<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act
Date of Report (Date of earliest event reported): June 12, 1998
(March 30, 1998)
GREIF BROS. CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-566 31-4388903
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) 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)
Index to Exhibits on Page 2
<PAGE> 2
GREIF BROS. CORPORATION
FORM 8-K/A
Dated June 12, 1998
CURRENT REPORT ON FORM 8-K
Dated April 14, 1998
Greif Bros. Corporation (the "Company") hereby amends
its Current Report on Form 8-K dated April 14, 1998 to include
the financial statements and pro forma financial information set
forth below which was omitted from the original filing pursuant
to Items 7(a)(4) and 7(b)(2).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
(1) Audited combined financial statements of the Industrial
Containers Business of Sonoco Products Company for the
years ended December 31, 1997 and 1996.
CONTENTS
Report of Independent Accountants
Combined Balance Sheets at December 31, 1997 and 1996
Combined Statements of Income and Retained Earnings for the years
ended December 31, 1997 and 1996
Combined Statements of Cash Flows for the years ended December
31, 1997 and 1996
Notes to Combined Financial Statements
(2) Unaudited combined financial statements of the
Industrial Containers Business of Sonoco Products
Company for the quarters ended March 31, 1998 and
1997.
CONTENTS
Unaudited Combined Balance Sheets at March 31, 1998 and 1997
Unaudited Combined Statements of Income and Retained Earnings for
the quarters ended March 31, 1998 and 1997
Unaudited Combined Statements of Cash Flows for the quarters
ended March 31, 1998 and 1997
Notes to Unaudited Combined Financial Statements
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of the
Sonoco Products Company:
We have audited the accompanying combined balance sheets of the
Industrial Containers Business, a division of Sonoco Products
Company (see Note 1), as of December 31, 1997 and 1996, and the
related combined statements of income and retained earnings and
cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the combined financial
position of the Industrial Containers Business, a division of
Sonoco Products Company, at December 31, 1997 and 1996 and the
combined results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the financial statements, in December
1997, Greif Bros. Corporation signed a letter of intent (subject
to certain conditions) to purchase the stock of the Industrial
Containers Business. These financial statements do not reflect
any adjustments arising from this proposed transaction.
/s/ Coopers & Lybrand LLP
Charlotte, North Carolina
February 12, 1998, except for the information
in Note 11 for which the date is March 30, 1998
<PAGE> 4
THE INDUSTRIAL CONTAINERS BUSINESS
A DIVISION OF SONOCO PRODUCTS COMPANY
COMBINED BALANCE SHEETS
December 31
(In Thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 599 $ 308
Accounts receivable, less $1,468
and $919 allowance for doubtful
accounts 22,930 21,903
Notes and other receivables 640 628
Inventories 16,634 17,486
Deferred income taxes 1,350 1,851
Prepaid expenses and other
current assets 164 390
Total current assets 42,317 42,566
Property, plant and equipment, net 42,804 39,317
Deferred income taxes 3,104 1,422
Other assets, net 15,547 16,224
$103,772 $ 99,529
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 7,831 $ 6,753
Accrued compensation 4,277 4,045
Accrued expenses 1,655 2,371
Total current liabilities 13,763 13,169
Other long-term liabilities 132 119
Accrued postretirement benefits 20,258 19,912
Total liabilities 34,153 33,200
Shareholders' equity:
Common stock 902 902
Additional paid-in capital 23,171 23,171
Retained earnings 76,840 88,937
Translation adjustment (656) (610)
Advances to parent company (30,638) (46,071)
Total shareholders' equity 69,619 66,329
$103,772 $ 99,529
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
<PAGE> 5
THE INDUSTRIAL CONTAINERS BUSINESS
A DIVISION OF SONOCO PRODUCTS COMPANY
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the years ended December 31
(In Thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net sales $181,928 $188,940
Cost of goods sold 155,007 156,561
Gross margin 26,921 32,379
Selling, general and administrative
expenses 15,126 16,563
Corporate allocation expense 2,658 3,203
Royalties 3,813 2,767
Other income, net (698) (715)
Income before income taxes 6,022 10,561
Provision for income taxes 2,619 3,947
Net income 3,403 6,614
Retained earnings, beginning of year 88,937 82,931
Dividends (15,500) (608)
Retained earnings, end of year $ 76,840 $ 88,937
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
<PAGE> 6
THE INDUSTRIAL CONTAINERS BUSINESS
A DIVISION OF SONOCO PRODUCTS COMPANY
COMBINED STATEMENTS OF CASH FLOWS
for the years ended December 31
(In Thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,403 $ 6,614
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 6,050 6,240
(Gain)loss on sale of property, plant
and equipment (106) 186
Deferred income taxes (1,187) (535)
Changes in operating assets and
liabilities:
Accounts receivable (934) 789
Notes and other receivables (12) 110
Inventories 835 476
Prepaid expenses and other current
assets 225 (185)
Accounts payable and accrued expenses 932 378
Other, net 124 (58)
Net cash provided by operating
activities 9,330 14,015
Cash flows from investing activities:
Purchases of property, plant and
equipment (9,009) (6,967)
Proceeds from sales of property, plant
and equipment 133 633
Other net - (27)
Net cash used in investing activities (8,876) (6,361)
Cash flows from financing activities:
Advances from (to) parent company, net 15,433 (6,783)
Advances to affiliate (604) (381)
Advances from affiliate 519 -
Cash dividends (15,500) (608)
Net cash used in financing activities (152) (7,772)
Effects of exchange rate changes on cash (11) (2)
Net increase (decrease) in cash and cash
equivalents 291 (120)
Cash and cash equivalents, beginning of year 308 428
Cash and cash equivalents, end of year $ 599 $ 308
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE> 7
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars In Thousands Except Per Share)
1. Significant Accounting Policies:
DESCRIPTION OF THE DIVISION - The Industrial Containers
Business (the "Division") manufactures fibre drums and plastic
drums at various locations for industrial customers in North
America.
On December 10, 1997, Sonoco signed a letter of intent,
subject to a definitive agreement, with Greif Bros.
Corporation ("Greif") to sell the stock of the Division. This
sale is subject to certain conditions. These financial
statements do not include any adjustments to the carrying
values of the Division's net assets that might arise from this
proposed transaction.
PRINCIPLES OF COMBINATION - The combined financial statements
of the Division include the operations of Sonoco Fibre Drum,
Inc. (excluding the operations of the Intermediate Bulk
Container Business), Sonoco Plastic Drum, Inc., Sonoco
Packaging Services, Inc. and Fibro Tambor, S.A. de C.V.. All
of these companies are 100% owned subsidiaries controlled by
Sonoco Products Company ("Sonoco"). All significant
intercompany accounts have been eliminated. All entities are
under common control and accordingly are presented in the
combined financial statements.
CONCENTRATION OF CREDIT RISK - Substantially all of the
Division's accounts receivable are due from customers located
principally in North America. The Division performs periodic
credit evaluations of its customers' financial condition and
generally does not require collateral.
CASH AND CASH EQUIVALENTS - The Division considers all highly
liquid investments with a maturity of three months or less
when purchased to be cash equivalents. The Division maintains
its cash in bank deposit accounts which at times may exceed
federally insured limits. The Division has not experienced any
losses in such accounts. The Division believes it is not
exposed to any significant credit risk on cash and cash
equivalents.
<PAGE> 8
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
1. Significant Accounting Policies, continued:
The Division participated in Sonoco's centralized cash
management system during the periods presented. Cash
receipts attributable to the Division's operations are
collected by Sonoco and cash disbursements, including
amounts attributable to capital additions, are provided by
Sonoco. No interest cost on funds provided has been
recorded. The net effect of these transactions is included
in "Advances to Parent Company" on the accompanying balance
sheets.
INVENTORIES - Inventories are stated at the lower of cost or
market. The last-in, first-out (LIFO) method was used to
determine costs of approximately 77% of total inventories in
1997 and 1996. The remaining inventories are determined on
the first-in, first-out (FIFO) method.
OTHER ASSETS - Other assets principally consist of goodwill
(see Note 4). Goodwill represents the excess of cash paid
over the fair value of assets acquired. Amortization is
computed over the estimated lives of the assets. At each
balance sheet date, the Company evaluates the realizability
of goodwill based on expectations of non-discounted cash
flows and operating income.
REVENUE RECOGNITION - The Company recognizes revenue upon
legal transfer of title of products.
USE OF ESTIMATES - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual
results could differ from those estimates.
<PAGE> 9
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
1. Significant Accounting Policies, continued:
INCOME TAXES - The Division records income tax expense as if
the Division filed a separate return. Deferred tax liabilities
and assets are recorded for the expected future tax
consequences of events that have been included in the
financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on
the temporary differences between the financial statement and
tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse. Federal income taxes currently payable or receivable
are due to or from Sonoco and are included in "Advances to
Parent Company".
2. Inventories:
The components of inventories, at December 31 are as
follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Raw materials $ 6,404 $ 6,661
Work in process and finished
goods 11,011 11,800
Excess of FIFO cost over LIFO
Cost (781) (975)
$ 16,634 $ 17,486
</TABLE>
3. Property, Plant and Equipment:
Property, plant and equipment is recorded at cost.
Depreciation is computed on the straight-line method, based
upon the estimated useful lives of the related assets
ranging from three to forty years. Expenditures for
maintenance and repairs are charged to expense as incurred,
whereas major betterments are capitalized. Gains and losses
on sales or retirements are included in other income and
other expense, respectively.
<PAGE> 10
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
3. Property, Plant and Equipment, continued:
Property, plant and equipment as of December 31 is as
follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Land $ 2,050 $ 2,050
Buildings 16,384 16,231
Equipment 71,366 68,099
Leasehold improvements 2,190 2,046
Construction in progress 6,126 1,630
98,116 90,056
Less accumulated depreciation (55,312) (50,739)
$ 42,804 $ 39,317
</TABLE>
Depreciation expense totaled approximately $5,482 and $5,672
in 1997 and 1996, respectively.
4. Other Assets:
Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Goodwill $ 22,567 $ 22,567
Other 94 203
22,661 22,770
Less accumulated amortization
of goodwill (7,114) (6,546)
$ 15,547 $ 16,224
</TABLE>
Amortization of goodwill totaled $568 in 1997 and 1996.
<PAGE> 11
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
5. Related Party Transactions:
The Division had sales of product of approximately $540 and
$919 to Sonoco Products Company during 1997 and 1996,
respectively.
The Division also uses certain administrative functions of
Sonoco including senior executive management services,
finance and treasury services, accounting, legal and human
resources. The cost of these functions has been primarily
allocated to the Division by a formula based on the level of
sales, assets and head count of the Division. Total costs
allocated to the Division were $2,658 and $3,203 in 1997 and
1996, respectively. The Division also uses trademarks and
other intellectual property of Sonoco. The cost of this
usage has been allocated to the Division based upon 2 1/2% of
revenues for the period from May 1, 1997 to December 31,
1997 and 1 1/2% of revenues for all periods presented prior to
May 1, 1997. Total costs in 1997 and 1996 were $3,813 and
$2,767, respectively. Management believes these allocations
adequately reflect the estimated cost of capital employed,
but may not necessarily be indicative of actual costs
incurred or costs to be incurred in the future.
6. Leases and Commitments:
The Company is obligated to unaffiliated parties under long-
term non-cancelable operating leases. Future minimum
payments, by year and in the aggregate, under the leases
consist of the following at December 31, 1997.
<TABLE>
<CAPTION>
<S> <C>
1998 $2,482
1999 2,482
2000 2,267
2001 2,267
2002 and thereafter 2,267
</TABLE>
Rent expense totaled approximately $2,000 and $1,948 in 1997
and 1996, respectively.
<page 12>
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
7. Retirement Benefit Plans:
The Division participates in the Sonoco non-contributory
defined benefit pension plans which cover substantially all
United States employees. Under the plans, retirement
benefits are based either on both years of service and
compensation or on service only. It is Sonoco's policy to
fund these plans, at a minimum, in amounts required under
ERISA. The expense allocated by Sonoco to the Division for
the years ended December 31, 1997 and 1996 was $324 and
$404, respectively.
8. Postretirement Benefits Other Than Pensions:
The Division provides health care and life insurance to the
majority of its United States retirees and their eligible
dependents. Benefit costs are funded principally on a pay-
as-you-go basis, with the retiree paying a portion of the
costs. In situations where full-time employees retire from
the Division between age 55 and 65, most are eligible to
receive, at a cost to the retiree equal to the cost for an
active employee, certain health care benefits identical to
those available to active employees. After attaining age 65,
an eligible retiree's health care benefit coverage becomes
coordinated with Medicare. For purposes of projecting future
benefit payments, early retiree contributions were assumed
to increase at the health care cost trend.
Non-pension retirement benefit expense includes the
following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Service cost during year $ 565 $ 671
Interest cost on accumulated
postretirement benefit obligation 1,955 1,960
Net amortization and deferral 225 440
Net periodic postretirement benefit
Cost $ 2,745 $ 3,071
</TABLE>
<PAGE> 13
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
8. Postretirement Benefits Other Than Pensions, continued:
The following sets forth the accrued obligation included in
the accompanying December 31 balance sheets applicable to
each employee group for non-pension postretirement benefits:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Accumulated postretirement
benefit obligation (APBO):
Retired employees $ 22,839 $ 19,030
Active employees-fully
eligible 3,294 3,617
Active employees-not yet
eligible 3,013 3,609
Accumulated benefit obligation 29,146 26,256
Deferred loss (8,888) (6,344)
Accrued postretirement
benefit cost $ 20,258 $ 19,912
</TABLE>
The discount rate used in determining the APBO was 7.25% in
1997 and 7.75% in 1996. The assumed health care cost trend
rate used in measuring the APBO was 9.25% in 1997 declining
to a rate of 4.75% in the year 2006. Increasing the assumed
trend rate for health care costs by one percentage point
would result in an increase in the APBO of approximately
$845 at December 31, 1997 and an increase of approximately
$370 in the related 1997 expense.
<PAGE> 14
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
9. Income Taxes:
<TABLE>
<CAPTION>
The provision for federal, state and foreign income taxes on
income for the years ending December 31 consists of the
following:
1997 1996
<S> <C> <C>
Current
Federal $ 3,129 $ 3,762
State 552 664
Foreign 125 56
3,806 4,482
Deferred
Federal (1,092) (331)
State (193) (58)
Foreign 98 (146)
(1,187) (535)
$ 2,619 $ 3,947
</TABLE>
<TABLE>
<CAPTION>
Deferred income tax benefits result from temporary
differences in the recognition of revenue and expense for
tax and financial statement purposes. The sources of these
differences and the tax effect of each are as follows at
December 31:
1997 1996
<S> <C> <C>
Deferred tax liabilities:
Property, plant and
equipment $(4,667) $(6,102)
Other (319) (536)
(4,986) (6,638)
Deferred tax assets:
Allowance for doubtful
accounts 579 290
Inventories 201 678
Accrued postretirement
benefits 7,880 7,746
Accrued expenses 570 883
Foreign 210 314
9,440 9,911
Net deferred tax asset $ 4,454 $ 3,273
</TABLE>
<PAGE> 15
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
9. Income Taxes, continued:
<TABLE>
<CAPTION>
A reconciliation of the United States federal statutory tax
rate of 35% to the actual tax expense for the years ending
December 31 is as follows:
1997 1996
<S> <C> <C>
Federal income tax expense at
statutory rate $2,108 3,697
State taxes, net of federal
benefit 240 423
Goodwill amortization 193 193
Foreign taxes - (417)
Other 78 51
$2,619 $3,947
</TABLE>
10 . Shareholder's Equity:
<TABLE>
<CAPTION>
As discussed in Note 1, the Division is a group of
affiliated companies with common ownership. The table
below summarizes the authorized and outstanding common
stock at December 31, 1997 and 1996.
Additional
Shares Shares Paid-In
Authorized Outstanding Amount Capital
<S> <C> <C> <C> <C>
Sonoco Fibre Drum, Inc.
($1 par) 1,000 1,000 $ 1 $16,776
Sonoco Plastic Drum, Inc.
($1 par) 100,000 10,000 10 6,395
Sonoco Packaging
Services, Inc.
($1 par) 1,000 1,000 1 -
Fibro Tambor, S.A. de
C.V. ($.018 par) 50,318,000 50,318,000 890 -
50,420,000 50,330,000 $902 $23,171
There are no other classes of common stock.
</TABLE>
Dividends were paid by Sonoco Fibre Drum, Inc. to its parent
of $15,500 per share in 1997. Dividends of $608 were paid by
Fibro Tambor to its parent in 1996.
<page 16>
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
(Dollars In Thousands Except Per Share)
11. Subsequent Event:
On March 30, 1998, Sonoco completed the sale of the Division (see Note 1)
to Greif for approximately $185 million.
<PAGE> 17
THE INDUSTRIAL CONTAINERS BUSINESS
A DIVISION OF SONOCO PRODUCTS COMPANY
COMBINED BALANCE SHEETS
(UNAUDITED)
March 31
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 887 $ 88
Accounts receivable, less $718 and $123
allowance for doubtful accounts 21,589 23,674
Notes and other receivables 2,131 714
Inventories 16,433 16,403
Deferred income taxes 1,350 1,851
Prepaid expenses and other current assets 235 412
Total current assets 42,625 43,142
Property, plant and equipment, net 43,936 38,109
Deferred income taxes 3,087 1,300
Other assets, net 15,347 17,106
$104,995 $ 99,657
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 10,791 $ 9,372
Accrued compensation 3,080 2,983
Accrued expenses 1,940 2,553
Total current liabilities 15,811 14,908
Other long-term liabilities 1,427 21
Accrued postretirement benefits 20,345 19,999
Total liabilities 37,583 34,928
Shareholder's equity:
Common stock 902 902
Additional paid-in capital 23,171 23,171
Retained earnings 77,046 89,524
Translation adjustment (656) (610)
Advances to parent company (33,051) (48,258)
Total shareholder's equity 67,412 64,729
$104,995 $ 99,657
</TABLE>
The accompanying notes are an integral part of the unaudited
combined financial statements.
<PAGE> 18
THE INDUSTRIAL CONTAINERS BUSINESS
A DIVISION OF SONOCO PRODUCTS COMPANY
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
for the quarters ended March 31
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net sales $ 43,999 $ 43,561
Cost of good sold 37,712 37,797
Gross margin 6,287 5,764
Selling, general and administrative
expenses 4,102 3,424
Corporate allocation expense 779 718
Royalties 953 692
Other expense (income), net 110 (48)
Income before income taxes 343 978
Provision for income taxes 137 391
Net income 206 587
Retained earnings, beginning of
period 76,840 88,937
Retained earnings, end of period $ 77,046 $ 89,524
</TABLE>
The accompanying notes are an integral part of the unaudited
combined financial statements.
<PAGE> 19
THE INDUSTRIAL CONTAINERS BUSINESS
A DIVISION OF SONOCO PRODUCTS COMPANY
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
for the quarters ended March 31
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 206 $ 587
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 887 2,622
Deferred income taxes 17 122
Changes in operating assets and
liabilities:
Accounts receivable 1,341 (1,771)
Notes and other receivables (1,491) (86)
Inventories 201 1,083
Prepaid expenses and other current
assets (71) (22)
Accounts payable and accrued
expenses 2,048 1,739
Other, net (413) (893)
Net cash provided by operating
activities 2,725 3,381
Cash flows from investing activities:
Purchases of property, plant and
equipment (2,019) (1,415)
Net cash used in investing
activities (2,019) (1,415)
Cash flows from financing activities:
Advances from (to) affiliates (418) (2,186)
Net cash used in financing
activities (418) (2,186)
Net increase (decrease) in cash and cash
equivalents 288 (220)
Cash and cash equivalents, beginning of
period 599 308
Cash and cash equivalents, end of period $ 887 $ 88
</TABLE>
The accompanying notes are an integral part of the unaudited combined
financial statements.
<PAGE> 20
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
1. General:
The accompanying unaudited combined financial
statements have been prepared without audit. Certain
information and footnote disclosures, including significant
accounting policies, normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
However, these statements have been prepared on a basis
consistent with the audited combined financial statements
for the years ended December 31, 1997 and 1996.
The management of the company believes that the
financial statements reflect all adjustments which are
necessary for a fair statement of the results of the
interim periods. Results of operations for the periods
shown are not necessarily indicative of results for the
year.
(b) Pro Forma Financial Information.
On March 30, 1998, pursuant to the terms of a Stock
Purchase Agreement between Greif Bros. Corporation (the
"Company") and Sonoco Products Company ("Sonoco"), the Company
acquired the Industrial Containers Business excluding the
operations of the Intermediate Bulk Containers Business of Sonoco
by purchasing all of the outstanding shares of KMI Continental
Fibre Drum, Inc., Sonoco Plastic Drum, Inc., GBC Holding Co., and
Fibro Tambor, S.A. de C.V., and the membership interest of Sonoco
in Total Packaging Systems of Georgia, LLC.
The following unaudited pro forma combined balance
sheet at January 31, 1998 and combined statements of income for
the quarter ended January 31, 1998 and for the year ended October
31, 1997 give effect to the purchase of the Industrial Containers
Business of Sonoco. The unaudited pro forma financial statements
are not necessarily indicative of the results which would have
been obtained had the transactions occurred at November 1, 1996,
nor are they necessarily indicative of future results. The pro
forma information should be read in conjunction with: the
accompanying notes to unaudited pro forma condensed combined
financial statements; the audited annual and unaudited interim
financial statements of the Industrial Containers Business of
Sonoco included elsewhere in this Form 8-K/A; the Company's
Annual Report on Form 10-K for the year ended October 31, 1997
and the Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1998.
The Company has a fiscal year which ends October 31,
1997 whereas the Industrial Containers Business has a fiscal year
which ends December 31, 1997. The unaudited pro forma condensed
combined balance sheet at January 31, 1998 and unaudited pro
forma condensed combined statements of income for the quarter
ended January 31, 1998 and for the year ended October 31, 1997
include the unaudited combined balance sheet of the Industrial
Containers Business at March 31, 1998 and the unaudited
statement of income for the quarter ended March 31, 1998 and the
audited combined statement of income for the year ended December
31, 1997.
<PAGE> 21
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
January 31, 1998
(Dollars In Thousands)
<TABLE>
<CAPTION>
Industrial
Greif Bros. Containers Pro Forma Pro Forma
Corporation Business Adjustments Results
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash & cash equivalents $ 16,834 $ 887 $ - $ 17,721
Canadian government
securities 7,305 - - 7,305
Trade accounts receivable 80,559 21,589 - 102,148
Inventories 46,040 16,433 - 62,473
Prepaid expenses and other 20,054 3,716 971 a 24,741
Total current assets 170,792 42,625 971 214,388
Long Term Assets
Property, plant and
equipment, net 340,128 43,936 36,129 b,e 420,193
Other long term assets 21,541 3,087 308 c 24,936
Goodwill 17,017 15,347 83,780 d 116,144
Total long term assets 378,686 62,370 120,217 561,273
Total assets $ 549,478 $ 104,995 $ 121,188 $ 775,661
Liabilities and Shareholders'
Equity
Current Liabilities
Accounts payable $ 29,998 $ 10,791 $ - $ 40,789
Current portion of
long term debt 8,309 - - 8,309
Accrued payrolls and
employee benefits 10,705 3,080 - 13,785
Taxes on income 4,409 - (4,409)a -
Other current liabilities 1,703 1,940 23,068 e,f 26,711
Total current
liabilities 55,124 15,811 18,659 89,594
Long term obligations 43,314 - 185,395 f 228,709
Deferred income taxes 30,619 - - 30,619
Other long term liabilities 15,329 21,772 (2,290)g 34,811
Total long term
liabilities 89,262 21,772 183,105 294,139
Shareholders' equity
Capital stock 9,774 24,073 (24,073)h 9,774
Retained earnings 401,959 77,046 (89,554)h 389,451
Translation adjustment (6,641) (656) - (7,297)
Advances to Parent - (33,051) 33,051 i -
Total shareholders'
equity 405,092 67,412 (80,576) 391,928
Total liabilities and
shareholders' equity $ 549,478 $ 104,995 $ 121,188 $ 775,661
</TABLE>
See accompanying notes to pro forma condensed financial statements.
<PAGE> 23
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNDAUDITED)
for the quarter ended January 31, 1998
(Dollars in Thousands)
<TABLE>
<CAPTION>
Industrial
Greif Bros. Containers Pro Forma Pro Forma
Corporation Business Adjustments Results
<S> <C> <C> <C> <C>
Net sales $ 169,697 $ 43,999 $ - $ 213,696
Other income:
Gain on sales of timber
and timber properties 2,787 - - 2,787
Interest and other 2,510 (1,063) 953 i 2,400
174,994 42,936 953 218,883
Costs and expenses:
Cost of products sold 138,177 37,712 313 b,g 176,202
Selling, general and
administrative 20,324 4,881 264 c,d,i 25,469
Interest 1,230 - 2,859 f 4,089
159,731 42,593 3,436 205,760
Income before income taxes 15,263 343 (2,483) 13,123
Taxes on income 5,647 137 (1,038)a 4,746
Net income $ 9,616 $ 206 $ (1,445) $ 8,377
</TABLE>
Net income per share (based on the average number of shares outstanding
during the year):
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:
Basic and Diluted:
Class A Common Stock $0.34
Class B Common Stock $0.39
Average Number of Shares Outstanding
Basic Diluted
Class A Common Stock 10,901,962 10,950,796
Class B Common Stock 12,001,793 12,001,793
Due to the special characteristics of the Company's two classes of
stock, 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.
See accompanying notes to pro forma condensed combined financial statements.
<PAGE> 24
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
for the year ended October 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
Industrial
Greif Bros. Containers Pro Forma Pro Forma
Corporation Business Adjustments Results
<S> <C> <C> <C> <C>
Net sales $ 648,984 $ 181,928 $ - $ 830,912
Other income:
Gain on sales of timber
and timber properties 12,918 - - 12,918
Interest and other 12,681 (3,115) 3,813 i 13,379
674,583 178,813 3,813 857,209
Costs and expenses:
Cost of products sold 563,665 155,007 1,254 b,g 719,926
Selling, general and
administrative 78,743 17,784 1,529 c,d,i 98,056
Interest 2,670 - 11,436 f 14,106
645,078 172,791 14,219 832,088
Income before income taxes 29,505 6,022 (10,406) 25,121
Taxes on income 11,419 2,619 (4,342)a 9,696
Net income $ 18,086 $ 3,403 $ (6,064) $ 15,425
</TABLE>
Net income per share (based on the average number of shares outstanding
during the year):
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:
Basic and Diluted:
Class A Common Stock $0.52
Class B Common Stock $0.81
Average Number of Shares Outstanding
Basic Diluted
Class A Common Stock 10,878,233 10,892,248
Class B Common Stock 12,001,793 12,001,793
Due to the special characteristics of the Company's two classes of
stock, 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.
See accompanying notes to pro forma combined financial statements.
<PAGE> 25
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
a. To reflect the income tax effects of the following pro
forma adjustments.
b. To record the write-up of property, plant and equipment to
its estimated fair values. The amount has been partially
offset by a write-down to net realizable value of certain
locations which the Company intends to close (see note e
below). In addition, depreciation expense resulting from
the different values of the property, plant and equipment
has been reflected in the statements.
c. To record deferred loan costs related to the long term
obligations incurred as a result of the acquisition of the
Industrial Containers Business. The amortization expense
related to these amounts has been recorded.
d. To record additional goodwill and its related amortization
expense. The goodwill is being amortized on a straight-
line basis over twenty-five years.
e. To record a restructuring reserve which is comprised of
$11,507,000 to reduce the estimated fair values of
property, plant and equipment and $8,773,000 for other
costs associated with certain plant closings. The
restructuring reserve relates to the closing of duplicate
facilities.
f. To record long term obligations incurred to purchase the
Industrial Containers Business. The interest expense
related to these long term obligations has been included
in the pro forma statements.
g. To adjust for postretirement benefits that were provided
to the employees of the Industrial Containers Business of
Sonoco.
h. To eliminate the equity amounts of the Industrial
Containers Business at November 1, 1996.
i. To eliminate the "Advances to Parent" balances from Sonoco
Products Company recorded on the Industrial Containers
Business' financial statements. Certain charges,
including royalties and other non-recurring charges from
Sonoco, have been eliminated.
<PAGE> 26
(c) Exhibits.
Exhibit Number Description
2 Stock Purchase Agreement dated March 30, 1998
between Greif Bros. Corporation and Sonoco
Products Company.
23.1 Consent of Coopers & Lybrand LLP, Charlotte,
North Carolina (contained herein).
99(a) Press Release issued by Greif Bros. Corporation
on March 31, 1998.
99(b) Credit Agreement, dated as of March 30, 1998,
among Greif Bros. Corporation, as Borrower,
Various Financial Institutions, as Banks, and
KeyBank National Association, as Agent.
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 hereunto duly authorized.
GREIF BROS. CORPORATION
DATE: June 12, 1998 BY /s/ Michael J. Gasser
Michael J. Gasser,
Chairman and Chief Executive Officer
<PAGE> 27
INDEX TO EXHIBITS
If Incorporated by
Reference which
Exhibit was
Previously
Exhibit Number Description Filed with SEC
2 Stock Purchase Agreement dated Current Report on
March 30, 1998 between Greif Form 8-K dated
Bros. Corporation and Sonoco April 14, 1998.
Products Company.
23.1 Consent of Coopers & Lybrand LLP,
Charlotte, North Carolina. Contained Herein.
99(a) Press Release issued by Greif Current Report on
Bros. Corporation on March 31, Form 8-K dated
1998. April 14, 1998.
99(b) Credit Agreement, dated as of Current Report on
March 30, 1998, among Greif Bros. Form 8-K dated
Corporation, as Borrower, Various April 14, 1998.
Financial Institutions, as Banks,
and KeyBank National Association,
as Agent.
<PAGE> 28
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Current Report on Form 8-K/A,
of Greif Bros. Corporation (File No. 1-566) of our report dated
February 12, 1998, except for the information presented in Note 11
for which the date is March 30, 1998, on our audits of the financial
statements of the Industrial Containers Business of Sonoco Products
Company as of December 31, 1997 and 1996 and for the years then ended.
/s/ Coopers & Lybrand LLP
Charlotte, North Carolina
June 12, 1998
