<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1997 Commission File Number 1-566
GREIF BROS. CORPORATION
(Exact name of registrant as specified in its charter)
State of 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 740-549-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Class "A" Common Stock
Class "B" Common Stock
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__. No _____.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in the definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of
the Registrant as of January 5, 1998 was approximately $101,942,807.
The number of shares outstanding of each of the Registrant's classes
of common stock, as of January 5, 1998 was as follows:
Class A Common Stock - 10,902,272
Class B Common Stock - 12,001,793
Listed hereunder are the documents, portions of which are incorporated
by reference, and the parts of this Form 10-K into which such portions
are incorporated:
1. The Registrant's Proxy Statement for use in connection with the Annual
Meeting of Shareholders to be held on February 23, 1998, portions of which
are incorporated by reference into Part III of this Form 10-K, which Proxy
Statement will be filed within 120 days of October 31, 1997.
<PAGE> 2
PART I
Item 1. Business
The Company principally manufactures industrial shipping containers and
containerboard and related products which it sells to customers in many
industries primarily in the United States and Canada, through direct sales
contact with its customers. There were no significant changes in the
business since the beginning of the fiscal year.
The Company operates 95 locations in 28 states of the United States and
in 3 provinces of Canada and, as such, is subject to federal, state, local
and foreign regulations in effect at the various localities.
Due to the variety of products, the Company has many customers buying
different types of the Company's products and, due to the scope of the
Company's sales, no one customer is considered principal in the total
operation of the Company.
Because the Company supplies a cross section of industries, such as
chemicals, food products, petroleum products, pharmaceuticals, metal
products and other and because the Company must make spot deliveries on a
day-to-day basis as its product is required by its customers, the Company
does not operate on a backlog and maintains only limited levels of finished
goods. Many customers place their orders weekly for delivery during the
week.
The Company's business is highly competitive in all respects (price,
quality and service) and the Company experiences substantial competition in
selling its products. Many of the Company's competitors are larger than the
Company.
While research and development projects are important to the Company's
continued growth, the amount expended in any year is not material in
relation to the results of operations of the Company.
The Company's raw materials are principally pulpwood, waste paper for
recycling, paper, steel and resins. In the current year, as in prior years,
certain of these materials have been in short supply, but to date these
shortages have not had a significant effect on the Company's operations.
The Company's business is not materially dependent upon patents,
trademarks, licenses or franchises.
The business of the Company is not seasonal to any significant extent.
The approximate number of persons employed during the year was 4,500.
<PAGE> 3
Item 1. Business (continued)
Industry Segments
The Company operates in two industry segments, industrial shipping
containers and materials (industrial shipping containers) and containerboard
and related products (containerboard).
Operations in the industrial shipping containers segment involve the
production and sale of fibre, steel and plastic drums, multiwall bags,
cooperage, dunnage, pallets and miscellaneous items. These products are
manufactured and principally sold throughout the United States and Canada.
Operations in the containerboard segment involve the production and
sale of containerboard, both virgin and recycled, and related corrugated
products including corrugated sheets and corrugated containers. The
products are manufactured and sold in the United States and Canada.
In computing operating profit for the two industry segments, gain on
timber sales, interest expense, other income and expense, a restructuring
charge (see Note 3 to the Consolidated Financial Statements), gains on
disposals of certain facilities and income taxes have not been allocated to
such segments. These amounts, excluding income taxes, comprise general
corporate other income and expense, net.
Each segment's operating assets are those assets used in the
manufacture and sale of industrial shipping containers or containerboard.
Corporate assets are principally cash and cash equivalents, timber
properties, corporate facilities and other.
<TABLE>
The following segment information is presented for the three years
ended October 31, 1997, except as to asset information which is as of
October 31, 1997, 1996 and 1995 (Dollars in thousands):
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net sales:
Industrial shipping containers $396,456 $391,315 $392,505
Containerboard 252,528 246,053 326,840
Total $648,984 $637,368 $719,345
<PAGE> 4
Item 1. Business (concluded)
1997 1996 1995
Operating profit:
Industrial shipping containers $13,157 $16,736 $ 9,059
Containerboard 10 36,926 80,476
Total segment 13,167 53,662 89,535
General corporate other income
and expense, net 16,338 14,034 8,376
Income before income taxes 29,505 67,696 97,911
Income taxes 11,419 24,949 37,778
Net income $18,086 $42,747 $60,133
Identifiable assets:
Industrial shipping containers $193,213 $193,378 $190,982
Containerboard 292,140 262,866 220,213
Total segment 485,353 456,244 411,195
Corporate assets 64,736 56,094 56,467
Total $550,089 $512,338 $467,662
Depreciation expense:
Industrial shipping containers $13,156 $13,282 $13,114
Containerboard 17,186 12,977 9,765
Total segment 30,342 26,259 22,879
Corporate assets 318 89 65
Total $30,660 $26,348 $22,944
Property additions:
Industrial shipping containers $ 3,843 $16,588 $12,540
Containerboard 22,923 56,160 47,593
Total segment 26,766 72,748 60,133
Corporate assets 9,427 1,647 933
Total $36,193 $74,395 $61,066
</TABLE>
<PAGE> 5
Item 2. Properties
The following are the Company's principal locations and products
manufactured at such facilities or the use of such facilities. The Company
considers its operating properties to be in satisfactory condition and
adequate to meet its present needs. However, the Company expects to make
further additions, improvements and consolidations of its properties as the
Company's business continues to expand.
<TABLE>
<CAPTION>
Location Products Manufactured/Use Industry Segment
<S> <C> <C>
Alabama:
Cullman Steel drums Industrial shipping
containers
Mobile Fibre drums Industrial shipping
containers
Arkansas:
Batesville (1) Fibre drums Industrial shipping
containers
California:
Fontana Steel drums Industrial shipping
containers
LaPalma Fibre drums Industrial shipping
containers
Morgan Hill Fibre drums Industrial shipping
containers
Merced Steel drums Industrial shipping
containers
Stockton Corrugated honeycomb Industrial shipping
containers
Colorado:
Denver (2) Warehouse Industrial shipping
containers
Georgia:
Macon Corrugated honeycomb Industrial shipping
containers
Tucker Fibre drum Industrial shipping
containers
Illinois:
Blue Island Fibre drums Industrial shipping
containers
Centralia Corrugated containers and sheets Containerboard
Chicago Steel drums Industrial shipping
containers
Lombard (3) General office Industrial shipping
containers
<PAGE> 6
Item 2. Properties (continued)
Location Products Manufactured /Use Industry Segment
Northlake Fibre drums and plastic drums Industrial shipping
containers
Oreana Corrugated containers Containerboard
Posen Corrugated honeycomb Industrial shipping
containers
Quincy (4) Warehouse Containerboard
Indiana:
Ferdinand (5) Corrugated containers Containerboard
Kansas:
Kansas City (6) Steel drums Industrial shipping
containers
Kansas City (7) Fibre drums Industrial shipping
containers
Winfield Steel drums Industrial shipping
containers
Kentucky:
Erlanger (8) Corrugated containers Containerboard
Louisville (9) Corrugated containers Containerboard
Winchester (10) Corrugated containers Containerboard
Louisiana:
St. Gabriel Steel drums and plastic drums Industrial shipping
containers
Maryland:
Sparrows Point Steel drums Industrial shipping
containers
Massachusetts:
Mansfield Fibre drums Industrial shipping
containers
Westfield Fibre drums Industrial shipping
containers
West
Springfield (11) General office Industrial shipping
containers
Worcester Plywood reels Industrial shipping
containers
<PAGE> 7
Item 2. Properties (continued)
Location Products Manufactured /Use Industry Segment
Michigan:
Grand Rapids Corrugated sheets Containerboard
Mason Corrugated sheets Containerboard
Roseville Corrugated containers Containerboard
Taylor Fibre drums Industrial shipping
containers
Minnesota:
Minneapolis Fibre drums Industrial shipping
containers
Rosemount Multiwall bags Industrial shipping
containers
St. Paul Tight cooperage Industrial shipping
containers
St. Paul (12) General office Industrial shipping
containers
Mississippi:
Durant Plastic products Industrial shipping
containers
Jackson General office
Missouri:
Kirkwood Fibre drums Industrial shipping
containers
Nebraska:
Omaha (13) Multiwall bags Industrial shipping
containers
Omaha Warehouse Industrial shipping
containers
New Jersey:
Rahway Fibre drums and plastic drums Industrial shipping
containers
Spotswood Fibre drums Industrial shipping
containers
Teterboro Fibre drums Industrial shipping
containers
New York:
Syracuse Fibre drums Industrial shipping
containers
<PAGE> 8
Item 2. Properties (continued)
Location Products Manufactured /Use Industry Segment
North Carolina:
Bladenboro Steel drums Industrial shipping
containers
Charlotte Fibre drums Industrial shipping
containers
Concord Corrugated sheets Containerboard
Ohio:
Caldwell Steel drums Industrial shipping
containers
Canton (14) Corrugated containers Containerboard
Cleveland Corrugated containers Containerboard
Delaware Principal office
Delaware (15) Research center Industrial shipping
containers
Fostoria Corrugated containers Containerboard
Hebron Plastic drums Industrial shipping
containers
Massillon Recycled containerboard Containerboard
Tiffin Corrugated containers Containerboard
Westerville (16) General office Industrial shipping
containers
Youngstown Steel drums Industrial shipping
containers
Zanesville Corrugated containers and sheets Containerboard
Pennsylvania:
Darlington Fibre drums and plastic drums Industrial shipping
containers
Hazelton Corrugated honeycomb Industrial shipping
containers
Kelton (17) Corrugated honeycomb Industrial shipping
containers
Reno Corrugated containers Containerboard
Stroudsburg Rims and drum hardware Industrial shipping
containers
Twin Oaks Fibre drums Industrial shipping
containers
Washington Corrugated containers and sheets Containerboard
<PAGE> 9
Item 2. Properties (continued)
Location Products Manufactured /Use Industry Segment
Tennessee:
Kingsport Fibre drums Industrial shipping
containers
Memphis Steel drums Industrial shipping
containers
Texas:
Angleton Steel drums Industrial shipping
containers
Fort Worth Fibre drums Industrial shipping
containers
LaPorte Fibre drums, steel drums Industrial shipping
and plastic drums containers
Waco Corrugated honeycomb Industrial shipping
containers
Virginia:
Amherst Containerboard Containerboard
Washington:
Vancouver (18) Corrugated honeycomb Industrial shipping
containers
West Virginia:
Huntington (19) Corrugated containers and sheets Containerboard
Wisconsin:
Sheboygan Fibre drums Industrial shipping
containers
Canada
Alberta:
Lloydminster Steel drums, fibre drums Industrial shipping
and plastic drums containers
Ontario:
Belleville Fibre drums and plastic products Industrial shipping
containers
Bowmanville Spiral tubes Industrial shipping
containers
Fort Frances Spiral tubes Industrial shipping
containers
Fruitland Drum hardware and machine shop Industrial shipping
containers
<PAGE> 10
Item 2. Properties (concluded)
Location Products Manufactured /Use Industry Segment
Milton Fibre drums Industrial shipping
containers
Niagara Falls General office Industrial shipping
containers
Oakville Steel drums Industrial shipping
containers
Stoney Creek Steel drums Industrial shipping
containers
Winona Machine shop Industrial shipping
containers
Quebec:
La Salle Fibre drums and steel drums Industrial shipping
containers
Maple Grove Pallets Industrial shipping
containers
Pointe Aux
Trembles Fibre drums and spiral tubes Industrial shipping
containers
<FN>
Note: All properties are held in fee except as noted below:
</TABLE>
Exceptions:
(1) Lease expires August 31, 1999
(2) Lease expires December 15, 1998
(3) Lease expires February 28, 1998
(4) Lease operates month to month
(5) Lease expires October 26, 1999
(6) Lease expires June 30, 1999
(7) Lease expires March 31, 1999
(8) Lease expires October 6, 2003
(9) Lease expires December 31, 1998
(10) Lease expires October 7, 2001
(11) Lease expires September 1, 1998
(12) Lease expires December 31, 1999
(13) Lease expires June 30, 1998
(14) Lease expires March 31, 1998
(15) Lease expires June 30, 2001
(16) Lease operates month to month
(17) Lease expires April 30, 2003
(18) Lease expires January 31, 2002
(19) Lease expires March 31, 2000
The Company also owns in fee a substantial number of scattered timber
tracts comprising approximately 316,000 acres in the states of Alabama,
Arkansas, Florida, Georgia, Louisiana, Mississippi and Virginia and the
provinces of Nova Scotia, Ontario and Quebec in Canada.
<PAGE> 11
Item 3. Legal Proceedings
The Company has no pending material legal proceedings.
From time to time, various legal proceedings arise from either Federal,
State or Local levels involving environmental sites to which the Company has
shipped, directly or indirectly, small amounts of toxic waste, such as paint
solvents, etc. The Company, to date, has been classified as a "de minimis"
participant and, as such, has not been subject, in any instance, to material
sanctions or sanctions greater than $100,000.
In addition, from time to time, but less frequently, the Company has
been cited for violations of environmental regulations. Except for the
following situation, none of these violations involve or are expected to
involve sanctions of $100,000 or more.
Currently, the only exposure known to the Company which may exceed
$100,000 relates to a pollution situation at its Strother Field plant in
Winfield, Kansas. A record of decision issued by the U.S. Environmental
Protection Agency (EPA) has set forth estimated remedial costs which could
expose the Company to approximately $3,000,000 in expense under certain
assumptions. If the Company ultimately is required to incur this expense, a
significant portion would be paid over 10 years. The Kansas site involves
groundwater pollution and certain soil pollution that was found to exist on
the Company's property. The estimated costs of the remedy currently
preferred by the EPA for the soil pollution on the Company's land represents
approximately $2,000,000 of the estimated $3,000,000 in expense.
The final remedies have not been selected. In an effort to minimize
its exposure for soil pollution, the Company has undertaken further
engineering borings and analysis to attempt to identify a more definitive
soil area which would require remediation. However, there can be no
assurance that the Company will be successful in minimizing such exposure,
and there can be no assurance that the total expense incurred by the Company
in remediating this site will not exceed $3,000,000.
A reserve for $2,000,000 was recorded by the Company during fiscal
1995 since it was considered the most likely amount of loss. To date,
$360,000 has been charged against the reserve.
<PAGE> 12
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.
Executive Officers of the Company
<TABLE>
The following information relates to Executive Officers of the Company
(elected annually):
<CAPTION>
Year first became
Name Age Positions and Offices Executive Officer
<S> <C> <C> <C>
Michael J. Gasser 46 Chairman of the Board 1988
of Directors and
Chief Executive
Officer, Chairman of
the Executive and
Nominating Committees
William B. Sparks, Jr. 56 Director, President 1995
and Chief Operating
Officer, member of
the Executive
Committee
Charles R. Chandler 62 Director, Vice 1996
Chairman, member of
the Executive
Committee
Joseph W. Reed 60 Chief Financial 1997
Officer and Secretary
Allan Hull 84 Director, Vice 1964
President, General
Counsel, member of
the Executive
Committee
Robert C. Macauley 74 Director, Chief 1996
Executive Officer of
Virginia Fibre
Corporation
(subsidiary company),
Chairman of the
Compensation
Committee
John P. Berg 77 President Emeritus 1972
<PAGE> 13
Executive Officers of the Company (continued)
Year first became
Name Age Positions and Offices Executive Officer
Lloyd D. Baker 64 President of Soterra, 1975
Incorporated
(subsidiary company)
Michael M. Bixby 54 Vice President, 1980
Regional Sales
Ronald L. Brown 50 Vice President, Sales 1996
and Marketing
Dwight L. Dexter 46 Vice President, 1990
Marketing
John K. Dieker 34 Corporate Controller 1996
Elco Drost 52 President of Greif 1996
Containers Inc.
(subsidiary company)
Michael A. Giles 47 Vice President, Mill 1996
Operations
C.J. Guilbeau 50 Vice President and 1986
Associate Director of
Manufacturing
Sharon R. Maxwell 48 Assistant Secretary 1997
Philip R. Metzger 50 Treasurer 1995
Mark J. Mooney 40 Vice President, 1997
National Sales
William R. Mordecai 45 Vice President, 1997
Containerboard Sales
and Logistics
Jerome B. Nolder, Jr. 39 Vice President, 1996
Container Operations
William R. Shew 67 Special Assistant to 1996
the Vice Chairman
Kent P. Snead 52 Corporate Director of 1997
Strategic Projects
</TABLE>
<PAGE> 14
Executive Officers of the Company (continued)
Except as indicated below, each Executive Officer has served in his
present capacity for at least five years.
Mr. Michael J. Gasser was elected Chairman of the Board of Directors and
Chief Executive Officer during 1994. Prior to that time, and for more than
five years, he served as a Vice President of the Company.
Mr. William B. Sparks, Jr. was elected President and Chief Operating
Officer during 1995. Prior to that time, and for more than
five years, he served as Chief Executive Officer of Down River International,
Inc., a former subsidiary of the Company.
Mr. Charles R. Chandler was elected Vice Chairman during 1996. Prior to
that time, and for more than five years, he served as President and
Chief Operating Officer of Virginia Fibre Corporation, a subsidiary
of the Company.
Mr. Joseph W. Reed was elected Chief Financial Officer and Secretary in
1997. Prior to that time, and for more than five years, he served as Senior
Vice President, Finance and Administration - CFO of Pharmacia, Inc.
Mr. John P. Berg was elected President Emeritus in 1996. Prior to that
time, he served as President of the Company and General Manager of one of
its divisions for more than five years.
Mr. Lloyd D. Baker was elected President of Soterra, Incorporated
(subsidiary company) during 1997. Prior to that time, and for more than
five years, he served as a Vice President of the Company.
Mr. Michael M. Bixby became Vice President of Regional Sales during
1997. During the past five years, he has been a Vice President of the
Company.
Mr. Ronald L. Brown became Vice President of Sales and Marketing during
1997. Prior to that time, and for more than five years, he served as
President and Chief Operating Officer for Down River International (former
subsidiary company).
Mr. John K. Dieker was elected Corporate Controller in 1995. From 1994
to 1995 he served as Assistant Corporate Controller. Prior to that time, he
served as Internal Auditor for two years.
During 1996, Mr. Elco Drost was elected President of Greif Containers
Inc. (subsidiary company) and continues to serve in this capacity. Prior to
that time, and for more than five years, he served as Vice President for the
subsidiary company.
<PAGE> 15
Executive Officers of the Company (concluded)
Mr. Michael A. Giles became Vice President, Mill Operations, in 1997.
He was Executive Vice President of Virginia Fibre Corporation (subsidiary
company) in 1996. From 1995 to 1996, he served as Vice President of
Manufacturing and, prior to that time, Vice President of Finance and
Treasurer at the subsidiary company for more than five years.
Mr. C.J. Guilbeau became Vice President and Associate Director of
Manufacturing during 1997. During the past five years, he has served as
Vice President of the Company.
Ms. Sharon R. Maxwell was elected Assistant Secretary during 1997.
Prior to that time, and for more than five years, she served as
administrative assistant to the Chairman.
Mr. Philip R. Metzger was elected Treasurer in 1995. Prior to that
time, and for more than the past five years, he served as Assistant
Treasurer and Assistant Controller.
Mr. Mark J. Mooney became Vice President of National Sales during 1997.
From 1993 to 1996, he served as the Operations Director, Multiwall Bags, and
prior to that time, General Sales and Marketing Manager of one of its
divisions.
Mr. William R. Mordecai became Vice President, Containerboard Sales and
Logistics, during 1997. During 1996 to 1997, Mr. Mordecai served as
Director, Containerboard Marketing for Virginia Fibre Corporation
(subsidiary company). During 1994 to 1996, he served as President of
Pimlico Paper Corporation. Prior to that time, and for more than the past
five years, he served as Director, Operations Planning, of MacMillan
Bloedel, Inc.
Mr. Jerome B. Nolder, Jr. became Vice President, Container Operations,
during 1997. Prior to that time, he served as General Manager of one of its
divisions since 1994, and prior to that time, he served as Operations
Manager for the division for more than five years.
Mr. William R. Shew became Special Assistant to the Vice Chairman
during 1997. Prior to that time, and for more than the past five years, he
served as President of Greif Board Corporation (subsidiary company).
Mr. Kent P. Snead became Corporate Director of Strategic Projects
during 1997. Prior to that time, and for more than the past five years, he
served as the Engineering Manager for Virginia Fibre Corporation (subsidiary
company).
<PAGE> 16
PART II
Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters
The Class A and Class B Common Stock are traded on the NASDAQ Stock Market.
Prior to March 1996, the Class A Common Stock was traded on the Chicago
Stock Exchange and there was no active market for the Class B Common Stock.
<TABLE>
The high and low sales prices for each quarterly period during the last
two fiscal years are as follows:
<CAPTION>
Quarter Ended,
Jan. 31, Apr. 30, July 31, Oct. 31,
1997 1997 1997 1997
<S> <C> <C> <C> <C>
Market price
Class A Common Stock:
High $31 $31 1/4 $31 1/4 $36 1/2
Low $27 $25 $23 3/4 $30
Class B Common Stock:
High $35 $35 $33 $37 1/4
Low $30 $28 1/4 $26 3/4 $31 1/4
Quarter Ended,
Jan. 31, Apr. 30, July 31, Oct. 31,
1996 1996 1996 1996
Market price
Class A Common Stock:
High $28 7/8 $32 $33 $31 1/2
Low $24 1/4 $26 1/4 $26 $27 3/4
Class B Common Stock:
High N/A $35 1/2 $36 1/2 $36
Low N/A $27 1/2 $26 3/4 $31 1/2
</TABLE>
As of December 1, 1997, there were 790 shareholders of record of the
Class A Common Stock and 179 shareholders of the Class B Common Stock.
<PAGE> 17
Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters (concluded)
The Company paid five dividends of varying amounts during its fiscal
year computed on the basis described in Note 5 to the Consolidated Financial
Statements on page 36 of this Form 10-K, which is hereby incorporated by
reference. The annual dividends paid for the last three fiscal years are as
follows:
1997 fiscal year dividends per share - Class A $.60; Class B $.89
1996 fiscal year dividends per share - Class A $.48; Class B $.71
1995 fiscal year dividends per share - Class A $.40; Class B $.59
<PAGE> 18
Item 6. Selected Financial Data
<TABLE>
The 5-year selected financial data is as follows (Dollars in thousands,
except per share amounts):
<CAPTION>
YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net sales $648,984 $637,368 $719,345 $583,526 $526,765
Net income $ 18,086 $ 42,747 $ 60,133 $ 33,754 $ 24,609
Total assets $550,089 $512,338 $467,662 $419,074 $381,183
Long term obligations $ 52,152 $ 25,203 $ 14,365 $ 28,215 $ 28,390
Dividends per share:
Class A Common Stock $.60 $.48 $.40 $.30 $.30
Class B Common Stock $.89 $.71 $.59 $.44 $.44
Net income per share:
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:
1997 1996 1995 1994 1993
Class A Common Stock $.64 $1.75 $2.39 $1.32 $.94
Class B Common Stock $.93 $1.98 $2.58 $1.46 $1.08
Due to the special characteristics of the Company's two classes of
stock (see Note 5 to the Consolidated Financial Statements), 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.
</TABLE>
<PAGE> 19
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
<TABLE>
FINANCIAL DATA
Presented below are certain comparative data illustrative of the
following discussions of the Company's results of operations, financial
condition and changes in financial condition (Dollars in thousands):
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Net sales:
Industrial shipping containers $396,456 $391,315 $392,505 $353,992
Containerboard 252,528 246,053 326,840 229,534
Total $648,984 $637,368 $719,345 $583,526
Operating profit:
Industrial shipping containers $13,157 $16,736 $ 9,059 $ 9,573
Containerboard 10 36,926 80,476 30,306
Total $13,167 $53,662 $89,535 $39,879
Net income $18,086 $42,747 $60,133 $33,754
Current ratio 2.9:1 3.7:1 4.0:1 4.4:1
Cash flow from operations $40,115 $81,906 $85,820 $48,049
(Decrease) increase in working
capital $(22,257) $(13,973) $ 3,342 $ 7,202
Capital expenditures $36,193 $74,395 $61,066 $40,682
</TABLE>
RESULTS OF OPERATIONS
Net income decreased $24,661,000 or 58% from the prior year. The
reduction is primarily due to the lower operating profit for the
containerboard segment caused by lower sales prices without a corresponding
decrease in the cost of products sold and selling, general and
administrative expenses for the segment. The lower sales prices were a
result of the continued weakness in paper prices which related to excess
capacity in the containerboard market during 1997. These negative price
trends, which started at the end of 1995, reached a 19-year low in May 1997.
In the last several months of 1997, sales prices in the containerboard
segment have begun to increase.
Historically, revenues or earnings may or may not be representative of
future operations because of various economic factors. As explained below,
the Company is subject to the general economic conditions of its customers
and the industry in which it operates.
<PAGE> 20
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
The Company remains confident that, with the financial strength that it
has built over its 120-year existence, it will be able to compete in its
highly competitive markets.
Net Sales
The containerboard segment had an increase in net sales of $6.5 million
or 2.6% in 1997. As mentioned above, excess capacity in the containerboard
market caused sales prices for containerboard and related products to be
lower. This reduction in sales prices at our paper mills was partially
offset by an increase in sales volume this year as compared to last year.
In addition, the Company completed three acquisitions of corrugated
container companies: Aero Box Company located in Roseville, Michigan;
Independent Container, Inc. with locations in Louisville and Erlanger,
Kentucky and Ferdinand, Indiana; and Centralia Container, Inc. located in
Centralia, Illinois. These acquisitions, along with the two acquisitions
from the prior year, contributed $48.7 million of net sales during 1997, and
contributed to the further integration of the businesses. In the prior
year, there were $7.3 million of net sales relating to the 1996
acquisitions.
The industrial shipping containers segment had an increase in net sales
of $5.1 million or 1.3% in 1997. The increase is primarily due to the
purchase of two steel drum operations located in Merced, California and
Oakville, Ontario, Canada in the current year which contributed $19.1
million in sales during 1997. The increase that resulted from this
acquisition was partially offset by the disposal of the Company's wood
components plants in Kentucky, California, Washington and Oregon, at the
beginning of August 1997 and one of its injection molding facilities located
in Ohio during February 1997. Net sales for the locations which were sold
amounted to $38 million in 1997 and $46.2 million in 1996. These locations
were sold since it was determined that they no longer met the strategic
objectives of the Company.
The containerboard segment had a decrease in net sales of $81 million
in 1996. The reduction in net sales was primarily caused by lower selling
prices due to weaknesses in the containerboard market during 1996. This
decrease was partially offset by a sales volume increase in 1996.
During 1996, the Company purchased two corrugated container companies
with locations in Illinois, West Virginia and Kentucky. In addition, a
subsidiary of the Company began operations at a new plant in Mason,
Michigan.
<PAGE> 21
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Net sales in the industrial shipping containers segment remained about
the same in 1996 as in the previous year. There was a decrease in net sales
due to the closing of two drum plants at the end of 1995. The closings
resulted from management's determination that they would not provide a
reasonable return to the Company. The reduction in net sales was offset by
a net increase in sales at the other locations of this segment primarily due
to more sales volume.
The containerboard segment had an increase in net sales of $97 million
in 1995 which was primarily due to higher sales prices. The increase in
sales prices resulted from shortages in the containerboard and related
products industry. In addition, there was a less significant increase in
unit sales of the segment because of the inclusion of an entire year of
sales in 1995 for the 325 ton per day recycled paper machine at a subsidiary
of the Company which was completed in December 1993.
The industrial shipping containers segment had an increase in net sales
of $39 million in 1995 resulting from more volume. In addition, there were
some sales price increases that were made because of the increase in the
cost of the Company's raw materials.
Operating Profit
During 1997, the decrease in operating profit of $40.5 million is
primarily due to a lower gross profit margin of 13.1% this year compared to
19.1% last year. This reduction was caused by lower sales prices per unit
in the containerboard segment without a corresponding reduction in the cost
of products sold. In addition, selling, general and administrative expenses
included in both segments increased over the prior year partially due to
additional selling, general and administrative costs being included from the
Company's recent acquisitions.
The operating profit of the containerboard segment is insignificant in
1997 compared to $37 million or 15.0% of net sales in 1996 and $80 million
or 24.6% of net sales in 1995. The decrease in 1996, and continued decrease
in 1997 is due to the reduction in sales prices resulting in less favorable
gross profit margins. The increase in 1995 is due to increases in net sales
and more favorable gross profit margins.
<PAGE> 22
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
The operating profit of the industrial shipping containers segment is
$13.2 million or 3.3% of net sales in 1997 compared to $17 million or 4.3%
of net sales in 1996 and $9 million or 2.3% of net sales in 1995. The
operating profits of this segment have been affected by severe price
pressures on its products. However, due to the Company's ongoing efforts to
reduce operating costs through cost control measures, manufacturing
innovations and capital expenditures, the operating profits increased from
1994 to 1996. During 1997, the Company experienced lower profitability due
to higher cost of materials without a corresponding increase in sales
prices.
Restructuring Charge
During 1997, the Company adopted a plan to consolidate its operations
which included the relocation of certain key operating employees, the
realignment of some of its administrative functions and the reduction of
certain support functions. As a result, there was a charge to income of
$6.2 million during the fourth quarter.
Other Income
Other income increased in 1997 due to $3 million of additional sales of
timber properties. Also, the Company sold its wood components plants and
one of its injection molding facilities during the year which resulted in
$3.7 million of gains on the sale of capital assets.
Other income of the Company increased in 1996 due to the sale of timber
properties in the United States and in Canada.
In 1995, other income increased primarily due to the sale of timber
properties under threat of acquisition by eminent domain and more salvage
timber sales. The increase in volume of timber sales was accompanied by
higher timber prices.
Interest Expense
Interest expense increased $2.2 million as a result of additional debt
issued in 1997 and 1996 relating to the acquisitions of the Company and
certain capital improvements.
<PAGE> 23
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Income Before Income Taxes
Income before income taxes decreased $38.2 million in 1997 primarily
due to less favorable gross profit margins than in the prior year. In
addition, there was a $6.2 million charge related to the restructuring and a
$2.2 million increase in interest expense. These reductions were offset by
the $3 million of higher timber sales and $3.7 million of gains on the sale
of certain facilities which no longer fit the business strategy of the
Company.
Income before income taxes decreased by $30.2 million in 1996 due to
lower sales and less favorable gross profit margins than in the prior year.
These reductions were offset by a $1.6 million increase in gains from timber
sales as compared to 1995.
In 1995, income before income taxes increased because of higher sales
and more favorable gross profit margins. In addition, as discussed above,
there was an increase in the sale of timber and timber properties.
LIQUIDITY AND CAPITAL RESOURCES
As indicated in the Consolidated Balance Sheets, elsewhere in this
Report and in the financial data set forth above, the Company is dedicated
to maintaining a strong financial position. It is our belief that this
dedication is extremely important during all economic times.
The Company's financial strength is important to continue to achieve
the following goals:
a. To protect the assets of the Company and the intrinsic value of
shareholders' equity in periods of adverse economic conditions.
b. To respond to any large and presently unanticipated cash demands that
might result from future adverse events.
c. To be able to benefit from new developments, new products and new
opportunities in order to achieve the best results for our shareholders.
d. To continue to pay competitive remuneration, including the ever-increasing
costs of employee benefits, to Company employees who produce the results
for the Company's shareholders.
<PAGE> 24
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
e. To replace and improve plants and equipment. When plants and production
machinery must be replaced, either because of wear or to obtain the cost-
reducing potential of technological improvement required to remain a low-
cost producer in the highly competitive environment in which the Company
operates, the cost of new plants and machinery are often significantly
higher than the historical cost of the items being replaced.
The Company, during 1997, invested approximately $36 million in capital
additions and $42 million for its acquisitions. During the last three
years, the Company has invested $223 million in capital additions and
acquisitions.
During 1997, the Company purchased three corrugated container
companies, Aero Box Company, Independent Container, Inc. and Centralia
Container, Inc. In addition, the Company purchased two steel drum
operations. Furthermore, one of the paper mills added a power plant to
its operations and a corrugated carton plant had a major addition to its
facility which included more machinery and equipment.
As discussed in the 1996 Annual Report, Virginia Fibre Corporation, a
subsidiary of the Company, made significant improvements to its facilities
by adding a new woodyard and a manufacturing control system. Greif Board
Corporation, a subsidiary of the Company, made significant improvements to
its machinery and equipment. In addition, Michigan Packaging Company, a
subsidiary of the Company, built a new manufacturing plant in Mason,
Michigan that was completed in November 1995. The Company purchased two
corrugated container companies, Decatur Container Corporation and Kyowva
Corrugated Container Company, Inc. in 1996.
While there is no commitment to continue such a practice, at least one
new manufacturing plant or a major addition to an existing plant has been
undertaken in each of the last three years.
On December 10, 1997, the Company signed a non-binding letter of intent
to acquire all of the outstanding shares of KMI Continental Fibre Drum,
Inc., Fibro Tambor, S.A. de C.V., Sonoco Plastic Drum, Inc. from Sonoco
Products and their interest in Total Packaging Systems of Georgia, LLC for
approximately $225 million in cash. The acquisition is subject to
satisfactory completion of due diligence by the Company and receipt of all
required governmental approvals. In addition, the Company has approved
future purchases, primarily for equipment, of approximately $7 million.
<PAGE> 25
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (concluded)
Self-financing and borrowing have been the primary sources for past
capital expenditures and acquisitions. The Company will attempt to finance
future capital expenditures and acquisitions in a like manner. Long term
obligations are higher at October 31, 1997 compared to October 31, 1996 due
to additional long term debt related to its acquisitions and capital
improvements. The increase caused by this debt was partially offset by the
payment of long term debt during 1997.
These investments are an indication of the Company's commitment to be
the quality, low-cost producer and the desirable long term supplier to all
of our customers.
Management believes that the present financial strength of the Company
will be sufficient to achieve the foregoing goals.
In spite of such necessary financial strength, the Company's industrial
shipping containers business, where packages manufactured by Greif Bros.
Corporation are purchased by other manufacturers and suppliers, is wholly
subject to the general economic conditions and business success of the
Company's customers.
Similarly, the Company's containerboard and related products business
is subject to the general economic conditions and the effect of the
operating rates of the containerboard industry, including pricing pressures
from its competitors.
The historical financial strength generated by these segments has
enabled them to remain independently liquid during adverse economic
conditions.
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, the matters
discussed in this Annual Report contain certain forward-looking statements
which involve risks and uncertainties, including, but not limited to,
economic, competitive, governmental and technological factors affecting the
Company's operations, markets, services and related products, prices and
other factors discussed in the Company's filings with the Securities and
Exchange Commission. The Company's actual results could differ materially
from those projected in such forward-looking statements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable at this time
<PAGE> 26
Item 8. Financial Statements and Supplementary Data
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
<TABLE>
For the years ended October 31, 1997 1996 1995
<S> <C> <C> <C>
Net sales $648,984 $637,368 $719,345
Other income:
Interest and other 12,918 5,214 5,822
Gain on timber sales 12,681 9,626 8,067
674,583 652,208 733,234
Costs and expenses (including
depreciation of $30,660 in 1997,
$26,348 in 1996 and $22,944 in
1995):
Cost of products sold 563,665 515,775 561,118
Selling, general and administrative 78,743 68,220 73,733
Interest 2,670 517 472
645,078 584,512 635,323
Income before income taxes 29,505 67,696 97,911
Taxes on income 11,419 24,949 37,778
Net income $ 18,086 $ 42,747 $ 60,133
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:
1997 1996 1995
Class A Common Stock $ .64 $1.75 $2.39
Class B Common Stock $ .93 $1.98 $2.58
</TABLE>
Due to the special characteristics of the Company's two classes of stock
(see Note 5), 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 Consolidated Financial Statements
<PAGE> 27
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
October 31, 1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 17,719 $ 26,560
Canadian government securities 7,533 19,479
Trade accounts receivable - less allowance of
$847 for doubtful items ($826 in 1996) 81,582 73,987
Inventories 44,892 49,290
Prepaid expenses and other 21,192 16,131
Total current assets 172,918 185,447
LONG TERM ASSETS
Cash surrender value of life insurance 1,070 2,982
Goodwill - less amortization 17,352 4,617
Other long term assets 20,952 7,116
39,374 14,715
PROPERTIES, PLANTS AND EQUIPMENT - at cost
Timber properties - less depletion 6,884 6,112
Land 11,139 10,771
Buildings 139,713 125,132
Machinery, equipment, etc. 424,177 385,834
Construction in progress 17,546 33,450
Less accumulated depreciation (261,662) (249,123)
337,797 312,176
$550,089 $512,338
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 28
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
October 31, 1997 1996
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 37,390 $ 31,609
Current portion of long term obligations 8,504 2,455
Accrued payrolls and employee benefits 13,821 8,989
Accrued taxes - general 97 1,949
Taxes on income 596 5,678
Total current liabilities 60,408 50,680
LONG TERM OBLIGATIONS 43,648 22,748
OTHER LONG TERM LIABILITIES 16,155 15,406
DEFERRED INCOME TAXES 29,740 22,872
Total long term liabilities 89,543 61,026
SHAREHOLDERS' EQUITY
Capital stock, without par value 9,739 9,034
Class A Common Stock:
Authorized 32,000,000 shares;
issued 21,140,960 shares;
outstanding 10,900,672 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 (41,868) (41,867)
Class A Common Stock: 10,240,288 shares
(10,267,788 in 1996)
Class B Common Stock: 5,278,207 shares
Retained earnings 437,550 436,672
Cumulative translation adjustment (5,283) (3,207)
400,138 400,632
$550,089 $512,338
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 29
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
For the years ended October 31, 1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 18,086 $ 42,747 $ 60,133
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and
amortization 31,926 26,420 23,002
Deferred income taxes 4,703 9,308 6,597
Gain on disposals of properties, plants
and equipment (7,023) (412) (331)
Increase (decrease) in cash from changes
in certain assets and liabilities, net of
effects from acquisitions:
Trade accounts receivable (769) 4,831 (7,449)
Inventories 9,660 6,356 (2,932)
Prepaid expenses and other (2,563) 420 (2,098)
Other long term assets (11,719) (75) (1,344)
Accounts payable 1,809 (5,481) 2,987
Accrued payrolls and employee benefits 4,449 (1,904) 3,800
Accrued taxes - general (1,871) (37) 2
Taxes on income (5,118) 5,449 (587)
Other long term liabilities (1,455) (5,716) 4,040
Net cash provided by operating activities 40,115 81,906 85,820
Cash flows from investing activities:
Acquisitions of companies, net of cash
acquired (41,121) (284) --
Disposals of investments in government
securities 12,585 1,481 9,211
Purchases of investments in government
securities (639) (1,979) (4,223)
Purchases of properties, plants and
equipment (36,193) (74,395) (61,066)
Proceeds on disposals of properties,
plants and equipment 7,634 851 745
Net cash used in investing activities (57,734) (74,326) (55,333)
Cash flows from financing activities:
Proceeds from issuance of long term
obligations 52,753 11,329 12,000
Payments on long term obligations (25,804) (3,692) (25,849)
Payments on short term obligations -- (6,668) --
Acquisitions of treasury stock (31) -- (2,647)
Exercise of stock options 735 -- --
Dividends paid (17,208) (13,740) (12,180)
Net cash provided by (used in) financing
activities 10,445 (12,771) (28,676)
Foreign currency translation adjustment (1,667) 139 258
Net (decrease) increase in cash and cash
equivalents (8,841) (5,052) 2,069
Cash and cash equivalents at beginning of year 26,560 31,612 29,543
Cash and cash equivalents at end of year $ 17,719 $ 26,560 $ 31,612
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 30
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars and shares in thousands, except per share amounts)
<CAPTION>
Capital Stock Treasury Stock Retained Translation Share-
Shares Amount Shares Amount Earnings Adjustment holders'
Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at November
1, 1994 24,182 $9,034 14,239 $(38,129) $359,712 $(3,678) $326,939
Net income 60,133 60,133
Dividends paid
(Note 5):
Class A - $.40 (4,349) (4,349)
Class B - $.59 (7,831) (7,831)
Treasury shares
acquired (107) 107 (2,647) (2,647)
Translation gain 288 288
Balance at October
31, 1995 24,075 9,034 14,346 (40,776) 407,665 (3,390) 372,533
Net income 42,747 42,747
Dividends paid
(Note 5):
Class A - $.48 (5,219) (5,219)
Class B - $.71 (8,521) (8,521)
Treasury shares
acquired (1,200) 1,200 (1,091) (1,091)
Translation gain 183 183
Balance at October
31, 1996 22,875 9,034 15,546 (41,867) 436,672 (3,207) 400,632
Net income 18,086 18,086
Dividends paid
(Note 5):
Class A - $.60 (6,526) (6,526)
Class B - $.89 (10,682) (10,682)
Treasury shares
acquired (1) 1 (31) (31)
Stock options
exercised 28 705 (28) 30 735
Translation loss (2,076) (2,076)
Balance at October
31, 1997 22,902 $9,739 15,519 $(41,868) $437,550 $(5,283) $400,138
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 31
Item 8. Financial Statements and Supplementary Data (continued)
GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The Consolidated Financial Statements include the accounts of Greif
Bros. Corporation and its subsidiaries (the Company). All intercompany
transactions and balances have been eliminated in consolidation.
Revenue Recognition
Revenue is recognized when goods are shipped.
Income Taxes
Income taxes are accounted for under Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". In accordance with
this statement, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, as measured by tax rates currently in effect.
Cash and Cash Equivalents
The Company considers highly liquid investments with an original
maturity of three months or less to be cash and cash equivalents. Included
in these amounts are repurchase agreements and certificates of deposit of
$4,800,000 and $4,700,000, respectively, in 1997 ($6,100,000 and
$13,400,000, respectively, in 1996).
Canadian Government Securities
The Canadian government securities are classified as available-for-sale
and, as such, are reported at their fair value which approximates amortized
cost. These securities have maturities to 2002.
During 1997, the Company received $10,600,000 in proceeds from the sale
of available-for-sale securities ($3,600,000 in 1995). The realized gains
and losses included in income are immaterial.
<PAGE> 32
Item 8. Financial Statements and Supplementary Data (continued)
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.
If inventories were stated on the first-in, first-out basis, the balance
would be $47,000,000 greater in 1997, $48,400,000 greater in 1996 and
$57,600,000 greater in 1995. During 1997, 1996 and 1995, the Company
experienced slight LIFO liquidations which were deemed to be immaterial to
the Consolidated Financial Statements.
Properties, Plants and Equipment
Depreciation on properties, plants and equipment is provided by the
straight-line method over the estimated useful lives of the assets.
Accelerated depreciation methods are used for income tax purposes.
Expenditures for repairs and maintenance are charged to income as incurred.
Depletion on timber properties is computed on the basis of cost and the
estimated recoverable timber acquired.
When properties are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the asset and related allowance
accounts. Gains or losses are credited or charged to income as applicable.
Goodwill
Goodwill is amortized on a straight-line basis over fifteen years. The
Company periodically reviews its goodwill to determine if an impairment has
occurred. Accumulated amortization was $1,052,000 at October 31, 1997
($19,000 at October 31, 1996).
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, Canadian government
securities and long term obligations approximate their fair values.
The fair value of long term obligations is estimated based on quoted
market prices on current rates offered to the Company for debt of the same
remaining maturities. The carrying values of the interest rate swap
agreements (see Note 4) approximate their fair values, as determined by the
counterparties.
<PAGE> 33
Item 8. Financial Statements and Supplementary Data (continued)
Foreign Currency Translation
In accordance with SFAS No. 52, "Foreign Currency Translation", the
assets and liabilities denominated in foreign currency are translated into
U.S. dollars at the current rate of exchange existing at year-end and
revenues and expenses are translated at the average monthly exchange rates.
The cumulative translation adjustments, which represent the effects of
translating assets and liabilities of the Company's foreign operations, are
presented in the Consolidated Statements of Changes in Shareholders' Equity.
The transaction gains and losses included in income are immaterial.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual amounts could differ from those estimates.
Operations by Industry Segment
Information concerning the Company's industry segments, presented on
pages 3-4 of this Form 10-K, is an integral part of these financial
statements.
Recent Accounting Standards
During 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share", SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information".
SFAS No. 128 (effective in 1998 for the Company) requires companies to
present basic earnings per share and diluted earnings per share. The
adoption of the new standard is not expected to have a material effect on
the presentation of earnings per share.
SFAS No. 130, which will not be effective until 1999 for the Company,
requires companies to present comprehensive income, which is comprised of
net income and other charges and credits to equity that are not the result
of transactions with the owners, in its financial statements. Currently, the
only item in addition to net income that would be included in comprehensive
income is the cumulative translation adjustment.
<PAGE> 34
Item 8. Financial Statements and Supplementary Data (continued)
SFAS No. 131, which will not be effective until 1999 for the Company,
requires that reporting segments be redefined in terms of a company's
operating segments. Adoption of the new standard is not expected to have a
significant impact on the presentation of the Company's segments.
NOTE 2 - ACQUISITIONS AND DISPOSITIONS
In November 1996, the Company purchased the assets of Aero Box Company,
a corrugated container company, located in Michigan. In March 1997, the
Company acquired the assets of two steel drum manufacturing plants located
in California and Ontario, Canada. In May 1997, the Company purchased all
of the outstanding common stock of Independent Container, Inc., a corrugated
container company with two locations in Kentucky and a location in Indiana.
In June 1997, the Company purchased all of the outstanding common stock of
Centralia Container, Inc., located in Illinois.
The 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 results of these acquisitions were not significant to
the Company.
In February 1997, the Company sold its injection molding plant in Ohio.
In addition, the Company sold its wood component facilities, which
manufactured door panels, wood moldings and window and door parts, with
locations in Kentucky, California, Washington and Oregon in August 1997.
The transactions resulted in a gain of $3.7 million which is included in
other income.
NOTE 3 - RESTRUCTURING COSTS
During the fourth quarter of 1997, the Company adopted a plan to
consolidate its operations. This plan included the relocation of certain
key operating people to the corporate office. In addition, there was a
realignment of some of the administrative functions that were being
performed at the subsidiary and division offices which resulted in some
staff reductions. Finally, costs associated with the reduction of certain
support functions were incurred. As a result, a restructuring charge of
$6.2 million, consisting primarily of severance benefits, was recorded in
the results of operations during the fourth quarter of 1997.
<PAGE> 35
Item 8. Financial Statements and Supplementary Data (continued)
NOTE 4 - LONG TERM OBLIGATIONS
<TABLE>
The Company's long term obligations, which are primarily with banks,
include the following as of October 31 (Dollars in thousands):
<CAPTION>
1997 1996
<S> <C> <C>
Notes Payable:
Fixed rate notes - 5.91% to 9.69%, due 1998 -
2015, secured by certain equipment, real
estate, inventory and receivables $ 1,558 $ 1,988
Variable rate notes - LIBOR plus .25% to .49%
or Prime Rate plus 1%, due 1999 - 2004,
certain notes secured by equipment 35,544 8,609
Revolving credit agreement and lines of
credit:
Variable rate - tied to LIBOR or Prime Rate,
expiring in 2000 15,050 12,830
Total 52,152 23,427
Capital lease obligation -- 1,776
Less: current portion 8,504 2,455
Long term obligations $43,648 $22,748
</TABLE>
Long term obligations have generally resulted from acquisitions and
capital improvements. Certain loan agreements contain debt covenants related
to the financial position or results of operations of the Company.
The Company has a revolving credit agreement and lines of credit
totaling $62 million. At October 31, 1997, the Company has $47 million
available under its revolving credit agreement and lines of credit.
During 1997, the Company entered into interest rate swap agreements
with aggregate notional amounts of $32,685,000 without the exchange of
underlying principal. The interest rate swaps were entered into to manage
the Company's exposure to variable rate debt. Under such agreements, the
Company receives interest from the counterparties equal to amounts incurred
under its existing variable rate debt, and pays interest to the
counterparties at fixed rates ranging from 6.43% to 7.39%. The differential
to be paid and received under such agreements is recorded as an adjustment
to interest expense and is included in interest receivable or payable. The
agreements expire within seven years.
Annual maturities of long term obligations are $8,504,000 in 1998,
$7,895,000 in 1999, $22,737,000 in 2000, $7,503,000 in 2001, $3,049,000 in
2002 and $2,464,000 thereafter.
<PAGE> 36
Item 8. Financial Statements and Supplementary Data (continued)
During 1997, the Company paid $3,726,000 of interest ($862,000 in 1996
and $1,359,000 in 1995) related to the long term obligations. Interest of
$1,163,000 in 1997, $569,000 in 1996 and $780,000 in 1995 was capitalized.
During 1997, the capital lease obligation relating to land, building
and machinery and equipment at one of the Company's plant locations was
assumed by another party through the disposal of a plant. The amount that
was capitalized under this agreement was $2,708,000 and had accumulated
depreciation of $606,000 as of October 31, 1996.
The Company has entered into non-cancelable operating leases for
buildings and office space. The future minimum lease payments for the non-
cancelable operating leases are $1,473,000 in 1998, $992,000 in 1999,
$630,000 in 2000, $578,000 in 2001, $298,000 in 2002 and $250,000
thereafter. Rent expense was $5,684,000 in 1997, $3,592,000 in 1996 and
$3,246,000 in 1995.
NOTE 5 - CAPITAL STOCK
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 shareholders, 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 6 - STOCK OPTIONS
In 1996, a Directors' Stock Option Plan (Directors' Plan) was adopted
which provides the granting of stock options to Directors who are not
employees of the Company. The aggregate number of the Company's Class A
Common Stock which options may be granted may not exceed 100,000 shares.
Under the terms of the Directors' Plan, options are granted at exercise
prices equal to the market value on the date options are granted and become
exercisable immediately. As of October 31, 1997, no options have been
exercised. Options expire ten years after date of grant.
<PAGE> 37
Item 8. Financial Statements and Supplementary Data (continued)
During 1995, the Company adopted an Incentive Stock Option Plan (Option
Plan) which provides the discretionary 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 Option 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. Options expire ten years after date of grant.
In 1997, 136,500 incentive stock options were granted with option
prices of $30.00 per share. Under the Directors' Plan, 12,000 options were
granted to outside directors with option prices of $30.50 per share.
In 1996, 152,100 incentive stock options were granted with option
prices of $29.62 per share. Under the Directors' Plan, 12,000 options were
granted to outside directors with option prices of $30.00 per share.
In 1995, 155,000 and 44,500 incentive stock options were granted with
option prices of $26.19 per share and $22.94 per share, respectively. In
addition, 10,000 non-statutory options were granted with option prices of
$23.75 per share.
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock option plans. If compensation cost would have been
determined based on the fair values at the date of grant under SFAS No. 123,
"Accounting for Stock-Based Compensation", pro forma net income and earnings
per share would have been as follows (Dollars in thousands, except per share
amounts):
<TABLE>
1997 1996
<S> <C> <C>
Net income $17,133 $42,486
Net income per share:
Class A Common Stock $.60 $1.74
Class B Common Stock $.89 $1.97
The fair value for each option is estimated on the date of grant using
the Black-Scholes option pricing model, as allowed under SFAS No. 123, with
the following assumptions:
<CAPTION>
1997 1996
Dividend yield 1.31% 1.16%
Volatility rate 20.60% 29.20%
Risk-free interest rate 6.29% 6.52%
Expected option life 6 years 6 years
</TABLE>
<PAGE> 38
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
The weighted fair value of shares granted were $9.03 and $10.95 at
October 31, 1997 and 1996, respectively. Stock option activity was as
follows (Shares in thousands):
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Beginning Balance 374 $27.25 210 $25.38 -- $ --
Granted 148 30.04 164 29.62 210 25.38
Forfeited 38 27.11 -- -- -- --
Exercised 28 25.79 -- -- -- --
Expired -- -- -- -- -- --
Ending Balance 456 $28.26 374 $27.25 210 $25.38
</TABLE>
There are 181,000 options which were exercisable at October 31, 1997
(12,000 options at October 31, 1996).
During 1996, the Company purchased all rights to options granted under
a stock option plan at one of its subsidiaries and subsequently eliminated
the plan.
<PAGE> 39
Item 8. Financial Statements and Supplementary Data (continued)
NOTE 7 - INCOME TAXES
<TABLE>
Income tax expense is comprised as follows (Dollars in thousands):
<CAPTION>
State
U.S. and
Federal Foreign Local Total
<S> <C> <C> <C> <C>
1997:
Current $ 3,617 $ 2,097 $ 1,607 $ 7,321
Deferred 4,087 (96) 107 4,098
$ 7,704 $ 2,001 $ 1,714 $11,419
1996:
Current $11,330 $ 3,075 $ 1,630 $16,035
Deferred 7,903 (59) 1,070 8,914
$19,233 $ 3,016 $ 2,700 $24,949
1995:
Current $27,053 $ 1,616 $ 3,567 $32,236
Deferred 3,655 258 1,629 5,542
$30,708 $ 1,874 $ 5,196 $37,778
Foreign income before income taxes amounted to $5,241,000 in 1997
($7,729,000 in 1996 and $4,452,000 in 1995).
The following is a reconciliation of the U.S. statutory Federal income
tax rate to the Company's effective tax rate:
1997 1996 1995
U.S. Federal statutory tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal tax benefit 3.8% 3.6% 3.9%
Other (.1%) (1.7%) (.3%)
Effective income tax rate 38.7% 36.9% 38.6%
</TABLE>
<PAGE> 40
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
Significant components of the Company's deferred tax assets and
liabilities are as follows at October 31 (Dollars in thousands):
<CAPTION>
1997 1996
<S> <C> <C>
Current deferred tax assets $ 5,729 $ 3,564
Current deferred tax liabilities $ 10 $ 29
Book basis on acquired assets $10,159 $11,432
Other 2,249 551
Long term deferred tax assets $12,408 $11,983
Depreciation $35,448 $27,974
Timber condemnation 3,557 2,873
Undistributed Canadian net income 1,627 1,753
Pension costs 1,111 1,887
Other 405 368
Long term deferred tax liabilities $42,148 $34,855
At October 31, 1997, the Company has provided deferred income taxes on
all of its undistributed Canadian earnings.
During 1997, the Company paid $13,334,000 in income taxes ($10,318,000
in 1996 and $35,692,000 in 1995).
</TABLE>
NOTE 8 - RETIREMENT PLANS
The Company has non-contributory defined benefit pension plans that
cover most of its employees. These plans include plans self-administered by
the Company along with Union administered multi-employer plans. The self-
administered hourly and Union plans' benefits are based primarily upon years
of service. The self-administered salaried plans' benefits are based
primarily on years of service and earnings. The Company contributes an
amount that is not less than the minimum funding nor more than the maximum
tax-deductible amount to these plans. The plans' assets consist of
unallocated insurance contracts, equity securities, government obligations
and the allowable amount of the Company's stock (127,752 shares of Class A
Common Stock and 77,755 shares of Class B Common Stock at October 31, 1997
and 1996).
<PAGE> 41
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
The pension expense for the plans included the following (Dollars in
thousands):
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Service cost, benefits earned during
the year $ 2,714 $ 2,648 $2,365
Interest cost on projected benefit
obligation 4,548 4,277 3,839
Actual return on assets (8,986) (6,404) (4,646)
Net amortization 3,974 1,759 263
2,250 2,280 1,821
Multi-employer and non-U.S. pension
expense 370 593 790
Total pension expense $ 2,620 $ 2,873 $2,611
The range of weighted average discount rate and expected long term rate
of return on plan assets used in the actuarial valuation was 7.0% - 9.0% for
1997, 1996 and 1995. The rate of compensation increases for salaried
employees used in the actuarial valuation range from 4.0% - 6.5% for 1997,
1996 and 1995.
</TABLE>
<PAGE> 42
Item 8. Financial Statements and Supplementary Data (continued)
<TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the Consolidated Financial Statements (Dollars in thousands):
<CAPTION>
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $34,190 $31,675 $10,636 $ 9,243
Accumulated benefit
obligation $34,569 $32,113 $12,279 $10,782
Projected benefit obligation $46,246 $46,085 $12,279 $10,782
Plan assets at fair value $59,836 $52,423 $10,718 $10,257
Plan assets greater than
(less than) projected
benefit obligation $13,590 6,338 $(1,561) $(525)
Unrecognized net (gain) loss (8,942) (9,274) 641 769
Prior service cost not yet
recognized in net periodic
pension cost 6,096 6,587 2,788 2,368
Adjustment required to
recognize minimum liability -- -- (1,048) (804)
Unrecognized net (asset)
obligation from transition (7,345) 438 (2,381) (2,333)
Prepaid pension cost
(liability) $ 3,399 $ 4,089 $(1,561) $ (525)
During 1997 and 1996, the Company, in accordance with the provisions of
SFAS No. 87, "Employers' Accounting for Pensions", recorded the "adjustment
required to recognize minimum liability". The amount was offset by a long
term asset, of an equal amount, recognized in the Consolidated Financial
Statements.
</TABLE>
<PAGE> 43
Item 8. Financial Statements and Supplementary Data (continued)
In addition to the pension plans, the Company has several voluntary
401(k) savings plans which cover eligible employees at least 21 years of age
with one year of service. For certain plans, the Company matches 25% of
each employees contribution, up to a maximum of 5% or 6% of base salary.
Company contributions to the 401(k) plans were $350,000 in 1997, $234,000 in
1996 and $27,000 in 1995.
NOTE 9 - SUBSEQUENT EVENT
On December 10, 1997, the Company signed a non-binding letter of intent
to acquire all of the outstanding shares of KMI Continental Fibre Drum,
Inc., Fibro Tambor, S.A. de C.V. and Sonoco Plastic Drum, Inc., which are
wholly-owned subsidiaries of Sonoco Products Co. (Sonoco). In addition, the
Company would purchase Sonoco's interest in Total Packaging Systems of
Georgia, LLC. These companies comprise the entire industrial container
group of Sonoco and last year had combined annual net sales of approximately
$210 million. The acquisition of these operations includes twelve fibre
drum plants and five plastic drum plants along with facilities for research
and development, packaging services and distribution.
The purchase price will be approximately $225 million in cash and is
subject to regulatory approval and due diligence review.
<PAGE> 44
Item 8. Financial Statements and Supplementary Data (continued)
REPORT OF MANAGEMENT'S RESPONSIBILITIES
To the Shareholders of
Greif Bros. Corporation
The Company's management is responsible for the financial and operating
information included in this Annual Report to Shareholders, including the
Consolidated Financial Statements of Greif Bros. Corporation and its
subsidiaries. These statements were prepared in accordance with generally
accepted accounting principles and, as such, include certain estimates and
judgments made by management.
The system of internal accounting control, which is designed to provide
reasonable assurance as to the integrity and reliability of financial
reporting, is established and maintained by the Company's management. This
system is continually reviewed by the internal auditor of the Company. In
addition, Price Waterhouse LLP, an independent accounting firm, audits the
financial statements of Greif Bros. Corporation and its subsidiaries and
considers the internal control structure of the Company in planning and
performing its audit. The Audit Committee of the Board of Directors meets
periodically with the internal auditor and independent accountants to
discuss the internal control structure and the results of their audits.
/s/ Michael J. Gasser /s/ Joseph W. Reed
Michael J. Gasser Joseph W. Reed
Chairman and Chief Executive Officer Chief Financial Officer and
Secretary
<PAGE> 45
Item 8. Financial Statements and Supplementary Data (continued)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the
Board of Directors of
Greif Bros. Corporation
In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)(1) on page 48 present fairly, in all
material respects, the financial position of Greif Bros. Corporation and its
subsidiaries at October 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years ended October
31, 1997, in conformity with generally accepted accounting principles.
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 of these statements
in accordance with generally accepted auditing standards which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP Columbus, Ohio
November 26, 1997, except as to Note 9,
which is as of December 10, 1997
<PAGE> 46
Item 8. Financial Statements and Supplementary Data (concluded)
<TABLE>
QUARTERLY FINANCIAL DATA (Unaudited)
The quarterly results of operations for fiscal 1997 and 1996 are shown
below (Dollars in thousands, except per share amounts):
<CAPTION>
Quarter Ended,
Jan. 31, Apr. 30, July 31, Oct. 31,
1997 1997 1997 1997
<S> <C> <C> <C> <C>
Net sales $152,370 $152,529 $167,062 $177,023
Gross profit $ 21,041 $ 17,608 $ 22,193 $ 24,477
Net income $ 4,485 $ 3,580 $ 4,682 $ 5,339
Net income per share:
Assuming distributions as actually paid out in dividends and the
balance as in liquidation:
Class A Common Stock $.14 $.12 $.18 $.20
Class B Common Stock $.25 $.18 $.24 $.26
Quarter Ended,
Jan. 31, Apr. 30, July 31, Oct. 31,
1996 1996 1996 1996
Net sales $159,743 $159,212 $155,994 $162,419
Gross profit $ 32,309 $ 26,051 $ 27,129 $ 36,104
Net income $ 10,826 $ 6,579 $ 9,636 $ 15,706
Net income per share:
Assuming distributions as actually paid out in dividends and the
balance as in liquidation:
Class A Common Stock $.41 $.27 $.40 $.67
Class B Common Stock $.52 $.31 $.44 $.71
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There has not been a change in the Company's principal independent
accountants and there were no matters of disagreement on accounting and
financial disclosure.
<PAGE> 47
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to Directors of the Company and disclosures
pursuant to Item 405 of Regulation S-K is incorporated by reference to the
Registrant's Proxy Statement, which Proxy Statement will be filed within 120
days of October 31, 1997. Information regarding the executive officers of
the Registrant may be found under the caption "Executive Officers of the
Company" in Part I, and is also incorporated by reference into this Item 10.
Item 11. Executive Compensation
Information with respect to Executive Compensation is incorporated
herein by reference to the Registrant's Proxy Statement, which Proxy
Statement will be filed within 120 days of October 31, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information with respect to Security Ownership of Certain Beneficial
Owners and Management is incorporated herein by reference to the
Registrant's Proxy Statement, which Proxy Statement will be filed within 120
days of October 31, 1997.
Item 13. Certain Relationships and Related Transactions
Information with respect to Certain Relationships and Related
Transactions is incorporated herein by reference to the Registrant's Proxy
Statement, which Proxy Statement will be filed within 120 days of October
31, 1997.
<PAGE> 48
PART IV
<TABLE>
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this Report:
<CAPTION>
Page
(1) Financial Statements:
<S> <C>
Consolidated Statements of Income for the three
years ended October 31, 1997 26
Consolidated Balance Sheets at October 31,
1997 and 1996 27-28
Consolidated Statements of Cash Flows
for the three years ended October 31, 1997 29
Consolidated Statements of Changes in
Shareholders' Equity for the three years
ended October 31, 1997 30
Notes to Consolidated Financial Statements 31-43
Report of Management's Responsibilities 44
Report of Independent Accountants 45
Quarterly Financial Data (Unaudited) 46
(2) Financial Statements Schedules:
Report of Independent Accountants on
Financial Statement Schedules 53
Consolidated Valuation and Qualifying Accounts
and Reserves (Schedule II) 54
</TABLE>
<PAGE> 49
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
(continued)
<TABLE>
(3) Exhibits:
<CAPTION>
If Incorporated by Reference
Exhibit with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
<S> <C> <C>
3(a) Amended and Restated Contained herein.
Certificate of Incorporation of
Greif Bros. Corporation.
3(b) Amended and Restated By-Laws of Contained herein.
Greif Bros. Corporation.
10(a) Greif Bros. Corporation 1996 Registration Statement on Form
Directors' Stock Option Plan S-8, File No. 333-26977 (see
Exhibit 4(b) therein).
10(b) Greif Bros. Corporation Contained Herein.
Incentive Stock Option Plan, as
Amended and Restated.
11 Statement Re: Computation of Contained herein.
Per Share Earnings.
21 Subsidiaries of the Registrant. Contained herein.
23 Consent of Price Waterhouse LLP. Contained herein.
24(a) Powers of Attorney for Michael J. Contained herein.
Gasser, Charles R. Chandler,
Michael H. Dempsey, Naomi C.
Dempsey, Daniel J. Gunsett,
Allan Hull, Robert C. Macauley,
David J. Olderman, William B.
Sparks, Jr., and J Maurice
Struchen.
27 Financial Data Schedule. Contained herein.
</TABLE>
<PAGE> 50
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
(concluded)
(b) Reports on Form 8-K
(1) No reports on Form 8-K have been filed during
the last quarter of fiscal 1997.
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
The individual financial statements of the Registrant have been omitted
since the Registrant is primarily an operating company and all subsidiaries
included in the consolidated financial statements, in the aggregate, do not
have minority equity interests and/or indebtedness to any person other than
the Registrant or its consolidated subsidiaries in amounts which exceed 5%
of total consolidated assets at October 31, 1997, except indebtedness
incurred in the ordinary course of business which is not in default.
<PAGE> 51
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 January 26, 1998 By /s/ Michael J. Gasser
Michael J. Gasser
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Michael J. Gasser /s/ Joseph W. Reed
Michael J. Gasser Joseph W. Reed
Chairman of the Board of Directors Chief Financial Officer and
Chief Executive Officer Secretary
(principal executive officer) (principal financial officer)
/s/ John K. Dieker Charles R. Chandler *
John K. Dieker Charles R. Chandler
Corporate Controller Member of the Board of Directors
(principal accounting officer)
Michael H. Dempsey * Naomi C. Dempsey *
Michael H. Dempsey Naomi C. Dempsey
Member of the Board of Directors Member of the Board of Directors
Daniel J. Gunsett * Allan Hull *
Daniel J. Gunsett Allan Hull
Member of the Board of Directors Member of the Board of Directors
Robert C. Macauley * David J. Olderman *
Robert C. Macauley David J. Olderman
Member of the Board of Directors Member of the Board of Directors
William B. Sparks, Jr. * J Maurice Struchen *
William B. Sparks, Jr. J Maurice Struchen
Member of the Board of Directors Member of the Board of Directors
[Signatures continued on the next page]
<PAGE> 52
* The undersigned, Michael J. Gasser, by signing his name hereto, does
hereby execute this Annual Report on Form 10-K on behalf of each of the
above-named persons pursuant to powers of attorney duly executed by such
persons and filed as an exhibit to this Annual Report on Form 10-K.
By /s/ Michael J. Gasser
Michael J. Gasser
Chairman of the Board of Directors
Chief Executive Officer
Each of the above signatures is affixed as of January 26, 1998.
<PAGE> 53
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Greif Bros. Corporation
Our audits of the consolidated financial statements referred to in our
report dated November 26, 1997, except as to Note 9, which is as of December
10, 1997, appearing on page 45 of this Form 10-K also included an audit of
the Financial Statement Schedules listed in Item 14(a)(2) of this Form 10-K.
In our opinion, these Financial Statement Schedules present fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP
Columbus, Ohio
November 26, 1997,
except as to Note 9,
which is as of December 10, 1997
<PAGE> 54
<TABLE>
SCHEDULE II
GREIF BROS. CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN $000)
<CAPTION>
Balance at
Balance at Charged to Charged to End of
Description of Period Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C>
Year ended
October 31,
1995:
Reserves deducted
from applicable
assets:
For doubtful
items-
trade accounts
receivables $ 989 $ 536 $37 (A) $773 (B) $ 789
For doubtful
items-
other notes
and accounts
receivable 697 -0- -0- -0- 697
Total reserves
deducted from
applicable
assets $1,686 $ 536 $37 $773 $1,486
Year ended
October 31, 1996:
Reserves deducted
from applicable
assets:
For doubtful
items-
trade accounts
receivables $ 789 $ 201 $22 (A) $186 (B) $ 826
For doubtful
items-
other notes
and accounts
receivable 697 -0- -0- -0- 697
Total reserves
deducted from
applicable
assets $1,486 $ 201 $22 $186 $1,523
Year ended
October 31,
1997:
Reserves deducted
from applicable
assets:
For doubtful
items-
trade accounts
receivables $ 826 $ 431 $11 (A) $421 (B) $ 847
For doubtful
items-
other notes
and accounts
receivable 697 -0- -0- -0- 697
Total reserves
deducted from
applicable
assets $1,523 $431 $11 $421 $1,544
<FN>
(A) Collections of accounts previously written-off.
(B) Accounts written-off.
</TABLE>
<PAGE> 55
<TABLE>
EXHIBIT INDEX
<CAPTION>
If Incorporated by Reference
Exhibit with which Exhibit was
No. Description of Exhibit Previously filed with SEC
<S> <C> <C>
3(a) Amended and Restated Contained herein.
Certificate of Incorporation of
Greif Bros. Corporation.
3(b) Amended and Restated By-Laws of Contained herein.
Greif Bros. Corporation.
10(a) Greif Bros. Corporation 1996 Registration Statement on Form
Directors' Stock Option Plan. S-8, File No. 333-26977 (see
Exhibit 4(b) therein).
10(b) Greif Bros. Corporation Contained herein.
Incentive Stock Option Plan, as
Amended and Restated.
11 Statement Re: Computation of Contained herein.
Per Share Earnings.
21 Subsidiaries of the Registrant. Contained herein.
23 Consent of Price Waterhouse LLP. Contained herein.
24(a) Powers of Attorney for Michael Contained herein.
J. Gasser, Charles R. Chandler,
Michael H. Dempsey, Naomi C.
Dempsey, Daniel J. Gunsett,
Allan Hull, Robert C. Macauley,
David J. Olderman, William B.
Sparks, Jr., and J Maurice
Struchen.
27 Financial Data Schedule. Contained herein.
</TABLE>
<PAGE> 56
EXHIBIT 3(a)
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GREIF BROS. CORPORATION
FIRST: The name of this Corporation is GREIF BROS. CORPORATION.
SECOND: The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware as the same exists or may hereafter be amended.
FOURTH: The total number of authorized shares of the capital stock of
this Corporation is forty-nine million, two hundred eighty thousand
(49,280,000), divided into two classes, namely: Class A Common Stock and
Class B Common Stock, all of which shall be without nominal or par value.
The total number of shares of such Class A Common Stock authorized is
thirty-two million (32,000,000) shares, without nominal or par value. The
total number of shares of such Class B Common Stock authorized is seventeen
million, two hundred eighty thousand (17,280,000) shares, without nominal or
par value. The description of said classes of stock and the designations,
preferences and restrictions, if any, and the voting powers or restrictions
or qualifications of such Class A Common Stock and Class B Common Stock are
as follows:
The Class A Common Stock shall be entitled to receive, in each and
every year, cumulative dividends at the rate of One (1) Cent per share
per annum, payable quarterly on the first day of January, the first day
of April, the first day of July and the first day of October in each
and every year, before any dividend, whether in cash, property, stock
or otherwise, shall be declared, set apart for payment or paid upon the
Class B Common Stock. Such dividends upon the Class A Common Stock
shall be cumulative from and after the date of original issue thereof.
In any year, after the full dividend at the rate of One (1) Cent
per share for such year and any and all arrearages thereof for
preceding years shall have been declared and paid to, or set apart for
the Class A Common Stock, the Class B Common Stock shall be entitled to
receive noncumulative dividends up to the amount of One Half (1/2) Cent
per share, provided, however, and upon the condition that the surplus
or net profits of the Corporation, after the payment of any such
dividends to the Class B Common Stock, shall be at least equal to the
sum required for payment in full of the aforesaid cumulative dividends
on the Class A Common Stock for one (1) year.
<PAGE> 57
EXHIBIT 3(a) (continued)
Out of any further distribution of surplus or net profits by way
of dividend in any year in excess of the aforesaid dividends upon the
Class A Common Stock and upon the Class B Common Stock, the Class A
Common Stock and the Class B Common Stock shall be entitled to share in
such further distribution in the proportion of One (1) Cent per share
for said Class A Common Stock to One and One-Half (1-1/2) Cents per
share for said Class B Common Stock.
Dividends upon either class of stock shall be payable only out of
the surplus or net profits of the Corporation as determined by the
Board of Directors and only as and when declared by the Board of
Directors, but may, in any year, be paid out of such surplus or net
profits whether arising during the same year or accrued during prior
years.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntarily or involuntarily, the Class A Common
Stock shall be entitled, out of the assets of the Corporation, to be
paid cumulative dividends accrued thereon and Fifteen and Five-Eighths
Cents ($.15625) for each share of such Class A Common Stock before any
distribution or payment shall be made to the Class B Common Stock, and
after such payment in full to the Class A Common Stock, as aforesaid,
the Class B Common Stock shall be entitled to be paid the sum of
Fifteen and Five-Eighths Cents ($.15625) for each share of Class B
Common Stock; and after such payment in full to the Class A Common
Stock, and the sum of Fifteen and Five-Eighths Cents ($.15625) per
share to the Class B Common Stock, as aforesaid, any remaining assets
to be distributed shall be distributed to the Class A Common Stock and
the Class B Common Stock, share and share alike.
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. If, at any time, however, and whenever four (4) quarterly
cumulative dividends upon the Class A Common Stock shall be in default
or unpaid in whole or in part, the Class A Common Stock shall have the
same voting power as the Class B Common Stock, to-wit: One (1) vote
for each share of stock, and shall be entitled to receive notices of
meetings of shareholders; and such voting power shall so continue to
vest in the Class A Common Stock until all arrears in the payment of
cumulative dividends upon the Class A Common Stock shall have been paid
and the dividends thereon for the current dividend shall have been
declared and the funds for the payment thereof set aside. However, if
and when thereafter the defaulted dividends shall be paid in full and
provisions made for the current dividend as herein provided (and such
payments shall be made as promptly as shall be consistent with the best
interest of the Corporation) the Class A Common Stock shall be divested
of such voting power and the voting power shall then revest exclusively
<PAGE> 58
EXHIBIT 3(a) (continued)
in the Class B Common Stock; but subject always to the same provisions
for the vesting of such voting power in the Class A Common Stock in
case of any similar default or defaults in the payment of four (4)
quarterly cumulative dividends upon the Class A Common Stock and the
revesting of such entire voting power in the Class B Common Stock in
the event that such default or defaults shall be cured as above
provided.
Such Class A Common Stock and Class B Common Stock may be issued
by the Corporation from time to time for such consideration as may be
fixed from time to time by the Board of Directors thereof.
FIFTH: The Board of Directors of the Corporation shall have the power
to adopt, amend, or repeal the by-laws of the Corporation. The by-laws
of the Corporation, as adopted or amended by the board of directors,
may be amended or repealed by the stockholders of the Corporation.
SIXTH: A director or officer of the Corporation shall not be disquali-
fied by his office from dealing or contracting with the Corporation as
a vendor, purchaser, employee, agent, or otherwise. No transaction or
contract or act of the Corporation shall be void or voidable or in any
way affected or invalidated by reason of the fact that any director or
officer, or any firm of which any director or officer is a shareholder,
director, or trustee, or any trust of which any director or officer is
a trustee or beneficiary, is in any way interested in such transaction
or contract or act. No director or officer shall be accountable or
responsible to the Corporation for or in respect to any transaction or
contract or act of the Corporation or for any gains or profits directly
or indirectly realized by him by reason of the fact that he or any firm
of which he is a member or any corporation of which he is a
shareholder, director, or trustee, or any trust of which he is a
trustee or beneficiary, is interested in such transaction or contract
or act; provided that the fact that such director or officer or such
firm or corporation or such trust is so interested shall have been
disclosed or shall have been known to the Board of Directors or such
members thereof as shall be present at any meeting of the Board of
Directors at which action upon such contract or transaction or act
shall have been taken. Any director may be counted in determining the
existence of a quorum at any meeting of the Board of Directors which
shall authorize or take action in respect to any such contract or
transaction or act, and may vote thereat to authorize, ratify, or
approve any such contract or transaction or act, and any officer of the
Corporation may take any action within the scope of his authority
respecting such contract or transaction or act with like force and
effect as if he or any firm of which he is a member, or any corporation
of which he is a shareholder, director, or trustee, or any trust of
which he is a trustee or beneficiary, were not interested in such
contract or transaction or act. Without limiting or qualifying the
<PAGE> 59
EXHIBIT 3(a) (concluded)
foregoing, if in any judicial or other inquiry, suit, cause, or
proceeding, the question of whether a director or officer of the
Corporation has acted in good faith is material, then notwithstanding
any statute or rule of law or of equity to the contrary (if any there
be), his good faith shall be presumed, in the absence of proof to the
contrary by clear and convincing evidence.
SEVENTH: No stockholder shall have any preemptive right to subscribe
to an additional issue of stock or to any security convertible into
such stock.
EIGHTH: To the fullest extent permitted by the General Corporation Law
of Delaware, as the same exists or may hereafter be amended, a director
of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breaches of fiduciary duties
as director.
NINTH: To the fullest extent permitted by the General Corporation Law
of Delaware, as the same exists or may hereafter be amended, the
Corporation may purchase or otherwise acquire shares of stock of any
class issued by it for such consideration and upon such terms and
conditions as may be authorized by the Board of Directors, in its
discretion, from time to time.
TENTH: Subject to any necessary voting percentage requirements
provided in this Amended and Restated Certificate of Incorporation (as
the same exists or may hereafter be amended) or the Corporation's
Amended and Restated By-Laws (as the same exists or may hereafter be
amended), the Corporation reserves the right to amend this Amended and
Restated Certificate of Incorporation in any manner permitted by the
General Corporation Law of Delaware, and all rights and powers
conferred herein on stockholders, directors and officers, if any, are
subject to this reserved power.
<PAGE> 60
EXHIBIT 3(b)
AMENDED AND RESTATED BY-LAWS
OF
GREIF BROS. CORPORATION
<PAGE> 61
EXHIBIT 3(b) (continued)
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
ARTICLE I Meeting of Stockholders 63
Section 1. Annual Meetings 63
Section 2. Special Meetings 63
Section 3. Notices of Meetings 63
Section 4. Place of Meetings 63
Section 5. Quorum 64
Section 6. Record Date 64
Section 7. Proxies 64
Section 8. Notice of Business 64
ARTICLE II Directors 65
Section 1. Number of Directors 65
Section 2. Election of Directors 65
Section 3. Term of Office 66
Section 4. Removal 66
Section 5. Vacancies 66
Section 6. Quorum and Transaction of Business 66
Section 7. Regular Meetings 66
Section 8. Special Meetings 66
Section 9. Notice of Meetings 67
Section 10. Compensation 67
ARTICLE III Committees 68
Section 1. Executive Committee 68
Section 2. Nominating Committee 68
Section 3. Meeting of Executive and Nominating
Committees 69
Section 4. Other Committees 69
ARTICLE IV Officers 69
Section 1. Number and Titles 69
Section 2. Election, Terms of Office,
Qualifications, and Compensation 70
Section 3. Additional Officers, Agents, Etc. 70
Section 4. Removal 70
Section 5. Resignations 70
Section 6. Vacancies 71
Section 7. Powers, Authority, and Duties of
Officers 71
<PAGE> 62
EXHIBIT 3(b) (continued)
TABLE OF CONTENTS
Page
ARTICLE V Indemnification and Insurance 71
Section 1. Indemnification in Non-Derivitive
Actions 71
Section 2. Indemnifications in Derivitive
Actions 72
Section 3. Indemnification as Matter of Right 72
Section 4. Determiniation of Conduct 72
Section 5. Advance Payment of Expenses 72
Section 6. Nonexclusivity 73
Section 7. Liability Insurance 73
Section 8. Meaning of Certain Terms 73
Section 9. Continuation of Indemnification and
Advancement of Expenses 74
ARTICLE VI Certificates for Shares 74
Section 1. Form and Execution 74
Section 2. Registration and Transfer 74
Section 3. Lost, Destroyed or Stolen Certificates 75
Section 4. Registered Stockholders 75
ARTICLE VII Fiscal Year 75
ARTICLE VIII Seal 75
ARTICLE IX Amendments 76
</TABLE>
<PAGE> 63
EXHIBIT 3(b) (continued)
BY-LAWS
0F
GREIF BROS. CORPORATION
ARTICLE I
Meetings of Stockholders
Section 1. Annual Meetings. The annual meeting of stockholders shall
be held on the fourth Monday of February, if not a legal holiday (or, if a
legal holiday, then on the next secular day following), at 10:00 a.m., or
at such other time and on such other date during the first six months of
each fiscal year as may be fixed by the Board of Directors and stated in
the notice of the meeting, for the election of Directors, the consideration
of reports to be laid before such meeting and the transaction of such other
business as may properly come before the meeting.
Section 2. Special Meetings. Special meetings of the stockholders
shall be called upon the written request of the Chairman of the Board of
Directors, the President, the Directors by action at a meeting, a majority
of the Directors acting without a meeting, or of the holders of shares
entitling them to exercise fifty percent (50%) of the voting power of the
Corporation entitled to vote thereat. Calls for such meetings shall
specify the purposes thereof. No business other than that specified in the
call shall be considered at any special meeting.
Section 3. Notices of Meetings. Unless waived, written notice of
each annual or special meeting stating the time, place, and the purposes
thereof shall be given by personal delivery or by mail to each stockholder
of record entitled to vote at or entitled to notice of the meeting, not
more than sixty (60) days nor less than ten (10) days before any such
meeting. If mailed, such notice shall be directed to the stockholder at
such stockholder's address as the same appears upon the records of the
Corporation. Any stockholder, either before or after any meeting, may
waive any notice required to be given by law or under these By-Laws.
Section 4. Place of Meetings. Meetings of stockholders shall be held
in Delaware County, Ohio, at the principal office of the Corporation in
that County unless the Board of Directors determines that a meeting shall
be held at some other place within or without the State of Delaware and
causes the notice thereof to so state.
<PAGE> 64
EXHIBIT 3(b) (continued)
Section 5. Quorum. The holders of shares entitling them to exercise
a majority of the voting power of the Corporation entitled to vote at any
meeting, present in person or by proxy, shall constitute a quorum for the
transaction of business to be considered at such meeting; provided,
however, that no action required by law or by the Certificate of
Incorporation or these By-Laws to be authorized or taken by the holders of
a designated proportion of the shares of any particular class or of each
class may be authorized or taken by a lesser proportion. The holders of a
majority of the voting shares represented at a meeting, whether or not a
quorum is present, may adjourn such meeting from time to time, until a
quorum shall be present.
Section 6. Record Date. The Board of Directors may fix a record date
for any lawful purpose, including without limiting the generality of the
foregoing, the determination of stockholders entitled to (i) receive notice
of or to vote at any meeting, (ii) receive payment of any dividend or other
distribution or allotment of any rights, (iii) receive or exercise rights
of purchase or of subscription for, or exchange or conversion of, shares or
other securities, subject to any contract right with respect thereto, or
(iv) participate in the execution of written consents, waivers or releases.
Said record date shall be not more than sixty (60) days nor less than ten
(10) days preceding the date of such meeting, the date fixed for the
payment of any dividend or distribution or the date fixed for the receipt
or the exercise of rights, as the case may be. If a record date shall not
be fixed, the record date for the determination of stockholders who are
entitled to notice of, or who are entitled to vote at, a meeting of
stockholders, shall be the close of business on the date next preceding the
day on which notice is given, or the close of business on the date next
preceding the day on which the meeting is held, as the case may be.
Section 7. Proxies. A person who is entitled to attend a
stockholders' meeting, to vote thereat, or to execute consents, waivers or
releases, may be represented at such meeting or vote thereat, and execute
consents, waivers and releases, and exercise any of his or her other
rights, by proxy or proxies appointed by a writing signed by such person.
Section 8. Notice of Business. At any meeting of the stockholders,
only such business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the Board of Directors or (b) by any
stockholder of the Corporation who is a stockholder of record at the time
of giving of the notice provided for in this Section 8, who shall be
entitled to vote at such meeting and who complies with the notice
procedures set forth in this Section 8. For business to be properly
brought before a stockholder meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
<PAGE> 65
EXHIBIT 3(b) (continued)
mailed and received at the principal executive offices of the Corporation
not less than 60 days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received no later than the
close of business on the 10th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of
the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (b) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the bylaws to
the contrary, no business shall be conducted at a stockholder meeting
except in accordance with the procedures set forth in this Section 8. The
chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that business was not properly brought before the meeting
and in accordance with the provisions of the bylaws, and if he should so
determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
ARTICLE II
Directors
Section 1. Number of Directors. Until changed in accordance with the
provisions of Article IX, below, the number of Directors of the Corporation
shall be ten (10).
Section 2. Election of Directors. Directors shall be elected at the
annual meeting of stockholders, but when the annual meeting is not held or
Directors are not elected thereat, they may be elected at a special meeting
called and held for that purpose. Such election shall be by ballot
whenever requested by any stockholder entitled to vote at such election;
but, unless such request is made, the election may be conducted in any
manner approved at such meeting. At each meeting of stockholders for the
election of Directors, the persons receiving the greatest number of votes
shall be Directors.
<PAGE> 66
EXHIBIT 3(b) (continued)
Section 3. Term of Office. Each Director shall hold office until the
annual meeting next succeeding his or her election and until his or her
successor is elected and qualified, or until his or her earlier
resignation, removal from office or death.
Section 4. Removal. All the Directors or any individual Director may
be removed from office, without assigning any cause, by the vote of the
holders of a majority of the stock entitled to vote in the election of
directors. In case of any such removal, a new Director may be elected at
the same meeting for the unexpired term of each Director removed.
Section 5. Vacancies. Vacancies in the Board of Directors may be
filled by a majority vote of the remaining Directors until an election to
fill such vacancies is had. Stockholders entitled to elect Directors shall
have the right to fill any vacancy on the Board (whether the same has been
temporarily filled by the remaining Directors or not) at any meeting of the
stockholders called for that purpose, and any Directors elected at any such
meeting of stockholders shall serve until the next annual election of
Directors and until their successors are elected and qualified.
Section 6. Quorum and Transaction of Business. A majority of the
whole authorized number of Directors shall constitute a quorum for the
transaction of business, except that a majority of the Directors in office
shall constitute a quorum for filling a vacancy on the Board. Whenever
less than a quorum is present at the time and place appointed for any
meeting of the Board, a majority of those present may adjourn the meeting
from time to time, until a quorum shall be present. The act of not less
than a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board.
Section 7. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places, within or without the
State of Delaware, as the Board of Directors may, by resolution or by-law,
from time to time, determine. The Secretary shall give notice of each such
resolution or by-law to any Director who was not present at the time the
same was adopted, but no further notice of such regular meeting need be
given.
Section 8. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President, or any
two members of the Board of Directors, and shall be held at such times and
places, within or without the State of Delaware, as may be specified in
such call.
<PAGE> 67
EXHIBIT 3(b) (continued)
Section 9. Notice of Meetings. Notice of the time and place of each
special meeting shall be given to each Director by the Secretary or by the
person or persons calling such meeting. Such notice need not specify the
purpose or purposes of the meeting and may be given in any manner or method
and at such time so that the Director receiving it may have reasonable
opportunity to participate in the meeting. Such notice shall, in all
events, be deemed to have been properly and duly given if mailed at least 7
days prior to the meeting and directed to the residence or business address
of each Director as shown upon the Secretary's records and, in the event of
a meeting to be held through the use of communications equipment, if the
notice sets forth the telephone number at which each Director may be
reached for purposes of participation in the meeting as shown upon the
Secretary's records and states that the Secretary must be notified if a
Director desires to be reached at a different telephone number. The giving
of notice shall be deemed to have been waived by any Director who shall
participate in such meeting and may be waived, in a writing, by any
Director either before or after such meeting.
Section 10. Compensation. The Directors who are not employees of the
Corporation shall be entitled to receive such reasonable compensation for
their services as may be fixed from time to time by resolution of the
Board, and expenses of attendance, if any, may be allowed for attendance at
each annual, regular or special meeting of the Board or other function, in
the Board's discretion. Nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of the Executive Committee or
of any other standing or special committee may by resolution of the Board
be allowed such compensation for their services as the Board may deem
reasonable, and additional compensation may be allowed to Directors for
special services rendered.
<PAGE> 68
EXHIBIT 3(b) (continued)
ARTICLE III
Committees
Section 1. Executive Committee. The Board of Directors may from time
to time, by resolution passed by a majority of the entire Board, create an
Executive Committee consisting of one or more Directors, the members of
which shall be elected by the Board of Directors to serve during the
pleasure of the Board. Provided, however, that the Chairman of the Board
shall be a member of the Executive Committee. If the Board of Directors
does not designate a chairman of the Executive Committee, the Executive
Committee shall elect a chairman from its own number. Except as otherwise
provided herein and in the resolution creating an Executive Committee, such
committee shall, during the intervals between the meetings of the Board of
Directors possess and may exercise all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be fixed to all papers
which may require it, but no such committee shall have the power or
authority to amend the Certificate of Incorporation, adopt an agreement of
merger or consolidation, recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and
assets, recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amend the by-laws of the Corporation.
Unless otherwise specifically provided in the resolution of the Board of
Directors or the Certificate of Incorporation, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance
of stock. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors. The Executive Committee shall keep full records and accounts of
its proceedings and transactions. All action by the Executive Committee
shall be reported to the Board of Directors at its meeting next succeeding
such action and shall be subject to control, revision and alteration by the
Board of Directors, provided that no rights of third persons shall be
prejudicially affected thereby.
Section 2. Nominating Committee. The Board of Directors may from
time to time, by resolution passed by a majority of the entire Board,
create a Nominating Committee consisting of one or more Directors, the
members of which shall be elected by the Board of Directors to serve during
the pleasure of the Board, provided that a majority of the members of the
Nominating Committee shall be Directors who are neither officers nor
employees of the Corporation or any subsidiary of the Corporation. If the
Board of Directors does not designate a chairman of the Nominating
Committee, the Nominating Committee shall elect a chairman from its own
<PAGE> 69
EXHIBIT 3(b) (continued)
number. Subject to the provisions this section and of Article I, Section 8
of these by-laws, the Nominating Committee shall have such authority as may
be delegated to it from time to time by the Board, in its discretion.
Section 3. Meetings of Executive and Nominating Committees. Subject
to the provisions of these By-Laws, the Executive Committee and Nominating
Committee shall fix their own rules of procedure, respectively, and shall
meet as provided by such rules or by resolutions of the Board of Directors,
and each such committee shall also meet at the call of the Chairman, the
President, the chairman of such committee or any two members of such
committee. Unless otherwise provided by such rules or by such resolutions,
the provisions of Section 8 of Article II relating to the notice required
to be given of meetings of the Board of Directors shall also apply to
meetings of the Executive Committee and Nominating Committee. A majority
of the Executive Committee or Nominating Committee, as applicable, shall be
necessary to constitute a quorum at a meeting of such committee. Each such
committee may act in a writing, or by telephone with written confirmation,
without a meeting, but no such action of such committee shall be effective
unless concurred in by all members of the committee.
Section 4. Other Committees. The Board of Directors may by resolution
provide for such other standing or special committees as it deems
desirable, and discontinue the same at its pleasure. Each such committee
shall have such powers and perform such duties, not inconsistent with law,
as shall be delegated to it by the Board of Directors.
ARTICLE IV
Officers
Section 1. Number and Titles. The officers of the Company shall be a
chairman of the board, if needed, a vice-chairman, if needed, a president,
one or more vice presidents, if needed, a secretary, one or more assistant
secretaries, if needed, a treasurer, and one or more assistant treasurers,
if needed. The board shall have the discretion to determine from time to
time whether or not either or both of a chairman and vice-chairman of the
board are needed, the number of vice presidents, if any, the Company shall
have, whether or not assistant secretaries and assistant treasurers are
needed, and, if so, the number of assistant secretaries and assistant
treasurers the Company shall have. If there is more than one vice
president, the board may, in its discretion, establish designations for the
vice presidencies so as to distinguish among them as to their functions or
their order, or both. Any two or more offices may be held by the same
person, but no officer shall execute, acknowledge, or verify any instrument
<PAGE> 70
EXHIBIT 3(b) (continued)
in more than one capacity if such instrument is required by law, the
Company's articles of incorporation, or these regulations to be executed,
acknowledged, or verified by two or more officers.
Section 2. Election, Terms of Office, Qualifications, and
Compensation. The officers shall be elected by the board of directors.
Each shall be elected for an indeterminate term and shall hold office
during the pleasure of the board of directors. The board of directors may
hold annual elections of officers; in that event, each such officer shall
hold office until his or her successor is elected and qualified unless he
earlier is removed by the board of directors. The chairman of the board,
if one is elected, shall be a director, but no other officer need be a
director. The other qualifications of all officers shall be such as the
board of directors may establish from time to time. The board of directors
shall have the authority to fix the compensation, if any, of each officer.
Section 3. Additional Officers, Agents, Etc. In addition to the
officers mentioned in Article IV, Section 1, the Company may have such
other officers, agents, and committees as the board of directors may deem
necessary and may appoint, each of whom or each member of which shall hold
office for such period, have such authority, and perform such duties as may
be provided in these by-laws or as may be determined by the board from time
to time. The board of directors may delegate to any officer or committee
the power to appoint any subordinate officer, agents, or committees. In
the absence of any officer, or for any other reason the board of directors
may deem sufficient, the board of directors may delegate, for the time
being, the powers and duties, or any of them, of such officer to any other
officer, or to any director.
Section 4. Removal. Any officer may be removed, either with or
without cause, at any time, by the board of directors at any meeting, the
notices (or waivers of notices) of which shall have specified that such
removal action was to be considered. Any officer appointed by an officer
or committee to which the board shall have delegated the power of
appointment may be removed, either with or without cause, by the committee
or superior officer (including successors) who made the appointment, or by
any committee or officer upon whom such power of removal may be conferred
by the board of directors.
Section 5. Resignations. Any officer may resign at any time by
giving written notice to the board of directors, the chairman, the
president, or the secretary. Any such resignation shall take effect at the
time specified therein. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
<PAGE> 71
EXHIBIT 3(b) (continued)
Section 6. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, shall be filled in
the manner prescribed for regular appointments or elections to such office.
Section 7. Powers, Authority, and Duties of Officers. Officers of
the Company shall have the powers and authority conferred and the duties
prescribed by law, in addition to those specified or provided for in these
regulations and such other powers, authority, and duties as may be
determined by the board of directors from time to time.
ARTICLE V
Indemnification and Insurance
Section 1. Indemnification in Non-Derivative Actions. The
Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the Corporation,
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses, including attorneys' fees, judgments, fines, and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit, or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his or her conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his or her conduct was unlawful.
<PAGE> 72
EXHIBIT 3(b) (continued)
Section 2. Indemnification in Derivative Actions. The Corporation
shall indemnify any person who was or is a party, or is threatened to be
made a party to any threatened, pending, or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the Corpora-
tion unless, and only to the extent that the Court of Chancery, or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the Court of Chancery or such
other court shall deem proper.
Section 3. Indemnification as Matter of Right. To the extent that a
director, officer, employee, or agent has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in
Sections 1 and 2 of this Article VI, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith.
Section 4. Determination of Conduct. Any indemnification under
Sections 1 and 2 of this Article VI, unless ordered by a court, shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee, or
agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 1 and 2 of this Article VI. Such
determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of Directors of the Corporation who were not
parties to such action, suit, or proceeding, or (b) if such a quorum is not
obtainable or if a quorum of disinterested Directors so directs, by
independent legal counsel in written opinion, or (c) by the stockholders.
Section 5. Advance Payment of Expenses. Expenses incurred in
defending any civil or criminal action, suit, or proceeding may be paid by
the Corporation in advance of the final disposition of such action, suit,
or proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee, or agent to repay such amount, if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
<PAGE> 73
EXHIBIT 3(b) (continued)
Section 6. Nonexclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of stockholders or disinterested Directors, or
otherwise, both as to action in his or her official capacity and as to
action in another capacity while holding such office.
Section 7. Liability Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under the provisions of this Article VI or of Section 145 of the Delaware
Corporation Law.
Section 8. Meaning of Certain Terms. For purposes of this Article
VI, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
For purposes of this Article VI, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such
Director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Article VI.
<PAGE> 74
EXHIBIT 3(b) (continued)
Section 9. Continuation of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
Certificates for Shares
Section 1. Form and Execution. Certificates for shares, certifying
the number of fully paid shares owned, shall be issued to each stockholder
in such form as shall be approved by the Board of Directors. Such
certificates shall be signed by the President or a Vice President and by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer; provided, however, that if such certificates are countersigned
by a transfer agent or registrar, the signatures of any of said officers
and the seal of the Corporation upon such certificates may be facsimiles,
engraved, stamped or printed. If any officer or officers, who shall have
signed, or whose facsimile signature shall have been used, printed or
stamped on any certificate or certificates for shares, shall cease to be
such officer or officers, because of death, resignation or otherwise,
before such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates, if authenticated by the
endorsement thereon of the signature of a transfer agent or registrar,
shall nevertheless be conclusively deemed to have been adopted by the
Corporation by the use and delivery thereof and shall be as effective in
all respects as though signed by a duly elected, qualified and authorized
officer or officers, and as though the person or persons who signed such
certificate or certificates, or whose facsimile signature or signatures
shall have been used thereon, had not ceased to be an officer or officers
of the Corporation.
Section 2. Registration of Transfer. Any certificate for shares of
the Corporation shall be transferable in person or by attorney upon the
surrender thereof to the Corporation or any transfer agent therefor (for
the class of shares represented by the certificate surrendered) properly
endorsed for transfer and accompanied by such assurances as the Corporation
or such transfer agent may require as to the genuineness and effectiveness
of each necessary endorsement.
<PAGE> 75
EXHIBIT 3(b) (continued)
Section 3. Lost, Destroyed or Stolen Certificates. A new share
certificate or certificates may be issued in place of any certificate
theretofore issued by the Corporation which is alleged to have been lost,
destroyed or wrongfully taken upon (i) the execution and delivery to the
Corporation by the person claiming the certificate to have been lost,
destroyed or wrongfully taken of an affidavit of that fact, specifying
whether or not, at the time of such alleged loss, destruction or taking,
the certificate was endorsed, and (ii) the furnishing to the Corporation of
indemnity and other assurances satisfactory to the Corporation and to all
transfer agents and registrars of the class of shares represented by the
certificate against any and all losses, damages, costs, expenses or
liabilities to which they or any of them may be subjected by reason of the
issue and delivery of such new certificate or certificates or in respect of
the original certificate.
Section 4. Registered Stockholders. A person in whose name shares
are of record on the books of the Corporation shall conclusively be deemed
the unqualified owner and holder thereof for all purposes and to have
capacity to exercise all rights of ownership. Neither the Corporation nor
any transfer agent of the Corporation shall be bound to recognize any
equitable interest in or claim to such shares on the part of any other
person, whether disclosed upon such certificate or otherwise, nor shall
they be obliged to see to the execution of any trust or obligation.
ARTICLE VII
Fiscal Year
The fiscal year of the Corporation shall end on such date as may be
fixed from time to time by the Board of Directors.
ARTICLE VIII
Seal
The Board of Directors may provide a suitable seal containing the name
of the Corporation. If deemed advisable by the Board of Directors,
duplicate seals may be provided and kept for the purposes of the
Corporation.
<PAGE> 76
EXHIBIT 3(b) (concluded)
ARTICLE IX
Amendments
These By-Laws may be amended, or new by-laws may be adopted, by the
Board of Directors; provided, that any by-law, other than an initial
by-law, which divides the Directors into classes having staggered terms
shall be adopted at any meeting of stockholders called for such purpose by
the affirmative vote of, or without a meeting by the written consent of,
the holders of shares entitling them to exercise a majority of the voting
power of the Corporation on such proposal.
<PAGE> 77
EXHIBIT 10(b)
INCENTIVE STOCK OPTION PLAN
GREIF BROS. CORPORATION
As Amended and Restated
1. PURPOSE
This Incentive Stock Option Plan, as amended and restated effective
September 2, 1997, (the "Plan") is intended as an incentive and to
encourage stock ownership by certain key employees of Greif Bros.
Corporation (the "Company") and its subsidiaries by the granting of stock
options as provided herein. It is intended that certain options issued
pursuant to the Plan will constitute incentive stock options (the
"Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the remainder
of the options issued pursuant to the Plan will constitute non-statutory
options. The Committee referred to in Section 2 shall determine which
options are to be Incentive Stock Options and which options are to be non-
statutory options and shall enter into option agreements with the
recipients accordingly. In this Plan where there is no contrary
indication, the provisions of the Plan apply to Incentive Stock Options and
non-statutory stock options.
2. ADMINISTRATION
(a) The Plan shall be administered by a committee (the "Committee") of at
least two persons which shall be either the Stock Option Committee of
the Board of Directors of the Company or such other committee as the
Board of Directors may designate comprised entirely of (i) "outside
directors" within the meaning of Section 162(m) of the Code, or any
successor provision, and the regulations and rulings thereunder; and
(ii) "non-employee directors" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor rule or regulation, as the Board of Directors of the
Company may from time to time designate. The Board of Directors may
remove from, add members to, or fill vacancies in the Committee.
(b) The Committee is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it may deem appropriate for the
conduct of meetings and proper administration of the Plan, and to make
such determinations under, and such interpretations of, and to take
such steps in connection with, the Plan or the options granted
thereunder as it may deem necessary or advisable.
(c) No person shall be a member of the Committee who is, or at any time
during the preceding one-year period was, eligible for selection as a
person to whom stock may be allocated or to whom stock options may be
granted pursuant to the Plan.
<PAGE> 78
EXHIBIT 10 (b) (continued)
3. ELIGIBILITY
Incentive Stock Options may be granted in such amounts of shares and to
such key employees of the Company or its subsidiaries as the Committee
shall select from time to time. No director who is not an officer or other
employee of the Company or its subsidiaries shall be eligible to receive
Incentive Stock Options under the Plan. Any individual may hold more than
one option.
4. STOCK
The stock to be subject to options under the Plan shall be shares of the
Company's Class A Common Stock which are authorized but unissued or held as
treasury shares. The aggregate number of shares of stock for which options
may be granted under the Plan from the original effective date of the Plan
shall not exceed 1,000,000 shares (as constituted after the two-for-one
stock split voted on at the special shareholders' meeting held on February
27, 1995), subject to adjustment in accordance with the terms of Section 10
hereof. The shares subject to the unexercised portion of any terminated or
expired options under the Plan may again be subjected to options under the
Plan.
5. TERMS AND CONDITIONS OF OPTIONS
(a) All options granted by the Committee pursuant to the Plan shall be
considered authorized by the Board of Directors and shall be evidenced
by stock option agreements in writing (stock option "agreements") in
such form and containing such terms and conditions as the Committee
shall prescribe from time to time in accordance with Regulation 16b-3
under the Exchange Act, the Plan and, with respect to Incentive Stock
Options, in accordance with Section 422 of the Code.
(b) An Incentive Stock Option shall not be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and
shall be exercisable during his lifetime only by him. A non-statutory
option (that is, a stock option that is not an Incentive Stock Option)
shall not be transferable by the optionee otherwise than by will or the
laws of descent and distribution, and shall be exercisable during his
lifetime only by him. Notwithstanding the foregoing, with the
permission of the Committee, a person who has been granted a non-
statutory option under the Plan, may transfer such option to a revocable
inter vivos trust as to which the option holder is the settlor or may
transfer such a stock option to a "permissible Transferee." A
Permissible Transferee shall be defined as any member of the immediate
family of the option holder, any trust, whether revocable or
irrevocable, solely for the benefit of members of the option holder's
immediate family, or any partnership whose only partners are members of
the option holder's immediate family. Any such transferee of a non-
statutory option shall remain subject to all of the terms and conditions
applicable to such non-statutory option and subject to the rules and
regulations prescribed by the Committee. A non-statutory option may not
be re-transferred by a Permissible Transferee except by will or the laws
<PAGE> 79
EXHIBIT 10 (b) (continued)
of descent and distribution and then only to another Permissible
Transferee.
(c) Notwithstanding any provision contained elsewhere in this Plan, during
any one calendar year, no person shall be granted options (either
Incentive Stock Options or non-statutory options) under this Plan
covering, in the aggregate, more than 100,000 shares of stock. For
purposes of this limitation, any options canceled during a calendar
year shall continue to be counted against the maximum number of shares
for which options may be granted in the calendar year in which the
canceled options were originally granted.
6. PRICE
The option price per share of each option granted under the Plan shall be
not less than 100% of the fair market value of a share of stock on the date
of grant of such option. An option shall be considered granted on the date
the Committee acts to grant the option or such later date as the Committee
shall specify. For purposes of the Plan, the fair market value of a share
shall be the last sale price of a share as reported on the NASDAQ National
Market on the last trading day prior to the date of grant.
7. OPTION PERIOD
Each stock option agreement shall set forth the period for which such
option is granted, which with respect to Incentive Stock Options shall not
exceed ten years from the date such option is granted ("the option
period").
8. 10 PERCENT SHAREHOLDER
Notwithstanding Sections 6 and 7 hereof, in the case of an individual who,
at the time an Incentive Stock Option is granted, owns stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company (or subsidiary of the Company), the option
price shall not be less than 110 percent of the fair market value of the
stock subject to the option at the time the option is granted, as
determined in good faith by the Committee, and the option shall not be
exercisable after the expiration of five years from the date it is granted.
9. MAXIMUM PER OPTIONEE
With respect to Incentive Stock Options, the aggregate fair market value as
determined by the Committee, of the stock for which an optionee may be
granted Incentive Stock Options under the Plan and any other plans of the
Company or its subsidiaries exercisable for the first time during any
calendar year shall not exceed $100,000. In the event that an optionee is
granted options under this Plan which, in the aggregate, exceed the
limitations of this Section 9, such options shall be treated as Incentive
Stock Options to the extent permissible under this Section 9 and the
remaining options shall be treated as non-statutory options.
<PAGE> 80
EXHIBIT 10 (b) (continued)
10. ADJUSMENT IN THE EVENT OF CHANGE OF STOCK
In the event of any change in the outstanding stock of the Company by
reason of stock dividends, recapitalizations, reorganizations, mergers,
consolidations, split-ups, combinations or exchanges of shares and the
like, the number and kind of shares which thereafter may be optioned and
sold under the Plan, the number and kind of shares under option in
outstanding stock option agreements and the purchase price per share
thereof shall be appropriately adjusted consistent with such change. The
determination of the Committee as to any adjustment shall be final and
conclusive. Notwithstanding the foregoing, any and all adjustments in
connection with an Incentive Stock Option shall comply in all respects with
Sections 422 and 424 of the Code and the regulations promulgated
thereunder.
11. EXERCISE OF OPTIONS
Each option may be exercised at any time during its option period, but not
earlier than two years from the date of the grant, subject to the
restrictions in the stock option agreement under which it is issued.
12. PAYMENT FOR OPTIONS
Within five business days following the date of exercise, the optionee
shall make full payment of the option price (i) in cash; (ii) with the
consent of the Committee, by tendering previously acquired shares of stock
(valued at their fair market value as of the date of exercise), or (iii)
with the consent of the Committee, in any combination of (i) and (ii). In
lieu of tendering previously acquired shares of stock in payment of the
option price, an optionee may make a constructive exchange of shares of
stock then owned by such optionee (the "Payment Shares") by complying with
the following procedures. If the Payment Shares are held by a registered
securities broker for the optionee in "street name," the optionee shall
provide the Company with a notarized statement attesting to the number of
shares owned that are intended to serve as Payment Shares. If the Payment
Shares are owned of record by such optionee, the optionee shall provide the
Company with the stock certificate numbers representing the shares which
are intended to serve as Payment Shares. Upon receipt of a notarized
statement regarding the ownership of the Payment Shares or confirmation of
the ownership of the Payment Shares by reference to the Company records,
whichever is applicable, the Company shall treat the Payment Shares as
being constructively exchanged and shall issue to the optionee a stock
certificate for the number of shares subject to the option exercise less
the number of Payment Shares.
13. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN
The Board of Directors of the Company may amend, modify or terminate the
Plan, at any time; provided, however, that no such action of the Board of
Directors, without approval of the shareholders may (a) increase the total
number of shares of stock for which options may be granted under the Plan,
except as contemplated in Section 10, (b) permit the granting of Incentive
Stock Options to anyone other than a key employee of the Company or its
<PAGE> 81
EXHIBIT 10 (b) (continued)
subsidiaries, (c) decrease the minimum option price with respect to
Incentive Stock Options (d) increase the maximum option periods with
respect to Incentive Stock Options, (e) increase, with respect to Incentive
Stock Options, the maximum per optionee set forth in Section 9, (f)
withdraw the administration of the Plan from the Committee, or (g) permit
any person while a member of the Committee to be eligible to receive or
hold an option under the Plan. No amendment, modification or termination
of the Plan shall in any manner affect any option theretofore granted to an
optionee under the Plan without the consent of the optionee or the
transferee of such option.
14. TERM OF THE PLAN
The Incentive Stock Option Plan became effective on the date of its
adoption by the Board of Directors following the approval of the Plan by
the holders of a majority of the shares of stock of the Company entitled to
vote at the annual meeting of shareholders on February 27, 1995. The Plan
shall terminate ten years, less one day, from the original effective date
of the Plan, or on such earlier date as may be determined by the Board of
Directors. Termination of the Plan, however, shall not affect the rights
of optionees under options theretofore granted to them, and all unexpired
options shall continue in force and operation after termination of the Plan
except as they may lapse or be terminated by their own terms and
conditions.
15. NON-STATUTORY OPTIONS
Included in the Plan are potential non-statutory options which, it is
recognized, may, by separate action of the Committee, be granted, subject
to provisions and conditions established by the Committee, to key persons
for whom the Plan does not suffice or to those who do not qualify for the
Plan because of not being employees of the Company or of any of its
subsidiaries.
16. LAWS AND REGULATIONS
(a) The Plan and all options granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable
thereto, and notwithstanding any provisions of this Plan or the options
granted hereunder, the holder of an option shall not be entitled to
exercise such option nor shall the Company be obligated to issue any
common stock under the Plan to the holder, if such exercise or issuance
shall constitute a violation by the holder or the Company of any
provisions of any such law or regulations.
(b) The Company, in its discretion, may postpone the issuance and delivery
of commons stock upon any exercise of an option until completion of any
stock exchange listing or registration or other qualification of such
common stock under any state or federal law, rule or regulation as the
Company may consider appropriate; and may require any person exercising
an option to make such representations and furnish such information as
it may consider appropriate in connection with the issuance of the
common stock in compliance with applicable law.
<PAGE> 82
EXHIBIT 10 (b) (concluded)
(c) Common stock issued and delivered upon exercise of an option shall be
subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the Company, in its
discretion, shall determine are necessary to satisfy applicable legal
requirements and obligations.
<PAGE> 83
EXHIBIT 11
<TABLE>
STATEMENTS RE: COMPUTATION OF PER SHARE EARNINGS
Net income per share was calculated using the following number of
shares for the periods presented:
<CAPTION>
Year Ended October 31,
1997 1996 1995
<S> <C> <C> <C>
Class A Common Stock 10,878,233 10,873,172 10,873,172
Class B Common Stock 12,001,793 12,021,793 13,252,073
Three Months Ended October 31,
1997 1996 1995
Class A Common Stock 10,892,550 10,873,172 10,873,172
Class B Common Stock 12,001,793 12,001,793 13,311,326
</TABLE>
<PAGE> 84
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
The following companies are wholly-owned subsidiaries of the Company
and are included in the consolidated financial statements:
Name of Subsidiary Incorporated Under Laws of
Barzon Corporation Delaware
Centralia Container, Inc. Illinois
Greif Board Corporation Delaware
Greif Containers Inc. Canada
Independent Container, Inc. Kentucky
Kyowva Corrugated Container Company, Inc. West Virginia
Michigan Packaging Company Delaware
Soterra, Incorporated Delaware
Tainer Transport, Inc. Delaware
Virginia Fibre Corporation Virginia
<PAGE> 85
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (File No. 333-26767) and on Form S-8
(File No. 333-26977) of Greif Bros. Corporation of our report dated
November 26, 1997, except as to Note 9, which is as of December 10, 1997,
which appears on page 45 of this Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement
Schedules, which appears on page 53 of this Form 10-K.
/s/ Price Waterhouse LLP
Columbus, Ohio
January 26, 1998
<PAGE> 86
EXHIBIT 24
Powers of Attorney for Directors
for Form 10-K Annual Reports
Each undersigned director of Greif Bros. Corporation, a Delaware
corporation (the "Company"), hereby constitutes and appoints Michael J.
Gasser and William B. Sparks, Jr., and each of them (with full power to
each of them to act alone), and his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or
her and in his or her name, place, and stead, in his or her capacity as a
director of the Company, to execute the Company's Form 10-K Annual Report
pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
for the Company's fiscal year ended October 31, 1997, for each fiscal year
thereafter, and any amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as the undersigned directors might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Each undersigned director of the Company has executed and delivered
this Power of Attorney on the date set forth opposite such director's
signature.
Signature of Director Execution Date
/s/ Michael J. Gasser December 4, 1997
Michael J. Gasser
/s/ Charles R. Chandler December 4, 1997
Charles R. Chandler
/s/ Michael H. Dempsey December 4, 1997
Michael H. Dempsey
/s/ Naomi C. Dempsey December 4, 1997
Naomi C. Dempsey
[Signatures continued on the next page]
<PAGE> 87
EXHIBIT 24 (concluded)
/s/ Daniel J. Gunsett December 4, 1997
Daniel J. Gunsett
/s/ Allan Hull December 4, 1997
Allan Hull
/s/ Robert C. Macauley December 4, 1997
Robert C. Macauley
/s/ David J. Olderman December 4, 1997
David J. Olderman
/s/ William B. Sparks, Jr. December 4, 1997
William B. Sparks, Jr.
/s/ J Maurice Struchen December 4, 1997
J Maurice Struchen
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Form 10-K and is
qualified in its entirety by reference to such Form 10-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<CASH> 17,719
<SECURITIES> 7,533
<RECEIVABLES> 82,429
<ALLOWANCES> (847)
<INVENTORY> 44,892
<CURRENT-ASSETS> 172,918
<PP&E> 599,459
<DEPRECIATION> (261,662)
<TOTAL-ASSETS> 550,089
<CURRENT-LIABILITIES> 60,408
<BONDS> 43,648
0
0
<COMMON> 9,739
<OTHER-SE> 390,399
<TOTAL-LIABILITY-AND-EQUITY> 550,089
<SALES> 648,984
<TOTAL-REVENUES> 674,583
<CGS> 563,665
<TOTAL-COSTS> 563,665
<OTHER-EXPENSES> 78,743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,670
<INCOME-PRETAX> 29,505
<INCOME-TAX> 11,419
<INCOME-CONTINUING> 18,086
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,086
<EPS-PRIMARY> .64<F1>
<EPS-DILUTED> .64<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 $.93.
</FN>
</TABLE>
