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, 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
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 ¨ |
Smaller reporting company ¨ | |||
| (Do not check if a 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 July 31, 2008 was as follows:
|
Class A Common Stock |
24,006,629 shares | |
|
Class B Common Stock |
22,662,266 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, |
|||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
|
Net sales |
$ | 1,034,081 | $ | 874,237 | $ | 2,798,392 | $ | 2,440,039 | ||||||||
|
Cost of products sold |
841,221 | 711,948 | 2,298,040 | 2,005,133 | ||||||||||||
|
Gross profit |
192,860 | 162,289 | 500,352 | 434,906 | ||||||||||||
|
Selling, general and administrative expenses |
88,078 | 77,306 | 252,021 | 229,585 | ||||||||||||
|
Restructuring charges |
6,558 | 6,061 | 24,370 | 12,147 | ||||||||||||
|
Timberland disposals, net |
156 | 56 | 346 | (264 | ) | |||||||||||
|
Gain on disposal of properties, plants and equipment, net |
2,906 | 930 | 52,651 | 9,517 | ||||||||||||
|
Operating profit |
101,286 | 79,908 | 276,958 | 202,427 | ||||||||||||
|
Interest expense, net |
13,142 | 12,400 | 38,194 | 34,480 | ||||||||||||
|
Debt extinguishment charge |
— | — | — | 23,479 | ||||||||||||
|
Other expense, net |
(2,104 | ) | (707 | ) | (9,213 | ) | (5,770 | ) | ||||||||
|
Income before income tax expense and equity earnings and minority interests |
86,040 | 66,801 | 229,551 | 138,698 | ||||||||||||
|
Income tax expense |
20,047 | 17,502 | 53,486 | 36,339 | ||||||||||||
|
Equity earnings and minority interests |
(1,403 | ) | (518 | ) | (2,134 | ) | (975 | ) | ||||||||
|
Net income |
$ | 64,590 | $ | 48,781 | $ | 173,931 | $ | 101,384 | ||||||||
|
Basic earnings per share: |
||||||||||||||||
|
Class A Common Stock |
$ | 1.11 | $ | 0.84 | $ | 2.99 | $ | 1.75 | ||||||||
|
Class B Common Stock |
$ | 1.67 | $ | 1.26 | $ | 4.48 | $ | 2.62 | ||||||||
|
Diluted earnings per share: |
||||||||||||||||
|
Class A Common Stock |
$ | 1.10 | $ | 0.82 | $ | 2.95 | $ | 1.72 | ||||||||
|
Class B Common Stock |
$ | 1.67 | $ | 1.26 | $ | 4.48 | $ | 2.62 | ||||||||
See accompanying Notes to Consolidated Financial Statements
1
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
|
July 31,
2008 |
October 31,
2007 |
|||||||
| (Unaudited) | ||||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ | 99,310 | $ | 123,699 | ||||
|
Trade accounts receivable, less allowance of $12,776 in 2008 and $12,539 in 2007 |
477,612 | 339,328 | ||||||
|
Inventories |
341,243 | 242,994 | ||||||
|
Deferred tax assets |
20,355 | 27,917 | ||||||
|
Net assets held for sale |
19,182 | 11,564 | ||||||
|
Prepaid expenses and other current assets |
122,545 | 96,283 | ||||||
| 1,080,247 | 841,785 | |||||||
|
Long-term assets |
||||||||
|
Goodwill |
563,775 | 493,252 | ||||||
|
Other intangible assets, net of amortization |
101,837 | 96,256 | ||||||
|
Assets held by special purpose entities (Note 8) |
50,891 | 50,891 | ||||||
|
Long-term notes receivable |
3,611 | 36,434 | ||||||
|
Other long-term assets |
62,397 | 59,547 | ||||||
| 782,511 | 736,380 | |||||||
|
Properties, plants and equipment |
||||||||
|
Timber properties, net of depletion |
199,268 | 197,235 | ||||||
|
Land |
131,591 | 126,018 | ||||||
|
Buildings |
363,191 | 356,878 | ||||||
|
Machinery and equipment |
1,093,490 | 1,032,677 | ||||||
|
Capital projects in progress |
121,561 | 90,659 | ||||||
| 1,909,101 | 1,803,467 | |||||||
|
Accumulated depreciation |
(794,927 | ) | (728,921 | ) | ||||
| 1,114,174 | 1,074,546 | |||||||
| $ | 2,976,932 | $ | 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
|
July 31,
2008 |
October 31,
2007 |
|||||||
| (Unaudited) | ||||||||
|
Current liabilities |
||||||||
|
Accounts payable |
$ | 469,757 | $ | 411,095 | ||||
|
Accrued payroll and employee benefits |
81,491 | 84,977 | ||||||
|
Restructuring reserves |
10,033 | 15,776 | ||||||
|
Short-term borrowings |
59,600 | 15,848 | ||||||
|
Other current liabilities |
175,428 | 121,214 | ||||||
| 796,309 | 648,910 | |||||||
|
Long-term liabilities |
||||||||
|
Long-term debt |
708,214 | 622,685 | ||||||
|
Deferred tax liabilities |
73,390 | 159,494 | ||||||
|
Pension liability |
20,944 | 19,892 | ||||||
|
Postretirement benefit liabilities |
31,604 | 32,983 | ||||||
|
Liabilities held by special purpose entities (Note 8) |
43,250 | 43,250 | ||||||
|
Other long-term liabilities |
225,012 | 119,180 | ||||||
| 1,102,414 | 997,484 | |||||||
|
Minority interest |
6,122 | 6,405 | ||||||
|
Shareholders’ equity |
||||||||
|
Common stock, without par value |
81,569 | 75,156 | ||||||
|
Treasury stock, at cost |
(108,290 | ) | (92,028 | ) | ||||
|
Retained earnings |
1,116,742 | 1,004,300 | ||||||
|
Accumulated other comprehensive income (loss): |
||||||||
|
- foreign currency translation |
15,757 | 43,260 | ||||||
|
- interest rate derivatives |
(2,057 | ) | (997 | ) | ||||
|
- energy and other derivatives |
(1,756 | ) | 226 | |||||
|
- minimum pension liability |
(29,878 | ) | (30,005 | ) | ||||
| 1,072,087 | 999,912 | |||||||
| $ | 2,976,932 | $ | 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 nine months ended July 31, |
2008 | 2007 | ||||||
|
Cash flows from operating activities: |
||||||||
|
Net income |
$ | 173,931 | $ | 101,384 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
|
Depreciation, depletion and amortization |
78,974 | 76,292 | ||||||
|
Asset impairments |
9,395 | 921 | ||||||
|
Deferred income taxes |
(78,542 | ) | (5,317 | ) | ||||
|
Gain on disposals of properties, plants and equipment, net |
(52,651 | ) | (9,517 | ) | ||||
|
Timberland disposals, net |
(346 | ) | 264 | |||||
|
Loss on extinguishment of debt |
— | 23,479 | ||||||
|
Equity earnings and minority interests |
2,134 | 975 | ||||||
|
Increase (decrease) in cash from changes in certain assets and liabilities: |
||||||||
|
Trade accounts receivable |
(103,611 | ) | 4,058 | |||||
|
Inventories |
(74,833 | ) | (10,837 | ) | ||||
|
Prepaid expenses and other current assets |
(16,587 | ) | (20,339 | ) | ||||
|
Other long-term assets |
(15,860 | ) | (59,191 | ) | ||||
|
Accounts payable |
64,909 | 21,472 | ||||||
|
Accrued payroll and employee benefits |
(6,685 | ) | (1,854 | ) | ||||
|
Restructuring reserves |
(5,743 | ) | (2,280 | ) | ||||
|
Other current liabilities |
28,911 | 10,314 | ||||||
|
Pension and postretirement benefit liability |
(327 | ) | (8,609 | ) | ||||
|
Other, including long-term liabilities |
15,992 | 44,408 | ||||||
|
Net cash provided by operating activities |
19,061 | 165,623 | ||||||
|
Cash flows from investing activities: |
||||||||
|
Acquisitions of companies, net of cash acquired |
(73,744 | ) | (313,464 | ) | ||||
|
Purchases of properties, plants and equipment |
(107,237 | ) | (80,144 | ) | ||||
|
Purchases of timber properties |
(1,500 | ) | (1,500 | ) | ||||
|
Receipt (issuance) of notes receivable |
33,178 | (29,748 | ) | |||||
|
Proceeds from the disposal of properties, plants, equipment and other assets |
55,628 | 13,515 | ||||||
|
Net cash used in investing activities |
(93,675 | ) | (411,341 | ) | ||||
|
Cash flows from financing activities: |
||||||||
|
Proceeds from issuance of long-term debt |
1,693,310 | 1,635,984 | ||||||
|
Payments on long-term debt |
(1,609,663 | ) | (1,441,133 | ) | ||||
|
| ||||||||