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, 2008

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, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” “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, 2008 was as follows:

 

Class A Common Stock

   23,957,800 shares

Class B Common Stock

   22,764,766 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, 		 
     2008     2007     2008     2007  

Net sales

   $ 918,019     $ 815,043     $ 1,764,311     $ 1,565,802  

Cost of products sold

     758,851       672,512       1,456,819       1,293,185  
                                

Gross profit

     159,168       142,531       307,492       272,617  

Selling, general and administrative expenses

     83,431       77,670       163,943       152,279  

Restructuring charges

     7,337       4,049       17,812       6,086  

Timberland disposals, net

     100       (382 )     190       (320 )

Gain on disposal of properties, plants and equipment, net

     12,971       3,448       49,745       8,587  
                                

Operating profit

     81,471       63,878       175,672       122,519  

Interest expense, net

     13,296       10,046       25,052       22,080  

Debt extinguishment charge

     —         23,479       —         23,479  

Other expense, net

     (3,780 )     (4,327 )     (7,110 )     (5,063 )
                                

Income before income tax expense and equity earnings and minority interests

     64,395       26,026       143,510       71,897  

Income tax expense

     14,748       7,278       33,438       18,837  

Equity earnings and minority interests

     (993 )     (124 )     (731 )     (457 )
                                

Net income

   $ 48,654     $ 18,624     $ 109,341     $ 52,603  
                                

Basic earnings per share:

        

Class A Common Stock

   $ 0.84     $ 0.32     $ 1.88     $ 0.91  

Class B Common Stock

   $ 1.25     $ 0.48     $ 2.81     $ 1.36  

Diluted earnings per share:

        

Class A Common Stock

   $ 0.82     $ 0.32     $ 1.85     $ 0.89  

Class B Common Stock

   $ 1.25     $ 0.48     $ 2.81     $ 1.36  

See accompanying Notes to Consolidated Financial Statements

 

1

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

ASSETS

 

     April 30,
2008 		    October 31,
2007 		 
     (Unaudited)        

Current assets

    

Cash and cash equivalents

   $ 96,978     $ 123,699  

Trade accounts receivable, less allowance of $11,722 in 2008 and $12,539 in 2007

     399,616       339,328  

Inventories

     288,000       242,994  

Deferred tax assets

     20,904       27,917  

Net assets held for sale

     15,952       11,564  

Prepaid expenses and other current assets

     109,225       96,283  
                
     930,675       841,785  
                

Long-term assets

    

Goodwill

     539,446       493,252  

Other intangible assets, net of amortization

     104,271       96,256  

Assets held by special purpose entities (Note 8)

     50,891       50,891  

Long-term notes receivable

     3,363       36,434  

Other long-term assets

     57,524       59,547  
                
     755,495       736,380  
                

Properties, plants and equipment

    

Timber properties, net of depletion

     198,941       197,235  

Land

     129,602       126,018  

Buildings

     366,744       356,878  

Machinery and equipment

     1,070,202       1,032,677  

Capital projects in progress

     125,860       90,659  
                
     1,891,349       1,803,467  

Accumulated depreciation

     (786,634 )     (728,921 )
                
     1,104,715       1,074,546  
                
   $ 2,790,885     $ 2,652,711  
                

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,
2008 		    October 31,
2007 		 
     (Unaudited)        

Current liabilities

    

Accounts payable

   $ 379,014     $ 411,095  

Accrued payroll and employee benefits

     73,500       84,977  

Restructuring reserves

     10,707       15,776  

Short-term borrowings

     47,679       15,848  

Other current liabilities

     136,204       121,214  
                
     647,104       648,910  
                

Long-term liabilities

    

Long-term debt

     722,492       622,685  

Deferred tax liabilities

     74,822       159,494  

Pension liability

     19,287       19,892  

Postretirement benefit liabilities

     31,487       32,983  

Liabilities held by special purpose entities (Note 8)

     43,250       43,250  

Other long-term liabilities

     226,221       119,180  
                
     1,117,559       997,484  
                

Minority interest

     6,424       6,405  
                

Shareholders’ equity

    

Common stock, without par value

     80,707       75,156  

Treasury stock, at cost

     (102,605 )     (92,028 )

Retained earnings

     1,074,236       1,004,300  

Accumulated other comprehensive income (loss):

    

- foreign currency translation

     (316 )     43,260  

- interest rate derivatives

     (2,782 )     (997 )

- energy and other derivatives

     528       226  

- minimum pension liability

     (29,970 )     (30,005 )
                
     1,019,798       999,912  
                
   $ 2,790,885     $ 2,652,711  
                

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,

   2008     2007  

Cash flows from operating activities:

    

Net income

   $ 109,341     $ 52,603  

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

    

Depreciation, depletion and amortization

     52,638       53,276  

Asset impairments

     10,236       939  

Deferred income taxes

     (77,659 )     27,081  

Gain on disposals of properties, plants and equipment, net

     (49,745 )     (8,587 )

Timberland disposals, net (Note 8)

     (190 )     320  

Loss on extinguishment of debt

     —         23,479  

Equity earnings and minority interests

     731       457  

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

    

Trade accounts receivable

     (40,544 )     17,479  

Inventories

     (29,004 )     (7,422 )

Prepaid expenses and other current assets

     (6,763 )     (28,587 )

Other long-term assets

     (3,709 )     (81,506 )

Accounts payable

     (19,162 )     (4,844 )

Accrued payroll and employee benefits

     (13,294 )     (12,874 )

Restructuring reserves

     (4,235 )     (4,117 )

Other current liabilities

     31       (1,786 )

Pension and postretirement benefit liability

     (2,101 )     (4,135 )

Other, including long-term liabilities

     22,648       59,931  
                

Net cash provided by (used in) operating activities

     (50,781 )     81,707  
                

Cash flows from investing activities:

    

Acquisitions of companies, net of cash acquired

     (66,605 )     (311,108 )

Purchases of properties, plants and equipment

     (69,500 )     (74,225 )

Purchases of timber properties

     (1,300 )     (400 )

Receipt (issuance) of notes receivable

     33,178       (29,748 )

Proceeds from the disposal of properties, plants, equipment and other assets

     51,440       13,122  
                

Net cash used in investing activities

     (52,787 )     (402,359 )
                

Cash flows from financing activities:

    

Proceeds from issuance of long-term debt

     1,156,574       1,254,588  

Payments on long-term debt

     (1,072,834 )