GREIF INC, 10-K filed on 12/20/2018
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
12 Months Ended
Oct. 31, 2018
Dec. 17, 2018
Apr. 30, 2018
Document Information [Line Items]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Oct. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Trading Symbol GEF    
Entity Registrant Name GREIF INC    
Entity Central Index Key 0000043920    
Current Fiscal Year End Date --10-31    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Class A Common Stock      
Document Information [Line Items]      
Entity Common Stock, Shares Outstanding   25,941,279  
Entity Public Float     $ 1,464,933,751
Class B Common Stock      
Document Information [Line Items]      
Entity Common Stock, Shares Outstanding   22,007,725  
Entity Public Float     $ 337,380,525
v3.10.0.1
Consolidated Statements of Income - USD ($)
12 Months Ended
Oct. 31, 2018
Oct. 31, 2017
Oct. 31, 2016
Total net sales $ 3,873,800,000 $ 3,638,200,000 $ 3,323,600,000
Costs of products sold 3,084,900,000 2,923,500,000 2,638,700,000
Gross profit 788,900,000 714,700,000 684,900,000
Selling, general and administrative expenses 397,900,000 380,400,000 376,800,000
Restructuring charges 18,600,000 12,700,000 26,900,000
Non-cash asset impairment charges 8,300,000 7,800,000 51,400,000
Goodwill impairment charges 0 13,000,000 0
Gain on disposal of properties, plants and equipment, net (5,600,000) (400,000) (10,300,000)
(Gain) loss on disposal of businesses, net (800,000) 1,700,000 14,500,000
Operating profit 370,500,000 299,500,000 225,600,000
Interest expense, net 51,000,000 60,100,000 75,400,000
Pension settlement charge 1,300,000 27,100,000 0
Other expense, net 18,400,000 12,000,000 9,000,000
Income before income tax expense and equity earnings of unconsolidated affiliates, net 299,800,000 200,300,000 141,200,000
Income tax expense 73,300,000 67,200,000 66,500,000
Equity earnings of unconsolidated affiliates, net of tax (3,000,000) (2,000,000) (800,000)
Net income 229,500,000 135,100,000 75,500,000
Net income attributable to noncontrolling interests (20,100,000) (16,500,000) (600,000)
Net income attributable to Greif, Inc. $ 209,400,000 $ 118,600,000 $ 74,900,000
Class A Common Stock      
Basic earnings per share attributable to Greif, Inc.:      
EPS Basic (usd per share) $ 3.56 $ 2.02 $ 1.28
Diluted earnings per share attributed to Greif, Inc.:      
EPS Diluted (usd per share) 3.55 2.02 1.28
Class B Common Stock      
Basic earnings per share attributable to Greif, Inc.:      
EPS Basic (usd per share) 5.33 3.02 1.90
Diluted earnings per share attributed to Greif, Inc.:      
EPS Diluted (usd per share) $ 5.33 $ 3.02 $ 1.90
v3.10.0.1
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2018
Oct. 31, 2017
Oct. 31, 2016
Statement of Comprehensive Income [Abstract]      
Net income $ 229.5 $ 135.1 $ 75.5
Other comprehensive income (loss), net of tax:      
Foreign currency translation (45.5) 37.6 (17.6)
Derivative financial instruments, net of tax expense of $3.3 million, tax expense of $3.1 million and tax benefit of $0.0 million, respectively 7.7 5.1 0.0
Minimum pension liabilities net of tax expense of $4.1 million, tax expense of $16.5 million and tax benefit of $4.7 million, respectively 16.3 14.2 (7.4)
Other comprehensive income (loss), net of tax (21.5) 56.9 (25.0)
Comprehensive income 208.0 192.0 50.5
Comprehensive income (loss) attributable to noncontrolling interests 18.1 33.2 (3.4)
Comprehensive income attributable to Greif, Inc. $ 189.9 $ 158.8 $ 53.9
v3.10.0.1
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2018
Oct. 31, 2017
Oct. 31, 2016
Statement of Comprehensive Income [Abstract]      
Income tax (expense) benefit on interest rate derivatives $ (3.3) $ (3.1) $ 0.0
Income tax (expense) benefit on minimum pension liability $ (4.1) $ (16.5) $ 4.7
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Oct. 31, 2018
Oct. 31, 2017
Current assets    
Cash and cash equivalents $ 94.2 $ 142.3
Trade accounts receivable, less allowance of $4.2 in 2018 and $8.9 in 2017 456.7 447.0
Inventories:    
Raw materials 203.9 192.1
Work-in-process 10.0 11.5
Finished goods 75.6 75.9
Assets held for sale 4.4 2.2
Prepaid expenses 39.8 35.3
Other current assets 92.1 88.2
Total current assets 976.7 994.5
Long-term assets    
Goodwill 776.0 785.4
Other intangible assets, net of amortization 80.6 98.0
Deferred tax assets 7.9 10.5
Assets held by special purpose entities 50.9 50.9
Pension assets 10.4 10.3
Other long-term assets 100.4 94.3
Total long-term assets 1,026.2 1,049.4
Properties, plants and equipment    
Timber properties, net of depletion 274.2 276.2
Land 96.4 99.5
Buildings 431.4 428.3
Machinery and equipment 1,554.9 1,540.2
Capital projects in progress 117.2 80.2
Properties, plants and equipment, gross 2,474.1 2,424.4
Accumulated depreciation (1,282.2) (1,236.0)
Properties, plants and equipment, net 1,191.9 1,188.4
Total assets 3,194.8 3,232.3
Current liabilities    
Accounts payable 403.8 399.2
Accrued payroll and employee benefits 114.4 111.8
Restructuring reserves 4.4 5.2
Current portion of long-term debt 18.8 15.0
Short-term borrowings 7.3 14.5
Other current liabilities 121.5 142.2
Total current liabilities 670.2 687.9
Long-term liabilities    
Long-term debt 884.1 937.8
Deferred tax liabilities 179.8 217.8
Pension liabilities 78.0 159.5
Postretirement benefit obligations 10.7 12.6
Liabilities held by special purpose entities 43.3 43.3
Contingent liabilities and environmental reserves 6.8 7.1
Mandatorily redeemable noncontrolling interests 8.6 9.2
Long-term income tax payable 46.1 0.0
Other long-term liabilities 77.5 78.1
Total long-term liabilities 1,334.9 1,465.4
Commitments and Contingencies (Note 13)
Redeemable Noncontrolling Interests (Note 20) 35.5 31.5
Equity    
Common stock, without par value 150.5 144.2
Treasury stock, at cost (135.4) (135.6)
Retained earnings 1,469.8 1,360.5
Accumulated other comprehensive income (loss), net of tax:    
Foreign currency translation (292.8) (249.3)
Derivative financial instruments 13.4 5.1
Minimum pension liabilities (97.7) (114.0)
Total Greif, Inc. shareholders’ equity 1,107.8 1,010.9
Noncontrolling interests 46.4 36.6
Total shareholders’ equity 1,154.2 1,047.5
Total liabilities and shareholders’ equity $ 3,194.8 $ 3,232.3
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Oct. 31, 2018
Oct. 31, 2017
Statement of Financial Position [Abstract]    
Allowance of trade accounts receivable $ 4.2 $ 8.9
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2018
Oct. 31, 2017
Oct. 31, 2016
Cash flows from operating activities:      
Net income $ 229.5 $ 135.1 $ 75.5
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, depletion and amortization 126.9 120.5 127.7
Non-cash asset impairment charges 8.3 20.8 51.4
Pension settlement charge 1.3 27.1 0.0
Gain on disposals of properties, plants and equipment, net (5.6) (0.4) (10.3)
(Gain) loss on disposals of businesses, net (0.8) 1.7 14.5
Unrealized foreign exchange (gain) loss (0.7) 4.6 4.1
Deferred income tax (benefit) expense (44.8) 2.3 1.5
Transition tax expense 52.8 0.0 0.0
Other, net (2.8) 1.2 0.0
Increase (decrease) in cash from changes in certain assets and liabilities:      
Trade accounts receivable (34.0) (47.3) (18.6)
Inventories (24.8) (7.0) 3.4
Deferred purchase price on sold receivables 2.1 5.1 5.2
Accounts payable 24.3 20.5 39.4
Restructuring reserves (0.8) (5.3) (10.7)
Pension and postretirement benefit liabilities (66.8) (1.7) (8.9)
Other, net (11.1) 27.8 26.8
Net cash provided by operating activities 253.0 305.0 301.0
Cash flows from investing activities:      
Acquisitions of companies, net of cash acquired 0.0 0.0 (0.4)
Collection of subordinated note receivable 0.0 0.0 44.2
Purchases of properties, plants and equipment (140.2) (96.8) (100.1)
Purchases of and investments in timber properties (8.9) (9.5) (7.1)
Purchases of properties, plants and equipment with insurance proceeds 0.0 0.0 (4.4)
Proceeds from the sale of properties, plants, equipment and other assets 12.5 9.6 12.3
Proceeds from the sale of businesses 1.4 5.9 23.8
Proceeds on insurance recoveries 0.0 0.4 6.6
Net cash used in investing activities (135.2) (90.4) (25.1)
Cash flows from financing activities:      
Proceeds from issuance of long-term debt 1,020.7 1,446.0 1,102.3
Payments on long-term debt (1,065.4) (1,627.9) (1,119.2)
Proceeds from (payments on) short-term borrowings, net (11.0) (36.4) 4.7
Proceeds from trade accounts receivable credit facility 2.8 203.6 283.5
Payments on trade accounts receivable credit facility (2.8) (53.6) (431.1)
Long-term debt and credit facility financing fees paid 0.0 (4.5) 0.0
Dividends paid to Greif, Inc. shareholders (100.0) (98.6) (98.7)
Dividends paid to noncontrolling interests (4.6) (4.2) (4.9)
Proceeds from the sale of membership units of a consolidated subsidiary 0.0 0.0 0.3
Acquisitions of treasury stock 0.0 0.0 (5.2)
Purchases of redeemable noncontrolling interest 0.0 0.0 (6.0)
Cash contribution from noncontrolling interest holder 2.0 0.0 1.5
Net cash used in financing activities (158.3) (175.6) (272.8)
Effects of exchange rates on cash (7.6) (0.4) (5.6)
Net increase (decrease) in cash and cash equivalents (48.1) 38.6 (2.5)
Cash and cash equivalents at beginning of year 142.3 103.7 106.2
Cash and cash equivalents at end of year 94.2 142.3 103.7
Non-cash transactions:      
Capital expenditures included in accounts payable 11.4 12.5 9.2
Schedule of interest and income taxes paid:      
Cash payments for interest expense 58.3 76.2 74.8
Cash payments for taxes $ 65.2 $ 53.4 $ 51.8
v3.10.0.1
Consolidated Statements of Changes in Shareholders' Equity - USD ($)
shares in Thousands, $ in Millions
Total
Capital Stock
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Greif, Inc. Equity
Noncontrolling interests
Beginning balance (shares) at Oct. 31, 2015   47,814 29,028        
Beginning balance, value at Oct. 31, 2015 $ 1,059.9 $ 139.1 $ (130.6) $ 1,384.5 $ (377.4) $ 1,015.6 $ 44.3
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 75.5     74.9   74.9 0.6
Other comprehensive income (loss):              
Foreign currency translation (17.6)       (13.6) (13.6) (4.0)
Derivative financial instruments, net of income tax expense 0.0            
Minimum pension liability adjustment, net of income tax expense (7.4)       (7.4) (7.4)  
Comprehensive income 50.5         53.9  
Out of period mark to redemption value of redeemable noncontrolling interest (19.8)     (19.8)   (19.8)  
Current period mark to redemption value of redeemable noncontrolling interest (2.1)     (2.1)   (2.1)  
Reclassification of redeemable noncontrolling interests (21.6)     1.2   1.2 (22.8)
Net (loss) allocated to redeemable noncontrolling interests (4.8)           (4.8)
Other (0.4)           (0.4)
Dividends paid (98.7)     (98.7)   (98.7)  
Contributions from noncontrolling interest 1.5           1.5
Dividends paid to noncontrolling interest (3.9)           (3.9)
Treasury shares acquired (shares)   (110) 110        
Treasury shares acquired (5.2)   $ (5.2)     (5.2)  
Restricted stock executives and directors (shares)   47 (47)        
Restricted stock executives and directors 1.4 $ 1.3 $ 0.1     1.4  
Long-term incentive shares issued (shares)   41 (41)        
Long-term incentive shares issued 1.1 $ 1.0 $ 0.1     1.1  
Ending balance (shares) at Oct. 31, 2016   47,792 29,050        
Ending balance, value at Oct. 31, 2016 957.9 $ 141.4 $ (135.6) 1,340.0 (398.4) 947.4 10.5
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 135.1     118.6   118.6 16.5
Other comprehensive income (loss):              
Foreign currency translation 37.6       20.9 20.9 16.7
Derivative financial instruments, net of income tax expense 5.1       5.1 5.1  
Minimum pension liability adjustment, net of income tax expense 14.2       14.2 14.2  
Comprehensive income 192.0         158.8  
Current period mark to redemption value of redeemable noncontrolling interest 0.5     0.5   0.5  
Net (loss) allocated to redeemable noncontrolling interests (1.4)           (1.4)
Other (2.6)           (2.6)
Dividends paid (98.6)     (98.6)   (98.6)  
Dividends paid to noncontrolling interest (3.1)           (3.1)
Treasury shares acquired (shares)   (2) 2        
Treasury shares acquired 0.1   $ 0.1     0.1  
Restricted stock executives and directors (shares)   24 (24)        
Restricted stock executives and directors 1.3 $ 1.3 $ 0.0     1.3  
Long-term incentive shares issued (shares)   29 (29)        
Long-term incentive shares issued 1.4 $ 1.5 $ (0.1)     1.4  
Ending balance (shares) at Oct. 31, 2017   47,843 28,999        
Ending balance, value at Oct. 31, 2017 1,047.5 $ 144.2 $ (135.6) 1,360.5 (358.2) 1,010.9 36.6
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 229.5     209.4   209.4 20.1
Other comprehensive income (loss):              
Foreign currency translation (45.5)       (43.5) (43.5) (2.0)
Derivative financial instruments, net of income tax expense 7.7     (0.6) 8.3 7.7  
Minimum pension liability adjustment, net of income tax expense 16.3       16.3 16.3  
Comprehensive income 208.0         189.9  
Current period mark to redemption value of redeemable noncontrolling interest 0.5     0.5   0.5  
Net (loss) allocated to redeemable noncontrolling interests (3.7)           (3.7)
Dividends paid (100.0)     (100.0)   (100.0)  
Dividends paid to noncontrolling interest (4.6)           (4.6)
Restricted stock executives and directors (shares)   21 (21)        
Restricted stock executives and directors 1.2 $ 1.2       1.2  
Long-term incentive shares issued (shares)   85 (85)        
Long-term incentive shares issued 5.3 $ 5.1 $ 0.2     5.3  
Ending balance (shares) at Oct. 31, 2018   47,949 28,893        
Ending balance, value at Oct. 31, 2018 $ 1,154.2 $ 150.5 $ (135.4) $ 1,469.8 $ (377.1) $ 1,107.8 $ 46.4
v3.10.0.1
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2018
Oct. 31, 2017
Oct. 31, 2016
Income tax (expense) benefit on minimum pension liability $ (4.1) $ (16.5) $ 4.7
Income tax expense, unrealized gain on derivatives $ 3.3 $ 3.1 $ 0.0
Class A Common Stock      
Dividend paid (usd per share) $ 1.70 $ 1.68 $ 1.68
Class B Common Stock      
Dividend paid (usd per share) $ 2.54 $ 2.51 $ 2.51
v3.10.0.1
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Oct. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Business
Greif, Inc. and its subsidiaries (collectively, “Greif,” “our,” or the “Company”), principally manufacture rigid industrial packaging products, such as steel, fibre and plastic drums, rigid intermediate bulk containers, closure systems for industrial packaging products, transit protection products, water bottles and remanufactured and reconditioned industrial containers, and provides services, such as container life cycle management, filling, logistics, warehousing and other packaging services. The Company produces containerboard and corrugated products for niche markets in North America and is also a leading global producer of flexible intermediate bulk containers. The Company has operations in over 40 countries. In addition, the Company owns timber properties in the southeastern United States, which are actively harvested and regenerated.
Due to the variety of its products, the Company has many customers buying different products and due to the scope of the Company’s sales, no one customer is considered principal in the total operations of the Company.
Because the Company supplies a cross section of industries, such as chemicals, paints and pigments, food and beverage, petroleum, industrial coatings, agricultural, pharmaceutical, mineral, packaging, automotive and building products, and must make spot deliveries on a day-to-day basis as its products are required by its customers. The Company does not operate on a backlog to any significant extent and maintains only limited levels of finished goods. Many customers place their orders weekly for delivery during the same week.
The Company’s raw materials are principally steel, resin, containerboard, old corrugated containers, pulpwood and used industrial packaging for reconditioning.
There were approximately 13,000 employees of the Company as of October 31, 2018.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Greif, Inc., all wholly-owned and majority-owned subsidiaries, joint ventures controlled by the Company or for which the Company is the primary beneficiary, including the joint venture relating to the Flexible Products & Services segment, and equity earnings of unconsolidated affiliates. All intercompany transactions and balances have been eliminated in consolidation. Investments in unconsolidated affiliates are accounted for using the equity method based on the Company’s ownership interest in the unconsolidated affiliate.
The Company’s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation.
The Company’s fiscal year begins on November 1 and ends on October 31 of the following year. Any references to the year 2018, 2017 or 2016, or to any quarter of those years, relates to the fiscal year ended in that year.
Argentina Currency
The Company’s results with respect to its Argentinian subsidiary business have been reported under highly inflationary accounting beginning August 1, 2018. As of October 31, 2018, the Company's Argentina subsidiary represented less than 2% of the Company’s consolidated net revenues and less than 1% of its consolidated total assets.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant estimates are related to the expected useful lives assigned to properties, plants and equipment, goodwill and other intangible assets, estimates of fair value, environmental liabilities, pension and postretirement benefits, including plan assets, income taxes, net assets held for sale and contingencies. Actual amounts could differ from those estimates.
Cash and Cash Equivalents
The Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value.
Allowance for Doubtful Accounts
Trade receivables represent amounts owed to the Company through its operating activities and are presented net of allowance for doubtful accounts. The allowance for doubtful accounts totaled $4.2 million and $8.9 million as of October 31, 2018 and 2017, respectively. The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company, the Company records a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. In addition, the Company recognizes allowances for bad debts based on the length of time receivables are past due with allowance percentages, based on its historical experiences, applied on a graduated scale relative to the age of the receivable amounts. If circumstances such as higher than expected bad debt experience or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to the Company were to occur, the recoverability of amounts due to the Company could change by a material amount. Amounts deemed uncollectible are written-off against an established allowance for doubtful accounts.
Concentration of Credit Risk and Major Customers
The Company maintains cash depository accounts with banks throughout the world and invests in high quality short-term liquid instruments. Such investments are made only in instruments issued by high quality institutions. These investments mature within three months and the Company has not incurred any related losses for the years ended October 31, 2018, 2017, and 2016.
Trade receivables can be potentially exposed to a concentration of credit risk with customers or in particular industries. Such credit risk is considered by management to be limited due to the Company’s many customers, none of which are considered principal in the total operations of the Company, and its geographic scope of operations in a variety of industries throughout the world. The Company does not have an individual customer that exceeds 10 percent of total revenue. In addition, the Company performs ongoing credit evaluations of its customers’ financial conditions and maintains reserves for credit losses. Such losses historically have been within management’s expectations.
Inventory
The Company primarily uses the FIFO method of inventory valuation. Reserves for slow moving and obsolete inventories are provided based on historical experience, inventory aging and product demand. The Company continuously evaluates the adequacy of these reserves and makes adjustments to these reserves as required. 
The Paper Packaging & Services segment trades certain inventories with third parties. These inventory trades are accounted for as non-monetary exchanges and any unfavorable imbalances, resulting from these trades, are recorded as a liability to the Company .
Net Assets Held for Sale
Net assets held for sale represent land, buildings and other assets and liabilities for locations that have met the criteria of “held for sale” accounting, as specified by Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment.” As of October 31, 2018, there were two asset groups within the Rigid Industrial Packaging & Services and one asset group within Paper Packaging & Services segment classified as assets and liabilities held for sale. The effect of suspending depreciation on the facilities held for sale is immaterial to the results of operations. The net assets held for sale are being marketed for sale and it is the Company’s intention to complete the sales of these assets within the upcoming year.
Goodwill and Indefinite-Lived Intangibles
Goodwill is the excess of the purchase price of an acquired entity over the amounts assigned to tangible and intangible assets and liabilities assumed in the business combination. The Company accounts for purchased goodwill and indefinite-lived intangible assets in accordance with ASC 350, “Intangibles – Goodwill and Other.” Under ASC 350, purchased goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment at least annually. The Company tests for impairment of goodwill and indefinite-lived intangible assets during the fourth quarter of each fiscal year as of August 1, or more frequently if certain indicators are present or changes in circumstances suggest that impairment may exist.
In accordance with ASC 350, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative test for goodwill impairment. If the Company believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. The quantitative test for goodwill impairment is conducted at the reporting unit level by comparing the carrying value of each reporting unit to the estimated fair value of the unit. If the carrying value of a reporting unit exceeds its estimated fair value, then the goodwill of the reporting unit is impaired. Goodwill impairment is recognized in the amount that the carrying value exceeds the fair value; not to exceed the balance of goodwill attributable to the reporting unit. When a portion of a reporting unit is disposed of, goodwill is allocated to the gain or loss on that disposition based on the relative fair values of the portion of the reporting unit subject to disposition and the portion of the reporting unit that will be retained.
The Company’s determinations of estimated fair value of the reporting units are based on both the market approach and a discounted cash flow analysis utilizing the income approach. Under the market approach, the principal inputs are market prices and valuation multiples for public companies engaged in businesses that are considered comparable to the reporting unit. Under the income approach, the principal inputs are the reporting unit’s cash-generating capabilities and the discount rate. The discount rates used in the income approach are based on a market participant’s weighted average cost of capital. The use of alternative estimates, including different peer groups or changes in the industry, or adjusting the discount rate, earnings before interest, taxes, depreciation, depletion and amortization forecasts or cash flow assumptions used could affect the estimated fair value of the reporting units and potentially result in goodwill impairment. Any identified impairment would result in an expense to the Company’s results of operations. Refer to Note 5 for additional information regarding goodwill and other intangible assets.
Other Intangibles
The Company accounts for intangible assets in accordance with ASC 350. Definite lived intangible assets are amortized over their useful lives on a straight-line basis. The useful lives for definite lived intangible assets vary depending on the type of asset and the terms of contracts or the valuation performed. Amortization expense on intangible assets is recorded on the straight-line method over their useful lives as follows:
  
Years
Trade names
10-15
Non-competes
1-10
Customer relationships
5-25
Other intangibles
3-20
Acquisitions
From time to time, the Company acquires businesses and/or assets that augment and complement its operations. In accordance with ASC 805, “Business Combinations,” these acquisitions are accounted for under the purchase method of accounting. The consolidated financial statements include the results of operations from these business combinations from the date of acquisition.
In order to assess performance, the Company classifies costs incurred in connection with acquisitions as acquisition-related costs. These costs consist primarily of transaction costs, integration costs and changes in the fair value of contingent payments (earn-outs) and are recorded within selling, general and administrative costs. Acquisition transaction costs are incurred during the initial evaluation of a potential targeted acquisition and primarily relate to costs to analyze, negotiate and consummate the transaction as well as financial and legal due diligence activities. Post-acquisition integration activities are costs incurred to combine the operations of an acquired enterprise into the Company’s operations.
Internal Use Software
Internal use software is accounted for under ASC 985, “Software.” Internal use software is software that is acquired, internally developed or modified solely to meet the Company’s needs and for which, during the software’s development or modification, a plan does not exist to market the software externally. Costs incurred to develop the software during the application development stage and for upgrades and enhancements that provide additional functionality are capitalized and then amortized over a three to ten year period. Internal use software is capitalized as a component of machinery and equipment on the Consolidated Balance Sheets.
Long-Lived Assets
Properties, plants and equipment are stated at cost. Depreciation on properties, plants and equipment is provided on the straight-line method over the estimated useful lives of the assets as follows:
  
Years
Buildings
30-45
Machinery and equipment
3-19

Depreciation expense was $107.5 million, $106.8 million and $107.4 million in 2018, 2017 and 2016, respectively. Expenditures for repairs and maintenance are charged to expense as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and related allowance accounts. Gains or losses are credited or charged to income as incurred.
The Company capitalizes interest on long-term fixed asset projects using a rate that approximates the weighted average cost of borrowing. For the years ended October 31, 2018, 2017, and 2016, the Company capitalized interest costs of $4.5 million, $3.5 million, and $2.6 million, respectively.
The Company tests for impairment of properties, plants and equipment if certain indicators are present to suggest that impairment may exist. Long-lived assets are grouped together at the lowest level, generally at the plant level, for which identifiable cash flows are largely independent of cash flows of other groups of long-lived assets. As events warrant, the Company evaluates the recoverability of long-lived assets, other than goodwill and indefinite-lived intangible assets, by assessing whether the carrying value can be recovered over their remaining useful lives through the expected future undiscounted operating cash flows of the underlying business. Impairment indicators include, but are not limited to, a significant decrease in the market price of a long-lived asset; a significant adverse change in the manner in which the asset is being used or in its physical condition; a significant adverse change in legal factors or the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; current period operating or cash flow losses combined with a history of operating or cash flow losses associated with the use of the asset; or a current expectation that it is more likely than not that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Future decisions to change our manufacturing processes, exit certain businesses, reduce excess capacity, temporarily idle facilities and close facilities could also result in material impairment charges. Any impairment loss that may be required is determined by comparing the carrying value of the assets to their estimated fair value.
As of October 31, 2018, the Company's timber properties consisted of approximately 243,000 acres, all of which were located in the southeastern United States. The Company’s land costs are maintained by tract. Upon acquisition of a new timberland tract, the Company records separate amounts for land, merchantable timber and pre-merchantable timber allocated as a percentage of the values being purchased. The Company begins recording pre-merchantable timber costs at the time the site is prepared for planting. Costs capitalized during the establishment period include site preparation by aerial spray, costs of seedlings, including refrigeration rental and trucking, planting costs, herbaceous weed control, woody release, and labor and machinery use. The Company does not capitalize interest costs in the process. Property taxes are expensed as incurred. New road construction costs are capitalized as land improvements and depreciated over 20 years. Road repairs and maintenance costs are expensed as incurred. Costs after establishment of the seedlings, including management costs, pre-commercial thinning costs and fertilization costs, are expensed as incurred. Once the timber becomes merchantable, the cost is transferred from the pre-merchantable timber category to the merchantable timber category in the depletion block.
Merchantable timber costs are maintained by five product classes: pine sawtimber, pine chip-n-saw, pine pulpwood, hardwood sawtimber and hardwood pulpwood, within a depletion block, with each depletion block based upon a geographic district or subdistrict. Currently, the Company has eight depletion blocks. These same depletion blocks are used for pre-merchantable timber costs. Each year, the Company estimates the volume of the Company’s merchantable timber for the five product classes by each depletion block and depletion costs recognized upon sales are calculated as volumes sold times the unit costs in the respective depletion block. Depletion expense was $4.0 million, $4.0 million and $3.2 million in 2018, 2017 and 2016, respectively.
Contingencies
Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability and safety and health matters. While the amounts claimed may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist.
All lawsuits, claims and proceedings are considered by the Company in establishing reserves for contingencies in accordance with ASC 450, “Contingencies.” In accordance with the provisions of ASC 450, the Company accrues for a litigation-related liability when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on currently available information known to the Company, the Company believes that its reserves for these litigation-related liabilities are reasonable and that the ultimate outcome of any pending matters is not likely to have a material effect on the Company’s financial position or results of operations.
Environmental Cleanup Costs
The Company accounts for environmental cleanup costs in accordance with ASC 410, “Asset Retirement and Environmental Obligations.” The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible. Expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. The Company determines its liability on a site-by-site basis and records a liability at the time when it is probable and can be reasonably estimated. The Company’s estimated liability is reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs.
Self-insurance
The Company is self-insured for certain of the claims made under its employee medical and dental insurance programs. The Company had recorded liabilities totaling $3.8 million and $3.3 million for estimated costs related to outstanding claims as of October 31, 2018 and 2017, respectively. These costs include an estimate for expected settlements on pending claims, administrative fees and an estimate for claims incurred but not reported. These estimates are based on management’s assessment of outstanding claims, historical analyses and current payment trends. The Company recorded an estimate for the claims incurred, but not reported using an estimated lag period based upon historical information.
The Company has certain deductibles applied to various insurance policies including general liability, product, vehicle and workers’ compensation. The Company maintains liabilities totaling $9.8 million and $11.0 million for anticipated costs related to general liability, product, vehicle and workers’ compensation claims as of October 31, 2018 and 2017, respectively. These costs include an estimate for expected settlements on pending claims, defense costs and an estimate for claims incurred but not reported. These estimates are based on the Company’s assessment of its deductibles, outstanding claims, historical analysis, actuarial information and current payment trends.
Income Taxes
Income taxes are accounted for under ASC 740, “Income Taxes.” In accordance with ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be settled or realized. Valuation allowances are established when management believes it is more likely than not that some portion of the deferred tax assets will not be realized.
The Company’s effective tax rate is impacted by the amount of income generated in each taxing jurisdiction, statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which the Company operates. Significant judgment is required in determining the Company’s effective tax rate and in evaluating its tax positions.
Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement. The Company’s effective tax rate includes the impact of reserve provisions and changes to reserves on uncertain tax positions that are not more likely than not to be sustained upon examination as well as related interest and penalties.
A number of years may elapse before a particular matter, for which the Company has established a reserve, is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. Unfavorable settlement of any particular issue would require use of the Company’s cash. Favorable resolution would be recognized as a reduction to the Company’s effective tax rate in the period of resolution.
Equity earnings of unconsolidated affiliates, net of tax
Equity earnings of unconsolidated affiliates, net of tax represent the Company’s share of earnings of affiliates in which the Company does not exercise control, but has significant influence. Investments in such affiliates are accounted for using the equity method of accounting. If the fair value of an investment in an affiliate is below its carrying value and the difference is deemed to be other than temporary, the difference between the fair value and the carrying value is charged to earnings. The Company has an equity interest in two such affiliates as of October 31, 2018, including the addition of an equity method investment in 2016. For additional information regarding the addition of the equity method investment in 2016 refer to Note 2.
Other Comprehensive Income
Our other comprehensive income is significantly impacted by foreign currency translation, effective cash flow hedges and defined benefit pension and postretirement benefit adjustments.
The impact of foreign currency translation is affected by the translation of assets, liabilities and operations of the Company's foreign subsidiaries which are denominated in functional currencies other than the U.S. dollar and the recognition of accumulated foreign currency translation upon the disposal of foreign entities. The primary assets and liabilities affecting the adjustments are: cash and cash equivalents; accounts receivable; inventory; properties, plants and equipment; accounts payable; pension and other postretirement benefit obligations; and certain intercompany loans payable and receivable. The primary currencies in which these assets and liabilities are denominated are the Euro, Brazilian real, and Chinese yuan.
The impact of effective cash flow hedges is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Currently, interest rate swaps are held by the Company to effectively convert a portion of floating rate debt to a fixed rate basis, thus reducing the impact of interest rate increases on future interest expense. The Company uses the regression method for assessing the effectiveness of the swaps.
The impact of defined benefit pension and postretirement benefit adjustments is primarily affected by unrecognized actuarial gains and losses related to the Company's defined benefit and other postretirement benefit plans, as well as the subsequent amortization of gains and losses from accumulated other comprehensive income in periods following the initial recording of such items. These actuarial gains and losses are determined using various assumptions, the most significant of which are (i) the weighted average rate used for discounting the liability, (ii) the weighted average expected long-term rate of return on pension plan assets, (iii) the method used to determine market-related value of pension plan assets, (iv) the weighted average rate of future salary increases and (v) the anticipated mortality rate tables.
Restructuring Charges
The Company accounts for all exit or disposal activities in accordance with ASC 420, “Exit or Disposal Cost Obligations.” Under ASC 420, a liability is measured at its fair value and recognized as incurred.
Employee-related costs primarily consist of one-time termination benefits provided to employees who have been involuntarily terminated. A one-time benefit arrangement is an arrangement established by a plan of termination that applies for a specified termination event or for a specified future period. A one-time benefit arrangement exists at the date the plan of termination meets all of the following criteria and has been communicated to employees:
 
(1)
Management, having the authority to approve the action, commits to a plan of termination.
(2)
The plan identifies the number of employees to be terminated, their job classifications or functions and their locations, and the expected completion date.
(3)
The plan establishes the terms of the benefit arrangement, including the benefits that employees will receive upon termination (including but not limited to cash payments), in sufficient detail to enable employees to determine the type and amount of benefits they will receive if they are involuntarily terminated.
(4)
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Facility exit and other costs consist of equipment relocation costs and project consulting fees. A liability for other costs associated with an exit or disposal activity shall be recognized and measured at its fair value in the period in which the liability is incurred (generally, when goods or services associated with the activity are received). The liability shall not be recognized before it is incurred, even if the costs are incremental to other operating costs and will be incurred as a direct result of a plan.
Pension and Postretirement Benefits
Under ASC 715, “Compensation – Retirement Benefits,” employers recognize the funded status of their defined benefit pension and other postretirement plans on the consolidated balance sheet and record as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that have not been recognized as components of the net periodic benefit cost.
Transfer and Servicing of Assets
An indirect wholly-owned subsidiary of Greif, Inc. agrees to sell trade receivables meeting certain eligibility requirements that it had purchased from other indirect wholly-owned subsidiaries of Greif, Inc., under a non-U.S. factoring agreement. The structure of the transactions provide for a legal true sale, on a revolving basis, of the receivables transferred from the various Greif, Inc. indirect subsidiaries to the respective banks or their affiliates. The banks and their affiliates fund an initial purchase price of a certain percentage of eligible receivables based on a formula with the initial purchase price approximating 75 percent to 90 percent of eligible receivables. The remaining deferred purchase price is settled upon collection of the receivables. At the balance sheet reporting dates, the Company removes from accounts receivable the amount of proceeds received from the initial purchase price since they meet the applicable criteria of ASC 860, “Transfers and Servicing,” and continues to recognize the deferred purchase price in its other current assets or other current liabilities, as the case may be. The receivables are sold on a non-recourse basis with the total funds in the servicing collection accounts pledged to the banks between settlement dates.
Stock-Based Compensation Expense
The Company recognizes stock-based compensation expense in accordance with ASC 718, “Compensation – Stock Compensation.” ASC 718 requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors, including stock options, restricted stock, restricted stock units and participation in the Company’s employee stock purchase plan.
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense in the Company’s consolidated statements of income over the requisite service periods. No stock options were granted in 2018, 2017 or 2016. For any options granted in the future, compensation expense will be based on the grant date fair value estimated in accordance with the standard.
Revenue Recognition
The Company recognizes revenue when title passes and risks and rewards of ownership have transferred to customers or services have been rendered, with appropriate provision for returns and allowances. Revenue is recognized in accordance with ASC 605, “Revenue Recognition.”
Timberland disposals, timber sales, higher and better use (“HBU”) land, surplus and development property sales revenues are recognized when closings have occurred, required down payments have been received, title and possession have been transferred to the buyer and all other criteria for sale and profit recognition have been satisfied.
The Company reports the sale of timberland property in "timberland gains," the sale of HBU and surplus property in “gain on disposal of properties, plants and equipment, net” and the sale of timber and development property under “net sales” and “cost of products sold" in its consolidated statements of income. All HBU and development property, together with surplus property, is used by the Company to productively grow and sell timber until the property is sold.
Shipping and Handling Fees and Costs
The Company includes shipping and handling fees and costs in cost of products sold.
Other Expense, net
Other expense, net primarily represents non-United States trade receivables program fees, foreign currency transaction gains and losses, non-service cost components of net periodic benefit costs and other infrequent non-operating items.
Currency Translation
In accordance with ASC 830, “Foreign Currency Matters,” the assets and liabilities denominated in a foreign currency are translated into United States dollars at the rate of exchange existing at period-end, and revenues and expenses are translated at average exchange rates.
The cumulative translation adjustments, which represent the effects of translating assets and liabilities of the Company’s international operations, are presented in the consolidated statements of changes in shareholders’ equity in accumulated other comprehensive income (loss). Transaction gains and losses on foreign currency transactions denominated in a currency other than an entity’s functional currency are credited or charged to income. The amounts included in other expense, net related to transaction losses were $8.8 million, $6.4 million and $6.7 million in 2018, 2017 and 2016, respectively.
Derivative Financial Instruments
In accordance with ASC 815, “Derivatives and Hedging,” the Company records all derivatives in the consolidated balance sheet as either assets or liabilities measured at fair value. Dependent on the designation of the derivative instrument, changes in fair value are recorded to earnings or shareholders’ equity through other comprehensive income (loss).
The Company may from time to time use interest rate swap agreements to hedge against changing interest rates. For interest rate swap agreements designated as cash flow hedges, the net gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company's interest rate swap agreements effectively convert a portion of floating rate debt to a fixed rate basis, thus reducing the impact of interest rate increases on future interest expense.
The Company's cross currency interest rate swap agreement synthetically swaps U.S. dollar denominated fixed rate debt for Euro denominated fixed rate debt and is designated as a net investment hedge for accounting purposes. The gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Interest payments received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the consolidated statements of income.
The Company enters into currency forward contracts to hedge certain currency transactions and short-term intercompany loan balances with its international businesses. Such contracts limit the Company’s exposure to both favorable and unfavorable currency fluctuations. These contracts are adjusted to reflect market value as of each balance sheet date, with the resulting changes in fair value being recognized in other expense, net.
Any derivative contract that is either not designated as a hedge, or is so designated but is ineffective, has its changes to market value recognized in earnings immediately. If a cash flow or fair value hedge ceases to qualify for hedge accounting, the contract would continue to be carried on the balance sheet at fair value until settled and have the adjustments to the contract’s fair value recognized in earnings. If a forecasted transaction were no longer probable to occur, amounts previously deferred in accumulated other comprehensive income (loss) would be recognized immediately in earnings.
Fair Value
The Company uses ASC 820, “Fair Value Measurements and Disclosures” to account for fair value. ASC 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about assets and liabilities measured at fair value. Additionally, this standard established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair values are as follows:
Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
The Company presents various fair value disclosures in Notes 9 and 12 to these consolidated financial statements.
Newly Adopted Accounting Standards
In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-07, "Compensation - Retirement Benefits (Topic 715)," which provides additional guidance in ASC 715 for the presentation of net periodic benefit cost related to pension and post-retirement benefits in the income statement and on the components eligible for capitalization in assets. This ASU requires the reporting of the service cost component to be in the same line item as other compensation costs arising from services rendered by the pertinent employees. Also, the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This update also allows only the service cost component to be eligible for capitalization when applicable. The update is effective for the Company on November 1, 2018 using a retrospective approach for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic post-retirement benefit in assets. The Company early adopted ASU 2017-07 on November 1, 2017 using a retrospective approach for each period presented. The impact of adoption for the year ended October 31, 2018 was $5.9 million of net periodic benefit costs, other than the service cost components, being recorded in the line item "other expense, net" in the consolidated statements of income. For the year ended October 31, 2017, $27.1 million of pension settlement charges, previously presented within operating profit have been presented outside of operating profit in the consolidated statements of income due to the retrospective adoption of this ASU. The adoption did not have a material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures other than the impact discussed above.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815)," which amends the accounting and disclosure requirements in ASC 815, "Derivatives and Hedging." The objective of this ASU is to improve transparency and reduce the complexity of hedge accounting. This ASU eliminates the separate recognition of periodic hedge ineffectiveness for cash flow and net investment hedges. The update is effective for the Company on November 1, 2019 using a modified retrospective approach and early adoption is permitted. The Company early adopted ASU 2017-12 on November 1, 2017 using a modified retrospective approach, which resulted in a reclassification of $0.6 million of losses out of "accumulated other comprehensive income (loss), net of tax" and into "Retained Earnings" related to an elimination of the cumulative ineffectiveness of cash flow hedges at the adoption date. The adoption did not have a material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures other than the impact discussed above.
Recently Issued Accounting Standards
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition.” This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The update is effective for the Company on November 1, 2018 using one of two retrospective application methods. The Company is finalizing its process related to the adoption of the new revenue standard. The Company has completed internal training sessions, interviews with key global business personnel, global revenue surveys and review of a global representative sample of revenue contracts.  The Company is in the process of finalizing its position papers and accounting policies, updating internal controls and reviewing and developing the additional disclosures required by the standard. The Company will adopt the modified retrospective transition method for implementing this guidance effective November 1, 2018. The Company anticipates that the impact of adoption will be limited to expanded disclosures with no material impact on its financial position, results of operations, comprehensive income or cash flows.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which amends the lease accounting and disclosure requirements in ASC 840, "Leases". The objective of this update is to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. This ASU will require the recognition of lease assets and lease liabilities for those leases classified as operating leases under previous GAAP. In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842): Targeted Improvements (ASU 2018-11)," which permits companies to initially apply the new leases standard at the adoption date and not restate periods prior to adoption. The Company plans to adopt ASU 2018-11 on November 1, 2019 and as a result, will not adjust its comparative period financial information or make the new required lease disclosures for periods before the effective date. The Company is currently in the process of collecting and evaluating all of its leases, which primarily consist of equipment and real estate leases. The Company also plans to implement a technology tool to assist with the accounting and reporting requirements of the new standard, as well as update its processes and controls around leases. The Company will adopt the standard effective November 1, 2019 and expects to elect certain available transitional practical expedients. The Company is in the process of determining the potential impact of adopting this guidance on its financial position, results of operations, comprehensive income, cash flows and disclosures, but does expect to recognize a significant liability and corresponding asset associated with in-scope operating leases.
In August of 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230)," which amends the classification of certain cash receipts and cash payments on the statement of cash flows. The update is effective for the Company on November 1, 2018 and early adoption is permitted, including any interim period. The update should be applied using a retrospective approach, excluding amendments for which retrospective application is impractical. The ASU requires the beneficial interests obtained through securitization of financial assets be disclosed as a non-cash activity and cash receipts from beneficial interests be classified as cash inflows from investing activities. Under existing guidance, the Company classifies cash receipts from beneficial interests in securitized receivables and cash payments resulting from debt prepayment or extinguishment as cash flows from operating activities. The Company anticipates that the impact of the adoption of this ASU will materially impact its cash flows from operating activities and cash flows from investing activities within the statement of cash flows, and does not anticipate the adoption will have a material impact on its financial position, results of operations, comprehensive income, cash flows or disclosures, other than the impacts mentioned above.
In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)," which improves the accounting for income tax consequences of intra-entity transfers of assets other than inventory. The update is effective for the Company on November 1, 2018 using a modified retrospective approach and early adoption is permitted, including any interim period. The adoption of ASU 2016-16 will result in a reclassification of approximately $15.7 million out of "prepaid tax assets" and into "Retained Earnings" as of November 1, 2018. The Company does not anticipate the adoption will have a material impact on its financial position, results of operations, comprehensive income, or cash flows, however, existing disclosures, such as the effective tax rate reconciliation or the disclosure of the components of deferred tax assets and deferred tax liabilities may be affected by the recognition of the tax consequences of intra-entity transfers of assets.
v3.10.0.1
Acquisitions and Divestitures
12 Months Ended
Oct. 31, 2018
Business Combinations [Abstract]  
Acquisitions and Divestitures
ACQUISITIONS AND DIVESTITURES
During 2018, the Company completed no divestitures and no acquisitions. The Company liquidated two non-strategic non-U.S. businesses in the Flexible Products & Services segment. The gain on disposal of businesses was $0.8 million for the year ended October 31, 2018. Proceeds from divestitures that were completed in fiscal year 2017 and collected during the year ended October 31, 2018 were $0.5 million. Proceeds from divestitures that were completed in fiscal year 2015 and collected during the year ended October 31, 2018 were $0.9 million. The Company has $2.9 million of notes receivable recorded from the sale of businesses, in remaining terms of up to six months.
During 2017, the Company completed two divestitures, completed no acquisitions, deconsolidated two nonstrategic businesses, and liquidated two non-U.S. nonstrategic businesses. The Company completed two divestitures of businesses in the Rigid Industrial Packaging & Services segment. The Company deconsolidated one nonstrategic business in the Flexible Products & Services segment and one nonstrategic business in the Rigid Industrial Packaging & Services segment. The Company liquidated two non-U.S. nonstrategic businesses in the Rigid Industrial Packaging & Services segment. The loss on disposal of businesses was $1.7 million for the year ended October 31, 2017. Proceeds from divestitures were $5.1 million for the year ended October 31, 2017. Proceeds from divestitures that were completed in fiscal year 2015 and collected during the year ended October 31, 2017 were $0.8 million. The Company had $4.3 million of notes receivable recorded from the sale of businesses.
During 2016, the Company completed four divestitures, one partial sale of ownership interest resulting in deconsolidation of a then wholly-owned indirect subsidiary and no material acquisitions. The divestitures were of nonstrategic businesses: three in the Rigid Industrial Packaging & Services segment; and one in the Flexible Products & Services segment. The loss on disposal of businesses was $14.5 million for the year ended October 31, 2016, consisting of an $18.1 million loss on the partial sale of ownership interest and a net gain of $3.6 million for the four divestitures. Proceeds from divestitures and the partial sale of ownership interest were $24.1 million. The Company had $2.4 million of notes receivable recorded for the sale of businesses.

The partial sale of ownership interest resulting in deconsolidation of a then wholly-owned indirect subsidiary was the result of the sale of 51 percent ownership interest in Earthminded Benelux, NV, a subsidiary in the Rigid Industrial Packaging & Services segment, which, together with the relinquishment of the Company's power to direct the activities that most significantly impact the subsidiary's performance, resulted in deconsolidation. As of September 1, 2016, the Company accounts for its investment in this subsidiary under the equity method of accounting due to the Company's noncontrolling ownership interest.
The $18.1 million loss on the partial sale of ownership interest resulting in deconsolidation was measured as the difference between (a) the fair value of the retained noncontrolling interest of $0.3 million and the consideration transferred of $0.3 million from the unrelated third party purchaser and (b) the carrying value of the former subsidiary's net assets of $18.7 million.
None of the above-referenced divestitures in 2018, 2017 or 2016 qualified as discontinued operations as they do not, individually or in the aggregate, represent a strategic shift that has had a major impact on the Company’s operations or financial results.
v3.10.0.1
Sale of Non-United States Accounts Receivable
12 Months Ended
Oct. 31, 2018
Receivables [Abstract]  
Sale of Non-United States Accounts Receivable
SALE OF NON-UNITED STATES ACCOUNTS RECEIVABLE
In 2012, Cooperage Receivables Finance B.V. (the “Main SPV”) and Greif Coordination Center BVBA, an indirect wholly owned subsidiary of Greif, Inc. (“Seller”), entered into the Nieuw Amsterdam Receivables Purchase Agreement (the “European RPA”) with affiliates of a major international bank (the “Purchasing Bank Affiliates”). On April 18, 2017, the Main SPV and Seller amended and extended the term of the existing European RPA. Under the European RPA, as amended, the maximum amount of receivables that may be sold and outstanding under the European RPA at any time is €100 million ($113.7 million as of October 31, 2018). Under the terms of the European RPA, the Company has the ability to loan excess cash back to the Purchasing Bank Affiliates in the form of a subordinated loan receivable.
Under the terms of the European RPA, the Company has agreed to sell trade receivables meeting certain eligibility requirements that the Seller had purchased from other of the Company's indirect wholly-owned subsidiaries under a factoring agreement. The structure of the transactions provide for a legal true sale, on a revolving basis, of the receivables transferred from the Company's various subsidiaries to the respective banks and their affiliates. The purchaser funds an initial purchase price of a certain percentage of eligible receivables based on a formula, with the initial purchase price approximating 75 percent to 90 percent of eligible receivables. The remaining deferred purchase price is settled upon collection of the receivables. At the balance sheet reporting dates, the Company removes from accounts receivable the amount of proceeds received from the initial purchase price since they meet the applicable criteria of ASC 860, “Transfers and Servicing,” and the Company continues to recognize the deferred purchase price in other current assets or other current liabilities, as appropriate. The receivables are sold on a non-recourse basis with the total funds in the servicing collection accounts pledged to the banks between settlement dates.
In October 2007, Greif Singapore Pte. Ltd., an indirect wholly-owned subsidiary of Greif, Inc., entered into the Singapore Receivable Purchase Agreement (the “Singapore RPA”) with a major international bank. The maximum amount of aggregate receivables that may be financed under the Singapore RPA is 15.0 million Singapore Dollars ($10.8 million as of October 31, 2018). Under the terms of the Singapore RPA, the Company has agreed to sell trade receivables in exchange for an initial purchase price of approximately 90 percent of the eligible receivables. The remaining deferred purchase price is settled upon collection of the receivables.
The table below contains information related to the Company’s accounts receivable programs: 
 
Year Ended October 31,
(in millions)
2018
 
2017
 
2016
European RPA
 
 
 
 
 
Gross accounts receivable sold to third party financial institution
$
707.2

 
$
715.1

 
$
620.3

Cash received for accounts receivable sold under the programs
628.8

 
633.4

 
548.1

Deferred purchase price related to accounts receivable sold
78.5

 
81.8

 
71.7

Loss associated with the programs
0.3

 
0.5

 
0.8

Expenses associated with the programs

 

 

Singapore RPA
 
 
 
 
 
Gross accounts receivable sold to third party financial institution
$
57.0

 
$
50.1

 
$
44.1

Cash received for accounts receivable sold under the programs
48.9

 
43.0

 
36.4

Deferred purchase price related to accounts receivable sold
8.2

 
7.1

 
7.1

Loss associated with the programs
0.1

 
0.6

 

Expenses associated with the programs
0.1

 
0.4

 

Total RPAs and Agreements
 
 
 
 
 
Gross accounts receivable sold to third party financial institution
$
764.2

 
$
765.2

 
$
664.4

Cash received for accounts receivable sold under the program
677.7

 
676.4

 
584.5

Deferred purchase price related to accounts receivable sold
86.7

 
88.9

 
78.8

Loss associated with the program
0.4

 
1.1

 
0.8

Expenses associated with the program
0.1

 
0.4

 

(in millions)
October 31, 2018
 
October 31, 2017
European RPA
 
 
 
Accounts receivable sold to and held by third party financial institution
$
132.1

 
$
116.3

Deferred purchase price liability related to accounts receivable sold
(6.2
)
 
(4.2
)
Singapore RPA
 
 
 
Accounts receivable sold to and held by third party financial institution
$
5.8

 
$
3.8

Deferred purchase price asset related to accounts receivable sold
0.7

 
0.5

Total RPAs and Agreements
 
 
 
Accounts receivable sold to and held by third party financial institution
$
137.9

 
$
120.1

Deferred purchase price liability related to accounts receivable sold
(5.5
)
 
(3.7
)

The deferred purchase price related to the accounts receivable sold is reflected as other current assets or other current liabilities, as appropriate on the Company’s consolidated balance sheet and was initially recorded at an amount which approximates its fair value due to the short-term nature of these items. The cash received initially and the deferred purchase price relate to the sale or ultimate collection of the underlying receivables and are not subject to significant other risks given their short nature; therefore, the Company reflects all cash flows under the accounts receivable sales programs as operating cash flows on the Company’s consolidated statements of cash flows.
Additionally, the Company performs collections and administrative functions on the receivables sold similar to the procedures it uses for collecting all of its receivables, including receivables that are not sold under the European RPA and the Singapore RPA. The servicing liability for these receivables is not material to the consolidated financial statements.
v3.10.0.1
Assets and Liabilities Held for Sale and Disposals of Property, Plant and Equipment, Net
12 Months Ended
Oct. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Assets and Liabilities Held for Sale and Disposals of Property, Plant and Equipment, Net
ASSETS AND LIABILITIES HELD FOR SALE AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT, NET
As of October 31, 2018, there were two asset groups within the Rigid Industrial Packaging & Services segment and one asset group within the Paper Packaging & Services segment classified as assets held for sale. The assets held for sale are being marketed for sale, and it is the Company's intention to complete the sales of these assets within twelve months following their initial classification into assets held for sale.
During 2018, the Company recorded a gain on disposal of properties, plants and equipment, net of $5.6 million. This included disposals of assets in the Rigid Industrial Packaging & Services segment that resulted in gains of $3.3 million and special use property sales that resulted in gains of $2.3 million in the Land Management segment.
For the year ended October 31, 2017, the Company recorded a gain on disposal of properties, plants and equipment, net of $0.4 million. This included special use property sales that resulted in gains of $2.5 million in the Land Management segment, disposals of assets in the Flexible Products & Services segment that resulted in gains of $0.9 million, partially offset by disposals of assets that resulted in a net loss of $0.2 million in the Rigid Industrial Packaging & Services segment, a $2.7 million loss on the reclassification of an asset group from held for sale to held and used in the Rigid Industrial Packaging & Services segment, and disposals of assets in the Paper Packaging segment that resulted in a net loss of $0.1 million.
For the year ended October 31, 2016, the Company recorded a gain on disposal of properties, plants and equipment, net of $10.3 million. This included insurance recoveries that resulted in gains of $6.4 million in the Rigid Industrial Packaging & Services segment, disposals of assets in the Flexible Products & Services segment classified as held for sale that resulted in gains of $1.3 million, sales of surplus properties in the Land Management segment that resulted in gains of $1.6 million, insurance recoveries that resulted in gains of $0.2 million in the Paper Packaging & Services segment, and other net gains totaling an additional $0.8 million.
v3.10.0.1
Goodwill and Other Intangible Assets
12 Months Ended
Oct. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets
GOODWILL AND OTHER INTANGIBLE ASSETS
The following table summarizes the changes in the carrying amount of goodwill by segment for the years ended October 31, 2018 and 2017:
(in millions)
Rigid Industrial Packaging &  Services (1)
 
Paper
Packaging & Services
 
Flexible  Products & Services (1)
 
Land
Management
 
Total
Balance at October 31, 2016
$
726.9

 
$
59.5

 
$

 
$

 
$
786.4

Goodwill acquired

 

 

 

 

Goodwill allocated to divestitures and businesses held for sale
(9.2
)
 

 

 

 
(9.2
)
Goodwill adjustments

 

 

 

 

Goodwill impairment charge
(13.0
)
 

 

 

 
(13.0
)
Currency translation
21.2

 

 

 

 
21.2

Balance at October 31, 2017
$
725.9

 
$
59.5

 
$

 
$

 
$
785.4

Goodwill acquired

 

 

 

 

Goodwill allocated to divestitures and businesses held for sale
(0.7
)
 

 

 

 
(0.7
)
Goodwill adjustments

 

 

 

 

Goodwill impairment charge

 

 

 

 

Currency translation
(8.7
)
 

 

 

 
(8.7
)
Balance at October 31, 2018
$
716.5

 
$
59.5

 
$

 
$

 
$
776.0

(1)Accumulated goodwill impairment loss was $63.3 million as of October 31, 2018 and 2017. Included in the accumulated goodwill impairment loss was $13.0 million related to the Rigid Industrial Packaging & Services segment and $50.3 million related to the Flexible Products & Services segment. Accumulated goodwill impairment loss was $50.3 million as of October 31, 2016 related to the Flexible Products & Services segment.
The Company reviews goodwill by reporting unit and indefinite-lived intangible assets for impairment as required by ASC 350, “Intangibles – Goodwill and Other,” either annually in the fourth quarter as of August 1, or whenever events and circumstances indicate impairment may have occurred. A reporting unit is the operating segment, or a business one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. The components are aggregated into reporting units for purposes of goodwill impairment testing to the extent they share similar qualitative and quantitative characteristics.
The Company performed its annual goodwill impairment test as of August 1, 2018 which resulted in no goodwill impairment. The majority of the Company's goodwill reporting units were tested utilizing a qualitative assessment. However, for the Rigid Industrial Packaging & Services - Asia Pacific reporting unit the Company proceeded directly to the quantitative impairment test. The fair value of the reporting unit exceeded the carrying value by 20%, resulting in no impairment. Discount rates, growth rates and cash flow projections are the assumptions that are most sensitive and susceptible to change as they require significant management judgment. In addition, certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in actual and expected consumption and demand, could result in changes to these assumptions and judgments. A revision of these assumptions could cause the fair value of the reporting unit to fall below its respective carrying value. As for all of the Company's reporting units, if in future years, the reporting unit's actual results are not consistent with the Company's estimates and assumptions used to calculate fair value, the Company may be required to recognize material impairments to goodwill.
During the fourth quarter of 2017 the Company performed an assessment of its operating segments and determined that as a result of changes in the way the chief operating decision maker receives and reviews financial information, a realignment of its operating segment structure was necessary. As a result of the operating segment realignment, the Company's reporting unit structure was updated for consistency. As of August 1, 2017, the Company realigned its operating segments to include eight operating segments: Rigid Industrial Packaging & Services – North America; Rigid Industrial Packaging & Services – Latin America; Rigid Industrial Packaging & Services – Europe, Middle East and Africa; Rigid Industrial Packaging & Services – Asia Pacific; and Rigid Industrial Packaging & Services – Tri-Sure; Paper Packaging & Services; Flexible Products & Services; and Land Management. The Company's eight operating segments are aggregated into four reportable business segments by combining the Rigid Industrial Packaging & Services – North America; Rigid Industrial Packaging & Services – Latin America; Rigid Industrial Packaging & Services – Europe, Middle East and Africa; Rigid Industrial Packaging & Services – Asia Pacific; and Rigid Industrial Packaging & Services – Tri-Sure operating segments. The Company’s reporting units are the same as the operating segments. As a result of the realignment, goodwill was reassigned to each of the Rigid Industrial Packaging & Services reporting units using a relative fair value approach.
The Company performed its annual goodwill review as of August 1, 2017, for each of the reporting units with a goodwill balance under both the former and current reporting unit structure. The impairment test under the former reporting unit structure concluded that no impairment existed as of August 1, 2017. The impairment test under the updated reporting unit structure concluded that the carrying value of the Rigid Industrial Packaging & Services – Latin America reporting unit exceeded the fair value of the reporting unit and the goodwill of the Rigid Industrial Packaging & Services – Latin America reporting unit of $13.0 million was fully impaired.
The fair value of the Rigid Industrial Packaging & Services – Latin America reporting unit was determined using a combination of the income approach by discounting estimated future cash flows and the market multiple approach. The cash flow projections were prepared based upon the evaluation of the historical performance and future growth expectations for the reporting unit. Revenue was based on the 2017 forecast as of August 1, 2017 with a long-term growth rate applied to future periods. The most critical assumptions within the cash flow projections are revenue growth rates and forecasted gross margin percentages. The most critical assumption within the market multiple calculation is the multiple selected.
Prior to the change in the fourth quarter of 2017, the Company's reporting unit structure consisted of five reporting units: Rigid Industrial Packaging & Services – Americas; Rigid Industrial Packaging & Services – Europe, Middle East, Africa and Asia Pacific; Paper Packaging & Services; Flexible Products & Services; and Land Management. The Company performed its annual goodwill impairment test as of August 1, 2016 which resulted in no goodwill impairment under the then-current reporting unit structure.
Refer to Note 9 herein for further discussion regarding goodwill allocated to divestitures and businesses held for sale.
The following table summarizes the carrying amount of net intangible assets by class as of October 31, 2018 and 2017:
(in millions)
Gross
Intangible
Assets
 
Accumulated
Amortization
 
Net Intangible
Assets
October 31, 2018:
 
 
 
 
 
Indefinite lived:
 
 
 
 
 
Trademarks and patents
$
13.3

 
$

 
$
13.3

Definite lived:
 
 
 
 
 
Customer relationships
$
162.2

 
$
105.8

 
$
56.4

Trademarks and patents
10.9

 
5.1

 
5.8

Other
21.2

 
16.1

 
5.1

Total
$
207.6

 
$
127.0

 
$
80.6

 
 
 
 
 
 
October 31, 2017:
 
 
 
 
 
Indefinite lived:
 
 
 
 
 
Trademarks and patents
$
13.4

 
$

 
$
13.4

Definite lived:
 
 
 
 
 
Customer relationships
$
170.2

 
$
99.7

 
$
70.5

Trademarks and patents
11.6

 
4.9

 
6.7

Other
23.4

 
16.0

 
7.4

Total
$
218.6

 
$
120.6

 
$
98.0


Gross intangible assets decreased by $11.0 million for the year ended October 31, 2018. The decrease was attributable to $3.7 million of currency fluctuations, $2.9 million of impairment and the write-off of $4.4 million of fully-amortized assets. Amortization expense was $15.2 million, $13.5 million and $16.8 million for the years ended October 31, 2018, 2017 and 2016, respectively. Amortization expense for the next five years is expected to be $15.3 million in 2019, $15.0 million in 2020, $14.4 million in 2021, $12.8 million in 2022 and $8.8 million in 2023.
Definite lived intangible assets for the periods presented are subject to amortization and are being amortized using the straight-line method over periods that are contractually or legally determined, or over the period a market participant would benefit from the asset. Indefinite lived intangibles of approximately $13.3 million as of October 31, 2018, related primarily to the Tri-Sure trademark and trade names related to Closures, Blagden Express, Closed-loop, Box Board and Pachmas, are not amortized.
v3.10.0.1
Restructuring Charges
12 Months Ended
Oct. 31, 2018
Restructuring and Related Activities [Abstract]  
Restructuring Charges
RESTRUCTURING CHARGES
The following is a reconciliation of the beginning and ended restructuring reserve balances for the years ended October 31, 2018 and 2017:
(in millions)
Employee
Separation
Costs
 
Other Costs
 
Total
Balance at October 31, 2016
$
9.2

 
$
1.2

 
$
10.4

Costs incurred and charged to expense
9.0

 
3.7

 
12.7

Costs paid or otherwise settled
(14.3
)
 
(3.6
)
 
(17.9
)
Balance at October 31, 2017
$
3.9

 
$
1.3

 
$
5.2

Costs incurred and charged to expense
14.8

 
3.8

 
18.6

Costs paid or otherwise settled
(14.5
)
 
(4.9
)
 
(19.4
)
Balance at October 31, 2018
$
4.2

 
$
0.2

 
$
4.4


The focus for restructuring activities in 2018 was to continue to rationalize operations and close underperforming assets in the Rigid Industrial Packaging & Services segment. During the year ended October 31, 2018, the Company recorded restructuring charges of $18.6 million, as compared to $12.7 million of restructuring charges recorded during the year ended October 31, 2017. The restructuring activity for the year ended October 31, 2018 consisted of $14.8 million in employee separation costs and $3.8 million in other restructuring costs, primarily consisting of professional fees and other fees associated with restructuring activities. There were five plants closed in 2018, and a total of 322 employees severed throughout 2018 as part of the Company’s restructuring efforts.
The following is a reconciliation of the total amounts expected to be incurred from open restructuring plans or plans that are being formulated and have not been announced as of the filing date of this Form 10-K. Remaining amounts expected to be incurred were $12.0 million as of October 31, 2018:
(in millions)
Total Amounts
Expected to be
Incurred
 
Amounts
Incurred During
the year ended October 31, 2018
 
Amounts
Remaining to be
Incurred
Rigid Industrial Packaging & Services:
 
 
 
 
 
Employee separation costs
$
22.7

 
$
13.6

 
9.1

Other restructuring costs
5.5

 
3.7

 
1.8

 
28.2

 
17.3

 
10.9

Flexible Products & Services:
 
 
 
 
 
Employee separation costs
0.8

 
0.8

 

Other restructuring costs
1.2

 
0.1

 
1.1

 
2.0

 
0.9

 
1.1

Paper Packaging & Services:
 
 
 
 
 
Employee separation costs
0.4

 
0.4

 

 
0.4

 
0.4

 

 
$
30.6

 
$
18.6

 
$
12.0


The focus for restructuring activities in 2017 was to continue to rationalize operations and close underperforming assets in the Rigid Industrial Packaging & Services and Flexible Products & Services segments. During 2017, the Company recorded restructuring charges of $12.7 million, consisting of $9.0 million in employee separation costs and $3.7 million in other restructuring costs, primarily consisting of professional fees and other fees associated with restructuring activities. There were two plants closed and a total of 157 employees severed throughout 2017 as part of the Company’s restructuring efforts.
The focus for restructuring activities in 2016 was to rationalize and close underperforming assets in the Rigid Industrial Packaging & Services and Flexible Products & Services segments. During 2016, the Company recorded restructuring charges of $26.9 million, consisting of $16.7 million in employee separation costs and $10.2 million in other restructuring costs, primarily consisting of professional fees incurred for services specifically associated with employee separation and relocation. There were four plants closed and a total of 254 employees severed throughout 2016 as part of the Company’s restructuring efforts.
v3.10.0.1
Consolidation of Variable Interest Entities
12 Months Ended
Oct. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Consolidation of Variable Interest Entities
CONSOLIDATION OF VARIABLE INTEREST ENTITIES
The Company evaluates whether an entity is a variable interest entity (“VIE”) whenever reconsideration events occur and performs reassessments of all VIE’s quarterly to determine if the primary beneficiary status is appropriate. The Company consolidates VIE’s for which it is the primary beneficiary. If the Company is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity or cost methods of accounting, as appropriate. When assessing the determination of the primary beneficiary, the Company considers all relevant facts and circumstances, including: the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE.
Paper Packaging Joint Venture
On April 20, 2018, Greif, Inc. and one of its indirect subsidiaries formed a joint venture (referred to herein as the “Paper Packaging JV” or "PPS VIE") with a third party. The Paper Packaging JV has been consolidated into the operations of the Company since its formation date of April 20, 2018.
The Paper Packaging JV is deemed to be a VIE as the equity investors at risk, as a group, lack the characteristics of a controlling financial interest. The structure of the Paper Packaging JV has governing provisions that are the functional equivalent of a limited partnership whereby the Company is the managing member that makes all the decisions related to the activities that most significantly affect the economic performance of the PPS VIE. In addition, the third party does not have any substantive kick-out rights or substantive participating rights in the Paper Packaging JV. The major factors that led to the conclusion that the Paper Packaging JV is a VIE was that all limited partnerships are considered to be VIE’s unless the limited partners have substantive kick-out rights or substantive participating rights.
As of October 31, 2018, the Paper Packaging JV’s net assets consist of cash and cash equivalents of $2.8 million and properties, plants, and equipment, net of $7.2 million. For the year ended October 31, 2018, there is no net income (loss) as the PPS JV is in the startup phase and has not yet commenced operations.
Significant Nonstrategic Timberland Transactions
On March 28, 2005, Soterra LLC (a wholly owned subsidiary) entered into two real estate purchase and sale agreements with Plum Creek Timberlands, L.P. (“Plum Creek”) to sell approximately 56,000 acres of timberland and related assets located primarily in Florida for an aggregate sales price of approximately $90 million, subject to closing adjustments. In connection with the closing of one of these agreements, Soterra LLC sold approximately 35,000 acres of timberland and associated assets in Florida, Georgia and Alabama for $51.0 million, resulting in a pretax gain of $42.1 million, on May 23, 2005. The purchase price was paid in the form of cash and a $50.9 million purchase note payable (the “Purchase Note”) by an indirect subsidiary of Plum Creek (the “Buyer SPE”). Soterra LLC contributed the Purchase Note to STA Timber LLC (“STA Timber”), one of the Company’s indirect wholly owned subsidiaries. The Purchase Note is secured by a Deed of Guarantee issued by Bank of America, N.A., London Branch, in an amount not to exceed $52.3 million (the “Deed of Guarantee”), as a guarantee of the due and punctual payment of principal and interest on the Purchase Note.
The Company completed the second and final phase of these transactions in the first and second quarters of 2006, respectively, with the sale of 15,300 acres and another approximately 5,700 acres.
On May 31, 2005, STA Timber issued in a private placement its 5.20% Senior Secured Notes due August 5, 2020 (the “Monetization Notes”) in the principal amount of $43.3 million. In connection with the sale of the Monetization Notes, STA Timber entered into note purchase agreements with the purchasers of the Monetization Notes (the “Note Purchase Agreements”) and related documentation. The Monetization Notes are secured by a pledge of the Purchase Note and the Deed of Guarantee. The Monetization Notes may be accelerated in the event of a default in payment or a breach of the other obligations set forth therein or in the Note Purchase Agreements or related documents, subject in certain cases to any applicable cure periods, or upon the occurrence of certain insolvency or bankruptcy related events. The Monetization Notes are subject to a mechanism that may cause them, subject to certain conditions, to be extended to November 5, 2020. The proceeds from the sale of the Monetization Notes were primarily used for the repayment of indebtedness. Greif, Inc. and its other subsidiaries have not extended any form of guaranty of the principal or interest on the Monetization Notes. Accordingly, Greif, Inc. and its other subsidiaries will not become directly or contingently liable for the payment of the Monetization Notes at any time.
The Buyer SPE is deemed to be a VIE since the assets of the Buyer SPE are not available to satisfy the liabilities of the Buyer SPE. The Buyer SPE is a separate and distinct legal entity from the Company and no ownership interest in the Buyer SPE is held by the Company, but the Company is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, Buyer SPE has been consolidated into the operations of the Company.
As of October 31, 2018 and 2017, assets of the Buyer SPE consisted of $50.9 million of restricted bank financial instruments which are expected to be held to maturity. For each of the years ended October 31, 2018, 2017 and 2016, the Buyer SPE recorded interest income of $2.4 million.
As of October 31, 2018 and 2017, STA Timber had long-term debt of $43.3 million. For each of the years ended October 31, 2018, 2017 and 2016, STA Timber recorded interest expense of $2.2 million. STA Timber is exposed to credit-related losses in the event of nonperformance by the issuer of the Deed of Guarantee.
Flexible Packaging Joint Venture
On September 29, 2010, Greif, Inc. and one of its indirect subsidiaries formed a joint venture (referred to herein as the “Flexible Packaging JV” or "FPS VIE") with Dabbagh Group Holding Company Limited and one of its subsidiaries, originally National Scientific Company Limited and now Gulf Refined Packaging for Industrial Packaging Company LTD ("GRP"). The Flexible Packaging JV owns the operations in the Flexible Products & Services segment. The Flexible Packaging JV has been consolidated into the operations of the Company since its formation date of September 29, 2010.
The Flexible Packaging JV is deemed to be a VIE since the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support. The major factors that led to the conclusion that the Company was the primary beneficiary of this VIE was that (1) the Company has the power to direct the most significant activities due to its ability to direct the operating decisions of the FPS VIE, which power is derived from the significant CEO discretion over the operations of the FPS VIE combined with the Company's sole and exclusive right to appoint the CEO of the FPS VIE, and (2) the significant variable interest through the Company's equity interest in the FPS VIE.
The economic and business purpose underlying the Flexible Packaging JV is to establish a global industrial flexible products enterprise through a series of targeted acquisitions and major investments in plant, machinery and equipment. All entities contributed to the Flexible Packaging JV were existing businesses acquired by an indirect subsidiary of the Company and that were reorganized under Greif Flexibles Asset Holding B.V. and Greif Flexibles Trading Holding B.V. (“Asset Co.” and “Trading Co.”), respectively. The Company has 51 percent ownership in Trading Co. and 49 percent ownership in Asset Co. However, the Company and GRP have equal economic interests in the Flexible Packaging JV, notwithstanding the actual ownership interests in the various legal entities.
All investments, loans and capital contributions are to be shared equally by the Company and GRP and each partner has committed to contribute capital of up to $150.0 million and obtain third party financing for up to $150.0 million as required.
The following table presents the Flexible Packaging JV total net assets:
(in millions)
October 31, 2018
 
October 31, 2017
Cash and cash equivalents
$
22.2

 
$
14.4

Trade accounts receivable, less allowance of $0.6 in 2018 and $2.1 in 2017
53.2

 
52.5

Inventories
49.0

 
53.3

Properties, plants and equipment, net
28.8

 
31.2

Other assets
21.5

 
25.8

     Total assets
$
174.7

 
$
177.2

 
 
 
 
Accounts payable
$
29.0

 
$
33.8

Other liabilities
24.8

 
30.2

     Total liabilities
$
53.8

 
$
64.0


Net income (loss) attributable to the noncontrolling interest in the Flexible Packaging JV for the years ended October 31, 2018, 2017 and 2016 were $9.9 million, $6.3 million and $(8.2) million, respectively.
Non-United States Accounts Receivable VIE
As further described in Note 3, Cooperage Receivables Finance B.V. is a party to the European RPA. Cooperage Receivables Finance B.V. is deemed to be a VIE since this entity is not able to satisfy its liabilities without the financial support from the Company. While this entity is a separate and distinct legal entity from the Company and no ownership interest in this entity is held by the Company, the Company is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE. As a result, Cooperage Receivables Finance B.V. has been consolidated into the operations of the Company.
DRUMDRUM NV VIE
On August 31, 2016, a wholly owned indirect subsidiary of Greif, Inc. sold 51 percent of its shares in its then wholly owned subsidiary, DRUMDRUM NV for $0.3 million.
DRUMDRUM NV is a VIE due to insufficient equity investment at risk. The Company is not the primary beneficiary of this VIE since (1) the Company does not have the power to direct the most significant activities due to its lack of ability to direct the financing, capital and operating decisions of the VIE, and (2) the Company does not have the obligation to absorb losses of the VIE that could potentially be significant to the VIE. As a result, DRUMDRUM NV was deconsolidated from the operations of the Company as of August 31, 2016. The retained noncontrolling interest of $0.8 million as of October 31, 2018 and $0.4 million as of October 31, 2017 is included in prepaid expenses and other current assets in the consolidated balance sheets and the Company's share of the operations is classified in equity earnings of unconsolidated affiliates, net of tax, in the consolidated statements of income.
v3.10.0.1
Long-Term Debt
12 Months Ended
Oct. 31, 2018
Debt Disclosure [Abstract]  
Long-Term Debt
LONG-TERM DEBT
Long-term debt is summarized as follows:
 
(in millions)
October 31, 2018
 
October 31, 2017
2017 Credit Agreement - Term Loan
$
277.5

 
$
288.8

Senior Notes due 2019
249.1

 
248.0

Senior Notes due 2021
226.5

 
230.9

Receivables Facility
150.0

 
150.0

2017 Credit Agreement - Revolving Credit Facility
3.8

 
35.0

Other debt
0.7

 
6.5

 
907.6

 
959.2

Less current portion
18.8

 
15.0

Less deferred financing costs
4.7

 
6.4

Long-term debt, net
$
884.1

 
$
937.8


2017 Credit Agreement
Since November 2016, the Company and certain of its international subsidiaries have been borrowers under a senior secured credit agreement (the “2017 Credit Agreement”) with a syndicate of financial institutions. The 2017 Credit Agreement replaced in its entirety the $1.0 billion senior secured credit agreement entered into on December 19, 2012, by the Company and two of its international subsidiaries ("Prior Credit Agreement") with a syndicate of financial institutions. The total available borrowing under the 2017 Credit Agreement was $783.3 million as of October 31, 2018, which has been reduced by $12.9 million for outstanding letters of credit, all of which was then available without violating covenants.
The 2017 Credit Agreement provides for an $800.0 million revolving multicurrency credit facility expiring November 3, 2021, and a $300.0 million term loan, with quarterly principal installments that commenced on April 30, 2017, through maturity on November 3, 2021, both with an option to add an aggregate of $550.0 million to the facilities with the agreement of the lenders. The Company used the term loan on February 1, 2017, to repay the principal of the Company’s $300.0 million 6.75% Senior Notes that matured on that date. The revolving credit facility is available to fund ongoing working capital and capital expenditure needs, for general corporate purposes, and to finance acquisitions. Interest is based on either a Eurodollar rate or a base rate that resets periodically plus a calculated margin amount. On November 3, 2016, a total of approximately $208.0 million was used to pay the obligations outstanding under the Prior Credit Agreement in full and certain costs and expenses incurred in connection with the 2017 Credit Agreement. The financing costs associated with the 2017 Credit Agreement totaled $4.2 million as of October 31, 2018, and are recorded as a direct deduction from the long-term debt liability.
The 2017 Credit Agreement contains certain covenants, which include financial covenants that require the Company to maintain a certain leverage ratio and an interest coverage ratio. The leverage ratio generally requires that at the end of any fiscal quarter the Company will not permit the ratio of (a) its total consolidated indebtedness, to (b) the Company's net income plus depreciation, depletion, and amortization, interest expense (including capitalized interest), and income taxes, minus certain extraordinary gains and non-recurring gains (or plus certain extraordinary losses and non-recurring losses) and plus or minus certain other items for the preceding twelve months ("adjusted EBITDA") to be greater than 4.00 to 1.00 (or 3.75 to 1.00, during any collateral release period). The interest coverage ratio generally requires that at the end of any fiscal quarter the Company will not permit the ratio of (a) adjusted EBITDA, to (b) the consolidated interest expense to the extent paid or payable, to be less than 3.00 to 1.00, during the applicable preceding twelve month period.

The terms of the 2017 Credit Agreement limit the Company's ability to make "restricted payments", which include dividends and purchases, redemptions and acquisitions of equity interests of the Company. The repayment of this facility is secured by a security interest in the personal property of the Company and the personal property of certain United States subsidiaries, including equipment and inventory and certain intangible assets, as well as a pledge of the capital stock of substantially all of the Company's United States subsidiaries and is secured, in part, by the capital stock of the non-U.S. borrowers. However, in the event that the Company receives and maintains an investment grade rating from either Moody's Investors Service, Inc. or Standard & Poor's Corporation, the Company may request the release of such collateral. The payment of outstanding principal under the 2017 Credit Agreement and accrued interest thereon may be accelerated and become immediately due and payable upon the Company's default in its payment or other performance obligations or its failure to comply with the financial and other covenants in the 2017 Credit Agreement, subject to applicable notice requirements and cure periods as provided in the 2017 Credit Agreement.

As of October 31, 2018, $281.3 million was outstanding under the 2017 Credit Agreement. The current portion of the 2017 Credit Agreement was $18.8 million and the long-term portion was $262.5 million. The weighted average interest rate on the 2017 Credit Agreement was 3.07% for the year ended October 31, 2018. The actual interest rate on the 2017 Credit Agreement was 3.37% as of October 31, 2018.
Senior Notes due 2019
On July 28, 2009, the Company issued $250.0 million of 7.75% Senior Notes due August 1, 2019 (the “Senior Notes due 2019”). Interest on these Senior Notes is payable semi-annually. The financing costs associated with the Senior Notes due 2019 totaled $0.4 million as of October 31, 2018, and are recorded as a direct deduction from the long-term liability. The $249.1 million outstanding balance as of October 31, 2018 is reported in long-term debt in the consolidated balance sheets because the Company intends to refinance this obligation on a long-term basis by utilizing financing available under the 2017 Credit Agreement or entering into a new financing arrangement.
Senior Notes due 2021
On July 15, 2011, Greif, Inc.’s wholly-owned subsidiary, Greif Nevada Holdings, Inc., S.C.S. issued €200.0 million of 7.375% Senior Notes due July 15, 2021. These Senior Notes are fully and unconditionally guaranteed on a senior basis by Greif, Inc. Interest on these Senior Notes is payable semi-annually.
United States Trade Accounts Receivable Credit Facility
On September 28, 2016, certain domestic subsidiaries of the Company, including Greif Receivables Funding LLC (“Greif Funding”) and Greif Packaging LLC (“Greif Packaging”), entered into a receivables financing facility (the “Receivables Facility”) with Cooperatieve Rabobank U.A., New York Branch (“Rabobank”), as the agent, managing agent, administrator and committed investor, and The Bank of Tokyo-Mitsubishi UFJ Ltd. as a managing agent, an administrator and a committed investor, by executing and delivering the Second Amended and Restated Transfer and Administration Agreement (the “Second Amended TAA”). The Second Amended TAA was renewed on September 26, 2018, to extend the facility through September 26, 2019. The maximum amount available to be borrowed under the Receivables Facility is $150.0 million, subject to the amounts of eligible receivables. The financing costs associated with the Receivables Facility are $0.1 million as of October 31, 2018, and are recorded as a direct deduction from the long-term debt liability.
Greif Funding is a direct subsidiary of Greif Packaging and is included in the Company’s consolidated financial statements. However, because Greif Funding is a separate and distinct legal entity from the Company, the assets of Greif Funding are not available to satisfy the liabilities and obligations of the Company, Greif Packaging or other subsidiaries of the Company, and the liabilities of Greif Funding are not the liabilities or obligations of the Company or its other subsidiaries.

The Second Amended TAA, as amended, provides for the ongoing purchase by Rabobank and The Bank of Tokyo-Mitsubishi UFJ Ltd. of receivables from Greif Funding, which Greif Funding will have purchased from Greif Packaging and certain other domestic subsidiaries of the Company as the originators under the Second Amended and Restated Sale Agreement, dated as of September 28, 2016 (the “Second Amended Sale Agreement”). Greif Packaging will service and collect on behalf of Greif Funding those receivables sold to Greif Funding under the Second Amended Sale Agreement. The maturity date of the Receivables Facility is September 26, 2019, subject to earlier termination as provided in the Second Amended TAA, including acceleration upon an event of default as provided therein, or such later date to which the purchase commitment may be extended by agreement of the parties. In addition, Greif Funding can terminate the Receivables Facility at any time upon five days prior written notice. The Company has guaranteed the performance by Greif Funding, Greif Packaging and its other participating subsidiaries of their respective obligations under the Second Amended TAA, as amended, the Second Amended Sale Agreement and related agreements, but has not guaranteed the collectability of the receivables. A significant portion of the proceeds from the Receivables Facility were used to pay the obligations under the prior receivables facility. The remaining proceeds are to be used to pay certain fees, costs and expenses incurred in connection with the Receivables Facility and for working capital and general corporate purposes.

The Receivables Facility is secured by certain trade accounts receivables relating to the Rigid Industrial Packaging and Paper Packaging & Services businesses of Greif Packaging and other domestic subsidiaries of the Company in the United States and bears interest at a variable rate based on the London Interbank Offered Rate or an applicable base rate, plus a margin, or a commercial paper rate plus a margin, all as provided in the Second Amended TAA, as amended. Interest is payable on a monthly basis and the principal balance is payable upon termination of the Receivables Facility. The Company intends to refinance this obligation on a long-term basis and has the intent and ability to consummate a long-term refinancing by exercising the renewal option in the agreement or entering into a new financing arrangement.

Other
In addition to the amounts borrowed under the 2017 Credit Agreement and proceeds from the Senior Notes and the Receivables Facility, as of October 31, 2018, the Company had outstanding other debt of $0.7 million in long-term debt and $7.3 million in short-term borrowings, compared to other debt of $6.5 million in long-term debt and $14.5 million in short-term borrowings, as of October 31, 2017. There are no financial covenants associated with this other debt.
As of October 31, 2018, annual maturities, including the current portion of long-term debt, were $417.9 million in 2019, $30.0 million in 2020, $249.3 million in 2021, $210.1 million in 2022, zero in 2023 and $0.3 million thereafter.
v3.10.0.1
Financial Instruments and Fair Value Measurements
12 Months Ended
Oct. 31, 2018
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Value Measurements
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The following table presents the fair value of those assets and (liabilities) measured on a recurring basis as of October 31, 2018 and 2017:
 
October 31, 2018
 
 
 
Fair Value Measurement
 
Balance Sheet Location
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
 
 
Interest rate derivatives
$

 
$
16.5

 
$

 
$
16.5

 
Other long-term assets and other current assets
Foreign exchange hedges

 
2.6

 

 
2.6

 
Other current assets
Foreign exchange hedges

 
(0.7
)
 

 
(0.7
)
 
Other current liabilities
Insurance annuity

 

 
20.4

 
20.4

 
Other long-term assets
Cross currency swap

 
5.2

 

 
5.2

 
Other long-term assets and other current assets
Total
$

 
$
23.6


$
20.4


$
44.0

 
 
 
 
 
 
 
 
 
 
 
 
 
October 31, 2017
 
 
 
Fair Value Measurement
 
Balance Sheet Location
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
 
 
Interest rate derivatives
$

 
$
8.9

 
$

 
$
8.9

 
Other long-term assets and other current assets
Foreign exchange hedges

 
0.1

 

 
0.1

 
Other current assets
Foreign exchange hedges

 
(0.6
)
 

 
(0.6
)
 
Other current liabilities
Insurance annuity

 

 
20.7

 
20.7

 
Other long-term assets
Total
$


$
8.4


$
20.7


$
29.1

 
 

The carrying amounts of cash and cash equivalents, trade accounts receivable, notes receivable, accounts payable, current liabilities and short-term borrowings as of October 31, 2018 and 2017 approximate their fair values because of the short-term nature of these items and are not included in this table.
Interest Rate Derivatives
The Company has various borrowing facilities which incur interest based on the one month U.S. dollar LIBOR rate plus an interest spread. During the first quarter of 2017, the Company entered into a forward interest rate swap with a notional amount of $300.0 million. As of February 1, 2017, the Company began to receive variable rate interest payments based upon one month U.S. dollar LIBOR and in return was obligated to pay interest at a fixed rate of 1.194% plus an interest spread. This effectively converted the borrowing rate on $300.0 million of debt from a variable rate to a fixed rate. This derivative is designated as a cash flow hedge for accounting purposes. Accordingly, the gain or loss on this derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. For additional disclosures of the gain or loss included within other comprehensive income, see Note 18 to these consolidated financial statements. The assumptions used in measuring fair value of the interest rate derivative are considered level 2 inputs, which are based upon LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements.
Gains reclassified to earnings under these contracts were $1.8 million for the year ended October 31, 2018, and losses reclassified to earnings under these contracts were $0.3 million for the year ended October 31, 2017. A derivative gain of $4.6 million, based upon interest rates at October 31, 2018, is expected to be reclassified from accumulated other comprehensive income (loss) to earnings in the next twelve months.
Foreign Exchange Hedges
The Company conducts business in various international currencies and is subject to risks associated with changing foreign exchange rates. The Company’s objective is to reduce volatility associated with foreign exchange rate changes. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities, commitments and anticipated foreign currency cash flows. As of October 31, 2018, the Company had outstanding foreign currency forward contracts in the notional amount of $194.4 million ($80.1 million as of October 31, 2017). Adjustments to fair value are recognized in earnings, offsetting the impact of the hedged profits. The assumptions used in measuring fair value of foreign exchange hedges are considered level 2 inputs, which were based on observable market pricing for similar instruments, principally foreign exchange futures contracts.
Realized losses recorded in other expense, net under fair value contracts were $9.2 million, $1.8 million and $2.7 million for the years ended October 31, 2018, 2017 and 2016, respectively. The Company recognized in other expense, net an unrealized net gain of $1.9 million during the year ended October 31, 2018. The Company recognized in other expense, net an unrealized net loss of $0.5 million and zero in the years ended October 31, 2017 and 2016, respectively.
Cross Currency Swap
The Company has operations and investments in various international locations and is subject to risks associated with changing foreign exchange rates. On March 6, 2018, the Company entered into a cross currency interest rate swap agreement that synthetically swaps $100.0 million of fixed rate debt to Euro denominated fixed rate debt at a rate of 2.352%. The agreement is designated as a net investment hedge for accounting purposes and will mature on March 6, 2023. Accordingly, the gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Interest payments received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the consolidated statements of income. For the year ended October 31, 2018, gains recorded in interest expense, net under the cross currency swap agreement were $1.6 million. For additional disclosure of the gain or loss included within other comprehensive income, see Note 18. The assumptions used in measuring fair value of the cross currency swap are considered level 2 inputs, which are based upon the Euro to United States Dollar exchange rate market.
Other Financial Instruments
The fair values of the Company’s 2017 Credit Agreement and the Receivables Facility do not materially differ from carrying value as the Company’s cost of borrowing is variable and approximates current borrowing rates. The fair values of the Company’s long-term obligations are estimated based on either the quoted market prices for the same or similar issues or the current interest rates offered for the debt of the same remaining maturities, which are considered level 2 inputs in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.”
The following table presents the estimated fair values for the Company’s Senior Notes and Assets held by special purpose entities:
(in millions)
October 31, 2018
 
October 31, 2017
Senior Notes due 2019 estimated fair value
$
257.4

 
$
272.0

Senior Notes due 2021 estimated fair value
263.4

 
281.0

Assets held by special purpose entities estimated fair value
51.6

 
52.5


Pension Plan Assets
On an annual basis the Company compares the asset holdings of its pension plan to targets it previously established. The pension plan assets are categorized as equity securities, debt securities, fixed income securities, insurance annuities or other assets, which are considered level 1, level 2 and level 3 fair value measurements. The typical asset holdings include:
Common Stock: Valued based on quoted prices and are primarily exchange-traded.
Mutual funds: Valued at the Net Asset Value “NAV” available daily in an observable market.
Common collective trusts: Unit value calculated based on the observable NAV of the underlying investment.
Pooled separate accounts: Unit value calculated based on the observable NAV of the underlying investment.
Government and corporate debt securities: Valued based on readily available inputs such as yield or price of bonds of comparable quality, coupon, maturity and type.
Insurance annuity: Value is derived based on the value of the corresponding liability.
Non-Recurring Fair Value Measurements
The following table presents quantitative information about the significant unobservable inputs used to determine the fair value of the impairment of long-lived assets held and used and net assets held for sale for the twelve months ended