-2-
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report: November 18, 1999
WESTVACO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-3013 13-1466285
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
299 PARK AVENUE, NEW YORK, NEW YORK 10171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(212) 688-5000
Item 5. Other Events.
See Exhibit 99 to this Form 8-K
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits.
Exhibit 99 Westvaco Corporation Press Release
issued November 18, 1999
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
WESTVACO CORPORATION
By
John W. Hetherington
Vice President and Secretary
November 23, 1999
EXHIBIT INDEX
Page No.
Exhibit 99 - Westvaco Corporation Press Release issued
November 18, 1999
FormType: 8-K
Exhibit 99. Additional Exhibits
Media Contacts: William P. Fuller III
(212) 318-5250
Donna Bodden
(212) 318-5258
Investor Relations Contact: Roger A. Holmes
(212) 318-5288
FOR IMMEDIATE RELEASE:
WESTVACO REPORTS 59 PERCENT INCREASE
IN FOURTH QUARTER INCOME BEFORE NONRECURRING ITEMS
NOVEMBER 18, 1999 -- Westvaco Corporation today reported its
fourth quarter and audited year-end sales and earnings for the
fiscal year ended October 31, 1999.
Fourth quarter income before nonrecurring items totaled $57.6
million, or 58 cents per share, a 59 percent increase from income
of $36.2 million, or 36 cents per share, before nonrecurring items
in the fourth quarter of 1998. Fourth quarter 1999 sales totaled
$771.5 million, a 5.4 percent increase compared with the same
period in 1998. Fiscal year 1999 sales declined 2.9 percent to
$2.8 billion.
"Market trends moved in a positive direction for us in the fourth
quarter," said John A. Luke, Jr., Chairman and CEO. "Particularly
noteworthy was stronger demand for our bleached board, coated
papers and and certain specialty chemical products as the fourth
quarter came to a close. This circumstance suggests a promising
beginning for our new fiscal year."
Several factors contributed to improved fourth quarter
performance. The U.S. economy remained strong, economic recovery
continued in Asia and Brazil and the company's strategy of market
leadership through product and service differentiation provided
ongoing competitive advantages. These circumstances led to good
operating rates at the company's manufacturing facilities and an
increase in order backlogs. The company also benefited from its
ongoing program to increase returns from forestry operations
through improved productivity and sale of nonstrategic
timberlands.
In the fourth quarter of 1999, nonrecurring items amounted to
$33.9 million, or 34 cents per share, including a charge of $49
million, or 49 cents per share, for a restructuring plan and a
credit of $15 million, or 15 cents per share, for a release of
deferred taxes. In the fourth quarter of 1998, the company took a
charge of $3 million, or 3 cents per share, for costs associated
with the partial closure of a packaging plant.
Westvaco reported net income of $23.7 million, or 24 cents per
share, after nonrecurring items in the fourth quarter of 1999
compared to $33.2 million, or 33 cents per share, in the fourth
quarter of 1998. Fiscal year 1999 net income totaled $111.2
million, or $1.11 per share after nonrecurring items, compared to
$132 million, or $1.30 per share, for 1998. Sales of nonstrategic
timberlands increased fourth quarter 1999 net income by $7.5
million, or 8 cents per share, and fiscal year 1999 net income by
$14 million, or 14 cents per share.
"In addition to strong market conditions, we are benefiting from
continuing emphasis on cost control and lower capital spending,"
said Mr. Luke. "In late 1998, we announced a multi-year goal of
$100 million a year in sustainable cost reductions, and we have
now reached that goal. Capital spending for the year totaled $232
million, 17 percent below depreciation, and we expect a similar
comparison in 2000."
During the fourth quarter, Westvaco announced a series of actions
principally intended to enhance the strength and focus of its
packaging-related businesses. Overall, the actions resulted in an
$80.5million pretax charge ($49 million after tax) against fourth
quarter earnings, mostly due to a noncash reduction in the book
value of assets. The company expects the charge to result in
annual pretax savings totaling about $35 million. These savings
will result from improved operational efficiencies and from
scaling back operations that no longer meet financial or strategic
objectives.
Actions related to the charge set the stage for the November 1
startup of Westvaco's Packaging Resources Group (PRG), a new
strategic platform designed to enhance the company's participation
in U.S. and international packaging markets. The group combined
the company's Bleached Board, Consumer Packaging and Kraft
Divisions, along with the packaging component of the company's
international sales operation. Additional support comes from
Rigesa, Ltda., Westvaco's Brazilian packaging business. The
decision to form the PRG is one result of a companywide strategic
review process. Westvaco plans to announce the overall results
from its review process in late November.
The PRG will expand significantly when Westvaco completes its
acquisition of Temple-Inland's bleached paperboard mill in
Evadale, TX. As announced in October, Westvaco has a definitive
agreement to pay $575 million for the mill's fixed assets and
approximately $50 million for working capital. The transaction is
scheduled to close in December. "We very much look forward to the
Evadale mill becoming part of our company," said Mr. Luke. "The
economics of this transaction are compelling as are the
opportunities it represents for us in growing global packaging
markets."
Westvaco Corporation (www.westvaco.com), headquartered in New
York, NY, is a major producer of paper, packaging, and specialty
chemicals. The company derives 24 percent of annual net sales
from international business, supplying customers in more than 70
countries from wholly-owned operations in the United States,
Brazil, the Czech Republic, and a joint venture in China.
Westvaco owns 1.45 million acres of timberland in the United
States and Brazil.
Certain statements in this document and elsewhere by management of
the company that are neither reported financial results nor other
historical information are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such information includes, without limitation, the business
outlook, assessment of market conditions, anticipated financial
and operating results, strategies, future plans, contingencies and
contemplated transactions of the company. Such forward-looking
statements are not guarantees of future performance and are
subject to known and unknown risks, uncertainties and other
factors which may cause or contribute to actual results of company
operations, or the performance or achievements of the company, or
industry results, to differ materially from those expressed, or
implied by the forward-looking statements. In addition to any
such risks, uncertainties and other factors discussed elsewhere
herein, risks, uncertainties and other factors that could cause or
contribute to actual results differing materially from those
expressed in or implied by the forward-looking statements include,
but are not limited to, competitive pricing for the company's
products; changes in raw materials, energy and other costs; impact
of Year 2000 issues; fluctuations in demand and changes in
production capacities; changes to economic growth in the U.S. and
international economies, especially in Asia and Brazil;
government policies and regulations, including but not limited to
those affecting the environment and the tobacco industry; and
currency movements.
(Please see attached tables)
Consolidated statement of income
In thousands, except per share
[Unaudited]
Fourth quarter Twelve months
ended October 31 ended October 31
1999 1998 1999 1998
Sales $771,451 $731,791 $2,801,849 $2,885,917
Other income (expense) 10,249 6,549 29,384 18,747
781,700 738,340 2,831,233 2,904,664
Cost of products sold 524,413 523,355 1,967,786 2,071,011
Selling, research and
administrative expenses 62,735 63,255 230,963 238,097
Depreciation and amortization 72,522 71,031 280,470 280,981
Restructuring charge 80,500 - 80,500 -
Interest expense 31,057 29,282 123,538 110,162
771,227 686,923 2,683,257 2,700,251
Income before taxes 10,473 51,417 147,976 204,413
Income taxes [13,200] 18,200 36,800 72,400
Net income $ 23,673 $ 33,217 $ 111,176 $ 132,013
Net income per common
share - basic $ .24 $ .33 $ 1.11 $ 1.30
Average number of shares
outstanding 100,304 100,883 100,236 101,311
Net income per common
share - diluted $ .24 $ .33 $ 1.11 $ 1.30
Average number of shares
and equivalents outstanding 100,594 100,946 100,495 101,788
Consolidated balance sheet
In thousands
At October 31
1999 1998
Assets
Cash and marketable securities $ 108,792 $ 105,050
Receivables 318,369 286,423
Inventories 248,963 285,783
Prepaid expenses 61,884 61,936
Current assets 738,008 739,192
Plant and timberlands-net 3,581,383 3,802,431
Other assets 577,301 467,045
$4,896,692 $5,008,668
Liabilities and shareholders' equity
Current liabilities $ 425,114 $ 467,125
Long-term obligations 1,502,177 1,526,343
Deferred income taxes 798,113 768,752
Shareholders' equity 2,171,288 2,246,448
$4,896,692 $5,008,668
Westvaco Corporation and consolidated subsidiary companies
Consolidated statement of cash flows
In thousands Twelve months
ended October 31
1999 1998
Cash flows from operating activities:
Net income $ 111,176 $ 132,013
Adjustments not affecting cash:
Provision for depreciation and
amortization 280,470 280,981
Provision for deferred income taxes 32,286 57,244
Restructuring charge 80,500 -
Pension credit and other employee
benefits [78,658] [50,869]
Other, net [14,290] 3,400
Net changes in assets and liabilities [2,577] [17,063]
Other, net 3,806 1,000
Net cash provided by operating activities 412,713 406,706
Cash flows from investing activities:
Additions to plant and timberlands [228,879] [422,984]
Proceeds from sales of plant and
timberlands 22,781 6,905
Other investments [22,659] -
Other, net [1,135] 50
Net cash used in investing activities [229,892] [416,029]
Cash flows from financing activities:
Proceeds from issuance of common stock 9,122 3,766
Proceeds from issuance of debt 881,518 548,194
Dividends paid [88,191] [89,300]
Treasury stock purchases [10,792] [49,484]
Repayment of debt [952,230] [470,146]
Net cash used in financing activities [160,573] [56,970]
Effect of exchange rate changes on cash [18,506] [4,011]
Increase (decrease) in cash and marketable
securities 3,742 [70,304]
Cash and marketable securities:
At beginning of period 105,050 175,354
At end of period $ 108,792 $ 105,050
[Unaudited]
Segment information Fourth quarter Twelve months
In milions ended October 31 ended October 31
1999 1998 1999 1998
Sales
Paper $295.4 $263.0 $1,028.5 $1,025.6
Packaging 356.4 342.2 1,320.9 1,384.2
Rigesa 36.8 45.1 140.8 184.0
Total Packaging 393.2 387.3 1,461.7 1,568.2
Chemical 86.0 87.5 314.5 332.1
Corporate and other 22.3 19.6 80.8 72.7
Total 796.9 757.4 2,885.5 2,998.6
Intersegment eliminations [25.5] [25.6] [83.7] [112.7]
Consolidated Totals $771.4 $731.8 $2,801.8 $2,885.9
Operating profit
Paper $ 28.5 $ 22.2 $ 62.0 $ 84.8
Packaging 46.9 39.0 165.3 172.3
Rigesa 6.8 10.5 25.2 35.2
Total Packaging 53.7 49.5 190.5 207.5
Chemical 13.4 16.1 52.5 53.2
Corporate and other [85.1] [36.4] [157.0] [141.1]
Consolidated Totals $ 10.5 $ 51.4 $ 148.0 $ 204.4
Westvaco Corporation and consolidated subsidiary companies
