x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
State
of Delaware
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31-4388903
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
425
Winter Road, Delaware, Ohio
|
43015
|
|
(Address
of principal executive offices)
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(Zip
Code)
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Title of Each Class
|
Name of Each Exchange on Which Registered
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|
Class
A Common Stock
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New
York Stock Exchange
|
|
Class
B Common Stock
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New
York Stock
Exchange
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Form
10-K Item
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Description
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Page
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|||
Part
I
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1.
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Business
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4
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||
(a)
General Development of Business
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4
|
||||
(b)
Financial Information about Segments
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4
|
||||
(c)
Narrative Description of Business
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4
|
||||
(d)
Financial Information about Geographic Areas
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6
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||||
(e)
Available Information
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6
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||||
(f)
Other Matters
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6
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||||
1A.
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Risk
Factors
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6
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|||
1B.
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Unresolved
Staff Comments
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9
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|||
2.
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Properties
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9
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|||
3.
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Legal
Proceedings
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11
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|||
4.
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Submission
of Matters to a Vote of Security Holders
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11
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|||
Part
II
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5.
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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12
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||
6.
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Selected
Financial Data
|
15
|
|||
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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15
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|||
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
30
|
|||
8.
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Financial
Statements and Supplementary Data
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34
|
|||
Consolidated
Statements of Income
|
34
|
||||
Consolidated
Balance Sheets
|
35
|
||||
Consolidated
Statements of Cash Flows
|
37
|
||||
Consolidated
Statements of Changes in Shareholders’ Equity
|
38
|
||||
Note
1 - Description of Business and Summary of Significant Accounting
Policies
|
39
|
||||
Note
2 - Acquisitions and Other Significant Transactions
|
45
|
||||
Note
3 - Sale of Non-United States Accounts Receivable
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46
|
||||
Note
4 - Goodwill and Other Intangible Assets
|
47
|
||||
Note
5 - Restructuring Charges
|
48
|
||||
Note
6 - Significant Nonstrategic Timberland Transactions and Consolidation of
Variable Interest Entities
|
50
|
||||
Note
7 - Long-Term Debt
|
50
|
||||
Note
8 - Financial Instruments
|
52
|
||||
Note
9 - Capital Stock
|
53
|
||||
Note
10 – Stock-Based Compensation
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54
|
||||
Note
11 - Income Taxes
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55
|
||||
Note
12 - Retirement Plans
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57
|
||||
Note
13 - Postretirement Health Care and Life Insurance
Benefits
|
60
|
||||
Note
14 - Contingent Liabilities
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62
|
||||
Note
15 - Business Segment Information
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64
|
||||
Note
16 - Quarterly Financial Data (Unaudited)
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66
|
||||
Report
of Independent Registered Public Accounting Firm
|
68
|
||||
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosures
|
69
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|||
9A.
|
Controls
and Procedures
|
69
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|||
|
Report
of Independent Registered Public Accounting Firm
|
71
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|||
9B.
|
Other
Information
|
72
|
|||
Part
III
|
10.
|
Directors
and Executive Officers of the Company
|
73
|
||
11.
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Executive
Compensation
|
73
|
|||
12.
|
Security
Ownership and Certain Beneficial Owners and Management and Related
Stockholder Matters
|
73
|
|||
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
73
|
|||
14.
|
Principal
Accountant Fees and Services
|
74
|
|||
Part
IV
|
15.
|
Exhibits
and Financial Statement Schedules
|
75
|
||
|
Signatures
|
76
|
|||
Schedules
|
Schedule
II
|
77
|
|||
Exhibits
|
Exhibits
and Certifications
|
78
|
|
•
|
translations
into United States dollars for financial reporting purposes of the assets
and liabilities of our international operations conducted in local
currencies; and
|
|
•
|
gains
or losses from transactions conducted in currencies other than the
operation’s functional currency.
|
|
•
|
political,
social and economic instability;
|
|
•
|
war,
civil disturbance or acts of
terrorism;
|
|
•
|
taking
of property by nationalization or expropriation without fair
compensation;
|
|
•
|
changes
in government policies and
regulations;
|
|
•
|
imposition
of limitations on conversions of currencies into United States dollars or
remittance of dividends and other payments by international
subsidiaries;
|
|
•
|
imposition
or increase of withholding and other taxes on remittances and other
payments by international
subsidiaries;
|
|
•
|
hyperinflation
in certain countries and the current threat of global deflation;
and
|
|
•
|
impositions
or increase of investment and other restrictions or requirements by
non-United States governments.
|
Location
|
Products
or Use
|
Owned
|
Leased
|
|||||||
INDUSTRIAL
PACKAGING:
|
||||||||||
Algeria
|
Steel
drums
|
1
|
—
|
|||||||
Argentina
|
Steel
and plastic drums, water bottles and distribution center
|
3
|
1
|
|||||||
Australia
|
Closures
|
—
|
2
|
|||||||
Austria
|
Steel
drums and administrative office
|
—
|
1
|
|||||||
Belgium
|
Steel
and plastic drums and coordination center (shared
services)
|
2
|
1
|
|||||||
Brazil
|
Steel
and plastic drums, water bottles, closures and general
office
|
5
|
5
|
|||||||
Canada
|
Fibre,
steel and plastic drums, blending and packaging services and
administrative office
|
8
|
1
|
|||||||
Chile
|
Steel
drums, water bottles and distribution center
|
—
|
1
|
|||||||
China
|
Steel
drums, closures and general office
|
—
|
8
|
|||||||
Colombia
|
Steel
and plastic drums and water bottles
|
1
|
1
|
|||||||
Costa
Rica
|
Steel
drums
|
—
|
1
|
|||||||
Czech Republic
|
Steel
drums
|
2
|
—
|
|||||||
Denmark
|
Fibre
drums
|
1
|
—
|
|||||||
Egypt
|
Steel
drums
|
1
|
—
|
|||||||
France
|
Fibre,
steel and plastic drums, intermediate bulk containers, closures and
distribution center
|
4
|
2
|
|||||||
Germany
|
Fibre,
steel and plastic drums and distribution center
|
3
|
2
|
Location
|
Products
or Use
|
Owned
|
Leased
|
|||||||
Greece
|
Steel
drums and water bottles
|
2
|
2
|
|||||||
Guatemala
|
Steel
drums
|
1
|
—
|
|||||||
Hungary
|
Steel
drums
|
1
|
—
|
|||||||
Ireland
|
Warehouse
|
—
|
1
|
|||||||
Italy
|
Steel
and plastic drums, water bottles and distribution center
|
1
|
2
|
|||||||
Jamaica
|
Distribution
center
|
—
|
1
|
|||||||
Kazakhstan
|
Distribution
center
|
—
|
1
|
|||||||
Kenya
|
Steel and
plastic drums
|
—
|
1
|
|||||||
Malaysia
|
Steel
and plastic drums
|
—
|
2
|
|||||||
Mexico
|
Fibre,
steel and plastic drums, closures and distribution center
|
2
|
2
|
|||||||
Morocco
|
Steel
and plastic drums and plastic bottles
|
1
|
—
|
|||||||
Mozambique
|
Steel
drums and plastic bottles
|
—
|
1
|
|||||||
Netherlands
|
Fibre
steel and plastic drums, closures, research center and general
office
|
5
|
—
|
|||||||
New
Zealand
|
Intermediate
bulk containers
|
—
|
1
|
|||||||
Nigeria
|
Steel
and plastic drums
|
—
|
3
|
|||||||
Philippines
|
Steel
drums and water bottles
|
—
|
1
|
|||||||
Poland
|
Steel
drums and water bottles
|
2
|
—
|
|||||||
Portugal
|
Steel
drums
|
1
|
—
|
|||||||
Russia
|
Steel
drums, water bottles and intermediate bulk containers
|
9
|
—
|
|||||||
Saudi
Arabia
|
Steel
drums
|
—
|
1
|
|||||||
Singapore
|
Steel
drums, steel parts and distribution center
|
—
|
2
|
|||||||
South
Africa
|
Steel
and plastic drums and distribution center
|
—
|
6
|
|||||||
Spain
|
Steel
drums and distribution center
|
3
|
—
|
|||||||
Sweden
|
Fibre
and steel drums and distribution center
|
2
|
—
|
|||||||
Turkey
|
Steel
drums and water bottles
|
1
|
—
|
|||||||
Ukraine
|
Distribution
center and water bottles
|
—
|
1
|
|||||||
United Kingdom
|
Steel
and plastic drums, water bottles and distribution center
|
3
|
2
|
|||||||
United
States
|
Fibre,
steel and plastic drums, intermediate bulk containers, closures, steel
parts, water bottles, load securement and distribution centers and
blending and packaging services
|
34
|
28
|
Uruguay
|
Steel and
plastic drums
|
—
|
1
|
|||||||
Venezuela
|
Steel
and plastic drums and water bottles
|
2
|
—
|
|||||||
Vietnam
|
Steel drums
|
—
|
1
|
|||||||
PAPER
PACKAGING:
|
|
|||||||||
United States
|
Corrugated
sheets, containers and other products, containerboard, multiwall bags,
investment property and distribution center
|
23
|
4
|
|||||||
TIMBER:
|
||||||||||
United
States
|
General
offices
|
4
|
1
|
|||||||
CORPORATE:
|
||||||||||
|
||||||||||
United
States
|
Principal
and general offices
|
2
|
—
|
(1)
|
Dividends
per share for 2007 has been adjusted to reflect a 2-for-1 stock split of
the Company’s shares of Class A and Class B Common Stock distributed on
April 11, 2007.
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
Per
Share
|
Total
Number of
Shares
Purchased
as
Part
of Publicly
Announced Plans
or Programs(1)
|
Maximum
Number
(or
Approximate
Dollar
Value)
of Shares that
May
Yet Be
Purchased
under the Plans
or
Programs(1)
|
||||||||||||
November 2007
|
— | — | — | 1,648,128 | ||||||||||||
December
2007
|
— | — | — | 1,648,128 | ||||||||||||
January
2008
|
2,500 | $ | 59.04 | 2,500 | 1,645,628 | |||||||||||
February
2008
|
— | — | — | 1,645,628 | ||||||||||||
March
2008
|
5,900 | $ | 59.04 | 5,900 | 1,639,728 | |||||||||||
April
2008
|
170,500 | $ | 61.22 | 170,500 | 1,469,228 | |||||||||||
May
2008
|
— | — | — | 1,469,228 | ||||||||||||
June
2008
|
2,000 | $ | 57.69 | 2,000 | 1,467,228 | |||||||||||
July
2008
|
100,500 | $ | 56.41 | 100,500 | 1,366,728 | |||||||||||
August
2008
|
— | — | — | 1,366,728 | ||||||||||||
September 2008
|
— | — | — | 1,366,728 | ||||||||||||
October
2008
|
100,000 | $ | 48.00 | 100,000 | 1,266,728 | |||||||||||
Total
|
381,400 | 381,400 |
(1)
|
The
Company’s Board of Directors has authorized a stock repurchase program
which permits the Company to purchase up to 4.0 million shares of the
Company’s Class A or Class B Common Stock, or any combination
thereof. As of October 31, 2008, the maximum number of shares that
could be purchased was 1,266,728, which may be any combination of
Class A or Class B Common
Stock.
|
As of and for the years ended October 31,
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Net
sales
|
$ | 3,776,756 | $ | 3,322,294 | $ | 2,628,475 | $ | 2,424,297 | $ | 2,209,282 | ||||||||||
Net
income
|
$ | 234,354 | $ | 156,368 | $ | 142,119 | $ | 104,656 | $ | 47,769 | ||||||||||
Total
assets
|
$ | 2,745,898 | $ | 2,652,711 | $ | 2,188,001 | $ | 1,883,323 | $ | 1,813,238 | ||||||||||
Long-term
debt, including current portion of long-term debt
|
$ | 673,171 | $ | 622,685 | $ | 481,408 | $ | 430,400 | $ | 457,415 | ||||||||||
Basic
earnings per share:
|
||||||||||||||||||||
Class A
Common Stock
|
$ | 4.04 | $ | 2.69 | $ | 2.46 | $ | 1.82 | $ | 0.85 | ||||||||||
Class
B Common Stock
|
$ | 6.04 | $ | 4.04 | $ | 3.69 | $ | 2.73 | $ | 1.26 | ||||||||||
Diluted
earnings per share:
|
||||||||||||||||||||
Class A
Common Stock
|
$ | 3.99 | $ | 2.65 | $ | 2.42 | $ | 1.78 | $ | 0.83 | ||||||||||
Class
B Common Stock
|
$ | 6.04 | $ | 4.04 | $ | 3.69 | $ | 2.73 | $ | 1.26 | ||||||||||
Dividends
per share:
|
||||||||||||||||||||
Class A
Common Stock
|
$ | 1.32 | $ | 0.92 | $ | 0.60 | $ | 0.40 | $ | 0.30 | ||||||||||
Class
B Common Stock
|
$ | 1.97 | $ | 1.37 | $ | 0.89 | $ | 0.59 | $ | 0.44 |
|
(1)
|
All
share information presented in this table has been adjusted to reflect a
2-for-1 stock split of the Company’s shares of Class A and Class B Common
Stock distributed on April 11,
2007.
|
For the year ended October 31,
|
2008
|
2007
|
2006
|
|||||||||
Net
Sales
|
||||||||||||
Industrial
Packaging
|
$ | 3,061.1 | $ | 2,653.6 | $ | 1,993.0 | ||||||
Paper
Packaging
|
696.9 | 653.7 | 620.3 | |||||||||
Timber
|
18.8 | 14.9 | 15.1 | |||||||||
Total
net sales
|
$ | 3,776.8 | $ | 3,322.2 | $ | 2,628.4 | ||||||
Operating
Profit
|
||||||||||||
Operating
profit, before the impact of restructuring charges and timberland
disposals, net:
|
||||||||||||
Industrial
Packaging
|
$ | 315.2 | $ | 229.4 | $ | 167.5 | ||||||
Paper
Packaging
|
77.4 | 67.7 | 60.0 | |||||||||
Timber
|
20.6 | 14.4 | 10.6 | |||||||||
Total
operating profit before the impact of restructuring charges and timberland
disposals, net
|
413.2 | 311.5 | 238.1 | |||||||||
Restructuring
charges:
|
||||||||||||
Industrial
Packaging
|
34.0 | 16.0 | 24.0 | |||||||||
Paper
Packaging
|
9.1 | 5.2 | 9.2 | |||||||||
Timber
|
0.1 | - | - | |||||||||
Total
restructuring charges
|
43.2 | 21.2 | 33.2 | |||||||||
Timberland
disposals, net:
|
||||||||||||
Timber
|
0.3 | (0.7 | ) | 41.3 | ||||||||
Operating
profit
|
||||||||||||
Industrial
Packaging
|
281.2 | 213.4 | 143.5 | |||||||||
Paper
Packaging
|
68.3 | 62.5 | 50.8 | |||||||||
Timber
|
20.8 | 13.7 | 51.9 | |||||||||
Total
operating profit
|
$ | 370.3 | $ | 289.6 | $ | 246.2 |
|
•
|
Selling
prices, customer demand and sales
volumes;
|
|
•
|
Raw
material costs, primarily steel, resin and
containerboard;
|
|
•
|
Energy
and transportation costs;
|
|
•
|
Benefits
from executing the Greif Business
System;
|
|
•
|
Restructuring
charges;
|
|
•
|
Contributions
from recent acquisitions;
|
|
•
|
Divestiture
of business units; and
|
|
•
|
Impact
of foreign currency translation.
|
|
•
|
Selling
prices, customer demand and sales
volumes;
|
|
•
|
Raw
material costs, primarily old corrugated
containers;
|
|
•
|
Energy
and transportation costs;
|
|
•
|
Benefits
from executing the Greif Business System;
and
|
|
•
|
Restructuring
charges.
|
|
•
|
Planned
level of timber sales;
|
|
•
|
Selling
prices and customer demand
|
|
•
|
Gains
(losses) on sale of timberland; and
|
|
•
|
Sale
of special use properties (surplus, HBU, and development
properties).
|
|
•
|
Surplus
property, meaning land that cannot be efficiently or effectively managed
by us, whether due to parcel size, lack of productivity, location, access
limitations or for other reasons.
|
|
•
|
HBU
property, meaning land that in its current state has a higher market value
for uses other than growing and selling
timber.
|
|
•
|
Development
property, meaning HBU land that, with additional investment, may have a
significantly higher market value than its HBU market
value.
|
|
•
|
Timberland,
meaning land that is best suited for growing and selling
timber.
|
|
·
|
Selling
prices and sales volumes;
|
|
·
|
Raw
material costs, primarily steel, resin and
containerboard;
|
|
·
|
Energy
and transportation costs;
|
|
·
|
Benefits
from executing the Greif Business
System;
|
|
·
|
Restructuring
charges;
|
|
·
|
Contributions
from recent acquisitions; and
|
|
·
|
Impact
of currency translation.
|
|
·
|
Selling
prices and sales volumes;
|
|
·
|
Raw
material costs, primarily old corrugated
containers;
|
|
·
|
Energy
and transportation costs;
|
|
·
|
Benefits
from executing the Greif Business System;
and
|
|
·
|
Restructuring
charges.
|
|
·
|
Planned
level of timber sales;
|
|
·
|
Sale
of special use properties (surplus, HBU, and development properties);
and
|
|
·
|
Timberland
disposals, net.
|
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than 1
year
|
1- 3 years
|
3-5 years
|
After 5 years
|
||||||||||||||||
Long-term
debt
|
$ | 863.6 | $ | 35.0 | $ | 420.0 | $ | 41.0 | $ | 367.6 | ||||||||||
Short-term
borrowing
|
62.0 | 62.0 | - | - | - | |||||||||||||||
Capital
lease obligations
|
0.6 | 0.3 | 0.3 | - | - | |||||||||||||||
Operating
leases
|
133.8 | 22.2 | 33.1 | 22.8 | 55.7 | |||||||||||||||
Liabilities
held by special purpose entities
|
69.5 | 2.2 | 4.5 | 4.5 | 58.3 | |||||||||||||||
Total
|
$ | 1,129.5 | $ | 121.7 | $ | 457.9 | $ | 68.3 | $ | 481.6 |
Expected
Maturity Date
|
||||||||||||||||||||||||||||
2009
|
2010
|
2011
|
2012
|
After
2012
|
Total
|
Fair
Value
|
||||||||||||||||||||||
Credit
Agreement:
|
||||||||||||||||||||||||||||
Scheduled
amortizations
|
$ | — | $ | 248 |