GREIF INC - 10-Q Quarterly Report

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 July 31, 2004

¨	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 July 31, 2004 was as follows:


Class A Common Stock		10,946,637 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 July 31,						Nine months ended July 31,
	2004			2003			2004			2003
Net sales	$	584,814		$	496,755		$	1,595,863		$	1,402,240
Costs of products sold		484,921			407,714			1,337,259			1,155,227

Gross profit		99,893			89,041			258,604			247,013

Selling, general and administrative expenses		57,105			54,622			163,875			173,123
Restructuring charges		12,324			16,580			39,861			35,568
Gain on sale of assets		1,290			3,407			6,521			5,752

Operating profit		31,754			21,246			61,389			44,074

Interest expense, net		10,885			12,545			33,848			40,022
Other income (expense), net		292			(1,816	)		1,208			546

Income before income tax expense and equity in earnings of affiliates and minority interests		21,161			6,885			28,749			4,598

Income tax expense		6,000			2,203			8,337			1,471
Equity in earnings of affiliates and minority interests		(292	)		(1,098	)		(460	)		(3,847	)

Income (loss) before cumulative effect of change in accounting principle		14,869			3,584			19,952			(720	)

Cumulative effect of change in accounting principle		—			—			—			4,822

Net income	$	14,869		$	3,584		$	19,952		$	4,102

Basic earnings (loss) per share:
Class A Common Stock (before cumulative effect)	$	0.52		$	0.13		$	0.71		$	(0.02	)
Class A Common Stock (after cumulative effect)	$	0.52		$	0.13		$	0.71		$	0.15
Class B Common Stock (before cumulative effect)	$	0.79		$	0.19		$	1.06		$	(0.04	)
Class B Common Stock (after cumulative effect)	$	0.79		$	0.19		$	1.06		$	0.21

Diluted earnings (loss) per share:
Class A Common Stock (before cumulative effect)	$	0.51		$	0.13		$	0.70		$	(0.02	)
Class A Common Stock (after cumulative effect)	$	0.51		$	0.13		$	0.70		$	0.15
Class B Common Stock (before cumulative effect)	$	0.79		$	0.19		$	1.06		$	(0.04	)
Class B Common Stock (after cumulative effect)	$	0.79		$	0.19		$	1.06		$	0.21

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

ASSETS


	July 31, 2004			October 31, 2003
	(Unaudited)

Current assets
Cash and cash equivalents	$	25,013		$	49,767
Trade accounts receivable, less allowance of $12,535 in 2004 and $10,286 in 2003		344,365			294,957
Inventories		175,769			167,157
Net assets held for sale		13,945			6,311
Deferred tax assets		11,238			10,875
Other current assets		58,122			54,390

		628,452			583,457

Long-term assets
Goodwill, net of amortization		241,975			252,309
Other intangible assets, net of amortization		28,535			30,654
Investment in affiliates		5,165			4,421
Other long-term assets		66,412			47,995

		342,087			335,379

Properties, plants and equipment
Timber properties, net of depletion		127,491			119,573
Land		67,645			67,479
Buildings		315,214			320,229
Machinery and equipment		829,117			831,815
Capital projects in progress		49,343			36,522

		1,388,810			1,375,618
Accumulated depreciation		(510,985	)		(463,243	)

		877,825			912,375

	$	1,848,364		$	1,831,211

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY


	July 31, 2004			October 31, 2003
	(Unaudited)

Current liabilities
Accounts payable	$	198,412		$	158,333
Accrued payrolls and employee benefits		38,318			43,126
Restructuring reserves		16,013			15,972
Short-term borrowings		15,602			15,605
Current portion of long-term debt		—			3,000
Other current liabilities		79,589			76,282

		347,934			312,318

Long-term liabilities
Long-term debt		601,622			643,067
Deferred tax liability		165,751			159,825
Postretirement benefit liability		49,282			48,504
Other long-term liabilities		85,067			93,047

		901,722			944,443

Minority interest		1,700			1,886

Shareholders’ equity
Common stock, without par value		22,038			12,207
Treasury stock, at cost		(63,449	)		(64,228	)
Retained earnings		688,685			681,043
Accumulated other comprehensive loss:
- foreign currency translation		(12,289	)		(15,314	)
- interest rate derivatives		(8,859	)		(12,938	)
- minimum pension liability		(29,118	)		(28,206	)

		597,008			572,564

	$	1,848,364		$	1,831,211

See accompanying Notes to Consolidated Financial Statements

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)


For the nine months ended July 31,	2004			2003
Cash flows from operating activities:
Net income	$	19,952		$	4,102
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		77,134			65,769
Asset impairments		2,581			5,963
Deferred income taxes		8,766			6,764
Gain on disposals of properties, plants and equipment, net		(6,520	)		(3,945	)
Equity in earnings of affiliates, net of dividends received, and minority interests		(930	)		(1,176	)
Cumulative effect of change in accounting principle		—			(4,822	)
Increase (decrease) in cash from changes in certain assets and liabilities:
Trade accounts receivable		(45,482	)		(12,745	)
Inventories		(6,785	)		(8,920	)
Other current assets		(3,212	)		5,885
Other long-term assets		(8,088	)		(162	)
Accounts payable		35,641			15,916
Accrued payroll and employee benefits		(4,808	)		(11,347	)
Restructuring reserves		41			9,184
Other current liabilities		814			(30	)
Postretirement benefit liability		778			(1,109	)
Other long-term liabilities		(11,016	)		(11,333	)

Net cash provided by operating activities		58,866			57,994

Cash flows from investing activities: