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 April 30, 1997 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 12,001,793 shares
<TABLE>
PART I. FINANCIAL INFORMATION
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months Ended April 30, Six Months Ended April 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $152,529 $159,212 $304,899 $318,955
Other income:
Interest and other 4,649 1,173 7,116 2,028
Gain on timber sales 2,058 1,106 3,597 2,997
159,236 161,491 315,612 323,980
Costs and expenses (including depreciation of
$14,305 in 1997 and $13,063 in 1996):
Cost of products sold 134,921 133,161 266,250 260,595
Selling, general 17,812 17,481 35,024 34,766
and administrative
Interest 923 270 1,673 514
153,656 150,912 302,947 295,875
Income before income taxes 5,580 10,579 12,665 28,105
Taxes on income 2,000 4,000 4,600 10,700
Net income $ 3,580 $ 6,579 $ 8,065 $ 17,405
Earnings per share (based on the average number of shares outstanding during
the period):
Based on the assumption that earnings were allocated to Class A and Class B
Common Stock to the extent that dividends wereactually 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 $ .12 $ .27 $ .26 $ .68
Class B Common Stock $ .18 $ .31 $ .43 $ .83
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 retained earnings.
<FN>
See accompanying Notes to the Consolidated Financial Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<CAPTION>
April 30, October 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 19,068 $ 26,560
Canadian government securities 15,691 19,479
Trade accounts receivable--less allowance
of $828 for doubtful items ($826 in 1996) 68,461 73,987
Inventories 52,469 49,290
Prepaid expenses and other 16,654 16,131
Total current assets 172,343 185,447
LONG TERM ASSETS
Cash surrender value of life insurance 3,028 2,982
Goodwill - less amortization 14,699 4,617
Other long term assets 7,697 7,116
25,424 14,715
PROPERTIES, PLANTS AND EQUIPMENT--at cost
Timber properties--less depletion 6,159 6,112
Land 10,815 10,771
Buildings 130,595 125,132
Machinery, equipment, etc. 390,139 385,834
Construction in progress 50,802 33,450
Less accumulated depreciation (256,526) (249,123)
331,984 312,176
$529,751 $512,338
CURRENT LIABILITIES
Accounts payable $ 26,574 $ 31,609
Current portion of long term obligations 18,317 2,455
Accrued payrolls and employee benefits 7,373 8,989
Accrued taxes--general 1,023 1,949
Taxes on income 634 5,678
Total current liabilities 53,921 50,680
LONG TERM OBLIGATIONS 39,609 22,748
OTHER LONG TERM LIABILITIES 13,943 15,406
DEFERRED INCOME TAXES 25,510 22,872
Total long term liabilities 79,062 61,026
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;
outstanding 10,873,172 shares
Class B Common Stock:
Authorized and issued 17,280,000 shares;
outstanding 12,001,793 shares
Treasury Stock, at cost (41,867) (41,867)
Class A Common Stock: 10,267,788 shares
Class B Common Stock: 5,278,207 shares
Retained earnings 434,462 436,672
Cumulative translation adjustment (4,861) (3,207)
396,768 400,632
$529,751 $512,338
<FN>
See accompanying Notes to the Consolidated Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
For the six months ended April 30, 1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,065 $17,405
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 14,916 13,063
Deferred income taxes 2,654 3,659
Increase (decrease) in cash from changes in
certain assets and liabilities, net of
effects from acquisitions:
Trade accounts receivable 8,912 12,508
Inventories (208) 11,078
Prepaid expenses and other (436) 287
Other long term assets (577) (99)
Accounts payable (5,980) (9,241)
Accrued payrolls and employee benefits (1,911) (1,654)
Accrued taxes - general (935) (674)
Taxes on income (5,061) (229)
Other long term liabilities
Net cash provided by operating activities 17,976 44,252
Cash flows from investing activities:
Acquisitions of companies, net of cash
acquired (5,188) (479)
Net disposals of investments in
government securities 3,788 311
Purchase of properties, plants and
equipment (22,224) (30,452)
Net cash used by investing activities (23,624) (30,620)
Cash flows from financing activities:
Net proceeds (payments) on long term debt 9,723 (1,443)
Dividends paid (10,275) (9,120)
Net cash used by financing activities (552) (10,563)
Foreign currency translation adjustment (1,292) (481)
Net increase (decrease) in cash and
cash equivalents (7,492) 2,588
Cash and cash equivalents at beginning
of period 26,560 31,612
Cash and cash equivalents at end of period $19,068 $34,200
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
NOTE 1 - CAPITAL STOCK AND RETAINED EARNINGS
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 propor-
tion 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 arrears. There is no cumulative voting.
NOTE 2 - DIVIDENDS PER SHARE
<TABLE>
The following dividends per share were paid during the
period indicated:
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Class A Common Stock $.12 $.08 $.36 $.32
Class B Common Stock $.18 $.12 $.53 $.47
NOTE 3 - CALCULATION OF EARNINGS PER SHARE
Earnings per share were calculated using the following
number of shares for the periods presented:
Three Months Ended Six Months Ended
April 30, April 30,
Class A Common Stock 10,873,172 shares 10,873,172 shares
Class B Common Stock 12,001,793 shares 12,001,793 shares
NOTE 4 - INVENTORIES
Inventories are comprised principally of raw materials
and are stated at the lower of cost (principally on last-in,
first-out basis) or market.
NOTE 5 - ACQUISITIONS
On November 8, 1996, the Company purchased the assets of
Aero Box Company, a corrugated container company, located in
Roseville, Michigan. On March 26, 1997, the Company acquired the
assets of two steel drum manufacturing plants with locations in
Merced, California and Oakville, Ontario. These acquisitions
have been accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the
assets purchased and liabilities assumed based upon the fair
values at the date of acquisition. The excess of the purchase
price over the fair values of the net assets acquired has been
recorded as goodwill. The Consolidated Financial Statements
include the operating results of each business from the date of
acquisition. Pro forma results of operations have not been
presented because the effect of these acquisitions were not
significant.
Subsequent to April 30, 1997, the Company purchased all
of the outstanding common stock of Independent Container, Inc., a
corrugated container company, located in Louisville, Kentucky,
Ferdinand, Indiana and Erlanger, Kentucky.
NOTE 6 - RECLASSIFICATIONS
Certain prior year amounts have been reclassified to
conform to the 1997 presentation.
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 6-month periods ended April 30, 1997 and April 30, 1996.
Net sales decreased 4% during the current period compared
to the previous period. This decrease was principally the result
of lower sales in the containerboard segment, which was
significantly affected by lower sales prices of its products.
The lower prices were caused by the continued weakness in the
containerboard market resulting from excess capacity of
containerboard. The net sales of the shipping containers segment
did not fluctuate significantly from the prior year.
The increase in other income was primarily due to a gain
on the sale of an office building and an injection molding
facility.
The cost of products sold as a percentage of sales
increased from 81.7% in 1996 to 87.3% in 1997. This increase is
primarily the result of lower net sales of the containerboard
segment without a corresponding reduction in the cost of products
sold.
The increase in interest expense is due to more long term
obligations than the prior year.
Liquidity and Capital Resources
As indicated in the Consolidated Balance Sheet, elsewhere
in this report and discussed in greater detail in the 1996 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 1996 Annual Report, the Company is
subject to the economic conditions of the market in which it
operates. 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 April 30, 1997 is an indication
of the continuation of the Company's strong liquidity.
Capital expenditures were $22,224,000 during the six
months ended April 30, 1997. These capital expenditures were
principally needed to replace and improve equipment.
In November 1996, the Company acquired the assets of Aero
Box Company, a manufacturer of corrugated containers, located in
Roseville, Michigan. In March 1997, the Company purchased the
assets of two steel drum plants with locations in Merced,
California and Oakville, Ontario.
The Company has approved future purchases, primarily for
equipment, of approximately $17 million. Self-financing and low
interest rate borrowing has been the primary source for financing
such capital expenditures.
Subsequent to April 30, 1997, the Company acquired all of
the outstanding common stock of Independent Container, Inc., a
corrugated container company, located in Louisville, Kentucky,
Ferdinand, Indiana and Erlanger, Kentucky.
The increase in long term obligations since year-end is
primarily due to the purchase of a corrugated container company,
two steel drum operations, improvements related to Greif Board
Corporation=s machinery and equipment and other capital
expenditures.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
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 April 30,
1997, the consolidated statements of income for the 6-month
periods ended April 30, 1997 and 1996, and the consolidated
statements of cash flows for the 6-month periods then ended.
These financial statements are unaudited; however, at year-end an
audit will be made for the fiscal year by our independent
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 June 11, 1997
John K. Dieker
Controller
</TABLE>
<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> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 19,068
<SECURITIES> 15,691
<RECEIVABLES> 69,289
<ALLOWANCES> (828)
<INVENTORY> 52,469
<CURRENT-ASSETS> 172,343
<PP&E> 588,510
<DEPRECIATION> (256,526)
<TOTAL-ASSETS> 529,751
<CURRENT-LIABILITIES> 53,921
<BONDS> 39,609
0
0
<COMMON> 9,034
<OTHER-SE> 387,734
<TOTAL-LIABILITY-AND-EQUITY> 529,751
<SALES> 304,899
<TOTAL-REVENUES> 315,612
<CGS> 266,250
<TOTAL-COSTS> 266,250
<OTHER-EXPENSES> 35,024
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,673
<INCOME-PRETAX> 12,665
<INCOME-TAX> 4,600
<INCOME-CONTINUING> 8,065
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,065
<EPS-PRIMARY> 0.26<F1>
<EPS-DILUTED> 0.26<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 $0.43.
</FN>
</TABLE>
