RICHMOND, Va., Jan. 23 /PRNewswire/ -- James River Corporation (NYSE: JR)
today reported fourth quarter 1996 net income of $35.4 million, or $.24 per
share, compared with $21.6 million, or $.08 per share in the prior year's
fourth quarter. Sales for the current quarter were $1.3 billion, compared
with $1.6 billion in the fourth quarter of 1995. Non-recurring items and
divestitures affected the comparability of revenues and results.
Comparability of Results
Excluding non-recurring items, the company posted net income of $43.6
million, or $.33 per share, in the current quarter, compared with $35.4
million, or $.25 per share, in the fourth quarter of 1995. Results for the
fourth quarter of 1996 included a net pretax charge for non-recurring items of
$10.6 million ($8.2 million net of taxes, or $.09 per share), while results
for the fourth quarter of 1995 included severance costs of $26.1 million
($13.8 million net of taxes and minority interests, or $.17 per share). The
current quarter's non-recurring items included severance and other costs of
$15.2 million and asset write-downs of $30.5 million, largely offset by a
pretax gain of $35.1 million on the sale of businesses.
The comparability of results was also affected by divestitures, the most
significant of which were the August 1995 spin-off of Crown Vantage and the
August 1996 sale of the Flexible Packaging division.
Full Year Results
For the year, excluding non-recurring items, net income was $170.2
million, or $1.30 per share, compared with $164.8 million, or $1.26 per share,
in 1995. Net sales of $5.7 billion in 1996 were 16 percent below the $6.8
billion reported in the prior year principally due to divestitures. Excluding
revenues of divested businesses, sales declined approximately 4 percent,
primarily attributable to the lower average selling prices for communications
papers.
Results by Business Segment
James River's North American Consumer Products Business posted operating
profits of $66.3 million in the current quarter, slightly higher than the
$61.1 million reported in last year's fourth quarter, while quarterly sales
declined from $693 million in 1995 to $628 million in 1996. Results improved
due to cost reduction efforts and lower raw material costs, despite lower
average selling prices for retail towel and tissue products and market pulp.
For the year, operating profits improved by 18 percent, from $235.1 million in
1995 to $277 million in 1996.
Operating profits for the company's European Consumer Products Business
were $38.5 million in the fourth quarter of 1996, two and a half times the
$15.7 million reported in the prior year's quarter, while sales declined from
$433 million in the prior year's quarter to $408 million in the current
quarter. Margin improvements were attributable to a combination of lower raw
material costs, stronger finished product volumes and manufacturing cost
reductions, partially offset by the impact of a two-month strike at the
company's Spanish tissue facility. For the year, operating profits more than
tripled, from $45.9 million in 1995 to $152.9 million in 1996.
The company's Packaging Business reported operating income of $17 million
in the current quarter, slightly below the $18 million reported in the fourth
quarter of 1995, while sales declined to $190 million from $357 million for
the same periods, primarily due to the 1996 sale of the company's Flexible
Packaging and Inks divisions. For the year, operating profits increased 44
percent, from $61 million in 1995 to $87.7 million in 1996.
Operating profits for the company's Communications Papers Business were
$10 million in the fourth quarter of 1996, compared with $25.7 million in the
fourth quarter of 1995, while sales fell to $106 million in the current
quarter compared to $142 million in the prior year. Results for 1996 were
weaker than those of a year ago due to significantly lower average selling
prices. For the year, operating profits declined from $191.2 million in 1995
(including $64.5 million attributable to operations divested during 1995) to
$22.2 million in 1996.
General corporate expenses were $24.7 million in the current quarter,
compared to $16.6 million in the fourth quarter of 1995. 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 year, cash provided by operations increased 18 percent, from $609
million in 1995 to $719 million in 1996. Additionally, cash received from
divestitures totaled $497 million in 1996, while cash paid for the remaining
14 percent investment in Jamont (the company's European Consumer Products
Business) totaled $200 million. Outstanding debt was reduced by $577 million
during the year using a combination of net divestiture proceeds and free cash
flow. Lower debt levels allowed the company to reduce interest expense by $61
million, from $226 million in 1995 to $165 million in 1996, a decrease of 27
percent. As a result of the company's improving financial profile, during the
quarter Standard & Poor's affirmed its ratings on James River's debt
securities and revised its outlook from stable to positive.
Outlook
Commenting on the year, Miles Marsh, the company's chairman and chief
executive officer, said, "I am pleased to be able to report an improvement in
James River's overall results this year compared to 1995, despite
significantly weaker market conditions for many grades of pulp and paper.
This has been a challenging and active year for us. We made significant
progress in cost reduction, portfolio rationalization, debt repayment, and
organizational effectiveness and, as a result, we are a stronger, more focused
company.
"Looking forward to 1997, I am confident that our continuing efforts in
these areas will allow us to post further progress toward our margin and
earnings goals."
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 Years (52 or 53 Weeks) Ended
December 29, 1996 and December 31, 1995
(in millions, except per share amounts)
Fourth Quarter Years (a)
1996 (b) 1995 (c) 1996 (b) 1995 (c) (d)
Net sales $1,299.7 $1,579.3 $5,690.5 $6,799.5
Income from operations 96.5 77.8 432.9 423.3
Net income 35.4 21.6 157.3 126.4
Net income per common share $.24 $.08 $1.15 $.81
(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) Results for the fourth quarter of 1996 included nonrecurring charges
of $10.6 million ($8.2 million net of taxes, or $.09 per share) for severance
costs, asset write-downs and net gains on asset dispositions. Results for
1996 included nonrecurring charges of $10.7 million ($12.9 million net of
taxes, or $.15 per share) for severance and exit costs and net gains on asset
dispositions.
(c) Results for the fourth quarter of 1995 included nonrecurring charges
of $26.1 million ($13.8 million net of taxes and minority interests, or $.17
per share) primarily for severance costs and related exit costs in connection
with workforce reductions. Results for the year ended December 31, 1995,
included nonrecurring severance and spin-off transaction costs of $51.9
million ($32.1 million net of taxes and minority interests, or $.38 per
share).
(d) Income tax expense for the year ended December 31, 1995, included a
charge of $7.4 million ($6.3 million net of minority interest, or $.07 per
share) for a French corporate tax rate increase.
CONSOLIDATED STATEMENTS OF OPERATIONS (a)
James River Corporation of Virginia and Subsidiaries
(in millions, except per share amounts)
Quarters Ended Years Ended
Dec. 29, Dec. 31, Dec. 29, Dec. 31,
1996 (b) 1995 (c) 1996 (b) 1995 (c) (d)
Net sales $1,299.7 $1,579.3 $5,690.5 $6,799.5
Cost of goods sold 966.5 1,209.5 4,216.7 5,258.9
Selling and administrative
expenses 226.1 265.9 1,030.2 1,065.4
Severance and other items 10.6 26.1 10.7 51.9
Income from operations 96.5 77.8 432.9 423.3
Interest expense 36.9 50.1 165.4 226.4
Other income, net 7.1 7.4 21.6 40.3
Income before income taxes
and minority interests 66.7 35.1 289.1 237.2
Income tax expense
Tax on current income 29.3 15.1 127.2 102.0
Effect of tax rate change (.9) 7.4
Total income tax expense 29.3 14.2 127.2 109.4
Income before minority interests 37.4 20.9 161.9 127.8
Minority interests (2.0) .7 (4.6) (1.4)
Net income $35.4 $21.6 $157.3 $126.4
Preferred dividend requirements (14.6) (14.7) (58.5) (58.5)
Net income applicable
to common shares $20.8 $6.9 $98.8 $67.9
Net income per common share
and common share equivalents $.24 $.08 $1.15 $.81
Weighted average number
of common shares and common
share equivalents 87.0 85.7 86.0 84.1
CONSOLIDATED BALANCE SHEETS
James River Corporation of Virginia and Subsidiaries
December 29, December 31,
(in millions) 1996 1995
ASSETS:
Cash and cash equivalents $33.8 $66.1
Accounts receivable 717.9 847.3
Inventories 650.4 821.4
Other current assets 117.6 135.7
Total current assets 1,519.7 1,870.5
Net property, plant and equipment 3,751.5 4,074.1
Investments in affiliates 154.6 146.8
Other assets 385.7 395.8
Goodwill 730.0 771.7
Total assets $6,541.5 $7,258.9
LIABILITIES AND CAPITAL:
Accounts payable and accrued liabilities $1,103.4 $1,054.2
Current portion of long-term debt 116.9 44.8
Total current liabilities 1,220.3 1,099.0
Long-term debt 1,853.9 2,503.0
Accrued postretirement benefits
other than pensions 458.0 464.7
Other long-term liabilities 259.9 448.7
Deferred income taxes 443.0 489.3
Preferred stock 738.4 740.3
Common shareholders' equity 1,568.0 1,513.9
Total liabilities
and shareholders' equity $6,541.5 $7,258.9
SEGMENT INFORMATION (a)
James River Corporation of Virginia and Subsidiaries
First Second Third Fourth
(in millions) Quarter Quarter Quarter Quarter Year
1996 Net sales:
Consumer products:
North America $671.3 $698.2 $644.8 $628.0 $2,642.3
Europe 439.4 426.8 418.6 408.4 1,693.2
Packaging 333.5 314.8 271.0 190.3 1,109.6
Communications papers 106.5 107.2 107.7 106.0 427.4
Intersegment elimination (64.1) (50.2) (34.7) (33.0) (182.0)
Total net sales $1,486.6 $1,496.8 $1,407.4 $1,299.7 $5,690.5
1995 Net sales:
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):
Consumer products:
North America $67.4 $60.4 $82.9 $66.3 $277.0
Europe 24.8 41.8 47.8 38.5 152.9
Packaging 26.1 24.1 20.5 17.0 87.7
Communications papers 4.1 3.1 5.0 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
1995 Operating profit (loss):
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) Results for the fourth quarter of 1996 included nonrecurring charges
of $10.6 million ($8.2 million net of taxes, or $.09 per share) for severance
costs, asset write-downs and net gains on asset dispositions. Results for
1996 included nonrecurring charges of $10.7 million ($12.9 million net of
taxes, or $.15 per share) for severance and exit costs and net gains on asset
dispositions.
(c) Results for the fourth quarter of 1995 included nonrecurring charges
of $26.1 million ($13.8 million net of taxes and minority interests, or $.17
per share) primarily for severance costs and related exit costs in connection
with workforce reductions. Results for the year ended December 31, 1995,
included nonrecurring severance and spin-off transaction costs of $51.9
million ($32.1 million net of taxes and minority interests, or $.38 per
share).
(d) Income tax expense for the year ended December 31, 1995, included a
charge of $7.4 million ($6.3 million net of minority interest, or $.07 per
share) for a French corporate tax rate increase.
CONSOLIDATED STATEMENTS OF CASH FLOWS
James River Corporation of Virginia and Subsidiaries
Years Ended
(in millions) December 29, 1996 December 31, 1995
Operating activities:
Net income $157.3 $126.4
Depreciation expense
and cost of timber harvested 400.9 461.4
Amortization of goodwill 21.4 24.4
Deferred income tax provision 21.0 33.0
Undistributed earnings
of unconsolidated affiliates (1.1) (1.9)
Severance and other items 10.7 51.9
Change in current assets
and liabilities:
Accounts receivable 61.6 (6.6)
Inventories 70.7 (48.3)
Other current assets 7.3 (.8)
Current liabilities 7.5 (30.7)
Other, net (38.1) .5
Cash provided by operating
activities 719.2 609.3
Investing activities:
Expenditures for property,
plant and equipment (426.1) (441.2)
Cash paid for acquisitions (199.9) (52.5)
Cash received from sale of assets 496.6 10.9
Proceeds on sale
of partnership option 22.2
Other, net 10.3 28.7
Cash used for investing activities (119.1) (431.9)
Financing activities:
Additions to long-term debt 4.2 9.1
Payments of long-term debt (545.2) (608.5)
Proceeds on spin-off
of Crown Vantage Inc. 480.4
Dividends paid (97.2) (120.4)
Common stock issued on exercise
of stock options 7.8 68.8
Other, net (2.0)
Cash used for financing activities (632.4) (170.6)
(Decrease) increase in cash
and cash equivalents $(32.3) $6.8
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
Corporation.
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