GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1997
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
January 31,
1997 1996
Class A Common Stock $.24 $.24
Class B Common Stock $.35 $.35
NOTE 3 - CALCULATION OF NET INCOME PER SHARE
Net income per share was calculated using the following
number of shares for the period presented:
Class A Common Stock - 10,873,172 shares
Class B Common Stock - 12,001,793 shares
NOTE 4 - 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.
NOTE 5 - ACQUISITIONS
On November 8, 1996, the Company purchased the assets of
Aero Box Company, a corrugated container company, located in
Roseville, Michigan. This acquisition has 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 the business from the date of acquisition. Pro forma
results of operations have not been presented because the effect
of this acquisition was not significant.
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 3-month periods ended January 31, 1997 and January 31, 1996.
Net sales decreased 5% during the current quarter compared
to the previous period. This decrease was primarily the result
of lower sales in the containerboard segment, which was
significantly affected by lower sales prices of its products.
The lower prices were caused by the continued weakness in the
containerboard market resulting from excess capacity of
containerboard. The net sales of the shipping containers segment
remained about the same in comparison to the prior year's
quarter.
The increase in other income was primarily due to a gain
on the sale of an office building.
The cost of products sold as a percentage of sales
increased slightly as compared to the prior year. This increase
is primarily the result of lower net sales of the containerboard
segment without a corresponding reduction, except for raw
materials, in the cost of products sold.
Liquidity and Capital Resources
As indicated in the Consolidated Balance Sheet, elsewhere
in this report and discussed in greater detail in the 1996 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.
As discussed in the 1996 Annual Report, the Company is
subject to the economic conditions of the market in which it
operates. During this period, the Company has been able to
utilize its developed financial position to meet its continued
business needs.
The current ratio of 3.3:1 as of January 31, 1997 is an
indication of the continuation of the Company's strong liquidity.
The increase in long term obligations since year-end is
due to the debt incurred in connection with the purchase of Aero
Box Company, financing to fund improvements related to machinery
and equipment for Greif Board Corporation, a subsidiary of the
Company, and other capital expenditures.
Capital expenditures were $15,354,000 during the three
months ended January 31, 1997. These capital expenditures were
principally needed to replace and improve equipment.
Effective November 8, 1996, the Company acquired the
assets of Aero Box Company, a manufacturer of corrugated boxes,
located in Roseville, Michigan.
The Company has approved future purchases, primarily for
equipment, of approximately $20 million. It is anticipated that
self-financing and bank borrowing will be the primary source for
financing such capital expenditures.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a.)The Company held its Annual Meeting of Stockholders on
February 24, 1997.
(b.)At the Annual Meeting of Stockholders, the following
nominees were elected to the Board of Directors:
Charles R. Chandler
Michael H. Dempsey
Naomi C. Dempsey
Michael J. Gasser
Daniel J. Gunsett
Allan Hull
Robert C. Macauley
David J. Olderman
William B. Sparks, Jr.
J Maurice Struchen
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 January 31,
1997, the consolidated statement of income for the 3-month
periods ended January 31, 1997 and 1996, and the consolidated
statement of cash flows for the 3-month periods then ended.
These financial statements are unaudited; however, at year-end an
audit will be made for the fiscal year by 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 March 6, 1997 John K. Dieker
Controller (Principal Accounting Officer)