GREIF INC, 10-K filed on 12/20/2017
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Oct. 31, 2017
Dec. 14, 2017
Class A Common Stock
Apr. 30, 2017
Class A Common Stock
Dec. 14, 2017
Class B Common Stock
Apr. 30, 2017
Class B Common Stock
Document Information [Line Items]
 
 
 
 
 
Document Type
10-K 
 
 
 
 
Amendment Flag
false 
 
 
 
 
Document Period End Date
Oct. 31, 2017 
 
 
 
 
Document Fiscal Year Focus
2017 
 
 
 
 
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 Common Stock, Shares Outstanding
 
25,835,281 
 
22,007,725 
 
Entity Public Float
 
 
$ 1,465,214,314 
 
$ 361,903,339 
Consolidated Statements of Income (USD $)
12 Months Ended
Oct. 31, 2017
Oct. 31, 2016
Oct. 31, 2015
Net sales
$ 3,638,200,000 
$ 3,323,600,000 
$ 3,616,700,000 
Costs of products sold
2,923,500,000 
2,638,700,000 
2,946,900,000 
Gross profit
714,700,000 
684,900,000 
669,800,000 
Selling, general and administrative expenses
380,400,000 
376,800,000 
413,200,000 
Restructuring charges
12,700,000 
26,900,000 
40,000,000 
Timberland gains
(24,300,000)
Non-cash asset impairment charges
7,800,000 
51,400,000 
45,900,000 
Goodwill impairment charges
13,000,000 
Pension settlement charge
27,100,000 
Gain on disposal of properties, plants and equipment, net
(400,000)
(10,300,000)
(7,000,000)
Loss on disposal of businesses, net
1,700,000 
14,500,000 
9,200,000 
Operating profit
272,400,000 
225,600,000 
192,800,000 
Interest expense, net
60,100,000 
75,400,000 
74,800,000 
Other expense, net
12,000,000 
9,000,000 
3,200,000 
Income before income tax expense and equity earnings of unconsolidated affiliates, net
200,300,000 
141,200,000 
114,800,000 
Income tax expense
67,200,000 
66,500,000 
48,400,000 
Equity earnings of unconsolidated affiliates, net of tax
(2,000,000)
(800,000)
(800,000)
Net income
135,100,000 
75,500,000 
67,200,000 
Net (income) loss attributable to noncontrolling interests
(16,500,000)
(600,000)
4,700,000 
Net income attributable to Greif, Inc.
$ 118,600,000 
$ 74,900,000 
$ 71,900,000 
Class A Common Stock
 
 
 
Basic earnings per share attributable to Greif, Inc.:
 
 
 
EPS Basic (usd per share)
$ 2.02 
$ 1.28 
$ 1.23 
Diluted earnings per share attributed to Greif, Inc.:
 
 
 
EPS Diluted (usd per share)
$ 2.02 
$ 1.28 
$ 1.23 
Class B Common Stock
 
 
 
Basic earnings per share attributable to Greif, Inc.:
 
 
 
EPS Basic (usd per share)
$ 3.02 
$ 1.90 
$ 1.83 
Diluted earnings per share attributed to Greif, Inc.:
 
 
 
EPS Diluted (usd per share)
$ 3.02 
$ 1.90 
$ 1.83 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Oct. 31, 2017
Oct. 31, 2016
Oct. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 135.1 
$ 75.5 
$ 67.2 
Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency translation
37.6 
(17.6)
(130.9)
Interest rate derivative, net of tax expense of $3.1 million, tax benefit of $0.0 million and tax benefit of $0.1 million, respectively
5.1 
0.1 
Minimum pension liabilities net of tax expense of $16.5 million, tax benefit of $4.7 million and tax expense of $0.5 million, respectively
14.2 
(7.4)
9.0 
Other comprehensive income (loss), net of tax
56.9 
(25.0)
(121.8)
Comprehensive income (loss)
192.0 
50.5 
(54.6)
Comprehensive income (loss) attributable to noncontrolling interests
33.2 
(3.4)
(23.5)
Comprehensive income (loss) attributable to Greif, Inc.
$ 158.8 
$ 53.9 
$ (31.1)
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Oct. 31, 2017
Oct. 31, 2016
Oct. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Income tax (expense) benefit on interest rate derivatives
$ (3.1)
$ 0 
$ 0.1 
Income tax (expense) benefit on minimum pension liability
$ (16.5)
$ 4.7 
$ (0.5)
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Oct. 31, 2017
Oct. 31, 2016
Current assets
 
 
Cash and cash equivalents
$ 142.3 
$ 103.7 
Trade accounts receivable, less allowance of $8.9 in 2017 and $8.8 in 2016
447.0 
399.2 
Inventories:
 
 
Raw materials
192.1 
185.4 
Work-in-process
11.5 
12.2 
Finished goods
75.9 
79.8 
Assets held for sale
2.2 
3.8 
Prepaid expenses
35.3 
30.0 
Other current assets
88.2 
98.2 
Total current assets
994.5 
912.3 
Long-term assets
 
 
Goodwill
785.4 
786.4 
Other intangible assets, net of amortization
98.0 
110.6 
Deferred tax assets
10.5 
9.0 
Assets held by special purpose entities
50.9 
50.9 
Pension assets
10.3 
22.2 
Other long-term assets
94.3 
89.7 
Total long-term assets
1,049.4 
1,068.8 
Properties, plants and equipment
 
 
Timber properties, net of depletion
276.2 
277.8 
Land
99.5 
99.5 
Buildings
428.3 
398.1 
Machinery and equipment
1,540.2 
1,484.8 
Capital projects in progress
80.2 
91.3 
Properties, plants and equipment, gross
2,424.4 
2,351.5 
Accumulated depreciation
(1,236.0)
(1,179.6)
Properties, plants and equipment, net
1,188.4 
1,171.9 
Total assets
3,232.3 
3,153.0 
Current liabilities
 
 
Accounts payable
399.2 
372.0 
Accrued payroll and employee benefits
111.8 
93.7 
Restructuring reserves
5.2 
10.4 
Current portion of long-term debt
15.0 
Short-term borrowings
14.5 
51.6 
Other current liabilities
142.2 
131.5 
Total current liabilities
687.9 
659.2 
Long-term liabilities
 
 
Long-term debt
937.8 
974.6 
Deferred tax liabilities
217.8 
193.0 
Pension liabilities
159.5 
179.8 
Postretirement benefit obligations
12.6 
13.7 
Liabilities held by special purpose entities
43.3 
43.3 
Contingent liabilities and environmental reserves
7.1 
6.8 
Mandatorily redeemable noncontrolling interests
9.2 
9.0 
Other long-term liabilities
78.1 
83.9 
Total long-term liabilities
1,465.4 
1,504.1 
Commitments and Contingencies (Note 13)
   
   
Redeemable Noncontrolling Interests (Note 20)
31.5 
31.8 
Equity
 
 
Common stock, without par value
144.2 
141.4 
Treasury stock, at cost
(135.6)
(135.6)
Retained earnings
1,360.5 
1,340.0 
Accumulated other comprehensive loss, net of tax:
 
 
Foreign currency translation
(249.3)
(270.2)
Interest rate derivative
5.1 
Minimum pension liabilities
(114.0)
(128.2)
Total Greif, Inc. shareholders’ equity
1,010.9 
947.4 
Noncontrolling interests
36.6 
10.5 
Total shareholders’ equity
1,047.5 
957.9 
Total liabilities and shareholders’ equity
$ 3,232.3 
$ 3,153.0 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, unless otherwise specified
Oct. 31, 2017
Oct. 31, 2016
Statement of Financial Position [Abstract]
 
 
Allowance of trade accounts receivable
$ 8.9 
$ 8.8 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Oct. 31, 2017
Oct. 31, 2016
Oct. 31, 2015
Cash flows from operating activities:
 
 
 
Net income
$ 135.1 
$ 75.5 
$ 67.2 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
120.5 
127.7 
134.6 
Timberland gains
(24.3)
Non-cash asset impairment charges
20.8 
51.4 
45.9 
Pension settlement charge
27.1 
Gain on disposals of properties, plants and equipment, net
(0.4)
(10.3)
(7.0)
Loss on disposals of businesses, net
1.7 
14.5 
9.2 
Unrealized foreign exchange loss
4.6 
4.1 
Deferred income tax expense (benefit)
2.3 
1.5 
(5.9)
Gain from Venezuela monetary assets and liabilities remeasurement
(4.9)
Loss for Venezuela non-monetary assets to net realizable value
9.3 
Other, net
1.2 
(2.2)
Increase (decrease) in cash from changes in certain assets and liabilities:
 
 
 
Trade accounts receivable
(47.3)
(18.6)
39.5 
Inventories
(7.0)
3.4 
38.9 
Deferred purchase price on sold receivables
5.1 
5.2 
(5.7)
Accounts payable
20.5 
39.4 
(56.6)
Restructuring reserves
(5.3)
(10.7)
18.8 
Pension and postretirement benefit liabilities
(1.7)
(8.9)
(4.0)
Other, net
27.8 
26.8 
(46.5)
Net cash provided by operating activities
305.0 
301.0 
206.3 
Cash flows from investing activities:
 
 
 
Acquisitions of companies, net of cash acquired
(0.4)
(1.6)
Collection (issuance) of subordinated note receivable
44.2 
(44.2)
Purchases of properties, plants and equipment
(96.8)
(100.1)
(135.8)
Purchases of and investments in timber properties
(9.5)
(7.1)
(38.4)
Purchases of properties, plants and equipment with insurance proceeds
(4.4)
Proceeds from the sale of properties, plants, equipment and other assets
9.6 
12.3 
49.3 
Proceeds from the sale of businesses
5.9 
23.8 
19.6 
Proceeds on insurance recoveries
0.4 
6.6 
4.6 
Net cash used in investing activities
(90.4)
(25.1)
(146.5)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
1,446.0 
1,102.3 
912.3 
Payments on long-term debt
(1,627.9)
(1,119.2)
(870.1)
Proceeds from (payments on) short-term borrowings, net
(36.4)
4.7 
2.6 
Proceeds from trade accounts receivable credit facility
203.6 
283.5 
123.0 
Payments on trade accounts receivable credit facility
(53.6)
(431.1)
(85.4)
Long-term debt and credit facility financing fees paid
(4.5)
Dividends paid to Greif, Inc. shareholders
(98.6)
(98.7)
(98.7)
Dividends paid to noncontrolling interests
(4.2)
(4.9)
(4.0)
Proceeds from the sale of membership units of a consolidated subsidiary
0.3 
Exercise of stock options
0.2 
Acquisitions of treasury stock
(5.2)
Purchases of redeemable noncontrolling interest
(6.0)
Cash contribution from noncontrolling interest holder
1.5 
Net cash used in financing activities
(175.6)
(272.8)
(20.1)
Effects of exchange rates on cash
(0.4)
(5.6)
(18.6)
Net increase (decrease) in cash and cash equivalents
38.6 
(2.5)
21.1 
Cash and cash equivalents at beginning of year
103.7 
106.2 
85.1 
Cash and cash equivalents at end of year
142.3 
103.7 
106.2 
Non-cash transactions:
 
 
 
Capital expenditures included in accounts payable
12.5 
9.2 
12.6 
Schedule of interest and income taxes paid:
 
 
 
Cash payments for interest expense
76.2 
74.8 
77.5 
Cash payments for taxes
$ 53.4 
$ 51.8 
$ 73.5 
Consolidated Statements of Changes in Shareholders' Equity (USD $)
In Millions, except Share data, unless otherwise specified
Total
Capital Stock
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Greif, Inc. Equity
Noncontrolling interests
Beginning balance, value at Oct. 31, 2014
$ 1,223.2 
$ 135.5 
$ (130.7)
$ 1,411.7 
$ (274.4)
$ 1,142.1 
$ 81.1 
Beginning balance (shares) at Oct. 31, 2014
 
47,724,000 
29,118,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Net income
67.2 
 
 
71.9 
 
71.9 
(4.7)
Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation
(130.9)
 
 
 
(112.1)
(112.1)
(18.8)
Interest rate derivative, net of income tax expense of $3.1 million
0.1 
 
 
 
0.1 
0.1 
 
Minimum pension liability adjustment, net of income tax expense
9.0 
 
 
 
9.0 
9.0 
 
Comprehensive income (loss)
(54.6)
 
 
 
 
(31.1)
 
Acquisitions of noncontrolling interests and other
(9.7)
 
 
(0.4)
 
(0.4)
(9.3)
Dividends paid
(98.7)
 
 
(98.7)
 
(98.7)
 
Dividends paid to noncontrolling interest
(4.0)
 
 
 
 
 
(4.0)
Stock options exercised (shares)
10,000 
10,000 
(10,000)
 
 
 
 
Stock options exercised
0.2 
0.2 
 
 
0.2 
 
Restricted stock executives and directors (shares)
 
30,000 
(30,000)
 
 
 
 
Restricted stock executives and directors
1.3 
1.3 
 
 
1.3 
 
Tax benefit of stock options and other
0.2 
0.2 
 
 
 
0.2 
 
Long-term incentive shares issued (shares)
 
50,000 
(50,000)
 
 
 
 
Long-term incentive shares issued
2.0 
1.9 
0.1 
 
 
2.0 
 
Ending balance, value at Oct. 31, 2015
1,059.9 
139.1 
(130.6)
1,384.5 
(377.4)
1,015.6 
44.3 
Ending balance (shares) at Oct. 31, 2015
 
47,814,000 
29,028,000 
 
 
 
 
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)
Interest rate derivative, net of income tax expense of $3.1 million
 
 
 
 
 
 
Minimum pension liability adjustment, net of income tax expense
(7.4)
 
 
 
(7.4)
(7.4)
 
Comprehensive income (loss)
50.5 
 
 
 
 
53.9 
 
Acquisitions of noncontrolling interests and other
(0.4)
 
 
 
 
 
(0.4)
Dividends paid
(98.7)
 
 
(98.7)
 
(98.7)
 
Dividends paid to noncontrolling interest
(3.9)
 
 
 
 
 
(3.9)
Stock options exercised (shares)
 
 
 
 
 
 
Restricted stock executives and directors (shares)
 
47,000 
(47,000)
 
 
 
 
Restricted stock executives and directors
1.4 
1.3 
0.1 
 
 
1.4 
 
Long-term incentive shares issued (shares)
 
41,000 
(41,000)
 
 
 
 
Long-term incentive shares issued
1.1 
1.0 
0.1 
 
 
1.1 
 
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)
Contributions from noncontrolling interest
1.5 
 
 
 
 
 
1.5 
Treasury shares acquired (shares)
 
(110,000)
110,000 
 
 
 
 
Treasury shares acquired
(5.2)
 
(5.2)
 
 
(5.2)
 
Ending balance, value at Oct. 31, 2016
957.9 
141.4 
(135.6)
1,340.0 
(398.4)
947.4 
10.5 
Ending balance (shares) at Oct. 31, 2016
 
47,792,000 
29,050,000 
 
 
 
 
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 
Interest rate derivative, net of income tax expense of $3.1 million
5.1 
 
 
 
5.1 
5.1 
 
Minimum pension liability adjustment, net of income tax expense
14.2 
 
 
 
14.2 
14.2 
 
Comprehensive income (loss)
192.0 
 
 
 
 
158.8 
 
Dividends paid
(98.6)
 
 
(98.6)
 
(98.6)
 
Dividends paid to noncontrolling interest
(3.1)
 
 
 
 
 
(3.1)
Stock options exercised (shares)
 
 
 
 
 
 
Restricted stock executives and directors (shares)
 
24,000 
(24,000)
 
 
 
 
Restricted stock executives and directors
1.3 
1.3 
 
 
 
1.3 
 
Long-term incentive shares issued (shares)
 
29,000 
(29,000)
 
 
 
 
Long-term incentive shares issued
1.4 
1.5 
(0.1)
 
 
1.4 
 
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)
Treasury shares acquired (shares)
 
(2,000)
2,000 
 
 
 
 
Treasury shares acquired
0.1 
 
0.1 
 
 
0.1 
 
Deconsolidation of noncontrolling interest
(2.6)
 
 
 
 
 
(2.6)
Ending balance, value at Oct. 31, 2017
$ 1,047.5 
$ 144.2 
$ (135.6)
$ 1,360.5 
$ (358.2)
$ 1,010.9 
$ 36.6 
Ending balance (shares) at Oct. 31, 2017
 
47,843,000 
28,999,000 
 
 
 
 
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Oct. 31, 2017
Oct. 31, 2016
Oct. 31, 2015
Income tax (expense) benefit. minimum pension liability
$ 16.5 
$ (4.7)
$ 0.5 
Other comprehensive income (loss), derivatives qualifying as hedges, tax
$ 3.1 
$ 0 
$ (0.1)
Class A Common Stock
 
 
 
Dividend paid (usd per share)
$ 1.68 
$ 1.68 
$ 1.68 
Class B Common Stock
 
 
 
Dividend paid (usd per share)
$ 2.51 
$ 2.51 
$ 2.51 
Basis of Presentation and Summary of Significant Accounting Policies
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, 2017.
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 2017, 2016 or 2015, or to any quarter of those years, relates to the fiscal year ended in that year.
Venezuela Currency
The Company’s results of its Venezuelan businesses have been reported under highly inflationary accounting since 2010 and the functional currency was converted to U.S. dollars at that time. Prior to the third quarter of 2015, Greif utilized the official rate of 6.4 Bolivars/U.S. dollar to measure Bolivar-denominated monetary assets and liabilities and the respective historical rate to measure Bolivar-denominated nonmonetary assets for each reporting period. During the third quarter of 2015, due to the continued devaluation of the Bolivar and reconsideration of the exchange rate mechanism that best reflected the economics of the Company's business activities in Venezuela, the Company remeasured the local currency denominated balance sheet using the SIMADI exchange rate.
As a result of the change to the SIMADI rate, the Company recorded other income of $4.9 million related to the remeasurement of its Venezuelan monetary assets and liabilities during 2015. In addition, the Company determined that an adjustment of $9.3 million to increase cost of goods sold was needed to reflect the non-monetary inventory assets at net realizable value and, upon review of long-lived assets for impairment, the Company determined that the carrying amount of the long-lived asset was not recoverable in U.S. dollar functional currency and recorded an impairment charge of $15.0 million.
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.
The Company had total cash and cash equivalents held outside of the United States in various foreign jurisdictions of $140.7 million and $96.6 million as of October 31, 2017 and 2016, respectively. Under current tax laws and regulations, if cash and cash equivalents held outside the United States are repatriated to the United States in the form of dividends or otherwise, the Company may be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes.
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 $8.9 million and $8.8 million as of October 31, 2017 and 2016, 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, 2017, 2016, and 2015.
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 the Company records an asset or liability for any imbalance resulting from these trades.
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, 2017, there were two asset groups within the Rigid Industrial Packaging Products & 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. Indefinite lived intangible assets are not amortized. 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. The Company tests for impairment of intangible assets at least annually, or more frequently if certain indicators are present to suggest that impairment may exist. 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 $106.8 million, $107.4 million and $113.4 million in 2017, 2016 and 2015, 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, 2017, 2016, and 2015, the Company capitalized interest costs of $3.5 million, $2.6 million, and $1.5 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, we evaluate 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, 2017, the Company's timber properties consisted of approximately 245,000 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, $3.2 million and $2.8 million in 2017, 2016 and 2015, 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 $3.3 million and $4.4 million for estimated costs related to outstanding claims as of October 31, 2017 and 2016, 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 $11.0 million and $11.8 million for anticipated costs related to general liability, product, vehicle and workers’ compensation claims as of October 31, 2017 and 2016, 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 and has a 20 percent or more voting interest. 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, 2017, 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 to these consolidated financial statements.
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 increase 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 2017, 2016 or 2015. 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, currency transaction gains and losses 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 $6.4 million, $6.7 million and $3.8 million in 2017, 2016 and 2015, 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 effective portion of 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 uses the regression method for assessing the effectiveness of these swaps. The effectiveness of these swaps is reviewed at least every quarter. Hedge ineffectiveness has not been material during any of the years presented herein.
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 fair value measurements. 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 February 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which makes changes to both the variable interest model and the voting interest model and eliminates the indefinite deferral of FASB Statement No. 167, included in ASU 2010-10, for certain investment funds. All reporting entities that hold a variable interest in other legal entities were required to re-evaluate their consolidation conclusions as well as disclosure requirements. The Company adopted the new guidance beginning on November 1, 2016, and the adoption did not have a material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures.
In May 2015, the FASB issued ASU 2015-07, "Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent)", which removes the requirement to present investments for which the practical expedient is used to measure fair value at net asset value within the fair value hierarchy table. The Company adopted this guidance beginning November 1, 2016 and has applied it retrospectively for all periods presented, and the adoption of this guidance did not have a material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures.
In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350),” which simplifies the subsequent measurement of goodwill in Accounting Standards Codification ("ASC") 350 by eliminating the step 2 requirement to perform procedures to determine the fair value at the impairment testing date of assets and liabilities in order to calculate goodwill impairment based on the implied fair value of goodwill. This amendment modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The Company elected to adopt the new guidance beginning on February 1, 2017 using a prospective approach, and utilized the new guidance for the August 1, 2017 goodwill impairment assessment. The adoption did not have a material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures.
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 in the process of determining the potential impact of adopting the new revenue standards including conducting internal training sessions and global revenue surveys. 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. The update is effective for the Company on November 1, 2019 using a modified retrospective approach. 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.
In October 2016, the FASB issued ASU 2016-16, "Intra-Equity 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 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.
In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715)," which provides additional guidance in ASC 715 for the presentation of net periodic benefit cost in the income statement and on the components eligible for capitalization in assets. This ASU will require 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 will be 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 plans to early adopt ASU 2017-07 on November 1, 2017 and expects the update to have no material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures.
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 the ASU is to improve transparency and reduce the complexity of hedge accounting. The update is effective for the Company on November 1, 2019 using a modified retrospective approach and early adoption is permitted. The Company plans to early adopt ASU 2017-12 on November 1, 2017 and expects the update to have no material impact on the Company's financial position, results of operations, comprehensive income, cash flows or disclosures.
Acquisitions and Divestitures
Acquisitions and Divestitures
ACQUISITIONS AND DIVESTITURES
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 has $4.3 million of notes receivable recorded from the sale of businesses, ranging in remaining terms of up to fourteen months.
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. Additionally, the Company recorded notes receivable of $2.4 million for the sale of two businesses in the second quarter which are expected to be collected in fiscal year 2018.
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.
During 2015, the Company completed eight divestitures and no material acquisitions. The divestitures were of nonstrategic businesses: six in the Rigid Industrial Packaging & Services segment and two in the Flexible Products & Services segment. The loss on disposal of businesses was $9.2 million for the year ended October 31, 2015. Proceeds from divestitures were $19.6 million. Additionally, the Company recorded notes receivable of $2.9 million for the sale of these businesses, with terms ranging from three months to five years.
None of the above-referenced divestitures in 2017, 2016 or 2015 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.
Sale of Non-United States Accounts Receivable
Sale of Non-United States Accounts Receivable
SALE OF NON-UNITED STATES ACCOUNTS RECEIVABLE
On April 27, 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 ($116.1 million as of October 31, 2017). 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. As of October 31, 2015, the Company had loaned $44.2 million of excess cash back to the Purchasing Bank Affiliates, which was included in prepaid expenses and other current assets. During the first quarter of 2016, the Company collected $44.2 million that had been loaned to the Purchasing Bank Affiliates as excess cash at the end of fiscal 2015.
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 prepaid expenses and other current assets or other current liabilities. 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 ($11.0 million as of October 31, 2017). 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 receivables programs: 
 
Year Ended October 31,
(in millions)
2017
 
2016
 
2015
European RPA
 
 
 
 
 
Gross accounts receivable sold to third party financial institution
$
715.1

 
$
620.3

 
$
715.2

Cash received for accounts receivable sold under the programs
633.4

 
548.1

 
633.6

Deferred purchase price related to accounts receivable sold
81.8

 
71.7

 
76.2

Loss associated with the programs
0.5

 
0.8

 
1.5

Expenses associated with the programs

 

 

Singapore RPA
 
 
 
 
 
Gross accounts receivable sold to third party financial institution
$
50.1

 
$
44.1

 
$
48.1

Cash received for accounts receivable sold under the programs
43.0

 
36.4

 
48.1

Deferred purchase price related to accounts receivable sold
7.1

 
7.1

 

Loss associated with the programs
0.6

 

 
0.1

Expenses associated with the programs
0.4

 

 
0.1

Total RPAs and Agreements
 
 
 
 
 
Gross accounts receivable sold to third party financial institution
$
765.2

 
$
664.4

 
$
763.3

Cash received for accounts receivable sold under the program
676.4

 
584.5

 
681.7

Deferred purchase price related to accounts receivable sold
88.9

 
78.8

 
76.2

Loss associated with the program
1.1

 
0.8

 
1.6

Expenses associated with the program
0.4

 

 
0.1

(in millions)
October 31, 2017
 
October 31, 2016
European RPA
 
 
 
Accounts receivable sold to and held by third party financial institution
$
116.3

 
$
106.7

Deferred purchase price asset (liability) related to accounts receivable sold
(4.2
)
 
(0.4
)
Singapore RPA
 
 
 
Accounts receivable sold to and held by third party financial institution
$
3.8

 
$
4.0

Uncollected deferred purchase price related to accounts receivable sold
0.5

 
0.5

Total RPAs and Agreements
 
 
 
Accounts receivable sold to and held by third party financial institution
$
120.1

 
$
110.7

Deferred purchase price asset (liability) related to accounts receivable sold
(3.7
)
 
0.1


The deferred purchase price related to the accounts receivable sold is reflected as prepaid expenses and other current assets or other current liabilities 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.
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
ASSETS AND LIABILITIES HELD FOR SALE AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT, NET
As of October 31, 2017, there were two asset groups within the Rigid Industrial Packaging Products & Services segment classified as assets and liabilities 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 the third quarter of 2017, one asset group in the Flexible Products & Services segment classified as assets and liabilities held for sale as of October 31, 2016, was reclassified into held and used as of October 31, 2017 and 2016. During the fourth quarter of 2017, one asset group in the Rigid Industrial Packaging & Services segment classified as assets and liabilities held for sale beginning in the first quarter of 2017 was reclassified into held and used as of October 31, 2017. The Company's decision not to sell the asset group resulted in a $2.7 million loss as of October 31, 2017 and is included in the (gain) loss on disposal of properties, plants and equipment, net in the Consolidated Statements of Income.
During 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 additional information regarding the sale of businesses refer to Note 2 to these consolidated financial statements.
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.
For the year ended October 31, 2015, the Company recorded a gain on disposal of properties, plants and equipment, net of $7.0 million. There were sales of HBU and surplus properties which resulted in gains of $2.7 million in the Land Management segment, a disposal of an asset group previously classified as held for sale in the Rigid Industrial Packaging & Services segment that resulted in a gain of $4.4 million, insurance recoveries which resulted in gains of $3.0 million in the Rigid Industrial Packaging & Services segment, a $3.0 million loss in the Flexible Products & Services segment resulting from the fair market value adjustment of an asset previously classified as held for sale and other miscellaneous losses of $0.1 million.
For the years ended October 31, 2017 and 2016, the Company recorded no gains relating to the sale of timberland. For the year ended October 31, 2015, the Company recorded a gain of $24.3 million relating to the sale of timberland.
Goodwill and Other Intangible Assets
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, 2017 and 2016:
(in millions)
Rigid Industrial Packaging &  Services (1)
 
Paper
Packaging & Services
 
Flexible  Products & Services (1)
 
Land
Management
 
Total
Balance at October 31, 2015
$
747.6

 
$
59.5

 
$

 
$

 
$
807.1

Goodwill acquired

 

 

 

 

Goodwill allocated to divestitures and businesses held for sale
(17.6
)
 

 

 

 
(17.6
)
Goodwill adjustments

 

 

 

 

Goodwill impairment charge

 

 

 

 

Currency translation
(3.1
)
 

 

 

 
(3.1
)
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

(1)Accumulated goodwill impairment loss was $63.3 million as of October 31, 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 and 2015, 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.
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 and 2015 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, 2017 and 2016:
(in millions)
Gross
Intangible
Assets
 
Accumulated
Amortization
 
Net Intangible
Assets
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

Non-compete agreements

 

 

Other
23.4

 
16.0

 
7.4

Total
$
218.6

 
$
120.6

 
$
98.0

 
 
 
 
 
 
October 31, 2016:
 
 
 
 
 
Indefinite lived:
 
 
 
 
 
Trademarks and patents
$
13.0

 
$

 
$
13.0

Definite lived:
 
 
 
 
 
Customer relationships
$
167.6

 
$
86.9

 
$
80.7

Trademarks and patents
12.1

 
4.8

 
7.3

Non-compete agreements
1.0

 
0.9

 
0.1

Other
23.5

 
14.0

 
9.5

Total
$
217.2

 
$
106.6

 
$
110.6


Gross intangible assets increased by $1.4 million for the year ended October 31, 2017. The increase was attributable to $6.2 million of currency fluctuations and the write-off of $4.8 million of fully-amortized assets. Amortization expense was $13.5 million, $16.8 million and $18.4 million for the years ended October 31, 2017, 2016 and 2015, respectively. Amortization expense for the next five years is expected to be $14.9 million in 2018, $14.8 million in 2019, $14.2 million in 2020, $12.7 million in 2021 and $8.9 million in 2022.
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 through purchase price accounting. Indefinite lived intangibles of approximately $13.4 million as of October 31, 2017, related primarily to the Tri-Sure trademark and trade names related to Blagden Express, Closed-loop and Box Board, are not amortized.
Restructuring Charges
Restructuring Charges
RESTRUCTURING CHARGES
The following is a reconciliation of the beginning and ended restructuring reserve balances for the years ended October 31, 2017 and 2016:
(in millions)
Employee
Separation
Costs
 
Other Costs
 
Total
Balance at October 31, 2015
$
14.7

 
$
6.6

 
$
21.3

Costs incurred and charged to expense
16.7

 
10.2

 
26.9

Costs paid or otherwise settled
(22.2
)
 
(15.6
)
 
(37.8
)
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


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 the year ended October 31, 2017, the Company recorded restructuring charges of $12.7 million, as compared to $26.9 million of restructuring charges recorded during the year ended October 31, 2016. The restructuring activity for the year ended October 31, 2017 consisted 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 in 2017, and a total of 157 employees severed throughout 2017 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 $14.9 million as of October 31, 2017:
(in millions)
Total Amounts
Expected to be
Incurred
 
Amounts
Incurred During
the year ended October 31, 2017
 
Amounts
Remaining to be
Incurred
Rigid Industrial Packaging & Services:
 
 
 
 
 
Employee separation costs
$
20.3

 
$
8.0

 
12.3

Other restructuring costs
4.4

 
3.2

 
1.2

 
24.7

 
11.2

 
13.5

Flexible Products & Services:
 
 
 
 
 
Employee separation costs
1.2

 
0.7

 
0.5

Other restructuring costs
1.4

 
0.5

 
0.9

 
2.6

 
1.2

 
1.4

Paper Packaging & Services:
 
 
 
 
 
Employee separation costs
0.3

 
0.3

 

Other restructuring costs

 

 

 
0.3

 
0.3

 

 
$
27.6

 
$
12.7

 
$
14.9


The focus for restructuring activities in 2016 was to rationalize operations 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.
The focus for restructuring activities in 2015 was to rationalize and close underperforming assets throughout all segments. During 2015, the Company recorded restructuring charges of $40.0 million, consisting of $27.8 million in employee separation costs and $12.2 million in other restructuring costs, primarily consisting of professional fees incurred for services specifically associated with employee separation and relocation. There were eight plants closed and a total of 1,020 employees severed throughout 2015 as part of the Company’s restructuring efforts.
Consolidation of Variable Interest Entities
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.
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, 2017 and 2016, 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, 2017, 2016 and 2015, the Buyer SPE recorded interest income of $2.4 million.
As of October 31, 2017 and 2016, STA Timber had long-term debt of $43.3 million. For each of the years ended October 31, 2017, 2016 and 2015, 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 as of 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 Flexibles Packaging J.V. also includes Global Textile Company LLC (“Global Textile”), which owned and operated a fabric hub in the Kingdom of Saudi Arabia that commenced operations in the fourth quarter of 2012 and ceased operations in the fourth quarter of 2014. The Company has 51 percent ownership in Trading Co. and 49 percent ownership in Asset Co. and Global Textile. 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, 2017
 
October 31, 2016
Cash and cash equivalents
$
14.4

 
$
15.2

Trade accounts receivable, less allowance of $2.1 in 2017 and $2.8 in 2016
52.5

 
43.3

Inventories
53.3

 
50.9

Properties, plants and equipment, net
31.2

 
25.0

Other assets
25.8

 
37.3

     Total assets
$
177.2

 
$
171.7

 
 
 
 
Accounts payable
$
33.8

 
$
30.7

Other liabilities
30.2

 
43.7

     Total liabilities
$
64.0

 
$
74.4


Net (income) loss attributable to the noncontrolling interest in the Flexible Packaging JV for the years ended October 31, 2017, 2016 and 2015 were $(6.3) million, $8.2 million and $14.2 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.
EarthMinded Benelux 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, EarthMinded Benelux NV for $0.3 million.
EarthMinded Benelux 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, EarthMinded Benelux NV was deconsolidated from the operations of the Company as of August 31, 2016. The retained noncontrolling interest of $0.4 million as of October 31, 2017 and $0.3 million as of October 31, 2016 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.
Long-Term Debt
Long-Term Debt
LONG-TERM DEBT
Long-term debt is summarized as follows:
 
(in millions)
October 31, 2017
 
October 31, 2016
2017 Credit Agreement
$
323.8

 
$

Prior Credit Agreement

 
201.2

Senior Notes due 2017

 
300.1

Senior Notes due 2019
248.0

 
247.0

Senior Notes due 2021
230.9

 
216.6

Receivables Facility
150.0

 

Other debt
6.5

 
9.7

 
959.2

 
974.6

Less current portion
15.0

 

Less deferred financing costs
6.4

 

Long-term debt
$
937.8

 
$
974.6


2017 Credit Agreement
On November 3, 2016, the Company and certain of its international subsidiaries entered into a new 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 $753.1 million as of October 31, 2017, which has been reduced by $11.9 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 $5.6 million as of October 31, 2017, 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 certain of its 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, 2017, $323.8 million was outstanding under the 2017 Credit Agreement. The current portion of the 2017 Credit Agreement was $15.0 million and the long-term portion was $308.8 million. The weighted average interest rate on the 2017 Credit Agreement was 2.20% for the year ended October 31, 2017. The actual interest rate on the 2017 Credit Agreement was 2.70% as of October 31, 2017.
Senior Notes due 2017
On February 9, 2007, the Company issued $300.0 million of 6.75% Senior Notes due February 1, 2017. These Senior Notes were paid in full on February 1, 2017 with $300.0 million of term loan proceeds borrowed under the 2017 Credit Agreement.
Senior Notes due 2019
On July 28, 2009, the Company issued $250.0 million of 7.75% Senior Notes due August 1, 2019. Interest on these Senior Notes is payable semi-annually. The financing costs associated with the Senior Notes due 2019 totaled $0.8 million as of October 31, 2017, and are recorded as a direct deduction from the long-term liability.
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, by executing and delivering the Second Amended and Restated Transfer and Administration Agreement (the “Second Amended TAA”). The Second Amended TAA was renewed and amended on September 27, 2017 to extend the facility through September 26, 2018 and to add The Bank of Tokyo-Mitsubishi UFJ Ltd. as a managing agent, an administrator and a committed investor. The maximum amount available to be borrowed under the Receivables Facility is $150.0 million, subject to the amounts of eligible receivables.
The Second Amended TAA replaced in its entirety the Amended and Restated Transfer and Administration Agreement, dated as of September 30, 2013 with PNC Bank, National Association, as a committed investor, managing agent, administrator and agent (the "Prior TAA"), which provided for a $150.0 million Receivables Facility.

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, 2018, 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 TAA. 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, 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.

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, 2017, the Company had outstanding other debt of $6.5 million in long-term debt and $14.5 million in short-term borrowings, compared to other debt of $9.7 million in long-term debt and $51.6 million in short-term borrowings, as of October 31, 2016. There are no financial covenants associated with this other debt.
Annual maturities are $165.0 million in 2018, $268.7 million in 2019, $30.0 million in 2020, $254.0 million in 2021, $241.3 million in 2022 and $0.2 million thereafter.
Financial Instruments and Fair Value Measurements
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, 2017 and 2016:
 
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
Foreign exchange hedges

 
0.1

 

 
0.1

 
Prepaid expenses and other current assets
Foreign exchange hedges

 
(0.6
)
 

 
(0.6
)
 
Other current liabilities
Insurance annuity

 

 
20.7

 
20.7

 
Other long-term assets
Total(1)
$

 
$
8.4


$
20.7


$
29.1

 
 
 
 
 
 
 
 
 
 
 
 
 
October 31, 2016
 
 
 
Fair Value Measurement
 
Balance Sheet Location
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
 
 
Foreign exchange hedges
$

 
$
0.3

 
$

 
$
0.3

 
Prepaid expenses and other current assets
Foreign exchange hedges

 
(0.3
)
 

 
(0.3
)
 
Other current liabilities
Insurance annuity

 

 
20.1

 
20.1

 
Other long-term assets
Total
$

 
$

 
$
20.1

 
$
20.1

 
 
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, 2017 and 2016 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 charge 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%. 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, any effective portion of 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. Any ineffective portion of the gain or loss on the derivative instrument is recognized into earnings. For additional disclosures of the gain or loss included with 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.
The Company had two interest rate derivatives (floating to fixed swap agreements designated as cash flow hedges) with a total notional amount of $150.0 million through December of fiscal 2015. The effective portion of the gain or loss on these derivative instruments was 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 affected earnings.
Losses reclassified to earnings under these contracts were $0.3 million, zero and $0.2 million for the years ended October 31, 2017, 2016 and 2015, respectively. These losses were recorded within the consolidated statements of income as interest expense, net.
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, 2017, the Company had outstanding foreign currency forward contracts in the notional amount of $80.1 million ($78.9 million as of October 31, 2016). Adjustments to fair value are recognized in earnings, offsetting the impact of the hedged item. 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 $1.8 million, $2.7 million and $6.0 million for the years ended October 31, 2017, 2016 and 2015, respectively.
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, 2017
 
October 31, 2016
Senior Notes due 2017 estimated fair value
$

 
$
302.4

Senior Notes due 2019 estimated fair value
272.0

 
280.1

Senior Notes due 2021 estimated fair value
281.0

 
264.9

Assets held by special purpose entities estimated fair value
52.5

 
54.3


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 October 31, 2017 and 2016:
 
Quantitative Information about Level 3 Fair Value Measurements
(in millions)
Fair Value of
Impairment
 
Valuation
Technique
 
Unobservable
Input
 
Range
of Input Values
October 31, 2017
 
 
 
 
 
 
 
Impairment of Net Assets Held for Sale
$
5.6

 
Broker Quote /
Indicative Bids
 
Indicative Bids
 
N/A
Impairment of Long Lived Assets
2.2

 
Sales Value
 
Sales Value
 
N/A
Total
$
7.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
October 31, 2016
 
 
 
 
 
 
 
Impairment of Net Assets Held for Sale
$
37.6

 
Broker Quote /
Indicative Bids
 
Indicative Bids
 
N/A
Impairment of Long Lived Assets
13.8

 
Sales Value
 
Sales Value
 
N/A
Total
$
51.4

 
 
 
 
 
 

Long-Lived Assets
During the year ended October 31, 2017, the Company wrote down long-lived assets with a carrying value of $3.8 million to a fair value of $1.6 million, resulting in recognized asset impairment charges of $2.2 million. These charges include $1.9 million related to properties, plants and equipment, net, in the Rigid Industrial Packaging & Services segment and $0.3 million of properties, plants and equipment, net, in the Flexible Products & Services segment.
During the year ended October 31, 2016, the Company wrote down long-lived assets with a carrying value of $19.2 million to a fair value of $5.4 million, resulting in recognized asset impairment charges of $13.8 million. These charges include $8.6 million related to properties, plants and equipment, net, in the Rigid Industrial Packaging & Services segment, $3.7 million of properties, plants and equipment, net, in the Flexible Products & Services segment, and $1.5 million related to a cost method investment in the Paper Packaging & Services segment.
During the year ended October 31, 2015, the Company wrote down long-lived assets with a carrying value of $60.7 million to a fair value of $14.8 million, resulting in recognized asset impairment charges of properties, plants and equipment of $45.9 million. These charges include $15.0 million of impairment charges related to Venezuelan properties, plants and equipment, net, $11.4 million of impairment charges related to assets recognized at fair value in the Company's reconditioning business, $1.5 million of IT software assets that were identified as obsolete, $0.5 million other-than-temporary impairment of equity method investment within the Flexible Products & Services segment, $10.9 million of impairment charges related to plant closures within the Rigid Industrial Packaging & Services and Flexible Products & Services segments, and $6.6 million of various machinery and equipment determined to be obsolete.
The assumptions used in measuring fair value of long-lived assets are considered level 3 inputs, which include bids received from third parties, recent purchase offers, market comparable information and discounted cash flows based on assumptions that market participants would use.
Assets and Liabilities Held for Sale
During the year ended October 31, 2017, the Company wrote down the assets and liabilities of one asset group that was held for sale with a carrying value of $69.2 million to a fair value of $63.6 million, resulting in recognized asset impairment charges of $5.6 million for goodwill allocated to the business classified as held for sale. Additionally during the year ended October 31, 2017, one asset group that was classified as held for sale at October 31, 2016 was reclassified to held and used at net realizable value, resulting in no impairment. The assumptions used in measuring fair value of assets and liabilities held for sale are considered level 3 inputs, which include recent purchase offers, market comparables and/or data obtained from commercial real estate brokers. During the year ended October 31, 2016, the Company wrote down assets and liabilities held for sale with a carrying value of $70.6 million to a fair value of $33.0 million, resulting in recognized asset impairment charges of $37.6 million. During the year ended October 31, 2016, three asset groups were reclassified to assets and liabilities held for sale, resulting in a $23.6 million impairment to net realizable value. Included in that impairment was $9.1 million of goodwill allocated to the business classified as held for sale. During the year ended October 31, 2015, one asset group that was classified as held for sale was remeasured to net realizable value, resulting in a $14.0 million impairment. The asset impairment included $11.9 million of goodwill allocated to the business classified as held for sale. Additionally during the year ended October 31, 2015, two asset groups that were classified as held for sale at October 31, 2014 were reclassified to held and used, resulting in a $3.0 million impairment to net realizable value. The assumptions used in measuring fair value of assets and liabilities held for sale are considered level 3 inputs, which include recent purchase offers, market comparables and/or data obtained from commercial real estate brokers.
Goodwill and Indefinite-Lived Intangibles
On an annual basis or when events or circumstances indicate impairment may have occurred, the Company performs impairment tests for goodwill and intangibles as defined under ASC 350, “Intangibles-Goodwill and Other.” As of August 1, 2017, the Company concluded that the carrying amount of the Rigid Industrial Packaging & Services – Latin America reporting unit exceeded the fair value of the reporting unit and the goodwill of Rigid Industrial Packaging & Services – Latin America $13.0 million was fully impaired. See Note 5 for additional information. The Company concluded that no such impairment existed as of October 31, 2016 and 2015 under the former reporting unit structure.
Stock-Based Compensation
Stock-Based Compensation
STOCK-BASED COMPENSATION
Stock-based compensation is accounted for in accordance with ASC 718, “Compensation – Stock Compensation,” which requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company maintains two stock-based compensation plans, the 2001 Management Equity Incentive and Compensation Plan (the “2001 Plan”) and the 2005 Outside Directors Equity Award Plan (the “2005 Directors Plan”) however no stock options were granted in 2017, 2016 or 2015. In 2015, 10,000 stock option shares were exercised at a weighted average exercise price of $27.36 and no shares were exercised in 2016 or 2017. No shares were forfeited or exercised in 2017, 2016 or 2015.
The Company’s Long Term Incentive Plan is intended to focus management on the key measures that drive superior performance over the longer-term. The Long Term Incentive Plan is based on three-year performance periods that commence at the start of every fiscal year. For each three-year performance period, the performance goals are based on targeted levels of earnings before interest, taxes, depreciation, depletion and amortization as determined by the Special Subcommittee of the Company’s Compensation Committee of the Board of Directors (the “Special Subcommittee”). Participants are paid 50% in cash and 50% in restricted shares of the Company’s Class A and/or Class B Common Stock, as determined by the Special Subcommittee.
The Company granted 31,075 shares of restricted stock with a grant date fair value of $53.80 under the Company’s Long Term Incentive Plan for 2016. The total stock expense recorded under the Long Term Incentive Plan was $1.7 million, $1.5 million and $1.4 million for the periods ended October 31, 2017, 2016 and 2015, respectively. All restricted stock awards under the Long Term Incentive Plan are fully vested at the date of award.
Under the Company’s 2005 Directors Plan, the Company granted 19,368 shares of restricted stock with a grant date fair value of $58.08 in 2017. The Company granted 42,435 shares of restricted stock with a grant date fair value of $26.51 under the Company’s 2005 Directors Plan in 2016. The total expense recorded under the plan was $1.1 million for the periods ended October 31, 2017, 2016, and 2015, respectively. All restricted stock awards under the 2005 Directors Plan are fully vested at the date of award.
During 2014, the Company awarded an officer, as part of the terms of his initial employment arrangement, 15,000 shares of Class A Common Stock under the 2001 Plan. These shares were issued subject to vesting and post-vesting restrictions on the sale or transfer until May 12, 2019. These shares fully vested in equal installments of 5,000 on May 12, 2015, 2016 and 2017. Share-based compensation expense was $0.1 million, $0.2 million, and $0.3 million for the periods ended October 31, 2017, 2016, and 2015 respectively.
The total stock compensation expenses recorded under the plans were $2.9 million, $2.8 million and $2.8 million for the periods ended October 31, 2017, 2016 and 2015 respectively.
Income Taxes
Income Taxes
INCOME TAXES
The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, and various non-U.S. jurisdictions.
The provision for income taxes consists of the following:
 
Year Ended October 31,
(in millions)
2017
 
2016
 
2015
Current
 
 
 
 
 
Federal
$
33.0

 
$
20.3

 
$
18.3

State and local
6.0

 
4.4

 
4.0

Non-U.S.
25.9

 
40.3

 
29.6

 
64.9

 
65.0

 
51.9

Deferred
 
 
 
 
 
Federal
4.5

 
0.5

 
2.4

State and local
(2.0
)
 
0.5

 
0.2

Non-U.S.
(0.2
)
 
0.5

 
(6.1
)
 
2.3

 
1.5

 
(3.5
)
 
$
67.2

 
$
66.5

 
$
48.4


The non-U.S. income before income tax expense was $85.2 million, $49.9 million and $44.8 million in 2017, 2016, and 2015, respectively. The U.S. income before income tax was $115.1 million, $91.3 million and $70.0 million in 2017, 2016, and 2015, respectively.
The following is a reconciliation of the provision for income taxes based on the federal statutory rate to the Company’s effective income tax rate:
 
Year Ended October 31,
 
2017
 
2016
 
2015
Federal statutory rate
35.00
 %
 
35.00
 %
 
35.00
 %
Impact of foreign tax rate differential
(9.86
)%
 
(11.15
)%
 
(10.10
)%
State and local taxes, net of federal tax benefit
1.35
 %
 
2.19
 %
 
2.80
 %
Net impact of changes in valuation allowances
20.74
 %
 
1.91
 %
 
3.00
 %
Venezuela balance sheet remeasurement
 %
 
 %
 
5.90
 %
Non-deductible write-off and impairment of goodwill and other intangible assets
(0.02
)%
 
7.37
 %
 
2.50
 %
Unrecognized tax benefits
(2.00
)%
 
4.84
 %
 
2.50
 %
Permanent book-tax differences
(15.71
)%
 
(4.78
)%
 
(0.50
)%
Withholding taxes
1.88
 %
 
4.64
 %
 
2.70
 %
Other items, net
2.20
 %
 
7.08
 %
 
(1.60
)%
 
33.58
 %
 
47.10
 %
 
42.20
 %

The Company included in the table above a $38.6 million and 19.26% change in valuation allowance, with offsetting amounts in permanent book-tax differences, for certain intercompany financing transactions.
The primary items which decreased the Company’s effective income tax rate from the federal statutory rate in 2017 were permanent book-tax differences, unrecognized tax benefits, the impact of foreign tax rates that differ from the federal statutory tax rate, and other immaterial items; offset primarily by increases in valuation allowances.
The primary items which increased the Company’s effective income tax rate from the federal statutory rate in 2016 were non-deductible expenses, such as the write-off of goodwill allocated to divestitures and impairments, withholding taxes, unrecognized tax benefits, state and local taxes, net of federal tax benefit, the net impact of changes in valuation allowances due to changes in circumstances in several legal entities and other tax items. Cumulatively, these items impacted the 2016 effective income tax rate by approximately 28.0 percent. This increase was offset by the impact of foreign tax rates and permanent book-tax differences, which decreased the effective income tax rate by approximately 15.9 percent in 2016. In both 2016 and 2015, the items that materially increased the effective income tax rate from the federal statutory rate were related to non-U.S. operations.
As discussed in Note 1 herein, with respect to its operations in Venezuela, the Company changed from the official exchange rate to the SIMADI rate requiring remeasurement of the Venezuelan balance sheet during 2015. This balance sheet remeasurement contributed 5.90 percent to the Company's effective tax rate. The net $19.4 million charge to the income statement had no tax benefit.
The components of the Company’s deferred tax assets and liabilities as of October 31 for the years indicated were as follows:
(in millions)
2017
 
2016
Deferred Tax Assets
 
 
 
Net operating loss and other carryforwards
$
116.4

 
$
83.0

Pension liabilities
38.8

 
57.0

Insurance operations
2.3

 
2.7

Incentive liabilities
14.7

 
8.0

Environmental reserves
1.4

 
1.3

Inventories
7.6

 
7.8

State income taxes
7.1

 
7.0

Postretirement benefit obligations
3.0

 
3.1

Other
16.6

 
9.1

Interest accrued
3.1

 
1.2

Allowance for doubtful accounts
1.6

 
1.9

Restructuring reserves
0.6

 
1.1

Deferred compensation
4.2

 
3.8

Foreign tax credits
5.1

 
2.4

Vacation accruals
1.4

 
1.5