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 January 31, 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>
For the three months ended January 31, 1997 1996
<S> <C> <C>
Net sales $152,370 $159,743
Other income:
Interest and other 2,467 855
Gain on timber sales 1,539 1,891
156,376 162,489
Costs and expenses (including depreciation of
$7,594 in 1997 and $6,523 in 1996):
Cost of products sold 131,329 127,434
Selling, general and administrative 17,212 17,285
Interest 750 244
149,291 144,963
Income before income taxes 7,085 17,526
Taxes on income 2,600 6,700
Net income $ 4,485 $ 10,826
Net income 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 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 $0.14 $0.41
Class B Common Stock $0.25 $0.52
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 Consolidated Financial Statements.
</TABLE>
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<CAPTION>
January 31, October 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 22,048 $ 26,560
Canadian government securities 19,273 19,479
Trade accounts receivable--less allowance
of $836 for doubtful items ($826 in 1996) 70,500 73,987
Inventories 50,148 49,290
Prepaid expenses and other 15,944 16,131
Total current assets 177,913 185,447
LONG TERM ASSETS
Cash surrender value of life insurance 3,020 2,982
Goodwill--less amortization 12,198 4,617
Other long term assets 7,333 7,116
22,551 14,715
PROPERTIES, PLANTS AND EQUIPMENT--at cost
Timber properties--less depletion 6,159 6,112
Land 10,950 10,771
Buildings 127,631 125,132
Machinery, equipment, etc. 389,846 385,834
Construction in progress 44,471 33,450
Less accumulated depreciation (256,147) (249,123)
322,910 312,176
$523,374 $512,338
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 25,085 $ 31,609
Current portion of long term obligations 16,357 2,455
Accrued payrolls and employee benefits 6,434 8,989
Accrued taxes--general 1,346 1,949
Taxes on income 5,244 5,678
Total current liabilities 54,466 50,680
LONG TERM OBLIGATIONS 32,153 22,748
OTHER LONG TERM LIABILITIES 14,505 15,406
DEFERRED INCOME TAXES 24,194 22,872
Total long term liabilities 70,852 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 434,347 436,672
Cumulative translation adjustment (3,458) (3,207)
398,056 400,632
$523,374 $512,338
<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 three months ended January 31, 1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,485 $10,826
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 7,986 6,523
Deferred income taxes 1,325 1,612
Increase (decrease) in cash from changes in certain
assets and liabilities, net of effects from acquisitions:
Trade accounts receivable 5,233 8,075
Inventories (576) 5,820
Prepaid expenses and other 253 413
Other long term assets (255) 221
Accounts payable (6,621) (13,926)
Accrued payrolls and employee benefits (2,659) (973)
Accrued taxes - general (611) (503)
Taxes on income (451) 3,673
Other long term liabilities (901) 368
Net cash provided by operating activities 7,208 22,129
Cash flows from investing activities:
Acquisitions of companies, net of cash acquired 134 -0-
Disposals (purchases) of investments in government
securities 206 724
Purchases of properties, plants and equipment (15,354) (12,375)
Net cash used by investing activities (15,014) (11,651)
Cash flows from financing activities:
Proceeds (payments) on long term debt 10,307 (71)
Dividends paid (6,810) (6,810)
Net cash used by financing activities 3,497 (6,881)
Foreign currency translation adjustment (203) (788)
Net (decrease) increase in cash and cash equivalents (4,512) 2,809
Cash and cash equivalents at beginning of period 26,560 31,612
Cash and cash equivalents at end of period $22,048 $34,421
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 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
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 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
January 31,
1997 1996
<S> <C> <C>
Class A Common Stock $.24 $.24
Class B Common Stock $.35 $.35
</TABLE>
NOTE 3 - CALCULATION OF NET INCOME PER SHARE
Net income per share was calculated using the following
number of shares for the period presented:
Class A Common Stock - 10,873,172 shares
Class B Common Stock - 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. This acquisition has 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 the business from the date of acquisition. Pro forma
results of operations have not been presented because the effect
of this acquisition was not significant.
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 3-month periods ended January 31, 1997 and January 31, 1996.
Net sales decreased 5% during the current quarter compared
to the previous period. This decrease was primarily 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
remained about the same in comparison to the prior year's
quarter.
The increase in other income was primarily due to a gain
on the sale of an office building.
The cost of products sold as a percentage of sales
increased slightly as compared to the prior year. This increase
is primarily the result of lower net sales of the containerboard
segment without a corresponding reduction, except for raw
materials, in the cost of products sold.
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 of 3.3:1 as of January 31, 1997 is an
indication of the continuation of the Company's strong liquidity.
The increase in long term obligations since year-end is
due to the debt incurred in connection with the purchase of Aero
Box Company, financing to fund improvements related to machinery
and equipment for Greif Board Corporation, a subsidiary of the
Company, and other capital expenditures.
Capital expenditures were $15,354,000 during the three
months ended January 31, 1997. These capital expenditures were
principally needed to replace and improve equipment.
Effective November 8, 1996, the Company acquired the
assets of Aero Box Company, a manufacturer of corrugated boxes,
located in Roseville, Michigan.
The Company has approved future purchases, primarily for
equipment, of approximately $20 million. It is anticipated that
self-financing and bank borrowing will be the primary source for
financing such capital expenditures.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a.)The Company held its Annual Meeting of Stockholders on
February 24, 1997.
(b.)At the Annual Meeting of Stockholders, the following
nominees were elected to the Board of Directors:
Charles R. Chandler
Michael H. Dempsey
Naomi C. Dempsey
Michael J. Gasser
Daniel J. Gunsett
Allan Hull
Robert C. Macauley
David J. Olderman
William B. Sparks, Jr.
J Maurice Struchen
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 January 31,
1997, the consolidated statement of income for the 3-month
periods ended January 31, 1997 and 1996, and the consolidated
statement of cash flows for the 3-month periods then ended.
These financial statements are unaudited; however, at year-end an
audit will be made for the fiscal year by 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 March 6, 1997 John K. Dieker
Controller (Principal Accounting Officer)
<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> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 22,048
<SECURITIES> 19,273
<RECEIVABLES> 71,336
<ALLOWANCES> (836)
<INVENTORY> 50,148
<CURRENT-ASSETS> 177,913
<PP&E> 579,057
<DEPRECIATION> (256,147)
<TOTAL-ASSETS> 523,374
<CURRENT-LIABILITIES> 54,466
<BONDS> 0
0
0
<COMMON> 9,034
<OTHER-SE> 389,022
<TOTAL-LIABILITY-AND-EQUITY> 523,374
<SALES> 152,370
<TOTAL-REVENUES> 156,376
<CGS> 131,329
<TOTAL-COSTS> 131,329
<OTHER-EXPENSES> 17,212
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 750
<INCOME-PRETAX> 7,085
<INCOME-TAX> 2,600
<INCOME-CONTINUING> 4,485
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,485
<EPS-PRIMARY> 0.14<F1>
<EPS-DILUTED> 0.14<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 $0.25.
</FN>
</TABLE>
