GREIF, INC, 10-K filed on 12/17/2020
Annual Report
v3.20.4
Document and Entity Information - USD ($)
12 Months Ended
Oct. 31, 2020
Dec. 14, 2020
Apr. 30, 2020
Document Information [Line Items]      
Entity Address, Postal Zip Code 43015    
Entity Address, State or Province OH    
Entity Address, City or Town Delaware    
Entity Address, Address Line One 425 Winter Road    
Entity Tax Identification Number 31-4388903    
Entity Incorporation, State or Country Code DE    
Document Transition Report false    
Document Quarterly Report true    
Document Type 10-K    
Amendment Flag false    
Document Period End Date Oct. 31, 2020    
Entity File Number 001-00566    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
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 Interactive Data Current Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
City Area Code 740    
Local Phone Number 549-6000    
Documents Incorporated by Reference 1. The Registrant’s Definitive Proxy Statement for use in connection with the Annual Meeting of Stockholders to be held on February 23, 2021 (the “2021 Proxy Statement”), portions of which are incorporated by reference into Parts II and III of this Form 10-K. The 2021 Proxy Statement will be filed within 120 days of October 31, 2020.    
ICFR Auditor Attestation Flag true    
Class A common stock      
Document Information [Line Items]      
Security Exchange Name NYSE    
Title of 12(b) Security Class A Common Stock    
Trading Symbol GEF    
Entity Common Stock, Shares Outstanding   26,444,986  
Entity Public Float     $ 860,619,382
Class B common stock      
Document Information [Line Items]      
Security Exchange Name NYSE    
Title of 12(b) Security Class B Common Stock    
Trading Symbol GEF-B    
Entity Common Stock, Shares Outstanding   22,007,725  
Entity Public Float     $ 234,235,302
v3.20.4
Consolidated Statements of Income - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2020
Oct. 31, 2019
Oct. 31, 2018
Net sales $ 4,515.0 $ 4,595.0 $ 3,873.8
Costs of products sold 3,600.3 3,635.1 3,084.9
Gross profit 914.7 959.9 788.9
Selling, general and administrative expenses 516.0 507.4 397.2
Restructuring charges 38.7 26.1 18.6
Acquisition and integration related costs 17.0 29.7 0.7
Non-cash asset impairment charges 18.5 7.8 8.3
Gain on disposal of properties, plants and equipment, net (19.2) (13.9) (5.6)
(Gain) loss on disposal of businesses, net 38.8 3.7 (0.8)
Operating profit 304.9 399.1 370.5
Interest expense, net 115.8 112.5 51.0
Debt extinguishment charges 0.0 22.0 0.0
Non-cash pension settlement charges 0.3 0.0 1.3
Other expense, net 2.7 2.6 18.4
Income before income tax expense and equity earnings of unconsolidated affiliates, net 186.1 262.0 299.8
Income tax expense 63.3 70.7 73.3
Equity earnings of unconsolidated affiliates, net of tax (1.5) (2.9) (3.0)
Net income 124.3 194.2 229.5
Net income attributable to noncontrolling interests (15.5) (23.2) (20.1)
Net income attributable to Greif, Inc. $ 108.8 $ 171.0 $ 209.4
Class A common stock      
Basic earnings per share attributable to Greif, Inc. common shareholders:      
Basic earnings per share attributable to Greif, Inc. common shareholders (usd per share) $ 1.83 $ 2.89 $ 3.56
Diluted earnings per share attributed to Greif, Inc. common shareholders:      
Diluted earnings per share attributable to Greif, Inc. common shareholders (usd per share) 1.83 2.89 3.55
Class B common stock      
Basic earnings per share attributable to Greif, Inc. common shareholders:      
Basic earnings per share attributable to Greif, Inc. common shareholders (usd per share) 2.74 4.33 5.33
Diluted earnings per share attributed to Greif, Inc. common shareholders:      
Diluted earnings per share attributable to Greif, Inc. common shareholders (usd per share) $ 2.74 $ 4.33 $ 5.33
v3.20.4
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2020
Oct. 31, 2019
Oct. 31, 2018
Statement of Comprehensive Income [Abstract]      
Net income $ 124.3 $ 194.2 $ 229.5
Other comprehensive income (loss), net of tax:      
Foreign currency translation (9.8) (4.5) (45.5)
Derivative financial instruments (12.0) (26.1) 7.7
Minimum pension liabilities 15.1 (25.3) 16.3
Other comprehensive income (loss), net of tax (6.7) (55.9) (21.5)
Comprehensive income 117.6 138.3 208.0
Comprehensive income attributable to noncontrolling interests 2.6 23.9 18.1
Comprehensive income attributable to Greif, Inc. $ 115.0 $ 114.4 $ 189.9
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Millions
Oct. 31, 2020
Oct. 31, 2019
Current assets    
Cash and cash equivalents $ 105.9 $ 77.3
Trade accounts receivable, less allowance of $9.4 in 2020 and $6.8 in 2019 636.6 664.2
Inventories:    
Raw materials 208.4 238.4
Work-in-process 5.4 11.3
Finished goods 79.8 108.5
Assets held for sale 57.0 4.1
Assets held by special purpose entities 115.8 101.2
Prepaid expenses 43.0 44.0
Other current assets 115.8 101.2
Total current assets 1,302.8 1,249.0
Long-term assets    
Goodwill 1,518.4 1,517.8
Other intangible assets, net of amortization 715.3 776.5
Deferred tax assets 11.3 15.9
Other long-term assets 99.2 90.9
Pension assets 29.5 35.4
Operating lease assets 307.5 0.0
Total long-term assets 2,681.2 2,487.4
Properties, plants and equipment    
Timber properties, net of depletion 224.5 272.4
Land 162.6 178.0
Buildings 524.7 531.0
Machinery and equipment 1,930.6 1,866.2
Capital projects in progress 120.6 170.4
Properties, plants and equipment, gross 2,963.0 3,018.0
Accumulated depreciation (1,436.1) (1,327.7)
Properties, plants and equipment, net 1,526.9 1,690.3
Total assets 5,510.9 5,426.7
Current liabilities    
Accounts payable 450.7 435.2
Accrued payroll and employee benefits 122.3 142.4
Restructuring reserves 21.6 11.3
Current portion of long-term debt 123.1 83.7
Short-term borrowings 28.4 9.2
Liabilities held by special purpose entities 158.4 143.6
Current portion of operating lease liabilities 52.3 0.0
Other current liabilities 158.4 143.6
Total current liabilities 1,000.1 825.4
Long-term liabilities    
Long-term debt 2,335.5 2,659.0
Operating lease liabilities 257.7 0.0
Deferred tax liabilities 339.2 313.0
Pension liabilities 137.7 177.6
Post-retirement benefit obligations 11.6 12.2
Other long-term liabilities 152.0 128.9
Contingent liabilities and environmental reserves 20.2 18.7
Mandatorily redeemable noncontrolling interests 8.4 8.4
Long-term income tax payable 27.8 27.8
Total long-term liabilities 3,290.1 3,388.9
Commitments and Contingencies (Note 11)
Redeemable Noncontrolling Interests (Note 18) 20.0 21.3
Equity    
Common stock, without par value 170.2 162.6
Treasury stock, at cost (134.4) (134.8)
Retained earnings 1,543.9 1,539.0
Accumulated other comprehensive income (loss), net of tax:    
Total Greif, Inc. shareholders’ equity 1,152.2 1,133.1
Noncontrolling interests 48.5 58.0
Total shareholders’ equity 1,200.7 1,191.1
Total liabilities and shareholders’ equity 5,510.9 5,426.7
Foreign Currency Translation    
Accumulated other comprehensive income (loss), net of tax:    
Total Greif, Inc. shareholders’ equity (294.9) (298.0)
Derivative financial instruments    
Accumulated other comprehensive income (loss), net of tax:    
Total Greif, Inc. shareholders’ equity (24.7) (12.7)
Minimum Pension Liability Adjustment    
Accumulated other comprehensive income (loss), net of tax:    
Total Greif, Inc. shareholders’ equity (107.9) (123.0)
Variable Interest Entity, Primary Beneficiary    
Inventories:    
Assets held by special purpose entities 50.9 0.0
Other current assets 50.9 0.0
Long-term assets    
Other long-term assets 0.0 50.9
Current liabilities    
Liabilities held by special purpose entities 43.3 0.0
Other current liabilities 43.3 0.0
Long-term liabilities    
Other long-term liabilities $ 0.0 $ 43.3
v3.20.4
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Oct. 31, 2020
Oct. 31, 2019
Statement of Financial Position [Abstract]    
Allowance of trade accounts receivable $ 9.4 $ 6.8
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2020
Oct. 31, 2019
Oct. 31, 2018
Cash flows from operating activities:      
Net income $ 124.3 $ 194.2 $ 229.5
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, depletion and amortization 242.5 206.1 126.9
Non-cash asset impairment charges 18.5 7.8 8.3
Non-cash pension settlement charges 0.3 0.0 1.3
Gain on disposals of properties, plants and equipment, net (19.2) (13.9) (5.6)
(Gain) loss on disposal of businesses, net 38.8 3.7 (0.8)
Unrealized foreign exchange (gain) loss (4.2) 3.0 (0.7)
Deferred income tax (benefit) expense 16.7 2.1 (44.8)
Transition tax (benefit) expense 0.0 (0.8) 52.8
Debt extinguishment charges 0.0 14.0 0.0
Non-cash lease expense 57.4 0.0 0.0
Other, net (3.0) 4.2 (2.8)
Increase (decrease) in cash from changes in certain assets and liabilities:      
Trade accounts receivable (9.1) 55.1 (34.0)
Inventories 27.1 33.9 (24.8)
Deferred purchase price on sold receivables 0.0 (6.9) 2.1
Accounts payable 38.1 (69.9) 24.3
Restructuring reserves 10.2 6.7 (0.8)
Operating leases (56.8) 0.0 0.0
Pension and post-retirement benefit liabilities (13.3) (15.3) (66.8)
Other, net (13.6) (34.5) (11.1)
Net cash provided by operating activities 454.7 389.5 253.0
Cash flows from investing activities:      
Acquisitions of companies, net of cash acquired 0.0 (1,857.9) 0.0
Purchases of properties, plants and equipment (131.4) (156.8) (140.2)
Purchases of and investments in timber properties (5.4) (5.4) (8.9)
Purchases of equity method investments (3.6) 0.0 0.0
Proceeds from the sale of properties, plants, equipment and other assets 33.4 28.7 12.5
Proceeds from the sale of businesses 80.9 1.5 1.4
Proceeds on insurance recoveries 0.9 0.6 0.0
Net cash used in investing activities (25.2) (1,989.3) (135.2)
Cash flows from financing activities:      
Proceeds from issuance of long-term debt 1,319.9 3,732.3 1,020.7
Payments on long-term debt (1,578.4) (2,075.6) (1,065.4)
Proceeds (payments) on short-term borrowings, net 17.0 2.2 (11.0)
Proceeds from trade accounts receivable credit facility 76.8 181.4 2.8
Payments on trade accounts receivable credit facility (122.9) (89.2) (2.8)
Dividends paid to Greif, Inc. shareholders (104.3) (104.0) (100.0)
Dividends paid to noncontrolling interests (13.4) (9.2) (4.6)
Payments for debt extinguishment and issuance costs 0.0 (44.1) 0.0
Purchases of redeemable noncontrolling interest 0.0 (11.9) 0.0
Cash contribution from noncontrolling interest holder 0.0 1.6 2.0
Net cash provided (used in) by financing activities (405.3) 1,583.5 (158.3)
Effects of exchange rates on cash 4.4 (0.6) (7.6)
Net increase (decrease) in cash and cash equivalents 28.6 (16.9) (48.1)
Cash and cash equivalents at beginning of year 77.3 94.2 142.3
Cash and cash equivalents at end of year 105.9 77.3 94.2
Non-cash transactions:      
Capital expenditures included in accounts payable 17.2 18.6 11.4
Schedule of interest and income taxes paid:      
Cash payments for interest expense 119.9 161.8 58.3
Cash payments for taxes $ 65.1 $ 71.4 $ 65.2
v3.20.4
Consolidated Statements of Changes in Shareholders' Equity - USD ($)
shares in Thousands, $ in Millions
Total
Executive Officer [Member]
Director [Member]
Capital Stock
Capital Stock
Executive Officer [Member]
Capital Stock
Director [Member]
Treasury Stock
Treasury Stock
Executive Officer [Member]
Treasury Stock
Director [Member]
Retained Earnings
Retained Earnings
Cumulative Effect, Period of Adoption, Adjustment
Accumulated Other Comprehensive Income (Loss)
Greif, Inc. Equity
Greif, Inc. Equity
Executive Officer [Member]
Greif, Inc. Equity
Director [Member]
Greif, Inc. Equity
Cumulative Effect, Period of Adoption, Adjustment
Noncontrolling Interests
Beginning balance (shares) at Oct. 31, 2017       47,843     28,999                    
Beginning balance, value at Oct. 31, 2017 $ 1,047.5     $ 144.2     $ (135.6)     $ 1,360.5   $ (358.2) $ 1,010.9       $ 36.6
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Net income 229.5                 209.4     209.4       20.1
Other comprehensive income (loss):                                  
Foreign currency translation (45.5)                     (43.5) (43.5)       (2.0)
Derivative financial instruments, net of income tax expense (benefit) 7.7                 (0.6)   8.3 7.7        
Minimum pension liability adjustment, net of income tax expense 16.3                     16.3 16.3        
Comprehensive income 208.0                       189.9        
Current period mark to redemption value of redeemable noncontrolling interest 0.5                 0.5     0.5        
Net income allocated to redeemable noncontrolling interests (3.7)                             (3.7)
Dividends paid (100.0)                 (100.0)     (100.0)        
Dividends paid to noncontrolling interests (4.6)                               (4.6)
Restricted stock executives and directors (shares)       21     (21)                    
Restricted stock directors 1.2     $ 1.2     $ 0.0           1.2        
Long-term incentive shares issued (shares)       85     (85)                    
Long-term incentive shares issued 5.3     $ 5.1     $ 0.2           5.3        
Ending balance (shares) at Oct. 31, 2018       47,949     28,893                    
Ending balance, value at Oct. 31, 2018 1,154.2     $ 150.5     $ (135.4)     1,469.8 $ (2.1) (377.1) 1,107.8     $ (2.1) 46.4
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Net income 194.2                 171.0     171.0       23.2
Other comprehensive income (loss):                                  
Foreign currency translation (4.5)                     (5.2) (5.2)       0.7
Derivative financial instruments, net of income tax expense (benefit) (26.1)                     (26.1) (26.1)        
Minimum pension liability adjustment, net of income tax expense (25.3)                     (25.3) (25.3)        
Comprehensive income 138.3                       114.4        
Current period mark to redemption value of redeemable noncontrolling interest 4.9                 4.9     4.9        
Net income allocated to redeemable noncontrolling interests (2.3)                               (2.3)
Dividends paid (104.0)                 (104.0)     (104.0)        
Dividends paid to noncontrolling interests (7.9)                               (7.9)
Acquisition of noncontrolling interest and other (2.7)                 (0.6)     (0.6)       (2.1)
Restricted stock executives and directors (shares)       25     (25)                    
Restricted stock directors 1.1     $ 1.1     $ 0.0           1.1        
Long-term incentive shares issued (shares)       292     (292)                    
Long-term incentive shares issued 11.6     $ 11.0     $ 0.6           11.6        
Ending balance (shares) at Oct. 31, 2019       48,266     28,576                    
Ending balance, value at Oct. 31, 2019 $ 1,191.1     $ 162.6     $ (134.8)     1,539.0   (433.7) 1,133.1       58.0
Other comprehensive income (loss):                                  
Adoption of ASU 2016-16 gef:Accountingstandardsupdate201616_1                                
Net income $ 124.3                 108.8     108.8       15.5
Foreign currency translation (9.8)                     3.1 3.1       (12.9)
Derivative financial instruments, net of income tax expense (benefit) (12.0)                     (12.0) (12.0)        
Minimum pension liability adjustment, net of income tax expense 15.1                     15.1 15.1        
Comprehensive income 117.6                       115.0        
Current period mark to redemption value of redeemable noncontrolling interest 0.4                 0.4     0.4        
Net income allocated to redeemable noncontrolling interests (0.1)                               (0.1)
Dividends paid (104.3)                 (104.3)     (104.3)        
Dividends paid to noncontrolling interests (12.0)                               (12.0)
Long-term incentive shares issued 5.3                     5.3      
Restricted stock executives and directors (shares)         3 28   (3) (28)                
Restricted stock directors   $ 0.1 $ 1.1   $ 0.1 $ 1.0   $ 0.0 $ 0.1         $ 0.1 $ 1.1    
Long-term incentive shares issued (shares)       153     (153)                    
Long-term incentive shares issued       $ 5.0     $ 0.3                    
Share based compensation 1.5     $ 1.5                 1.5        
Ending balance (shares) at Oct. 31, 2020       48,450     28,392                    
Ending balance, value at Oct. 31, 2020 $ 1,200.7     $ 170.2     $ (134.4)     $ 1,543.9   $ (427.5) $ 1,152.2       $ 48.5
v3.20.4
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Oct. 31, 2020
Oct. 31, 2019
Oct. 31, 2018
Derivative gain (loss), tax $ 4.0 $ 8.6 $ 3.3
Defined benefit plan, tax $ (4.8) $ 1.1 $ (4.1)
Adoption of ASU 2016-16   gef:Accountingstandardsupdate201616_1  
Class A common stock      
Dividend paid (usd per share) $ 1.76 $ 1.76  
Common Stock, Dividends, Per Share, Declared (in USD per share)     $ 1.70
Class B common stock      
Dividend paid (usd per share) $ 2.63 $ 2.63 $ 2.54
v3.20.4
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Oct. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Business
Greif, Inc. and its subsidiaries (collectively, “Greif,” “our,” or the “Company”), principally manufacture rigid industrial packaging products, such as steel, fibre and plastic drums, rigid intermediate bulk containers, closure systems for industrial packaging products, transit protection products, water bottles and remanufactured and reconditioned industrial containers, and provides services, such as container life cycle management, filling, logistics, warehousing and other packaging services. The Company produces containerboard, corrugated sheets, corrugated containers and other corrugated and specialty products to customers in North America. The Company also produces coated and uncoated recycled paperboard, along with tubes and cores which are used in a variety of applications that include industrial products (construction products, protective packaging, and adhesives). In addition, we also purchase and sell recycled fiber. The Company is a leading global producer of flexible intermediate bulk containers. In addition, the Company owns timber properties in the southeastern United States which are actively harvested and regenerated. The Company has operations in over 40 countries.

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.
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 makes 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, recycled coated and uncoated paperboard and used industrial packaging for reconditioning.
There were approximately 16,000 full time employees of the Company as of October 31, 2020.
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 years or to any quarter of those years, relates to the fiscal year or quarter, as the case may be, ended in that year, unless otherwise stated.
Argentina Currency
The Company’s results with respect to the business of its Argentinian subsidiary have been reported under highly inflationary accounting in accordance with Accounting Standards Codification ("ASC") 830, "Foreign Currency Matters," beginning on August 1, 2018. As of October 31, 2020, the Company's Argentina subsidiary represented approximately 1% of the Company’s consolidated net revenues and less than 1% of its consolidated total assets.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant estimates are related to the expected useful lives assigned to properties, plants and equipment, goodwill and other intangible assets, estimates of fair value, environmental liabilities, pension and post-retirement benefits, including plan assets, income taxes, net assets held for sale and contingencies. Actual amounts could differ from those estimates.
Cash and Cash Equivalents
The Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value.
Allowance for Doubtful Accounts
Trade receivables represent amounts owed to the Company through its operating activities and are presented net of allowance for doubtful accounts. The allowance for doubtful accounts totaled $9.4 million and $6.8 million as of October 31, 2020 and 2019, 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, 2020, 2019, and 2018.
Trade receivables can be potentially exposed to a concentration of credit risk with customers or in particular industries. Such credit risk is considered by management to be limited due to the Company’s many customers, none of which are considered principal in the total operations of the Company, and its geographic scope of operations in a variety of industries throughout the world. The Company does not have an individual customer that exceeds 10 percent of total revenue. In addition, the Company performs ongoing credit evaluations of its customers’ financial conditions and maintains reserves for credit losses. Such losses historically have been within management’s expectations.
Inventory
The Company primarily uses the FIFO method of inventory valuation. Reserves for slow moving and obsolete inventories are provided based on historical experience, inventory aging and product demand. The Company continuously evaluates the adequacy of these reserves and makes adjustments to these reserves as required. 
The Paper Packaging & Services segment trades certain inventories with third parties. These inventory trades are accounted for as non-monetary exchanges and any unfavorable imbalances, resulting from these trades, are recorded as a liability.
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 ASC 360, “Property, Plant, and Equipment,” at the lower of carrying value or fair value less cost to sell. Fair value is based on the estimated proceeds from the sale of the assets utilizing recent purchase offers, market comparables and/or reliable third party data. The Company's estimate as to fair value is regularly reviewed and assets are subject to changes, such as in the commercial real estate markets and the Company's continuing evaluation as to the asset’s acceptable sale price. As of October 31, 2020, there was one asset group within the Rigid Industrial Packaging & Services, four asset groups within Paper Packaging & Services segment, one asset group within Land Management segment and zero asset groups within the Corporate and Other segment classified as assets and liabilities held for sale. The effect of suspending depreciation and depletion on the facilities and timberlands, respectively, 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, assuming offers deemed sufficient by management are received as result of marketing efforts. See Note 7 herein for additional information regarding assets and liabilities held for sale.
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 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 as 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. See Note 3 for additional information regarding goodwill and other intangible assets.
Other Intangibles
The Company accounts for intangible assets in accordance with ASC 350. Definite lived intangible assets are amortized over their useful lives on a straight-line basis. The useful lives for definite lived intangible assets vary depending on the type of asset and the terms of contracts or the valuation performed. Amortization expense on intangible assets is recorded on the straight-line method over their useful lives as follows:
  Years
Trade names
1-15
Customer relationships
5-25
Non-compete agreements
1-10
Other intangibles
1-20

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. Under this method, the Company allocates the fair value of purchase consideration transferred to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition. The excess purchase consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. The Company's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred.
The Company classifies costs incurred in connection with acquisitions and their integration as acquisition and integration related costs. These costs are expensed as incurred and consist primarily of transaction costs, legal and consulting fees, integration costs and changes in the fair value of contingent payments (earn-outs) and are recorded within Acquisition and Integration related Costs line item presented on the consolidated income statement. 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.
The consolidated financial statements include the results of operations from these business combinations from the date of acquisition.
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
30-40
Machinery and equipment
5-15

Depreciation expense was $169.1 million, $149.0 million and $107.5 million in 2020, 2019 and 2018, 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, 2020, 2019, and 2018, the Company capitalized interest costs of $4.5 million, $5.6 million, and $4.5 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, the Company evaluates the recoverability of long-lived assets, other than goodwill and indefinite-lived intangible assets, by assessing whether the carrying value can be recovered over their remaining useful lives through the expected future undiscounted operating cash flows of the underlying business. Impairment indicators include, but are not limited to, a significant decrease in the market price of a long-lived asset; a significant adverse change in the manner in which the asset is being used or in its physical condition; a significant adverse change in legal factors or the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; current period operating or cash flow losses combined with a history of operating or cash flow losses associated with the use of the asset; or a current expectation that it is more likely than not that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Future decisions to change our manufacturing processes, exit certain businesses, reduce excess capacity, temporarily idle facilities and close facilities could also result in material impairment losses. 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, 2020, the Company's timber properties consisted of approximately 244,000 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, $3.7 million and $4.0 million in 2020, 2019 and 2018, 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 $7.2 million and $7.6 million for estimated costs related to outstanding claims as of October 31, 2020 and 2019, 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 $24.7 million and $27.5 million for anticipated costs related to general liability, product, vehicle and workers’ compensation claims as of October 31, 2020 and 2019, respectively. These costs include an estimate for expected settlements on pending claims, defense costs and an estimate for claims incurred but not reported. These estimates are based on the Company’s assessment of its deductibles, outstanding claims, historical analysis, actuarial information and current payment trends.
Income Taxes
Income taxes are accounted for under ASC 740, “Income Taxes.” In accordance with ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be settled or realized. Valuation allowances are established when management believes it is more likely than not that some portion of the deferred tax assets will not be realized.
The Company’s effective tax rate is impacted by the amount of income generated in each taxing jurisdiction, statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which the Company operates. Significant judgment is required in determining the Company’s effective tax rate and in evaluating its tax positions.
Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement. The Company’s effective tax rate includes the impact of reserve provisions and changes to reserves on uncertain tax positions that are not more likely than not to be sustained upon examination as well as related interest and penalties.
A number of years may elapse before a particular matter, for which the Company has established a reserve, is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. Unfavorable settlement of any particular issue would require use of the Company’s cash. Favorable resolution would be recognized as a reduction to the Company’s effective tax rate in the period of resolution.
Equity earnings of unconsolidated affiliates, net of tax
Equity earnings of unconsolidated affiliates, net of tax represent the Company’s share of earnings of affiliates in which the Company does not exercise control, but has significant influence. Investments in such affiliates are accounted for using the equity method of accounting. The Company has an equity interest in three such affiliates as of October 31, 2020. 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.
Other Comprehensive Income
The Company's other comprehensive income is significantly impacted by foreign currency translation, effective cash flow hedges and defined benefit pension and post-retirement 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 post-retirement benefit obligations; and certain intercompany loans payable and receivable. The primary currencies in which these assets and liabilities are denominated are the Euro, Brazilian real, and Chinese yuan.
The impact of effective cash flow hedges is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Currently, interest rate swaps are held by the Company to effectively convert a portion of floating rate debt to a fixed rate basis, thus reducing the impact of interest rate increases on future interest expense. The Company uses the regression method for assessing the effectiveness of the swaps.
The impact of defined benefit pension and post-retirement benefit adjustments is primarily affected by unrecognized actuarial gains and losses related to the Company's defined benefit and other post-retirement 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 is 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 is no 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 Post-retirement Benefits
Under ASC 715, “Compensation – Retirement Benefits,” the Company recognizes the funded status of its defined benefit pension and other post-retirement plans on the consolidated balance sheet and records 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.
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.
Revenue Recognition
Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring goods or providing services. Customer payment terms are typically less than one year and as such, transaction prices are not adjusted for the effects of a significant financing component. Standalone selling prices for each performance obligation are generally stated in the contract. Variable consideration in the form of volume rebates is estimated based on contract terms and historical experience of actual results limited to the amount which is probable will not result in reversal of cumulative revenue recognized when the variable consideration is resolved. Taxes collected from customers and remitted to governmental authorities are excluded from net sales.
For the vast majority of revenues, contracts with customers are either a purchase order or the combination of a purchase order with a master supply agreement. A performance obligation is considered an individual unit sold. The Company does not bundle products. Prices negotiated with each individual customer are representative of the stand-alone selling price of the product. The Company typically satisfies the performance obligation at a point in time when control is transferred to customers. The point in time when control of goods is transferred is largely dependent on delivery terms.
Contract liabilities relate primarily to prepayments received from the Company’s customers before revenue is recognized and from volume rebates to customers. These amounts are included in other current liabilities in the consolidated balance sheets. The Company does not have any material contract assets. Freight charged to customers is included in net sales in the income statement.
The Company's contracts with customers are broadly similar in nature throughout its reportable segments, but the amount, timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic factors. See Note 15 herein for additional disclosures of revenue disaggregated by geography for each reportable segment.
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 foreign currency transaction gains and losses, non-service cost components of net periodic post-retirement benefit costs and other infrequent non-operating items.
Currency Translation
In accordance with ASC 830, “Foreign Currency Matters,” the assets and liabilities denominated in a foreign currency are translated into United States dollars at the rate of exchange existing at period-end, and revenues and expenses are translated at average exchange rates.
The cumulative translation adjustments, which represent the effects of translating assets and liabilities of the Company’s international operations, are presented in the consolidated statements of changes in shareholders’ equity in accumulated other comprehensive income (loss). Transaction gains and losses on foreign currency transactions denominated in a currency other than an entity’s functional currency are credited or charged to income. The amounts included in other expense, net related to foreign currency transaction losses were $4.2 million, $2.1 million and $8.8 million in 2020, 2019 and 2018, respectively.
Derivative Financial Instruments
In accordance with ASC 815, “Derivatives and Hedging,” the Company records all derivatives in the consolidated balance sheet as either assets or liabilities measured at fair value. Dependent on the designation of the derivative instrument, changes in fair value are recorded to earnings or shareholders’ equity through other comprehensive income (loss).
The Company may from time to time use interest rate swap agreements to hedge against changing interest rates. For interest rate swap agreements designated as cash flow hedges, the net gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company's interest rate swap agreements effectively convert a portion of floating rate debt to a fixed rate basis, thus reducing the impact of interest rate increases on future interest expense.
The Company's cross currency interest rate swap agreement synthetically swaps U.S. dollar denominated fixed rate debt for Euro denominated fixed rate debt and is designated as a net investment hedge for accounting purposes. The gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Interest payments received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the consolidated statements of income.
The Company enters into currency forward contracts to hedge certain currency transactions and short-term intercompany loan balances with its international businesses. Such contracts limit the Company’s exposure to both favorable and unfavorable currency fluctuations. These contracts are adjusted to reflect market value as of each balance sheet date, with the resulting changes in fair value being recognized in other expense, net.
Any derivative contract that is either not designated as a hedge, or is so designated but is ineffective, has its changes to market value recognized in earnings immediately. If a cash flow or fair value hedge ceases to qualify for hedge accounting, the contract would continue to be carried on the balance sheet at fair value until settled and have the adjustments to the contract’s fair value recognized in earnings. If a forecasted transaction were no longer probable to occur, amounts previously deferred in accumulated other comprehensive income (loss) would be recognized immediately in earnings.
Variable Interest Entities
The Company evaluates whether an entity is a variable interest entity (“VIE”) and determines if the primary beneficiary status is appropriate on a quarterly basis. The Company consolidates VIEs 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 method of accounting. 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; the obligation to absorb the expected losses; and/or the right to receive the expected returns of the VIE.
Fair Value
The Company uses ASC 820, “Fair Value Measurements and Disclosures” to account for fair value. ASC 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about assets and liabilities measured at fair value. Additionally, this standard established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair values are as follows:
Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
The Company presents various fair value disclosures in Note 7 and Note 10 of the Notes to the consolidated financial statements.
Newly Adopted Accounting Standards
In February 2016 and July 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02 and ASU 2018-11, "Leases (Topic 842)," or ASC 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. The Company adopted ASU 2018-11 on November 1, 2019, utilizing a modified retrospective approach and did not adjust its comparative period financial information. The Company adopted the practical expedient package which permits the Company to not reassess previous conclusions whether a contract is or contains a lease, lease classification, or treatment of indirect costs for existing contracts as of the adoption date. The Company also adopted the short-term lease recognition exemption and the practical expedient allowing for the combination of lease and non-lease components for all leases except real estate, for which these components are presented separately. The Company has completed the lease collection and evaluation process, implemented a technology tool to assist with the accounting and reporting requirements of the new standard, and designed new processes and controls around leases. On the day of adoption, the Company capitalized onto the balance sheet $301.2 million of right-of-use assets and $305.8 million of lease liabilities related to operating leases. The adoption did not have a material impact on the Company's financial position, results of operations, comprehensive income, cash flows, or disclosures, other than as set forth above and in Note 14 of the Notes to Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The objective of this ASU is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 were effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company adopted this ASU as of the effective date and will utilize the optional expedients to the extent that they apply to the Company. The Company currently applies expedient guidance related to hedging relationships, which allowed the Company to amend hedge documentation, without dedesignating and redesignating, for all outstanding hedging relationships linked to expiring reference rates. The Company also has long-term debt and interest rate derivatives, as described in Note 6 and Note 7 of the Notes to Consolidated Financial Statements, respectively, which rely upon use of LIBOR. The Company applies additional practical expedients to these relationships during the remaining relief period. 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 June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a current expected credit loss model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for years beginning after December 15, 2019, including interim periods within those years, with early adoption permitted. The Company plans to adopt this ASU on November 1, 2020. The Company does not anticipate the adoption of this guidance to have a material impact on its financial position, results of operations, comprehensive income, cash flows and disclosures.
v3.20.4
Acquisitions and Divestitures
12 Months Ended
Oct. 31, 2020
Business Combinations [Abstract]  
Acquisitions and Divestitures ACQUISITIONS AND DIVESTITURESCaraustar Acquisition
The Company completed its acquisition of Caraustar Industries, Inc. and its subsidiaries (“Caraustar”) on February 11, 2019 (the “Caraustar Acquisition”). Caraustar was a leader in the production of coated and uncoated recycled paperboard, which is used in a variety of applications that include industrial products (tubes and cores, construction products, protective packaging, and adhesives) and consumer packaging products (folding cartons, set-up boxes, and packaging services). The total purchase price for this acquisition, net of cash acquired, was $1,834.9 million.
In connection with the preparation of the Company's consolidated financial statements for the year ended October 31, 2020, the Company identified a prior period error related to the initial purchase accounting for the Caraustar Acquisition. The error was a $14.6 million understatement of deferred tax liability that remained as of October 31, 2019. The error was corrected during the fourth quarter of 2020 by an adjustment to increase deferred tax liabilities with the offset as a correction to goodwill. The Company believes that the correction of this error was not material to the consolidated financial statements as of and for the years ended October 31, 2020 and 2019, respectively.
The following table, as revised from the closing of the measurement period as presented in the second quarter of 2020 and to account for the increase in deferred tax liabilities and goodwill acquired as discussed above, summarizes the consideration transferred to acquire Caraustar and the final valuation of identifiable assets acquired and liabilities assumed at the acquisition date, as well as measurement period adjustments made since the acquisition in 2019 through the close of measurement period:
(in millions)Amounts Recognized as of the Acquisition DateMeasurement Period Adjustments (1)Amount Recognized as of Acquisition Date (as Adjusted)
Fair value of consideration transferred
Cash consideration$1,834.9 $— 1,834.9 
Recognized amounts of identifiable assets acquired and liabilities assumed
Accounts receivable147.0 — 147.0 
Inventories103.9 (4.4)99.5 
Prepaid and other current assets21.5 (9.3)12.2 
Intangibles717.1 8.4 725.5 
Other long-term assets1.3 4.3 5.6 
Properties, plants and equipment521.3 (17.6)503.7 
Total assets acquired1,512.1 (18.6)1,493.5 
Accounts payable(99.5)— (99.5)
Accrued payroll and employee benefits(42.9)(7.2)(50.1)
Other current liabilities(21.8)4.5 (17.3)
Long-term deferred tax liability(185.7)37.4 (148.3)
Pension and post-retirement obligations(67.1)— (67.1)
Other long-term liabilities(12.7)(7.5)(20.2)
Total liabilities assumed(429.7)27.2 (402.5)
Total identifiable net assets$1,082.4 $8.6 $1,091.0 
Goodwill$752.5 $(8.6)$743.9 
(1) The measurement adjustments were primarily due to refinement to third party appraisals and carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments resulted in a net $8.6 million decrease to Goodwill. The measurement adjustments recorded in 2020 did not have a significant impact on the Company's consolidated statements of income for the year ended October 31, 2020.
The Company recognized goodwill related to this acquisition of $743.9 million. The goodwill recognized in this acquisition is attributable to the acquired assembled workforce, expected synergies, and economies of scale, none of which qualify for recognition as a separate intangible asset. Caraustar is reported within the Paper Packaging & Services segment to which the goodwill was assigned. The goodwill is not expected to be deductible for tax purposes.
The cost approach was used to determine the fair value for buildings, improvements and equipment, and the market approach was used to determine the fair value for land. The cost approach measures the value by estimating the cost to acquire, or construct, comparable assets and adjusts for age and condition. The Company assigned buildings and improvements a useful life ranging from 1 year to 20 years and equipment a useful life ranging from 1 year to 15 years. Acquired property, plant and equipment will be depreciated over its estimated remaining useful lives on a straight-line basis.
The fair value for acquired customer relationship intangibles was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after-tax cash flows arising from the revenue from customer relationships that existed on the acquisition date over their estimated lives, including the probability of expected future contract renewals and revenue, less a contributory assets charge, all of which is discounted to present value. The fair value of the trade name intangible assets were determined utilizing the relief from royalty method which is a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trade names and discounted to present value using an appropriate discount rate. 
Acquired intangible assets will be amortized over the estimated useful lives, primarily on a straight-line basis. The following table summarizes the current preliminary purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired:
(in millions)Current Preliminary Purchase Price AllocationWeighted Average Estimated Useful Life
Customer relationships$708.0 15.0
Trademarks15.0 3.0
Other2.5 4.6
Total intangible assets$725.5 

As of April 30, 2020, the Company had completed the determination of the fair value of assets acquired and liabilities assumed related to the Caraustar Acquisition.
Divestitures
For the year ended October 31, 2020, the Company completed its divestiture of a U.S. business in the Paper Packaging & Services segment, the Consumer Packaging Group ("CPG") business, for $85.0 million before final adjustments of $5.4 million, for final net cash proceeds of $79.6 million, of which $35.6 million of goodwill was allocated to the sold business. This divestiture did not qualify as discontinued operations as it did not represent a strategic shift that has had a major impact on the Company's operations or financial results.
v3.20.4
Goodwill and Other Intangible Assets
12 Months Ended
Oct. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets GOODWILL AND OTHER INTANGIBLE ASSETS
The following table summarizes the changes in the carrying amount of goodwill by segment for the years ended October 31, 2020 and 2019:
(in millions)
Rigid Industrial Packaging &  Services (1)
Paper
Packaging & Services
Total
Balance at October 31, 2018$716.5 $59.5 $776.0 
Goodwill acquired22.3 726.6 748.9 
Goodwill allocated to divestitures and businesses held for sale— — 
Goodwill adjustments— — — 
Currency translation(7.1)— (7.1)
Balance at October 31, 2019$731.7 $786.1 $1,517.8 
Goodwill acquired— — — 
Goodwill allocated to divestitures and businesses held for sale(0.7)(35.6)(36.3)
Goodwill adjustments related to acquisitions1.1 17.4 18.5 
Currency translation18.4 — 18.4 
Balance at October 31, 2020$750.5 $767.9 $1,518.4 
(1)Accumulated goodwill impairment loss was $63.3 million as of October 31, 2020, 2019 and 2018. 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.
The $36.3 million in adjustments related to divestitures and businesses held for sale was mainly composed of $35.6 million for the CPG divestiture in the Paper Packaging & Services segment. The $18.5 million in adjustments related to acquisitions was mainly composed of $2.8 million for measurement period adjustments and the $14.6 million revision in the opening balance sheet deferred tax liability related to the Caraustar Acquisition in the Paper Packaging & Services segment. See Note 2 herein for additional disclosure of goodwill allocated to acquisitions and divestitures.
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 August 1, or whenever events and circumstances indicate impairment may have occurred. A reporting unit is the operating segment, or a business unit one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. The components are aggregated into reporting units for purposes of goodwill impairment testing to the extent they share similar qualitative and quantitative characteristics.
The Company performed its annual goodwill impairment test as of August 1, 2020. The fair value of the Company's goodwill reporting units exceeded the carrying value, resulting in no impairment. Discount rates, revenue growth rates and cash flow projections are the assumptions that are most sensitive and susceptible to change as they require significant management judgment. In addition, certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in actual and expected consumption and demand, could result in changes to these assumptions and judgments. A revision of these assumptions could cause the fair value of the reporting unit to fall below its respective carrying value. As for all of the Company's reporting units, if in future years, the reporting unit's actual results are not consistent with the Company's estimates and assumptions used to calculate fair value, the Company may be required to recognize material impairments to goodwill.
The following table summarizes the carrying amount of net intangible assets by class as of October 31, 2020 and 2019:
(in millions)Gross
Intangible
Assets
Accumulated
Amortization
Net Intangible
Assets
October 31, 2020:
Indefinite lived:
Trademarks and patents$13.5 $— $13.5 
Definite lived:
Customer relationships$891.8 $204.9 $686.9 
Trademarks and patents27.4 14.9 12.5 
Non-compete agreements1.7 1.2 0.5 
Other20.9 19.0 1.9 
Total$955.3 $240.0 $715.3 
October 31, 2019:
Indefinite lived:
Trademarks and patents$13.1 $— $13.1 
Definite lived:
Customer relationships$890.6 $150.3 $740.3 
Trademarks and patents27.0 9.3 17.7 
Non-compete agreements2.3 0.7 1.6 
Other21.9 18.1 3.8 
Total$954.9 $178.4 $776.5 

Gross intangible assets increased by $0.4 million for the year ended October 31, 2020. The increase was attributable to $5.9 million from immaterial asset acquisitions and $5.3 million of currency fluctuations, offset by $0.9 million of impairment and the write-off of $9.9 million fully-amortized assets.
Amortization expense was $69.1 million, $53.2 million and $15.2 million for the years ended October 31, 2020, 2019 and 2018, respectively. Amortization expense for the next five years is expected to be $67.2 million in 2021, $59.1 million in 2022, $56.6 million in 2023, $53.3 million in 2024 and $50.8 million in 2025.
Definite lived intangible assets for the periods presented are subject to amortization and are being amortized using the straight-line method over periods that are contractually or legally determined, or over the period a market participant would benefit from the asset. Indefinite lived intangibles of approximately $13.5 million as of October 31, 2020, related primarily to the Tri-Sure trademark and trade names related to Closures, Blagden Express, Closed-loop, Box Board and Pachmas, are not amortized, but rather are tested for impairment at least annually
v3.20.4
Restructuring Charges
12 Months Ended
Oct. 31, 2020
Restructuring and Related Activities [Abstract]  
Restructuring Charges RESTRUCTURING CHARGES
The following is a reconciliation of the beginning and ending restructuring reserve balances for the years ended October 31, 2020 and 2019:
(in millions)Employee
Separation
Costs
Other CostsTotal
Balance at October 31, 2018$4.2 $0.2 $4.4 
Costs incurred and charged to expense22.5 3.6 26.1 
Costs paid or otherwise settled(17.2)(2.0)(19.2)
Balance at October 31, 2019$9.5 $1.8 $11.3 
Costs incurred and charged to expense26.4 12.3 38.7 
Costs paid or otherwise settled(18.0)(10.4)(28.4)
Balance at October 31, 2020$17.9 $3.7 $21.6 

The focus for restructuring activities in 2020 was to optimize and integrate operations in the Paper Packaging & Services segment related to the Caraustar Acquisition and continue to rationalize operations and close underperforming assets in the Rigid Industrial Packaging & Services and the Flexible Products & Services segments. During the year ended October 31, 2020, the Company recorded restructuring charges of $38.7 million, as compared to $26.1 million of restructuring charges recorded during the year ended October 31, 2019. The restructuring activity for the year ended October 31, 2020 consisted of $26.4 million in employee separation costs and $12.3 million in other restructuring costs, primarily consisting of professional fees and other fees associated with restructuring activities. There were sixteen plants closed in 2020, and a total of 658 employees severed throughout 2020 as part of the Company’s restructuring efforts.
The focus for restructuring activities in 2019 was to optimize and integrate operations in the Paper Packaging & Services segment related to the Caraustar Acquisition and continue to rationalize operations and close underperforming assets in the Rigid Industrial Packaging & Services and the Flexible Products & Services segments. During 2019, the Company recorded restructuring charges of $26.1 million, consisting of $22.5 million in employee separation costs and $3.6 million in other restructuring costs, primarily consisting of professional fees and other fees associated with restructuring activities. There were twelve plants closed and a total of 430 employees severed throughout 2019 as part of the Company’s restructuring efforts.
The focus for restructuring activities in 2018 was to rationalize and close underperforming assets in the Rigid Industrial Packaging & Services and Flexible Products & Services segments. During 2018, the Company recorded restructuring charges of $18.6 million, consisting of $14.8 million in employee separation costs and $3.8 million in other restructuring costs, primarily consisting of professional fees incurred for services specifically associated with employee separation and relocation. There were five plants closed and a total of 322 employees severed throughout 2018 as part of the Company’s restructuring efforts.
The following is a reconciliation of the total amounts expected to be incurred from open restructuring plans or plans that are being formulated and have not been announced as of the filing date of this Form 10-K. Remaining amounts expected to be incurred were $22.8 million as of October 31, 2020:
(in millions)Total Amounts
Expected to be
Incurred
Amounts Incurred During the year ended October 31, 2020
Amounts
Remaining to be
Incurred
Rigid Industrial Packaging & Services:
Employee separation costs$31.6 $21.0 10.6 
Other restructuring costs10.9 5.3 5.6 
42.5 26.3 16.2 
Flexible Products & Services:
Employee separation costs1.9 0.9 1.0 
Other restructuring costs2.4 1.9 0.5 
4.3 2.8 1.5 
Paper Packaging & Services:
Employee separation costs4.5 4.5 — 
Other restructuring costs10.2 5.1 5.1 
14.7 9.6 5.1 
Total$61.5 $38.7 $22.8 
v3.20.4
Consolidation of Variable Interest Entities
12 Months Ended
Oct. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Consolidation of Variable Interest Entities CONSOLIDATION OF VARIABLE INTEREST ENTITIES
The Company evaluates whether an entity is a VIE whenever reconsideration events occur and performs reassessments of all VIEs quarterly to determine if the primary beneficiary status is appropriate. The Company consolidates VIEs 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 $90.0 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 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, 2020 and 2019, assets of the Buyer SPE consisted of $50.9 million of restricted bank financial instruments which are expected to be held to maturity, scheduled for November 5, 2020. The balance as of October 31, 2020 is presented in Assets held by special purpose entities' on the consolidated balance sheets. For each of the years ended October 31, 2020, 2019 and 2018, the Buyer SPE recorded interest income of $2.4 million.
As of October 31, 2020 and 2019, STA Timber had consolidated liabilities of $43.3 million, and the maturity date of the consolidated liabilities is November 5, 2020. The balance as of October 31, 2020 is presented in 'Liabilities held by special purpose entities' on the consolidated balance sheets. For each of the years ended October 31, 2020, 2019 and 2018, STA Timber recorded interest expense of $2.2 million. The intercompany borrowing arrangement between the two VIEs is eliminated in consolidation. STA Timber is exposed to credit-related losses in the event of nonperformance by the issuer of the Deed of Guarantee.
Subsequent to October 31, 2020, and prior to the filing of this Form 10-K, the Purchase Note and the Monetization Notes matured and were settled.
Flexible Packaging Joint Venture
On September 29, 2010, Greif, Inc. and one of its indirect subsidiaries formed a joint venture (referred to herein as the “Flexible Packaging JV” or "FPS VIE") with Dabbagh Group Holding Company Limited and one of its subsidiaries, originally National Scientific Company Limited and now Gulf Refined Packaging for Industrial Packaging Company LTD ("GRP"). The Flexible Packaging JV owns the operations in the Flexible Products & Services segment. The Flexible Packaging JV has been consolidated into the operations of the Company since its formation date of September 29, 2010.
The Flexible Packaging JV is deemed to be a VIE since the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support. The major factors that led to the conclusion that the Company was the primary beneficiary of this VIE was that (1) the Company has the power to direct the most significant activities due to its ability to direct the operating decisions of the FPS VIE, which power is derived from the significant CEO discretion over the operations of the FPS VIE combined with the Company's sole and exclusive right to appoint the CEO of the FPS VIE, and (2) the significant variable interest through the Company's equity interest in the FPS VIE.
The economic and business purpose underlying the Flexible Packaging JV is to establish a global industrial flexible products enterprise through a series of targeted acquisitions and major investments in plant, machinery and equipment. All entities contributed to the Flexible Packaging JV were existing businesses acquired by an indirect subsidiary of the Company and that were reorganized under Greif Flexibles Asset Holding B.V. and Greif Flexibles Trading Holding B.V. (“Asset Co.” and “Trading Co.”), respectively. The Company has 51 percent ownership in Trading Co. and 49 percent ownership in Asset Co. However, the Company and GRP have equal economic interests in the Flexible Packaging JV, notwithstanding the actual ownership interests in the various legal entities.
All investments, loans and capital contributions are to be shared equally by the Company and GRP and each partner has committed to contribute capital of up to $150.0 million and obtain third party financing for up to $150.0 million as required.
The following table presents the Flexible Packaging JV total net assets:
(in millions)October 31, 2020October 31, 2019
Cash and cash equivalents$19.0 $16.9 
Trade accounts receivable, less allowance of $0.7 in 2020 and $0.7 in 2019
47.5 51.2 
Inventories36.0 46.4 
Properties, plants and equipment, net22.8 22.3 
Other assets20.3 29.3 
Total assets$145.6 $166.1 
Accounts payable$29.4 $28.9 
Other liabilities22.8 23.6 
Total liabilities$52.2 $52.5 

Net income attributable to the noncontrolling interest in the Flexible Packaging JV for the years ended October 31, 2020, 2019 and 2018 were $6.4 million, $12.4 million and $9.9 million, respectively.
Paper Packaging Joint Venture
On April 20, 2018, Greif, Inc. and one of its indirect subsidiaries formed a joint venture (referred to herein as the “Paper Packaging JV” or "PPS VIE") with a third party. The Paper Packaging JV has been consolidated into the operations of the Company since its formation date of April 20, 2018.
The Paper Packaging JV is deemed to be a VIE as the equity investors at risk, as a group, lack the characteristics of a controlling financial interest. The structure of the Paper Packaging JV has governing provisions that are the functional equivalent of a limited partnership whereby the Company is the managing member that makes all the decisions related to the activities that most significantly affect the economic performance of the PPS VIE. In addition, the third party does not have any substantive kick-out rights or substantive participating rights in the Paper Packaging JV. The major factors that led to the conclusion that the Paper Packaging JV is a VIE was that all limited partnerships are considered to be VIE’s unless the limited partners have substantive kick-out rights or substantive participating rights.
The following table presents the Paper Packaging JV total net assets:
(in millions)October 31, 2020
Trade accounts receivable, less allowance of $0.0 in 2020
5.5 
Inventories6.3 
Properties, plants and equipment, net34.3 
Other assets0.6 
Total assets$46.7 
Accounts payable5.2 
Other liabilities1.3 
Total liabilities$6.5 

As of October 31, 2019, the Paper Packaging JV’s net assets consist mainly of properties, plants, and equipment, net of $29.4 million.
There was $1.8 million net loss for the year ended October 31, 2020. There was $0.1 million net loss for the year ended October 31, 2019.
Non-United States Accounts Receivable VIE
As further described in Note 6 of the Notes to Consolidated Financial Statements, Cooperage Receivables Finance B.V. is a party to the European RFA, as defined in Note 6 of the Notes to Consolidated Financial Statements. 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.
v3.20.4
Long-Term Debt
12 Months Ended
Oct. 31, 2020
Debt Disclosure [Abstract]  
Long-Term Debt LONG-TERM DEBT
Long-term debt is summarized as follows:
(in millions)October 31, 2020October 31, 2019
2019 Credit Agreement - Term Loans$1,429.8 $1,612.2 
Senior Notes due 2027495.1 494.3 
Senior Notes due 2021234.8 221.7 
Accounts receivable credit facilities310.0 351.6 
2019 Credit Agreement - Revolving Credit Facility— 76.1 
Other debt— 0.4 
2,469.7 2,756.3 
Less current portion123.1 83.7 
Less deferred financing costs11.1 13.6 
Long-term debt, net$2,335.5 $2,659.0 

2019 Credit Agreement
On February 11, 2019, the Company and certain of its subsidiaries entered into an amended and restated senior secured credit agreement (the “2019 Credit Agreement”) with a syndicate of financial institutions. The Company's obligations under the 2019 Credit Agreement are guaranteed by certain of its U.S. and non-U.S. subsidiaries.
The 2019 Credit Agreement provides for (a) an $800.0 million secured revolving credit facility, consisting of a $600.0 million multicurrency facility and a $200.0 million U.S. dollar facility, maturing on February 11, 2024, (b) a $1,275.0 million secured term A-1 loan with quarterly principal installments commencing on April 30, 2019 and continuing through maturity on January 31, 2024, and (c) a $400.0 million secured term A-2 loan with quarterly principal installments commencing on April 30, 2019 and continuing through maturity on January 31, 2026. In addition, the Company has an option to add an aggregate of $700.0 million to the secured revolving credit facility under the 2019 Credit Agreement with the agreement of the lenders. The revolving credit facility is available to fund ongoing working capital and capital expenditure needs, for general corporate purposes, and to finance acquisitions.
On November 13, 2020 the Company and certain of its U.S. subsidiaries entered into an incremental term loan agreement (the "Incremental Term A-3 Loan Agreement") with a syndicate of farm credit institutions. The Incremental Term A-3 Loan Facility provides for a loan commitment in the aggregate principal amount of $225.0 million that must be funded in a single draw on a business day occurring on or before July 15, 2021 (the "Incremental Term A-3 Loan"). The Incremental Term A-3 Loan matures on July 15, 2026, with quarterly installments of principal payable on the last day of each fiscal quarter commencing with the first such date to occur after the funding date. The Incremental Term A-3 Loan has, for all material purposes, the identical terms and provisions as the term A-1 and the term A-2 loans under the 2019 Credit Agreement, discussed above. The Company's obligations with respect to the Incremental Term A-3 Loan will constitute obligations under the 2019 Credit Agreement and will be secured and guaranteed with the other obligations as provided in the under the 2019 Credit Facility on a pari passu basis. The Company intends to draw upon the Incremental Term A-3 Loan prior to July 15, 2021, and use the loan proceeds to pay all of the outstanding principal of and interest on the Senior Notes due 2021, discussed below.
The 2019 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 quarter, the Company will not permit the ratio of (a) its total consolidated indebtedness, to (b) its consolidated net income plus depreciation, depletion and amortization, interest expense (including capitalized interest), income taxes, and 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 (as used in this paragraph only, “EBITDA”) to be greater than 4.75 to 1.00 and stepping down annually by 0.25 increments beginning on July 31, 2020 to 4.00 on July 31, 2023. The current leverage ratio
covenant requirement was 4.50 as of October 31, 2020. The interest coverage ratio generally requires that, at the end of any quarter, the Company will not permit the ratio of (a) its consolidated EBITDA, to (b) its 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. As of October 31, 2020, the Company was in compliance with the covenants and other agreements in the 2019 Credit Agreement.
As of October 31, 2020, $1,429.8 million was outstanding under the 2019 Credit Agreement. The current portion of such outstanding amount was $123.1 million, and the long-term portion was $1,306.7 million. The weighted average interest rate for borrowings under the 2019 Credit Agreement was 2.68% for the year ended October 31, 2020. The actual interest rate for borrowings under the 2019 Credit Agreement was 1.96% as of October 31, 2020. The deferred financing costs associated with the term loan portion of the 2019 Credit Agreement totaled $8.5 million as of October 31, 2020 and are recorded as a direct deduction from the balance sheet line Long-Term Debt. The deferred financing costs associated with the revolver portion of the 2019 Credit Agreement totaled $6.1 million as of October 31, 2020 and are recorded within Other Long-Term Assets.
Senior Notes due 2027
On February 11, 2019, the Company issued $500.0 million of 6.50% Senior Notes due March 1, 2027 (the "Senior Notes due 2027"). Interest on the Senior Notes due 2027 is payable semi-annually commencing on September 1, 2019. The Company's obligations under the Senior Notes due 2027 are guaranteed by its U.S. subsidiaries that guarantee the 2019 Credit Agreement, as described above. The Company used the net proceeds from the issuance of the Senior Notes due 2027, together with borrowings under the 2019 Credit Agreement, to fund the purchase price of the Caraustar Acquisition, to redeem all of the Senior Notes due 2019, to repay outstanding borrowings under the Company's then existing credit agreement, and to pay related fees and expenses. The deferred financing cost associated with the Senior Notes due 2027 totaled $2.3 million as of October 31, 2020 and are recorded as a direct deduction from the balance sheet line Long-Term Debt.
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 (the "Senior Notes due 2021" and together with the Senior Notes due 2027, the "Senior Notes"). The Senior Notes due 2021 are guaranteed on a senior basis by Greif, Inc. Interest on the Senior Notes due 2021 is payable semiannually. As discussed above, the Company intends to draw upon the Incremental Term A-3 Loan prior to July 15, 2021, and to use the loan proceeds to pay all of the outstanding principal of and interest on Senior Notes due 2021.
United States Trade Accounts Receivable Credit Facility
On September 24, 2019, certain U.S. subsidiaries of Greif, Inc. (the “Company”) amended and restated the existing receivables financing facility (the “U.S. Receivables Facility”). Greif Receivables Funding LLC (“Greif Funding”), Greif Packaging LLC (“Greif Packaging”), for itself and as servicer, and certain other U.S. subsidiaries of the Company entered into a Third Amended and Restated Transfer and Administration Agreement, dated as of September 24, 2019 (the “Third Amended TAA”), with Bank of America, N.A. (“BANA”), as the agent, managing agent, administrator and committed investor, and various investor groups, managing agents, and administrators, from time to time parties thereto. The Third Amended TAA provided for a $275.0 million U.S. Receivables Facility. On September 24, 2020, the Third Amended TAA was amended to reduce the U.S. Receivables Facility to $250.0 million. The financing costs associated with the U.S. Receivables Facility were $0.2 million as of October 31, 2020, and are recorded as a direct deduction from the balance sheet line Long-Term Debt.

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 Third Amended TAA provides for the ongoing purchase by BANA of receivables from Greif Funding, which Greif Funding will have purchased from Greif Packaging and certain other U.S. subsidiaries of the Company as the originators under the Third Amended and Restated Sale Agreement, dated as of September 24, 2019 (the “Third Amended Sale Agreement”). Greif Packaging will service and collect on behalf of Greif Funding those receivables sold to Greif Funding under the Third Amended Sale Agreement. The commitment termination date of the U.S. Receivables Facility is September 24, 2021, subject to earlier termination as provided in the Third 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 may terminate the U.S. 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 Third Amended TAA, the Fourth Amended Sale Agreement and related agreements thereto, but has not guaranteed the collectability of the receivables thereunder. A significant portion of the proceeds from the U.S. Receivables Facility was used to pay the obligations under the Third Amended TAA. The remaining proceeds were used to pay certain fees, costs and expenses incurred in connection with the U.S. Receivables Facility and to repay borrowings on our Revolving Credit Facility.
The U.S. Receivables Facility is secured by certain trade accounts receivables related to the Rigid Industrial Packaging & Services and the Paper Packaging & Services businesses of Greif Packaging and other 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 Third Amended TAA. Interest is payable on a monthly basis and the principal balance is payable upon termination of the U.S. Receivables Facility. The $232.8 million outstanding balance under the U.S. Receivables Facility as of October 31, 2020 is reported in the balance sheet line Long-Term Debt in the condensed consolidated balance sheets because the Company intends to refinance this obligation on a long-term basis and has the intent and ability to consummate a long-term refinancing.
International Trade Accounts Receivable Credit Facilities
On April 17, 2020, Cooperage Receivables Finance B.V. and Greif Coordination Center BVBA, an indirect wholly owned subsidiary of Greif, Inc., amended and restated the Nieuw Amsterdam Receivables Financing Agreement (the "European RFA" and together with the U.S. Receivables Facility, the "Accounts Receivables Facility") with affiliates of a major international bank. The amended and restated European RFA will mature April 17, 2021. The European RFA provides an accounts receivable financing facility of up to €100.0 million ($117.5 million as of October 31, 2020) secured by certain European accounts receivable. The $77.2 million outstanding on the European RFA as of October 31, 2020 is reported in the balance sheet line Long-Term Debt on the consolidated balance sheets because the Company intends to refinance these obligations on a long-term basis and has the intent and ability to consummate a long-term refinancing by exercising the renewal option in the respective agreement or entering into new financing arrangements.
Other
In addition to the amounts borrowed under the 2019 Credit Agreement and proceeds from the Senior Notes and the Accounts Receivables Facilities, as of October 31, 2020, the Company had outstanding other debt of $28.4 million in short-term borrowings, compared to outstanding other debt of $9.2 million in short-term borrowings, as of October 31, 2019. There are no financial covenants associated with this other debt.
As of October 31, 2020, annual scheduled payments and maturities, including the current portion of long-term debt, were $667.9 million in 2021, $138.0 million in 2022, $138.0 million in 2023, $764.1 million in 2024, $18.7 million in 2025 and $747.7 million thereafter.
v3.20.4
Financial Instruments and Fair Value Measurements
12 Months Ended
Oct. 31, 2020
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Value Measurements FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The following table presents the fair value of those assets and (liabilities) measured on a recurring basis as of October 31, 2020 and 2019:
October 31, 2020
Fair Value MeasurementBalance Sheet Location
(in millions)Level 1Level 2Level 3Total
Interest rate derivatives$— $(37.9)$— $(37.9)Other current liabilities and other long-term liabilities
Foreign exchange hedges— 1.5 — 1.5 Other current assets
Foreign exchange hedges— (1.6)— (1.6)Other current liabilities
Insurance annuity— — 21.4 21.4 Other long-term assets
Cross currency swap— 8.9 — 8.9 Other current assets and other long-term assets
Total$— $(29.1)$21.4 $(7.7)
October 31, 2019
Fair Value MeasurementBalance Sheet Location
(in millions)Level 1Level 2Level 3Total
Interest rate derivatives$— $1.3 $— $1.3 Other long-term assets and other current assets
Interest rate derivatives— (25.0)— (25.0)Other long-term liabilities and other
current liabilities
Foreign exchange hedges— 0.9 — 0.9 Other current assets
Foreign exchange hedges— (0.2)— (0.2)Other current liabilities
Insurance annuity— — 20.0 20.0 Other long-term assets
Cross currency swap— 10.6 — 10.6 Other long-term assets and other current assets
Total$— $(12.4)$20.0 $7.6 

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, 2020 and 2019 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 a spread.
In 2020, the Company entered into four forward starting interest rate swaps with a total notional amount of $200.0 million effective July 15, 2021. The Company receives variable rate interest payments based upon one-month U.S. dollar LIBOR, and in return the Company is obligated to pay interest at a weighted-average interest rate of 0.90% plus a spread. This effectively converted the borrowing rate on an amount of debt equal to the outstanding notional amount of the interest rate swap from a variable rate to a fixed rate.
In 2019, the Company entered into six interest rate swaps with a total notional amount of $1,300.0 million that amortize to $200.0 million over a five-year term. The outstanding notional as of October 31, 2020 is $600.0 million. The Company receives variable rate interest payments based upon one-month U.S. dollar LIBOR, and in return the Company is obligated to pay interest at a weighted-average interest rate of 2.49% plus a spread. This effectively converted the borrowing rate on an amount of debt equal to the outstanding notional amount of the interest rate swap from a variable rate to a fixed rate.
In 2017, the Company entered into an interest 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 1.19% plus a spread. This effectively converted the borrowing rate on $300.0 million of debt from a variable rate to a fixed rate.
These derivatives are designated as cash flow hedges for accounting purposes. Accordingly, the gain or loss on these derivative instruments are 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. See Note 16 herein for additional disclosures of the gain or loss included within other comprehensive income. The assumptions
used in measuring fair value of these interest rate derivatives are considered level 2 inputs, which are based upon observable market rates, including LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements.
Gains (losses) reclassified to earnings under these contracts were $(16.5) million, $3.0 million and $1.8 million for the year ended October 31, 2020, 2019 and 2018. A derivative loss of $17.7 million, based upon interest rates at October 31, 2020, is expected to be reclassified from accumulated other comprehensive income (loss) to earnings in the next twelve months.
Foreign Exchange Hedges
The Company conducts business in various international currencies and is subject to risks associated with changing foreign exchange rates. The Company’s objective is to reduce volatility associated with foreign exchange rate changes. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities, commitments and anticipated foreign currency cash flows. As of October 31, 2020, the Company had outstanding foreign currency forward contracts in the notional amount of $268.6 million ($275.0 million as of October 31, 2019). Adjustments to fair value are recognized in earnings, offsetting the impact of the hedged profits. The assumptions used in measuring fair value of foreign exchange hedges are considered level 2 inputs, which were based on observable market pricing for similar instruments, principally foreign exchange futures contracts.
Realized gains (losses) recorded in other expense, net under fair value contracts were $(3.2) million, $4.6 million and $(9.2) million for the years ended October 31, 2020, 2019 and 2018, respectively. The Company recognized in other expense, net an unrealized net gain (loss) of $(0.1) million, $0.7 million and $1.9 million in the years ended October 31, 2020, 2019 and 2018, respectively.
Cross Currency Swap
On March 6, 2018, the Company entered into a cross currency interest rate swap agreement that synthetically swaps $100.0 million of fixed rate debt to Euro denominated fixed rate debt at a rate of 2.35%. The agreement is designated as a net investment hedge for accounting purposes and will mature on March 6, 2023. Accordingly, the gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Interest payments received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the consolidated statements of income. For the year ended October 31, 2020, 2019 and 2018, gains recorded in interest expense, net under the cross currency swap agreement were $2.4 million, $2.4 million and $1.6 million, respectively. See Note 16 herein for additional disclosure of the gain or loss included within other comprehensive income. The assumptions used in measuring fair value of the cross currency swap are considered level 2 inputs, which are based upon the Euro to United States dollar exchange rate market.
Other Financial Instruments
The fair values of the Company’s 2019 Credit Agreement and the Accounts Receivables Facilities 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, 2020October 31, 2019
Senior Notes due 2021 estimated fair value242.0 248.1 
Senior Notes due 2027 estimated fair value524.4 537.9 
Assets held by special purpose entities estimated fair value50.9 51.9 

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 Company recognized asset impairment charges of $18.5 million and $7.8 million for the years ended October 31, 2020 and 2019.
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, 2020 and 2019:
 Quantitative Information about Level 3 Fair Value Measurements
(in millions)Fair Value of
Impairment
Valuation
Technique
Unobservable
Input
Range
of Input Values
October 31, 2020
Impairment of Long Lived Assets18.5 Discounted Cash Flows, Indicative BidsDiscounted Cash Flows, Indicative BidsN/A
Total$18.5 
October 31, 2019
Impairment of Net Assets Held for Sale$2.1 Indicative BidsIndicative BidsN/A
Impairment of Long Lived Assets5.7 Sales ValueSales ValueN/A
Total$7.8 

Long-Lived Assets
During the year ended October 31, 2020, the Company wrote down long-lived assets with a carrying value of $36.4 million to a fair value of $17.9 million, resulting in recognized asset impairment charges of $18.5 million. These charges include $4.2 million related to properties, plants and equipment, net, in the Rigid Industrial Packaging & Services segment, $0.9 million related to definite-lived intangibles in the Rigid Industrial Packaging & Services segment, $12.5 million related to properties, plants and equipment, net, in the Paper Packaging & Services segment and $0.9 million related to properties, plants and equipment, net, in the Flexible Products & Services segment.
During the year ended October 31, 2019, the Company wrote down long-lived assets with a carrying value of $5.9 million to a fair value of $0.2 million, resulting in recognized asset impairment charges of $5.7 million. These charges include $0.6 million related to properties, plants and equipment, net, in the Rigid Industrial Packaging & Services segment, and $5.1 million related to properties, plants and equipment, net, in the Paper Packaging & Services segment.
During the year ended October 31, 2018, the Company wrote down long-lived assets with a carrying value of $10.7 million to a fair value of $3.1 million, resulting in recognized asset impairment charges of $7.6 million. The $7.6 million of impairment charges was all related to properties, plants and equipment, net, in the Rigid Industrial Packaging & Services segment.
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, 2020, the Company recorded no impairment charges related to assets and liabilities held for sale.
During the year ended October 31, 2019, the Company wrote down the assets and liabilities of one asset group that was held for sale with a carrying value of $2.1 million to a fair value of zero, resulting in recognized asset impairment charges of $2.1 million.
During the year ended October 31, 2018, the Company wrote down the assets and liabilities of one asset group that was held for sale with a carrying value of $2.9 million to a fair value of $2.2 million, resulting in recognized asset impairment charges of $0.7 million for goodwill allocated to the business classified as held for sale.
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 indefinite-lived intangibles as defined under ASC 350, “Intangibles-Goodwill and Other.” During the year ended October 31, 2020, the Company allocated $35.6 million of goodwill to the CPG divestiture on a relative fair value basis. There was no goodwill impairment for the years ended October 31, 2020, 2019 or 2018.
v3.20.4
Stock-Based Compensation
12 Months Ended
Oct. 31, 2020
Share-based Payment Arrangement [Abstract]  
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's stock-based compensation plans include the Long-Term Incentive Plan, which is comprised of the 2020 Long-Term Incentive Plan (the “2020 LTIP”) and the 2006 Amended and Restated Long-Term Incentive Plan (the “2006 LTIP”); the 2005 Outside Directors Equity Award Plan (the “2005 Directors Plan”); and the 2001 Management Equity Incentive and Compensation Plan (the “2001 Plan”).
For the Company's stock-based compensation plans, no stock options were granted in 2020, 2019 or 2018 and no shares were forfeited in 2020, 2019 or 2018.
The total stock compensation expense (income) recorded under the plans were $(1.2) million, $12.7 million and $6.5 million for periods ended October 31, 2020, 2019 and 2018 respectively.
Long-Term Incentive Plan
The 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 provides key employees with incentive compensation based upon consecutive and overlapping three-year performance periods that commence at the start of every year. For each three-year performance period, the performance goals are based on performance criteria as determined by the Special Subcommittee of the Compensation Committee of the Company’s Board of Directors (the “Special Subcommittee”).
For each of the three-year performance periods ending in fiscal 2019, 2020 and 2021, awards were or will be made under the 2006 LTIP, with the performance goals based on targeted levels of adjusted earnings before interest, taxes, depreciation, depletion and amortization. For each of these periods, awards are to be paid 50% in cash and 50% in restricted stock.
For the three-year performance periods ending after fiscal 2021, awards will be made under the 2020 LTIP, and participants may be granted restricted stock units (“RSUs”) or performance stock units (“PSUs”) or a combination thereof.
The Company grants RSUs based on a three-year vesting period on the basis of service only. The RSUs are an equity-classified plan measured at fair value on the grant date recognized ratably over the service period. Dividend-equivalent rights may be granted in connect