UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 16, 2003 (December 11, 2003)
GREIF, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-566 | 31-4388903 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(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 or former address, if changed since last report.
| Item 12. | Results of Operations and Financial Condition. |
On December 11, 2003, Greif, Inc. (the “Company”) issued a press release (the “Release”) announcing its results for the fourth quarter and the fiscal year ended October 31, 2003. The full text of the Release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Release included the following non-GAAP financial measures: (i) net income before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle, (ii) net income before restructuring charges, debt extinguishment charge and timberland gains, (iii) earnings per Class A and Class B share before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle, (iv) earnings per Class A and Class B share before restructuring charges, debt extinguishment charge and timberland gains, (v) operating profit before restructuring charges and timberland gains, and (vi) operating profit before restructuring charges. Net income before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle is equal to GAAP net income plus restructuring charges and debt extinguishment charge less timberland gains and cumulative effect of change in accounting principle, net of tax. Net income before restructuring charges, debt extinguishment charge and timberland gains is equal to GAAP net income plus restructuring charges and debt extinguishment charge less timberland gains, net of tax. Earnings per Class A and Class B share before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle is equal to GAAP earnings per Class A and Class B share plus the effects of restructuring charges and debt extinguishment charge less the effects of timberland gains and cumulative effect of change in accounting principle, net of tax. Earnings per Class A and Class B share before restructuring charges, debt extinguishment charge and timberland gains is equal to GAAP earnings per Class A and Class B share plus the effects of restructuring charges and debt extinguishment charge less the effects of timberland gains, net of tax. Operating profit before restructuring charges and timberland gains is equal to GAAP operating profit plus restructuring charges less timberland gains. Operating profit before restructuring charges is equal to GAAP operating profit plus restructuring charges.
Management uses net income before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle, net income before restructuring charges, debt extinguishment charge and timberland gains, earnings per Class A and Class B share before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle, earnings per Class A and Class B share before restructuring charges, debt extinguishment charge and timberland gains, operating profit before restructuring charges and timberland gains and operating profit before restructuring charges because it believes that these measures are a better indication of the Company’s operational performance than GAAP net income, earnings per Class A and Class B share and operating profit since they exclude restructuring charges, debt extinguishment charge and cumulative effect of change in accounting principle, which are not representative of ongoing operations, and timberland gains that are volatile from period to period. Net income before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle, net income before restructuring charges, debt extinguishment charge and timberland gains, earnings per Class A and Class B share before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle, earnings per Class A and Class B share before restructuring charges, debt extinguishment charge and timberland gains, operating profit before restructuring charges and timberland gains and operating profit before restructuring charges provide a more stable platform on which to compare the historical performance of the Company.
The Release also included the financial terms of net debt and capital expenditures. Net debt is defined as total debt outstanding less cash and cash equivalents. Capital expenditures are defined as purchases of properties, plants and equipment less timberland purchases. Following is a reconciliation of total debt to net debt at October 31, 2003 and 2002, and purchases of properties, plants and equipment to capital expenditures for the fiscal years ended October 31, 2003 and 2002.
Dollars in millions
| |
October 31,
2003 |
October 31,
2002 |
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Total debt |
$ | 662 | $ | 653 | ||
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Cash and cash equivalents |
50 | 25 | ||||
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Net debt |
$ | 612 | $ | 628 | ||
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Years ended October 31,
|
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2003
|
2002
|
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Purchases of properties, plants and equipment |
$ | 65 | $ | 58 | ||
|
Timberland purchases |
4 | 12 | ||||
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Capital expenditures |
$ | 61 | $ | 46 | ||
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Management used net debt instead of total debt because it believes net debt was more representative of the Company’s total obligations at October 31, 2003. Capital expenditures are used because management believes they are a better indication of capital spending than purchases of properties, plants and equipment due to the volatile nature of timberland purchases.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
GREIF, INC. |
||||||||
| Date: |
December 16, 2003 |
By: |
/s/ Donald S. Huml |
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Donald S. Huml Chief Financial Officer (Duly Authorized Signatory) |
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INDEX TO EXHIBITS
Description
Exhibit No.
99.1
Press release issued by Greif, Inc. on December 11, 2003 announcing its results for the fourth quarter and the fiscal year ended October 31, 2003.
DELAWARE, Ohio (December 11, 2003) - Greif, Inc. (NYSE: GEF, GEF.B), a global leader in industrial packaging with niche businesses in paper, corrugated packaging and timber, today announced results for the fourth quarter and fiscal year ended October 31, 2003.
Net income before restructuring charges, debt extinguishment charge and timberland gains was $22.2 million for the fourth quarter of 2003 compared with $16.3 million for the fourth quarter of last year. Earnings per share before restructuring charges, debt extinguishment charge and timberland gains were $0.79 versus $0.57 per Class A share and $1.19 versus $0.87 per Class B share for the fourth quarter of 2003 and 2002, respectively.
For fiscal 2003, net income before restructuring charges, debt extinguishment charge, timberland gains and cumulative effect of change in accounting principle was $42.8 million, or $1.53 per Class A share and $2.28 per Class B share, compared to $31.6 million, or $1.12 per Class A share and $1.68 per Class B share, in fiscal 2002.
The Company reported GAAP net income of $5.4 million, or $0.19 per Class A share and $0.29 per Class B share, for the fourth quarter of 2003 versus $12.3 million, or $0.44 per Class A share and $0.65 per Class B share, for the same quarter last year. For fiscal 2003, the Company reported GAAP net income of $9.5 million, or $0.34 per Class A share and $0.50 per Class B share, versus $31.0 million, or $1.10 per Class A share and $1.64 per Class B share, for fiscal 2002.
Michael J. Gasser, chairman and chief executive officer, stated, "Our fourth quarter and fiscal 2003 results were in line with expectations despite the sluggish industrial economy that impacted our businesses throughout the year. Market conditions at the end of fiscal 2003 reflected initial signs of recovery, however, we remain cautious pending evidence that recently improved activity levels will continue. During fiscal 2004, we will focus on implementation of our performance improvement plan and building our capabilities to achieve sustainable advantages in our businesses. These efforts, combined with specific benefits from CorrChoice, are expected to provide substantial contributions to our financial results in fiscal 2004."
A reconciliation of the differences between the non-GAAP financial measures disclosed in this release with the most directly comparable GAAP financial measures is included in the financial schedules that are a part of this release.
Highlights
CorrChoice Transaction
On September 30, 2003, CorrChoice, Inc., which had been a Greif joint venture, redeemed all of the outstanding shares of its minority shareholders for $115.3 million, which was substantially funded by the cash and cash equivalents of CorrChoice. As a result of this transaction, Greif now owns 100% of CorrChoice compared to its 63% interest when the joint venture was formed on November 1, 1998. CorrChoice's results were fully consolidated, net of intercompany eliminations, in Greif's consolidated income statement for fiscal 2003, with a minority interest deduction through September 30, 2003. CorrChoice's results were previously accounted for under the equity method, since Greif lacked effective control. The transaction was immediately accretive to the Company's earnings.
CorrChoice operates seven corrugated sheet feeder plants that supply converting operations in the eastern United States. As a result of this transaction, Greif's Paper, Packaging & Services business is uniquely positioned as a fully integrated producer of containerboard.
Supplemental pro forma information, that assumes that the CorrChoice transaction had occurred on November 1, 2001, is included in the financial schedules that are a part of this release.
Performance Improvement Plan
As previously announced, the performance improvement plan is expected to enhance long-term organic sales growth and productivity, and achieve permanent cost reductions. In connection with the first phase of the performance improvement plan, the Company recognized $60.7 million in restructuring charges during fiscal 2003, which primarily relate to employee separation costs, disposal of facilities and equipment, and other costs. The Company realized approximately $30 million in cost savings during fiscal 2003, compared to the original estimate of $15 million. The Company anticipates an additional $30 million of cost savings for fiscal 2004 from this phase of the performance improvement plan, which will result in annual cost savings of $60 million in fiscal 2004.
The Company's focus during fiscal 2003 has been primarily SG&A optimization. The opportunities identified and, more importantly, captured, exceeded expectations, with a corresponding increase in related one-time costs. The focus during fiscal 2004 will be to become an even leaner, more market-focused/performance-driven company. This next and final phase of the restructuring is expected to deliver additional annualized benefits of approximately $50 million with about $15 million of those savings to be realized in fiscal 2004. The opportunities identified include, but are not limited to, improved labor productivity, material yield and other manufacturing efficiencies, coupled with further network consolidation. The related one-time costs for this phase will be approximately $50 million, which will be incurred in fiscal 2004. This is expected to result in the elimination of an estimated additional 700 positions and the closing of several facilities. In addition, the Company is launching a strategic sourcing initiative to more effectively leverage its global spend and lay the foundation for building a world-class sourcing and supply chain capability.
Consolidated Results
Net sales rose 18% to a record $514 million for the fourth quarter of 2003 from $436 million last year. The fourth quarter of 2003 benefited from the inclusion of CorrChoice's net sales ($53 million) and the positive impact of foreign currency translation ($24 million). For fiscal 2003, net sales rose to $1.9 billion compared to $1.6 billion last year. The fiscal 2003 net sales benefited from the inclusion of CorrChoice ($206 million) and the positive impact of foreign currency translation ($68 million) compared to the prior year.
Gross profit was $98.5 million, or 19.2% of net sales, for the fourth quarter of 2003 versus $96.0 million, or 22.0% of net sales, for the fourth quarter of 2002, and was 18.0% and 20.6% of net sales for fiscal 2003 and 2002, respectively. The principal factors impacting the quarterly and annual comparisons were higher costs for raw materials in Industrial Packaging & Services; lower pricing levels and absorption of fixed costs in Paper, Packaging & Services; and lower planned timber sales.
Selling, general and administrative ("SG&A") expenses declined to $55.0 million, or 10.7% of net sales, for the fourth quarter of 2003 from $63.0 million, or 14.5% of net sales, for the same period a year ago. The decline in SG&A expenses was primarily attributable to implementation of the Company's performance improvement plan and the elimination of goodwill amortization expenses under Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ($2.8 million). These reductions were partially offset by SG&A expenses of CorrChoice ($3.5 million) and the negative impact of foreign currency translation ($1.1 million). Fiscal 2003 SG&A expenses declined to $228.1 million, or 11.9% of net sales, from $250.8 million, or 15.4% of net sales, for fiscal 2002. The results were impacted by the same factors as the fourth quarter of 2003 comparisons with the prior year.
Operating profit, before restructuring charges of $25.2 million and timberland gains of $1.1 million, increased 32% to $43.5 million for the fourth quarter of 2003 compared with operating profit, before restructuring charges of $2.8 million and timberland gains of $2.4 million, of $33.0 million for the same period last year. The fourth quarter of 2003 restructuring charges were attributable to continued execution of the Company's performance improvement plan. GAAP operating profit was $19.5 million for the fourth quarter of 2003 compared with $32.7 million a year ago.
Operating profit, before restructuring charges of $60.7 million and timberland gains of $5.6 million, was $117.4 million for fiscal 2003 compared with operating profit, before restructuring charges of $2.8 million and timberland gains of $12.1 million, of $85.1 million for fiscal 2002. GAAP operating profit was $62.3 million and $94.4 million for fiscal 2003 and 2002, respectively.
Business Group Results
Industrial Packaging & Services
Net sales rose 8% to $367 million for the fourth quarter of 2003 from $340 million for the same period last year. On a consolidated basis, net sales increased 1% after excluding the impact of foreign currency translation. Selling prices increased compared to the same period last year in response to higher raw material costs, while volumes were generally lower due to a decrease in demand in the markets served versus the fourth quarter of 2002.
Operating profit, before restructuring charges of $21.4 million, rose to $24.3 million for the fourth quarter of 2003 from operating profit, before restructuring charges of $2.3 million, of $15.5 million a year ago. Higher raw material costs, especially outside of North America, caused the gross profit margin to decline. Cost reduction initiatives continue to be implemented to lower costs and improve operating efficiencies. SG&A expenses for Industrial Packaging & Services reflect a portion of the savings resulting from these initiatives. GAAP operating profit was $3.0 million for the fourth quarter of 2003 compared with $13.2 million for the fourth quarter of 2002.
Net sales were $1.4 billion in fiscal 2003 versus $1.3 billion in fiscal 2002. On a consolidated basis, net sales increased 4% after excluding the impact of foreign currency translation. Operating profit, before restructuring charges of $47.9 million, was $67.8 million in fiscal 2003 compared with operating profit, before restructuring charges of $2.3 million, of $34.8 million the prior year. GAAP operating profit was $19.9 million for fiscal 2003 compared with $32.5 million for fiscal 2002.
Paper, Packaging & Services
Net sales increased 65% to $139 million for the fourth quarter of 2003 from $84 million for the fourth quarter of 2002 primarily due to the inclusion of CorrChoice ($53 million).
Operating profit, before restructuring charges of $3.6 million, was $13.2 million for the fourth quarter of 2003 compared with operating profit, before restructuring charges of $0.5 million, of $9.6 million a year ago. This increase was due to the inclusion of CorrChoice ($7.2 million), which was partially offset by a lower gross profit margin resulting from reduced pricing levels and modestly lower fixed cost absorption due to continued soft market conditions in the containerboard operations. The decline in gross profit was partially offset by lower SG&A expenses in the fourth quarter of 2003 compared with the same quarter last year. GAAP operating profit was $9.6 million for the fourth quarter of 2003 compared with $9.2 million for the fourth quarter of 2002.
There was sequential improvement in the Paper, Packaging & Services segment from the third quarter to the fourth quarter of fiscal 2003. The fourth quarter of 2003 operating profit, before restructuring charges of $3.6 million, was $13.2 million compared to the previously reported third quarter of 2003 operating loss, before restructuring charges of $5.1 million, of $0.1 million. This increase was due to the inclusion of CorrChoice ($7.2 million) and volume increases, especially in the containerboard operations, for the segment. While selling prices at the Company's mills have declined, these decreases were principally offset by cost reduction initiatives. GAAP operating profit was $9.6 million for the fourth quarter of 2003 compared with a GAAP operating loss of $5.2 million for the third quarter of 2003.
Net sales were $504 million in fiscal 2003 versus $324 million in fiscal 2002 due to the inclusion of CorrChoice ($206 million). Operating profit, before restructuring charges of $12.5 million, was $29.4 million in fiscal 2003 compared with operating profit, before restructuring charges of $0.5 million, of $20.2 million a year ago. GAAP operating profit was $16.9 million for fiscal 2003 and $19.8 million for fiscal 2002.
Timber
Timber sales were $8 million for the fourth quarter of 2003 compared with $11 million for the same period last year. The fourth quarter of 2003 timber sales were consistent with budgeted levels. As a result of the lower sales, operating profit, before restructuring charges of $0.2 million and timberland gains of $1.1 million, was $6.0 million for the fourth quarter of 2003, compared to operating profit, before restructuring charges of $0.1 million and timberland gains of $2.4 million, of $7.9 million a year ago. GAAP operating profit was $6.9 million for the fourth quarter of 2003 compared with $10.3 million for the fourth quarter of 2002.
Timber sales were $28 million in fiscal 2003 versus $41 million in fiscal 2002. Operating profit, before restructuring charges of $0.4 million and timberland gains of $5.6 million, was $20.3 million in fiscal 2003 compared with operating profit, before restructuring charges of $0.1 million and timberland gains of $12.1 million, of $30.0 million last year. GAAP operating profit was $25.5 million for fiscal 2003 compared with $42.1 million for fiscal 2002.
Financing Arrangements
Total debt outstanding was $662 million and $653 million at October 31, 2003 and 2002, respectively. Excluding cash and cash equivalents, net debt outstanding was $612 million and $628 million at October 31, 2003 and 2002, respectively. Net debt to total capitalization was 49.6% and 51.4% at October 31, 2003 and 2002, respectively.
In October 2003, the Company established a $120 million on-balance sheet securitization program for certain of its trade accounts receivable. The securitization program will provide the Company with less expensive borrowings, and the proceeds of $85 million during fiscal 2003 were used to repay a portion of Company's $550 million Amended and Restated Senior Secured Credit Agreement. The debt resulting from the trade accounts receivable securitization is classified as long-term debt in the Company's balance sheet.
Interest expense decreased to $12.8 million for the fourth quarter of 2003 compared to $15.0 million for the same period last year. This reduction was due to lower average interest rates on the Company's debt and the inclusion of CorrChoice's interest income, which was partially offset by higher average debt outstanding. For fiscal 2003 and 2002, interest expense was $52.8 million and $56.0 million, respectively.
The Company incurred a $5.9 million charge for debt extinguishment costs in the fourth quarter of 2002 in conjunction with debt refinancing activities. These costs totaled $10.3 million during fiscal 2002.
Capital Expenditures
Capital expenditures were $61 million, excluding timberland purchases of $4 million, for fiscal 2003 compared with $46 million, excluding timberland purchases of $12 million, last year. For fiscal 2003, capital expenditures were $22 million below the Company's depreciation expense.
Company Outlook
Fiscal 2003 net income, before restructuring charges, timberland gains and cumulative effect of change in accounting principle, primarily benefited from a reduction in SG&A expenses. This positive contribution was partially offset by sluggish market conditions globally, which impacted the Company's net sales, while gross profit was affected by generally higher raw material costs compared to fiscal 2002. The operating environment for fiscal 2004 is expected to be similar to fiscal 2003.
Earnings per share, before restructuring charges and timberland gains, are expected to increase due to additional savings realized from the Company's performance improvement plan, full ownership of CorrChoice for the entire fiscal year (in fiscal 2003, 100% of CorrChoice's earnings were included for October 2003 and 63% for the remainder of the year) and incremental increases in operating performance. As a result, management's guidance, before restructuring charges and timberland gains, is $2.35 - $2.40 per Class A share for fiscal 2004.
Conference Call
The Company will host a conference call to discuss its fourth quarter of 2003 results on Friday, December 12, 2003 at 10:00 a.m. ET at (800) 218-0204. For international callers, the number is (303) 205-0033. Please use the reservation code 561600.
The conference call will also be available through a live webcast, which can be accessed at www.greif.com. A replay of the conference will be available on the Company's Web site approximately one hour following the call.
About Greif
Greif is a world leader in industrial packaging products and services. The Company provides extensive experience in steel, plastic, fibre, corrugated and multiwall containers for a wide range of industries. Greif also produces containerboard and manages timber properties in North America. Greif is strategically positioned in more than 40 countries to serve multinational as well as regional customers. Additional information is on the Company's website at www.greif.com.
Forward-Looking Statements
All statements other than statements of historical facts included in this news release, including, without limitation, statements regarding the Company's future financial position, business strategy, budgets, projected costs, goals and plans and objectives of management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "project," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. All forward-looking statements made in this news release are based on information presently available to management. Although the Company believes that the expectations reflected in forward-looking statements have a reasonable basis, the Company can give no assurance that these expectations will prove to be correct. Forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Such risks and uncertainties that might cause a difference include, but are not limited to: general economic and business conditions, including a prolonged or substantial economic downturn; changing trends and demands in the industries in which the Company competes, including industry over-capacity; industry competition; the continuing consolidation of the Company's customer base for its paper and packaging products; political instability in those foreign countries where the Company manufactures and sells its products; foreign currency fluctuations and devaluations; availability and costs of raw materials for the manufacture of the Company's products, particularly steel and resin, and price fluctuations in energy costs; costs associated with litigation or claims against the Company pertaining to environmental, safety and health, product liability and other matters; work stoppages and other labor relations matters; the Company's ability to integrate its newly acquired operations effectively with its existing business; the Company's ability to achieve improved operating efficiencies and capabilities; the frequency and volume of sales of the Company's timber and timberland; and the deviation of actual results from the estimates and/or assumptions used by the Company in the application of its significant accounting policies. These and other risks and uncertainties that could materially affect the Company's consolidated financial results are further discussed in our filings with the Securities and Exchange Commission, including its Form 10-K for the year ended October 31, 2002. The Company assumes no obligation to update any forward-looking statements.
Quarter ended Year ended
October 31, October 31,
----------- -----------
2003 2002 2003 2002
---- ---- ---- ----
Net sales $ 514,201 $ 435,516 $ 1,916,441 $ 1,632,767
Cost of products sold 415,664 339,487 1,570,891 1,296,952
------------ ------------ ------------ ------------
Gross profit 98,537 96,029 345,550 335,815
Selling, general and administrative expenses 54,997 62,982 228,120 250,756
Restructuring charges 25,175 2,824 60,743 2,824
Gain on sale of timberland 1,099 2,445 5,577 12,122
------------ ------------ ------------ ------------
Operating profit 19,464 32,668 62,264 94,357
Interest expense, net 12,812 15,016 52,834 55,965
Debt extinguishment charge -- 5,910 -- 10,300
Other income, net 2,565 3,141 4,385 7,837
------------ ------------ ------------ ------------
Income before income tax expense and equity in
earnings of affiliates and minority interests 9,217 14,883 13,815 35,929
Income tax expense 2,784 5,357 4,255 12,934
Equity in earnings of affiliates and minority interests (1,039) 2,780 (4,886) 7,984
------------ ------------ ------------ ------------
Income before cumulative effect of change in
accounting principle 5,394 12,306 4,674 30,979
Cumulative effect of change in accounting principle -- -- 4,822 --
------------ ------------ ------------ ------------
Net income $ 5,394 $ 12,306 $ 9,496 $ 30,979
============ ============ ============ ============
Basic and diluted earnings per share:
Class A Common Stock (before cumulative effect) $ 0.19 $ 0.44 $ 0.17 $ 1.10
Class A Common Stock (after cumulative effect) $ 0.19 $ 0.44 $ 0.34 $ 1.10
Class B Common Stock (before cumulative effect) $ 0.29 $ 0.65 $ 0.24 $ 1.64
Class B Common Stock (after cumulative effect) $ 0.29 $ 0.65 $ 0.50 $ 1.64
Quarter ended Year ended
October 31, October 31,
----------- -----------
2003 2002 2003 2002
---- ---- ---- ----
Net Sales
Industrial Packaging & Services $ 367,309 $ 340,475 $ 1,384,243 $ 1,268,013
Paper, Packaging & Services 138,779 84,315 503,731 324,009
Timber 8,113 10,726 28,467 40,745
------------ ------------ ------------ ------------
Total $ 514,201 $ 435,516 $ 1,916,441 $ 1,632,767
============ ============ ============ ============
Operating Profit
Operating profit before restructuring charges
and timberland gains:
Industrial Packaging & Services $ 24,320 $ 15,493 $ 67,800 $ 34,830
Paper, Packaging & Services 13,242 9,621 29,376 20,243
Timber 5,978 7,933 20,254 29,986
------------ ------------ ------------ ------------
Total operating profit before restructuring
charges and timberland gains 43,540 33,047 117,430 85,059
------------ ------------ ------------ ------------
Restructuring charges:
Industrial Packaging & Services 21,360 2,322 47,924 2,322
Paper, Packaging & Services 3,647 446 12,469 446
Timber 168 56 350 56
------------ ------------ ------------ ------------
Total restructuring charges 25,175 2,824 60,743 2,824
------------ ------------ ------------ ------------
Timberland gains:
Timber 1,099 2,445 5,577 12,122
------------ ------------ ------------ ------------
Total $ 19,464 $ 32,668 $ 62,264 $ 94,357
============ ============ ============ ============
Depreciation, Depletion and Amortization Expense
Industrial Packaging & Services $ 16,107 $ 15,468 $ 63,635 $ 70,327
Paper, Packaging & Services 9,251 6,467 34,633 23,569
Timber 550 646 1,991 3,581
------------ ------------ ------------ ------------
Total $ 25,908 $ 22,581 $ 100,259 $ 97,477
============ ============ ============ ============
Quarter ended Year ended
October 31, October 31,
------------- -----------
2003 2002 2003 2002
---- ---- ---- ----
Net Sales
North America $ 308,295 $ 268,901 $ 1,150,934 $ 996,260
Europe 137,097 111,972 522,090 420,950
Other 68,809 54,643 243,417 215,557
---------- ----------- ------------ -----------
Total $ 514,201 $ 435,516 $ 1,916,441 $ 1,632,767
========== =========== ============ ===========
Operating Profit
North America $ 29,293 $ 17,737 $ 69,717 $ 43,375
Europe 7,629 10,775 31,002 27,009
Other 6,618 4,535 16,711 14,675
Operating profit before restructuring charges
and timberland gains 43,540 33,047 117,430 85,059
Restructuring charges 25,175 2,824 60,743 2,824
Timberland gains 1,099 2,445 5,577 12,122
---------- ----------- ------------ -----------
Total $ 19,464 $ 32,668 $ 62,264 $ 94,357
========== =========== ============ ===========
October 31, 2003 October 31, 2002
---------------- ----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 49,767 $ 25,396
Trade accounts receivable 294,957 265,110
Inventories 167,157 144,320
Other current assets 61,361 74,995
----------- -----------
573,242 509,821
----------- -----------
LONG-TERM ASSETS
Goodwill 244,728 232,577
Intangible assets 24,072 28,999
Other long-term assets 52,416 194,880
----------- -----------
321,216 456,456
----------- -----------
PROPERTIES, PLANTS AND EQUIPMENT 926,538 792,018
----------- -----------
$ 1,820,996 $ 1,758,295
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 158,333 $ 133,585
Short-term borrowings 17,562 20,005
Current portion of long-term debt 3,000 3,000
Other current liabilities 125,929 124,982
----------- -----------
304,824 281,572
----------- -----------
LONG-TERM LIABILITIES
Long-term debt 641,110 629,982
Other long-term liabilities 300,612 276,267
----------- -----------
941,722 906,249
----------- -----------
MINORITY INTEREST 1,886 1,345
----------- -----------
SHAREHOLDERS' EQUITY 572,564 569,129
----------- -----------
$ 1,820,996 $ 1,758,295
=========== ===========
Quarter ended October 31, 2003 Quarter ended October 31, 2002
------------------------------ ------------------------------
Per Share Amounts* Per Share Amounts*
------------------ ------------------
Class A Class B Class A Class B
GAAP - operating profit $ 19,464 $ 32,668
Restructuring charges 25,175 2,824
Timberland gains (1,099) (2,445)
--------- ---------
Non-GAAP - operating profit before
restructuring charges and timberland
gains $ 43,540 $ 33,047
========= =========
GAAP - net income $ 5,394 $ 0.19 $ 0.29 $ 12,306 $ 0.44 $ 0.65
Restructuring charges, net of tax 17,572 0.63 0.94 1,807 0.06 0.10
Debt extinguishment charge, net of
tax -- -- -- 3,782 0.13 0.20
Timberland gains, net of tax (767) (0.03) (0.04) (1,565) (0.06) (0.08)
--------- --------- --------- --------- --------- ---------
Non-GAAP - net income before
restructuring charges, debt
extinguishment charge and
timberland gains $ 22,199 $ 0.79 $ 1.19 $ 16,330 $ 0.57 $ 0.87
========= ========= ========= ========= ========= =========
Year ended October 31, 2003 Year ended October 31, 2002
--------------------------- ---------------------------
Per Share Amounts* Per Share Amounts*
------------------ ------------------
Class A Class B Class A Class B
GAAP - operating profit $ 62,264 $ 94,357
Restructuring charges 60,743 2,824
Timberland gains (5,577) (12,122)
--------- ---------
Non-GAAP - operating profit before
restructuring charges and timberland
gains $ 117,430 $ 85,059
========= =========
GAAP - net income $ 9,496 $ 0.34 $ 0.50 $ 30,979 $ 1.10 $ 1.64
Restructuring charges, net of tax 42,034 1.49 2.25 1,807 0.06 0.10
Debt extinguishment charge, net of
tax -- -- -- 6,592 0.23 0.35
Timberland gains, net of tax (3,859) (0.13) (0.21) (7,758) (0.27) (0.41)
Cumulative effect of change in
accounting principle (4,822) (0.17) (0.26) -- -- --
--------- --------- --------- --------- --------- ---------
Non-GAAP - net income before
restructuring charges, debt
extinguishment charge, timberland
gains and cumulative effect of
change in accounting principle $ 42,849 $ 1.53 $ 2.28 $ 31,620 $ 1.12 $ 1.68
========= ========= ========= ========= ========= =========
|
* Basic and diluted
Quarter ended Year ended
October 31, October 31,
----------- -----------
2003 2002 2003 2002
---- ---- ---- ----
Industrial Packaging & Services
GAAP - operating profit $ 2,960 $ 13,171 $ 19,876 $ 32,508
Restructuring charges 21,360 2,322 47,924 2,322
--------- --------- --------- ---------
Non-GAAP - operating profit before
restructuring charges $ 24,320 $ 15,493 $ 67,800 $ 34,830
========= ========= ========= =========
Paper, Packaging & Services
GAAP - operating profit $ 9,595 $ 9,175 $ 16,907 $ 19,797
Restructuring charges 3,647 446 12,469 446
--------- --------- --------- ---------
Non-GAAP - operating profit before
restructuring charges $ 13,242 $ 9,621 $ 29,376 $ 20,243
========= ========= ========= =========
Timber
GAAP - operating profit $ 6,909 $ 10,322 $ 25,481 $ 42,052
Restructuring charges 168 56 350 56
Timberland gains (1,099) (2,445) (5,577) (12,122)
--------- --------- --------- ---------
Non-GAAP - operating profit before
restructuring charges and timberland gains $ 5,978 $ 7,933 $ 20,254 $ 29,986
========= ========= ========= =========
Quarter ended
July 31, 2003*
--------------
Paper, Packaging & Services
GAAP - operating loss $ (5,248)
Restructuring charges 5,124
-----------
Non-GAAP - operating loss before
restructuring charges $ (124)
===========
|
* Amount represents the Paper, Packaging & Services results, as reported in the Form 10-Q for the quarter ended July 31, 2003. It does not include CorrChoice's results, which have subsequently been consolidated for the fourth quarter and fiscal year ended October 31, 2003.
Quarter ended Year ended
October 31, October 31,
----------- -----------
2003 2002 2003 2002
---- ---- ---- ----
Net sales $ 514,201 $ 491,416 $ 1,916,441 $ 1,825,648
Cost of products sold 415,664 380,621 1,570,891 1,454,892
-------------- ------------- ------------- -------------
Gross profit 98,537 110,795 345,550 370,756
Selling, general and administrative expenses 54,997 67,521 228,120 260,432
Restructuring charges 25,175 4,445 60,743 4,445
Gain on sale of timberland 1,099 2,445 5,577 12,122
-------------- ------------- ------------- --------------
Operating profit 19,464 41,274 62,264 118,001
Interest expense, net 13,357 15,016 54,460 55,965
Debt extinguishment charge -- 5,910 -- 10,300
Other income, net 2,565 2,433 4,385 8,324
-------------- ------------- ------------- --------------
Income before income tax expense and equity in
earnings of affiliates and minority interests 8,672 22,781 12,189 60,060
Income tax expense 2,619 8,201 3,754 21,622
Equity in earnings of affiliates and minority interests (325) (218) (681) (837)
-------------- ------------- ------------- --------------
Income before cumulative effect of change in
accounting principle 5,728 14,362 7,754 37,601
Cumulative effect of change in accounting principle -- -- 4,822 --
-------------- ------------- ------------- --------------
Net income $ 5,728 $ 14,362 $ 12,576 $ 37,601
============== ============= ============ ==============
Operating profit before restructuring charges and
timberland gains $ 43,540 $ 43,274 $ 117,430 $ 110,324
============== ============= ============= =============
Net income before restructuring charges, debt
extinguishment charge, timberland gains and
cumulative effect of change in accounting principle $ 22,533 $ 19,424 $ 45,929 $ 39,280
============== ============= ============= ==============
Note: The supplemental pro forma information included in this release assumes that the CorrChoice transaction, which occurred on September 30, 2003, had occurred on November 1, 2001. The pro forma information, as presented above, is not necessarily indicative of the results which would have been obtained had the transaction occurred on November 1, 2001, nor are they necessarily indicative of future results.