RICHMOND, Va., July 25 /PRNewswire/ -- James River Corporation
(NYSE: JR) today reported net income of $30.5 million, or $.18 per
share, for the second quarter of 1996. This compares with net income of
$41 million, or $.32 per share, for the second quarter of 1995 and net
income of $20.5 million, or $.07 per share, for the first quarter of
1996. Net sales were $1.5 billion in both the first and second quarters
of 1996 and $1.8 billion in the second quarter of 1995. The
comparability of results was impacted by non-recurring charges and a
spin-off to common shareholders in 1995.
Comparability of Results
Excluding non-recurring items, the company posted net income of
$34.7 million, or $.24 per share, in the current quarter, compared with
$42.7 million, or $.34 per share, in the second quarter of 1995 and
$34.8 million, or $.23 per share, in the first quarter of 1996. Results
for the current quarter included non-recurring charges of $7 million
($4.2 million net of taxes, or $.06 per share) for severance costs and
losses on certain asset divestitures. The second quarter of 1995
included non-recurring charges of $2.6 million ($1.7 million net of
taxes and minority interests, or $.02 per share), and the first quarter
of 1996 included non-recurring charges of $23.4 million ($14.3 million
net of taxes, or $.16 per share).
The comparability of results to the second quarter of 1995 was also
affected by James River's August 1995 spin off of Crown Vantage Inc.,
which included a large part of the company's Communications Papers
Business and the specialty paper-based portion of the Packaging
Business. On a pro forma basis, excluding the results attributable to
the operations spun off to Crown Vantage and non-recurring items, net
income for the second quarter of 1995 would have been $39.2 million, or
$.29 per share, and net sales would have been $1.6 billion.
First Half Results
For the six months, excluding non-recurring items, net income was
$69.5 million, or $.47 per share, in 1996, compared with $71.1 million,
or $.50 per share, in 1995. Net sales of $3.0 billion in the first half
of 1996 were 1 percent below last year's first half, excluding Crown
Vantage.
Results by Business
James River's North American Consumer Products Business posted
operating profits of $60.4 million in the current quarter. This
compares with profits of $58.4 million in last year's second quarter and
$67.4 million in the first quarter of 1996. Compared to the first
quarter, results were negatively affected by list price reductions for
retail towel and tissue products and lower average selling prices for
market pulp, partially offset by stronger seasonal volumes and lower raw
material costs.
Operating profits for the company's European Consumer Products
Business climbed to $41.8 million in the second quarter of 1996, more
than three times the $12.9 million reported in 1995's second quarter,
and 69 percent above the $24.8 million reported in the first quarter of
1996. Margin improvements were attributable to a combination of lower
raw material costs, stronger finished product volumes and continuing
cost reductions. As a net buyer of market pulp, the European Consumer
Products Business has benefited from lower average pulp costs in 1996.
The company's Packaging Business had operating income of
$24.1 million in the current quarter, 46 percent above the $16.5 million
reported in the second quarter of 1995, but slightly below the
$26.1 million reported in the first quarter of 1996. Compared to the
prior year, increased profits were principally attributable to mix
upgrades and raw material and other cost reductions, partially offset by
unit volume declines. Profits fell marginally below the first quarter
1996 level due to continued volume softness and competitive pricing.
Operating profits for the company's Communications Papers Business
declined to $3.1 million in the second quarter of 1996. This compares
with pro forma profits of $39.4 million in the second quarter of 1995
(excluding results of operations subsequently spun off to Crown Vantage)
and reported profits of $4.1 million in the first quarter of 1996.
Results for the current quarter were weaker than those of a year ago due
to significantly lower average selling prices and softer demand.
Profits were only slightly below those of the first quarter, however, as
the effect of lower average prices was largely offset by improved demand
for uncoated free sheet papers, which resulted in increased shipments
and reduced production downtime.
General corporate expenses were $23.6 million in the current
quarter, compared to $17 million in 1995's second quarter and
$22.6 million in this year's first quarter. The current quarter
included approximately $8 million of costs associated with installing
new integrated management information systems to support the company's
cost reduction programs.
Debt Reduction and Restructuring Progress
For the first half of the year, cash provided by operations
increased by 26 percent, from $285 million in 1995 to $359 million in
1996. Cash received from divestitures totaled $67 million in the first
six months of 1996. Outstanding debt was reduced by 9 percent, or
$232 million, during the first six months of 1996 using a combination of
free cash flow and divestiture proceeds. Lower debt levels allowed the
company to reduce interest expense for the first half of the year by
$34 million, from $122 million in 1995 to $88 million in 1996, a
decrease of 28 percent.
During the third quarter of 1996, the company expects to complete
the sale of its Flexible Packaging Division for gross cash proceeds of
$365 million and to negotiate the sale of its CZ Inks Division. In
September 1996, James River will acquire the remaining 14 percent
minority ownership interest in Jamont, N.V. (the company's European
Consumer Products Business, which will then be 100 percent owned) for
approximately $200 million in cash, pursuant to a put agreement with the
current owner of these shares. The proceeds from divestitures, net of
the Jamont put price, are expected to be used for further debt
reduction.
Outlook
Commenting on the quarter, Miles Marsh, the company's chairman and
chief executive officer, said, "We are pleased to be able to report an
improvement in earnings per share versus the first quarter, despite
lower selling prices for many of our products. In particular, we are
gratified by the performance of our European Consumer Products Business,
which performed well in more favorable than expected market conditions,
and by our Communications Papers Business, which remained profitable
despite weak market conditions. In addition, our healthy cash flows in
the first half of the year have enabled us to make notable progress on
debt reduction.
"1996 has been and will likely continue to be a challenging and
transitional year. While we are encouraged by the improvements in our
performance, we remain somewhat cautious on the outlook for the second
half of the year, given the unfavorable price trends of the past six
months. We continue to focus on reducing costs, selling non-core
assets, decreasing debt and building brands."
James River Corporation, headquartered in Richmond, Va., is a
leading marketer and manufacturer of consumer products, packaging, and
business, printing and converting papers. In North America, the company
markets diversified brands such as Quilted Northern bathroom tissue,
Brawny paper towels, Dixie paper cups and plates, Pacesetter paperboard,
Quilt-Rap sandwich wrap and Qwik Wave microwave packaging, as well as
Eureka! recycled copy paper and Word Pro copy paper. In addition, the
company produces a number of popular European brands such as Lotus towel
and tissue products. James River's current annual sales rate is
approximately $6 billion.
CONSOLIDATED STATEMENTS OF OPERATIONS (a) (b)
James River Corporation of Virginia and Subsidiaries
(in millions, except per share amounts)
Quarters Ended Six Months Ended
June 30, June 25, June 30, June 25,
1996(c) 1995(d) 1996(c) 1995(d)
Net sales $1,496.8 $1,817.9 $2,983.4 $3,485.5
Cost of goods sold 1,108.9 1,407.0 2,225.8 2,726.7
Selling and administrative
expenses 282.1 279.9 552.0 527.9
Severance and other items 7.0 2.6 30.4 5.0
Income from operations 98.8 128.4 175.2 225.9
Interest expense 42.7 60.0 88.1 121.8
Other income, net 4.4 8.2 8.4 17.6
Income before income taxes
and minority interests 60.5 76.6 95.5 121.7
Income tax expense 26.6 32.9 42.0 52.3
Income before minority
interests 33.9 43.7 53.5 69.4
Minority interests (3.4) (2.7) (2.5) (1.9)
Net income $30.5 $41.0 $51.0 $67.5
Preferred dividend
requirements (14.6) (14.6) (29.3) (29.2)
Net income applicable
to common shares $15.9 $26.4 $21.7 $38.3
Net income per common share $.18 $.32 $.25 $.46
Weighted average number
of common shares 85.5 83.4 85.5 83.2
SEGMENT INFORMATION (a)
James River Corporation of Virginia and Subsidiaries
(in millions)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
1996 Net sales:
Consumer products:
North America $671.3 $698.2 -- -- $1,369.5
Europe 439.4 426.8 -- -- 866.2
Packaging 333.5 314.8 -- -- 648.3
Communications papers 106.5 107.2 -- -- 213.7
Intersegment
elimination (64.1) (50.2) -- -- (114.3)
Total net sales $1,486.6 $1,496.8 -- -- $2,983.4
1995 Net sales (b):
Consumer products:
North America $609.5 $686.7 $700.1 $692.8 $2,689.1
Europe 387.9 428.7 405.6 432.5 1,654.7
Packaging 420.3 431.5 411.2 357.4 1,620.4
Communications papers 301.3 325.9 269.7 141.9 1,038.8
Intersegment
elimination (51.4) (54.9) (51.9) (45.3) (203.5)
Total net sales $1,667.6 $1,817.9 $1,734.7 $1,579.3 $6,799.5
1996 Operating profit (loss) (c):
Consumer products:
North America $67.4 $60.4 -- -- $127.8
Europe 24.8 41.8 -- -- 66.6
Packaging 26.1 24.1 -- -- 50.2
Communications papers 4.1 3.1 -- -- 7.2
General corporate
expenses (22.6) (23.6) -- -- (46.2)
Severance and other
items (23.4) (7.0) -- -- (30.4)
Income from
operations $76.4 $98.8 -- -- $175.2
1995 Operating profit (loss) (b) (d):
Consumer products:
North America $38.4 $58.4 $77.2 $61.1 $235.1
Europe 8.8 12.9 8.5 15.7 45.9
Packaging 18.0 16.5 8.5 18.0 61.0
Communications papers 44.5 60.2 60.8 25.7 191.2
General corporate
expenses (9.8) (17.0) (14.6) (16.6) (58.0)
Severance and other
items (2.4) (2.6) (20.8) (26.1) (51.9)
Income from
operations $97.5 $128.4 $119.6 $77.8 $423.3
CONSOLIDATED BALANCE SHEETS (a)
James River Corporation of Virginia and Subsidiaries
(in millions)
June 30, December 31, June 25,
1996 1995 1995
ASSETS:
Cash and cash equivalents $63.9 $66.1 $45.7
Accounts receivable 842.8 847.3 960.0
Inventories 714.0 821.4 896.4
Other current assets 125.0 135.7 162.9
Total current assets 1,745.7 1,870.5 2,065.0
Net property, plant and equipment 3,965.3 4,074.1 4,724.1
Investments in affiliates 148.9 146.8 126.7
Other assets 386.8 395.8 368.5
Goodwill 743.3 771.7 804.7
Total assets $6,990.0 $7,258.9 $8,089.0
LIABILITIES AND CAPITAL:
Accounts payable and accrued
liabilities $1,063.9 $1,054.2 $1,170.9
Current portion of long-term debt 21.5 44.8 229.5
Total current liabilities 1,085.4 1,099.0 1,400.4
Long-term debt 2,294.7 2,503.0 2,857.3
Accrued postretirement benefits
other than pensions 466.3 464.7 552.7
Other long-term liabilities 475.2 448.7 485.8
Deferred income taxes 440.6 489.3 585.7
Preferred stock 740.3 740.3 740.3
Common shareholders' equity 1,487.5 1,513.9 1,466.8
Total liabilities and
shareholders' equity $6,990.0 $7,258.9 $8,089.0
(a) On August 25, 1995, the Company completed the spin-off to
shareholders of Crown Vantage Inc. which included a large part of the
Company's Communications Papers Business, along with the specialty
paper-based portion of its Packaging Business.
(b) Prior to the fourth quarter of 1995, James River consolidated
its European Consumer Products Business ("Jamont") on a one-month lag
basis. This one-month lag was eliminated during the fourth quarter, and
Jamont's results for the first three quarters of 1995 were restated for
the effect of using new closing dates.
(c) Results for the second quarter of 1996 included nonrecurring
charges of $7.0 million ($4.2 million net of tax benefits, or $.06 per
share) for severance costs and net losses on asset dispositions.
Results for the first six months included nonrecurring charges of
$30.4 million ($18.5 million net of tax benefits, or $.22 per share) for
severance costs and net losses on asset dispositions.
(d) Results for the six months ended June 25, 1995 included
nonrecurring severance costs of $5.0 million ($3.6 million net of tax
benefits and minority interests, or $.04 per share).
CONSOLIDATED STATEMENTS OF CASH FLOWS
James River Corporation of Virginia and Subsidiaries
(in millions)
Six Months Ended
June 30, 1996 June 25, 1995
Operating activities:
Net income $51.0 $67.5
Depreciation expense and cost
of timber harvested 205.3 234.9
Amortization of goodwill 10.3 11.4
Deferred income tax provision 4.8 8.7
Equity in earnings of unconsolidated
affiliates (1.4) (11.5)
Dividends received from unconsolidated
affiliates 5.3 18.0
Severance and other items 30.4 5.0
Retirement benefits expense in excess
of funding 2.0 7.5
Change in current assets and liabilities:
Accounts receivable (24.8) (16.2)
Inventories 67.0 (37.5)
Other current assets (.3) (10.4)
Current liabilities 31.5 12.4
Other, net (22.6) (4.4)
Cash provided by operating activities 358.5 285.4
Investing activities:
Expenditures for property, plant and
equipment (185.7) (208.7)
Cash received from sale of assets 66.5 2.8
Proceeds on sale of partnership option 24.3
Other, net 3.0 12.7
Cash used for investing activities (116.2) (168.9)
Financing activities:
Additions to long-term debt 1.6 6.3
Payments of long-term debt (192.6) (88.1)
Dividends paid (55.2) (53.8)
Other, net 1.7 5.5
Cash used for financing activities (244.5) (130.1)
Decrease in cash and cash equivalents $(2.2) $(13.6)
PRO FORMA CONSOLIDATED OPERATING DATA (a)
(in millions, except per share data)
Quarter Ended Six Months Ended
June 25, 1995 June 25, 1995
Net sales:
Consumer products:
North America $689.7 $1,302.1
Europe 428.7 816.6
Packaging 357.7 703.5
Communications papers 156.9 297.6
Intersegment elimination (53.8) (104.1)
Total net sales $1,579.2 $3,015.7
Operating profit:
Consumer products:
North America $59.1 $98.2
Europe 12.9 21.7
Packaging 17.4 36.0
Communications papers 39.4 61.9
General corporate expenses (14.6) (23.0)
Severance and other items (2.6) (5.0)
Income from operations $111.6 $189.8
Net income $37.5 $59.3
Net income per common share $.27 $.36
(a) In August 1995, James River completed the spin-off to
shareholders of a large part of the Company's Communications Papers
Business, along with the specialty paper-based portion of its Packaging
Business to Crown Vantage Inc. The above pro forma information assumes
that the spin-off of Crown Vantage Inc. occurred as of the beginning of
1995. The pro forma financial information does not purport to be
indicative of the results of operations which would actually have been
reported if the transactions had occurred for the period indicated or
which may be reported in the future.
James River press releases available through Company News On-Call by
fax, 800-758-5804, ext. 457350, or at http://www.prnewswire.com.
CONTACT:
Financial, Celeste Gunter, 804-649-4307, or
Media, Richard B. Elder, 804-343-4785, both of James River
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