||
|
Exercise of stock options |
6,182 | 4,679 | ||||||
|
|
|
|
|
|
|
|||
|
Net cash provided by (used in) financing activities |
14,237 | (4,736 | ) | |||||
|
|
|
|
|
|
|
|||
|
Effects of exchange rates on cash |
1,789 | 940 | ||||||
|
|
|
|
|
|
|
|||
|
Net increase (decrease) in cash and cash equivalents |
18,029 | (11,646 | ) | |||||
|
Cash and cash equivalents at beginning of period |
38,109 | 49,767 | ||||||
|
|
|
|
|
|
|
|||
|
Cash and cash equivalents at end of period |
$ | 56,138 | $ | 38,121 | ||||
|
|
|
|
|
|
|
|||
See accompanying Notes to Consolidated Financial Statements
5
GREIF, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2005
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The information furnished herein reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the consolidated balance sheets as of January 31, 2005 and October 31, 2004 and the consolidated statements of operations and cash flows for the three-month periods ended January 31, 2005 and 2004 of Greif, Inc. and subsidiaries (the “Company”). These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended October 31, 2004 (the “2004 Form 10-K”).
The Company’s fiscal year begins on November 1 and ends on October 31 of the following year. Any references to the year 2005 or 2004, or to any quarter of those years, relates to the fiscal year or quarter, as the case may be, ending in that year.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts could differ from those estimates.
Certain prior year amounts have been reclassified to conform to the 2005 presentation.
Stock-Based Compensation
At January 31, 2005, the Company had various stock-based compensation plans as described in Note 10 to the Notes to Consolidated Financial Statements in the 2004 Form 10-K. The Company applies Acco