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, 2007

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 001-00566

 


LOGO

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer      x                  Accelerated filer      ¨                  Non-accelerated filer      ¨

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, 2007 was as follows:

 

Class A Common Stock

   23,613,318 shares

Class B Common Stock

   22,985,666 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

April 30,

   

Six months ended

April 30,

 
     2007     2006     2007     2006  

Net sales

   $ 815,043     $ 620,107     $ 1,565,802     $ 1,202,423  

Cost of products sold

     672,512       510,664       1,293,185       1,003,308  
                                

Gross profit

     142,531       109,443       272,617       199,115  

Selling, general and administrative expenses

     77,670       62,378       152,279       121,832  

Restructuring charges

     4,049       10,287       6,086       15,755  

Gain (loss) on sale of timberlands

     (382 )     9,238       (320 )     40,807  

Gain on sale disposal of properties, plants and equipment, net

     3,448       5,548       8,587       7,190  
                                

Operating profit

     63,878       51,564       122,519       109,525  

Interest expense, net

     10,046       9,794       22,080       18,967  

Debt extinguishment charge

     23,479       —         23,479       —    

Other income (loss), net

     (4,327 )     1,186       (5,063 )     793  
                                

Income before income tax expense

     26,026       42,956       71,897       91,351  

Income tax expense

     7,278       13,365       18,837       28,319  

Equity in earnings (loss) of affiliates and minority interests

     (124 )     (898 )     (457 )     (987 )
                                

Net income

   $ 18,624     $ 28,693     $ 52,603     $ 62,045  
                                

Basic earnings per share:

        

Class A Common Stock

   $ 0.32     $ 0.50     $ 0.91     $ 1.08  

Class B Common Stock

   $ 0.48     $ 0.75     $ 1.36     $ 1.61  

Diluted earnings per share:

        

Class A Common Stock

   $ 0.32     $ 0.49     $ 0.89     $ 1.06  

Class B Common Stock

   $ 0.48     $ 0.75     $ 1.36     $ 1.61  

See accompanying Notes to Consolidated Financial Statements

 

1

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

ASSETS

 

     April 30,
2007
    October 31,
2006
 
     (Unaudited)        

Current assets

    

Cash and cash equivalents

   $ 115,370     $ 187,101  

Trade accounts receivable, less allowance of $11,896 in 2007 and $8,575 in 2006

     350,769       315,661  

Inventories

     247,489       205,004  

Net assets held for sale

     4,663       3,374  

Deferred tax assets

     15,118       15,814  

Prepaid expenses and other current assets

     94,038       66,083  
                
     827,447       793,037  

Long-term assets

    

Long-term notes receivable

     32,008       626  

Goodwill, net of amortization

     407,283       286,552  

Other intangible assets, net of amortization

     136,180       63,587  

Assets held by special purpose entities (Note 8)

     50,891       50,891  

Other long-term assets

     72,786       52,359  
                
     699,148       454,015  
                

Properties, plants and equipment

    

Timber properties, net of depletion

     193,974       195,115  

Land

     130,053       81,768  

Buildings

     340,127       317,110  

Machinery and equipment

     1,005,870       930,924  

Capital projects in progress

     72,536       53,099  
                
     1,742,560       1,578,016  

Accumulated depreciation

     (696,154 )     (637,067 )
                
     1,046,406       940,949  
                
   $ 2,573,001     $ 2,188,001  
                

See accompanying Notes to Consolidated Financial Statements

 

2

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

     April 30,
2007
    October 31,
2006
 
     (Unaudited)        

Current liabilities

    

Accounts payable

   $ 317,155     $ 301,753  

Accrued payrolls and employee benefits

     53,314       65,513  

Restructuring reserves

     4,274       8,391  

Short-term borrowings

     53,036       29,321  

Other current liabilities

     103,773       86,321  
                
     531,552       491,299  

Long-term liabilities

    

Long-term debt

     723,120       481,408  

Deferred tax liability

     203,987       179,329  

Pension liability

     14,672       18,639  

Postretirement benefit liability

     47,534       47,702  

Liabilities held by special purpose entities (Note 8)

     43,250       43,250  

Other long-term liabilities

     114,842       77,488  
                
     1,147,405       847,816  
                

Minority interest

     4,952       4,875  
                

Shareholders' equity

    

Common stock, without par value

     67,747       56,765  

Treasury stock, at cost

     (86,304 )     (81,643 )

Retained earnings

     933,076       901,267  

Accumulated other comprehensive income (loss):

    

- foreign currency translation

     5,972       1,525  

- interest rate derivatives

     (377 )     (1,861 )

- energy and other derivatives

     75       (945 )

- minimum pension liability

     (31,097 )     (31,097 )
                
     889,092       844,011  
                
   $ 2,573,001     $ 2,188,001  
                

See accompanying Notes to Consolidated Financial Statements

 

3

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

 

For the six months ended April 30,

   2007     2006  

Cash flows from operating activities:

    

Net income

   $ 52,603     $ 62,045  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation, depletion and amortization

     53,276       47,999  

Asset impairments

     939       5,525  

Deferred income taxes

     27,081       12,436  

Gain on disposal of properties, plants and equipment, net

     (8,587 )     (7,190 )

Loss (gain) on the sale of timberland (Note 8)

     320       (40,807 )

Loss on extinguishment of debt

     23,479       —    

Equity in losses (earnings) of affiliates and minority interests

     457       987  

Increase (decrease) in cash from changes in certain assets and liabilities:

    

Trade accounts receivable

     17,479       (28,970 )

Inventories

     (7,422 )     (3,322 )

Prepaid expenses and other current assets

     (28,587 )     (32,498 )

Other long-term assets

     (73,347 )     1,353  

Long-term notes receivable

     (8,159 )     626  

Accounts payable

     (4,844 )     7,578  

Accrued payroll and employee benefits

     (12,874 )     (176 )

Restructuring reserves

     (4,117 )     (3,297 )

Other current liabilities

     (1,786 )     (10,965 )

Pension and postretirement benefit liability

     (4,135 )     2,138  

Other long-term liabilities

     59,931       35,032  
                

Net cash provided by operating activities

     81,707       48,494  
                

Cash flows from investing activities:

    

Acquisitions of companies, net of cash acquired

     (311,108 )     —    

Purchases of properties, plants and equipment

     (74,225 )     (45,503 )

Purchases of timber properties

     (400 )     (36,667 )

Increase in notes receivable

     (29,748 )     —    

Proceeds from the sale of properties, plants and equipment

     13,122       52,282  
                

Net cash used in investing activities

     (402,359 )     (29,888 )
                

Cash flows from financing activities:

    

Proceeds from issuance of long-term debt

     1,254,588       480,544  

Payments on long-term debt

     (1,012,876 )     (458,685 )

Proceeds from short-term borrowings

     46,552       11,141