RICHMOND, Va., April 24 /PRNewswire/ -- James River Corporation (NYSE: JR)
today reported earnings of $.38 per share for the first quarter of 1997, a 65
percent increase over earnings of $.23 per share, before non-recurring items,
in the first quarter of 1996. Net income was $47.5 million in the current
quarter compared with $34.8 million, before non-recurring items, in the prior
year. Last year's reported first quarter net income was $20.5 million, or
$.07 per share, after a non-recurring charge for severance and losses on
divestitures of $14.3 million, net of tax, or $.16 per share.
Sales for the current quarter were $1.4 billion, compared with $1.6
billion in the first quarter of 1996. Excluding sales of divested operations,
first quarter 1996 sales would have been $1.4 billion. Compared to the prior
year, increased sales volumes experienced in each of the company's businesses
were offset by lower general market pricing and the effect of foreign currency
translation.
Results by Business
James River's North American Consumer Products Business (48 percent of
company sales) posted operating profits of $68.4 million, 7.5 percent higher
than the $63.6 million reported in last year's first quarter. First quarter
1997 sales declined to $688 million from $711 million in 1996, due primarily
to the loss of revenue from divested operations. Excluding divestitures,
revenues from continuing operations increased 3 percent. Strong volumes for
tissue-based products in both retail and commercial markets and reduced
manufacturing and raw material costs contributed to the improved results. New
product initiatives contributed to the strong sales volumes. The volume and
cost improvements were partially offset by lower average selling prices lead
by competitors for retail tissue products and market pulp.
Operating profits for the European Consumer Products Business (30 percent
of company sales) were $45.3 million in the first quarter of 1997, more than
82 percent above the $24.8 million reported in the prior year. Sales declined
to $427 million in the current quarter from $465 million in the prior year.
While finished product sales volumes were more than 3 percent higher than the
prior year, revenues were negatively impacted by a strengthening of the U.S.
dollar and a modest decline in average pricing. Lower raw material costs and
manufacturing cost reductions also contributed to this business' margin
improvement.
The Packaging Business (14 percent of company sales) reported lower
operating income and sales in the current quarter due primarily to the
divestitures of the Flexible Packaging and Inks divisions in the second half
of 1996. Operating income was $21.2 million, down from $29.8 million in the
prior year, while sales declined to $197 million from $341 million for the
same periods. The first quarter benefited from manufacturing cost
reductions, lower raw material costs, and stronger volumes, despite lower
average selling prices for folding cartons and paperboard.
The Communications Papers Business (8 percent of company sales) reported
an operating loss of $3.6 million in the first quarter of 1997, compared with
operating income of $4.2 million for the same quarter a year ago. Stronger
volumes increased sales to $119 million in the current quarter compared to
$112 million in the prior year's quarter, but weaker prices affected the
bottom line. However, as we begin the second quarter, there are encouraging
signs of pricing recovery on the horizon.
General corporate expenses declined 17 percent to $18.8 million in the
current quarter, compared to $22.6 million in the same quarter of the prior
year. This reflects a reduction in spending on new, integrated management
information systems, as design and installation projects are completed and the
systems become operational.
Cash Flows and Restructuring
For the first quarter of 1997, cash provided by operations totaled $71
million. Net debt (total debt less cash and cash equivalents) declined to
$1,907 million as of March 30, 1997, compared to $1,937 million as of December
29, 1996.
During the first quarter, the company signed a definitive agreement with
the Hancock Timber Resource Group, an investment unit of John Hancock Mutual
Life Insurance Company, for the sale of approximately 95,000 acres of southern
timberlands for cash proceeds of $111 million. The sale, which is expected to
generate a gain, is scheduled to close during the second quarter.
Outlook
Commenting on the quarter, Miles Marsh, the company's chairman and chief
executive officer, said, "I am pleased to be able to report a significant
improvement in James River's overall results this quarter compared to last
year. It is important to note that this improvement continues our recent
trend of strong performance increases, which have been achieved despite
industry-wide price declines. Also, it is notable that in the just-completed
quarter, our earnings per share gain was the largest in our peer group of
consumer and paper companies. We were able to continue to post stronger year-
over-year results, in large part, because of our aggressive focus on cost
reduction and productivity improvements, as well as our brand-building
increases in advertising and marketing, which have contributed to our stronger
sales volumes. Expected recovery in the underlying pulp market, which we
believe will soon lead to improved pricing in many of our end markets, should
make the benefits of our cost reduction and marketing programs even more
apparent."
James River Corporation, headquartered in Richmond, Va., is a leading
marketer and manufacturer of paper-based consumer products, packaging, and
business, printing and converting papers. The second largest worldwide
producer of tissue products, James River markets such leading brands as
Quilted Northern bathroom tissue, Brawny paper towels, Vanity Fair napkins,
and Dixie cups and plates in North America, and Lotus bathroom tissue, towels,
and facial tissue in Europe. The company also markets Quilt-Rap sandwich
wrap, Qwik Wave microwave packaging, and Eureka! and Word Pro copy papers.
James River's current annual sales rate is approximately $5.6 billion.
Forward-looking statements in this release are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are not guarantees of future performance and
are subject to risks and uncertainties that could cause actual results and
company plans and objectives to differ materially from those projected. Such
risks and uncertainties include, but are not limited to, general business and
economic conditions; competitive pricing pressures for the company's products;
changes in raw material, energy and other costs; and opportunities that may be
presented to and pursued by the company.
FINANCIAL SUMMARY
James River Corporation of Virginia and Subsidiaries
For the Quarters (13 Weeks) Ended
March 30, 1997 and March 31, 1996
(in millions, except per share amounts)
Quarters Ended
March 30, 1997 March 31, 1996(a)(b)
Net sales $1,381.9 $1,555.4
Income from operations 112.5 76.4
Net income 47.5 20.5
Net income per common share $.38 $.07
(a) Results for the first quarter of 1996 included nonrecurring charges of
$23.4 million primarily consisting of domestic severance costs of
$13.8 million ($8.4 million net of tax benefits, or $.10 per share) and net
losses on asset dispositions of $9.6 million ($5.9 million net of tax
benefits, or $.06 per share).
(b) Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year's presentation including a
reclassification of customer freight charges from net sales to cost of sales
of $68.8 million for the quarter ended March 31, 1996.
CONSOLIDATED STATEMENTS OF OPERATIONS
James River Corporation of Virginia and Subsidiaries
(in millions, except per share amounts) Quarters Ended
March 30, 1997 March 31, 1996 (a)(b)
Net sales $1,381.9 $1,555.4
Cost of goods sold 1,019.2 1,182.0
Selling and administrative expenses 250.2 273.6
Severance and other items 23.4
Income from operations 112.5 76.4
Interest expense 37.9 45.4
Other income, net 7.8 4.0
Income before income taxes
and minority interests 82.4 35.0
Income tax expense 34.6 15.4
Income before minority interests 47.8 19.6
Minority interests (0.3) 0.9
Net income $47.5 $20.5
Preferred dividend requirements (14.6) (14.7)
Net income applicable to common shares $32.9 $5.8
Net income per common share $.38 $.07
Weighted average number of common shares 87.2 85.5
CONSOLIDATED BALANCE SHEETS
James River Corporation of Virginia and Subsidiaries
(in millions) March 30, December 29, March 31,
1997 1996 1996
ASSETS:
Cash and cash equivalents $58.1 $33.8 $42.7
Accounts receivable 691.6 717.9 862.8
Inventories 662.4 650.4 798.0
Other current assets 113.3 117.6 126.8
Total current assets 1,525.4 1,519.7 1,830.3
Net property, plant and equipment 3,626.9 3,751.5 4,006.9
Investments in affiliates 159.5 154.6 149.0
Other assets 368.3 385.7 381.8
Goodwill 681.7 730.0 702.9
Total assets $6,361.8 $6,541.5 $7,070.9
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued
liabilities $1,041.9 $1,103.4 $1,074.2
Current portion of long-term debt 116.3 116.9 19.4
Total current liabilities 1,158.2 1,220.3 1,093.6
Long-term debt 1,848.7 1,853.9 2,413.9
Accrued postretirement benefits
other than pensions 457.3 458.0 465.5
Other long-term liabilities 202.5 259.9 271.2
Deferred income taxes 454.4 443.0 440.8
Minority interests 160.3
Preferred stock 738.4 738.4 740.3
Common shareholders' equity 1,502.3 1,568.0 1,485.3
Total liabilities and
shareholders' equity $6,361.8 $6,541.5 $7,070.9
SEGMENT INFORMATION (a)
James River Corporation of Virginia and Subsidiaries
First Second Third Fourth
(in millions) Quarter Quarter Quarter Quarter Year
1997 Net sales:
Consumer products:
North America $687.5
Europe 426.6
Packaging 196.7
Communications papers 119.3
Intersegment elimination (48.2)
Total net sales $1,381.9
1996 Net sales (b):
Consumer products:
North America $710.9 $745.2 $685.3 $668.4 $2,809.8
Europe 464.9 452.4 445.2 434.7 1,797.2
Packaging 341.2 319.9 280.0 198.8 1,139.9
Communications papers 112.2 113.8 116.2 114.5 456.7
Intersegment elimination (73.8) (61.1) (47.9) (48.9) (231.7)
Total net sales $1,555.4 $1,570.2 $1,478.8 $1,367.5 $5,971.9
1997 Income (loss) from operations:
Consumer products:
North America $68.4
Europe 45.3
Packaging 21.2
Communications papers (3.6)
General corporate expenses (18.8)
Income from operations $112.5
1996 Income (loss) from operations (a)(b) :
Consumer products:
North America $63.6 $60.4 $80.7 $68.1 $272.8
Europe 24.8 41.8 47.8 38.5 152.9
Packaging 29.8 24.0 22.9 15.2 91.9
Communications papers 4.2 3.2 4.8 10.0 22.2
General corporate expenses (22.6) (23.6) (25.3) (24.7) (96.2)
Severance and other items (23.4) (7.0) 30.3 (10.6) (10.7)
Income from operations $76.4 $98.8 $161.2 $96.5 $432.9
(a) Results for the first quarter of 1996 included nonrecurring charges of
$23.4 million primarily consisting of domestic severance costs of
$13.8 million ($8.4 million net of tax benefits, or $.10 per share) and net
losses on asset dispositions of $9.6 million ($5.9 million net of tax
benefits, or $.06 per share).
(b) Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year's presentation including a
reclassification of customer freight charges from net sales to cost of sales
of $68.8 million, $73.4 million, $71.4 million and $67.8 million for the
first, second, third and fourth quarters of 1996, respectively. Reportable
segments have been reconfigured to include bleached board operations (formerly
in the North American Consumer Products segment) in the Packaging segment and
to include the foodwrap operations (formerly in the Packaging segment) in the
North American Consumer Products segment.
CONSOLIDATED STATEMENTS OF CASH FLOWS
James River Corporation of Virginia and Subsidiaries
Quarters Ended
(in millions) March 30, 1997 March 31, 1996
Operating activities:
Net income $47.5 $20.5
Depreciation expense and cost of timber harvested 96.2 101.7
Amortization of goodwill 5.2 5.2
Deferred income tax (benefit) provision 20.0 (2.4)
Equity in earnings of unconsolidated affiliates (3.5) (.8)
Dividends received from unconsolidated affiliates 1.4 1.5
Severance and other items 23.4
Retirement benefits expense in excess of funding (2.1) .8
Change in current assets and liabilities:
Accounts receivable (14.8) (31.7)
Inventories (23.5) 9.7
Other current assets 12.8 4.4
Current liabilities (20.5) 37.5
Foreign currency hedge (31.5)
Other, net (16.7) (21.1)
Cash provided by operating activities 70.5 148.7
Investing activities:
Expenditures for property, plant and equipment (60.4) (81.7)
Cash received from sale of assets 1.6 26.1
Other, net 7.1 1.7
Cash used for investing activities (51.7) (53.9)
Financing activities:
Additions to long-term debt 35.2 .9
Payments of long-term debt (5.4) (92.1)
Dividends paid and other, net (24.3) (27.0)
Cash provided by (used for) financing activities 5.5 (118.2)
Increase (decrease) in cash and cash equivalents $24.3 $(23.4)
SOURCE James River Corporation
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CONTACT:
financial, Celeste Gunter, 804-649-4307 or
media, Richard B. Elder, 804-343-4785, both of James River
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