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
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 | ||||||