U.S. 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 Quarter Ended July 31, 1995 Commission File Number 1-566
GREIF BROS.CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-4388903
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
621 Pennsylvania Avenue, Delaware, Ohio 43015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 614-363-1271
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 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 10,873,172 shares
Class B Common Stock 13,201,793 shares
<TABLE>
PART I. FINANCIAL INFORMATION
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<CAPTION>
July 31, October 31,
1995 1994
<S> <C> <C>
CURRENT ASSETS
Cash and short term investments $ 22,713 $ 29,543
U.S. and Canadian government securities
--at amortized cost which approximates market 19,770 23,970
Trade accounts receivable--less allowance
of $989 for doubtful items 67,333 69,501
Inventories, at the lower of cost (prin-
cipally last-in, first-out) or market 69,591 50,944
Prepaid expenses and other 14,492 14,384
Total current assets 193,899 188,342
LONG TERM ASSETS
Cash surrender value of life insurance 2,678 2,618
Interest in partnership 1,091 1,091
Other long term assets 7,937 5,853
11,706 9,562
PROPERTIES, PLANTS AND EQUIPMENT -- at cost
Timber properties -- less depletion 4,257 3,639
Land 10,538 10,521
Buildings 105,754 99,936
Machinery, equipment, etc. 301,302 291,426
Construction in progress 31,847 18,136
Less accumulated depreciation (218,680) (202,488)
235,018 221,170
$440,623 $419,074
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
July 31, October 31,
1995 1994
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 27,908 $ 32,948
Current portion of long term obligations 2,242 249
Accrued payrolls and employee benefits 9,946 7,082
Accrued taxes--general 1,213 1,952
Taxes on income 312 713
Total current liabilities 41,621 42,944
LONG TERM OBLIGATIONS (interest rates from
4.81% - 8.00%; payable to 2000) 8,180 27,966
OTHER LONG TERM LIABILITIES 18,016 14,265
DEFERRED INCOME TAXES 11,283 6,960
Total long term liabilities 37,479 49,191
SHAREHOLDERS' EQUITY (Note 1)
Capital stock, without par value 9,034 9,034
Class A Common Stock:
Authorized 32,000,000 shares;
issued 21,140,960 shares;
in treasury 10,267,788 shares;
outstanding 10,873,172 shares
Class B Common Stock:
Authorized and issued 17,280,000 shares;
in treasury 4,078,207 shares;
(3,967,226 in 1994)
outstanding 13,201,793 shares
(13,312,774 in 1994)
Earnings retained for use in the business 356,444 321,583
Cumulative translation adjustment (3,955) (3,678)
361,523 326,939
$440,623 $419,074
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months Ended July 31, Nine Months Ended July 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales and other income
Net sales $184,159 $147,629 $539,086 $416,317
Other income:
Gain on sales of
timber and timber
properties 1,402 992 6,119 2,860
Interest, oil royalties
and other 1,553 1,577 4,184 4,151
187,114 150,198 549,389 423,328
Costs and expenses
Cost of products sold 138,011 121,604 417,569 347,967
Selling, general and
administrative 19,911 14,187 54,153 42,891
Interest 104 456 820 1,103
158,026 136,247 472,542 391,961
Income before income taxes 29,088 13,951 76,847 31,367
Taxes on income 11,500 5,250 29,000 11,750
Net income $ 17,588 $ 8,701 $ 47,847 $ 19,617
Net income per share (based on the average number of shares outstanding during
the period, adjusted for two-for-one stock split):
Based on the assumption that earnings were allocated to Class A and Class B
Common Stock to the extent that dividends were actually paid for the year and
the remainder were allocated as they would be received by shareholders in the
event of liquidation, that is, equally to Class A and Class B shares, share and
share alike:
Class A Common Stock $0.71 $0.35 $1.89 $0.74
Class B Common Stock $0.74 $0.37 $2.05 $0.86
Due to the special characteristics of the Company's two classes of stock
(see Note 1), earnings per share can be calculated upon the basis of varying
assumptions, none of which, in the opinion of management, would be free from the
claim that it fails fully and accurately to represent the true interest of
the shareholders of each class of stock and in the earnings retained for use in
the business.
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS RETAINED FOR USE IN THE BUSINESS
(Dollars in thousands, except per share amounts)
<CAPTION>
For the nine months ended July 31, 1995 1994
<S> <C> <C>
Balance at beginning of period $321,583 $298,757
Net income 47,847 19,617
369,430 318,374
Dividends paid:
On Class A Common Stock -- $.34
($.26 in 1994) 3,697 2,827
On Class B Common Stock -- $.50
($.38 in 1994) 6,643 5,078
10,340 7,905
Stock acquired for treasury 2,646 1,693
Balance at end of period $356,444 $308,776
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
For the nine months ended July 31, 1995 1994
Cash flows from operating activities:
<S> <C> <C>
Net income $47,847 $19,617
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and depletion 17,097 15,768
Deferred income taxes 4,329 4,499
(Increase) decrease:
Trade accounts receivable 2,168 (5,272)
Inventories (18,647) (3,320)
Prepaid expenses and other (108) 3
Other long term assets (2,144) 452
Increase (decrease):
Accounts payable (5,040) 5,323
Accrued payrolls and employee benefits 2,864 (109)
Accrued taxes -- general (739) 57
Taxes on income (401) (692)
Other long term liabilities 3,751 (310)
Net cash provided by operating activities 50,977 36,016
Cash flows from investing activities:
Sales (purchases) of investments in government
and short term securities 4,200 1,872
Purchase of properties, plants and equipment (31,008) (30,785)
Net cash used by investing activities (26,808) (28,913)
Cash flows from financing activities:
Proceeds (payments) on long term debt (17,793) 3,006
Acquisition of treasury stock (2,646) (1,693)
Dividends paid (10,340) (7,905)
Net cash provided (used) by financing activities (30,779) (6,592)
Foreign currency translation adjustment (220) (1,543)
Net increase (decrease) in cash and short term
investments (6,830) (1,032)
Cash and short term investments at beginning of
period 29,543 30,827
Cash and short term investments at end of period $22,713 $29,795
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1995
NOTE 1 - CAPITAL STOCK AND RETAINED EARNINGS
In March, 1995, authorized Class A Common Stock was increased from
16,000,000 shares to 32,000,000 shares and Class B Common Stock from 8,640,000
shares to 17,280,000 shares. At the same time, all issued shares were split
two-for-one.
Class A Common Stock is entitled to cumulative dividends of 1 cent a
share per year after which Class B Common Stock is entitled to non-cumulative
dividends up to 1/2 cent a share per year. Further distribution in any year
must be made in proportion of 1 cent a share for Class A Common Stock to 1-1/2
cents a share for Class B Common Stock. The Class A Common Stock shall have
no voting power nor shall it be entitled to notice of meetings of the
stockholders, all rights to vote and all voting power being vested exclusively
in the Class B Common Stock unless four quarterly cumulative dividends upon
the Class A Common stock are in default. There is no cumulative voting. The
Company has acquired 14,345,995 shares of Class A and Class B Common Stock for
treasury at a cost of $40,775,296 which was appropriately charged against
earnings retained for use in the business. Included in the above are 106,555
shares of Class B Common Stock acquired in fiscal 1995 for $2,646,000.
NOTE 2 - DIVIDENDS PER SHARE
<TABLE>
The following dividends per share were paid during the period indicated,
adjusted for two-for-one stock split:
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Class A Common Stock $.06 $.04 $.34 $.26
Class B Common Stock $.09 $.06 $.50 $.38
</TABLE>
NOTE 3 - CALCULATION OF NET INCOME PER SHARE
<TABLE>
Net income per share was calculated using the following number of
shares for the periods presented:
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
<S> <C> <C>
Class A Common Stock 10,873,172 shares 10,873,172 shares
Class B Common Stock 13,215,106 shares 13,268,883 shares
</TABLE>
NOTE 4 - INVENTORIES
Inventories are comprised principally of raw materials.
NOTE 5 - STOCK OPTIONS
During fiscal 1995, the Company adopted an Incentive Stock Option Plan
(the Plan) which provides the granting of incentive stock options to key
employees and non-statutory options for non-employees. The aggregate number
of the Company's Class A Common Stock which options may be granted shall not
exceed 1,000,000 shares. Under the terms of the Plan, options are granted at
exercise prices equal to the market value on the date the options are granted
and become exercisable after two years from the date of grant.
In the current year, 155,000 incentive stock options and 10,000 non-
statutory options have been granted with option prices of $26.19 and $23.75,
respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Historically, revenues or earnings may or may not be representative of
future operations because of various economic factors. The following
comparative information is presented for the 9-month periods ended July 31,
1995 and July 31, 1994.
Net sales increased 29% during the current period compared to the
previous period. This increase was principally the result of increases in the
containerboard segment, which was significantly affected by increased sales
prices resulting from shortages in containerboard and related products. In
addition, the shipping containers segment contributed to the increase due to
an increase in unit sales and higher sales prices resulting from the increase
in cost of the Company's raw materials.
The gain on sales of timber and timber properties increased due to the
sale of timber properties to the U.S. Forest Service and more salvage timber
sales. Also, the sales prices for timber were higher as compared to the
previous period.
The cost of products sold as a percentage of sales decreased from 84% in
1994 to 77% in 1995. This decrease was largely the result of a higher percent
of the net sales being comprised of the containerboard and related products
segment, which has a higher gross profit margin than the Company's other
segment. This decrease was partially offset by an increase in the cost of the
Company's raw materials.
Inventories are higher at July 31, 1995 compared to October 31,
1994. This increase is to support the higher volume of sales that the Company
is experiencing this year. In addition, the higher cost of raw materials
contributed to this increase in inventories.
Liquidity and Capital Resources
As indicated in the Consolidated Balance Sheets, elsewhere in this
report and discussed in greater detail in the 1994 Annual Report to
Shareholders, the Company is dedicated to maintaining a strong financial
position. It is our belief that this dedication is extremely important during
all economic times.
As discussed in the 1994 Annual Report, the Company is subject to the
economic conditions of its customers. During this period, the Company has
been able to utilize its developed financial position to meet its continued
business needs.
The current ratio as of July 31, 1995 is an indication of the
continuation of the Company's strong liquidity.
Long term obligations are lower at July 31, 1995 compared to October 31,
1994 due to pre-payment of long term debt. The decrease caused by this pre-
payment was partially offset by additional long term debt which was incurred
to build a manufacturing plant in Michigan.
In May 1995, a subsidiary company approved a $35 million mill
modernization program at Riverville, Virginia. In addition, the Company has
outstanding purchase commitments, primarily for equipment, of approximately
$21 million. Self-financing and low interest rate borrowing have been the
primary source for financing such capital expenditures.
Capital expenditures were approximately $31 million during the nine
months ended July 31, 1995. These capital expenditures were principally
needed to replace and improve equipment and build a manufacturing plant in
Michigan which will be completed in 1995. Construction in progress increased
since year-end primarily due to capital expenditures for the plant in Michigan
and the mill modernization in Virginia.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
As disclosed in the 1994 Form 10-K and further described in the Form 10-
Q for the quarter ended April 30, 1995, there is a pollution situation at the
Company's plant in Winfield, Kansas. No additional activity has been included
in the results of operations for the quarter ended July 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits
None.
(b.) Reports on Form 8-K
No events occurred requiring Form 8-K to be filed.
OTHER COMMENTS
The information furnished herein reflects all adjustments which are, in
the opinion of management, necessary for a fair presentation of the
consolidated balance sheet as of July 31, 1995, the consolidated statement of
income for the 9-month periods ended July 31, 1995 and 1994, and the
consolidated statement of cash flows for the 9-month periods then ended.
These financial statements are unaudited; however, at year-end an audit will
be made for the fiscal year by independent certified public accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Greif Bros. Corporation
(Registrant)
Date September 11, 1995 John K. Dieker
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JUL-31-1995
<CASH> 22,713
<SECURITIES> 19,770
<RECEIVABLES> 68,322
<ALLOWANCES> (989)
<INVENTORY> 69,591
<CURRENT-ASSETS> 193,899
<PP&E> 453,698
<DEPRECIATION> (218,680)
<TOTAL-ASSETS> 440,623
<CURRENT-LIABILITIES> 41,621
<BONDS> 0
<COMMON> 9,034
0
0
<OTHER-SE> 352,489
<TOTAL-LIABILITY-AND-EQUITY> 440,623
<SALES> 539,086
<TOTAL-REVENUES> 549,389
<CGS> 417,569
<TOTAL-COSTS> 417,569
<OTHER-EXPENSES> 54,153
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 820
<INCOME-PRETAX> 76,847
<INCOME-TAX> 29,000
<INCOME-CONTINUING> 47,847
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,847
<EPS-PRIMARY> 1.89<F1>
<EPS-DILUTED> 1.89<F1>
<FN>
<F1>Amount represents the earnings per share for the Class A Common Stock. The
earnings per share for the Class B Common Stock are $2.05.
</FN>
</TABLE>
