-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Y317maFOKNwYq14xSIc8O37PMlcJ7hvfb5aIRN444SpbD/1Lphi3Ula4fa5x9Y59 YzrFyRqwwlkavSQDAWpjKQ== 0000916641-94-000047.txt : 19940623 0000916641-94-000047.hdr.sgml : 19940623 ACCESSION NUMBER: 0000916641-94-000047 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JAMES RIVER CORP OF VIRGINIA CENTRAL INDEX KEY: 0000053117 STANDARD INDUSTRIAL CLASSIFICATION: 2621 IRS NUMBER: 540848173 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: 1933 Act SEC FILE NUMBER: 033-54213 FILM NUMBER: 94535187 BUSINESS ADDRESS: STREET 1: 120 TREDEGAR ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046445411 424B5 1 PROSPECTUS SUPPLEMENT, DECS PROSPECTUS SUPPLEMENT (To Prospectus Dated June 22, 1994) Prospectus Supplement 15,000,000 DEPOSITARY SHARES filed pursuant to Rule [LOGO] JAMES RIVER CORPORATION 424(b)(5) relating to OF VIRGINIA Registration Statements No. 33-53411 and No. 33-54213 DEPOSITARY SHARES EACH REPRESENTING A ONE-HUNDREDTH INTEREST IN A SHARE OF SERIES P 9% CUMULATIVE CONVERTIBLE PREFERRED STOCK (DIVIDEND ENHANCED CONVERTIBLE STOCK(SM) - DECS(SM)) (PAR VALUE $10 PER SHARE) (SUBJECT TO CONVERSION INTO OR REDEMPTION FOR SHARES OF COMMON STOCK, PAR VALUE $.10 PER SHARE) Each of the 15,000,000 Depositary Shares offered hereby (the "Depositary Shares") represents a one-hundredth interest in a share of Series P 9% Cumulative Convertible Preferred Stock (the "Dividend Enhanced Convertible Stock" or "DECS") of James River Corporation of Virginia, a Virginia corporation ("James River" or the "Company"), to be deposited with Wachovia Bank of North Carolina, N.A., as Depositary, and entitles its holder to all proportional rights and preferences of the DECS (including dividend, voting, redemption and liquidation rights). The Depositary Receipts (as defined herein) evidence the Depositary Shares. See "Description of Depositary Shares." On July 1, 1998 (the "Mandatory Conversion Date"), each of the outstanding Depositary Shares, if not previously redeemed by the Company or converted at the option of the holder, will automatically convert into one share of Common Stock of the Company, par value $.10 per share (the "Common Stock"), subject to adjustment in certain events. The DECS (and the related Depositary Shares) are redeemable, at the option of the Company on or after July 1, 1997 (the "Initial Redemption Date"), at a call price payable in shares of Common Stock and are convertible at the option of the holder of the Depositary Shares at any time into shares of Common Stock, in each case as described herein. The number of shares of Common Stock a holder of a Depositary Share will receive upon redemption, and the value of the shares received upon conversion, will vary depending upon the market price of the Common Stock at the time of redemption or conversion, all as set forth herein. See "Description of DECS." Dividends on the Depositary Shares are cumulative and accrue at the annual rate of $1.5525 per share and are payable quarterly in arrears on each January 1, April 1, July 1, and October 1, beginning October 1, 1994. Each Depositary Share has a liquidation preference equal to the sum of (i) the per share price to public shown below and (ii) the amount of accrued and unpaid dividends thereon to the date of liquidation, dissolution or winding up. The Depositary Shares are convertible at the option of the holder, at any time prior to the Mandatory Conversion Date, into .8547 of a share of Common Stock for each Depositary Share (equivalent to a conversion price of $20.1825 per share of Common Stock (the "Conversion Price")), subject to adjustment in certain events. The opportunity for equity appreciation afforded by an investment in the Depositary Shares is less substantial than the opportunity for equity appreciation afforded by an investment in the Common Stock because the Company may, at its option, redeem the Depositary Shares at any time on or after the Initial Redemption Date and before the Mandatory Conversion Date, and may be expected to do so if before the Mandatory Conversion Date the Current Market Price (as defined herein) of the Common Stock exceeds the Conversion Price. Because the price of the Common Stock is subject to market fluctuations, the value of the Common Stock received by an owner of Depositary Shares upon mandatory conversion of the Depositary Shares may be more or less than the amount paid for the Depositary Shares offered hereby. The Common Stock is listed on the New York Stock Exchange ("NYSE") under the symbol JR. On June 21, 1994, the last reported sale price of the Common Stock on the NYSE was $17.25 per share. See "Price Range of Common Stock and Dividends." The Depositary Shares have been approved for listing on the NYSE, subject to notice of issuance, under the symbol JRPrP. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO UNDERWRITING PROCEEDS TO THE PUBLIC(1) DISCOUNT COMPANY(2) Per Share.................................... $17.25 $.50 $16.75 Total(3)..................................... $258,750,000 $7,500,000 $251,250,000
(1) Plus accrued dividends, if any, from the date of issue. (2) Before deducting expenses payable by James River estimated to be $475,000. (3) James River has granted the several Underwriters an option, exercisable within 30 days of the date hereof, to purchase up to an aggregate of 1,666,666 additional Depositary Shares at the Price to Public, less Underwriting Discount, for the purpose of covering over-allotments, if any. If the Underwriters exercise such option in full, the total Price to Public, Underwriting Discount, and Proceeds to the Company will be $287,499,989, $8,333,333, and $279,166,656, respectively. See "Underwriters." The Depositary Shares are offered, subject to receipt and acceptance by the Underwriters, to prior sale, and to the Underwriters' right to reject any order in whole or in part and to withdraw, cancel, or modify the offer without notice. It is expected that delivery of the Depositary Shares will be made at the offices of Salomon Brothers Inc, Seven World Trade Center, New York, New York, or through the facilities of the Depository Trust Company, on or about June 29, 1994. SALOMON BROTHERS INC MERRILL LYNCH & CO. J.P. MORGAN SECURITIES INC. The date of this Prospectus Supplement is June 22, 1994. OVERVIEW OF JAMES RIVER BUSINESS SEGMENTS
MAJOR MARKETS MAJOR PRODUCTS SELECTED BRANDS CONSUMER PRODUCTS Retail Towel and Tissue Bathroom Tissue Quilted Northern(Register mark) Retail Tabletop Household Roll Towels Brawny(Register mark) Commercial Towel and Tissue Napkins Dixie(Register mark) Commercial Tabletop Paper and Plastic Cups and Plates Vanity Fair(Register mark) Plastic Cutlery Marathon(Register mark) Party Goods Handi-Kup(Register mark) Canada-Cup(Register mark) Paper Art(Register mark) FOOD AND CONSUMER PACKAGING Packaged Food Products Flexible Packaging Pacesetter(Register mark) paperboard Packaged Consumer Products Folding Cartons Quilt-Rap(tm) sandwich wrap Qwik-Crisp(Register mark) microwave Packaging Papers packaging Paperboard Mini-Pouch(tm) liquid container COMMUNICATIONS PAPERS Business Papers Uncoated Business Papers Word Pro(Register mark) Printing Papers Commercial Printing Eureka!(tm) Premium Printing Papers Papers (coated and Monterey(Register mark) uncoated groundwood) King James(Register mark) Premium Printing Papers Retreeve(Register mark) Graphika!(Register mark) JAMONT 1 Retail Towel and Tissue Towel and Tissue Products Lotus Commercial Towel and Feminine Hygiene Products Vania Tissue Air-Laid Parent Rolls Colhogar Feminine Hygiene Pharmacy Supplies Tenderly Ancillary Products
SELECTED BUSINESS SEGMENT FINANCIAL DATA 2 (IN MILLIONS)
THREE MONTHS ENDED (UNAUDITED) FISCAL YEARS ENDED MAR MAR 1991 1992 1993 1993 1994 NET SALES: Consumer Products............... $2,394.8 $2,404.4 $2,358.1 $558.8 $557.2 Food and Consumer Packaging..... 1,560.9 1,565.1 1,568.5 387.4 375.7 Communications Papers........... 775.0 918.0 901.3 215.9 215.0 Jamont 1......................... 1,848.8 1,736.5 1,482.1 380.0 362.7 OPERATING PROFITS (LOSSES): Consumer Products............... 128.8 71.0 111.3 23.2 28.3 Food and Consumer Packaging..... 141.9 89.2 103.8 23.3 26.6 Communications Papers........... 33.0 (55.0) (58.4) (20.3) (25.1) Jamont 1......................... 155.9 112.8 68.1 15.3 16.3
1 Unconsolidated affiliate. 2 Includes certain intersegment sales that are eliminated on a consolidated basis. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY SHARES AND THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 SUMMARY OF PROSPECTUS SUPPLEMENT THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY REFERENCE HEREIN. CERTAIN TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE HEREIN. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS SUPPLEMENT ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED. THE COMPANY James River is a manufacturer and marketer of (i) consumer products, including towel and tissue and disposable food and beverage service products, (ii) food and consumer packaging, including folding cartons, flexible packaging, and barrier packaging papers, and (iii) communications papers, including uncoated business papers and coated printing papers. James River is one of the industry leaders, in terms of sales within the United States, in towel and tissue products, disposable foodservice items, folding cartons, and flexible packaging and, on the West Coast, in uncoated business papers. Each of the Company's businesses produces an increasing number of recycled paper products to meet growing customer demand. James River, through its consolidated subsidiaries and its unconsolidated affiliates, including Jamont N.V. ("Jamont"), a pan-European consumer products joint venture, operates 116 manufacturing facilities located in 28 states, Canada, and 12 European countries. The Company's strategy is to focus on the development of its core businesses: Consumer Products, Food and Consumer Packaging, and Communications Papers. The primary objective of this strategy is to deliver to the Company's customers the highest value products produced at the lowest possible cost. In pursuit of this strategy, the Company has strengthened and leveraged brands, improved processes and productivity, reduced costs, and invested in new product development, and will continue to pursue this strategy. Despite a very difficult business environment during the past three years, the Company believes that these accomplishments have positioned it to benefit from an improvement in business conditions. The Company has substantially completed a profit improvement program, initiated at the beginning of 1993, designed to reduce annual operating costs by $200 million. This program included the closure and consolidation of certain smaller, less efficient facilities, staffing reductions, and productivity improvements. Although the savings from this program have been partially offset by weaker pricing in certain product lines, the benefits from this program derived in 1993 and the first quarter of 1994 have helped to significantly improve the Company's operating results. RECENT DEVELOPMENTS On April 27, 1994, James River announced the signing of a share acquisition agreement with Montedison S.p.A. and Rayne Holdings Inc. ("Rayne"), whereby James River will acquire the 50% ownership interest in Jamont Holdings N.V. ("Jamont Holdings") currently owned by Rayne for approximately $575 million in cash (the "Acquisition"). James River currently owns the remaining 50% of Jamont Holdings. Jamont Holdings owns 86.4% of Jamont, which has operations in 12 European countries and produces branded and private label tissue and foodservice products for the retail and away-from-home markets. Jamont had sales of $1.5 billion in 1993, and currently holds the overall second position in the European tissue market with a market share of approximately 15%. Upon completion of the Acquisition, Jamont will become a consolidated subsidiary of James River. James River intends to finance the Acquisition with a combination of the proceeds from the issuance of the securities offered hereby and the proceeds from funded indebtedness, which may include borrowings under existing credit facilities and issuances of commercial paper and debt securities. The Acquisition, which is subject to normal closing conditions, as well as obtaining necessary financing and securing the approval of James River's lenders, is expected to be completed during James River's third quarter. James River and Rayne entered into a put and call agreement in 1991 related to Rayne's interest in Jamont Holdings. Pursuant to that agreement, Rayne has the option to put its interest in Jamont Holdings to James River during the summer of 1996 and the summer of 1998 for a total of approximately $820 million. In addition, James River has a currently exercisable option to call Rayne's interest in Jamont Holdings at a price of approximately $650 million. The Acquisition will allow James River to acquire Rayne's interest in Jamont Holdings at a significant discount to the scheduled put and call prices. S-3 DEPOSITARY SHARES AND DECS* GENERAL. The DECS are shares of Series P 9% Convertible Preferred Stock and rank prior to the Common Stock (and on a parity with the Preferred Stock of the Company of every other series) as to payment of dividends and upon liquidation. Each of the Depositary Shares represents beneficial ownership of a one-hundredth interest in a share of the DECS. Each of the Depositary Shares converts automatically into one share of Common Stock on the Mandatory Conversion Date. The Company has the option to redeem the DECS (and thereby the Depositary Shares), in whole or in part, at any time or from time to time on or after the Initial Redemption Date and before the Mandatory Conversion Date at the Call Price, payable in shares of Common Stock. In addition, the DECS (and thereby the Depositary Shares) are convertible at the option of the holder at any time before the Mandatory Conversion Date as set forth below. The DECS are an equity security of the Company designed to provide investors with a higher dividend per Depositary Share than the dividend per share currently paid on the Common Stock. The annual dividend rate on the Depositary Shares is $1.5525 per share (equivalent to $155.25 per DECS). Based on the current annual dividend rate of $0.60 per share of Common Stock, the annual per share dividend rate on the Depositary Shares is $.9525 greater than the current annual per share dividend rate on the Common Stock. Further declarations of dividends on the Common Stock by the Company are at the discretion of its Board of Directors, and will necessarily depend on the Company's earnings, capital requirements, financial condition, and other factors. See "Price Range of Common Stock and Dividends." The opportunity for equity appreciation afforded by an investment in the Depositary Shares is less substantial than the opportunity for equity appreciation afforded by an investment in the Common Stock because the Company may, at its option, call for redemption of the DECS (and thereby the Depositary Shares) at any time on or after the Initial Redemption Date and before the Mandatory Conversion Date, and may be expected to do so before the Mandatory Conversion Date if the Current Market Price (as defined herein) of the Common Stock exceeds the Conversion Price. In such event, holders of the Depositary Shares will receive less than one share of Common Stock for each Depositary Share. However, holders of Depositary Shares called for redemption will have the option to surrender Depositary Shares for conversion at the Conversion Price up to the close of business on the redemption date (and may be expected to do so if the Current Market Price of the Common Stock exceeds the Conversion Price). A holder of Depositary Shares that elects to convert will receive .8547 of a share of Common Stock for each Depositary Share. In no event will a holder of Depositary Shares receive less than .8547 of a share of Common Stock (equivalent to the Conversion Price of $20.1825 per share of Common Stock). DIVIDENDS. The holders of the Depositary Shares are entitled to receive, when, as, and if dividends are declared on the DECS by the Board of Directors of the Company out of funds legally available therefor, cumulative preferential dividends from the issue date of the Depositary Shares, accruing at the rate per share of $1.5525 per annum, payable quarterly in arrears on each January 1, April 1, July 1, and October 1 or, if any such date is not a business day, on the next succeeding business day. The first dividend payment will be for the period from the issue date of the Depositary Shares to and including September 30, 1994 and will be payable on October 1, 1994. Dividends are payable in cash except in connection with certain redemptions by the Company. Accumulated unpaid dividends will not bear interest. See "Descriptions of DECS -- Dividends." *"Dividend Enhanced Convertible Stock" and "DECS" are service marks of Salomon Brothers Inc. S-4 MANDATORY CONVERSION OF DECS. On the Mandatory Conversion Date, each outstanding DECS (and the related Depositary Shares) will convert (the "Mandatory Conversion") automatically into shares of Common Stock at the Common Equivalent Rate and the right to receive an amount of cash equal to all accrued and unpaid dividends on such DECS (and thereby related Depositary Shares) through the Mandatory Conversion Date. Notwithstanding the foregoing, if the Mandatory Conversion Date occurs after a record date for a quarterly dividend and before the corresponding payment date, such dividend shall be paid on the payment date rather than on the Mandatory Conversion Date. The "Common Equivalent Rate" is initially one share of Common Stock for each Depositary Share, subject to adjustment in the event of certain stock dividends or distributions, subdivisions, splits, combinations, issuances of certain rights or warrants, or distributions of certain assets with respect to the Common Stock. The Mandatory Conversion, however, is subject to the Company's right to redeem all or a portion of the outstanding Depositary Shares on or after the Initial Redemption Date and before the Mandatory Conversion Date, and to the conversion of the Depositary Shares at the option of the holder at any time before the Mandatory Conversion Date, as described below in this summary. See "Description of DECS -- Mandatory Conversion of DECS" and "Description of Depositary Shares -- Conversion and Call Provision." Because the price of the Common Stock is subject to market fluctuations, the value of the Common Stock received upon Mandatory Conversion of the Depositary Shares may be more or less than the amount paid for the Depositary Shares offered hereby. RIGHT TO REDEEM DEPOSITARY SHARES. The DECS (and the related Depositary Shares) are not redeemable by the Company before the Initial Redemption Date. At any time or from time to time on or after the Initial Redemption Date and before the Mandatory Conversion Date, the Company may redeem the outstanding Depositary Shares in whole or in part. Upon any such redemption, the holder of record of the Depositary Shares will receive, in exchange for each Depositary Share so called, a number of shares of Common Stock equal to the greater of (i) the Call Price of the Depositary Shares in effect on the date of redemption divided by the Current Market Price of the Common Stock determined as of the date which is one trading day before the public announcement of the call for redemption or (ii) .8547 shares of Common Stock, subject to adjustment to the same extent as the Optional Conversion Rate, as defined and described herein (equivalent to the Conversion Price of $20.1825 per share of Common Stock). The "Call Price" of each Depositary Share is the sum of (i) $17.6381 on and after the Initial Redemption Date through September 30, 1997, $17.5411 on and after October 1, 1997, through December 31, 1997, $17.4441 on and after January 1, 1998, through March 31, 1998, $17.3470 on and after April 1, 1998, through May 31, 1998, and $17.2500 on and after June 1, 1998, until the Mandatory Conversion Date, and (ii) all accrued and unpaid dividends thereon to the date fixed for redemption. Notwithstanding the foregoing, if the date fixed for redemption occurs after a record date for a quarterly dividend and before the corresponding payment date, such dividend shall be paid on the payment date and the Call Price shall not include the amount of the dividend to be so paid. The Call Price for each DECS is 100 multiplied by the related Call Price for a Depositary Share. See "Description of DECS -- Right to Redeem DECS" and "Description of Depositary Shares -- Conversion and Call Provision." CONVERSION AT OPTION OF HOLDER. The DECS (and thereby the Depositary Shares) are convertible, in whole or in part, at the option of the holder at any time before the Mandatory Conversion Date, unless previously redeemed, into .8547 of a share of Common Stock for each Depositary Share (equivalent to a Conversion Price of $20.1825 per share of Common Stock), subject to adjustment in the event of certain stock dividends or distributions, subdivisions, splits, combinations, issuances of certain rights or warrants or distributions of certain assets with respect to the Common Stock. See "Description of DECS -- Conversion at Option of Holder" and "Description of Depositary Shares -- Conversion and Call Provision." LIQUIDATION PREFERENCE. The DECS (and the related Depositary Shares) rank senior to the Common Stock and on a parity with every other series of the Company's Preferred Stock upon liquidation. The liquidation preference of each of the Depositary Shares will be in an amount equal to the sum of (i) the per share price to the public of each Depositary Share (shown on the cover page hereof) and (ii) all accrued and unpaid dividends thereon to the date of liquidation, dissolution or winding up. See "Description of DECS -- Liquidation Rights" and "Description of Depositary Shares -- Dividends and Other Distributions." VOTING RIGHTS. The holders of DECS (and thereby the holders of Depositary Shares) shall have the right with the holders of Common Stock to vote in the election of directors and upon each other matter coming before any meeting of the stockholders on the basis of 85.47 votes for each DECS held (equivalent to .8547 of a vote for S-5 each Depositary Share). The holders of DECS and the holders of Common Stock will vote together as a single voting group except as otherwise required by law or by the Amended and Restated Articles of Incorporation of the Company. In addition, whenever dividends on the DECS shall be in arrears and unpaid in an aggregate amount of dividends payable thereon for six quarterly dividend periods, the number of directors of James River will be increased by two and the holders of the DECS (voting as a separate voting group together with holders of shares of all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote for the election of those two additional directors until such time as no dividends on any outstanding shares of any series of such Preferred Stock are in arrears and unpaid, in whole or in part. The holders of the Depositary Shares will be entitled to direct the voting of the shares of the DECS represented thereby. See "Description of DECS -- Voting Rights" and "Description of Depositary Shares -- Voting of DECS." LISTING. The Depositary Shares have been accepted for listing on the NYSE, subject to notice of issuance, under the symbol JRPrP. S-6 THE COMPANY James River is a manufacturer and marketer of (i) consumer products, including towel and tissue and disposable food and beverage service products, (ii) food and consumer packaging, including folding cartons, flexible packaging and barrier packaging papers, and (iii) communications papers, including uncoated business papers and coated printing papers. James River is one of the industry leaders, in terms of sales within the United States, in towel and tissue products, disposable foodservice items, folding cartons, and flexible packaging and, on the West Coast, in uncoated business papers. Each of the Company's businesses produces an increasing number of recycled paper products to meet growing customer demand. James River, through its consolidated subsidiaries and its unconsolidated affiliates, including Jamont, a pan-European consumer products joint venture, operates 116 manufacturing facilities located in 28 states, Canada, and 12 European countries. The Company's strategy is to focus on the development of its core businesses: Consumer Products, Food and Consumer Packaging, and Communications Papers. The primary objective of this strategy is to deliver to the Company's customers the highest value products produced at the lowest possible cost. In pursuit of this strategy, the Company has strengthened and leveraged brands, improved processes and productivity, reduced costs, and invested in new product development, and will continue to pursue this strategy. Despite a very difficult business environment during the past three years, the Company believes that these accomplishments have positioned it to benefit from an improvement in business conditions. The Company has substantially completed a profit improvement program, initiated at the beginning of 1993, designed to reduce annual operating costs by $200 million. This program included the closure and consolidation of certain smaller, less efficient facilities, staffing reductions, and productivity improvements. Although the savings from this program have been partially offset by weaker pricing in certain product lines, the benefits from this program derived in 1993 and the first quarter of 1994 have helped to significantly improve the Company's operating results. CONSUMER PRODUCTS BUSINESS The Consumer Products Business, which represented 49% of James River's 1993 consolidated net sales, produces sanitary paper products such as bathroom tissue, household roll towels, and wipes, and tabletop products such as paper and plastic cups, paper plates, napkins, and plastic cutlery. The Consumer Products Business is organized along distribution channels to the retail and commercial markets. Each of these channels carries both towel and tissue products and tabletop products. The Company has been able to capitalize on its broad product offerings in towel, tissue, and tabletop products to better service these distribution channels and increase market penetration. Products sold in the retail market include a number of national and regional brands of towel and tissue and foodservice products including Quilted Northern(Register mark), Marina(Register mark) and Nice 'N Soft(Register mark) bathroom tissue; Brawny(Register mark) paper towels; Vanity Fair(Register mark) premium foodservice products; and Dixie(Register mark) plates, cups, and cutlery. Retail products are marketed both nationally and regionally, principally through grocery stores, mass merchants, warehouse clubs, and drug stores. The Company believes it has the leading position in the fast-growing warehouse club market. The commercial group markets the broadest line of towel and tissue and tabletop products in the industry sold under the Dixie(Register mark), Marathon(Register mark), Handi-Kup(Register mark), and Canada Cup(Register mark) brand names, as well as a variety of regional brands. A national sales force sells these products to fast food chains and to sanitary paper, janitorial supply, and foodservice distributors, for use in restaurants, hotels, offices, factories, and schools. James River's strategy for its Consumer Products Business is to focus on strengthening brand franchises and building brand equity, improving product performance, and achieving continuous cost reduction and productivity improvements. During 1993, the Company made a number of significant new product introductions under existing brands, including Quilted Northern(Register mark) bathroom tissue, the new Dixie(Register mark) Seasons product line, and a new Vanity Fair(Register mark) line of cups, plates, and embossed napkins, and introduced Chelsea bathroom tissue, which is marketed by Price Costco warehouse clubs. The Company is also focusing on developing premium recycled products, including 100% recycled Quilted Northern(Register mark) bathroom tissue and 100% recycled Brawny paper towels. New product activity has continued in 1994, including the rollout of the new Dixie(Register mark) Kids line of cups and plates designed to appeal to children. These revitalization efforts resulted in the introduction of new and improved branded products which represented 65% of 1993 retail products sales volume. As a result of product initiatives, cost reductions, and an improving business climate, the Company's Consumer Products Business has realized significant improvements in operating results. Operating profits for 1993 S-7 increased by 56%, to $111.3 million from $71.0 million in 1992. Operating profits continued to improve in the first quarter of 1994, with profits of $28.3 million compared to $23.2 million in the prior year's first quarter. FOOD AND CONSUMER PACKAGING BUSINESS The Food and Consumer Packaging Business, which accounted for 32% of James River's 1993 consolidated net sales, provides retail packaging for food and other consumer products which have high-volume distribution. The Company prints and converts films, paperboard, and paper into the broadest range of packaging options available to food and consumer products manufacturers. The Company's packaging operations serve both national and regional markets. The Company believes its flexible packaging and folding carton businesses hold the leading and number two position in those respective markets. James River provides packaging to approximately eighty percent of the top fifty food processors, including significant amounts of packaging to Kellogg's, General Mills, General Foods, Kraft, Pillsbury, Nestle, Nabisco and Frito-Lay. Products of this business include flexible packaging (such as potato chip bags, bread bags, frozen vegetable bags, and cheese packages), folding cartons (such as ice cream cartons, cereal boxes, and microwave packages), and barrier papers (such as food wrap and cereal and cracker box inner liners). Flexible packaging products include a wide variety of multilayer packaging materials which are made primarily from plastic films and films combined with paper and foil and are designed from multiple layers of materials which meet specific needs of the processed food industry. Flexible packaging operations are supported by ink manufacturing and blending plants which produce flexographic and rotogravure inks and lacquers. Folding cartons are produced from both bleached and recycled paperboard. Folding carton operations are supported by a polyethylene extrusion coating plant and an automated carton die manufacturing plant. The Company continues to improve its competitive position by lowering costs, including closing high-cost facilities and reducing staffing, and by investing strategically in productivity enhancing machinery. For example, the Company recently began operating a state-of-the-art coated recycled board machine in Kalamazoo, Michigan. The Company believes that this $120 million machine, which is the largest of its kind in the industry, produces the highest quality recycled paperboard at the lowest cost. James River's Packaging Business has a long-standing tradition of technological leadership, and it has pioneered and excelled in areas such as microwave packaging technology. Led by activities at its advanced research and development facility in Cincinnati, Ohio, the Company works closely with leading food producers to develop packaging innovations. Operating profits for the Food and Consumer Packaging Business increased by 16% in 1993 to $103.8 million from $89.2 million in the prior year. Operating profits continued to improve in the first quarter of 1994, increasing 14% to $26.6 million from $23.3 million in the first quarter of the prior year. COMMUNICATIONS PAPERS BUSINESS The Company's Communications Papers Business, which represented 19% of 1993 consolidated net sales, has three major product lines: uncoated business and commercial printing papers, coated groundwood printing papers, and premium printing papers. Uncoated business and commercial printing papers serve the office and commercial printing markets. The Company's Word Pro(Register mark) and private label business papers are used in offices and by retail printers for copy machines and offset presses. James River also produces numerous recycled business and printing papers including Eureka!(tm) copy paper, formsbond, and offset printing papers; Echo(tm) web offset printing papers; and Reclaim(Register mark) formsbond and lightweight opaque web printing papers. James River's coated groundwood printing and publishing papers, all produced at its St. Francisville, Louisiana, pulp and paper mill, serve the catalog, magazine, and direct mail markets. The Company's premium printing papers include specialty cast-coated products, writing papers, and cover and text papers. These papers are produced at a number of smaller mills located in the eastern United States and the United Kingdom. Branded premium printing papers include James River's Curtis line of cover, text, and writing papers, and King James(Register mark) cast-coated papers. The Company also produces a variety of recycled brands including Retreeve(Register mark) cover, text, and writing papers and Graphika!(Register mark) laser writing papers, as well as a number of recycled papers included in the Curtis and King James lines. Due to intense pricing pressure in the Communications Paper Business, the Company has intensified its strategy of continuing aggressively to improve operating efficiencies, quality, and overall productivity through Total Quality Management techniques and to maintain its status as a preferred supplier to its customers in its S-8 major product lines. The Company has undertaken continuing cost reduction and performance improvement programs that include facility disposals and closures, staffing reductions, and operational restructurings. The Company has also upgraded its product lines to include more value-added grades and targeted new product areas that offer growth opportunities. Operating losses generated by the Communications Paper Business increased 6% in 1993 to $58.4 million from $55 million in the prior year. Operating losses continued to increase in the first quarter of 1994, increasing 24% to $25.1 million from $20.3 million in the prior year, as pricing in most white paper grades continued to decline during the quarter due to increases in industry capacity and higher levels of imports. JAMONT James River currently owns 43.2% of Jamont, which is accounted for as an unconsolidated affiliate. James River has entered into an agreement to increase its ownership interest in Jamont to 86.4%. See "Summary of Prospectus Supplement -- Recent Developments." Jamont, with annual sales of approximately $1.5 billion, is a leading producer of branded and private label tissue and foodservice products for the retail and commercial markets in Europe. Jamont also produces feminine hygiene products, as well as various nonwoven products and pharmacy supplies. Jamont, headquartered in Brussels, Belgium, currently operates 24 manufacturing facilities in 12 European countries and is the second largest manufacturer of tissue in Europe with an aggregate market share of approximately 15%. Many of Jamont's products hold the leading market position in their respective countries. Jamont's consumer products are sold under well-known brand names such as Lotus bathroom tissue, which currently occupies the leading position in the French market, Tenderly bathroom tissue sold in Italy, and Colhogar bathroom tissue sold in Spain. Jamont's retail products include toilet tissue, kitchen towels, handkerchiefs, facial tissue, napkins, and other foodservice products sold through retail outlets. In the branded goods segment, Jamont's national franchises are aimed principally at the premium end of the market. Jamont is also well established in the private label sector. Jamont's commercial products include toilet tissue, hand towels and wipes, paper napkins, tablecloths, placemats, and disposable plates, cups, and cutlery. End users in this market include offices, factories, restaurants, hotels, hospitals, schools, and airlines. Jamont's feminine hygiene products are principally sold in the French and Belgian markets under the Vania brand name. Jamont's strategic objective is to be the leader in its European markets with respect to quality, market share, cost, and profitability. Jamont believes that it is well positioned to achieve these objectives as a result of its recently completed capital improvement program and its asset rationalization efforts. In the summer of 1993, Jamont completed a three year, approximately $600 million capital expenditure program which included the building of four new tissue machines in France, Spain, and Turkey; the total rebuild of tissue machines in Italy and Finland; modernizing and expanding a variety of converting plants; and constructing or expanding de-inking facilities in France and the United Kingdom. At the same time, Jamont's asset rationalization efforts have resulted in the closure of six higher-cost plants, with production being transferred to other more efficient facilities, and a reduction in total staffing from approximately 9,100 to 7,800 employees. Jamont continues to seek to increase the value of its business by focusing on: higher growth opportunities such as the Southern and Eastern European and away-from-home markets; the development and implementation of a pan-European brand strategy; continued strengthening of its private label business; and maintaining its low cost position through continuing productivity improvements, cost reduction, and commercialization of new technologies. USE OF PROCEEDS The net proceeds from the sale of Preferred Stock to be offered hereby are estimated to be $250.8 million ($278.7 million, assuming exercise of the Underwriters' over-allotment option) and will be applied toward James River's payment of the purchase price for the Acquisition (approximately $575 million) during the Company's third quarter. See "Summary of Prospectus Supplement -- Recent Developments" herein. Pending such application of the net proceeds, they may be temporarily invested or applied to the reduction of commercial paper or borrowings under existing credit facilities. Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan Securities Inc., is the agent bank under the Company's revolving credit facility. See "Underwriters." It is anticipated that the balance of the purchase price and related expenses for the Acquisition, of approximately $327.6 million, will be funded with the proceeds from the issuance of James River funded indebtedness, which may include borrowings under existing credit facilities and issuances of commercial paper and debt securities. S-9 PRICE RANGE OF COMMON STOCK AND DIVIDENDS James River's Common Stock is listed on the NYSE under the symbol JR. The following table sets forth for the periods indicated, the high and low sales prices of the Common Stock as reported on the NYSE Composite Tape:
HIGH LOW 1992: First Quarter............................................................ $23 3/8 $19 1/8 Second Quarter........................................................... 22 5/8 20 Third Quarter............................................................ 21 7/8 18 Fourth Quarter........................................................... 19 1/4 17 1993: First Quarter............................................................ 19 7/8 16 1/4 Second Quarter........................................................... 23 3/8 18 5/8 Third Quarter............................................................ 23 19 1/2 Fourth Quarter........................................................... 22 18 1/4 1994: First Quarter............................................................ 20 1/4 18 Second Quarter through June 21, 1994..................................... 19 15 5/8
See the cover page of this Prospectus Supplement for a recent price of the Common Stock. James River has paid dividends on its Common Stock since its initial public offering in March 1973. After giving effect to Common Stock splits, the initial annual dividend rate was $0.01 per share. Annual dividends have been paid at the current rate of $0.60 per share since 1990. James River's historical dividend policy is to pay 20% of earnings per share to its common shareholders. Although the Company's depressed earnings have caused dividends to exceed that rate for the past four years, the Company's financial condition has not warranted a reduction in dividends in response to conditions which management believes to be temporary. The continued payment of common dividends and the amount thereof will be dependent upon James River's earnings, financial position, cash requirements, and other relevant factors, including the satisfaction of preferred stock dividend requirements and compliance with the terms of loan agreements to which James River is a party. As of March 27, 1994, under the most restrictive provisions of James River's loan agreements, the Company had net worth in excess of the minimum requirement specified by such agreements of approximately $250 million. S-10 SELECTED FINANCIAL INFORMATION The following table sets forth certain selected historical financial data for James River for the fiscal years 1989 through 1993 and for the three months ended in March 1993 and 1994. Data presented for the fiscal years is derived from James River's audited consolidated financial statements. Data for interim periods is derived from unaudited consolidated financial statements. This data is qualified in its entirety by the detailed information and financial statements included in the documents incorporated in this Prospectus Supplement by reference. All amounts are in millions, except ratios, employees, and per share data.
THREE MONTHS ENDED FISCAL YEARS ENDED (UNAUDITED) APRIL APRIL DEC. DEC. DEC. DEC. MARCH MARCH 1989 1990 1990 1991 1992 1993 1993 1994 (A) (B)(C) (C) (D)(E) (F) INCOME STATEMENT DATA: Net sales....................... $5,871.8 $5,950.0 $3,391.5 $4,561.7 $4,728.2 $4,650.2 $1,113.6 $1,105.5 Income (loss) from operations: Before restructuring........ 564.8 459.8 327.5 244.0 49.3 114.0 17.7 20.3 After restructuring......... 564.8 459.8 127.6 244.0 (62.4) 114.0 17.7 20.3 Income (loss) before extraordinary items and accounting changes............ 255.1 221.6 9.7 78.3 (122.1) (.3) (10.1) (7.1) Net income (loss)............... 255.1 221.6 9.7 78.3 (427.3) (.3) (10.1) (7.1) PER COMMON SHARE: Net income (loss) before extraordinary items and accounting changes............ $2.87 $2.45 $(.08) $.66 $(1.82) $(.40) $(.22) $(.19) Net income (loss)............... 2.87 2.45 (.08) .66 (5.55) (.40) (.22) (.19) Annual rate of cash dividends declared...................... .48 .60 .60 .60 .60 .60 .60 .60 RATIOS (UNAUDITED): (G) Earnings to fixed charges....... 2.90 2.40 1.21 1.34 -- 1.04 -- -- Earnings to combined fixed charges and preferred stock dividends..................... 2.48 2.09 1.03 1.15 -- -- -- -- BALANCE SHEET AND OTHER DATA (AT END OF PERIOD): Working capital................. $721.6 $642.6 $1,121.9 $827.8 $768.9 $501.2 $676.7 $554.6 Total assets.................... 5,558.1 5,818.4 5,741.4 5,626.6 6,336.3 5,851.3 6,242.3 5,841.1 Long-term debt.................. 1,918.3 1,771.2 1,801.9 1,758.1 2,153.9 1,942.8 2,037.9 1,999.7 Preferred stock................. 302.4 355.0 354.8 354.6 454.3 454.1 454.3 454.0 Common shareholders' equity..... 2,045.8 2,203.0 2,212.2 2,220.8 1,659.3 1,514.1 1,620.5 1,476.8 Shares used for per share calculations (h).............. 81.5 81.7 81.8 81.9 81.8 81.9 81.7 81.9 Number of employees (i)......... 42,000 46,000 45,000 39,000 38,600 35,000 37,700 34,500
(a) During the fiscal year ended April 1990, James River recorded a gain of $51.6 million ($24.7 million after taxes, or $.30 per share) on the sale of its Nonwovens Division, and a charge of $62.9 million ($36.0 million net of tax benefits, or $.44 per share) for asset write-offs on the discontinuation of unprofitable operations and other nonrecurring items. (b) During 1990, James River changed its fiscal year from one ending on the last Sunday in April to one ending on the last Sunday in December. Accordingly, the transition period ended December 30, 1990 ("Transition 1990"), included 35 weeks, as compared to a full fiscal year consisting of either 52 or 53 weeks. (c) In August 1990, James River announced a major restructuring program designed to focus the Company's operations on those businesses in which it commands a substantial market share and which are less cyclical. Pursuant to this program, 29 operating facilities, including the Company's Specialty Papers Business and certain other operations, were to be divested. The Company recorded a charge of $200 million ($143.6 million net of tax benefits, or $1.76 per share) in connection with this program. Beginning in August 1990, results attributable to the operations to be divested were excluded from James River's income statement and net assets of such operations were reclassified to a current asset, net assets held for sale. S-11 (d) James River terminated its 1990 restructuring program effective as of the beginning of 1992, at which time the three facilities which remained unsold or uncommitted were reconsolidated and the associated net assets held for sale were reclassified to their applicable balance sheet classifications. (e) During 1992, James River recorded several nonrecurring or unusual charges or credits, as follows: (Bullet) James River adopted Statement of Accounting Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires the accrual of the cost of providing postretirement benefits during the years that employees render service. The Company recorded a one-time, non-cash charge of $499.3 million ($309.8 million net of tax benefits, or $3.79 per share) for the cumulative effect of this change in accounting principle. (Bullet) James River adopted SFAS No. 109, "Accounting for Income Taxes," which requires the adoption of the liability method of accounting for income taxes. The Company recorded a credit of $35.9 million, or $.44 per share, in connection with this change in accounting principle. (Bullet) James River recorded an extraordinary loss of $50.6 million ($31.4 million net of tax benefits, or $.38 per share) on the early extinguishment of $566.8 million principal amount of notes and debentures. (Bullet) James River recorded a restructuring charge of $111.7 million ($71.4 million net of tax benefits, or $.87 per share) to cover costs associated with a productivity enhancement program, which included the planned disposal and consolidation of several smaller, less efficient operations in each of the Company's business segments, related severence expenses, and organizational streamlining. (Bullet) James River recorded nonrecurring charges totalling $31 million ($19.7 million net of tax benefits, or $.25 per share) related to the refinement of estimates of final restructuring costs and environmental and litigation costs. (f) During 1993, James River recorded a charge of $11 million, or $.13 per share, to increase its deferred tax liability for the effect of the 1% increase in the statutory federal income tax rate. Also during 1993, the Company recognized interest income of $14.3 million ($8.7 million net of taxes, or $.11 per share) in connection with the favorable settlement of certain prior year's income tax returns. (g) In computing the ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends, earnings consist of income before income taxes, extraordinary items, the cumulative effect of changes in accounting principles, minority interests, and fixed charges excluding capitalized interest. Fixed charges consist of interest expense, capitalized interest, and that portion of rental expense (one-third) deemed representative of the interest factor. Earnings and fixed charges also include James River's proportionate share of such amounts for its unconsolidated affiliates which are owned 50%, and distributed income from less than 50% owned affiliates. For purposes of the ratio of earnings to combined fixed charges and preferred stock dividends, fixed charges are increased by the preferred stock dividend requirements of James River adjusted to amounts representing the pretax earnings which would be required to cover such dividend requirements. Earnings were inadequate to cover fixed charges or combined fixed charges and preferred stock dividends for certain periods. The amounts of such deficiencies were as follows:
DEC DEC MARCH MARCH 1992 1993 1993 1994 Earnings to fixed charges $195.6 -- $18.6 $12.2 Earnings to combined fixed charges and preferred stock dividends 236.1 $48.5 32.7 26.1
The pretax restructuring charges of $200 million in Transition 1990 and $111.7 million in 1992 have been included in the calculations of the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock dividends for these respective periods. Excluding the impact of the Transition 1990 restructuring charge from earnings, the ratio of earnings to fixed charges would have been 2.59x and the ratio of earnings to combined fixed charges and preferred stock dividends would have been 2.19x for Transition 1990. Excluding the impact of the 1992 restructuring charge from earnings, the amount of the deficiency of earnings compared to fixed charges would have been $83.9 million and the amount of the deficiency of earnings compared to combined fixed charges and preferred stock dividends would have been $123.1 million for 1992. (h) Weighted-average number of common shares and common share equivalents. (i) Number of employees is approximate and includes employees of unconsolidated affiliates. S-12 UNAUDITED PRO FORMA JAMES RIVER AND JAMONT HOLDINGS FINANCIAL INFORMATION The following pro forma consolidated capitalization and condensed balance sheet as of March 27, 1994, and the pro forma consolidated statements of operations for the three months ended March 27, 1994, and the year ended December 26, 1993, give effect to the following transactions: (a) the proposed acquisition by James River of the remaining 50% ownership interest in Jamont Holdings for a purchase price of $575 million in cash; and (b) the assumed financing of such acquisition with the net proceeds from the issuance of $258.8 million of the Depositary Shares (assuming no exercise of the Underwriters' over-allotment option) and the balance of proceeds from funded indebtedness, which may include borrowings under existing credit facilities and issuances of commercial paper and debt securities. James River currently owns 50% of Jamont Holdings, which is accounted for using the equity method of accounting. James River's additional 50% investment in Jamont Holdings has been accounted for using the purchase method of accounting and will result in the consolidation of Jamont Holdings. The unaudited pro forma consolidated condensed financial information is presented as if these transactions had been completed as of March 27, 1994, for the pro forma consolidated capitalization and condensed balance sheet and as of the first day of each period for which pro forma consolidated statements of operations are presented. The pro forma financial information does not purport to be indicative of the actual financial position as it will finally be recorded, or the results of operations which would actually have been reported if the transactions had occurred on the dates or for the periods indicated, or which may be reported in the future. The pro forma financial information should be read in conjunction with the separate historical consolidated financial statements and the related notes to such financial statements of James River and of Jamont Holdings, incorporated by reference herein. In addition to changes arising from the operation of the business during the period from December 27, 1993 to March 27, 1994, the pro forma financial information in this Prospectus Supplement (the "Current Pro Formas") differs from the pro forma financial information in the Prospectus dated June 22, 1994 (the "Base Pro Formas") of which this Prospectus Supplement is a part as a result of the following: (a) The dividend yield on the DECS in the Current Pro Formas has been calculated at 9.0%, versus the 7.5% dividend yield on the additional Preferred Stock contemplated in the Base Pro Formas; (b) The assumed interest rate on the incremental funded indebtedness of $327.6 million incurred in connection with the proposed acquisition of Jamont Holdings has been increased to 8.0% in the Current Pro Formas from the 7.0% utilized in the Base Pro Formas; (c) Incremental goodwill arising from the proposed acquisition of Jamont Holdings decreased from $155.9 million in the Base Pro Formas to $122.5 million in the Current Pro Formas, principally as a result of changes in foreign currency translation and the conversion to equity of certain convertible advances payable by Jamont Holdings during the first quarter of 1994; and (d) The redemption of the outstanding shares of James River's Series D Cumulative Preferred Stock ("Series D") for aggregate consideration of $1.2 million has been reflected in the Current Pro Formas. James River called its outstanding shares of Series D for redemption on June 16, 1994 and deposited the funds required to be delivered upon such redemption on June 20, 1994. Pursuant to the terms of such shares, the Series D is deemed to be no longer outstanding as of June 20, 1994 for any purpose, and all rights with respect thereto ceased and terminated on that date except the right to receive payment of the consideration payable, including accrued dividends thereon, upon redemption thereof. S-13 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED CAPITALIZATION (UNAUDITED) MARCH 27, 1994 (IN MILLIONS)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE)2 Current portion of long-term debt $ 79.4 $ 130.5 $ 209.9 Long-term debt: Commercial paper and borrowings supported by revolving credit facilities 328.4 437.5 $ 11.4(c) 777.3 Notes and debentures 1,671.3 189.9 316.2(d) 2,177.4 Total long-term debt (net of current portion) 1,999.7 627.4 327.6 2,954.7 Minority interests 5.8 149.0 154.8 Shareholders' equity: Preferred stock 454.0 258.8(d) 711.6 (1.2)(e) Common shareholders' equity 1,476.8 884.4 (884.4)(f) 1,468.8 (8.0)(c) Total shareholders' equity 1,930.8 884.4 (634.8) 2,180.4 Total capitalization $ 4,015.7 $ 1,791.3 $(307.2) $5,499.8
The accompanying notes are an integral part of this pro forma information. S-14 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED) MARCH 27, 1994 (IN MILLIONS)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE)2 ASSETS Current assets: Cash and short-term securities $ 24.6 $ 40.4 $ 65.0 Accounts receivable 410.1 436.3 846.4 Inventories 707.3 190.2 897.5 Other current assets 164.8 5.9 170.7 Total current assets 1,306.8 672.8 1,979.6 Property, plant, and equipment 5,448.9 1,438.4 6,887.3 Less accumulated depreciation 1,908.2 297.5 2,205.7 Net property, plant, and equipment 3,540.7 1,140.9 4,681.6 Investments in affiliates 527.1 20.0 $(431.5)(a) 115.6 Other assets 314.4 38.6 3.0(c) 356.0 Goodwill 152.1 462.9 122.5(b) 737.5 Total assets $ 5,841.1 $ 2,335.2 $(306.0) $7,870.3 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 79.4 $ 130.5 $ 209.9 Other current liabilities 672.7 417.0 $ 1.2(e) 1,090.9 Total current liabilities 752.1 547.5 1.2 1,300.8 Long-term debt 1,999.7 627.4 316.2(d) 2,954.7 11.4(c) Other long-term liabilities 734.5 31.1 765.6 Deferred income taxes 418.2 95.8 514.0 Minority interests 5.8 149.0 154.8 Shareholders' equity: Preferred stock 454.0 258.8(d) 711.6 (1.2)(e) Common shareholders' equity 1,476.8 884.4 (884.4)(f) 1,468.8 (8.0)(c) Total shareholders' equity 1,930.8 884.4 (634.8) 2,180.4 Total liabilities and shareholders' equity $ 5,841.1 $ 2,335.2 $(306.0) $7,870.3
The accompanying notes are an integral part of this pro forma information. S-15 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 27, 1994 (IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE)3 Net sales $ 1,105.5 $ 362.7 $1,468.2 Cost of goods sold 934.9 228.3 $ 0.8(a) 1,164.0 Selling and administrative expenses 150.3 118.1 268.4 Income from operations 20.3 16.3 (0.8) 35.8 Interest expense 34.9 13.9 6.6(b) 55.4 Other income, net 2.2 2.9 1.7(c) 6.8 Income (loss) before income taxes and minority interest (12.4) 5.3 (5.7) (12.8) Income tax expense (benefit) (5.0) 4.4 (2.6)(d) (3.2) Income (loss) before minority interest (7.4) 0.9 (3.1) (9.6) Minority interest 0.4 (0.9) (0.5) Net loss $ (7.0) -- $ (3.1) $ (10.1) Preferred dividend requirements (8.2) (5.8)(e) (14.0) Net loss applicable to common shares $ (15.2) -- $ (8.9) $ (24.1) Net loss per common share and common share equivalent $ (.19) $ (.29) Weighted average number of common shares and common share equivalents 81.9 81.9
The accompanying notes are an integral part of this pro forma information. S-16 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE YEAR ENDED DECEMBER 26, 1993 (IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE)3 Net sales $ 4,650.2 $ 1,482.1 $6,132.3 Cost of goods sold 3,858.6 947.9 $ 3.1 (a) 4,809.6 Selling and administrative expenses 677.6 466.1 1,143.7 Income from operations 114.0 68.1 (3.1) 179.0 Interest expense 137.5 72.3 26.2 (b) 236.0 Other income, net 40.0 17.6 (2.5)(c) 55.1 Income before income taxes and minority interest 16.5 13.4 (31.8) (1.9) Income tax expense (benefit) 18.9 15.7 (10.2)(d) 24.4 Loss before minority interest (2.4) (2.3) (21.6) (26.3) Minority interest 2.1 2.0 4.1 Net loss $ (0.3) $ (0.3) $ (21.6) $ (22.2) Preferred dividend requirements (32.8) (23.3)(e) (56.1) Net loss applicable to common shares $ (33.1) $ (0.3) $ (44.9) $ (78.3) Net loss per common share and common share equivalent $ (0.40) $ (0.96) Weighted average number of common shares and common share equivalents 81.9 81.9
The accompanying notes are an integral part of this pro forma information. S-17 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) 1. BASIS OF REPORTING The accompanying pro forma consolidated capitalization and condensed balance sheet as of March 27, 1994, and the pro forma consolidated statements of operations for the three months ended March 27, 1994, and the year ended December 26, 1993, give effect to the acquisition of the remaining 50% interest in Jamont Holdings using the purchase method of accounting. The aggregate purchase price to be paid for the additional interest in Jamont Holdings is approximately $575 million, excluding estimated acquisition and financing costs of $11.4 million. The accompanying pro forma consolidated financial statements give effect to the expected issuances of approximately $258.8 million of the Depositary Shares (assuming no exercise of the Underwriters' over-allotment option) and the incurrence of funded indebtedness of approximately $327.6 million, the proceeds of which will be used to finance the acquisition of Jamont Holdings. The values assigned to the net assets acquired will be based upon a determination, after the completion of the transaction, of the fair values of the assets acquired and liabilities assumed. Jamont Holdings was originally formed in 1990, at which time its assets and liabilities were adjusted to then fair values. In 1991, Jamont Holdings commenced an approximately $600 million capital expansion program which was completed in 1993. Accordingly, based on the relatively recent valuations of Jamont Holdings' assets and liabilities, for the purpose of these pro forma consolidated financial statements, the excess of the purchase price over such estimated fair value of the net assets acquired, approximating $122.5 million, has been allocated to goodwill. Historical financial information on Jamont Holdings contained in the pro forma consolidated financial statements has been derived from the audited financial statements of Jamont Holdings as of December 31, 1993, and for the year then ended and the unaudited financial statements as of March 31, 1994, and for the three months then ended, each prepared in accordance with accounting standards generally accepted in The Netherlands and measured in European Currency Units. Such financial information has been adjusted to conform to U.S. generally accepted accounting principles and translated into U.S. dollars. 2. PRO FORMA BALANCE SHEET AND CAPITALIZATION ADJUSTMENTS The pro forma consolidated capitalization and condensed balance sheet give effect to the adjustments described below. (a) To eliminate James River's existing investment in Jamont Holdings as of March 27, 1994, previously accounted for using the equity method. (b) To record estimated goodwill, representing the excess of James River's purchase price over the estimated fair value of Jamont Holdings' net equity. (c) To record $11.4 million of estimated acquisition and financing costs, assumed to be funded through borrowings under the Company's revolving credit facility, detailed as follows: (i) $0.4 million related to the acquisition of Jamont Holdings, excluding financing-related costs; (ii) $3.0 million related to the incurrence of $316.2 million of funded indebtedness; and (iii) $8.0 million related to the issuance of $258.8 million of the Depositary Shares. (d) To record the assumed incurrence and issuance of the following: (i) $316.2 million of funded indebtedness incurred in connection with the acquisition of Jamont Holdings; and (ii) $258.8 million of the Depositary Shares issued in connection with the acquisition of Jamont Holdings. (e) To reflect the redemption of the outstanding shares of Series D. S-18 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION, CONTINUED (UNAUDITED) (f) To eliminate the Jamont Holdings historical shareholders' equity balances. 3. PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS The pro forma consolidated statement of operations gives effect to the adjustments described below. (a) To record amortization of the incremental goodwill, using the straight-line method over an assumed life of 40 years. (b) To record interest expense on the $327.6 million of incremental funded indebtedness, at an assumed interest rate of 8.0%. (c) To reverse James River's share of the earnings of Jamont Holdings associated with its existing 50% ownership interest, previously accounted for using the equity method. (d) To record income tax benefits related to the incremental interest expense. (e) To reflect increased preferred dividend requirements related to the issuance of $258.8 million of the Depositary Shares, at a dividend yield of 9.0%. 4. LENDER CONSENTS For purposes of these pro forma consolidated financial statements, it has been assumed that any necessary consents or waivers which may be required for the completion of the acquisition of the remaining 50% interest in Jamont Holdings have been obtained by James River and that no material incremental costs will be incurred in obtaining such consents or waivers. 5. PRO FORMA CONSOLIDATED SEGMENT INFORMATION Following the completion of the acquisition of the remaining interest in Jamont Holdings, James River intends to continue to report its operations in its existing three business segments. These segments are: Consumer Products, which includes the manufacture and marketing of towel and tissue and disposable foodservice products; Food and Consumer Packaging, which includes the manufacture of folding cartons, flexible packaging, and packaging papers used in packaging food and other retail consumer goods; and Communications Papers, which includes the manufacture and marketing of a variety of uncoated business and printing papers, coated groundwood printing papers, and premium printing papers. Upon its consolidation, James River intends to report the results of Jamont Holdings as part of its Consumer Products segment. 6. PRO FORMA RATIOS On a pro forma basis after reflecting the assumed acquisition and financing of Jamont Holdings, James River's earnings were inadequate to cover both fixed charges and combined fixed charges and preferred stock dividends for the year ended December 26, 1993, and for the three months ended March 27, 1994. For the year ended December 26, 1993, the amount of the deficiency of pro forma earnings compared to pro forma fixed charges was $16.4 million, and the amount of the deficiency of pro forma earnings compared to pro forma combined fixed charges and preferred stock dividends was $108.3 million. For the three months ended March 27, 1994, the amount of the deficiency of pro forma earnings compared to pro forma fixed charges was $14.9 million and the amount of the deficiency of pro forma earnings compared to pro forma combined fixed charges of preferred stock dividends was $37.8 million. See "Selected Financial Information" herein. S-19 DESCRIPTION OF DECS The following information concerning the DECS supplements the description of the Preferred Stock in the accompanying Prospectus and should be read in conjunction with the statements under "Description of Preferred Stock" in the accompanying Prospectus. The following statements are brief summaries of certain provisions relating to the DECS represented by the Depositary Shares offered hereby and are qualified in their entirety by the provisions of James River's Amended and Restated Articles of Incorporation and the Articles of Amendment creating the DECS, a copy of which will be filed with the Securities and Exchange Commission. Each of the Depositary Shares represents a one-hundredth interest in a share of DECS and entitles the owner to such proportion of all the rights, preferences and privileges of the share of DECS represented thereby. See "Description of Depositary Shares." DIVIDENDS The holders of DECS (and thereby the Depositary Shares) are entitled to receive, when, as and if dividends on the DECS are declared by the Board of Directors of the Company out of funds legally available therefor, cumulative preferential dividends from the issue date of the DECS, accruing at the rate per share of $155.25 per annum or $38.81 per quarter (equivalent to $1.5525 per annum or $.3881 per quarter for each Depositary Share), payable quarterly in arrears on each January 1, April 1, July 1 and October 1 or, if any such date is not a business day, on the next succeeding business day; provided, however, that with respect to any dividend period during which a redemption occurs, the Company may, at its option, declare accrued dividends to, and pay such dividends to the redemption date on, the date fixed for redemption, in which case such dividends would be payable in cash to the holders of DECS as of the record date for such dividend payment and would not be included in the calculation of the related Call Price as set forth below. The first dividend payment will be for the period from the issue date of the DECS to and including September 30, 1994 and will be payable on October 1, 1994. Dividends (or amounts equal to accrued and unpaid dividends) payable on the DECS for any period other than a quarterly dividend period will be computed on the basis of a 360-day year of twelve 30-day months. Dividends are payable in cash except in connection with certain redemptions by the Company. Dividends on the DECS will accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends accumulate to the extent they are not paid on the dividend payment date for the quarter for which they accrue. Accumulated unpaid dividends will not bear interest. No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the DECS or any shares of any other series of Preferred Stock for any dividend period unless all dividends for all past dividend periods have been declared and paid upon, or declared and a sufficient sum set apart for the payment of such dividend upon, all outstanding shares of the DECS and all outstanding shares of all other series of Preferred Stock. Unless full cumulative dividends on all outstanding shares of the DECS and (to the extent that the amount thereof shall have become determinable) any outstanding shares of any other series of Preferred Stock due for all past dividend periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then, subject to the rights of holders of shares of previously issued series of Preferred Stock: (i) no dividend (other than a dividend payable solely in shares of any class of stock ranking junior to the DECS as to the payment of dividends or as to rights in liquidation, dissolution, or winding up of the affairs of James River ("Junior Stock")) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Stock; (ii) no other distribution shall be made upon any shares of Junior Stock; (iii) no shares of Junior Stock or any series of Preferred Stock shall be purchased, redeemed, or otherwise acquired for value by James River or any of its subsidiaries; and (iv) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption, or other acquisition for value of any shares of Junior Stock by James River or any of its subsidiaries. The Articles of Amendment creating the DECS do not restrict the Company's ability to repurchase or redeem on and after the Initial Redemption Date any of the DECS while there is an arrearage in the payment of dividends. Holders of the DECS shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein described. S-20 MANDATORY CONVERSION OF DECS On the Mandatory Conversion Date, each outstanding DECS (and the related Depositary Shares) will convert automatically into shares of Common Stock at the Common Equivalent Rate in effect on such date and the right to receive an amount in cash equal to all accrued and unpaid dividends on such DECS to the Mandatory Conversion Date, whether or not declared, out of funds legally available for the payment of dividends, subject to the right of the Company to redeem the DECS on or after the Initial Redemption Date and before the Mandatory Conversion Date, as described below, and subject to the conversion of the DECS (and the related Depositary Shares) at the option of the holder at any time before the Mandatory Conversion Date. Notwithstanding the foregoing, if the Mandatory Conversion Date occurs after a record date for a quarterly dividend and before the corresponding payment date, such dividend shall be paid on the payment date rather than on the Mandatory Conversion Date. The Common Equivalent Rate is initially one hundred shares of Common Stock for each DECS (equivalent to one share of Common Stock for each Depositary Share), and is subject to adjustment as described below. Because the price of the Common Stock is subject to market fluctuations, the value of the Common Stock received by a holder of Depositary Shares upon Mandatory Conversion may be more or less than the amount paid for the Depositary Shares. Dividends will cease to accrue on the Mandatory Conversion Date in respect of the DECS (and related Depositary Shares) then outstanding. RIGHT TO REDEEM DECS The DECS (and the related Depositary Shares) are not redeemable by the Company before the Initial Redemption Date. At any time and from time to time on or after the Initial Redemption Date and before the Mandatory Conversion Date, the Company may redeem the outstanding DECS (and thereby the Depositary Shares), in whole or in part. Upon any such redemption, the holder of record of the DECS will receive, in exchange for each DECS so called, a number of shares of Common Stock equal to the greater of (i) the Call Price of the DECS in effect on the date of redemption divided by the Current Market Price of the Common Stock determined as of the date which is one trading day before the public announcement of the call for redemption or (ii)85.47 shares of Common Stock, subject to adjustment to the same extent as the Optional Conversion Rate, as defined and described herein (equivalent to the Conversion Price of $20.1825 per share of Common Stock). The Call Price of each DECS is the sum of (i) $1,763.81 ($17.6381 per Depositary Share) on and after the Initial Redemption Date through September 30, 1997, $1,754.11 ($17.5411 per Depositary Share) on and after October 1, 1997, through December 31, 1997, $1,744.41 ($17.4441 per Depositary Share) on and after January 1, 1998, through March 31, 1998, $1,734.70 ($17.3470 per Depositary Share) on and after April 1, 1998, through May 31, 1998, and $1,725.00 ($17.2500 per Depositary Share) on and after June 1, 1998, until the Mandatory Conversion Date, and (ii) all accrued and unpaid dividends thereon to the date fixed for redemption. Notwithstanding the foregoing, if the date fixed for redemption occurs after a record date for a quarterly dividend and before the corresponding payment date, such dividend shall be paid on the payment date and the Call Price shall not include the amount of the dividend to be so paid. A public announcement of any call for redemption shall be made before the mailing of the notice of such call to holders of the DECS as described below. Dividends will cease to accrue on the DECS on the date fixed for their redemption. The term "Current Market Price" per share of the Common Stock on any date of determination means the lesser of (x) the average of the closing sale prices of the Common Stock as reported on the NYSE for the fifteen consecutive trading days ending on and including such date of determination and (y) the closing sale price of the Common Stock as reported on the NYSE for such date of determination; provided, however, that, with respect to any redemption of the DECS, if any event that results in an adjustment of the Common Equivalent Rate occurs during the period beginning on the first day of such fifteen-day period and ending on the applicable redemption date, the Current Market Price as determined pursuant to the foregoing will be appropriately adjusted to reflect the occurrence of such event. The opportunity for equity appreciation afforded by an investment in the DECS is less substantial than the opportunity for equity appreciation afforded by an investment in the Common Stock because the Company may, at its option, call for redemption the DECS at any time on or after the Initial Redemption Date and before the Mandatory Conversion Date, and may be expected to do so before the Mandatory Conversion Date if the market price of the Common Stock exceeds the Conversion Price. In such event, holders of the DECS will receive less S-21 than one hundred shares of Common Stock for each DECS (equivalent to less than one share of Common Stock for each Depositary Share). Holders of DECS called for redemption, however, will have the option to surrender DECS for conversion at the Conversion Price up to the close of business on the redemption date (and may be expected to do so if the Current Market Price of the Common Stock exceeds the Conversion Price). A holder of DECS that elects to convert will receive 85.47 shares of Common Stock for each DECS (equivalent to .8547 of a share of Common Stock for each Depositary Share). In no event will a holder of Depositary Shares receive less than .8547 of a share of Common Stock (equivalent to the Conversion Price of $20.1825 per share of Common Stock). Because the number of shares of Common Stock to be delivered in payment of the Call Price will be determined on the basis of the Current Market Price, the value per share of the shares of Common Stock to be delivered may be more or less than the Call Price on the date of delivery. CONVERSION AT OPTION OF HOLDER The DECS (and thereby the Depositary Shares) are convertible, in whole or in part, at the option of the holder thereof, at any time before the Mandatory Conversion Date, unless previously redeemed, into shares of Common Stock at a rate of 85.47 shares of Common Stock for each DECS (the "Optional Conversion Rate") (equivalent to .8547 of a share of Common Stock for each Depositary Share and equivalent to a Conversion Price of $20.1825 per share of Common Stock), subject to adjustment as described below. The right to convert DECS called for redemption will terminate at the close of business on the redemption date. Conversion of DECS (and thereby the related Depositary Shares) may be effected by delivering certificates evidencing such DECS (or the Depositary Receipts evidencing such Depositary Shares), together with written notice of conversion and a proper assignment of such certificates to the Company or in blank, to the office or agency to be maintained by the Company for that purpose, and otherwise in accordance with conversion procedures established by the Company. Each conversion shall be deemed to have been effected immediately before the close of business on the date on which the foregoing requirement shall have been satisfied. The conversion shall be at the Optional Conversion Rate in effect at such time and on such date. Holders of DECS at the close of business on a record date for any payment of dividends will be entitled to receive the dividend payable on such DECS on the corresponding dividend payment date notwithstanding the optional conversion of such DECS following such record date and before such dividend payment date. The Company will make no other payment or allowance for unpaid dividends, whether or not in arrears, on converted DECS or for dividends or distributions on the shares of Common Stock issued upon such conversion. CONVERSION ADJUSTMENT The Common Equivalent Rate and the Optional Conversion Rate are subject to adjustment if the Company shall (i) pay a dividend or make a distribution with respect to Common Stock in shares of such stock, (ii) subdivide or split its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, (iv) issue by reclassification of its shares of Common Stock any shares of Common Stock of the Company, (v) issue rights or warrants to all holders of its Common Stock entitling them (for a period not exceeding 45 days from the date of such issuance) to subscribe for or purchase shares of Common Stock at a price per share less than the market price of the Common Stock or (vi) pay a dividend or make a distribution to all holders of its Common Stock of evidence of its indebtedness, securities of a subsidiary, or other assets (excluding any dividends or distributions referred to in clause (i) above or any cash dividends (other than Extraordinary Cash Distributions, as defined below)) or issue to all holders of its Common Stock rights or warrants to subscribe for or purchase any of its securities (other than those referred to in clause (v) above). The Company will also be entitled to make upward adjustments in the Common Equivalent Rate, the Optional Conversion Rate and the Call Price, as it in its discretion shall determine to be advisable, so that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended) hereafter made by the Company to its stockholders will not be taxable. "Extraordinary Cash Distributions" means, with respect to any cash dividend or distribution paid on any date, the amount, if any, by which all cash dividends and cash distributions on the Common Stock paid during the consecutive 12-month period ending on and including such date (other than cash dividends and cash distributions for which an adjustment to the Common Equivalent Rate and the Optional Conversion Rate was previously made) exceeds, on a per share of Common Stock basis, 10% of the average daily closing sales price of the Common Stock over such 12-month period. All adjustments to the Common Equivalent Rate and the Optional Conversion Rate will be calculated to the nearest 1/1000th of a share of Common Stock or if S-22 there is not a nearest 1/1000th of a share to the next lower 1/1000th of a share). No adjustment in the Common Equivalent Rate and the Optional Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least one percent therein; provided, however, that any adjustments which by reason of the foregoing are not required to be made shall be carried forward and taken into account in any subsequent adjustment. ADJUSTMENT FOR CONSOLIDATION OR MERGER In case of any consolidation or merger to which the Company is a party (other than a merger or consolidation in which the Company is the continuing corporation and in which the Common Stock outstanding immediately before the merger or consolidation remains unchanged), or in case of any sale or transfer to another corporation of the property of the Company as an entirety or substantially as an entirety, or in case of any statutory exchange of securities with another corporation (other than in connection with a merger or acquisition), each DECS shall, after consummation of such transaction, be subject to (i) conversion at the option of the holder into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such DECS might have been converted immediately before consummation of such transaction, (ii) conversion on the Mandatory Conversion Date into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such DECS would have been converted if the conversion on the Mandatory Conversion Date had occurred immediately before the date of consummation of such transaction, and (iii) redemption on any redemption date in exchange for the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock that would have been issuable at the Call Price in effect on such redemption date upon a redemption of such share immediately before consummation of such transaction, assuming that the public announcement of such redemption had been made on the last possible date permitted by the terms of the DECS and applicable law, assuming in each case that such holder of Common Stock failed to exercise rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon consummation of such transaction (provided that if the kind or amount of securities, cash or other property receivable upon consummation of such transaction is not the same for each non-electing share, then the kind and amount of securities, cash or other property receivable upon consummation of such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The kind and amount of securities into which the DECS shall be convertible after consummation of such transaction shall be subject to adjustment as described in the immediately preceding paragraph following the date of consummation of such transaction. The Company may not become a party to any such transaction unless the terms thereof are consistent with the foregoing. FRACTIONAL SHARES No fractional shares of Common Stock will be issued upon redemption or conversion of the DECS. In lieu of any fractional share otherwise issuable in respect of all DECS of any holder which are redeemed or converted on any redemption date or upon Mandatory Conversion or any optional conversion, such holder shall be entitled to receive an amount in cash equal to the same fraction of the (i) Current Market Price in the case of redemption, or (ii) Closing Price (as defined in the Articles of Amendment) of the Common Stock determined (A) as of the fifth trading day immediately preceding the Mandatory Conversion Date, in the case of Mandatory Conversion, or (B) as of the second trading day immediately preceding the effective date of conversion, in the case of an optional conversion by a holder. RIGHTS AGREEMENT Reference is made to the description of the Common Stock incorporated herein by reference for a description of the Rights to buy the Company's Series M Cumulative Participating Preferred Stock (the "Rights") issued by the Company. See also "Description of Common Stock -- Shareholder Rights Plan." Shares of Common Stock issued upon conversion or redemption of the DECS, and before the Rights are redeemed or expire, shall also be issued with Rights in accordance with the terms and conditions of the Rights Agreement. The method of calculation of the Current Market Price of the Common Stock does not take into account the separate value of the Rights, except to the extent any such value may be reflected in the Current Market Price. NOTICE TO HOLDERS OF DECS The Company will provide notice of any call of the DECS to holders of record of the DECS (and thereby the Depositary Shares) to be called not less than 15 nor more than 60 days before the date fixed for redemption. Such notice shall be provided by mailing notice of such redemption to the holders of record of the DECS to be S-23 called. Each holder of DECS to be called shall surrender the certificate evidencing such DECS to the Company at the place designated in such notice and shall be entitled to receive certificates for shares of Common Stock following such surrender and the date of such redemption. If fewer than all the outstanding DECS are to be called, the DECS to be called shall be selected by the Company from outstanding DECS by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors of the Company in its sole discretion to be equitable. For a description of notices to holders of Depositary Shares, see "Description of Depositary Shares -- Record Date." LIQUIDATION RIGHTS In the event of the liquidation, dissolution, or winding up of the business of the Company, whether voluntary or involuntary, the holders of DECS, after payment or provision for payment of the debts and other liabilities of the Company and before any distribution to the holders of the Common Stock, or any other stock ranking junior to the DECS with respect to distributions upon liquidation, dissolution or winding up, will be entitled to receive for each DECS an amount equal to the sum of (i) 100 times the per share price to the public shown on the cover page of this Prospectus Supplement and (ii) all accrued and unpaid dividends thereon to the date of payment. If the assets of the Company available for distribution to the holders of the DECS upon a dissolution, liquidation or winding up of the Company shall be insufficient to pay in full the liquidation payments payable to the holders of outstanding DECS and any shares of the Company ranking on a parity with the DECS upon liquidation, then the holders of all such DECS shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding DECS and the holders of outstanding shares of the Company ranking on a parity with the DECS upon liquidation are entitled were paid in full. VOTING RIGHTS The holders of DECS shall have the right with the holders of Common Stock to vote in the election of directors and upon each other matter coming before any meeting of the stockholders on the basis of 85.47 votes for each DECS held (equivalent to .8547 of a vote for each Depositary Share). The holders of DECS, and the holders of Common Stock will vote together as a single voting group except as otherwise provided by law or by the Amended and Restated Articles of Incorporation of the Company. Whenever dividends on the DECS shall be in arrears and unpaid in an aggregate amount of dividends payable thereon for six quarterly dividend periods, the number of directors of James River will be increased by two and the holders of the DECS (voting as a separate voting group together with holders of shares of all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote for the election of those two additional Directors. Such right shall, when vested, continue until all dividends in default on the DECS shall have been paid in full and, when so paid, such right of the holders of the DECS shall cease. The term of office of all Directors elected by the holders of the DECS and such other series shall terminate on the earlier of (i) the next annual meeting of shareholders at which a successor shall have been elected and qualified or (ii) the termination of the right of holders of the DECS and such other series to vote for such Directors. The holders of the DECS (and thereby the Depositary Shares) will be entitled to vote as a separate voting group on certain significant corporate actions, including certain amendments to James River's Amended and Restated Articles of Incorporation including, without limitation, any change in the designation, rights, preferences or limitations of all or part of the DECS. REISSUANCE DECS redeemed for or converted into Common Stock or otherwise acquired by the Company will assume the status of authorized but unissued Preferred Stock and may thereafter be reissued in the same manner as other authorized but unissued Preferred Stock. LISTING The Depositary Shares have been approved for listing on the NYSE, subject to notice of issuance, under the symbol JRPrP. REGISTRAR AND TRANSFER AGENT Wachovia Bank of North Carolina, N.A. will serve as registrar and transfer agent for the DECS (and the Depositary Shares). S-24 DESCRIPTION OF DEPOSITARY SHARES Each Depositary Share represents a one-hundredth interest in a share of DECS deposited under the Deposit Agreement ("Deposit Agreement"), dated as of June 22, 1994, among James River, Wachovia Bank of North Carolina, N.A., as Depositary ("Depositary"), and the holders from time to time of Depositary Receipts issued thereunder. Subject to the terms of the Deposit Agreement, each owner of a Depositary Share is entitled, proportionately, to all of the rights and preferences of the shares of DECS represented thereby (including dividend, voting, redemption, and liquidation rights) contained in James River's Amended and Restated Articles of Incorporation and the Articles of Amendment creating the DECS and summarized above under "Description of DECS." James River does not expect that there will be any public trading market for the DECS except as represented by the Depositary Shares. The Depositary Shares are evidenced by depositary receipts issued pursuant to the Deposit Agreement ("Depositary Receipts"). The following description of the Depositary Shares does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of the Deposit Agreement (which contains the form of Depositary Receipt), a copy of which will be filed with the Commission. ISSUANCE OF DEPOSITARY RECEIPTS Immediately following the issuance of the DECS by James River, the Company will deposit the DECS with the Depositary, which will then execute and deliver the Depositary Receipts to the Company. The Company will, in turn, deliver the Depositary Receipts to the Underwriters. Depositary Receipts will be issued evidencing only whole Depositary Shares. WITHDRAWAL OF DECS Upon surrender of the Depositary Receipts at the Corporate Trust Office of the Depositary, the owner of the Depositary Shares evidenced thereby is entitled to delivery at such office of the number of whole shares of DECS represented by such Depositary Shares. If the Depositary Receipts delivered by the holder evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of DECS to be withdrawn, the Depositary will deliver to such holder at the same time a new Depositary Receipt evidencing such excess number of Depositary Shares. Owners of Depositary Shares will be entitled to receive only whole shares of DECS on the basis of one share of DECS for one hundred Depositary Shares. In no event will fractional shares of DECS (or cash in lieu thereof) be distributed by the Depositary. Consequently, a holder of a Depositary Receipt representing a fractional share of DECS would be able to liquidate his position only by sale to a third party (in a public trading market transaction or otherwise) unless the Depositary Shares are redeemed by the Company or converted by the holder. CONVERSION AND CALL PROVISION MANDATORY CONVERSION OR CALL. As described under "Description of DECS -- Mandatory Conversion of DECS" and " -- Right to Redeem DECS", the DECS are subject to mandatory conversion into shares of Common Stock on the Mandatory Conversion Date, and to the right of the Company to call the DECS, at the Company's option, for redemption on or after the Initial Redemption Date and before the Mandatory Conversion Date. The Depositary Shares are subject to mandatory conversion or call upon substantially the same terms and conditions (including as to notice to the owners of Depositary Shares) as the DECS, except that the number of shares of Common Stock received upon mandatory conversion or redemption of each Depositary Share will be equal to the number of shares of Common Stock received upon mandatory conversion or redemption of each DECS divided by one hundred. If fewer than all of the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall be selected by lot or pro rata or by any other equitable method determined by the Depositary to be consistent with the method determined by the Board of Directors with respect to the DECS. If fewer than all of the Depositary Shares evidenced by a Depositary Receipt are called for redemption, the Depositary will deliver to the holder of such Depositary Receipt upon its surrender to the Depositary, together with the redemption consideration, a new Depositary Receipt evidencing the Depositary Shares evidenced by such prior Depositary Receipt and not called for redemption. S-25 CONVERSION AT THE OPTION OF HOLDER. As described under "Description of DECS -- Conversion at the Option of Holder", the DECS may be converted, in whole or in part, into shares of Common Stock at the option of the holders of DECS at any time before the Mandatory Conversion Date, unless previously redeemed. The Depositary Shares may, at the option of holders thereof, be converted into shares of Common Stock upon the same terms and conditions as the DECS, except that the number of shares of Common Stock received upon conversion of each Depositary Share will be equal to the number of shares of Common Stock received upon conversion of each DECS divided by one hundred. To effect such an optional conversion, a holder of Depositary Shares must deliver Depositary Receipts evidencing the Depositary Shares to be converted, together with a written notice of conversion and a proper assignment of the Depositary Receipts to the Company or in blank, to the Depositary or its agent. Each optional conversion of Depositary Shares shall be deemed to have been effected immediately before the close of business on the date on which the foregoing requirements shall have been satisfied. The conversion shall be at the Optional Conversion Rate in effect at such time and on such date, adjusted to reflect the fact that one hundred Depositary Shares are the equivalent of one DECS. No fractional share of DECS may be converted. If only a portion of the Depositary Shares evidenced by a Depositary Receipt is to be converted, a new Depositary Receipt or Receipts will be issued for any Depositary Shares not converted. No fractional shares of Common Stock will be issued upon conversion or redemption of Depositary Shares, and, if such conversion or redemption would otherwise result in a fractional share of Common Stock being issued, an amount will be paid in cash in lieu thereof as described in "Description of DECS -- Fractional Shares" or as set forth in the Deposit Agreement. After the date fixed for conversion or redemption, the Depositary Shares so converted or called for redemption will no longer be deemed to be outstanding and all rights of the holders of such Depositary Shares will cease, except the right to receive the Common Stock and amounts payable on such conversion or redemption and any money or other property to which the holders of such Depositary Shares were entitled upon such conversion or redemption, upon surrender to the Depositary of the Depositary Receipt or Receipts evidencing such Depositary Shares. DIVIDENDS AND OTHER DISTRIBUTIONS The Depositary will distribute all cash dividends or other cash distributions in respect of the DECS to the record holders of Depositary Receipts in proportion, insofar as practicable, to the number of Depositary Shares owned by such holders. In the event of a distribution other than cash in respect of the DECS, the Depositary will distribute property received by it to the record holders of Depositary Receipts in proportion, insofar as practicable, to the number of Depositary Shares owned by such holders, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with the approval of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including sale (at public or private sale) of such property and distribution of the net proceeds from such sale to such holders. The amount distributed in any of the foregoing cases will be reduced by any amount required to be withheld by the Company or the Depositary on account of taxes. RECORD DATE Whenever (i) any cash dividend or other cash distribution shall become payable, any distribution other than cash shall be made, or any rights, preferences or privileges shall be offered with respect to the DECS, or (ii) the Depositary shall receive notice of any meeting at which holders of DECS are entitled to vote or of which holders of DECS are entitled to notice, or of any election on the part of the Company to call for redemption any DECS, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date for the DECS) for the determination of the holders of Depositary Receipts (x) who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof, (y) who shall be entitled to give instructions for the exercise of voting rights at any such meeting or to receive notice of such meeting, or (z) who shall be subject to such redemption, subject to the provisions of the Deposit Agreement. VOTING OF DECS Upon receipt of notice of any meeting at which holders of DECS are entitled to vote, the Depositary will mail the information contained in such notice of meeting to the record holders of Depositary Receipts. Each record holder of Depositary Receipts on the record date (which will be the same date as the record date for the S-26 DECS) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the number of DECS represented by such holder's Depositary Shares. The Depositary will endeavor, insofar as practicable, to vote the number of DECS represented by such Depositary Shares in accordance with such instructions, and the Company has agreed to take all reasonable action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting DECS to the extent it does not receive specific written voting instructions from the holders of Depositary Receipts representing such DECS. AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT The form of Depositary Receipts and any provision of the Deposit Agreement may at any time be amended by agreement between the Company and the Depositary. However, any amendment that imposes any fees, taxes or other charges payable by holders of Depositary Receipts (other than taxes and other governmental charges, fees and other expenses payable by such holders as stated under "Charges of Depositary"), or that otherwise prejudices any substantial existing right of holders of Depositary Receipts, will not take effect as to outstanding Depositary Receipts until the expiration of 90 days after notice of such amendment has been mailed to the record holders of outstanding Depositary Receipts. Every holder of Depositary Receipts at the time any such amendment becomes effective shall be deemed to consent and agree to such amendment and to be bound by the Deposit Agreement, as so amended. In no event may any amendment impair the right of any owner of Depositary Shares, subject to the conditions specified in the Deposit Agreement, upon surrender of the Depositary Receipts evidencing such Depositary Shares to receive DECS or, upon conversion of the DECS represented by the Depositary Receipts, to receive shares of Common Stock, and in each case any money or other property represented thereby, except in order to comply with mandatory provisions of applicable law. Whenever so directed by the Company, the Depositary will terminate the Deposit Agreement after mailing notice of such termination to the record holders of all Depositary Receipts then outstanding at least 30 days before the date fixed in such notice for such termination. The Depositary may likewise terminate the Deposit Agreement if at any time 45 days shall have expired after the Depositary shall have delivered to the Company a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment. If any Depositary Receipts remain outstanding after the date of termination, the Depositary thereafter will discontinue the transfer of Depositary Receipts, will suspend the distribution of dividends to the holders thereof, and will not give any further notices (other than notice of such termination) or perform any further acts under the Deposit Agreement except as provided below and except that the Depositary will continue (i) to collect dividends on the DECS and any other distributions with respect thereto and (ii) to deliver the DECS together with such dividends and distributions and the net proceeds of any sales of rights, preferences, privileges or other property, without liability for interest thereon, in exchange for Depositary Receipts surrendered. At any time after the expiration of two years from the date of termination, the Depositary may sell the DECS then held by it at public or private sale, at such place or places and upon such terms as it deems proper and may thereafter hold the net proceeds of any such sale, together with any money and other property then held by it, without liability for interest thereon, for the pro rata benefit of the holders of Depositary Receipts which have not been surrendered. The Company does not intend to terminate the Deposit Agreement or to permit the resignation of the Depositary without appointing a successor depositary. If the Deposit Agreement is terminated and such number of DECS remains outstanding as is necessary to satisfy the requirements of the NYSE, the Company will use its best efforts to list the DECS on the NYSE (unless the holders of a majority of the outstanding DECS shall consent to the Company not effecting such listing). CHARGES OF DEPOSITARY The Company will pay all charges of the Depositary including charges in connection with the initial deposit of the DECS, the initial execution and delivery of the Depositary Receipts, the distribution of information to the holders of Depositary Receipts with respect to matters on which DECS are entitled to vote, withdrawals of the DECS by the holders of Depositary Receipts or redemption or conversion of the DECS, except for taxes (including transfer taxes, if any) and other governmental charges and such other charges as are provided in the Deposit Agreement to be at the expense of holders of Depositary Receipts or persons depositing DECS. S-27 GENERAL The Depositary will make available for inspection by holders of Depositary Receipts at its Corporate Office all reports and communications from the Company that are delivered to the Depositary and made generally available to the holders of the DECS. Neither the Depositary nor the Company will be liable if it is prevented or delayed by law or any circumstance beyond its control from or in performing its obligations under the Deposit Agreement. DESCRIPTION OF COMMON STOCK The following description of the Common Stock is qualified in its entirety by reference to the more complete description thereof set forth in the documents incorporated by reference in this Prospectus. See "Incorporation of Certain Documents by Reference." The holders of Common Stock are entitled to voting rights for the election of directors and for other purposes, subject to the voting rights of the holders of Preferred Stock conferred by law and to the specific voting rights granted to each series of Preferred Stock and to voting rights which may in the future be granted to subsequently created series of Preferred Stock. The Common Stock does not have cumulative voting rights. The rights of the holders of Common Stock may not be modified other than by the affirmative vote of more than two-thirds of the holders of the issued and outstanding shares thereof, voting as a single voting group. Dividends may be declared on Common Stock out of funds legally available therefor when all required dividend and redemption requirements for Preferred Stock have been met. Certain of James River's loan agreements contain restrictions which may limit the ability of James River to pay dividends. In the event of any liquidation of James River, the holders of Preferred Stock are entitled to be paid out of the net assets of James River, before any distribution is made to the holders of Common Stock, their applicable liquidation value plus accumulated but unpaid dividends to the date of payment. Thereafter the holders of Common Stock are entitled to a pro rata distribution of the remaining assets. The liquidation value per share for each authorized series of Preferred Stock other than the DECS is set forth in Note 14 to Notes to Audited Consolidated Financial Statements included in the Annual Report to Shareholders for the year ended December 26, 1993, which is incorporated by reference in this Prospectus. The liquidation value per share of the Depositary Shares is $17.25 plus accrued and unpaid dividends through the date of payment. SHAREHOLDER RIGHTS PLAN James River has a shareholder rights plan pursuant to which preferred stock purchase rights ("Rights") are issued at the rate of one Right for each share of Common Stock. Each Right entitles its holder to purchase one one-thousandth of a share of Series M Cumulative Participating Preferred Stock ("Series M") at an exercise price of $150, subject to adjustment. Due to the nature of its dividend, liquidation, and voting rights, the economic value of one one-thousandth of a share of Series M that may be acquired upon the exercise of each Right should approximate the economic value of one share of Common Stock. The Rights will only be exercisable if a person or group acquires, has the right to acquire, or has commenced a tender offer for 15% or more of the outstanding Common Stock. The Rights are nonvoting, pay no dividends, and may be redeemed by the Company for $.01 per Right at any time before the tenth day (subject to adjustment) after a 15% position is acquired. The Rights will have no effect on earnings per share until they become exercisable and expire on March 1, 1999, unless earlier exercised or redeemed. After the Rights are exercisable, if the Company is acquired in a merger or other business combination, or if 50% or more of the Company's assets are sold, each Right will entitle its holder (other than the acquiring person or group) to purchase, at the then-current exercise price, common stock of the acquiring person having a value of twice the exercise price. In addition, in the event a 15% or greater shareholder (i) acquires the Company through a merger where James River is the surviving corporation, (ii) engages in certain self-dealing transactions, or (iii) increases his ownership other than through a cash tender offer providing fair value to all holders of Common Stock, each Right will entitle its holder (other than the acquiring person or group) to purchase, at the then-current exercise price, Common Stock having a value of twice the exercise price. S-28 FEDERAL INCOME TAX CONSIDERATIONS GENERAL In the opinion of McGuire, Woods, Battle & Boothe, counsel to the Company, the following discussion sets forth the material United States federal income tax consequences under existing law of the ownership and disposition of DECS (and thereby the Depositary Shares). This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the regulations promulgated thereunder, and administrative and judicial interpretations as of the date hereof, all of which are subject to change, possibly with retroactive effect. This discussion relates only to DECS and shares of Common Stock received upon conversion thereof or in exchange therefor that are held as capital assets within the meaning of Section 1221 of the Code. It does not address all tax consequences that may be relevant in the particular circumstances of each holder (some of which, such as dealers in securities, insurance companies, and tax-exempt organizations, may be subject to special rules), nor does it address any state, local or foreign tax considerations that may be relevant to a particular investor. The Company does not intend to seek a ruling from the Internal Revenue Service (the "IRS") as to any tax consequences relating to DECS. Furthermore, there have been no regulations, rulings or judicial decisions specifically considering stock having the same terms as DECS, and there can be no assurance that the IRS will agree with the positions set forth below. PERSONS CONSIDERING THE PURCHASE OF THE DEPOSITARY SHARES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION. INTRODUCTION Holders of Depositary Shares will be treated for federal income tax purposes as if they were owners of the DECS represented by such Depositary Shares. Accordingly, holders of Depositary Shares will recognize the items of income, gain, loss, and deduction that they would recognize if they directly held such DECS. References in the remainder of this "Federal Income Tax Considerations" section to holders of DECS include holders of Depositary Shares, and references to DECS include Depositary Shares. DIVIDENDS To the extent paid out of the Company's current or accumulated earnings and profits, dividends received by a holder of DECS will be taxable as ordinary income. In the case of a corporate holder, such dividend will qualify for the 70 percent intercorporate dividends-received deduction, provided that such corporate holder meets the minimum holding period requirements (generally at least 46 days) and other applicable requirements. Under certain circumstances, a corporate holder may be subject to the alternative minimum tax with respect to the amount of its dividends-received deduction. Under certain circumstances, a corporation that receives an "extraordinary dividend" (as defined in Section 1059(c) of the Code) is required to reduce its stock basis by the non-taxed portion of such dividend. In addition, Section 1059(f) provides that any dividend with respect to "disqualified preferred stock" is treated as an extraordinary dividend. Generally, quarterly dividends not in arrears paid to an original holder of DECS will not constitute extraordinary dividends as defined in Section 1059(c). Moreover, DECS will not constitute "disqualified preferred stock" within the meaning of Section 1059(f). REDEMPTION PREMIUM Under certain circumstances, Section 305(c) of the Code requires that any redemption premium with respect to stock (i.e., the excess of the stock redemption price over its issue price) be included in the holder's income as a constructive dividend, thereby subjecting the holder to tax prior to actual receipt of the redemption premium. Under existing administrative guidance, however, Section 305(c) should not apply to stock with terms such as those of the DECS. REDEMPTION OR MANDATORY OR OPTIONAL CONVERSION INTO COMMON STOCK Gain or loss generally will not be recognized by a holder upon the redemption of the DECS for shares of Common Stock or the conversion of DECS into shares of Common Stock. Dividend income will be recognized, however, to the extent cash or Common Stock is received in payment of dividends. In addition, a holder who S-29 receives cash in lieu of a fractional share will be treated as having received such fractional share and having exchanged it for cash in a taxable transaction subject to Section 302 of the Code. Generally, a holder's basis in the Common Stock received upon the call or conversion of the DECS (including any fractional share interest and excluding shares of Common Stock taxed as a dividend upon receipt) will equal the adjusted tax basis of the called or converted DECS. The holding period of such Common Stock will include the holding period of the called or converted DECS. A holder's basis in Common Stock received in payment of dividends will be equal to the fair market value of that Common Stock, and the holding period for such Common Stock will begin on the day after the date that the Common Stock is acquired. ADJUSTMENT OF CONVERSION RATE Certain adjustments to the Common Equivalent Rate and the Optional Conversion Rate to reflect the Company's issuance of certain rights, warrants, evidences of indebtedness, securities or other assets to holders of Common Stock may result in constructive distributions taxable as dividends to the holders of DECS, which may constitute (or may cause other dividends to constitute) "extraordinary dividends" to corporate holders. See "Federal Income Tax Considerations -- General -- Dividends." BACKUP WITHHOLDING Certain noncorporate holders may be subject to backup withholding at a rate of 31 percent on dividends received upon the DECS and, after call or conversion, upon Common Stock. Generally, backup withholding applies to a United States person only when the taxpayer fails to furnish or certify a proper Taxpayer Identification Number or when the taxpayer is notified by the IRS that the taxpayer has failed to report payments of interest and dividends properly. Holders should consult their tax advisors to ascertain whether they are exempt from backup withholding and the procedure for obtaining any applicable exemption. CERTAIN TAX CONSEQUENCES TO NON-U.S. HOLDERS The following is a general discussion of certain United States federal income and estate tax consequences of the ownership and disposition of Depositary Shares or Common Stock by a non-U.S. holder. For purposes of this discussion, the term "non-U.S. holder" means any owner of Depositary Shares or Common Stock that is, for United States federal income tax purposes, (i) a foreign corporation, (ii) a non-resident alien individual, (iii) a foreign estate or trust, or (iv) a foreign partnership, except that the term does not include certain individuals who were United States citizens and who are subject to the provisions of the Code applicable to certain United States expatriates whose loss of United States citizenship had as one of its principal purposes the avoidance of United States taxes. DIVIDENDS Dividends paid to a non-U.S holder of Depositary Shares or Common Stock generally will be subject to withholding of United States federal income tax at a 30 percent rate. The 30 percent statutory withholding rate may be reduced by an applicable tax treaty, although the non-U.S. holder may be required to file certain forms to claim the benefit of the lower treaty rate. Dividends are exempt from the withholding tax if effectively connected with the conduct of a trade or business in the United States by the non-U.S. holder (under certain tax treaties, such trade or business must be conducted through a permanent establishment in the United States to which such dividends are attributable), although the non-U.S. holder may be required to file certain forms (including IRS Form 4224) with the payor of the dividend to obtain the benefit of the exemption. Dividends that are effectively connected with the conduct of a trade or business in the United States generally will be taken into account in determining the non-U.S. holder's United States federal income tax on its net income derived from such trade or business. In addition, a non-U.S. holder that is a corporation may be subject to a branch profits tax at a rate of 30 percent (or such lower rate as may be specified by an applicable tax treaty) on the repatriation from the United States of the earnings and profits attributable to its income that is effectively connected to a United States trade or business, subject to certain adjustments and the relevant provisions of any applicable tax treaty. GAIN ON DISPOSITION Generally, a non-U.S. holder will not be subject to United States federal income tax on any gain realized upon the disposition of Depositary Shares or Common Stock unless (i) the Company is or has been a "United States real property holding corporation" as defined in Section 897 of the Code ("USRPHC") and (A) in the case of Depositary Shares that are regularly traded on an established securities market (within the meaning of Treasury Regulations), the non-U.S. holder held, directly or indirectly at any time during the five-year period ending on the S-30 date of disposition, more than five percent of the DECS, (B) in the case of Depositary Shares that are not regularly traded on an established securities market (within the meaning of Treasury Regulations), the non-U.S. holder held, directly or indirectly at any time during the five-year period ending on the date of disposition, Depositary Shares having a fair market value on the date of acquisition that exceeded five percent of the fair market value of the Common Stock, or (C) in the case of Common Stock, the non-U.S. holder held, directly or indirectly at any time during the five-year period ending on the date of disposition, more than five percent of the Common Stock; (ii) the non-U.S. holder is engaged in a trade or business within the United States and the gain is effectively connected with such business (and, if an applicable tax treaty so provides, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States); (iii) the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and who meets certain other conditions; or (iv) the non-U.S. holder is an individual who is subject to tax pursuant to the provisions of United States tax law applicable to certain United States expatriates. At present, no determination has been made as to whether the Company is a USRPHC, and no assurance can be given that it is not now or will not become a USRPHC. ESTATE TAX Depositary Shares or Common Stock owned by an individual non-U.S. holder at the time of his or her death will be includible in his or her estate for United States federal estate tax purposes unless an applicable estate tax treaty provides otherwise. INFORMATION REPORTING AND BACKUP WITHHOLDING DIVIDENDS. The Company or other payor of dividends must report annually to the IRS and to each non-U.S. holder the amount of dividends paid to and the tax withheld with respect to such holder. These information reporting requirements apply regardless of whether United States withholding tax was reduced or eliminated by an applicable tax treaty. Copies of these information returns may also be available to the tax authorities of a foreign jurisdiction under the provisions of a specific tax treaty or exchange of information agreement. In general, dividends payable to non-U.S. holders are subject to backup withholding (see "Federal Income Tax Considerations -- In General -- Backup Withholding"). However, dividends that are subject to United States withholding tax at the 30 percent statutory rate or at a reduced tax treaty rate generally are exempt from backup withholding of United States federal income tax. BROKER SALES. If a non-U.S. holder sells Depositary Shares or Common Stock through a United States office of a United States or foreign broker, the broker is required to file an information return and to withhold 31 percent of the sale proceeds unless the non-U.S. holder is an exempt recipient or has provided the broker with the information and statements, under penalties of perjury, necessary to establish an exemption from backup withholding. If the sale proceeds realized by the non-U.S. holder are paid to or through the foreign office of a broker, such broker will not be required to backup withhold or to file information returns. However, payments of proceeds generally will be subject to information reporting (but not backup withholding) if made through a foreign office of (i) a United States broker or (ii) a foreign broker (a) that is a "controlled foreign corporation" for U.S. tax purposes (generally a corporation controlled by United States shareholders), or (b) if 50 percent or more of the broker's gross income for the three-year period ending with the close of the taxable year preceding the year of payment (or, if shorter, the period that the broker has been in existence) is effectively connected with the conduct of a trade of business within the United States (a "Foreign U.S. Connected Broker"), unless the broker has documentary evidence in its files that the payee is a non-U.S. holder and certain other conditions are met, or the payee otherwise establishes an exemption. The Treasury Department has indicated that it is studying the possible application of backup withholding in the case of such foreign offices of U.S. brokers and Foreign U.S. Connected Brokers. REFUNDS. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder may be refunded or credited against the non-U.S. holder's federal income tax liability, provided that the required information is furnished to the IRS. S-31 UNDERWRITERS The Underwriters named below have severally agreed, subject to the terms and conditions of the Underwriting Agreement with the Company, to purchase from the Company the number of Depositary Shares set forth opposite their respective names. The Underwriters are committed to purchase all of the Depositary Shares if any are purchased.
NUMBER OF NAME DEPOSITARY SHARES Salomon Brothers Inc..................................................... 3,016,668 Merrill Lynch, Pierce, Fenner & Smith Incorporated................................................ 3,016,666 J.P. Morgan Securities Inc............................................... 3,016,666 CS First Boston Corporation.............................................. 850,000 Goldman, Sachs & Co...................................................... 850,000 Kidder, Peabody & Co. Incorporated....................................... 850,000 Scott & Stringfellow, Inc................................................ 850,000 UBS Securities Inc....................................................... 850,000 S.G. Warburg & Co., Inc.................................................. 850,000 Wheat First Butcher Singer............................................... 850,000 Total....................................................... 15,000,000
The Underwriters have advised the Company that they propose initially to offer the Depositary Shares to the public at the public offering price set forth on the cover page of this Prospectus Supplement and to certain dealers at such price less a concession not in excess of $0.30 per Depositary Share. The Underwriters may allow, and such dealers may reallow, a discount not in excess of $0.02 per Depositary Share on sales to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. The Company has agreed not to register for sale, offer, sell, contract to sell or otherwise dispose of, without the prior written consent (which consent will not be unreasonably withheld) of Salomon Brothers Inc, any shares of Common Stock, any securities convertible into or exercisable or exchangeable for Common Stock, or any rights to acquire Common Stock for a period of 90 days after the date of this Prospectus Supplement; provided, however, that such restriction shall not affect the ability of the Company or its subsidiaries to take any such actions (i) as a consequence of obligations with respect to securities outstanding before the date of this Prospectus Supplement, (ii) in connection with any employee benefit or incentive plans of the Company or (iii) in connection with the offering of the Depositary Shares made hereby or the conversion thereof. The Company has granted to the Underwriters an option, exercisable for 30 days from the date of this Prospectus Supplement (or, if such 30th day shall be a Saturday, a Sunday or a holiday, on the next business day thereafter when the New York Stock Exchange is open for trading), to purchase up to an additional 1,666,666 Depositary Shares, at the per share price to public less underwriting discount. The Underwriters may exercise such rights of purchase only for the purpose of covering over-allotments, if any, incurred in connection with the sale of Depositary Shares offered hereby. To the extent that the Underwriters exercise such options, each Underwriter will become obligated, subject to certain conditions, to purchase the same proportion of such additional Depositary Shares as the number of other Depositary Shares to be purchased by that Underwriter bears to 15,000,000 Depositary Shares. The Company has agreed to indemnify the Underwriters against certain liabilities which may be incurred in connection with this offering including liabilities under the Securities Act of 1933, as amended. Certain of the Underwriters engage in transactions with and perform services for the Company in the ordinary course of business. From time to time, in the ordinary course of their respective businesses, affiliates of J.P. Morgan Securities Inc. have engaged, and may in the future engage, in commercial banking and investment banking transactions with the issuer. In particular, Morgan Guaranty Trust Company of New York is the agent bank under the Company's revolving credit facility and a lender under certain other agreements. See Note 12 of Notes to Audited Consolidated Financial Statements included in the Annual Report to Shareholders for the year ended December 26, 1993, incorporated by reference in this Prospectus. William V. Daniel, a director of the Company, is a Managing Director of Wheat First Butcher Singer. LEGAL OPINIONS The legality of the DECS and Depositary Shares in respect of which this Prospectus Supplement is being delivered will be passed on for the Company by McGuire, Woods, Battle & Boothe, Richmond, Virginia. Certain legal matters will be passed on for the Underwriters by Hunton & Williams, Richmond, Virginia. Anne M. Whittemore, a director of the Company, is a Partner in the law firm of McGuire, Woods, Battle & Boothe. Lawyers of such firm own an aggregate of approximately 20,500 shares of Common Stock of the Company. S-32 PROSPECTUS [LOGO] JAMES RIVER CORPORATION OF VIRGINIA PREFERRED STOCK (CONVERTIBLE OR NON-CONVERTIBLE) ($10 PAR VALUE) DEPOSITARY SHARES REPRESENTING PREFERRED STOCK James River Corporation of Virginia ("James River" or the "Company ") may from time to time offer shares of its Preferred Stock, par value $10 per share (the "Preferred Stock"), in one or more series. The accompanying Prospectus Supplement (the "Prospectus Supplement") sets forth, as applicable, the specific designation, voting powers, preferences and relative rights and qualifications, limitations and restrictions thereof, including dividend rate (or manner of calculation thereof), time of payment of dividends, liquidation value, terms for mandatory or optional conversion, listing on a securities exchange, terms for mandatory or optional redemption, aggregate number of shares sold, purchase price, public offering price, names of any underwriters or agents, compensation of such underwriters or agents and other terms in connection with the offering and sale of the series of Preferred Stock in respect of which this Prospectus is being delivered. If so specified in the Prospectus Supplement, the Preferred Stock may be represented by Depositary Shares, each of which may represent the percentage interest so specified in each share of Preferred Stock described in the Prospectus Supplement ("Depositary Shares"). The Company may sell shares of Preferred Stock or Depositary Shares representing Preferred Stock to or through underwriters or dealers, directly to other purchasers or through agents. See "Plan of Distribution." SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is June 22, 1994. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements, and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's common stock is listed on the New York Stock Exchange, and such reports, proxy and information statements, and other information concerning the Company can be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus does not contain all the information set forth in the registration statement to which this Prospectus relates (the "Registration Statement") and the exhibits thereto which the Company has filed with the Commission under the Securities Act of 1933, as amended (the "Securities Act"), and to which reference is hereby made. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company are hereby incorporated by reference into this Prospectus: (a) the Annual Report on Form 10-K for the fiscal year ended December 26, 1993; (b) Proxy Statement dated March 14, 1994, in connection with the Company's Annual Meeting of Shareholders held on April 28, 1994; (c) the Quarterly Report on Form 10-Q for the quarter ended March 27, 1994; (d) the Current Reports on Form 8-K dated January 25, 1994, February 22, 1994, April 21, 1994, April 27, 1994, and June 1, 1994; and (e) the description of Common Stock included in Form 8-A filed January 3, 1980 incorporating by reference the description included in Amendment No 1. to Registration Statement No. 2-63209, as amended by Amendment No. 4 to Application or Report on Form 8 dated July 28, 1992, and the description of the Rights included in Form 8-A dated March 3, 1989, as amended by Amendment No. 1 to Application or Report on Form 8 dated July 28, 1992. All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Debt Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained herein or in a document all or any portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to any person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than certain exhibits to such documents. Requests for such copies should be directed to Celeste Gunter, Director, Investor Relations, James River Corporation of Virginia, 120 Tredegar Street, Richmond, Virginia 23219 (telephone (804) 649-4307). 2 THE COMPANY James River is a manufacturer and marketer of consumer products, including towel and tissue and disposable food and beverage service products; food and consumer packaging, including folding cartons, flexible packaging, and barrier packaging papers; and communications papers, including uncoated business papers and coated printing papers. James River is one of the industry leaders, in terms of sales within the United States, in towel and tissue products, disposable food service items, folding cartons, and flexible packaging, and, on the West Coast, in uncoated business papers. The Company produces a number of branded products, which include Quilted Northern(r), Marina(r), and Nice 'N Soft(r) bathroom tissue; Brawny(r) paper towels; Vanity Fair(r) premium food service products; Dixie(r) plates, cups, and cutlery; Eureka(tm) recycled and Word Pro(r) copy papers; Delta Brite(r) publishing papers; Monterey(r) magazine paper; Curtis text and cover papers; Qwik Crisp(r) microwave packaging; and Quilt-Rap(tm) sandwich wrap. Each of the Company's businesses produces an increasing number of recycled paper products to meet the growing demands of customers. James River, through its consolidated subsidiaries and its unconsolidated affiliates, has operations in 28 states, Canada, and 12 European countries. James River has pursued a strategy of investment which has allowed the Company to significantly expand its business and to broaden its product lines. James River was incorporated under the laws of the Commonwealth of Virginia in 1969. The Company's principal executive offices are located at 120 Tredegar Street, Richmond, Virginia 23219 (P.O. Box 2218, Richmond, Virginia 23217), and its telephone number is (804) 644-5411. RECENT DEVELOPMENTS On April 27, 1994, James River announced the signing of a share acquisition agreement with Montedison S.p.A., and Rayne Holdings Inc. ("Rayne"), whereby James River will acquire the 50% ownership interest in Jamont Holdings N.V. ("Jamont Holdings") currently owned by Rayne for $575 million in cash. James River currently owns the remaining 50% of Jamont Holdings. Jamont Holdings owns 86.4% of Jamont N.V. ("Jamont"), which has operations in 12 European countries and produces branded and private label tissue and foodservice products for the retail and away-from-home markets. Jamont had sales of $1.5 billion in 1993. Upon the consummation of the acquisition, Jamont will become a consolidated subsidiary of James River. James River intends to finance this transaction through the issuance of a combination of debt and equity securities. See "Use of Proceeds " herein. The final transaction, which is subject to normal closing conditions, as well as obtaining necessary financing and securing the approval of James River's lenders, is expected to be completed during the third quarter of 1994. On April 21, 1994, James River published its results for the first quarter ended March 27, 1994. The Company reported income from operations of $20.3 million and a net loss of $7.1 million, or $0.19 per share. These amounts compare to income from operations of $17.7 million and a net loss of $10.1 million, or $0.22 per share, in the prior year's first quarter. Operating results for the Consumer Products Business increased by over 20%, to $28.3 million compared to $23.2 million in the prior year, principally from strong retail volume and the benefits realized from productivity improvements. Results for the Food and Consumer Packaging Business increased by 14%, to $26.6 million in 1994 from $23.3 million in 1993. However, operating losses generated by the Communications Papers Business increased 24%, to $25.1 million from $20.3 million last year, as pricing in most white paper grades continued to decline during the quarter due to additional industry capacity and higher levels of imports. RATIOS The following table sets forth the ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preferred stock dividends for the period indicated.
FISCAL PERIODS ENDED(1) 4/30/89 4/29/90 12/30/90 12/29/91 12/27/92 12/26/93 (2) (3),(4) (5) Ratio of Earnings to Fixed Charges (unaudited)........... 2.90x 2.40x 1.21x 1.34x -- 1.04x Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (unaudited)............................ 2.48x 2.09x 1.03x 1.15x -- --
3 (1) In computing the ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends, earnings consist of income before income taxes, extraordinary items, the cumulative effect of changes in accounting principles, minority interests, and fixed charges excluding capitalized interest. Fixed charges consist of interest expense, capitalized interest, and that portion of rental expense (one-third) deemed representative of the interest factor. Earnings and fixed charges also include the Company's proportionate share of such amounts for unconsolidated affiliates which are owned 50% or more and distributed income from less than 50% owned affiliates. For purposes of the ratio of earnings to combined fixed charges and preferred stock dividends, fixed charges are increased by the preferred stock dividends requirements of James River adjusted to amounts representing the pretax earnings which would be required to cover such dividend requirements. (2) During 1990, the Company changed its fiscal year from one ending on the last Sunday of April to one ending on the last Sunday of December. Accordingly, disclosures for the transition period ended December 30, 1990 include the 35 weeks from April 30 to December 30, 1990. During this period, the Company initiated an operational restructuring program designed to focus the Company's operations on those businesses in which it commands a substantial market share and which are less cyclical. In connection with that program, the Company recorded a $200 million pretax charge which has been included in the calculation of the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock dividends for this period. Excluding the impact of the $200 million pretax restructuring charge from earnings, the ratio of earnings to fixed charges would have been 2.59x and the ratio of earnings to combined fixed charges and preferred stock dividends would have been 2.19x for this period. (3) For the year ended December 27, 1992, earnings were inadequate to cover both fixed charges and combined fixed charges and preferred stock dividends. The amount of the deficiency of earnings compared to fixed charges was $195.6 million, and the amount of the deficiency of earnings compared to combined fixed charges and preferred stock dividends was $236.1 million for this year. (4) During 1992, the Company initiated a productivity enhancement program and recorded a $112 million pretax restructuring charge which has been included in the calculation of the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock dividends for this year. Excluding the impact of the $112 million pretax charge from earnings, the amount of the deficiency of earnings compared to fixed charges would have been $83.9 million, and the amount of the deficiency of earnings compared to combined fixed charges and preferred stock dividends would have been $123.1 million for this year. (5) For the year ended December 26, 1993, earnings were inadequate to cover combined fixed charges and preferred stock dividends. The amount of the deficiency of earnings compared to combined fixed charges and preferred stock dividends was $48.5 million for this year. INVESTMENT CONSIDERATIONS RECENT INDUSTRY CONDITIONS A substantial portion of James River's business is strongly influenced by conditions in the pulp and paper industry. Beginning in 1990, the financial performance of the pulp and paper industry began to decline, primarily due to a combination of (i) significant levels of excess industry capacity, (ii) slowing demand growth resulting from recessionary conditions in both the U.S. and Europe, and (iii) foreign currency devaluations which have provided cost advantages to certain foreign competitors. These conditions resulted in intense competition, declining utilization rates, increased levels of foreign imports, and depressed pricing, domestically as well as abroad. The depressed levels of earnings reported by many pulp and paper producers have continued through 1993. For James River and other competitors serving the tissue, foodservice, packaging, and communications papers markets, difficult market conditions persist. In addition, severely depressed prices for market pulp and bleached paper board have reduced James River's return on assets compared to competitors which are less fully integrated and able to purchase these raw materials at prices which are generally below the Company's total cost of production. RECENT JAMES RIVER FINANCIAL PERFORMANCE For the year ended December 26, 1993, James River reported operating income of $114.0 million and a net loss of $0.3 million, equivalent to a loss of $.40 per share after preferred dividends. Results for 1993 included a 4 charge of $11.0 million, or $.13 per share, representing the cumulative increase in the deferred income tax liability resulting from the 1% increase in the statutory federal income tax rate enacted during 1993. James River's ratio of earnings to fixed charges for the year ended December 26, 1993, was 1.04x. For the year ended December 27, 1992, James River reported a loss from operations of $62.4 million, including a $111.7 million pretax restructuring charge, and a net loss of $427.3 million, or $5.55 per share. In addition to the restructuring charge, results for 1992 included a charge of $273.8 million net of income tax benefits, or $3.35 per share, for the cumulative effect of changes in accounting principles and an extraordinary loss of $31.4 million net of income tax benefits, or $.38 per share, on the early extinguishment of debt. For the year ended December 27, 1992, the Company's earnings were inadequate to cover fixed charges by $195.6 million. Improvements in both operating and net results during 1993, as compared to 1992, reflect increased productivity, cost reductions, and limited pricing improvements in certain of the Company's product lines. However, competitive pricing pressures still exist in each of the Company's business segments, particularly in communications papers including uncoated free sheet papers and coated groundwood papers, where excess industry capacity and imports have resulted in continuing reductions in pricing. RECENT JAMONT HOLDINGS FINANCIAL PERFORMANCE For the year ended December 31, 1993, Jamont Holdings reported operating income of $68 million and a net loss of $0.4 million, after reflecting adjustments necessary to conform accounting principles to those generally accepted in the United States. These results represent a significant decline from those of the prior year. Jamont Holdings was negatively affected in 1993 by the deep recessionary conditions experienced in Western Europe, as well as by significant amounts of industry overcapacity. These combined factors caused tissue pricing to fall steadily beginning in the second half of 1992. As of the end of 1993, pricing was at a level approximately 13% below that of mid-1992. However, the negative effects of reduced pricing were partially offset by Jamont Holdings' cost reduction, productivity improvement, and asset rationalization programs. During 1993, Jamont Holdings closed three converting plants and reduced its workforce by approximately 5%, or 450 employees. In addition, Jamont Holdings completed its approximately $600 million capital investment program during the summer of 1993. This program, which began in 1991, consisted of a number of capital projects aimed at enhancing quality, expanding capacity, and reducing costs, and included the construction of six new paper machines. ENVIRONMENTAL CONSIDERATIONS Like its competitors, James River is subject to extensive regulation by various federal, state, provincial, and local agencies concerning compliance with environmental control statutes and regulations. These regulations impose limitations on the discharge of materials into the environment, including effluent and emission limitations, as well as require the Company to obtain and operate in compliance with the conditions of permits and other governmental authorizations. Future regulations could materially increase the Company's capital requirements in future years. In addition, James River has been identified as a potentially responsible party and is involved in remedial investigations and actions under federal and state laws. There can be no assurance that the Company will not be named as a potentially responsible party at additional sites in the future or that the costs associated with such additional sites would not be material. For a further discussion of these matters, see "Environmental Matters" herein. LEVEL OF INDEBTEDNESS As of December 26, 1993, James River's outstanding long-term debt totalled $1.9 billion and the current portion of long-term debt totalled $97 million. The Company's ratio of total debt to total capitalization was 50.9% as of this date. For purposes of this ratio, James River defines total capitalization as the sum of current and long-term debt and equity accounts. See "Ratios," "Investment Considerations -- Recent Industry Conditions," and " -- Recent James River Financial Performance." herein. FLUCTUATING PRICES OF RAW MATERIALS AND ENERGY James River obtains its wood, resin, and energy requirements through periodic purchases reflecting fluctuating market prices. There can be no assurance that any raw materials and energy price increases experienced by James River could be passed on to James River's customers. 5 USE OF PROCEEDS The proceeds from the sale of Preferred Stock to be offered hereby may be used for general corporate purposes, which may include capital expenditures, acquisitions, and working capital requirements. Except as described under "Recent Developments," the Company has not entered into any agreement with a third party with respect to any acquisition. The Company estimates that approximately $250 million of the proceeds from the sale of Preferred Stock to be offered hereby may be applied toward James River's purchase of the remaining 50% ownership interest in Jamont Holdings from Montedison S.p.A. and Rayne for approximately $575 million during the third quarter of 1994. See "Recent Developments" herein. Pending application of the proceeds, they may be temporarily invested or applied to the reduction of short-term borrowings. It is anticipated that the balance of the purchase price for the remaining Jamont Holdings interest, or approximately $325 million, will be funded with the proceeds from the sale of James River debt securities ("Debt Securities"). Concurrent with the filing of the Registration Statement of which this Prospectus is a part, the Company has filed a Registration Statement on Form S-3 for the issuance of up to $600 million of Debt Securities to be offered from time to time. UNAUDITED PRO FORMA JAMES RIVER AND JAMONT HOLDINGS FINANCIAL INFORMATION The following pro forma consolidated capitalization and condensed balance sheet as of December 26, 1993, and the pro forma consolidated statement of operations for the year then ended give effect to the following transactions: (a) the acquisition by James River of the remaining 50% ownership interest in Jamont Holdings for a purchase price of $575 million in cash; (b) the assumed financing of such acquisition with the proceeds from the issuance of $325 million of Debt Securities and $250 million of Preferred Stock. Prior to the proposed acquisition, James River owned 50% of Jamont Holdings, which was accounted for using the equity method of accounting. James River's additional 50% investment in Jamont Holdings has been accounted for using the purchase method of accounting and will result in the consolidation of Jamont Holdings. The unaudited pro forma consolidated condensed financial information is presented as if these transactions had been consummated as of December 26, 1993, for the pro forma consolidated capitalization and condensed balance sheet and as of the first day of the year for the pro forma consolidated statement of operations. The pro forma financial information does not purport to be indicative of the actual financial position as it is finally recorded, or the results of operations which would actually have been reported if the transactions had occurred on the dates or for the periods indicated, or which may be reported in the future. The pro forma financial information should be read in conjunction with the separate historical consolidated financial statements and the related notes to such financial statements of James River and of Jamont Holdings, incorporated by reference herein. 6 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED CAPITALIZATION (UNAUDITED) DECEMBER 26, 1993 (IN MILLIONS)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE 2) Current portion of long-term debt $ 97.3 $ 69.7 $ 167.0 Long-term debt: Commercial paper and borrowings supported by revolving credit facilities 287.1 423.4 $ 11.4(c) 721.9 Notes and debentures 1,655.7 263.6 325.0(d) 2,244.3 Total long-term debt (net of current portion) 1,942.8 687.0 336.4 2,966.2 Minority interests 7.0 158.8 165.8 Shareholders' equity: Preferred stock 454.1 250.0(d) 704.1 Common shareholders' equity 1,514.1 843.0 (843.0)(e) 1,506.1 (8.0)(c) Total shareholders' equity 1,968.2 843.0 (601.0) 2,210.2 Total capitalization $ 4,015.3 $ 1,758.5 $(264.6) $5,509.2
The accompanying notes are an integral part of this pro forma information. 7 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED) DECEMBER 26, 1993 (IN MILLIONS)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE 2) ASSETS Current assets: Cash and short-term securities $ 23.6 $ 81.4 $ 105.0 Accounts receivable 422.9 396.2 819.1 Inventories 666.5 176.0 842.5 Other current assets 169.3 5.7 175.0 Total current assets 1,282.3 659.3 1,941.6 Property, plant, and equipment 5,400.8 1,378.6 6,779.4 Less accumulated depreciation and cost of timber harvested 1,829.3 267.5 2,096.8 Net property, plant, and equipment 3,571.5 1,111.1 4,682.6 Investments in affiliates 519.5 18.5 $(423.5)(a) 114.5 Other assets 324.7 39.2 3.0(c) 366.9 Goodwill 153.3 451.3 155.9(b) 760.5 Total assets $ 5,851.3 $ 2,279.4 $(264.6) $7,866.1 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 97.3 $ 69.7 $ 167.0 Other current liabilities 683.8 396.5 1,080.3 Total current liabilities 781.1 466.2 1,247.3 Long-term debt 1,942.8 687.0 $ 325.0(d) 2,966.2 11.4(c) Other long-term liabilities 721.8 34.8 756.6 Deferred income taxes 430.4 89.6 520.0 Minority interests 7.0 158.8 165.8 Shareholders' equity: Preferred stock 454.1 250.0(d) 704.1 Common shareholders' equity 1,514.1 843.0 (843.0)(e) 1,506.1 (8.0)(c) Total shareholders' equity 1,968.2 843.0 (601.0) 2,210.2 Total liabilities and shareholders' equity $ 5,851.3 $ 2,279.4 $(264.6) $7,866.1
The accompanying notes are an integral part of this pro forma information. 8 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE YEAR ENDED DECEMBER 26, 1993 (IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA ADJUSTMENTS HISTORICAL INCREASE PRO FORMA JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED (NOTE 3) Net sales $ 4,650.2 $ 1,482.1 $6,132.3 Cost of goods sold 3,858.6 947.9 $ 3.9(a) 4,810.4 Selling and administrative expenses 677.6 466.1 1,143.7 Income from operations 114.0 68.1 (3.9) 178.2 Interest expense 137.5 72.3 22.8(b) 232.6 Other income, net 40.0 17.6 (2.4)(c) 55.2 Income before income taxes and minority interest 16.5 13.4 (29.1) 0.8 Income tax expense (benefit) 18.9 15.7 (8.9)(d) 25.7 Loss before minority interest (2.4) (2.3) (20.2) (24.9) Minority interest 2.1 2.0 4.1 Net loss $ (0.3) $ (0.3) $ (20.2) $ (20.8) Preferred dividend requirements (32.8) (18.8)(e) (51.6) Net loss applicable to common shares $ (33.1) $ (0.3) $ (39.0) $ (72.4) Net loss per common share and common share equivalent $ (0.40) $ (0.88) Weighted average number of common shares and common share equivalents 81.9 81.9
The accompanying notes are an integral part of this pro forma information. 9 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) 1. BASIS OF REPORTING The accompanying pro forma consolidated capitalization and condensed balance sheet as of December 26, 1993, and the pro forma consolidated statement of operations for the year then ended give effect to the acquisition of the remaining 50% interest in Jamont Holdings using the purchase method of accounting. The aggregate purchase price to be paid for the additional interest in Jamont Holdings is approximately $575 million, excluding estimated acquisition and financing costs of $11.4 million. The accompanying pro forma consolidated financial statements give effect to the expected issuances of approximately $325 million of Debt Securities and approximately $250 million of Preferred Stock, the proceeds of which will be used to finance the Jamont Holdings acquisition. The values assigned to the net assets acquired will be based upon the determination, after the consummation of the transaction, of the fair values of the assets acquired and liabilities assumed. Jamont Holdings was originally formed in 1990, at which time its assets and liabilities were adjusted to then fair values. In 1991, Jamont Holdings commenced a $600 million capital expansion program which was completed in 1993. Accordingly, based on the relatively recent valuations of Jamont Holdings' assets and liabilities, for the purpose of these pro forma consolidated financial statements, the excess of the purchase price over such estimated fair value of the net assets acquired, approximating $156 million, has been allocated to goodwill. Historical financial information on Jamont Holdings contained in the pro forma consolidated financial statements has been derived from the audited financial statements of Jamont Holdings as of December 31, 1993, and for the year then ended, prepared in accordance with accounting standards generally accepted in The Netherlands and measured in European Currency Units. Such financial information has been adjusted to conform to U.S. generally accepted accounting principles and translated into U.S. dollars. 2. PRO FORMA BALANCE SHEET AND CAPITALIZATION ADJUSTMENTS The pro forma consolidated capitalization and condensed balance sheet give effect to the adjustments described below. (a) To eliminate James River's existing investment in Jamont Holdings as of December 26, 1993, previously accounted for using the equity method. (b) To record estimated goodwill, representing the excess of James River's purchase price over the estimated fair value of Jamont Holdings' net equity. (c) To record $11.4 million of estimated acquisition and financing costs, assumed to be funded through borrowings under the Company's revolving credit facility, detailed as follows: (i) $0.4 million related to the acquisition of Jamont Holdings, excluding financing-related costs; (ii) $3.0 million related to the issuance of $325 million of Debt Securities; and (iii) $8.0 million related to the issuance of $250 million of Preferred Stock. (d) To record the assumed issuances of the following James River securities: (i) $325 million of Debt Securities issued in connection with the acquisition of Jamont Holdings; and (ii) $250 million of Preferred Stock issued in connection with the acquisition of Jamont Holdings. (e) To eliminate the Jamont Holdings historical shareholders' equity balances. 10 JAMES RIVER AND JAMONT HOLDINGS AND CONSOLIDATED SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION, CONTINUED (UNAUDITED) 3. PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS The pro forma consolidated statement of operations gives effect to the adjustments described below. (a) To record amortization of the incremental goodwill, using the straight-line method over an assumed life of 40 years. (b) To record interest expense on the $325 million of incremental long-term debt, at an assumed interest rate of 7.0%. (c) To reverse James River's share of the earnings of Jamont Holdings associated with its existing 50% ownership interest, previously accounted for using the equity method. (d) To record income tax benefits related to the incremental interest expense. (e) To reflect increased preferred dividend requirements related to the issuance of the $250 million of additional Preferred Stock, at an estimated dividend yield of 7.5%. 4. LENDER CONSENTS For purposes of these pro forma consolidated financial statements, it has been assumed that any necessary consents or waivers which may be required for the consummation of the acquisition of the remaining interest in Jamont Holdings have been obtained by James River and that no incremental costs will be incurred in obtaining such consents or waivers. 5. PRO FORMA CONSOLIDATED SEGMENT INFORMATION Following the consummation of the acquisition of the remaining interest in Jamont Holdings, James River intends to continue to report its operations in its existing three business segments. These segments are: Consumer Products, which includes the manufacture and marketing of towel and tissue and disposable foodservice products; Food and Consumer Packaging, which includes the manufacture of folding cartons, flexible packaging, and packaging papers used in packaging food and other retail consumer goods; and Communications Papers, which includes the manufacture and marketing of a variety of uncoated business and printing papers, coated groundwood printing papers, and premium printing papers. Upon its consolidation, James River intends to report the results of Jamont Holdings as part of its Consumer Products segment. 6. PRO FORMA RATIOS On a pro forma basis, after reflecting the assumed acquisition and financing of Jamont Holdings, James River's earnings were inadequate to cover both fixed charges and combined fixed charges and preferred stock dividends for the year ended December 26, 1993. The amount of the deficiency of pro forma earnings compared to pro forma fixed charges was $13.2 million, and the amount of the deficiency of pro forma earnings compared to pro forma combined fixed charges and preferred stock dividends was $91.5 million for this year. See "Ratios" herein. 11 ENVIRONMENTAL MATTERS Like its competitors, James River is subject to extensive regulation by various federal, state, provincial, and local agencies concerning compliance with environmental control statutes and regulations. These regulations impose limitations on the discharge of materials into the environment, including effluent and emission limitations, as well as require the Company to obtain and operate in compliance with the conditions of permits and other governmental authorizations. James River has made and will continue to make substantial capital investments and operating expenditures, as well as production adjustments, in connection with compliance with environmental laws and regulations, including the Clean Air Act Amendments of 1990 (the "Clean Air Act"), the Clean Water Act, the Resource Conservation and Recovery Act, and others. During 1993, capital expenditures totalling approximately $58 million were made by James River for pollution control facilities and equipment. Estimates of costs for future environmental compliance are necessarily imprecise due to, among other things, the continuing emergence of new environmental laws and regulations and environmental control or process technology developments. While the Company believes that its environmental control costs are likely to increase as environmental regulations become broader and more stringent, James River is unable to predict, except as described below, the amount or timing of such increases, or the extent to which the impact of any future regulations on James River would be proportional to the impact on its competitors. Such future regulations could materially increase the Company's capital requirements in future years. In December 1993, the U.S. Environmental Protection Agency (the "EPA ") published draft rules, informally referred to as the "cluster rules ", which contain proposed revisions to the effluent guidelines under the Clean Water Act in conjunction with new regulations relating to the discharge of certain substances under the Clean Air Act. The final rules are scheduled to be issued in late 1995, with a nominal compliance date of 1998. The new rules may require significant changes in the pulping and/or bleaching process presently used in some U.S. pulp mills, including several of James River's mills, necessitating additional capital expenditures to achieve compliance by approximately 1998. Based on preliminary estimates, the Company anticipates that such capital expenditures could be at least $300 million for James River. This estimate could change, depending on several factors, including, among others, (i) the ability of the Company and other pulp manufacturers to convince the EPA that the proposed regulations are unnecessarily complex, burdensome, and environmentally unjustified; (ii) the outcome of potential administrative and judicial challenges; (iii) new developments in control and process technology; and (iv) any unfavorable revisions to the proposed cluster rules based on public comment. In addition, James River has been identified as a potentially responsible party ("PRP") and is involved in remedial investigations and actions under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, or similar state laws regarding the past disposal of wastes at approximately 45 sites in the United States. Such statutes may impose joint and several liability for the costs of remedial investigations and actions on the entities that arranged for disposal of the wastes, the waste generators, the waste transporters, and the owners and operators of waste sites. Responsible parties (or any one of them, including the Company) may be required to bear all of such costs regardless of fault, legality of the original disposal, or ownership of the disposal site. The Company has settled or resolved actions related to certain sites at minimal cost and has determined that it has no responsibility with regard to certain other sites for which it has received notification. In most cases, James River is one of many PRP's, and its relative contributions of waste materials have been minor. However, at the Solvent Recovery Services of New England site in Connecticut, James River has been notified by the EPA that, based on records available at this time, the Company appears to be one of the largest "potentially responsible parties ". As is the case with most manufacturing and many other entities, there can be no assurance that the Company will not be named as a PRP at additional sites in the future or that the costs associated with such additional sites would not be material. In accordance with financial reporting requirements, including Statement of Financial Accounting Standards No. 5, James River's policy is to accrue remediation costs when it is probable that such costs will be incurred and when they can be reasonably estimated. As of December 26, 1993, James River's accrued environmental remediation liabilities totalled $22.2 million. This amount reflects management's best estimate of James River's ultimate liability for such costs. On a quarterly basis, the Company reviews the status of all significant existing or potential environmental issues and adjusts its accrual as necessary. Estimates of costs for future remediation are 12 necessarily imprecise due to, among other things, the identification of presently unknown remediation sites and the allocation of costs among PRP's. The Company believes that its share of the ultimate costs of cleanup for its current remediation sites will not have a material adverse impact on its financial condition. DESCRIPTION OF PREFERRED STOCK GENERAL The Company is authorized to issue five million shares of Preferred Stock, par value $10 per share, in series. As of April 29, 1994, the Company had outstanding the following series of Preferred Stock:
SHARES OUTSTANDING Series D Cumulative Preferred Stock............................................................... 12,400 Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock............................... 1,999,995 Series L $14.00 Cumulative Convertible Exchangeable Preferred Stock............................... 1,000,000 Series N $14.00 Cumulative Convertible Exchangeable Preferred Stock............................... 264,042 Series O 8 1/4% Cumulative Preferred Stock........................................................ 200,000 Total...................................................................................... 3,476,437
In addition, in connection with its Shareholder Rights Plan, the Company has reserved 150,000 shares of Preferred Stock for the issuance of Series M Cumulative Participating Preferred Stock (the "Series M Preferred Stock"). When exercisable, each share purchase right (a "Right ") entitles its holder to purchase one one-thousandth of a share of Series M Preferred Stock at an exercise price of $150 per share, subject to adjustment. The Rights will be exercisable only if a person or group acquires, has the right to acquire, or has commenced a tender offer for 15% or more of the outstanding common stock of the Company (the "Common Stock"). The Board of Directors of the Company is authorized by the Company's Articles of Incorporation to provide, without further shareholder action, for the issuance of one or more additional series of Preferred Stock. The Board of Directors, or a duly authorized committee thereof, has the power to fix various terms with respect to each series, including voting powers, designations, preferences, dividend rates, conversion and exchange provisions, redemption provisions, and the amounts which holders are entitled to receive upon any liquidation, dissolution or winding up of James River. The Preferred Stock of each series shall rank on a parity with the Preferred Stock of every other series as to dividends and assets according to the respective dividend rates and series, and without the preference or priority of any series over any other series. However, all shares of the Preferred Stock shall be preferred over the Common Stock, to the extent provided for in any series of Preferred Stock, as to both dividends and amounts distributable upon any voluntary or involuntary liquidation of James River. The applicable Prospectus Supplement or Prospectus Supplements set forth the particular designation, preferences, and rights of the series of Preferred Stock in respect of which this Prospectus is delivered. DESCRIPTION OF DEPOSITARY SHARES Each Depositary Share will represent a fraction of a share of Preferred Stock deposited under the Deposit Agreement ( "Deposit Agreement"), among James River, Wachovia Bank & Trust Company, N.A., as Depositary ("Depositary") and the holders from time to time of Depositary Receipts issued thereunder. Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will be entitled, proportionately, to all of the rights and preferences of the Preferred Stock represented thereby contained in James River's Articles of Incorporation and the Articles of Amendment creating the Preferred Stock. James River does not expect that there will be any public trading market for the Preferred Stock except as represented by the Depositary Shares. The Depositary Shares will be evidenced by depositary receipts issued pursuant to the Deposit Agreement ("Depositary Receipts"). The above description of the Depositary Shares is not complete and is subject to, and qualified in its entirety by, the description in the applicable Prospectus Supplement and the provisions of the Deposit Agreement (which contains the form of Depositary Receipt), a copy of which has been filed with the Commission as an exhibit to the Registration Statement of which this Prospectus is a part. 13 PLAN OF DISTRIBUTION The Company may sell the Preferred Stock and Depositary Shares representing Preferred Stock being offered hereby in any of four ways: (i) directly to purchasers, (ii) through agents, (iii) through underwriters and (iv) through dealers. Offers to purchase Preferred Stock or Depositary Shares representing Preferred Stock may be solicited directly by the Company or by agents designated by the Company from time to time. Any such agent, who may be deemed to be an underwriter as that term is defined in the Securities Act of 1933, involved in the offer or sale of the Preferred Stock or Depositary Shares representing Preferred Stock in respect of which this Prospectus is delivered is named and any commissions payable by the Company to such agent are set forth in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment (ordinarily five business days or less). Agents may be customers of, engage in transactions with or perform services for, the Company in the ordinary course of business. If an underwriter or underwriters are utilized in the sale, the Company will execute an underwriting agreement with such underwriters at the time of sale to them, and the names of the underwriters and the terms of the transaction are set forth in the Prospectus Supplement, which will be used by the underwriters to make resales of the Preferred Stock or Depositary Shares representing Preferred Stock in respect of which this Prospectus is delivered to the public. If a dealer is utilized in the sale of the Preferred Stock or Depositary Shares representing Preferred Stock in respect of which this Prospectus is delivered, the Company will sell such Preferred Stock or Depositary Shares representing Preferred Stock to the dealer, as principal. The dealer may then resell such Preferred Stock or Depositary Shares representing Preferred Stock to the public at varying prices to be determined by such dealer at the time of resale. Agents, underwriters and dealers may be entitled under the relevant agreements to indemnification by the Company against certain liabilities, including liabilities under the Securities Act of 1933. The place and time of delivery for the Preferred Stock or Depositary Shares representing Preferred Stock in respect of which this Prospectus is delivered are set forth in the Prospectus Supplement. LEGAL OPINIONS The legality of the Preferred Stock or the Depositary Shares representing Preferred Stock in respect of which this Prospectus is being delivered will be passed on for the Company by McGuire, Woods, Battle & Boothe, Richmond, Virginia. Anne M. Whittemore, a director of the Company, is a Partner in the law firm of McGuire, Woods, Battle & Boothe. Lawyers of such firm own an aggregate of approximately 20,500 shares of Common Stock of the Company. EXPERTS The consolidated financial statements of James River and Subsidiaries incorporated by reference into its Annual Report on Form 10-K for the year ended December 26, 1993, and the related financial statement schedules included in such Form 10-K, have been audited by Coopers & Lybrand, independent accountants, as set forth in their reports dated January 25, 1994, included therein and incorporated herein by reference. These consolidated financial statements are incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The consolidated balance sheet of Jamont Holdings and Subsidiaries as of December 31, 1993, and the related consolidated profit and loss account for the year then ended, included in James River's Current Report on Form 8-K dated April 27, 1994, have been audited by Coopers & Lybrand, independent accountants, as set forth in their report dated March 14, 1994, included therein and incorporated herein by reference. The aforementioned financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 14 NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. TABLE OF CONTENTS
PAGE PROSPECTUS SUPPLEMENT Summary of Prospectus Supplement.............. S- 3 The Company................................... S- 7 Use of Proceeds............................... S- 9 Price Range of Common Stock and Dividends..... S-10 Selected Financial Information................ S-11 Unaudited Pro Forma James River and Jamont Holdings Financial Information.............. S-13 Description of DECS........................... S-20 Description of Depositary Shares.............. S-25 Description of Common Stock................... S-28 Federal Income Tax Considerations............. S-29 Underwriters.................................. S-32 Legal Opinions................................ S-32 PROSPECTUS Available Information......................... 2 Incorporation of Certain Documents by Reference................................... 2 The Company................................... 3 Recent Developments........................... 3 Ratios........................................ 3 Investment Considerations..................... 4 Use of Proceeds............................... 6 Unaudited Pro Forma James River and Jamont Holdings Financial Information.............. 6 Environmental Matters......................... 12 Description of Preferred Stock................ 13 Description of Depositary Shares.............. 13 Plan of Distribution.......................... 14 Legal Opinions................................ 14 Experts....................................... 14
15,000,000 DEPOSITARY SHARES [LOGO] JAMES RIVER CORPORATION OF VIRGINIA DEPOSITARY SHARES EACH REPRESENTING A ONE-HUNDREDTH INTEREST IN A SHARE OF SERIES P 9% CUMULATIVE CONVERTIBLE PREFERRED STOCK ($10 PAR VALUE) SALOMON BROTHERS INC MERRILL LYNCH & CO. J.P. MORGAN SECURITIES INC. PROSPECTUS SUPPLEMENT DATED JUNE 22, 1994 -----END PRIVACY-ENHANCED MESSAGE-----