NOTE 8 — CONSOLIDATION OF VARIABLE INTEREST ENTITIES

The Company evaluates whether an entity is a variable interest entity (“VIE”) upon acquisition and whenever reconsideration events occur. 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 VIEs 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

In 2005, the Company sold certain timber properties to Plum Creek Timberlands, L.P. (“Plum Creek”) in a series of transactions that included the creation of two separate legal entities that are now consolidated as separate VIEs. One is an indirect subsidiary of Plum Creek (the “Buyer SPE”), and the other is STA Timber LLC, an indirect wholly owned subsidiary of the Company (“STA Timber”). As of April 30, 2015 and October 31, 2014, consolidated assets of Buyer SPE consisted of $50.9 million of restricted bank financial instruments which are expected to be held to maturity. For both of the three month periods ended April 30, 2015 and 2014, Buyer SPE recorded interest income of $0.6 million. For both of the six month periods ended April 30, 2015 and 2014, Buyer SPE recorded interest income of $1.2 million.

As of April 30, 2015 and October 31, 2014, STA Timber had consolidated long-term debt of $43.3 million. For both of the three month periods ended April 30, 2015 and 2014, STA Timber recorded interest expense of $0.6 million. For both of the six month periods ended April 30, 2015 and 2014, STA Timber recorded interest expense of $1.2 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 an issuer of a deed of guarantee in the transaction.

Flexible Packaging Joint Venture

On September 29, 2010, Greif, Inc. and its indirect subsidiary Greif International Holding Supra C.V. (“Greif Supra”) formed a joint venture (referred to herein as the “Flexible Packaging JV”) with Dabbagh Group Holding Company Limited and its subsidiary National Scientific Company Limited (“NSC”). The Flexible Packaging JV owns the operations in the Flexible Products & Services segment, with the exception of the North American multiwall packaging business, which was sold in August 2014. The Flexible Packaging JV has been consolidated into the operations of the Company as of its formation date of September 29, 2010.

All entities contributed to the Flexible Packaging JV were existing businesses acquired by Greif Supra 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 Flexible Packaging J.V. also includes Global Textile Company LLC (“Global Textile”), which owned and operated a fabric hub in the Kingdom of Saudi Arabia that commenced operations in the fourth quarter of 2012 and ceased operations in the fourth quarter of 2014.

The following table presents the Flexible Packaging JV total net assets (Dollars in millions):


April 30, 2015	Asset Co.			Global Textile			Trading Co.		Flexible Packaging JV
Total assets	$	101.0		$	17.6		$	106.9	$	225.5
Total liabilities		114.3			18.0			53.4		185.7

Net assets	$	(13.3	)	$	(0.4	)	$	53.5	$	39.8


October 31, 2014	Asset Co.		Global Textile			Trading Co.		Flexible Packaging JV
Total assets	$	113.6	$	21.6		$	126.4	$	261.6
Total liabilities		102.7		42.8			51.8		197.3

Net assets	$	10.9	$	(21.2	)	$	74.6	$	64.3

Net losses attributable to the noncontrolling interest in the Flexible Packaging JV for the three months ended April 30, 2015 and 2014 were $3.0 million and $4.0 million, respectively; and for the six months ended April 30, 2015 and 2014, net losses attributable to the noncontrolling interest were $6.3 million and $5.5 million, respectively.