GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
NOTE 1 - CAPITAL STOCK AND RETAINED EARNINGS
Class A Common Stock is entitled to cumulative dividends of 1 cent a
share per year after which Class B Common Stock is entitled to non-cumulative
dividends up to 1/2 cent a share per year. Further distribution in any year
must be made in proportion of 1 cent a share for Class A Common Stock to 1-1/2
cents a share for Class B Common Stock. The Class A Common Stock shall have
no voting power nor shall it be entitled to notice of meetings of the
stockholders, all rights to vote and all voting power being vested exclusively
in the Class B Common Stock unless four quarterly cumulative dividends upon
the Class A Common Stock are in arrears. There is no cumulative voting.
NOTE 2 - DIVIDENDS PER SHARE
The following dividends per share were paid during the period indicated,
Three Months Ended Nine Months Ended
July 31, July 31,
1996 1995 1996 1995
Class A Common Stock $.08 $.06 $.40 $.34
Class B Common Stock $.12 $.09 $.59 $.50
NOTE 3 - CALCULATION OF NET INCOME PER SHARE
Net income per share was calculated using the following number of shares
for the periods presented:
Three Months Ended Nine Months Ended
July 31, July 31,
Class A Common Stock 10,873,172 shares 10,873,172 shares
Class B Common Stock 12,001,793 shares 12,028,460 shares
NOTE 4 - INVENTORIES
Inventories are comprised principally of raw materials.
NOTE 5 - TREASURY SHARES ACQUIRED
Effective November 6, 1995, Macauley & Company (the Partnership) in which
the Company was a limited partner, was liquidated. Prior to the liquidation,
the Partnership held Class B Common Stock (2,400,000 shares) of the Company.
Upon liquidation, the Company received 1,200,000 shares of the Class B Common
Stock. The Company recorded the liquidation by crediting interest in
partnership and charging an equal amount to treasury stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Historically, revenues or earnings may or may not be representative of
future operations because of various economic factors. The following
comparative information is presented for the three-month and nine-month
periods ended July 31, 1996 and July 31, 1995.
Net sales decreased during the current period compared to the previous
period. This decrease was principally the result of decreases in the
containerboard segment, which was significantly affected by lower sales prices
of the products in this segment.
For the quarter ended July 31, 1996, the gain on sales of timber and
timber properties increased since the prior year due to timber properties sold
in Nova Scotia, Canada.
The cost of products sold as a percentage of sales increased since the
prior year. The profit margins of the containerboard segment were lower as
compared to the previous period due to a reduction in the sales prices of its
products without a corresponding reduction in its costs.
Liquidity and Capital Resources
As indicated in the Consolidated Balance Sheet, elsewhere in this report
and discussed in greater detail in the 1995 Annual Report to Shareholders, the
Company is dedicated to maintaining a strong financial position. It is our
belief that this dedication is extremely important during all economic times.
The current ratio as of July 31, 1996 is an indication of the
continuation of the Company's strong liquidity.
As discussed in the 1995 Annual Report, the Company is subject to the
economic conditions of its customers. During this period, the Company has
been able to utilize its developed financial position to meet its continued
business needs.
During the nine months ended July 31, 1996, the Company generated
$74,499,000 of cash from operations. Capital expenditures were $51,413,000
during this same period. These capital expenditures were principally related
to a paper mill modernization program in Virginia as well as replacing and
improving equipment.
The Company has approved future purchases, primarily for equipment, of
approximately $38 million. Self-financing and low interest rate borrowing has
been the primary source for financing such capital expenditures.
The reduction in trade accounts receivable since year-end is due to lower
sales during the third quarter of fiscal 1996 compared to the third quarter of
fiscal 1995. Inventory and accounts payable balances are lower primarily due
to a decrease in certain raw material prices.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.)Exhibits.
None.
(b.)Reports on Form 8-K.
No events occurred requiring Form 8-K to be filed.
OTHER COMMENTS
The information furnished herein reflects all adjustments which are, in
the opinion of management, necessary for a fair presentation of the consolidated
balance sheet as of July 31, 1996, the consolidated statement of income for
the 9-month periods ended July 31, 1996 and 1995, and the consolidated
statement of cash flows for the 9-month periods then ended. These financial
statements are unaudited; however, at year end an audit will be made for the
fiscal year by our independent accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Greif Bros. Corporation
(Registrant)
Date September 9, 1996
John K. Dieker
Controller