GREIF BROS. CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 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 propor-
tion 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 Six Months Ended
April 30, April 30,
1997 1996 1997 1996
Class A Common Stock $.12 $.08 $.36 $.32
Class B Common Stock $.18 $.12 $.53 $.47
NOTE 3 - CALCULATION OF EARNINGS PER SHARE
Earnings per share were calculated using the following
number of shares for the periods presented:
Three Months Ended Six Months Ended
April 30, April 30,
Class A Common Stock 10,873,172 shares 10,873,172 shares
Class B Common Stock 12,001,793 shares 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. On March 26, 1997, the Company acquired the
assets of two steel drum manufacturing plants with locations in
Merced, California and Oakville, Ontario. These 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 effect of these acquisitions were not
significant.
Subsequent to April 30, 1997, the Company purchased all
of the outstanding common stock of Independent Container, Inc., a
corrugated container company, located in Louisville, Kentucky,
Ferdinand, Indiana and Erlanger, Kentucky.
NOTE 6 - RECLASSIFICATIONS
Certain prior year amounts have been reclassified to
conform to the 1997 presentation.
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 6-month periods ended April 30, 1997 and April 30, 1996.
Net sales decreased 4% during the current period compared
to the previous period. This decrease was principally 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
did not fluctuate significantly from the prior year.
The increase in other income was primarily due to a gain
on the sale of an office building and an injection molding
facility.
The cost of products sold as a percentage of sales
increased from 81.7% in 1996 to 87.3% in 1997. This increase is
primarily the result of lower net sales of the containerboard
segment without a corresponding reduction in the cost of products
sold.
The increase in interest expense is due to more long term
obligations than the prior year.
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 as of April 30, 1997 is an indication
of the continuation of the Company's strong liquidity.
Capital expenditures were $22,224,000 during the six
months ended April 30, 1997. These capital expenditures were
principally needed to replace and improve equipment.
In November 1996, the Company acquired the assets of Aero
Box Company, a manufacturer of corrugated containers, located in
Roseville, Michigan. In March 1997, the Company purchased the
assets of two steel drum plants with locations in Merced,
California and Oakville, Ontario.
The Company has approved future purchases, primarily for
equipment, of approximately $17 million. Self-financing and low
interest rate borrowing has been the primary source for financing
such capital expenditures.
Subsequent to April 30, 1997, the Company acquired all of
the outstanding common stock of Independent Container, Inc., a
corrugated container company, located in Louisville, Kentucky,
Ferdinand, Indiana and Erlanger, Kentucky.
The increase in long term obligations since year-end is
primarily due to the purchase of a corrugated container company,
two steel drum operations, improvements related to Greif Board
Corporation=s machinery and equipment and other capital
expenditures.
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 April 30,
1997, the consolidated statements of income for the 6-month
periods ended April 30, 1997 and 1996, and the consolidated
statements of cash flows for the 6-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 June 11, 1997
John K. Dieker
Controller