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 July 31, 2005

 

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 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 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 July 31, 2005 was as follows:

 

Class A Common Stock                    11,537,181 shares

Class B Common Stock                    11,556,189 shares

 



PART I. FINANCIAL INFORMATION

 

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

 

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(Dollars in thousands, except per share amounts)

 

    

Three months ended

July 31,


   

Nine months ended

July 31,


 
     2005

    2004

    2005

    2004

 

Net sales

   $ 609,046     $ 584,814     $ 1,804,570     $ 1,595,863  

Costs of products sold

     515,575       484,921       1,524,455       1,337,259  
    


 


 


 


Gross profit

     93,471       99,893       280,115       258,604  

Selling, general and administrative expenses

     52,224       57,105       168,013       163,875  

Restructuring charges

     5,296       12,324       23,103       39,861  

Gain on sale of assets

     46,579       1,290       61,117       6,521  
    


 


 


 


Operating profit

     82,530       31,754       150,116       61,389  

Interest expense, net

     9,754       10,885       30,540       33,848  

Debt extinguishment charge

     —         —         2,828       —    

Other income, net

     2,401       292       3,608       1,208  
    


 


 


 


Income before income tax expense and equity in earnings of affiliates and minority interests

     75,177       21,161       120,356       28,749  

Income tax expense

     24,344       6,000       37,310       8,337  

Equity in earnings of affiliates and minority interests

     (121 )     (292 )     (431 )     (460 )
    


 


 


 


Net income

   $ 50,712     $ 14,869     $ 82,615     $ 19,952  
    


 


 


 


Basic earnings per share:

                                

Class A Common Stock

   $ 1.76     $ 0.52     $ 2.88     $ 0.71  

Class B Common Stock

   $ 2.63     $ 0.79     $ 4.31     $ 1.06  

Diluted earnings per share:

                                

Class A Common Stock

   $ 1.71     $ 0.51     $ 2.81     $ 0.70  

Class B Common Stock

   $ 2.63     $ 0.79     $ 4.31     $ 1.06  

 

See accompanying Notes to Consolidated Financial Statements

 

2


GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

ASSETS

 

    

July 31,

2005


    October 31,
2004


 
     (Unaudited)        

Current assets

                

Cash and cash equivalents

   $ 70,810     $ 38,109  

Trade accounts receivable, less allowance of $8,256 in 2005 and $11,454 in 2004

     276,352       307,750  

Inventories

     206,235       191,457  

Net assets held for sale

     17,103       14,753  

Deferred tax assets

     9,357       6,636  

Other current assets

     66,282       53,977  
    


 


       646,139       612,682  
    


 


Long-term assets

                

Goodwill, net of amortization

     232,091       237,803  

Other intangible assets, net of amortization

     24,550       27,524  

Timber note receivable (Note 9)

     50,891       —    

Other long-term assets

     55,092       54,547  
    


 


       362,624       319,874  
    


 


Properties, plants and equipment

                

Timber properties, net of depletion

     132,553       129,141  

Land

     72,701       68,349  

Buildings

     315,991       321,183  

Machinery and equipment

     843,142       851,800  

Capital projects in progress

     49,727       37,192  
    


 


       1,414,114       1,407,665  

Accumulated depreciation

     (569,608 )     (526,983 )
    


 


       844,506       880,682  
    


 


     $ 1,853,269     $ 1,813,238  
    


 


 

See accompanying Notes to Consolidated Financial Statements

 

3


GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

    

July 31,

2005


    October 31,
2004


 
     (Unaudited)        

Current liabilities

                

Accounts payable

   $ 235,547     $ 281,265  

Accrued payrolls and employee benefits

     40,582       49,633  

Restructuring reserves

     10,858       17,283  

Short-term borrowings

     26,050       11,621  

Other current liabilities

     79,980       77,416  
    


 


       393,017       437,218  
    


 


Long-term liabilities

                

Long-term debt

     404,682       457,415  

Deferred tax liability

     170,506       148,639  

Pension liability

     45,070       44,036  

Postretirement benefit liability

     48,869       48,667  

Timber note securitized (Note 9)

     43,250       —    

Other long-term liabilities

     37,212       46,444  
    


 


       749,589       745,201  
    


 


Minority interest

     1,797       1,725  
    


 


Shareholders’ equity

                

Common stock, without par value

     47,857       27,382  

Treasury stock, at cost

     (72,157 )     (65,360 )

Retained earnings

     778,557       711,919  

Accumulated other comprehensive loss:

                

    -    foreign currency translation

     1,544       5,655  

    -    interest rate derivatives

     (3,530 )     (7,097 )

    -    minimum pension liability

     (43,405 )     (43,405 )
    


 


       708,866       629,094  
    


 


     $ 1,853,269     $ 1,813,238  
    


 


 

See accompanying Notes to Consolidated Financial Statements

 

4


GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

 

For the nine months ended July 31,


   2005

    2004

 

Cash flows from operating activities:

                

Net income

   $ 82,615     $ 19,952  

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

                

Depreciation, depletion and amortization

     74,576       77,134  

Asset impairments

     4,110       2,581  

Deferred income taxes

     8,673       8,766  

Gain on disposals of properties, plants and equipment, net

     (19,042 )     (6,520 )

Gain on sale of significant nonstrategic timberland gains (Note 9)

     (42,090 )     —    

Equity in earnings of affiliates, net of dividends received, and minority interests

     698       (930 )

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

                

Trade accounts receivable

     29,486       (45,482 )

Inventories

     (16,893 )     (6,785 )

Other current assets

     (13,839 )     (3,212 )

Other long-term assets

     13,834       (8,088 )

Accounts payable

     (43,136 )     35,641  

Accrued payroll and employee benefits

     (8,653 )     (4,808 )

Restructuring reserves

     (6,369 )     41  

Other current liabilities

     2,931       814  

Postretirement benefit liability

     1,555       778  

Other long-term liabilities

     618       (11,016 )
    


 


Net cash provided by operating activities

     69,074       58,866  
    


 


Cash flows from investing activities:

                

Acquisitions of companies, net of cash acquired

     (4,889 )     —    

Purchases of properties, plants and equipment

     (59,184 )     (47,406 )

Proceeds from the sale of properties, plants and equipment

     23,789       10,324