GREIF INC.

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 April 30, 2009

¨	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 001-00566

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.

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

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 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	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

The number of shares outstanding of each of the issuer’s classes of common stock at the close of business on April 30, 2009 was as follows:

Class A Common Stock	24,360,723 shares
Class B Common Stock	22,462,266 shares

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollars in thousands, except per share amounts)

	Three months ended					Six months ended
	April 30,					April 30,
	2009		2008			2009			2008
Net sales	$	647,897	$	918,019		$	1,314,157		$	1,764,311
Cost of products sold		533,816		758,851			1,099,521			1,456,819
Gross profit		114,081		159,168			214,636			307,492

Selling, general and administrative expenses		65,695		83,431			124,129			163,943
Restructuring charges		20,295		7,337			47,471			17,812
Timberland disposals, net		-		100			-			190
Gain on disposal of properties, plants and equipment, net		2,237		12,971			4,554			49,745
Operating profit		30,328		81,471			47,590			175,672

Interest expense, net		13,403		13,296			25,602			25,052
Debt extinguishment charge		782		-			782			-
Other income (expense), net		1,957		(3,780	)		170			(7,110	)

Income before income tax expense and equity in earnings (losses) of affiliates and minority interests		18,100		64,395			21,376			143,510

Income tax expense		5,960		14,748			6,926			33,438
Equity in earnings (losses) of affiliates and minority interests		2		(993	)		(1,042	)		(731	)
Net income	$	12,142	$	48,654		$	13,408		$	109,341

Basic earnings per share:
Class A Common Stock	$	0.21	$	0.84		$	0.24		$	1.88
Class B Common Stock	$	0.31	$	1.25		$	0.34		$	2.81

Diluted earnings per share:
Class A Common Stock	$	0.21	$	0.82		$	0.24		$	1.85
Class B Common Stock	$	0.31	$	1.25		$	0.34		$	2.81

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

ASSETS

	April 30, 2009			October 31, 2008
	(Unaudited)
Current assets
Cash and cash equivalents	$	66,775		$	77,627
Trade accounts receivable, less allowance of $14,400 in 2009 and $13,532 in 2008		309,296			392,537
Inventories		244,074			303,994
Deferred tax assets		28,307			33,206
Net assets held for sale		24,188			21,321
Prepaid expenses and other current assets		83,027			93,965
		755,667			922,650

Long-term assets
Goodwill		531,581			512,973
Other intangible assets, net of amortization		102,630			104,424
Assets held by special purpose entities (Note 8)		50,891			50,891
Other long-term assets		106,659			88,563
		791,761			756,851

Properties, plants and equipment
Timber properties, net of depletion		203,154			199,701
Land		117,061			119,679
Buildings		339,247			343,702
Machinery and equipment		1,043,859			1,046,347
Capital projects in progress		108,195			91,549
		1,811,516			1,800,978
Accumulated depreciation		(761,814	)		(734,581	)
		1,049,702			1,066,397
	$	2,597,130		$	2,745,898

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

	April 30, 2009			October 31, 2008
	(Unaudited)
Current liabilities
Accounts payable	$	195,146		$	384,648
Accrued payroll and employee benefits		50,613			91,498
Restructuring reserves		25,327			15,147
Short-term borrowings		57,862			44,281
Other current liabilities		76,286			136,227
		405,234			671,801

Long-term liabilities
Long-term debt		828,162			673,171
Deferred tax liabilities		183,654			183,021
Pension liabilities		13,431			14,456
Postretirement benefit liabilities		25,246			25,138
Liabilities held by special purpose entities (Note 8)		43,250			43,250
Other long-term liabilities		98,794			75,521
		1,192,537			1,014,557

Minority interest		4,762			3,729

Shareholders' equity
Common stock, without par value		94,412			86,446
Treasury stock, at cost		(115,511	)		(112,931	)
Retained earnings		1,124,734			1,155,116
Accumulated other comprehensive loss:
- foreign currency translation		(78,025	)		(39,693	)
- interest rate derivatives		(1,014	)		(1,802	)
- energy and other derivatives		(2,382	)		(4,299	)
- minimum pension liabilities		(27,617	)		(27,026	)
		994,597			1,055,811
	$	2,597,130		$	2,745,898

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

For the six months ended April 30,	2009			2008
Cash flows from operating activities:
Net income	$	13,408		$	109,341
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion and amortization		49,518			52,638
Asset impairments		11,620			10,236
Deferred income taxes		5,532			(77,659	)
Gain on disposals of properties, plants and equipment, net		(4,554	)		(49,745	)
Timberland disposals, net		-			(190	)
Equity in losses of affiliates and minority interests		1,042			731
Increase (decrease) in cash from changes in certain assets and liabilities:
Trade accounts receivable		81,917			(40,544	)
Inventories		54,957			(29,004	)
Prepaid expenses and other current assets		8,595			(6,763	)
Other long-term assets		(12,044	)		(3,401	)
Accounts payable		(242,598	)		(19,162	)
Accrued payroll and employee benefits		(40,581	)		(13,294	)
Restructuring reserves		10,180			(4,235	)
Other current liabilities		(54,041	)		31
Pension and postretirement benefit liabilities		(917	)		(2,101	)
Other long-term liabilities		23,453			107,041
Other		41,595			(84,393	)
Net cash used in operating activities		(52,918	)		(50,473	)

Cash flows from investing activities:
Acquisitions of companies, net of cash acquired		(19,201	)		(66,605	)
Purchases of properties, plants and equipment		(53,472	)		(69,500	)
Purchases of timber properties		(600	)		(1,300	)
Proceeds from the sale of properties, plants, equipment and other assets		5,249			51,440
Purchases of land rights and other		-			(308	)
Receipt of notes receivable		-			33,178
Net cash used in investing activities		(68,024	)		(53,095	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,974,879			1,156,574
Payments on long-term debt		(1,819,597	)		(1,072,834	)
Proceeds from short-term borrowings		14,361			29,996
Dividends paid		(43,790	)		(32,391	)
Acquisitions of treasury stock and other		(3,145	)		(10,899	)
Exercise of stock options		272			3,152
Debt issuance cost		(8,309	)		-
Net cash provided by financing activities		114,671			73,598
Effects of exchange rates on cash		(4,581	)		3,249
Net decrease in cash and cash equivalents		(10,852	)		(26,721	)
Cash and cash equivalents at beginning of period		77,627			123,699
Cash and cash equivalents at end of period	$	66,775		$	96,978

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2009

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 April 30, 2009 and October 31, 2008 and the consolidated statements of income and cash flows for the three-month and six-month periods ended April 30, 2009 and 2008 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, 2008 (the “2008 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 2009 or 2008, 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 (“GAAP”) 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 2009 presentation.

Industrial Packaging and Paper Packaging Acquisitions and Divestitures

During the first six months of 2009, the Company completed acquisitions of two small North America industrial packaging companies and made a contingent purchase price payment related to a 2005 acquisition for an aggregate purchase price of $19.2 million. Both acquisitions occured in February 2009 and are expected to complement the Company’s existing product lines. These acquisitions, included in operating results from the acquisition dates, were accounted for using the purchase method of accounting and, accordingly, the purchase prices were allocated to the assets purchased and liabilities assumed based upon their estimated fair values at the dates of acquisition. The estimated fair values of the net assets acquired were $4.2 million (including $4.0 million of accounts receivable and $0.2 million of inventory) and liabilities assumed were $1.3 million. Identifiable intangible assets, with a combined fair value of $4.3 million, including trade-names, customer relationships, and certain non-compete agreements, have been recorded for these acquisitions. The excess of the purchase prices over the estimated fair values of the net tangible and intangible assets acquired of $12.0 million was recorded as goodwill. The final allocation of the purchase prices may differ due to additional refinements in the fair values of the net assets acquired as well as the execution of consolidation plans to eliminate duplicate operations, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” This is due to the valuation of certain other assets and liabilities that are subject to refinement and therefore the actual fair value may vary from the preliminary estimates. Adjustments to the acquired net assets resulting from final valuations are not expected to be significant. The Company is finalizing certain closing date adjustments with the sellers, as well as the allocation of income tax adjustments.

During 2008, the Company completed acquisitions of four industrial packaging companies and one paper packaging company and made a contingent purchase price payment related to an acquisition from October 2005 for an aggregate purchase price of $90.3 million. These five acquisitions consisted of a joint venture in the Middle East in November 2007, acquisition of a 70 percent interest in a South American company in November 2007, the acquisition of a North American company in December 2007, the acquisition of a company in Asia in May 2008, and the acquisition of a North American paper packaging company in July 2008. These industrial packaging and paper packaging acquisitions complement the Company’s existing product lines that together will provide growth opportunities and scale. These acquisitions, included in operating results from the acquisition dates, were accounted for using the purchase method of accounting and, accordingly, the purchase prices were allocated to the assets purchased and liabilities assumed based upon their estimated fair values at the dates of acquisition. The estimated fair values of the net assets acquired were $65.5 million (including $12.2 million of accounts receivable and $7.4 million of inventory) and liabilities assumed were $43.2 million. Identifiable intangible assets, with a combined fair value of $19.5 million, including trade-names, customer relationships, and certain non-compete agreements, have been recorded for these acquisitions. The excess of the purchase prices over the estimated fair values of the net tangible and intangible assets acquired of $48.5 million was recorded as goodwill. The final allocation of the purchase price of the July 2008 paper packaging acquisition may differ due to additional refinements in the fair values of the net assets acquired, in accordance with SFAS No. 141, “Business Combinations.” This is due to the valuation of certain other assets and liabilities that are subject to refinement and therefore the actual fair value may vary from the preliminary estimates. Adjustments to the acquired net assets resulting from final valuations are not expected to be significant. The Company is finalizing the allocation of income tax adjustments. The Company is required to make a contingent payment in 2009 based on a fixed percentage of EBITDA for one acquisition. This payment is currently being negotiated. Furthermore, in December 2010, the Company is required to pay $5.0 million to purchase the land and building that is currently being leased from the seller of one North American industrial packaging acquisition.

The Company implemented various restructuring plans at certain of the 2008 acquired businesses discussed above. The Company’s restructuring activities, which were accounted for in accordance with Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination” (“EITF 95-3”), primarily have included reductions in staffing levels, other exit costs associated with the consolidation of facilities, facility relocation, and the reduction of excess capacity. In connection with these restructuring activities, as part of the cost of the above acquisitions, the Company established reserves, primarily for severance and excess facilities, in the amount of $4.9 million, of which $2.9 million remains in the restructuring reserve at April 30, 2009. These charges primarily reflect severance, other exit costs associated with the consolidation of facilities, and the reduction of excess capacity.

Had the transactions occurred on November 1, 2007, results of operations would not have differed materially from reported results.

During 2008, the Company sold a business unit in Australia, a 51 percent interest in a Zimbabwean operation, three North American paper packaging operations and a North American industrial packaging operation. The net gain from these divestitures was $31.6 million and is included in gain on disposal of properties, plants, and equipment, net in the accompanying 2008 consolidated statement of income. Included in the gain calculation for the disposal in Australia was the reclass to net income of a gain of $37.4 million of accumulated foreign currency translation adjustments.

Stock-Based Compensation Expense

On November 1, 2005, the Company adopted SFAS No. 123(R), “Share-Based Payment,” which requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors, including stock options, restricted stock, restricted stock units and participation in the Company’s employee stock purchase plan. In adopting SFAS No. 123(R), the Company used the modified prospective application transition method, as of November 1, 2005, the first day of the Company’s fiscal year 2006. There was no share-based compensation expense recognized under SFAS No. 123(R) for the first six months of 2009 and 2008.

SFAS No. 123(R) requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense in the Company’s consolidated statements of income over the requisite service periods. The Company will use the straight-line single option method of expensing stock options to recognize compensation expense in its consolidated statements of income for all share-based awards. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense will be reduced to account for estimated forfeitures. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. No options have been granted in 2009 and 2008. For any options granted in the future, compensation expense will be based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R).

Equity Earnings and Minority Interests

Equity earnings represent investments in affiliates in which the Company does not exercise control and has a 20 percent or more voting interest. Such investments in affiliates are accounted for using the equity method of accounting. If the fair value of an investment in an affiliate is below its carrying value and the difference is deemed to be other than temporary, the difference between the fair value and the carrying value is charged to earnings. The Company has an equity interest in six affiliates, and the equity earnings of these interests were recorded in net income. Equity earnings (losses) for the first six months of 2009 and 2008 were ($0.6) million and $1.1 million, respectively. There were no dividends received from our equity method subsidiaries for the six months ended April 30, 2009 and 2008, respectively.

The Company records minority interest expense which reflects the portion of the earnings of majority-owned operations which are applicable to the minority interest partners. The Company has majority holdings in various companies, and the minority interests of other persons in the respective net income of these companies were recorded as an expense. Minority interest expense for the first six months of 2009 and 2008 was $0.4 million and $1.8 million, respectively.

NOTE 2 — RECENT ACCOUNTING STANDARDS

In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141(R), “Business Combinations,” which replaces SFAS No. 141. The objective of SFAS 141(R) is to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS No. 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquiree), including those sometimes referred to as “true mergers” or “mergers of equals” and combinations achieved without the transfer of consideration. SFAS No. 141(R) will apply to any acquisition entered into on or after November 1, 2009, but will have no effect on the Company’s consolidated financial statements for the fiscal year ending October 31, 2009 or any prior fiscal years upon adoption.

In December 2007, the FASB issued SFAS No. 160, “Accounting and Reporting of Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” The objective of SFAS No. 160 is to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements. SFAS No. 160 amends Accounting Research Bulletin ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 also changes the way the consolidated financial statements are presented, establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation, requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated and expands disclosures in the consolidated financial statements that clearly identify and distinguish between the parent’s ownership interest and the interest of the noncontrolling owners of a subsidiary. The provisions of SFAS No. 160 are to be applied prospectively as of the beginning of the fiscal year in which SFAS No. 160 is adopted, except for the presentation and disclosure requirements, which are to be applied retrospectively for all periods presented. SFAS No. 160 will be effective for the Company’s financial statements for the fiscal year beginning November 1, 2009 (2010 for the Company). The Company is currently evaluating the impact that the adoption of SFAS No. 160 will have on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This standard identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with GAAP. The FASB believes that the GAAP hierarchy should be directed to entities because it is the entity, not its auditor, that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Accordingly, the FASB concluded that the GAAP hierarchy should reside in the accounting literature established by the FASB and issued this Statement to achieve that result. The standard will be effective 60 days following the Securities Exchange Commission’s approval of the Public Company Accounting Oversight Board amendment to AU Section 411. The Company is currently evaluating the impact, if any, that the adoption of SFAS No. 162 will have on its consolidated financial statements.

NOTE 3 — SALE OF NON-UNITED STATES ACCOUNTS RECEIVABLE

Pursuant to the terms of a Receivable Purchase Agreement (the “RPA”) dated October 28, 2004, as amended, between Greif Coordination Center BVBA (the “Seller”), an indirect wholly-owned subsidiary of Greif, Inc., and a major international bank (the “Buyer”), the Seller agreed to sell trade receivables meeting certain eligibility requirements that the Seller had purchased from other indirect wholly-owned indirect European subsidiaries of Greif, Inc., under discounted receivables purchase agreements and from an indirect wholly-owned French subsidiary under a factoring agreement. In addition, on October 28, 2005, an indirect wholly-owned Italian subsidiary of Greif, Inc., entered into the Italian Receivables Purchase Agreement with the Italian branch of the major international bank (the “Italian RPA”) and agreed to sell trade receivables that meet certain eligibility criteria to the Italian branch of the major international bank. The Italian RPA is similar in structure and terms as the RPA. The maximum amount of the receivables that may be sold under the RPA and the Italian RPA is €115.0 million ($149.9 million at April 30, 2009).

In October 2007, an indirect wholly-owned Singapore subsidiary of Greif Inc., entered into the Singapore Receivable Purchase Agreement (the “Singapore RPA”) with a major international bank. The maximum amount of the aggregate receivables that may be sold under the Singapore RPA is 10.0 million Singapore Dollars ($6.7 million at April 30, 2009).

In October 2008, an indirect wholly-owned Brazil subsidiary of Greif, Inc., entered into agreements (“the Brazil Agreements”) with Brazilian Banks. There is no maximum amount of aggregate receivables that may be sold under the Brazil Agreements; however, the sale of individual receivables is subject to approval by the banks.

The structure of the transactions provide for a legal true sale, on a revolving basis, of the receivables transferred from the various Greif, Inc. subsidiaries to the respective banks. The bank funds an initial purchase price of a certain percentage of eligible receivables based on a formula with the initial purchase price approximating 75 percent to 90 percent of eligible receivables. The remaining deferred purchase price is settled upon collection of the receivables. At the balance sheet reporting dates, the Company removes from accounts receivable the amount of proceeds received from the initial purchase price since they meet the applicable criteria of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” and continues to recognize the deferred purchase price in its accounts receivable. The receivables are sold on a non-recourse basis with the total funds in the servicing collection accounts pledged to the banks between settlement dates. At April 30, 2009 and October 31, 2008, €60.6 million ($79.0 million) and €106.0 million ($137.8 million), respectively, of accounts receivable were sold under the RPA and Italian RPA. At April 30, 2009 and October 31, 2008, 5.5 million Singapore Dollars ($3.6 million) and 7.8 million Singapore Dollars ($5.3 million), respectively, of accounts receivable were sold under the Singapore RPA. At April 30, 2009 and October 31, 2008, 7.2 million Brazilian Reais ($3.2 million) and 9.5 million Brazilian Reais ($4.5 million), respectively, of accounts receivable were sold under the Brazil Agreements.

At the time the receivables are initially sold, the difference between the carrying amount and the fair value of the assets sold are included as a loss on sale in the consolidated statements of income. Expenses, primarily related to the loss on sale of receivables, associated with the RPA and Italian RPA totaled €0.7 million ($0.9 million) and €1.0 million ($1.6 million) for the three months ended April 30, 2009 and 2008, respectively. Expenses associated with the Singapore RPA and Brazil Agreements were not material to the consolidated financial statements for the three months ended April 30, 2009 and 2008. Additionally, the Company performs collections and administrative functions on the receivables sold similar to the procedures it uses for collecting all of its receivables, including receivables that are not sold under the RPA, the Italian RPA, the Singapore RPA and the Brazil Agreements. The servicing liability for these receivables is not material to the consolidated financial statements.

NOTE 4 — INVENTORIES

Inventories are summarized as follows (Dollars in thousands):

	April 30,			October 31,
	2009			2008
Finished goods	$	64,820		$	71,659
Raw materials and work-in-process		203,129			279,186
		267,949			350,845
Reduction to state inventories on last-in, first-out basis		(23,875	)		(46,851	)
	$	244,074		$	303,994

Inventories are stated at the lower of cost or market, utilizing the first-in, first-out basis (“FIFO”) for approximately 75 percent of consolidated inventories and the last-in, first-out (“LIFO”) basis for approximately 25 percent of consolidated inventories. Approximately 88 percent of inventories in the United States utilize the LIFO basis, and approximately 12 percent utilize the FIFO basis. All Non-United States inventories utilize the FIFO basis.

NOTE 5 — NET ASSETS HELD FOR SALE

Net assets held for sale represent land, buildings and land improvements less accumulated depreciation for locations that meet the classification requirements of net assets held for sale as defined in SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” As of April 30, 2009, there were eleven facilities held for sale. The net assets held for sale are being marketed for sale and it is the Company’s intention to complete the facility sales within the upcoming year.

NOTE 6 — GOODWILL AND OTHER INTANGIBLE ASSETS

The Company annually and on an interim basis, when considered necessary, reviews goodwill and indefinite-lived intangible assets for impairment as required by SFAS No. 142, “Goodwill and Other Intangible Assets.” The Company has concluded that no impairment exists at this time.

Changes to the carrying amount of goodwill by segment for the six-month period ended April 30, 2009 are as follows (Dollars in thousands):

	Industrial Packaging			Paper Packaging			Total
Balance at October 31, 2008	$	480,312		$	32,661		$	512,973
Goodwill acquired		12,035			-			12,035
Goodwill adjustments		10,287			(1,700	)		8,587
Currency translation		(2,014	)		-			(2,014	)
Balance at April 30, 2009	$	500,620		$	30,961		$	531,581

The goodwill acquired of $12.0 million consists of a $2.8 million contingent purchase price payment related to a 2005 acquisition and $9.2 million of preliminary goodwill related to acquisitions in the Industrial Packaging segment during the second quarter. The goodwill adjustments represent a net increase in goodwill of $8.6 million primarily related to the final purchase price adjustments for three of the 2008 acquisitions, the recognition of deferred tax assets and the recording of tax contingency reserves.

All other intangible assets for the periods presented, except for $7.6 million related to the Tri-Sure Trademark, Blagden Express Tradename, and Closed-loop Tradename, are subject to amortization and are being amortized using the straight-line method over periods that range from five to 20 years. The detail of other intangible assets by class as of April 30, 2009 and October 31, 2008 are as follows (Dollars in thousands):

	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
April 30, 2009:
Trademark and patents	$	29,803	$	14,202	$	15,601
Non-compete agreements		17,096		4,618		12,478
Customer relationships		82,798		13,292		69,506
Other		9,802		4,757		5,045
Total	$	139,499	$	36,869	$	102,630

October 31, 2008:
Trademark and patents	$	29,996	$	13,066	$	16,930
Non-compete agreements		16,514		3,470		13,044
Customer relationships		80,017		10,741		69,276
Other		9,624		4,450		5,174
Total	$	136,151	$	31,727	$	104,424

During the first six months of 2009, gross intangible assets increased by $3.3 million. The increase in gross intangible assets is comprised of $4.3 million in preliminary purchase price allocations related to current quarter acquisitions and a $1.0 million decrease of currency fluctuations both related to the Industrial Packaging segment. Amortization expense for the six months ended April 30, 2009 and 2008 was $5.3 million and $4.7 million, respectively. Amortization expense for the next five years is expected to be $13.2 million in 2010, $12.2 million in 2011, $11.2 million in 2012, $8.0 million in 2013 and $7.1 million in 2014.

NOTE 7 — RESTRUCTURING CHARGES

The focus for restructuring activities in 2009 is on business realignment to address the adverse impact resulting from the sharp decline in business throughout the global economy and further implementation of the Greif Business System. During the first six months of 2009, the Company recorded restructuring charges of $47.5 million, consisting of $25.1 million in employee separation costs, $11.6 million in asset impairments and $10.8 million in other costs. In addition, the Company recorded $9.3 million in restructuring-related inventory charges in cost of products sold. Thirteen company-owned plants in the Industrial Packaging segment were closed and the total employees severed that were eligible for severance during the first six months of 2009 were 1,124. The remaining restructuring charges for the above activities are anticipated to be approximately $25 million for the remainder of 2009.

In 2008, the focus for restructuring activities was on integration of acquisitions in the Industrial Packaging segment and on alignment to market-focused strategy and implementation of the Greif Business System in the Paper Packaging segment. During the first six months of 2008, the Company recorded restructuring charges of $17.8 million, consisting of $5.0 million in employee separation costs, $10.2 million in asset impairments, $0.4 million in professional fees and $2.2 million in other costs. Two company-owned plants in the Industrial Packaging segment were closed and the total employees severed during the first six months of 2008 were 270.

For each relevant business segment, costs incurred in 2009 are as follows (Dollars in thousands):

	Three months ended April 30, 2009		Six months ended April 30, 2009		Total Amounts Expected to be Incurred

Industrial Packaging
Employee separation costs	$	11,180	$	23,486	$	38,351
Asset impairments		6,741		11,582		19,273
Inventory adjustments		7,452		9,285		9,299
Other restructuring costs		1,642		9,670		19,948
		27,015		54,023		86,871

Paper Packaging
Employee separation costs		9		1,451		2,343
Asset impairments		-		38		169
Other restructuring costs		723		1,094		1,165
		732		2,583		3,677

Timber
Employee separation costs		-		150		150
		-		150		150

	$	27,747	$	56,756	$	90,698

Amounts in the column Total Amounts Expected to be Incurred above relate to the commencement of restructuring plans which are anticipated to be realized in 2009 and 2010.

The following is a reconciliation of the beginning and ending restructuring reserve balances for the six-month period ended April 30, 2009 (Dollars in thousands):

	Cash Charges						Non-cash Charges
	Employee Separation Costs			Other Costs			Asset Impairments			Inventory Write-down			Total
Balance at October 31, 2008	$	14,413		$	734		$	-		$	-		$	15,147
Costs incurred and charged to expense		25,087			10,764			11,620			-			47,471
Costs incurred and charged to cost of
products sold		-			-			-			9,285			9,285
Reserves established in the purchase price
of business combinations		320			1,294			3,209			-			4,823
Costs paid or otherwise settled		(18,696	)		(8,589	)		(14,829	)		(9,285	)		(51,399	)
Balance at April 30, 2009	$	21,124		$	4,203		$	-		$	-		$	25,327

NOTE 8 — SIGNIFICANT NONSTRATEGIC TIMBERLAND TRANSACTIONS AND CONSOLIDATION OF VARIABLE INTEREST ENTITIES

On May 31, 2005, STA Timber LLC, a wholly owned subsidiary of the Company (“STA Timber”) issued in a private placement its 5.20 percent Senior Secured Notes due August 5, 2020 (the “Monetization Notes”) in the principal amount of $43.3 million. In connection with the sale of the Monetization Notes, STA Timber entered into note purchase agreements with the purchasers of the Monetization Notes (the “Note Purchase Agreements”) and related documentation. The Monetization Notes are secured by a pledge of the Purchase Note and the Deed of Guarantee (as hereafter defined). The Monetization Notes may be accelerated in the event of a default in payment or a breach of the other obligations set forth therein or in the Note Purchase Agreements or related documents, subject in certain cases to any applicable cure periods, or upon the occurrence of certain insolvency or bankruptcy related events. The Monetization Notes are subject to a mechanism that may cause them, subject to certain conditions, to be extended to November 5, 2020. The proceeds from the sale of the Monetization Notes were primarily used for the repayment of indebtedness. The Purchase Note means the $50.9 million purchase note payable by an indirect subsidiary of Plum Creek Timberlands, L.P (“Plum Creek”) as a portion of the purchase price in connection with its purchase from Soterra LLC, a wholly owned subsidiary of the Company, of approximately 56,000 acres of timberland located in Florida, Georgia and Alabama, on May 23, 2005. The Purchase Note is secured by a Deed of Guarantee issued by Bank of America, N.A., London Branch, in an amount not to exceed $52.3 million (the “Deed of Guarantee”), as a guarantee of the due and punctual payment of principal and interest on the Purchase Note.

The Company has consolidated the assets and liabilities of STA Timber in accordance with FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities.” Because STA Timber is a separate and distinct legal entity from Greif, Inc. and its other subsidiaries, the assets of STA Timber are not available to satisfy the liabilities and obligations of these entities and the liabilities of STA Timber are not liabilities or obligations of these entities. In addition, Greif, Inc. and its other subsidiaries have not extended any form of guaranty of the principal or interest on the Monetization Notes. Accordingly, Greif, Inc. and its other subsidiaries will not become directly or contingently liable for the payment of the Monetization Notes at any time.

The Company has also consolidated the assets and liabilities of the buyer-sponsored special purpose entity (the “Buyer SPE”) involved in these transactions as the result of Interpretation 46R. However, because the Buyer SPE is a separate and distinct legal entity from the Company, the assets of the Buyer SPE are not available to satisfy the liabilities and obligations of the Company and the liabilities of the Buyer SPE are not liabilities or obligations of the Company.

Assets of the Buyer SPE at April 30, 2009 and October 31, 2008 consist of restricted bank financial instruments of $50.9 million. STA Timber had long-term debt of $43.3 million as of April 30, 2009 and October 31, 2008. STA Timber is exposed to credit-related losses in the event of nonperformance by the issuer of the Deed of Guarantee, but the Company does not expect that issuer to fail to meet its obligations. The accompanying consolidated income statements for the six month periods ended April 30, 2009 and 2008 include interest expense on STA Timber debt of $1.1 million and interest income on Buyer SPE investments of $1.2 million.

NOTE 9 — DEBT

Long-term debt is summarized as follows (Dollars in thousands):

	April 30,		October 31,
	2009		2008
$700 Million Credit Agreement	$	439,475	$	-
$450 Million Credit Agreement		-		247,597
Senior Notes		300,000		300,000
Trade accounts receivable credit facility		84,000		120,000
Other long-term debt		4,687		5,574
	$	828,162	$	673,171

Credit Agreement

On February 19, 2009, the Company and Greif International Holding B.V., as borrowers, entered into a $700 million Senior Secured Credit Agreement (the “Credit Agreement”) with a syndicate of financial institutions. The Credit Agreement replaced the then existing Credit Agreement (the “Prior Credit Agreement”) that provided the Company with a $450.0 million revolving multicurrency credit facility due 2010. At April 30, 2009, $234.6 million was available under the Credit Agreement. As a result of this transaction, a $0.8 million debt extinguishment charge, which included the write-off of unamortized capitalized debt issuance costs, was recorded.

The Credit Agreement provides for a $500 million revolving multicurrency credit facility and a $200 million term loan, both maturing in February 2012, with an option to add $200 million to the facilities with the agreement of the lenders. The $200 million term loan is scheduled to amortize by $2.5 million each quarter-end for the first four quarters, $5 million each quarter-end for the next eight quarters and $150 million on the maturity date. The Credit Agreement is available to fund ongoing working capital and capital expenditure needs, for general corporate purposes, to finance acquisitions, and to repay amounts outstanding under the Prior Credit Agreement. Interest is based on a Eurodollar rate or a base rate that resets periodically plus a calculated margin amount. On February 19, 2009, $325.3 million borrowed under the revolving credit facility and term loan was used to prepay the obligations outstanding under the Prior Credit Agreement and certain costs and expenses incurred in connection with the Credit Agreement. As of April 30, 2009, $439.5 million was outstanding under the Credit Agreement, which consisted of $242.0 million borrowed on the $500 million revolving multicurrency credit facility and $197.5 million term loan. The weighted average interest rate on the Credit Agreement was 3.28 percent since February 19, 2009, and the interest rate was 3.31 percent at April 30, 2009.

The Credit Agreement contains financial covenants that require the Company to maintain a certain leverage ratio and a fixed charge coverage ratio. At April 30, 2009, the Company was in compliance with these covenants.

Senior Notes

On February 9, 2007, the Company issued $300.0 million of 6 3 /4 percent Senior Notes due February 1, 2017. Interest on the Senior Notes is payable semi-annually. Proceeds from the issuance of Senior Notes were principally used to fund the purchase of previously outstanding 8 7/8 percent Senior Subordinated Notes in a tender offer and for general corporate purposes.

The Indenture pursuant to which the Senior Notes were issued contains certain covenants. At April 30, 2009, the Company was in compliance with these covenants.

United States Trade Accounts Receivable Credit Facility

On December 8, 2008, the Company entered into a $135.0 million trade accounts receivable credit facility with a financial institution and its affiliate, with a maturity date of December 8, 2013, subject to earlier termination of their purchase commitment on December 7, 2009, or such later date to which the purchase commitment may be extended by agreement of the parties. The credit facility is secured by certain of the Company’s trade accounts receivable in the United States and bears interest at a variable rate based on the applicable commercial paper rate plus a margin or other agreed-upon rate (2.09 percent at April 30, 2009). In addition, the Company can terminate the credit facility at any time upon five days prior written notice. A significant portion of the proceeds from this credit facility were used to pay the obligations under the previous credit facility, which was terminated. The remaining proceeds will be used to pay certain fees, costs and expenses incurred in connection with the credit facility and for working capital and general corporate purposes. There was $84.0 million outstanding under the United States trade accounts receivable credit facility at April 30, 2009. The agreement for this receivables financing facility contains financial covenants that require the Company to maintain a certain leverage ratio and an interest coverage ratio. At April 30, 2009, the Company was in compliance with these covenants.

Greif Receivables Funding LLC (“GRF”), an indirect subsidiary of the Company, has participated in the purchase and transfer of receivables in connection with these credit facilities and is included in the Company’s consolidated financial statements. However, because GRF is a separate and distinct legal entity from the Company and its other subsidiaries, the assets of GRF are not available to satisfy the liabilities and obligations of the Company and its other subsidiaries, and the liabilities of GRF are not the liabilities or obligations of the Company and its other subsidiaries. This entity purchases and services the Company’s trade accounts receivable that are subject to these credit facilities.

Other

In addition to the amounts borrowed against the Credit Agreement and proceeds from the Senior Notes and the United States trade accounts receivable credit facility, at April 30, 2009 the Company had other debt outstanding of $62.6 million, comprised of $4.7 million in long-term debt and $57.9 million in short-term borrowings and at October 31, 2008 other debt outstanding of $49.9 million, comprised of $5.6 million in long-term debt and $44.3 million in short-term borrowings.

At April 30, 2009, annual maturities of the Company’s long-term debt under the various financing arrangements were $4.7 million in 2010, $439.5 million in 2012, $84.0 million in 2014 and $300.0 million thereafter.

At April 30, 2009 and October 31, 2008, the Company had deferred financing fees and debt issuance costs of $11.6 million and $4.6 million, respectively, which are included in other long-term assets.

NOTE 10 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The carrying amounts of cash and cash equivalents, trade accounts receivable, accounts payable, current liabilities and short-term borrowings at April 30, 2009 and October 31, 2008 approximate their fair values because of the short-term nature of these items.

The estimated fair value of the Company’s long-term debt was $805.7 million and $619.2 million as compared to the carrying amounts of $828.2 million and $673.2 million at April 30, 2009 and October 31, 2008, respectively. The fair values of the Company’s long-term obligations are estimated based on either the quoted market prices for the same or similar issues or the current interest rates offered for debt of the same remaining maturities.

The Company uses derivatives from time to time to partially mitigate the effect of exposure to interest rate movements, exposure to foreign currency fluctuations, and commodity cost fluctuations. The Company records derivatives based on SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and related amendments. This Statement requires that all derivatives be recognized as assets or liabilities in the balance sheet and measured at fair value. Changes in the fair value of derivatives are recognized in either net income or in other comprehensive income, depending on the designated purpose of the derivative.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities–Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits companies to measure many financial instruments and certain other items at fair value at specified election dates. SFAS No. 159 was effective for the Company on November 1, 2008. Since the Company has not utilized the fair value option for any allowable items, the adoption of SFAS No. 159 did not have a material impact on the Company’s financial condition and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value within GAAP and expands required disclosures about fair value measurements. In November 2007, the FASB provided a one year deferral for the implementation of SFAS No. 157 for nonfinancial assets and liabilities. The Company adopted SFAS No. 157 on February 1, 2008, as required. The adoption of SFAS No. 157 did not have a material impact on the Company’s financial condition and results of operations.

SFAS No. 157 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of April 30, 2009, the Company held certain derivative asset and liability positions that are required to be measured at fair value on a Level 2 basis. The majority of the Company’s derivative instruments related to receive fixed-rate, pay floating-rate interest rate swaps and receive fixed-rate, pay fixed-rate cross-currency interest rate swaps. The fair values of these derivatives have been measured in accordance with Level 2 inputs in the fair value hierarchy, and as of April 30, 2009, are as follows (Dollars in thousands):

	Notional Amount		Fair Value Adjustment			Balance Sheet Location
	April 30, 2009		April 30, 2009			April 30, 2009

Cross-currency interest rate swaps	$	300,000	$	11,977		Other long-term assets
Interest rate derivatives		100,000		(1,559	)	Other long-term liabilities
Energy and other derivatives		61,184		(4,608	)	Other current liabilities
Total	$	461,184	$	5,810

The Company has entered into cross-currency interest rate swaps which are designated as a hedge of a net investment in a foreign operation. Under these agreements, the Company receives interest semi-annually from the counterparties equal to a fixed rate of 6.75 percent on $300.0 million and pays interest at a fixed rate of 6.25 percent on €219.9 million. Upon maturity of these swaps on August 1, 2009, August 1, 2010, and August 1, 2012, the Company will be required to pay €73.3 million to the counterparties and receive $100.0 million from the counterparties on each of these dates. The other comprehensive gain on these agreements was $12.0 million and $24.5 million at April 30, 2009 and October 31, 2008, respectively.

The Company has interest rate swap agreements with various maturities through 2011. The interest rate swap agreements are used to fix a portion of the interest on the Company’s variable rate debt. Under certain of these agreements, the Company receives interest quarterly from the counterparties equal to LIBOR and pays interest at a fixed rate (4.93 percent at April 30, 2009) over the life of the contracts.

At April 30, 2009, the Company had outstanding foreign currency forward contracts in the notional amount of $54.9 million ($174.0 million at October 31, 2008). The purpose of these contracts is to hedge the Company’s exposure to foreign currency transactions and short-term intercompany loan balances in its international businesses. The fair value of these contracts at April 30, 2009 resulted in a loss of $0.7 million recorded in other comprehensive income and a loss of $0.3 million recorded in the consolidated statements of income. The fair value of similar contracts at April 30, 2008 resulted in a gain of $0.9 million recorded in other comprehensive income and a loss of $0.1 million recorded in the consolidated statements of income.

The Company has entered into certain cash flow hedges to mitigate its exposure to cost fluctuations in natural gas prices through October 31, 2010. The fair value of the energy hedges was in an unfavorable position of $3.0 million ($2.0 million net of tax) at April 30, 2009, compared to an unfavorable position of $5.2 million ($3.4 million net of tax) at October 31, 2008. As a result of the high correlation between the hedged instruments and the underlying transactions, ineffectiveness has not had a material impact on the Company’s consolidated statements of income for the quarter ended April 30, 2009.

The Company has entered into certain cash flow hedges to mitigate its exposure to cost fluctuations in old corrugated containers (“OCC”) prices through July 31, 2009. The fair value of these hedges was in an unfavorable position of $0.6 million ($0.4 million net of tax). As a result of the high correlation between the hedged instruments and the underlying transactions, ineffectiveness has not had a material impact on the Company’s consolidated statements of income for the quarter ended April 30, 2009.

While the Company may be exposed to credit losses in the event of nonperformance by the counterparties to its derivative financial instrument contracts, its counterparties are established banks and financial institutions with high credit ratings. The Company has no reason to believe that such counterparties will not be able to fully satisfy their obligations under these contracts.

During the next six months, the Company expects to reclassify into earnings a net loss from accumulated other comprehensive income of approximately $3.9 million after tax at the time the underlying hedge transactions are realized.

NOTE 11 — CONTINGENT LIABILITIES

Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability and safety and health matters. While the amounts claimed may be substantial, the ultimate liability cannot now be determined because of considerable uncertainties that exist. Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies.

All lawsuits, claims and proceedings are considered by the Company in establishing reserves for contingencies in accordance with SFAS No. 5, “Accounting for Contingencies.” In accordance with the provisions of SFAS No. 5, the Company accrues for a litigation-related liability when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on currently available information known to the Company, the Company believes that its reserves for these litigation-related liabilities are reasonable and that the ultimate outcome of any pending matters is not likely to have a material adverse effect on the Company’s financial position or results from operations.

NOTE 12 — CAPITAL STOCK

Class A Common Stock is entitled to cumulative dividends of 1 cent a share per year after which Class B Common Stock is entitled to non-cumulative dividends up to one half (1/2) cent per share per year. Further distribution in any year must be made in proportion of one cent a share for Class A Common Stock to one and one-half (1 ½) cents a share for Class B Common Stock. The Class A Common Stock has no voting rights unless four quarterly cumulative dividends upon the Class A Common Stock are in arrears or unless changes are proposed to the Company’s certificate of incorporation. The Class B Common Stock has full voting rights. There is no cumulative voting for the election of directors.

The following table summarizes the Company’s Class A and Class B common and treasury shares at the specified dates:

	Authorized Shares		Issued Shares		Outstanding Shares		Treasury Shares
April 30, 2009:
Class A Common Stock		128,000,000		42,281,920		24,360,723		17,921,197
Class B Common Stock		69,120,000		34,560,000		22,462,266		12,097,734

October 31, 2008: