|
|
|
|
Delaware
|
|
001-00566
|
31-4388903
|
(State or other jurisdiction
of incorporation)
|
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
425 Winter Road, Delaware, Ohio
|
43015
|
||
(Address of principal executive offices)
|
(Zip Code)
|
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
|
|
Exhibit No.
|
|
Description
|
|
Consent of Ernst & Young LLP, independent auditors of Paperboard Parent, Inc.
|
|
|
The audited consolidated financial statements of Paperboard Parent, Inc. and subsidiaries for the years ended December 31, 2018 and 2017.
|
|
|
Unaudited pro forma condensed consolidated financial statements of Greif Inc. and subsidiaries, giving effect to the Caraustar acquisition and related financing transactions as of and for the year ended October 31, 2018.
|
|
GREIF, INC.
|
|
Date: April 25, 2019
|
By
|
/s/ Lawrence A. Hilsheimer
|
|
|
Lawrence A. Hilsheimer,
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
PAPERBOARD PARENT, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
|
|
Page
|
|
|
|
|
INDEPENDENT AUDITOR’S REPORT
|
1
|
|
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2018 AND 2017, STATEMENTS OF COMPREHENSIVE LOSS, CHANGES IN SHAREHOLDERS’ DEFICIT AND CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017:
|
|
|
Consolidated Balance Sheets
|
2-3
|
|
Consolidated Statements of Comprehensive Loss
|
4
|
|
Consolidated Statements of Changes in Shareholders’ Deficit
|
5
|
|
Consolidated Statements of Cash Flows
|
6
|
|
Notes to Consolidated Financial Statements
|
7-31
|
|
PAPERBOARD PARENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2018 AND 2017
(In thousands)
|
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
8,305
|
|
|
$
|
16,033
|
|
Receivables — net of allowances for doubtful accounts, returns, and discounts of $2,905 and $2,612 at December 31, 2018 and December 31, 2017, respectively
|
|
143,648
|
|
|
131,937
|
|
||
Inventories, net
|
|
98,438
|
|
|
87,881
|
|
||
Prepaid expenses
|
|
4,998
|
|
|
5,039
|
|
||
Prepaid income taxes
|
|
1,352
|
|
|
640
|
|
||
Other current assets
|
|
2,409
|
|
|
1,811
|
|
||
Assets held for sale
|
|
—
|
|
|
2,376
|
|
||
Total current assets
|
|
259,150
|
|
|
245,717
|
|
||
|
|
|
|
|
||||
PROPERTIES, PLANT, AND EQUIPMENT:
|
|
|
|
|
||||
Land
|
|
66,205
|
|
|
65,095
|
|
||
Buildings
|
|
87,262
|
|
|
83,965
|
|
||
Machinery and equipment
|
|
449,680
|
|
|
418,435
|
|
||
Capital projects in progress
|
|
49,429
|
|
|
35,089
|
|
||
Total property, plant, and equipment
|
|
652,576
|
|
|
602,584
|
|
||
Less accumulated depreciation
|
|
(193,996
|
)
|
|
(148,567
|
)
|
||
Property, plant, and equipment, net
|
|
458,580
|
|
|
454,017
|
|
||
GOODWILL, NET
|
|
263,060
|
|
|
259,600
|
|
||
OTHER INTANGIBLE ASSETS, NET
|
|
127,732
|
|
|
151,655
|
|
||
DEFERRED TAX ASSETS
|
|
6,597
|
|
|
956
|
|
||
RESTRICTED CASH AND CASH EQUIVALENTS
|
|
1,416
|
|
|
1,100
|
|
||
OTHER LONG TERM ASSETS
|
|
—
|
|
|
878
|
|
||
TOTAL ASSETS
|
|
$
|
1,116,535
|
|
|
$
|
1,113,923
|
|
|
|
|
|
|
||||
See accompanying Notes to Consolidated Financial Statements.
|
PAPERBOARD PARENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2018 AND 2017
(In thousands, except share data)
|
|
|
2018
|
|
2017
|
||||
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
8,600
|
|
|
$
|
8,600
|
|
Accounts payable
|
|
101,209
|
|
|
114,840
|
|
||
Accrued payroll and employee benefits
|
|
20,394
|
|
|
13,990
|
|
||
Other current liabilities
|
|
34,504
|
|
|
32,487
|
|
||
Total current liabilities
|
|
164,707
|
|
|
169,917
|
|
||
|
|
|
|
|
||||
LONG-TERM DEBT, less current maturities
|
|
856,103
|
|
|
850,644
|
|
||
DEFERRED TAX LIABILITY
|
|
34,001
|
|
|
29,269
|
|
||
PENSION LIABILITY
|
|
72,157
|
|
|
59,136
|
|
||
OTHER LONG-TERM LIABILITIES
|
|
8,201
|
|
|
9,730
|
|
||
|
|
|
|
|
||||
SHAREHOLDERS' DEFICIT:
|
|
|
|
|
||||
Preferred stock, $0.001 par value - authorized, 25,000 shares; issued no shares
|
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value - authorized, 300,000 shares; 123,241 and 123,132 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
127,568
|
|
|
127,083
|
|
||
Accumulated deficit
|
|
(119,059
|
)
|
|
(128,063
|
)
|
||
Accumulated other comprehensive loss:
|
|
|
|
|
||||
Minimum pension liabilities
|
|
(24,091
|
)
|
|
(1,759
|
)
|
||
Foreign currency translation
|
|
(3,052
|
)
|
|
(2,034
|
)
|
||
Total accumulated other comprehensive loss
|
|
(27,143
|
)
|
|
(3,793
|
)
|
||
Total shareholders' deficit
|
|
(18,634
|
)
|
|
(4,773
|
)
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
$
|
1,116,535
|
|
|
$
|
1,113,923
|
|
|
|
|
|
|
||||
See accompanying Notes to Consolidated Financial Statements.
|
PAPERBOARD PARENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In thousands)
|
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
SALES
|
|
$
|
1,373,824
|
|
|
$
|
1,311,424
|
|
COST OF PRODUCTS SOLD
|
|
1,107,429
|
|
|
1,109,469
|
|
||
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
|
|
182,214
|
|
|
159,301
|
|
||
RESTRUCTURING CHARGES
|
|
495
|
|
|
6,382
|
|
||
GOODWILL IMPAIRMENT
|
|
—
|
|
|
31,725
|
|
||
(GAIN) LOSS ON DISPOSAL OF PROPERTIES, PLANTS AND EQUIPMENT, NET
|
|
2,151
|
|
|
1,540
|
|
||
INCOME FROM OPERATIONS
|
|
81,535
|
|
|
3,007
|
|
||
OTHER (EXPENSE) INCOME:
|
|
|
|
|
||||
Interest expense, net
|
|
(73,756
|
)
|
|
(74,081
|
)
|
||
Other income — net
|
|
5,394
|
|
|
6,949
|
|
||
Total other expense
|
|
(68,362
|
)
|
|
(67,132
|
)
|
||
INCOME (LOSS) BEFORE INCOME TAXES
|
|
13,173
|
|
|
(64,125
|
)
|
||
INCOME TAX EXPENSE (BENEFIT)
|
|
5,914
|
|
|
(41,658
|
)
|
||
NET INCOME (LOSS)
|
|
7,259
|
|
|
(22,467
|
)
|
||
OTHER COMPREHENSIVE (LOSS) INCOME:
|
|
|
|
|
||||
Pension and other postretirement gains and (losses)
|
|
(20,587
|
)
|
|
6,304
|
|
||
Foreign currency translation adjustment
|
|
(1,018
|
)
|
|
3,784
|
|
||
Total other comprehensive (loss) income
|
|
(21,605
|
)
|
|
10,088
|
|
||
COMPREHENSIVE LOSS
|
|
$
|
(14,346
|
)
|
|
$
|
(12,379
|
)
|
|
|
|
|
|
||||
See accompanying Notes to Consolidated Financial Statements.
|
PAPERBOARD PARENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In thousands, except share data)
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Shareholders' Deficit
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
BALANCE — December 31, 2016
|
122,464
|
|
|
$
|
—
|
|
|
$
|
126,012
|
|
|
$
|
(106,013
|
)
|
|
$
|
(13,881
|
)
|
|
$
|
6,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,467
|
)
|
|
—
|
|
|
(22,467
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
985
|
|
|
—
|
|
|
—
|
|
|
985
|
|
|||||
Issuance of common stock under equity incentive plan
|
668
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|||||
Stock-based compensation, windfall adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
417
|
|
|
—
|
|
|
417
|
|
|||||
Pension and other benefit liability adjustment — net of taxes of ($1,725)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,304
|
|
|
6,304
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,784
|
|
|
3,784
|
|
|||||
BALANCE — December 31, 2017
|
123,132
|
|
|
$
|
—
|
|
|
$
|
127,083
|
|
|
$
|
(128,063
|
)
|
|
$
|
(3,793
|
)
|
|
$
|
(4,773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
7,259
|
|
|
—
|
|
|
7,259
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
214
|
|
|
—
|
|
|
—
|
|
|
214
|
|
|||||
Issuance of common stock under equity incentive plan
|
109
|
|
|
—
|
|
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|||||
Pension and other benefit liability adjustment — net of taxes of ($5,622)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,587
|
)
|
|
(20,587
|
)
|
|||||
Accounting standard adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
1,745
|
|
|
(1,745
|
)
|
|
—
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,018
|
)
|
|
(1,018
|
)
|
|||||
BALANCE — December 31, 2018
|
123,241
|
|
|
$
|
—
|
|
|
$
|
127,568
|
|
|
$
|
(119,059
|
)
|
|
$
|
(27,143
|
)
|
|
$
|
(18,634
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
See accompanying Notes to Consolidated Financial Statements.
|
PAPERBOARD PARENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In thousands)
|
|
|
2018
|
|
2017
|
||||
OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
7,259
|
|
|
$
|
(22,467
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation, depletion and amortization
|
|
76,607
|
|
|
72,535
|
|
||
Non-cash asset impairment costs
|
|
—
|
|
|
3,750
|
|
||
Goodwill impairment charges
|
|
—
|
|
|
31,725
|
|
||
Gain on disposals of properties, plants and equipment, net
|
|
1,849
|
|
|
1,540
|
|
||
Deferred income tax (benefit) expense
|
|
3,334
|
|
|
(43,323
|
)
|
||
Stock-based compensation expense
|
|
214
|
|
|
985
|
|
||
Deferred debt costs amortization
|
|
3,138
|
|
|
3,888
|
|
||
Deferred debt issuance cost on early extinguishment of debt
|
|
—
|
|
|
6,468
|
|
||
Term loan original discount amortization
|
|
1,452
|
|
|
1,671
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Trade accounts receivable
|
|
(11,142
|
)
|
|
(4,315
|
)
|
||
Inventories
|
|
(10,189
|
)
|
|
(3,084
|
)
|
||
Accounts payable
|
|
(14,010
|
)
|
|
14,757
|
|
||
Accrued liabilities
|
|
(4,841
|
)
|
|
(8,723
|
)
|
||
Other, net
|
|
(951
|
)
|
|
(4,488
|
)
|
||
Prepaid income taxes
|
|
583
|
|
|
3,822
|
|
||
Net cash provided by operating activities
|
|
53,303
|
|
|
54,741
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
|
||||
Purchases of properties, plant, and equipment
|
|
(50,863
|
)
|
|
(43,022
|
)
|
||
Proceeds from the sale of properties, plants, and equipment and other assets
|
|
570
|
|
|
5,870
|
|
||
Acquisitions of businesses, net of cash acquired
|
|
(9,600
|
)
|
|
(21,267
|
)
|
||
Net cash used in investing activities
|
|
(59,893
|
)
|
|
(58,419
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
|
268,500
|
|
|
1,106,000
|
|
||
Payments on long-term debt
|
|
(267,600
|
)
|
|
(1,079,922
|
)
|
||
Deferred debt costs
|
|
(28
|
)
|
|
(10,408
|
)
|
||
Proceeds from exercise of stock options
|
|
271
|
|
|
86
|
|
||
Principal payments on capital lease arrangements
|
|
(1,965
|
)
|
|
(1,160
|
)
|
||
Payments related to the early extinguishment of debt
|
|
—
|
|
|
(99
|
)
|
||
Net cash provided by (used in) financing activities
|
|
(822
|
)
|
|
14,497
|
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
|
(7,412
|
)
|
|
10,819
|
|
||
Cash and cash equivalents and restricted cash at beginning of year
|
|
17,133
|
|
|
6,314
|
|
||
Cash and cash equivalents and restricted cash at end of year
|
|
$
|
9,721
|
|
|
$
|
17,133
|
|
Cash and cash equivalents
|
|
8,305
|
|
|
16,033
|
|
||
Restricted cash
|
|
1,416
|
|
|
1,100
|
|
||
Cash and cash equivalents and restricted cash at end of year
|
|
$
|
9,721
|
|
|
$
|
17,133
|
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
||||
Cash payments for interest
|
|
$
|
68,211
|
|
|
$
|
61,140
|
|
Cash payments (refunds) for income taxes
|
|
$
|
3,515
|
|
|
$
|
(2,154
|
)
|
Accrued purchases of property, plant, and equipment
|
|
$
|
—
|
|
|
$
|
6,803
|
|
|
|
|
|
|
||||
See accompanying Notes to Consolidated Financial Statements.
|
|
2018
|
|
2017
|
||||
Raw materials and supplies
|
$
|
47,520
|
|
|
$
|
42,621
|
|
Work in process
|
4,091
|
|
|
3,330
|
|
||
Finished goods
|
46,827
|
|
|
41,930
|
|
||
Total inventory
|
$
|
98,438
|
|
|
$
|
87,881
|
|
Buildings and improvements
|
10-45 years
|
Office equipment and software
|
3-10 years
|
Machinery and equipment:
|
|
Small tools
|
1 year
|
Small machinery and vehicles
|
4-8 years
|
Production equipment
|
14-25 years
|
•
|
A significant decrease in the market price of a long-lived asset;
|
•
|
A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition;
|
•
|
A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator;
|
•
|
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;
|
•
|
A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long- lived asset;
|
•
|
A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life;
|
•
|
Impairment of indefinite lived intangible assets.
|
|
|
Paperboard
|
|
Recycling
|
|
Industrial Products
|
|
Folding Carton
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2016
|
|
$
|
148,837
|
|
|
$
|
19,532
|
|
|
$
|
83,420
|
|
|
$
|
31,725
|
|
|
$
|
283,514
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
7,811
|
|
|
—
|
|
|
7,811
|
|
|||||
Impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,725
|
)
|
|
(31,725
|
)
|
|||||
Balance at December 31, 2017
|
|
$
|
148,837
|
|
|
$
|
19,532
|
|
|
$
|
91,231
|
|
|
$
|
—
|
|
|
$
|
259,600
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
3,460
|
|
|
—
|
|
|
3,460
|
|
|||||
Impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at December 31, 2018
|
|
$
|
148,837
|
|
|
$
|
19,532
|
|
|
$
|
94,691
|
|
|
$
|
—
|
|
|
$
|
263,060
|
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Life in Years
|
|||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|||||||
Customer relationships
|
|
$
|
239,416
|
|
|
$
|
(129,538
|
)
|
|
$
|
109,878
|
|
|
8.9
|
|
Leasehold interest
|
|
381
|
|
|
(381
|
)
|
|
—
|
|
|
3.2
|
|
|||
Non-compete agreement
|
|
3,670
|
|
|
(2,770
|
)
|
|
900
|
|
|
4.8
|
|
|||
Trademark and trade names
|
|
22,149
|
|
|
(5,195
|
)
|
|
16,954
|
|
|
28.1
|
|
|||
|
|
$
|
265,616
|
|
|
$
|
(137,884
|
)
|
|
$
|
127,732
|
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|||||||
Customer relationships
|
|
$
|
234,616
|
|
|
$
|
(102,764
|
)
|
|
$
|
131,852
|
|
|
8.9
|
|
Leasehold interest
|
|
381
|
|
|
(345
|
)
|
|
36
|
|
|
3.2
|
|
|||
Non-compete agreement
|
|
3,210
|
|
|
(1,420
|
)
|
|
1,790
|
|
|
5.0
|
|
|||
Trademark and trade names
|
|
22,149
|
|
|
(4,172
|
)
|
|
17,977
|
|
|
28.1
|
|
|||
|
|
$
|
260,356
|
|
|
$
|
(108,701
|
)
|
|
$
|
151,655
|
|
|
10.5
|
|
2019
|
$
|
29,004
|
|
2020
|
27,362
|
|
|
2021
|
20,336
|
|
|
2022
|
14,114
|
|
|
2023
|
11,525
|
|
|
Thereafter
|
25,391
|
|
|
Total
|
$
|
127,732
|
|
|
2018
|
|
2017
|
||||
Term loan
|
$
|
844,950
|
|
|
$
|
853,550
|
|
Senior credit facility
|
34,500
|
|
|
25,000
|
|
||
Less discount, net of accumulated amortization of $9,464 and $8,013 at December 31, 2018 and December 31, 2017, respectively
|
(4,644
|
)
|
|
(6,095
|
)
|
||
Less deferred debt costs, net of accumulated amortization of $23,451 and $20,341 at December 31, 2018 and December 31, 2017, respectively
|
(10,101
|
)
|
|
(13,211
|
)
|
||
Total debt
|
864,705
|
|
|
859,244
|
|
||
Less current maturities
|
(8,600
|
)
|
|
(8,600
|
)
|
||
Total long-term debt
|
$
|
856,105
|
|
|
$
|
850,644
|
|
2019
|
|
|
$
|
8,600
|
|
2020
|
|
|
8,600
|
|
|
2021
|
|
|
8,600
|
|
|
2022
|
|
|
819,150
|
|
|
Total
|
|
|
$
|
844,950
|
|
|
|
2018
|
|
2017
|
||||
Minimum rentals
|
|
$
|
17,535
|
|
|
$
|
17,175
|
|
Contingent rentals
|
|
239
|
|
|
790
|
|
||
Total
|
|
$
|
17,774
|
|
|
$
|
17,965
|
|
2019
|
|
|
|
$
|
15,781
|
|
2020
|
|
|
|
14,043
|
|
|
2021
|
|
|
|
9,937
|
|
|
2022
|
|
|
|
7,490
|
|
|
2023
|
|
|
|
5,831
|
|
|
Thereafter
|
|
|
|
12,278
|
|
|
Total
|
|
|
|
$
|
65,360
|
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Life (In Years)
|
||||
|
|
|
|
|
|
||||
Outstanding - December 31, 2017
|
12,677
|
|
|
$
|
1,340
|
|
|
6.4
|
|
|
|
|
|
|
|
||||
Granted
|
143
|
|
|
2,500
|
|
|
|
||
Forfeited or expired
|
(434
|
)
|
|
2,006
|
|
|
|
||
Exercised
|
(109
|
)
|
|
1,233
|
|
|
|
||
Outstanding - December 31, 2018
|
12,277
|
|
|
$
|
1,331
|
|
|
5.4
|
|
|
|
|
|
|
|
||||
Vested and expected to vest - December 31, 2018
|
12,277
|
|
|
$
|
1,331
|
|
|
5.4
|
|
|
|
|
|
|
|
||||
Options exercisable - December 31, 2018
|
9,912
|
|
|
$
|
1,096
|
|
|
4.8
|
|
|
2018
|
|
2017
|
Risk-free interest rate
|
2.53% - 2.60%
|
|
1.52% - 1.92%
|
Expected dividend yield
|
—%
|
|
—%
|
Expected option lives (years)
|
4.3 - 9.5
|
|
5.3 - 9.9
|
Expected volatility
|
34.5% - 37.8%
|
|
53.0% - 54.7%
|
|
|
Pension Plan
|
||||||
|
|
2018
|
|
2017
|
||||
Service cost of benefits earned
|
|
$
|
3,993
|
|
|
$
|
691
|
|
Interest cost on projected benefit obligation
|
|
14,981
|
|
|
16,062
|
|
||
Expected return on plan assets
|
|
(24,477
|
)
|
|
(23,304
|
)
|
||
Amortization of prior service cost
|
|
10
|
|
|
10
|
|
||
Net pension benefit
|
|
$
|
(5,493
|
)
|
|
$
|
(6,541
|
)
|
|
|
SERP
|
||||||
|
|
2018
|
|
2017
|
||||
Interest cost on projected benefit obligation
|
|
$
|
139
|
|
|
$
|
130
|
|
Amortization of prior service cost and loss
|
|
49
|
|
|
9
|
|
||
Net pension benefit
|
|
$
|
188
|
|
|
$
|
139
|
|
|
|
Pension Plan
|
|
SERP
|
||||
Estimated actuarial loss
|
|
$
|
—
|
|
|
$
|
14
|
|
Prior service cost
|
|
10
|
|
|
44
|
|
|
|
Pension Plan
|
|
SERP
|
||||
2019
|
|
$
|
20,308
|
|
|
$
|
340
|
|
2020
|
|
21,047
|
|
|
318
|
|
||
2021
|
|
21,578
|
|
|
310
|
|
||
2022
|
|
21,889
|
|
|
302
|
|
||
2023
|
|
22,367
|
|
|
292
|
|
||
2024-2028
|
|
115,312
|
|
|
1,288
|
|
|
|
Pension Plan
|
|
SERP
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation — end of prior year
|
|
$
|
399,283
|
|
|
$
|
380,585
|
|
|
$
|
3,728
|
|
|
$
|
3,156
|
|
Service cost
|
|
487
|
|
|
691
|
|
|
—
|
|
|
—
|
|
||||
Interest cost
|
|
14,981
|
|
|
16,062
|
|
|
138
|
|
|
130
|
|
||||
Amendment - addition of three retired participants
|
|
—
|
|
|
—
|
|
|
—
|
|
|
610
|
|
||||
Actuarial loss (gain)
|
|
(19,008
|
)
|
|
20,613
|
|
|
(30
|
)
|
|
110
|
|
||||
Benefits paid
|
|
(19,519
|
)
|
|
(18,668
|
)
|
|
(340
|
)
|
|
(278
|
)
|
||||
Projected benefit obligation — end of year
|
|
$
|
376,224
|
|
|
$
|
399,283
|
|
|
$
|
3,496
|
|
|
$
|
3,728
|
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets — end of prior year
|
|
$
|
343,554
|
|
|
$
|
309,805
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
|
(21,670
|
)
|
|
56,669
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
7,650
|
|
|
—
|
|
|
340
|
|
|
278
|
|
||||
Expenses
|
|
(2,792
|
)
|
|
(4,252
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
|
(19,519
|
)
|
|
(18,668
|
)
|
|
(340
|
)
|
|
(278
|
)
|
||||
Fair value of plan assets — end of year
|
|
$
|
307,223
|
|
|
$
|
343,554
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Funded status of the plans — ending funded status
|
|
$
|
(69,001
|
)
|
|
$
|
(55,730
|
)
|
|
$
|
(3,496
|
)
|
|
$
|
(3,728
|
)
|
Amounts recognized in the consolidated balance sheets — accrued pension liability
|
|
$
|
(69,001
|
)
|
|
$
|
(55,730
|
)
|
|
$
|
(3,496
|
)
|
|
$
|
(3,728
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Plans with accumulated benefit obligations in excess of plan assets:
|
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
|
$
|
376,224
|
|
|
$
|
399,283
|
|
|
$
|
3,496
|
|
|
$
|
3,728
|
|
Accumulated benefit obligation
|
|
376,142
|
|
|
399,152
|
|
|
3,496
|
|
|
3,728
|
|
||||
Plan assets
|
|
307,223
|
|
|
343,554
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Pre-tax amounts in accumulated other comprehensive (income) loss:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost
|
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
(44
|
)
|
|
$
|
610
|
|
Net actuarial loss
|
|
26,423
|
|
|
(8,500
|
)
|
|
(52
|
)
|
|
101
|
|
||||
Total
|
|
$
|
26,413
|
|
|
$
|
(8,510
|
)
|
|
$
|
(96
|
)
|
|
$
|
711
|
|
|
|
Pension Plan
|
|
SERP
|
||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Weighted-average discount rate
|
|
4.24%
|
|
3.84%
|
|
4.24%
|
|
3.84%
|
Weighted-average rate of compensation increase
|
|
2.50%
|
|
2.50%
|
|
N/A
|
|
N/A
|
|
|
2018
|
|
2017
|
Weighted-average discount rate
|
|
3.84%
|
|
4.30%
|
Weighted-average expected rate of return on plan assets
|
|
7.25%
|
|
7.75%
|
Weighted-average rate of compensation increase
|
|
2.50%
|
|
2.50%
|
|
|
SERP
|
||
|
|
2018
|
|
2017
|
Weighted-average discount rate
|
|
3.84%
|
|
4.30%
|
Weighted-average expected rate of return on plan assets
|
|
N/A
|
|
N/A
|
Weighted-average rate of compensation increase
|
|
N/A
|
|
N/A
|
|
|
2018
|
|
|
2017
|
|
||||||||
Large capitalization U.S. equity
|
|
$
|
92,673
|
|
|
30
|
%
|
|
$
|
107,659
|
|
|
31
|
%
|
Mid capitalization U.S. Equity
|
|
8,022
|
|
|
3
|
|
|
9,614
|
|
|
3
|
|
||
Small capitalization U.S. Equity
|
|
7,993
|
|
|
3
|
|
|
9,529
|
|
|
3
|
|
||
International Equity
|
|
59,479
|
|
|
19
|
|
|
63,854
|
|
|
19
|
|
||
Total Equity
|
|
168,167
|
|
|
55
|
|
|
190,656
|
|
|
56
|
|
||
Total fixed income
|
|
139,056
|
|
|
45
|
|
|
152,898
|
|
|
44
|
|
||
Total assets
|
|
$
|
307,223
|
|
|
100
|
%
|
|
$
|
343,554
|
|
|
100
|
%
|
|
|
Carrying Amount
|
|
Prices in Active Markets For Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|||||||
Large capitalization U.S. equity
|
|
$
|
92,673
|
|
|
$—
|
|
$
|
92,673
|
|
|
$—
|
|||
Mid capitalization U.S. Equity
|
|
8,022
|
|
|
—
|
|
8,022
|
|
|
—
|
|||||
Small capitalization U.S. Equity
|
|
7,993
|
|
|
—
|
|
7,993
|
|
|
—
|
|||||
International Equity
|
|
59,479
|
|
|
—
|
|
59,479
|
|
|
—
|
|||||
Fixed Income (intermediate-term maturities)
|
|
139,056
|
|
|
—
|
|
139,056
|
|
|
—
|
|||||
Total assets
|
|
$
|
307,223
|
|
|
$—
|
|
$
|
307,223
|
|
|
$—
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets For Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|||||||
Large capitalization U.S. equity
|
|
$
|
107,659
|
|
|
$—
|
|
$
|
107,659
|
|
|
$—
|
|||
Mid capitalization U.S. Equity
|
|
9,614
|
|
|
—
|
|
9,614
|
|
|
—
|
|||||
Small capitalization U.S. Equity
|
|
9,529
|
|
|
—
|
|
9,529
|
|
|
—
|
|||||
International Equity
|
|
63,854
|
|
|
—
|
|
63,854
|
|
|
—
|
|||||
Fixed Income (intermediate-term maturities)
|
|
152,898
|
|
|
—
|
|
152,898
|
|
|
—
|
|||||
Total assets
|
|
$
|
343,554
|
|
|
$—
|
|
$
|
343,554
|
|
|
$—
|
•
|
Provide a long-term investment return greater than the actuarial assumptions.
|
•
|
Maximize investment return commensurate with appropriate levels of risk.
|
•
|
Comply with the Employee Retirement Income Security Act of 1974 (ERISA) by investing the funds in a manner consistent with ERISA’s fiduciary standards.
|
|
|
2018
|
|
2017
|
||||
Service cost of benefits earned
|
|
$
|
2
|
|
|
$
|
10
|
|
Amortization of gain
|
|
(55
|
)
|
|
(37
|
)
|
||
Interest cost on accumulated post-retirement benefit obligation
|
|
27
|
|
|
45
|
|
||
Net pension benefit
|
|
$
|
(26
|
)
|
|
$
|
18
|
|
|
|
Postretirement Benefits
|
||
2019
|
|
$
|
102
|
|
2020
|
|
94
|
|
|
2021
|
|
87
|
|
|
2022
|
|
79
|
|
|
2023
|
|
72
|
|
|
2024 - 2028
|
|
260
|
|
|
|
2018
|
|
2017
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Projected benefit obligation — end of prior year
|
|
$
|
951
|
|
|
$
|
1,321
|
|
Service cost
|
|
2
|
|
|
9
|
|
||
Interest cost
|
|
27
|
|
|
45
|
|
||
Actuarial gain
|
|
(142
|
)
|
|
(301
|
)
|
||
Benefits paid
|
|
(116
|
)
|
|
(123
|
)
|
||
Projected benefit obligation — end of year
|
|
$
|
722
|
|
|
$
|
951
|
|
|
|
|
|
|
||||
Net amount recognized in balance sheet - Other long-term liabilities
|
|
$
|
(722
|
)
|
|
$
|
(951
|
)
|
|
|
|
|
|
||||
Pre-tax amounts in accumulated other comprehensive loss:
|
|
|
|
|
||||
Prior service credit
|
|
$
|
20
|
|
|
$
|
22
|
|
Net actuarial gain
|
|
(762
|
)
|
|
(675
|
)
|
||
Total
|
|
$
|
(742
|
)
|
|
$
|
(653
|
)
|
|
|
2018
|
|
2017
|
||||
Current:
|
|
|
|
|
||||
Federal
|
|
$
|
157
|
|
|
$
|
—
|
|
State
|
|
(2,195
|
)
|
|
(829
|
)
|
||
Foreign
|
|
(398
|
)
|
|
(828
|
)
|
||
Uncertain tax position benefits
|
|
—
|
|
|
—
|
|
||
|
|
$
|
(2,436
|
)
|
|
$
|
(1,656
|
)
|
Deferred:
|
|
|
|
|
||||
Federal
|
|
$
|
(1,337
|
)
|
|
$
|
43,661
|
|
State
|
|
(2,095
|
)
|
|
(266
|
)
|
||
Foreign
|
|
61
|
|
|
61
|
|
||
Uncertain tax position benefits
|
|
(107
|
)
|
|
(142
|
)
|
||
|
|
$
|
(3,478
|
)
|
|
$
|
43,314
|
|
Income tax benefit (provision)
|
|
$
|
(5,914
|
)
|
|
$
|
41,658
|
|
|
|
2018
|
|
2017
|
||||
Deferred income tax assets:
|
|
|
|
|
||||
Pension liabilities
|
|
$
|
15,314
|
|
|
$
|
12,553
|
|
Postretirement benefits other than pension
|
|
166
|
|
|
225
|
|
||
Compensation accruals
|
|
4,986
|
|
|
3,616
|
|
||
Accrued liabilities
|
|
2,807
|
|
|
2,195
|
|
||
Debt issuance costs
|
|
3,717
|
|
|
4,856
|
|
||
Original issue discount
|
|
441
|
|
|
—
|
|
||
Net operating losses and credits
|
|
24,877
|
|
|
38,680
|
|
||
Capital loss carryforward
|
|
—
|
|
|
—
|
|
||
Inventory capitalization
|
|
1,012
|
|
|
996
|
|
||
Interest limitation (IRC Section 163(j))
|
|
8,455
|
|
|
—
|
|
||
Other
|
|
459
|
|
|
401
|
|
||
Total gross deferred income tax assets
|
|
62,234
|
|
|
63,522
|
|
||
Valuation allowance
|
|
(6,446
|
)
|
|
(7,918
|
)
|
||
Total deferred income tax assets
|
|
55,788
|
|
|
55,604
|
|
||
Deferred income tax liabilities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
(83,192
|
)
|
|
(83,917
|
)
|
||
Total deferred income tax liabilities
|
|
(83,192
|
)
|
|
(83,917
|
)
|
||
Net deferred income taxes
|
|
$
|
(27,404
|
)
|
|
$
|
(28,313
|
)
|
|
|
Asset impairment charges and loss on disposals
|
|
Severance and other termination costs
|
|
Other exit costs
|
|
Restructuring liability total
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liability balance at December 31, 2016
|
|
|
|
$
|
896
|
|
|
$
|
182
|
|
|
$
|
1,078
|
|
|
|
||||
2017 costs
|
|
$
|
4,886
|
|
|
61
|
|
|
1,435
|
|
|
1,496
|
|
|
$
|
6,382
|
|
|||
2017 payments
|
|
|
|
(91
|
)
|
|
(1,835
|
)
|
|
(1,926
|
)
|
|
|
|||||||
Liability balance at December 31, 2017
|
|
|
|
$
|
866
|
|
|
$
|
(218
|
)
|
|
$
|
648
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018 costs
|
|
$
|
(302
|
)
|
|
74
|
|
|
724
|
|
|
797
|
|
|
$
|
495
|
|
|||
2018 payments
|
|
|
|
(183
|
)
|
|
(809
|
)
|
|
(992
|
)
|
|
|
|||||||
Liability balance at December 31, 2018
|
|
|
|
$
|
757
|
|
|
$
|
(303
|
)
|
|
$
|
454
|
|
|
|
|
2018
|
||
Cumulative costs
|
$
|
31,658
|
|
Estimated costs to complete initiatives
|
467
|
|
|
Total estimated costs of initiatives
|
$
|
32,125
|
|
|
|
Defined benefit pension and postretirement plans
|
|
Foreign currency items
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Balance at December 31, 2016
|
|
$
|
(8,063
|
)
|
|
$
|
(5,818
|
)
|
|
$
|
(13,881
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
6,323
|
|
|
3,784
|
|
|
10,107
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|||
Balance at December 31, 2017
|
|
$
|
(1,759
|
)
|
|
$
|
(2,034
|
)
|
|
$
|
(3,793
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(20,528
|
)
|
|
(1,018
|
)
|
|
(21,546
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
(59
|
)
|
|
—
|
|
|
(59
|
)
|
|||
Impact of accounting standard adoption
|
|
(1,745
|
)
|
|
—
|
|
|
(1,745
|
)
|
|||
Balance at December 31, 2018
|
|
$
|
(24,091
|
)
|
|
$
|
(3,052
|
)
|
|
$
|
(27,143
|
)
|
•
|
a $800.0 million senior secured revolving credit facility (consisting of a $600.0 million multicurrency facility and a $200.0 million U.S. dollar facility) expiring 2024 (the “New Senior Secured Revolving Facility”);
|
•
|
a $1,275.0 million senior secured term loan A facility maturing 2024 (the “New Term Loan A-1”); and
|
•
|
a $400.0 million senior secured term loan A facility maturing 2026 (the “New Term Loan A-2”).
|
•
|
application of the acquisition method of accounting under the provision of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations" ("ASC 805") to reflect the total merger consideration of $1,862.3 million (the purchase price, as adjusted);
|
•
|
the incurrence of borrowings of $1,275.0 million under the New Term Loan A-1 and borrowings of $400.0 million under the New Term Loan A-2, along with utilization of $334.0 million of the New Senior Secured Revolving Facility;
|
•
|
the refinancing of, and repayment of borrowings under, our Existing Senior Secured Credit Facilities;
|
•
|
the issuance of $500.0 million of Notes;
|
•
|
the redemption of the 2019 Senior Notes, including payment of the make whole premium in connection therewith;
|
•
|
the payment of all existing indebtedness of Paperboard, including Caraustar’s existing credit agreement dated as of May 1, 2013, as amended, and Caraustar’s existing ABL credit agreement dated as of May 1, 2013, as amended; and
|
•
|
payment of fees and expenses incurred in connection with the Caraustar Transactions.
|
•
|
the accompanying notes to the unaudited pro forma condensed combined financial statements;
|
•
|
Greif’s historical audited financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2018, filed with the Securities and Exchange Commission ("SEC") on December 20, 2018; and
|
•
|
Paperboard’s historical audited financial statements and accompanying notes as of and for the years ended December 31, 2018 and 2017, included as Exhibit 99.1 to this Form 8-K/A.
|
Greif, Inc.
|
Unaudited Pro Forma Condensed Combined Statement of Income
|
For the Twelve Months Ended October 31, 2018
|
(in millions, except per share amounts)
|
Historical Greif for the year ended
10/31/2018
|
|
Historical Paperboard for the year ended 12/31/2018
|
|
Pro Forma Adjustments
|
|
Notes
|
|
Pro Forma Condensed Combined
|
||||||||
Net sales
|
$
|
3,873.8
|
|
|
$
|
1,373.8
|
|
|
$
|
(12.6
|
)
|
|
5a
|
|
$
|
5,235.0
|
|
Costs of products sold
|
3,084.9
|
|
|
1,107.4
|
|
|
(10.0
|
)
|
|
5a
|
|
4,182.3
|
|
||||
Gross profit
|
788.9
|
|
|
266.4
|
|
|
(2.6
|
)
|
|
|
|
1,052.7
|
|
||||
Selling, general and administrative expenses
|
397.9
|
|
|
182.2
|
|
|
22.6
|
|
|
5b
|
|
602.7
|
|
||||
Restructuring charges
|
18.6
|
|
|
0.5
|
|
|
—
|
|
|
|
|
19.1
|
|
||||
Non-cash asset impairment charges
|
8.3
|
|
|
—
|
|
|
—
|
|
|
|
|
8.3
|
|
||||
(Gain) loss on disposal of properties, plants and equipment, net
|
(5.6
|
)
|
|
2.2
|
|
|
—
|
|
|
|
|
(3.4
|
)
|
||||
(Gain) loss on disposal of businesses, net
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(0.8
|
)
|
||||
Operating profit
|
370.5
|
|
|
81.5
|
|
|
(25.2
|
)
|
|
|
|
426.8
|
|
||||
Interest expense, net
|
51.0
|
|
|
73.8
|
|
|
19.4
|
|
|
5c
|
|
144.2
|
|
||||
Pension settlement charge
|
1.3
|
|
|
—
|
|
|
—
|
|
|
|
|
1.3
|
|
||||
Other expense (income), net
|
18.4
|
|
|
(5.4
|
)
|
|
—
|
|
|
|
|
13.0
|
|
||||
Income (loss) before income tax expense and equity earnings of unconsolidated affiliates, net
|
299.8
|
|
|
13.1
|
|
|
(44.6
|
)
|
|
|
|
268.3
|
|
||||
Income tax expense (benefit)
|
73.3
|
|
|
5.9
|
|
|
(11.6
|
)
|
|
5d
|
|
67.6
|
|
||||
Equity earnings of unconsolidated affiliates, net of tax
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(3.0
|
)
|
||||
Net income (loss)
|
229.5
|
|
|
7.2
|
|
|
(33.0
|
)
|
|
|
|
203.7
|
|
||||
Net income attributable to noncontrolling interests
|
(20.1
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(20.1
|
)
|
||||
Net income attributable to Greif, Inc.
|
$
|
209.4
|
|
|
$
|
7.2
|
|
|
$
|
(33.0
|
)
|
|
|
|
$
|
183.6
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share attributable to Greif, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||
Class A common stock
|
$
|
3.56
|
|
|
|
|
|
|
5e
|
|
$
|
3.12
|
|
||||
Class B common stock
|
$
|
5.33
|
|
|
|
|
|
|
5e
|
|
$
|
4.67
|
|
||||
Diluted earnings per share attributed to Greif, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||
Class A common stock
|
$
|
3.55
|
|
|
|
|
|
|
5e
|
|
$
|
3.12
|
|
||||
Class B common stock
|
$
|
5.33
|
|
|
|
|
|
|
5e
|
|
$
|
4.67
|
|
Greif, Inc.
|
Unaudited Pro Forma Condensed Combined Statement of Financial Position
|
As of October 31, 2018
|
(in millions)
|
Historical Greif
as of 10/31/2018
|
|
Adjusted Historical Paperboard as of 12/31/2018
(Note 2)
|
|
Pro Forma Adjustments
|
|
Notes
|
|
Pro Forma Condensed Combined
|
||||||||
Pro Forma Combined Balance Sheet:
|
|
|
|
|
|
|
|
|
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
94.2
|
|
|
$
|
8.3
|
|
|
$
|
57.5
|
|
|
4a, 4b
|
|
$
|
160.0
|
|
Trade accounts receivable, net
|
456.7
|
|
|
143.6
|
|
|
—
|
|
|
|
|
600.3
|
|
||||
Inventories, net
|
289.5
|
|
|
98.4
|
|
|
9.3
|
|
|
4c
|
|
397.2
|
|
||||
Assets held for sale
|
4.4
|
|
|
—
|
|
|
—
|
|
|
|
|
4.4
|
|
||||
Prepaid expenses
|
39.8
|
|
|
6.4
|
|
|
—
|
|
|
|
|
46.2
|
|
||||
Other current assets
|
92.1
|
|
|
2.4
|
|
|
—
|
|
|
|
|
94.5
|
|
||||
|
976.7
|
|
|
259.1
|
|
|
66.8
|
|
|
|
|
1,302.6
|
|
||||
Long-term assets
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
776.0
|
|
|
263.1
|
|
|
596.7
|
|
|
4d
|
|
1,635.8
|
|
||||
Other intangible assets, net of amortization
|
80.6
|
|
|
127.7
|
|
|
558.9
|
|
|
4e
|
|
767.2
|
|
||||
Deferred tax assets
|
7.9
|
|
|
6.6
|
|
|
—
|
|
|
|
|
14.5
|
|
||||
Assets held by special purpose entities
|
50.9
|
|
|
—
|
|
|
—
|
|
|
|
|
50.9
|
|
||||
Pension assets
|
10.4
|
|
|
—
|
|
|
—
|
|
|
|
|
10.4
|
|
||||
Other long-term assets
|
100.4
|
|
|
1.4
|
|
|
—
|
|
|
|
|
101.8
|
|
||||
|
1,026.2
|
|
|
398.8
|
|
|
1,155.6
|
|
|
|
|
2,580.6
|
|
||||
Properties, plants and equipment, net
|
1,191.9
|
|
|
458.6
|
|
|
—
|
|
|
4f
|
|
1,650.5
|
|
||||
Total assets
|
$
|
3,194.8
|
|
|
$
|
1,116.5
|
|
|
$
|
1,222.4
|
|
|
|
|
$
|
5,533.7
|
|
(in millions)
|
Historical Greif as of
10/31/2018
|
|
Adjusted Historical Paperboard as of 12/31/2018
(Note 2)
|
|
Pro Forma Adjustments
|
|
Notes
|
|
Pro Forma Condensed Combined
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
403.8
|
|
|
$
|
101.2
|
|
|
$
|
—
|
|
|
|
|
$
|
505.0
|
|
Accrued payroll and employee benefits
|
114.4
|
|
|
20.4
|
|
|
—
|
|
|
|
|
134.8
|
|
||||
Restructuring reserves
|
4.4
|
|
|
—
|
|
|
—
|
|
|
|
|
4.4
|
|
||||
Current portion of long-term debt
|
18.8
|
|
|
8.6
|
|
|
56.4
|
|
|
4g
|
|
83.8
|
|
||||
Short-term borrowings
|
7.3
|
|
|
—
|
|
|
—
|
|
|
|
|
7.3
|
|
||||
Other current liabilities
|
121.5
|
|
|
34.5
|
|
|
—
|
|
|
|
|
156.0
|
|
||||
|
670.2
|
|
|
164.7
|
|
|
56.4
|
|
|
|
|
891.3
|
|
||||
Long-term liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
884.1
|
|
|
856.1
|
|
|
1,025.0
|
|
|
4h
|
|
2,765.2
|
|
||||
Deferred tax liabilities
|
179.8
|
|
|
34.0
|
|
|
145.3
|
|
|
4i
|
|
359.1
|
|
||||
Pension liabilities
|
78.0
|
|
|
72.2
|
|
|
(5.0
|
)
|
|
4j
|
|
145.2
|
|
||||
Postretirement benefit obligations
|
10.7
|
|
|
0.7
|
|
|
—
|
|
|
|
|
11.4
|
|
||||
Liabilities held by special purpose entities
|
43.3
|
|
|
—
|
|
|
—
|
|
|
|
|
43.3
|
|
||||
Contingent liabilities and environmental reserves
|
6.8
|
|
|
—
|
|
|
—
|
|
|
|
|
6.8
|
|
||||
Mandatorily redeemable noncontrolling interests
|
8.6
|
|
|
—
|
|
|
—
|
|
|
|
|
8.6
|
|
||||
Long-term income tax payable
|
46.1
|
|
|
—
|
|
|
—
|
|
|
|
|
46.1
|
|
||||
Other long-term liabilities
|
77.5
|
|
|
7.5
|
|
|
—
|
|
|
|
|
85.0
|
|
||||
|
1,334.9
|
|
|
970.5
|
|
|
1,165.3
|
|
|
|
|
3,470.7
|
|
||||
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
||||||||
Redeemable Noncontrolling Interests
|
35.5
|
|
|
—
|
|
|
—
|
|
|
|
|
35.5
|
|
||||
Equity
|
|
|
|
|
|
|
|
|
|
||||||||
Total Paperboard shareholders' deficit
|
—
|
|
|
(18.7
|
)
|
|
18.7
|
|
|
4k
|
|
—
|
|
||||
Total Greif, Inc. shareholders’ equity
|
1,107.8
|
|
|
—
|
|
|
(18.0
|
)
|
|
4k
|
|
1,089.8
|
|
||||
Noncontrolling interests
|
46.4
|
|
|
—
|
|
|
—
|
|
|
|
|
46.4
|
|
||||
Total shareholders’ equity
|
1,154.2
|
|
|
(18.7
|
)
|
|
0.7
|
|
|
|
|
1,136.2
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
3,194.8
|
|
|
$
|
1,116.5
|
|
|
$
|
1,222.4
|
|
|
|
|
$
|
5,533.7
|
|
Paperboard Historical Consolidated Balance Sheet Line Items
|
Greif Historical Consolidated Balance Sheet Line Items
|
|
Paperboard Historical Consolidated Balance Sheet
|
|
Reclassification Adjustments
|
|
Tickmark
|
|
Paperboard Adjusted Historical Consolidated Balance Sheet
|
||||||
ASSETS
|
ASSETS
|
|
|
|
|
|
|
|
|
||||||
Current assets
|
Current assets
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
Cash and cash equivalents
|
|
$
|
8.3
|
|
|
|
|
|
|
$
|
8.3
|
|
||
Receivables - net of allowances for doubtful accounts, returns, and discounts of $2.9
|
Trade accounts receivable, net
|
|
143.6
|
|
|
|
|
|
|
143.6
|
|
||||
Inventories, net
|
Inventories, net
|
|
98.4
|
|
|
|
|
|
|
98.4
|
|
||||
Prepaid expenses
|
Prepaid expenses
|
|
5.0
|
|
|
1.4
|
|
|
(i)
|
|
6.4
|
|
|||
Prepaid income taxes
|
|
|
1.4
|
|
|
(1.4
|
)
|
|
(i)
|
|
—
|
|
|||
Other current assets
|
Other current assets
|
|
2.4
|
|
|
|
|
|
|
2.4
|
|
||||
|
|
|
259.1
|
|
|
—
|
|
|
|
|
259.1
|
|
|||
Long-term assets
|
Long-term assets
|
|
|
|
|
|
|
|
|
||||||
Goodwill
|
Goodwill
|
|
263.1
|
|
|
|
|
|
|
263.1
|
|
||||
Other intangible assets, net of amortization
|
Other intangible assets, net of amortization
|
|
127.7
|
|
|
|
|
|
|
127.7
|
|
||||
Deferred tax assets
|
Deferred tax assets
|
|
6.6
|
|
|
|
|
|
|
6.6
|
|
||||
Restricted cash and cash equivalents
|
|
|
1.4
|
|
|
(1.4
|
)
|
|
(ii)
|
|
—
|
|
|||
Other long-term assets
|
Other long-term assets
|
|
—
|
|
|
1.4
|
|
|
(ii)
|
|
1.4
|
|
|||
|
|
|
398.8
|
|
|
—
|
|
|
|
|
398.8
|
|
|||
Properties, plants and equipment
|
Properties, plants and equipment
|
|
|
|
|
|
|
|
|
||||||
Land
|
Land
|
|
66.2
|
|
|
|
|
|
|
66.2
|
|
||||
Buildings
|
Buildings
|
|
87.3
|
|
|
|
|
|
|
87.3
|
|
||||
Machinery and equipment
|
Machinery and equipment
|
|
449.7
|
|
|
|
|
|
|
449.7
|
|
||||
Capital projects in progress
|
Capital projects in progress
|
|
49.4
|
|
|
|
|
|
|
49.4
|
|
||||
Total property, plant, and equipment
|
|
|
652.6
|
|
|
—
|
|
|
|
|
652.6
|
|
|||
Accumulated depreciation
|
Accumulated depreciation
|
|
(194.0
|
)
|
|
|
|
|
|
(194.0
|
)
|
||||
Property, plant, and equipment, net
|
|
|
458.6
|
|
|
—
|
|
|
|
|
458.6
|
|
|||
Total assets
|
Total assets
|
|
$
|
1,116.5
|
|
|
$
|
—
|
|
|
|
|
$
|
1,116.5
|
|
(ii)
|
Reclassified restricted cash and cash equivalents to other long-term assets to conform with Greif's presentation.
|
Paperboard Historical Consolidated Balance Sheet Line Items
|
Greif Historical Consolidated Balance Sheet Line Items
|
|
Paperboard Historical Consolidated Balance Sheet
|
|
Reclassification Adjustments
|
|
Tickmark
|
|
Paperboard Adjusted Historical Consolidated Balance Sheet
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
||||||
Current liabilities
|
Current liabilities
|
|
|
|
|
|
|
|
|
||||||
Accounts payable
|
Accounts payable
|
|
$
|
101.2
|
|
|
|
|
|
|
$
|
101.2
|
|
||
Accrued payroll and employee benefits
|
Accrued payroll and employee benefits
|
|
20.4
|
|
|
|
|
|
|
20.4
|
|
||||
Current portion of long-term debt
|
Current portion of long-term debt
|
|
8.6
|
|
|
|
|
|
|
8.6
|
|
||||
Other current liabilities
|
Other current liabilities
|
|
34.5
|
|
|
|
|
|
|
34.5
|
|
||||
|
|
|
164.7
|
|
|
—
|
|
|
|
|
164.7
|
|
|||
Long-term liabilities
|
Long-term liabilities
|
|
|
|
|
|
|
|
|
||||||
Long-term debt, less current maturities
|
Long-term debt
|
|
856.1
|
|
|
|
|
|
|
856.1
|
|
||||
Deferred tax liabilities
|
Deferred tax liabilities
|
|
34.0
|
|
|
|
|
|
|
34.0
|
|
||||
Pension liabilities
|
Pension liabilities
|
|
72.2
|
|
|
|
|
|
|
72.2
|
|
||||
|
Postretirement benefit obligations
|
|
—
|
|
|
0.7
|
|
|
(iii)
|
|
0.7
|
|
|||
Other long-term liabilities
|
Other long-term liabilities
|
|
8.2
|
|
|
(0.7
|
)
|
|
(iii)
|
|
7.5
|
|
|||
|
|
|
970.5
|
|
|
—
|
|
|
|
|
970.5
|
|
|||
Total Paperboard shareholders' deficit
|
Total Paperboard shareholders' deficit
|
|
(18.7
|
)
|
|
|
|
|
|
(18.7
|
)
|
||||
Total liabilities and shareholders’ equity
|
Total liabilities and shareholders’ equity
|
|
$
|
1,116.5
|
|
|
$
|
—
|
|
|
|
|
$
|
1,116.5
|
|
(iii)
|
Reclassified postretirement benefit obligations out of other long-term liabilities to conform with Greif's presentation.
|
(in millions)
|
|
|
|
||
Calculation of consideration
|
Amount
|
|
Note
|
||
Consideration paid to Paperboard shareholders, per Merger Agreement
|
$
|
957.6
|
|
|
|
Cash paid for repayment of Paperboard's historical debt
|
888.4
|
|
|
(i)
|
|
Aggregate exercise price of Paperboard vested options settled as part of the Caraustar Transactions
|
16.3
|
|
|
(ii)
|
|
Preliminary fair value of estimated total merger consideration
|
$
|
1,862.3
|
|
|
|
(i)
|
All of the outstanding historical debt of Paperboard was repaid in connection with the merger. Based on the amounts of historical debt reflected as outstanding on Paperboard’s balance sheet as of December 31, 2018, a total of $888.4 million was repaid, comprised of short-term debt of $8.6 million and long-term debt of $870.9 million. In addition, accrued interest and related fees of approximately $8.9 million associated with the debt was paid in connection with such repayment.
|
(ii)
|
In connection with the merger, all outstanding Paperboard options immediately prior to the acquisition date became fully vested and were settled by Greif as prescribed by the Merger Agreement.
|
(in millions)
|
|
|
|
||||
Adjust Cash to zero from December 31, 2018 balance:
|
Historical Paperboard as of 12/31/2018
|
|
Pro Forma Adjustment
|
||||
Eliminate Cash and Cash Equivalents
|
$
|
8.3
|
|
|
$
|
(8.3
|
)
|
(in millions)
|
|
|
|
|
|
||||||
Adjust inventory to fair market value per valuation:
|
Historical Paperboard as of 12/31/2018
|
|
Fair Value
|
|
Pro Forma Adjustment
|
||||||
Inventories, net
|
$
|
98.4
|
|
|
$
|
107.7
|
|
|
$
|
9.3
|
|
(in millions)
|
|
|
|
|
|
||||||
Intercompany Sales, Cost of Goods Sold, and profit elimination
|
Sales
|
|
Cost of Goods Sold
|
|
Margin
|
||||||
Historical Greif, Inc. sales to historical Paperboard
|
$
|
(3.1
|
)
|
|
$
|
(2.3
|
)
|
|
$
|
(0.8
|
)
|
Historical Paperboard sales to historical Greif, Inc.
|
(9.5
|
)
|
|
(7.7
|
)
|
|
(1.8
|
)
|
|||
Pro forma adjustments
|
$
|
(12.6
|
)
|
|
$
|
(10.0
|
)
|
|
$
|
(2.6
|
)
|
(in millions)
|
Twelve Month Period
|
||
Changes to interest expense:
|
|
||
Add: Estimated interest expense incurred related to Debt Financing
|
$
|
120.7
|
|
Add: Estimated amortization of deferred financing costs
|
6.5
|
|
|
Less: Historical Greif interest expense incurred related to the 2019 Senior Notes, the Existing Senior Secured Credit Facilities, and the related amortization of debt cost
|
34.0
|
|
|
Less: Historical Paperboard interest expense incurred, inclusive of amortization of debt costs
|
73.8
|
|
|
Pro forma adjustment to interest expense:
|
$
|
19.4
|
|
(in millions, except per share amounts)
|
|
Year ended 10/31/2018
|
||
Numerator
|
|
|
||
Numerator for basic and diluted EPS –
|
|
|
||
Pro Forma net income attributable to Greif, Inc.
|
|
$
|
183.6
|
|
Cash dividends
|
|
100.0
|
|
|
Undistributed net income (loss) attributable to Greif, Inc.
|
|
83.6
|
|
|
Denominator
|
|
|
||
Denominator for basic EPS –
|
|
|
||
Class A common stock
|
|
25.90
|
|
|
Class B common stock
|
|
22.00
|
|
|
Denominator for diluted EPS –
|
|
|
||
Class A common stock
|
|
26.00
|
|
|
Class B common stock
|
|
22.00
|
|
|
Pro Forma EPS Basic
|
|
|
||
Class A common stock
|
|
$
|
3.12
|
|
Class B common stock
|
|
$
|
4.67
|
|
Pro Forma EPS Diluted
|
|
|
||
Class A common stock
|
|
$
|
3.12
|
|
Class B common stock
|
|
$
|
4.67
|
|