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, 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.)
425 Winter Road, Delaware, Ohio 43015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 614-549-6000
621 Pennsylvania Avenue, Delaware, Ohio
(Former address, 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 10,878,672 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 Nine Months
Ended July 31, Ended July 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $167,062 $155,994 $471,961 $474,949
Other income:
Interest and other 1,698 1,535 8,814 3,563
Gain on timber sales 3,781 3,084 7,378 6,081
172,541 160,613 488,153 484,593
Costs and expenses:
Cost of products sold 144,869 128,865 411,119 389,460
Selling, general and administrative 19,275 16,116 54,299 50,882
Interest 1,063 196 2,736 710
165,207 145,177 468,154 441,052
Income before income taxes 7,334 15,436 19,999 43,541
Taxes on income 2,652 5,800 7,252 16,500
Net income $ 4,682 $ 9,636 $ 12,747 $ 27,041
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 $ .18 $ .40 $ .44 $1.08
Class B Common Stock $ .24 $ .44 $ .67 $1.27
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>
July 31, October 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 15,378 $ 26,560
Canadian government securities 8,255 19,479
Trade accounts receivable--less allowance
of $882 for doubtful items ($826 in 1996) 74,632 73,987
Inventories 54,635 49,290
Prepaid expenses and other 23,112 16,131
Total current assets 176,012 185,447
LONG TERM ASSETS
Cash surrender value of life insurance 3,163 2,982
Goodwill -- less amortization 15,513 4,617
Other long term assets 12,426 7,116
31,102 14,715
PROPERTIES, PLANTS AND EQUIPMENT--at cost
Timber properties--less depletion 6,204 6,112
Land 11,675 10,771
Buildings 131,473 125,132
Machinery, equipment, etc. 401,683 385,834
Construction in progress 58,007 33,450
Less accumulated depreciation (264,287) (249,123)
344,755 312,176
$551,869 $512,338
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 32,516 $ 31,609
Current portion of long term obligations 27,790 2,455
Accrued payrolls and employee benefits 6,935 8,989
Accrued taxes--general 1,433 1,949
Taxes on income 3,659 5,678
Total current liabilities 72,333 50,680
LONG-TERM OBLIGATIONS 38,504 22,748
OTHER LONG-TERM LIABILITIES 15,681 15,406
DEFERRED INCOME TAXES 26,768 22,872
Total long-term liabilities 80,953 61,026
SHAREHOLDERS' EQUITY (Note 1)
Capital stock, without par value 9,192 9,034
Class A Common Stock:
Authorized 32,000,000 shares;
issued 21,140,960 shares;
outstanding 10,878,672 shares
(10,873,172 in 1996)
Class B Common Stock:
Authorized and issued 17,280,000 shares;
outstanding 12,001,793 shares
Treasury Stock, at cost (41,891) (41,867)
Class A Common Stock: 10,262,288 shares
(10,267,788 in 1996)
Class B Common Stock: 5,278,207 shares
Retained earnings 435,679 436,672
Cumulative translation adjustment (4,397) (3,207)
398,583 400,632
$551,869 $512,338
<FN>
See accompanying Notes to the 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, 1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $12,747 $27,041
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 23,771 19,360
Deferred income taxes 3,907 4,786
Increase (decrease) in cash from changes in
certain assets and liabilities, net of effects
from acquisitions:
Trade accounts receivable 6,181 14,081
Inventories (83) 17,700
Prepaid expenses and other (6,667) 2,207
Other long-term assets (4,786) 373
Accounts payable (3,065) (12,504)
Accrued payrolls and employee benefits (2,437) (2,786)
Accrued taxes - general (535) (238)
Taxes on income (2,055) 4,267
Other long-term liabilities (1,929) 457
Net cash provided by operating activities 25,049 74,744
Cash flows from investing activities:
Acquisitions of companies, net of cash
acquired (7,514) (479)
Net sales of investments in government
securities 11,224 135
Purchase of properties, plants and equipment (34,464) (49,027)
Net cash used by investing activities (30,754) (49,371)
Cash flows from financing activities:
Net proceeds (payments) on long-term debt 9,091 (2,548)
Acquisition of treasury stock (24) --
Exercise of stock options 158 --
Dividends paid (13,740) (11,430)
Net cash used by financing activities (4,515) (13,978)
Foreign currency translation adjustment (962) (815)
Net (decrease) increase in cash and cash
equivalents (11,182) 10,580
Cash and cash equivalents at beginning of
period 26,560 31,612
Cash and cash equivalents at end of period $15,378 $42,192
<FN>
See accompanying Notes to the Consolidated Financial Statements.
</TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 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 Nine Months Ended
July 31, July 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Class A Common Stock $.12 $.08 $.48 $.40
Class B Common Stock $.18 $.12 $.71 $.59
</TABLE>
NOTE 3 - CALCULATION OF NET INCOME PER SHARE
Net income per share was calculated using the following number of shares
for the periods presented:
Three Months Ended Nine Months Ended
July 31, July 31,
Class A Common Stock 10,874,038 shares 10,873,461 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 May 9, 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. On June 30,
1997, the Company acquired all of the outstanding common stock of Centralia
Container, Inc., a corrugated container company, located in Centralia,
Illinois. 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.
NOTE 6 - SUBSEQUENT EVENTS
On August 4, 1997, the Company sold its wood component operations, which
manufacture door panels, wood moldings and window and door parts, with
locations in Kentucky, California, Washington and Oregon. At the present time,
it is not expected that the transaction will have a material impact on the
results of operations.
NOTE 7 - 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 9-month periods ended July 31,
1997 and July 31, 1996.
Net sales decreased during the current period compared to the previous
period primarily due to 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 sales price decreases
were partially offset by the seven corrugated container plants which were
acquired subsequent to the third quarter of 1996. The net sales of the
shipping containers segment increased since the prior year due to the addition
of two steel drum manufacturing plants during the second quarter of 1997.
The increase in other income was primarily due to a gain on the sale of
an office building and an injection molding facility during 1997.
The cost of products sold as a percentage of sales increased from 82.0%
in 1996 to 87.1% 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 July 31, 1997 is an indication of the
continuation of the Company's strong liquidity.
Capital expenditures were $34,464,000, after eliminating the effect of
the acquisitions, during the nine months ended July 31, 1997. These capital
expenditures were principally needed to replace and improve equipment.
In May 1997, the Company acquired the stock of Independent Container,
Inc, a manufacturer of corrugated containers, located in Louisville, Kentucky,
Ferdinand, Indiana and Erlanger, Kentucky. In June 1997, the Company
purchased the stock of Centralia Container, Inc., a corrugated container
company, located in Centralia, Illinois.
The Company has approved future purchases, primarily for equipment, of
approximately $11 million. Self-financing and borrowing has been the primary
source for financing such capital expenditures.
The increase in long-term obligations since year-end is primarily due to
the purchase of three corrugated container companies, two steel drum
operations, improvement related to Greif Board Corporation's machinery and
equipment and other capital expenditures.
Subsequent to July 1997, the Company sold its wood component operations,
located in Kentucky, California, Washington and Oregon. These locations
manufacture door panels, wood moldings and window and door parts.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material developments with respect to 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 July 31, 1997, the consolidated statements of
income for the 9-month periods ended July 31, 1997 and 1996, and the
consolidated statements 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 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 September 10, 1997 Joseph W. Reed
Chief Financial 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> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 15,378
<SECURITIES> 8,255
<RECEIVABLES> 75,514
<ALLOWANCES> (882)
<INVENTORY> 54,635
<CURRENT-ASSETS> 176,012
<PP&E> 609,042
<DEPRECIATION> (264,287)
<TOTAL-ASSETS> 551,869
<CURRENT-LIABILITIES> 72,333
<BONDS> 38,504
0
0
<COMMON> 9,192
<OTHER-SE> 389,391
<TOTAL-LIABILITY-AND-EQUITY> 551,869
<SALES> 471,961
<TOTAL-REVENUES> 488,153
<CGS> 411,119
<TOTAL-COSTS> 411,119
<OTHER-EXPENSES> 54,299
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,736
<INCOME-PRETAX> 19,999
<INCOME-TAX> 7,252
<INCOME-CONTINUING> 12,747
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,747
<EPS-PRIMARY> 0.44<F1>
<EPS-DILUTED> 0.44<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 $0.67.
</FN>
</TABLE>
