GREIF INC (Form: 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2003

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 ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the period covered by this report:

Class A Common Stock		10,570,846 shares
Class B Common Stock		11,724,403 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 July 31,					Nine months ended July 31,
	2003			2002		2003			2002
Net sales	$	451,740		$	435,148	$	1,261,726		$	1,197,251
Costs of products sold		370,194			344,767		1,038,813			957,465

Gross profit		81,546			90,381		222,913			239,786

Selling, general and administrative expenses		50,746			64,591		162,748			187,774
Restructuring charges		16,580			—		35,568			—

Operating profit		14,220			25,790		24,597			52,012

Interest expense, net		12,933			13,854		41,103			40,949
Debt extinguishment charge		—			4,390		—			4,390
Gain on sale of timberland		2,514			1,127		4,478			9,677
Other income (expense), net		(1,386	)		659		431			4,696

Income (loss) before income tax expense (benefit) and equity in earnings of affiliates and minority interests		2,415			9,332		(11,597	)		21,046

Income tax expense (benefit)		773			3,360		(3,711	)		7,577
Equity in earnings of affiliates and minority interests		1,338			1,979		5,169			5,204

Income (loss) before cumulative effect of change in accounting principle		2,980			7,951		(2,717	)		18,673

Cumulative effect of change in accounting principle		—			—		4,822			—

Net income	$	2,980		$	7,951	$	2,105		$	18,673

Basic earnings (loss) per share:
Class A Common Stock (before cumulative effect)	$	0.11		$	0.28	$	(0.09	)	$	0.67
Class A Common Stock (after cumulative effect)	$	0.11		$	0.28	$	0.08		$	0.67
Class B Common Stock (before cumulative effect)	$	0.16		$	0.42	$	(0.15	)	$	0.99
Class B Common Stock (after cumulative effect)	$	0.16		$	0.42	$	0.11		$	0.99

Diluted earnings (loss) per share:
Class A Common Stock (before cumulative effect)	$	0.11		$	0.28	$	(0.09	)	$	0.66
Class A Common Stock (after cumulative effect)	$	0.11		$	0.28	$	0.08		$	0.66
Class B Common Stock (before cumulative effect)	$	0.16		$	0.42	$	(0.15	)	$	0.99
Class B Common Stock (after cumulative effect)	$	0.16		$	0.42	$	0.11		$	0.99

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	July 31, 2003			October 31, 2002
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	21,485		$	25,396
Trade accounts receivable—less allowance of $10,286 in 2003 and $9,857 in 2002		281,752			265,110
Inventories		154,956			144,320
Net assets held for sale		6,777			13,945
Deferred tax assets		2,968			3,652
Prepaid expenses and other		52,124			57,398

		520,062			509,821

Long-term assets
Goodwill—less accumulated amortization		239,020			232,577
Other intangible assets—less accumulated amortization		25,319			28,999
Investment in affiliates		151,833			149,820
Other long-term assets		46,978			45,060

		463,150			456,456

Properties, plants and equipment
Timber properties—less depletion		84,884			81,380
Land		88,481			84,271
Buildings		250,191			244,967
Machinery and equipment		779,682			748,184
Capital projects in progress		32,645			26,042

		1,235,883			1,184,844
Accumulated depreciation		(443,323	)		(392,826	)

		792,560			792,018

	$	1,775,772		$	1,758,295

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	July 31, 2003			October 31, 2002
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	151,063		$	133,585
Accrued payrolls and employee benefits		38,135			48,974
Restructuring reserves		11,057			2,300
Short-term borrowings		24,617			20,005
Current portion of long-term debt		3,000			3,000
Other current liabilities		79,107			73,708

		306,979			281,572

Long-term liabilities
Long-term debt		624,480			629,982
Deferred tax liability		141,800			135,577
Postretirement benefit liability		50,683			47,131
Other long-term liabilities		86,449			93,559

		903,412			906,249

Minority interest		1,699			1,345

Shareholders’ equity
Common stock, without par value		12,147			11,974
Treasury stock, at cost		(62,143	)		(61,130	)
Retained earnings		677,593			687,204
Accumulated other comprehensive loss:
—foreign currency translation		(29,581	)		(33,726	)
—interest rate derivatives		(13,518	)		(15,601	)
—minimum pension liability		(20,816	)		(19,592	)

		563,682			569,129

	$	1,775,772		$	1,758,295

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

For the nine months ended July 31,	2003			2002
Cash flows from operating activities:
Net income	$	2,105		$	18,673
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		65,769			74,896
Asset impairments		5,963			—
Equity in earnings of affiliates and minority interests, net of dividends received		(1,176	)		(2,907	)
Deferred income taxes		8,761			(3,090	)
Gain on disposals of properties, plants and equipment		(3,945	)		(13,097	)
Cumulative effect of change in accounting principle		(4,822	)		—
Other, net		(12,604	)		(17,682	)
Changes in current assets and liabilities		(2,057	)