RICHMOND, Va., Oct. 24 /PRNewswire/ -- James River Corporation (NYSE: JR)
today reported net income of $70.9 million, or $.62 per share, for the third
quarter of 1996. This compares with net income of $37.3 million, or $.27 per
share, for the third quarter of 1995. Net sales were $1.4 billion in the
current quarter, compared with $1.7 billion in the prior year's quarter. The
comparability of these results was impacted by non-recurring items and
divestitures in both 1995 and 1996.
Comparability of Results
Excluding non-recurring items, the company posted net income of
$57.1 million, or $.48 per share, in the current quarter, compared with
$58.4 million, or $.51 per share, in the third quarter of 1995. Non-recurring
items in the current quarter included a gain on the sale of the company's
Flexible Packaging division, partially offset by severance and other costs.
The Flexible Packaging gain totaled $46.9 million ($24.2 million net of taxes,
or $.24 per share). Severance and other costs of $16.6 million ($10.4 million
net of taxes, or $.10 per share) were accrued in connection with further
headcount reductions in our North American Consumer Products and Packaging
businesses and an announced closure of a converting plant in France. The
third quarter of 1995 included non-recurring pretax charges of $20.8 million
($14.0 million net of taxes and minority interests, or $.16 per share), as
well as a non-cash charge of $8.3 million ($.08 per share) for the cumulative
effect of an increase in the French income tax rate.
The comparability of results 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 a small part of the Packaging
Business, as well as the August 1996 sale of the Flexible Packaging division.
Nine Months
For the nine months, excluding non-recurring items, net income was
$126.6 million, or $.97 per share, in 1996, compared with $129.5 million, or
$1.01 per share, in 1995. Net sales were $4.4 billion in the first nine
months of 1996, 16 percent below the $5.2 billion reported in the prior year.
Excluding revenues of divested businesses from both periods, sales were down
3 percent, principally attributable to the lower average selling prices for
communications papers.
Results by Business
James River's North American Consumer Products Business posted operating
profits of $82.9 million in the current quarter, compared with profits of
$77.2 million in last year's third quarter. Results improved despite lower
average selling prices for retail towel and tissue products and market pulp,
principally due to lower manufacturing and raw material costs.
Operating profits for the company's European Consumer Products Business
climbed to $47.8 million in the third quarter of 1996, more than five times
the $8.5 million reported in the prior year's quarter. Margin improvements
were attributable to a combination of lower raw material costs, significantly
stronger finished product volumes and manufacturing cost reductions.
The company's Packaging Business had operating income of $20.5 million in
the current quarter, more than twice the $8.5 million reported in the third
quarter of 1995. Increased profits were principally attributable to mix
upgrades and raw material and other cost reductions, partially offset by lower
unit volumes.
Operating profits for the company's Communications Papers Business
declined to $5.0 million in the third quarter of 1996. This compares with
reported profits of $60.8 million in the third quarter of 1995. On a pro
forma basis, excluding the results of operations subsequently spun-off to
Crown Vantage, profits would have been $39.1 million in last year's third
quarter. Results for the current quarter were weaker than those of a year ago
due to significantly lower average selling prices.
General corporate expenses were $25.3 million in the current quarter,
compared to $14.6 million in 1995's third quarter. The current year's
expenses are higher principally due to costs being incurred in installing new
integrated management information systems to support the company's cost
reduction programs.
Debt Reduction and Restructuring Progress
For the first nine months of the year, cash provided by operations
increased by 30 percent, from $441 million in 1995 to $572 million in 1996.
As of the end of September 1996, cash received from divestitures totaled
$441 million and cash paid for the remaining 14 percent investment in Jamont
totaled $200 million. Outstanding debt was reduced by $500 million during the
first three quarters of 1996 using a combination of net divestiture proceeds
and free cash flow. Lower debt levels allowed the company to reduce interest
expense for the first nine months of the year by $48 million, from
$176 million in 1995 to $128 million in 1996, a decrease of 27 percent.
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 overall
improvement in our recurring operating margins, which increased from
8.1 percent in last year's third quarter to 9.3 percent in the current
quarter, despite significantly weaker market conditions for communications
papers and market pulp. In particular, we are gratified by the improved
performance of our core Consumer Products Businesses in both North America and
Europe, which increased their individual operating margins to 12.9 percent and
11.4 percent, respectively. In addition, our healthy cash flows in the first
nine months of the year have enabled us to make notable progress on debt
reduction.
"Looking forward, while normal seasonality and scheduled maintenance
outages will impact our fourth quarter, we anticipate that in 1997 progress
will continue in both domestic and European businesses. We also anticipate
continued progress in the areas of cost and business effectiveness."
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 $5.5 billion.
FINANCIAL SUMMARY
James River Corporation of Virginia and Subsidiaries
For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
September 29, 1996 and September 24, 1995
(in millions, except per share amounts)
Third Quarter (a) (b) Nine Months (a) (b)
1996 (c)(d) 1995 (e)(f) 1996 (c)(d) 1995 (e)(f)
Net sales $1,407.4 $1,734.7 $4,390.8 $5,220.2
Income from operations 161.2 119.6 336.4 345.5
Net income 70.9 37.3 121.9 104.8
Net income per common
share and common share
equivalents $.62 $.27 $.91 $.73
(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 of 1995, 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 third quarter of 1996 included a nonrecurring gain of
$46.9 million ($24.2 million net of tax expense, or $.24 per share) for the
disposition of Flexible Packaging assets and nonrecurring charges of $16.6
million ($10.4 million net of tax benefits, or $.10 per share) for severance
and related exit costs. Results for the first nine months of 1996 included a
nonrecurring gain of $46.9 million ($24.2 million net of tax expense, or $.28
per share) for the disposition of Flexible Packaging assets and nonrecurring
charges of $47.0 million ($28.9 million net of tax benefits, or $.34 per
share) for severance and related exit costs and net losses on other asset
dispositions.
(d) Net income per common share and common share equivalents for the third
quarter of 1996 is diluted by $.04 per share for the effect of the assumed
conversion of Series P 9% Cumulative Convertible Preferred Stock ("Series P"),
including $.02 per share related to nonrecurring items. The conversion of
Series P is not included in net income per common share and common share
equivalents for the nine months ended September 29, 1996, because it is
antidilutive.
(e) Results for the third quarter of 1995 included nonrecurring charges of
$20.8 million ($14.0 million net of tax benefits and minority interests, or
$.16 per share) primarily for severance costs and transaction costs related to
the spin-off of Crown Vantage Inc. Results for the nine months ended
September 24, 1995, included nonrecurring severance and spin-off transaction
costs of $25.8 million ($17.6 million net of tax benefits and minority
interests, or $.20 per share).
(f) Income tax expense for the quarter and nine months ended September 24,
1995, included a charge of $8.3 million ($7.1 million net of minority
interest, or $.08 per share) for a French corporate tax rate increase.
CONSOLIDATED STATEMENTS
OF OPERATIONS (a)(b)
James River Corporation
of Virginia and
Subsidiaries Quarters Ended Nine Months Ended
(in millions, except Sept. 29, Sept. 24, Sept. 29, Sept. 24,
per share amounts) 1996(c)(d) 1995(e)(f) 1996(c)(d) 1995(e)(f)
Net sales $1,407.4 $1,734.7 $4,390.8 $5,220.2
Cost of goods sold 1,024.4 1,322.7 3,250.2 4,049.4
Selling and administrative
expenses 252.1 271.6 804.1 799.5
Severance and other items (30.3) 20.8 0.1 25.8
Income from operations 161.2 119.6 336.4 345.5
Interest expense 40.4 54.5 128.5 176.3
Other income, net 6.1 15.3 14.5 32.9
Income before income
taxes and minority
interests 126.9 80.4 222.4 202.1
Income tax expense:
Tax on current income 55.9 34.6 97.9 86.9
Effect of tax rate change -- 8.3 -- 8.3
Total income tax expense 55.9 42.9 97.9 95.2
Income before minority
interests 71.0 37.5 124.5 106.9
Minority interests (.1) (.2) (2.6) (2.1)
Net income $70.9 $37.3 $121.9 $104.8
Preferred dividend
requirements (8.1) (14.6) (43.9) (43.8)
Net income applicable
to common shares
and common share
equivalents $62.8 $22.7 $78.0 $61.0
Net income per common share
and common share equivalents $.62 $.27 $.91 $.73
Weighted average number of
common shares and common
share equivalents 101.4 84.8 85.7 84.2
CONSOLIDATED BALANCE SHEETS
James River Corporation of
Virginia and Subsidiaries Sept. 29, Dec. 31, Sept. 24,
(in millions) 1996 1995 1995
ASSETS:
Cash and cash equivalents $62.5 $66.1 $43.7
Accounts receivable 787.2 847.3 906.7
Inventories 646.3 821.4 806.1
Other current assets 116.0 135.7 142.0
Total current assets 1,612.0 1,870.5 1,898.5
Net property, plant and equipment 3,723.6 4,074.1 4,006.7
Investments in affiliates 152.9 146.8 140.9
Other assets 403.8 395.8 399.5
Goodwill 732.4 771.7 758.3
Total assets $6,624.7 $7,258.9 $7,203.9
LIABILITIES AND CAPITAL:
Accounts payable and
accrued liabilities $1,100.4 $1,054.2 $1,108.9
Current portion of long-term debt 13.3 44.8 17.0
Total current liabilities 1,113.7 1,099.0 1,125.9
Long-term debt 2,033.6 2,503.0 2,456.6
Accrued postretirement
benefits other than pensions 458.0 464.7 460.5
Other long-term liabilities 278.2 448.7 431.2
Deferred income taxes 461.7 489.3 497.8
Preferred stock 738.4 740.3 740.3
Common shareholders' equity 1,541.1 1,513.9 1,491.6
Total liabilities and
shareholders' equity $6,624.7 $7,258.9 $7,203.9
SEGMENT INFORMATION (a)
James River Corporation of Virginia and Subsidiaries
(in millions)
First Second Third Fourth Year
Quarter Quarter Quarter Quarter
1996 Net sales:
Consumer products:
North America $671.3 $698.2 $644.8 -- $2,014.3
Europe 439.4 426.8 418.6 -- 1,284.8
Packaging 333.5 314.8 271.0 -- 919.3
Communications papers 106.5 107.2 107.7 -- 321.4
Intersegment
elimination (64.1) (50.2) (34.7) -- (149.0)
Total net sales $1,486.6 $1,496.8 $1,407.4 -- $4,390.8
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 $82.9 -- $210.7
Europe 24.8 41.8 47.8 -- 114.4
Packaging 26.1 24.1 20.5 -- 70.7
Communications papers 4.1 3.1 5.0 -- 12.2
General corporate
expenses (22.6) (23.6) (25.3) -- (71.5)
Severance and
other items (23.4) (7.0) 30.3 -- (0.1)
Income from
operations $76.4 $98.8 $161.2 -- $336.4
1995 Operating profit (loss)(b)(e):
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
(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 of 1995, 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 third quarter of 1996 included a nonrecurring gain of
$46.9 million ($24.2 million net of tax expense, or $.24 per share) for the
disposition of Flexible Packaging assets and nonrecurring charges of $16.6
million ($10.4 million net of tax benefits, or $.10 per share) for severance
and related exit costs. Results for the first nine months of 1996 included a
nonrecurring gain of $46.9 million ($24.2 million net of tax expense, or $.28
per share) for the disposition of Flexible Packaging assets and nonrecurring
charges of $47.0 million ($28.9 million net of tax benefits, or $.34 per
share) for severance and related exit costs and net losses on other asset
dispositions.
(d) Net income per common share and common share equivalents for the third
quarter of 1996 is diluted by $.04 per share for the effect of the assumed
conversion of Series P 9% Cumulative Convertible Preferred Stock ("Series P"),
including $.02 per share related to nonrecurring items. The conversion of
Series P is not included in net income per common share and common share
equivalents for the nine months ended September 29, 1996, because it is
antidilutive.
(e) Results for the third quarter of 1995 included nonrecurring charges of
$20.8 million ($14.0 million net of tax benefits and minority interests, or
$.16 per share) primarily for severance costs and transaction costs related to
the spin-off of Crown Vantage Inc. Results for the nine months ended
September 24, 1995, included nonrecurring severance and spin-off transaction
costs of $25.8 million ($17.6 million net of tax benefits and minority
interests, or $.20 per share).
(f) Income tax expense for the quarter and nine months ended September 24,
1995, included a charge of $8.3 million ($7.1 million net of minority
interest, or $.08 per share) for a French corporate tax rate increase.
CONSOLIDATED STATEMENTS OF CASH FLOWS
James River Corporation of Virginia and Subsidiaries
(in millions)
Nine Months Ended
Sept. 29, 1996 Sept. 24, 1995
Operating activities:
Net income $121.9 $104.8
Depreciation expense and cost of
timber harvested 304.2 352.3
Amortization of goodwill 15.8 17.2
Deferred income tax provision 32.7 19.4
Equity in earnings of unconsolidated affiliates (5.7) (18.4)
Dividends received from unconsolidated affiliates 7.8 20.1
Severance and other items .1 25.8
Retirement benefits expense in excess of funding (3.2) 9.5
Change in current assets and liabilities:
Accounts receivable .3 (63.8)
Inventories 77.2 (54.3)
Other current assets 6.3 (5.6)
Current liabilities 52.9 45.7
Other, net (38.4) (12.1)
Cash provided by operating activities 571.9 440.6
Investing activities:
Expenditures for property, plant and equipment (287.8) (315.6)
Cash paid for acquisitions, net (199.9) --
Cash received from sale of assets 440.9 8.5
Proceeds on sale of partnership option -- 22.2
Other, net 5.9 18.7
Cash used for investing activities (40.9) (266.2)
Financing activities:
Additions to long-term debt 3.4 7.8
Payments of long-term debt (469.9) (659.9)
Proceeds on spin-off of Crown Vantage Inc. -- 480.4
Dividends paid (69.9) (80.8)
Common stock issued on exercise of stock options 3.7 62.5
Other, net (1.9) --
Cash used for financing activities (534.6) (190.0)
Decrease in cash and cash equivalents $(3.6) $(15.6)
SOURCE James River Corporation
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CONTACT:
Celeste Gunter, Financial, 804-649-4307, or
Richard B. Elder, Media, 804-343-4785, both of James River
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