-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QHJNI4LQD1Ppy0J7WEyx+oQFx5l3AIpcldueNmZUelpXRzSzgnYHXUpMUC6nbrvZ V8D+9iLB9tTSZY8Q3qUwFA== 0000053117-97-000028.txt : 19971024 0000053117-97-000028.hdr.sgml : 19971024 ACCESSION NUMBER: 0000053117-97-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971023 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971023 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORT JAMES CORP CENTRAL INDEX KEY: 0000053117 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 540848173 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07911 FILM NUMBER: 97699630 BUSINESS ADDRESS: STREET 1: 120 TREDEGAR ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046494296 MAIL ADDRESS: STREET 1: P O BOX 2218 CITY: RICHMOND STATE: VA ZIP: 23218 FORMER COMPANY: FORMER CONFORMED NAME: JAMES RIVER CORP OF VIRGINIA DATE OF NAME CHANGE: 19920703 8-K 1 FORT JAMES CORPORATION FORM 8K DATED 10/23/97 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 23, 1997 FORT JAMES CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Virginia - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 1-7911 54-0848173 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification Number) 120 Tredegar Street, Richmond, Virginia 23219 - -------------------------------------------------------------------------------- (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (804) 644-5411 - -------------------------------------------------------------------------------- James River Corporation of Virginia - -------------------------------------------------------------------------------- (Former name, former address, and former fiscal year, if changed since last report) Item 5. Other Events. On October 23, 1997, Fort James Corporation ("Fort James" or the "Company") published a press release announcing the Company's results for the third quarter and nine months ended September 28, 1997. The Company published its consolidated condensed balance sheets as of September 28, 1997, December 29, 1996, and September 29, 1996, its consolidated statements of operations for the quarters (13 weeks) and nine months (39 weeks) ended September 28, 1997, and September 29, 1996, its consolidated statements of cash flows for the nine months ended September 28, 1997, and September 29, 1996, and certain segment information for the nine months ended September 28, 1997, and the year ended December 29, 1996. A copy of the press release, which includes the consolidated financial statements, is filed herewith as Exhibit 99. Item 7. Financial Statements and Exhibits (c) 99 Press release dated October 23, 1997, published by the registrant - filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FORT JAMES CORPORATION By:/s/ William A. Paterson William A. Paterson Senior Vice President & Controller (Principal Accounting Officer) Date: October 23, 1997 EX-99 2 PRESS RELEASE DATED 10/23/97 EXHIBIT 99 NEWS RELEASE Fort James Corporation 120 Tredegar Street Richmond, Virginia 23219 Contact: Celeste Gunter, Financial 804.649.4307 Richard B. Elder, Media 804.343.4785 FORT JAMES CORPORATION ANNOUNCES IMPROVED THIRD QUARTER 1997 RESULTS RICHMOND, VIRGINIA, October 23, 1997 -- Fort James Corporation today announced higher operating profits, earnings and earnings per share for its third quarter ended September 28, 1997, excluding non-recurring transactional and refinancing costs. Fort James was created through the merger of James River Corporation and Fort Howard Corporation in August 1997. The merger has been accounted for as a pooling of interests and, accordingly, results for 1997 and 1996 have been restated to include those of both companies. THIRD QUARTER RESULTS Compared with the third quarter of 1996, income from operations increased five percent to $277.9 million from $264.6 million, net income rose 22 percent to $122.6 million from $100.2 million and earnings per share climbed 20 percent to $.54 versus $.45, before the effects of the transactional and refinancing costs and other nonoperating items. Net sales declined five percent to $1,825 million from $1,926 million, primarily due to divestitures and the impact of foreign currency translation. Excluding divested operations and the impact of foreign currency translation, sales increased approximately two percent over those of the prior year. Operating margins increased to 15.2 percent for the current quarter, from 13.7 percent in 1996. Including the non-recurring items, third quarter 1997 income from operations was $224 million and net income was $23.5 million, or $.07 per share, while third quarter 1996 income from operations was $294.9 million and net income was $114 million, or $.52 per share. NON-RECURRING ITEMS Third quarter results for both 1997 and 1996 included certain non-recurring items. Results for the current quarter reflect a pretax charge of $53.9 million (not tax-deductible, equivalent to $.25 per share) for fees and expenses associated with the merger and an extraordinary charge on the early extinguishment of debt of $74.9 million ($45.2 million net of taxes, or $.22 per share). In the third quarter of 1996, the company reported a pretax gain of $46.9 million ($24.2 million net of taxes, or $.12 per share) on the sale of the Flexible Packaging division. This was partially offset by severance and other costs of $16.6 million ($10.4 million net of taxes, or $.05 per share). -MORE- Page 2 -- Fort James Announces Improved Third Quarter 1997 Results October 23, 1997 NINE MONTHS RESULTS For the first nine months, excluding non-recurring items, net income increased 43 percent to $334.3 million, or $1.49 per share, in 1997 from $233 million, or $1.04 per share, in 1996. Net sales of $5,498 million in 1997 were approximately seven percent below the $5,922 million reported in 1996, due to divestitures and foreign currency translation. Net sales increased approximately one percent excluding these items. RESULTS BY BUSINESS SEGMENT The North American Consumer Products Business posted operating profits of $220 million and an operating margin of 19.8 percent in the current quarter, similar to the $218 million operating profits and 20 percent margin reported in the 1996 third quarter. The performance reflected lower sales volumes in commercial foodservice markets, offset by increased volumes in away-from-home tissue markets and reduced manufacturing costs. The European Consumer Products Business reported operating profits of $48.3 million in the third quarter of 1997,compared to $54.5 million in the prior year. Changes in foreign currency translation associated with the strengthening of the U.S. dollar caused the year-over-year decline in results. Absent this change, results would have been modestly higher than those of the prior year. With operating profits of $22.7 million, the Packaging Business' third quarter results were comparable to the $22.9 million reported in the prior year. The benefits of improved sales volumes and cost reduction were largely offset by lower average pricing, increased wastepaper costs and transition costs incurred in connection with new customers. Quarterly operating profits for the Communications Papers Business increased to $11 million, compared to $4.8 million in 1996, on improved volumes and lower wood costs. General corporate expenses declined to $24 million in the current quarter compared to $35.4 million in the 1996 quarter, primarily as a result of reduced spending on new, integrated management information systems. CASH FLOW AND REFINANCING ACTIVITIES For the first nine months of 1997, cash provided by operations totaled $565 million and total debt was reduced by $415 million. Lower average debt levels, combined with some initial benefits from the company's refinancing activities, allowed the company to reduce interest expense by 15 percent in the first nine months, from $327.3 million in 1996 to $277.6 million in 1997. In early October, the company completed the refinancing of a total of approximately $2.3 billion of debt, partially necessitated by the merger, as well as to take advantage of Fort James' investment grade debt rating. An additional extraordinary charge on the early extinguishment of debt of approximately $80 million, net of taxes, is anticipated to be recorded in the fourth quarter in connection with the completion of the refinancings. As a result of this program, the company expects to reduce interest expense by more than $50 million annually. -MORE- Page 3 -- Fort James Announces Improved Third Quarter 1997 Results October 23, 1997 During the quarter, the company also converted its Series P preferred stock into approximately 15.3 million common shares and called its Series O preferred stock for redemption as of October 1. These actions will reduce aggregate cash dividends by $25 million annually. RESTRUCTURING ACTIVITIES The company is currently developing a detailed restructuring plan in conjunction with the merger, and expects to recognize a restructuring charge in the fourth quarter of 1997. The range of possible restructuring charges cannot be reasonably estimated until this plan is complete. OUTLOOK Commenting on the quarter, Miles Marsh, the company's chairman and chief executive officer, said, "Conditions in the away-from-home tissue markets continue to be quite good, however, conditions in the retail tissue markets have become somewhat more competitive and are expected to remain this way for the near-term. We are very pleased with the rapid and smooth completion of the merger of our two companies, and we are now moving in a thoughtful manner to integrate the two companies. We are on track with our rationalization plans, which we continue to believe will ultimately provide merger savings in excess of $200 million, and I am enthusiastic on the growth prospects for the company." Fort James is a leading international consumer products company, serving consumers both at home and away-from-home with bathroom and facial tissue, paper towels, napkins, and cups and plates. The company's popular brands include Quilted Northern, Brawny, Dixie, Vanity Fair, Mardi Gras, Green Forest, Soft 'N Gentle and So-Dri in North America and Lotus, Tenderly, Colhogar and Kittensoft in Europe. Fort James also produces folding cartons for packaging food and pharmaceuticals and communications papers such as printing, publishing and office copy paper. The company has approximately 30,000 employees and more than 65 manufacturing facilities in the U.S., Canada and 12 European countries. 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; opportunities that may be presented to and pursued by the company; determinations by regulatory and governmental authorities; the ability to successfully integrate the James River and Fort Howard businesses; and the ability to achieve synergistic and other cost reductions and efficiencies. # # # Copies of today's news release, along with additional information on Fort James, is available, at no charge, by calling (888) 526 3711. You may also access the company's web site at Internet address http://www.fortjames.com.
FINANCIAL SUMMARY Fort James Corporation and Subsidiaries For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended September 28, 1997 and September 29, 1996 (in millions, except per share amounts) Third Quarter Nine Months -------------------------------------------------------------------- 1997(a) (b) 1996 (c) (d) 1997(a) (b) 1996 (c) (d) - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $1,825.4 $1,925.9 $5,497.5 $5,921.5 Income from operations before restructure and other unusual items 277.9 264.6 814.6 709.1 Income before restructure and other unusual items and extraordinary item 122.6 100.2 334.3 233.0 Net income per common share: Before restructure and other unusual items and extraordinary item $.54 $.45 $1.49 $1.04 Net income $.07 $.52 $1.18 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------
(a) Results for the third quarter of 1997 included a nonrecurring charge related to transaction costs which are non-deductible for taxes of $53.9 million (or $.25 per share). Results for the first nine months of 1997 included the transaction costs offset by a nonrecurring gain of $57.7 million ($35.2 million net of tax expense, or $.17 per share) on the sale of 95,000 acres of southern timberlands. (b) Net income for the third quarter of 1997 included a net charge of $45.2 million (or $.22 per share) for extraordinary loss on early extinguishment of debt. Net income for the first nine months of 1997 included a net charge of $47.1 million (or $.23 per share) related to extraordinary loss on early extinguishment of debt. (c) Results for the third quarter of 1996 included a nonrecurring gain of $46.9 million ($24.2 million net of tax expense, or $.12 per share) for the disposition of Flexible Packaging assets and nonrecurring charges of $16.6 million ($10.4 million net of tax benefits, or $.05 per share) for severance and related exit costs. The results for the first nine months of 1996 included a nonrecurring gain of $46.9 million ($24.2 million net of tax expense, or $.14 per share) for the disposition of the Flexible Packaging assets and nonrecurring charges of $47.0 million ($28.9 million net of tax benefits, or $.16 per share) for severance and related exit costs and net losses on other asset dispositions. Net income for the first nine months of 1996 included a net charge of $3.3 million (or $.02 per share) related to extraordinary loss on early extinguishment of debt. (d) All financial information for Fort James Corporation includes the results of James River Corporation of Virginia and Fort Howard Corporation for all periods presented giving retroactive effect to the merger on August 13, 1997, which has been accounted for as a pooling of interests. 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.
CONSOLIDATED STATEMENTS OF OPERATIONS Fort James Corporation and Subsidiaries Quarters Ended Nine Months Ended ----------------------------------------------------------------------- September 28, September 29, September 28, September 29, (in millions, except per share amounts) 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------- Net sales $1,825.4 $1,925.9 $5,497.5 $5,921.5 Cost of goods sold 1,270.4 1,358.8 3,834.6 4,258.4 Selling and administrative expenses 277.1 302.5 848.3 954.0 Restructure and other unusual it ems income (expense) (53.9) 30.3 3.8 (.1) - ------------------------------------------------------------------------------------------------------------------------- Income from operations 224.0 294.9 818.4 709.0 Interest expense 87.3 102.2 277.6 327.3 Other income, net 11.1 5.0 22.3 12.4 - ------------------------------------------------------------------------------------------------------------------------- Income before income taxes, minority interests and extraordinary item 147.8 197.7 563.1 394.1 Income tax expense 77.3 83.6 244.9 163.2 - ------------------------------------------------------------------------------------------------------------------------- Income before minority interests and extraordinary item 70.5 114.1 318.2 230.9 Minority interests (1.8) (.1) (2.6) (2.6) - -------------------------------------------------------------------------------------------------------------------------- Income before extraordinary item 68.7 114.0 315.6 228.3 Extraordinary loss on early extinguishment of debt (45.2) (47.1) (3.3) - -------------------------------------------------------------------------------------------------------------------------- Net income $23.5 $114.0 $268.5 $225.0 ========================================================================================================================== Preferred dividend requirements (8.1) (8.1) (24.4) (43.9) - -------------------------------------------------------------------------------------------------------------------------- Net income applicable to common shares $15.4 $105.9 $244.1 $181.1 ========================================================================================================================== Net income per common share: Before extraordinary item $.29 $.52 $1.41 $1.02 Extraordinary loss on early extinguishment of debt (.22) (.23) (.02) - -------------------------------------------------------------------------------------------------------------------------- Net income per share $.07 $.52 $1.18 $1.00 ========================================================================================================================== Weighted average number of common shares and common share equivalents 209.4 204.1 207.7 181.1 ========================================================================================================================== CONSOLIDATED BALANCE SHEETS (d) Fort James Corporation and Subsidiaries September 28, December 29, September 29, (in millions) 1997 1996 1996 - ------------------------------------------------------------------------------------------------------------------------- ASSETS: Cash and cash equivalents $34.6 $34.6 $63.2 Accounts receivable 813.5 781.3 877.5 Inventories 843.0 801.6 783.0 Other current assets 135.1 191.1 169.9 - ------------------------------------------------------------------------------------------------------------------------- Total current assets 1,826.2 1,808.6 1,893.6 - ------------------------------------------------------------------------------------------------------------------------- Net property, plant and equipment 4,720.9 4,999.3 4,954.5 Investments in affiliates 163.5 154.6 152.9 Other assets 471.4 464.4 479.0 Goodwill 650.2 730.0 732.4 - ------------------------------------------------------------------------------------------------------------------------- Total assets $7,832.2 $8,156.9 $8,212.4 ========================================================================================================================= LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable and accrued liabilities $1,376.4 $1,413.1 $1,341.7 Current portion of long-term debt 139.2 128.9 83.2 - ------------------------------------------------------------------------------------------------------------------------- Total current liabilities 1,515.6 1,542.0 1,424.9 - ------------------------------------------------------------------------------------------------------------------------- Long-term debt 3,879.9 4,305.3 4,534.3 Accrued postretirement benefits other than pensions 475.1 475.9 475.8 Other long-term liabilities 254.8 291.7 295.4 Deferred income taxes 725.7 690.5 731.9 Preferred stock 450.4 738.4 738.4 Common shareholders' equity 530.7 113.1 11.7 - --------------------------------------------------------------------------------------------------------------------=---- Total liabilities and shareholders' equity $7,832.2 $8,156.9 $8,212.4 =========================================================================================================================
SEGMENT INFORMATION (d) Fort James Corporation and Subsidiaries First Second Third Fourth (in millions) Quarter Quarter Quarter Quarter Year - ------------------------------------------------------------------------------------------------------------------------------------ 1997 Net sales: Consumer products: North America $1,077.4 $1,127.2 $1,109.2 $3,313.8 Europe 472.6 465.4 438.5 1,376.5 Packaging 196.7 198.3 200.0 595.0 Communications papers 119.3 112.0 117.8 349.1 Intersegment elimination (48.2) (48.6) (40.1) (136.9) - ------------------------------------------------------------------------------------------------------------------------------------ Total net sales $1,817.8 $1,854.3 $1,825.4 $5,497.5 ==================================================================================================================================== 1996 Net sales: Consumer products: North America $1,091.0 $1,145.3 $1,086.2 $1,039.5 $4,362.0 Europe 510.4 496.7 491.6 481.5 1,980.2 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) (48.1) (48.7) (231.7) - ------------------------------------------------------------------------------------------------------------------------------------ Total net sales $1,981.0 $2,014.6 $1,925.9 $1,785.6 $7,707.1 ==================================================================================================================================== 1997 Income (loss) from operations (a): Consumer products: North America $204.6 $231.1 $219.9 $655.6 Europe 52.4 52.9 48.3 153.6 Packaging 21.2 23.8 22.7 67.7 Communications papers (3.6) 0.4 11.0 7.8 General corporate expenses (23.8) (22.3) (24.0) (70.1) Restructure and other unusual items income (expense) 57.7 (53.9) 3.8 - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations $250.8 $343.6 $224.0 $818.4 ==================================================================================================================================== 1996 Income (loss) from operations (c): Consumer products: North America $177.6 $184.2 $217.8 $173.7 $753.3 Europe 31.1 48.8 54.5 42.7 177.1 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 (28.7) (29.7) (35.4) (30.7) (124.5) Restructure and other unusual items income (expense) (23.4) (7.0) 30.3 (10.6) (10.7) - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations $190.6 $223.5 $294.9 $200.3 $909.3 ====================================================================================================================================
(a) Results for the third quarter of 1997 included a nonrecurring charge related to transaction costs which are non-deductible for taxes of $53.9 million (or $.25 per share). Results for the first nine months of 1997 included the transaction costs offset by a nonrecurring gain of $57.7 million ($35.2 million net of tax expense, or $.17 per share) on the sale of 95,000 acres of southern timberlands. (b) Net income for the third quarter of 1997 included a net charge of $45.2 million (or $.22 per share) for extraordinary loss on early extinguishment of debt. Net income for the first nine months of 1997 included a net charge of $47.1 million (or $.23 per share) related to extraordinary loss on early extinguishment of debt. (c) Results for the third quarter of 1996 included a nonrecurring gain of $46.9 million ($24.2 million net of tax expense, or $.12 per share) for the disposition of Flexible Packaging assets and nonrecurring charges of $16.6 million ($10.4 million net of tax benefits, or $.05 per share) for severance and related exit costs. The results for the first nine months of 1996 included a nonrecurring gain of $46.9 million ($24.2 million net of tax expense, or $.14 per share) for the disposition of the Flexible Packaging assets and nonrecurring charges of $47.0 million ($28.9 million net of tax benefits, or $.16 per share) for severance and related exit costs and net losses on other asset dispositions. Net income for the first nine months of 1996 included a net charge of $3.3 million (or $.02 per share) related to extraordinary loss on early extinguishment of debt. (d) All financial information for Fort James Corporation includes the results of James River Corporation of Virginia and Fort Howard Corporation for all periods presented giving retroactive effect to the merger on August 13, 1997, which has been accounted for as a pooling of interests. 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.
CONSOLIDATED STATEMENT OF CASH FLOWS Fort James Corporation and Subsidiaries Nine Months Ended ----------------------------------------------------------------- (in millions) September 28, 1997 September 29, 1996 - ----------------------------------------------------------------------------------------------------------------------------------- Operating activities: Net income $268.5 $225.0 Depreciation expense and cost of timber harvested 358.7 379.9 Amortization of goodwill 15.1 15.8 Deferred income tax provision 78.3 58.1 Restructure and other unusual items (3.8) .1 Loss on debt repurchases, net of taxes 47.1 3.3 Undistributed earnings of unconsolidated affiliates 1.4 4.2 Change in current assets and liabilities: Accounts receivable (109.4) 7.9 Inventories (63.4) 103.6 Other current assets 30.8 6.6 Current liabilities 13.8 25.6 Foreign currency hedge (31.5) Other, net (41.1) (26.2) - ---------------------------------------------------------------------------------------------------------------------------- Cash provided by operating activities 564.5 803.9 - ----------------------------------------------------------------------------------------------------------------------------- Investing activities: Expenditures for property, plant and equipment (313.5) (328.7) Cash received from sale of assets 144.3 440.9 Cash paid for acquisitions, net (199.9) Other, net 13.2 5.9 - ----------------------------------------------------------------------------------------------------------------------------- Cash used for investing activities (156.0) (81.8) - ----------------------------------------------------------------------------------------------------------------------------- Financing activities: Additions to long-term debt 633.4 3.4 Payments of long-term debt (982.3) (865.1) Common stock issued, net of offering costs 205.1 Common and preferred stock cash dividends paid (82.4) (69.9) Premiums paid on early extinguishment of debt (45.5) Common stock issued on exercise of stock options 68.3 3.9 Other, net (3.4) - ----------------------------------------------------------------------------------------------------------------------------- Cash used for financing activities (408.5) (726.0) - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents - $(3.9) =============================================================================================================================
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