UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-566
GREIF, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 31-4388903 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 425 Winter Road, Delaware, Ohio | 43015 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (740) 549-6000
Not Applicable
Former name, former address and former fiscal year, if changed since last report.
Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
The number of shares outstanding of each of the issuer’s classes of common stock at the close of business on April 30, 2004 was as follows:
| Class A Common Stock |
10,797,605 shares | |
| Class B Common Stock |
11,661,189 shares |
PART I. FINANCIAL INFORMATION
| ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS |
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except per share amounts)
| Three months ended April 30, |
Six months ended April 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net sales |
$ | 542,189 | $ | 470,807 | $ | 1,011,049 | $ | 905,485 | ||||||||
| Costs of products sold |
452,928 | 388,564 | 852,338 | 747,513 | ||||||||||||
| Gross profit |
89,261 | 82,243 | 158,711 | 157,972 | ||||||||||||
| Selling, general and administrative expenses |
55,745 | 59,000 | 106,770 | 118,501 | ||||||||||||
| Restructuring charges |
12,278 | 17,449 | 27,537 | 18,988 | ||||||||||||
| Gain on sale of assets |
1,122 | 1,934 | 5,231 | 2,345 | ||||||||||||
| Operating profit |
22,360 | 7,728 | 29,635 | 22,828 | ||||||||||||
| Interest expense, net |
10,716 | 13,923 | 22,963 | 27,477 | ||||||||||||
| Other income, net |
694 | 2,138 | 916 | 2,362 | ||||||||||||
| Income (loss) before income tax expense (benefit) and equity in earnings of affiliates and minority interests |
12,338 | (4,057 | ) | 7,588 | (2,287 | ) | ||||||||||
| Income tax expense (benefit) |
3,800 | (1,298 | ) | 2,337 | (732 | ) | ||||||||||
| Equity in earnings of affiliates and minority interests |
(89 | ) | (1,654 | ) | (168 | ) | (2,749 | ) | ||||||||
| Income (loss) before cumulative effect of change in accounting principle |
8,449 | (4,413 | ) | 5,083 | (4,304 | ) | ||||||||||
| Cumulative effect of change in accounting principle |
— | — | — | 4,822 | ||||||||||||
| Net income (loss) |
$ | 8,449 | $ | (4,413 | ) | $ | 5,083 | $ | 518 | |||||||
| Basic and diluted earnings (loss) per share: |
||||||||||||||||
| Class A Common Stock (before cumulative effect) |
$ | 0.30 | $ | (0.16 | ) | $ | 0.18 | $ | (0.15 | ) | ||||||
| Class A Common Stock (after cumulative effect) |
$ | 0.30 | $ | (0.16 | ) | $ | 0.18 | $ | 0.02 | |||||||
| Class B Common Stock (before cumulative effect) |
$ | 0.45 | $ | (0.24 | ) | $ | 0.27 | $ | (0.23 | ) | ||||||
| Class B Common Stock (after cumulative effect) |
$ | 0.45 | $ | (0.24 | ) | $ | 0.27 | $ | 0.02 | |||||||
See accompanying Notes to Consolidated Financial Statements
2
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| April 30, 2004 |
October 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 29,592 | $ | 49,767 | ||||
| Trade accounts receivable, less allowance of $12,013 in 2004 and $11,225 in 2003 |
306,462 | 294,957 | ||||||
| Inventories |
160,407 | 167,157 | ||||||
| Net assets held for sale |
14,330 | 6,311 | ||||||
| Deferred tax assets |
8,898 | 10,875 | ||||||
| Other current assets |
60,393 | 54,390 | ||||||
| 580,082 | 583,457 | |||||||
| Long-term assets |
||||||||
| Goodwill, net of amortization |
242,707 | 252,309 | ||||||
| Other intangible assets, net of amortization |
28,701 | 30,654 | ||||||
| Investment in affiliates |
5,395 | 4,421 | ||||||
| Other long-term assets |
64,262 | 47,995 | ||||||
| 341,065 | 335,379 | |||||||
| Properties, plants and equipment |
||||||||
| Timber properties, net of depletion |
88,367 | 86,437 | ||||||
| Land |
103,183 | 100,615 | ||||||
| Buildings |
315,275 | 320,229 | ||||||
| Machinery and equipment |
822,212 | 831,815 | ||||||
| Capital projects in progress |
44,498 | 36,522 | ||||||
| 1,373,535 | 1,375,618 | |||||||
| Accumulated depreciation |
(492,283 | ) | (463,243 | ) | ||||
| 881,252 | 912,375 | |||||||
| $ | 1,802,399 | $ | 1,831,211 | |||||
See accompanying Notes to Consolidated Financial Statements
3
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| April 30, 2004 |
October 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 158,906 | $ | 158,333 | ||||
| Accrued payrolls and employee benefits |
34,603 | 43,126 | ||||||
| Restructuring reserves |
18,911 | 15,972 | ||||||
| Short-term borrowings |
20,200 | 15,605 | ||||||
| Current portion of long-term debt |
— | 3,000 | ||||||
| Other current liabilities |
66,708 | 76,282 | ||||||
| 299,328 | 312,318 | |||||||
| Long-term liabilities |
||||||||
| Long-term debt |
624,114 | 643,067 | ||||||
| Deferred tax liability |
159,778 | 159,825 | ||||||
| Postretirement benefit liability |
48,683 | 48,504 | ||||||
| Other long-term liabilities |
85,930 | 93,047 | ||||||
| 918,505 | 944,443 | |||||||
| Minority interest |
1,532 | 1,886 | ||||||
| Shareholders’ equity |
||||||||
| Common stock, without par value |
17,975 | 12,207 | ||||||
| Treasury stock, at cost |
(63,772 | ) | (64,228 | ) | ||||
| Retained earnings |
678,353 | 681,043 | ||||||
| Accumulated other comprehensive loss: |
||||||||
| - foreign currency translation |
(10,549 | ) | (15,314 | ) | ||||
| - interest rate derivatives |
(10,270 | ) | (12,938 | ) | ||||
| - minimum pension liability |
(28,703 | ) | (28,206 | ) | ||||
| 583,034 | 572,564 | |||||||
| $ | 1,802,399 | $ | 1,831,211 | |||||
See accompanying Notes to Consolidated Financial Statements
4
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
| For the six months ended April 30, |
2004 |
2003 |
||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 5,083 | $ | 518 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation, depletion and amortization |
52,807 | 43,527 | ||||||
| Asset impairments |
2,252 | 1,698 | ||||||
| Deferred income taxes |
3,851 | 5,136 | ||||||
| Gain on disposals of properties, plants and equipment, net |
(5,231 | ) | (2,345 | ) | ||||
| Equity in earnings of affiliates, net of dividends received, and minority interests |
(1,328 | ) | 161 | |||||
| Cumulative effect of change in accounting principle |
— | (4,822 | ) | |||||
| Increase (decrease) in cash from changes in certain assets and liabilities: |
||||||||
| Trade accounts receivable |
(8,200 | ) | 1,601 | |||||
| Inventories |
8,153 | (7,459 | ) | |||||
| Other current assets |
(5,615 | ) | 12,921 | |||||
| Other long-term assets |
(6,674 | ) | (658 | ) | ||||
| Accounts payable |
(2,167 | ) | (2,299 | ) | ||||
| Accrued payroll and employee benefits |
(8,423 | ) | (9,797 | ) | ||||
| Restructuring reserves |
2,939 | 6,018 | ||||||
| Other current liabilities |
(11,502 | ) | (3,932 | ) | ||||
| Postretirement benefit liability |
179 | (1,520 | ) | |||||
| Other long-term liabilities |
(4,607 | ) | (9,942 | ) | ||||
| Net cash provided by operating activities |
21,517 | 28,806 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of properties, plants and equipment |
(28,096 | ) | (22,988 | ) | ||||
| Proceeds on disposals of properties, plants and equipment |
5,666 | 4,826 | ||||||
| Net cash used in investing activities |
(22,430 | ) | (18,162 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Payments on long-term debt |
(21,952 | ) | (8,220 | ) | ||||
| Proceeds from short-term borrowings |
4,252 | 7,877 | ||||||
| Dividends paid |
(7,774 | ) | (7,770 | ) | ||||
| Acquisitions of treasury stock |
(29 | ) | (1,031 | ) | ||||
| Exercise of stock options |
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