UNITED STATES
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: May 25, 2000
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 May 25, 2000
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 J. Carrara
Assistant General Counsel and Assistant
Secretary
May 25, 2000
EXHIBIT INDEX
Page No.
Exhibit 99 - Westvaco Corporation Press Release issued May 25, 2000
Exhibit 99
Media Contact: William P. Fuller III,(212)-318-5250
Investor Relations Contact: Roger A. Holmes (212)-318-5288
FOR IMMEDIATE RELEASE:
WESTVACO REPORTS SHARPLY HIGHER SECOND QUARTER 2000 EARNINGS
Strategic actions and stronger markets bolster performance
NEW YORK, NY, May 25, 2000 -Westvaco Corporation (NYSE: W) today
announced second quarter earnings of $61.4 million, or 61 cents
per share, for the period ended April 30, a 125 percent increase
compared to earnings of $27.3 million, or 27 cents per share, in
the second quarter of fiscal 1999. Earnings for the quarter
include a gain of 7 cents per share due to an asset sale and a
charge of 9 cents per share due to early redemption of higher
coupon debt.
"Our second quarter earnings reflect strong performance across
all of our businesses," said John A. Luke, Jr., Chairman and CEO.
"Initiatives that resulted from our 1999 strategic review
continued to have a meaningful impact on our financial results.
In addition, our cash flow is stronger due to higher earnings and
the effects of our lower level of capital spending."
Second quarter operating earnings by Westvaco's packaging
business totaled $87 million, up from $51 million in the second
quarter of 1999, due to higher shipment volume, product mix
improvement and excellent performance by the company's recently
acquired bleached paperboard mill in Evadale, TX. In addition,
consumer packaging operations, including the recently acquired
Mebane Packaging Group, contributed to the packaging segment's
strong showing.
Operating earnings for the paper segment totaled $35 million
compared to $6 million in the second quarter of 1999. This sharp
improvement occurred as market demand strengthened and new coated
paper product introductions led to higher market share. Lower
costs also contributed to the enhanced performance by the
company's printing papers business.
Second quarter operating earnings in the company's specialty
chemicals business increased to $18 million from $14 million as
stronger markets overseas and the continued strength of U.S.
markets lifted product demand. Demand was particularly strong
for Westvaco's activated carbon products used in automotive
emission controls and tall oil based ingredients for ink resins,
coatings and other products.
"As we report our earnings for the second quarter and first half
of fiscal 2000, I am pleased that our strong performance reflects
not only healthy markets for our products, but also important
contributions from actions we have taken following our 1999
strategic review," said Mr. Luke.
Late in 1999, Westvaco announced the results of a comprehensive
strategic review and said the company would build its global
packaging presence and continue to strengthen its position in
high-value global chemical markets. In the first quarter of
2000, the company completed two significant packaging
acquisitions, a bleached board mill in Evadale, TX, and Mebane
Packaging Group. Mebane is a leading provider of high-value
packaging to the U.S. pharmaceutical, health care and personal
care markets.
In April, Westvaco initiated another important step in building
the company's global packaging platform by signing a definitive
agreement to acquire IMPAC Group, Inc. IMPAC is a leading global
supplier of high-value specialty packaging and printing solutions
for a wide variety of consumer products markets including
entertainment, cosmetics and health and beauty aids.
"We are excited about the opportunities IMPAC brings to us," said
Mr. Luke. "IMPAC has leading market positions with premier
global consumer product companies, and its leadership team has
demonstrated the ability to be responsive in developing packaging
innovations for leading consumer product companies. IMPAC will
enhance our ability to provide complete packaging solutions to
customers around the world by expanding our capability beyond
paper-based products to include plastic packaging, and its strong
presence in Europe extends our global reach."
During the second quarter, Westvaco also expanded its specialty
chemicals business with the acquisition of asphalt emulsifier
licenses and technology from Raschig GmbH, a German subsidiary of
an American firm. The acquisition strengthens Westvaco's
leadership position in global asphalt emulsion markets, providing
a stronger platform for innovations designed to capitalize on
increasing spending on highway maintenance around the world.
Another strategic objective for Westvaco is to extract more value
from its forestland ownership while continuing to assure long-
term, low-cost fiber supplies for the company's paper mills. The
company recently determined that it could meet its fiber supply
needs while reducing its U.S. land base of 1.3 million acres by
about 200,000 acres through the sale of non-strategic parcels
over the next two to three years. Westvaco is assessing the
potential for novel ownership structures for its other forestland
that will enable the company to meet its fiber supply needs while
extracting additional value from the land.
Revenues for the second quarter of fiscal 2000 totaled $904.7
million, 33 percent more than during the same period a year
earlier. Revenues for the first six months of 2000 totaled $1.7
billion, a 28 percent increase compared to the first half of
1999. Earnings for the first six months of fiscal 2000 totaled
$111.6 million, or $1.11 per share, up 112 percent from $52.5
million, or 52 cents per share, earned during the first half of
fiscal 1999.
Westvaco Corporation (www.westvaco.com), headquartered in New
York, NY, is a major producer of packaging, paper and specialty
chemicals. The company serves customers in more than 70 countries
and its assets include operations in the United States, South
America, Asia and Europe.
(Please see attached tables)
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; technological
developments; fluctuations in demand and changes in production
capacities; changes in 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.
CONSOLIDATED STATEMENT OF INCOME
[Unaudited] In thousands, except per share
Second quarter Six months
ended April 30 ended April 30
2000 1999 2000 1999
Sales $904,658 $679,481 $1,704,251 $1,330,196
Other income (expense) 14,854 4,611 27,213 13,316
919,512 684,092 1,731,464 1,343,512
Cost of products sold 617,434 485,836 1,171,677 950,196
Selling, research and
administrative expenses 66,402 56,232 127,184 111,238
Depreciation and amortization 78,907 68,786 150,809 138,117
Interest expense 45,401 30,843 90,701 61,444
808,144 641,697 1,540,371 1,260,995
Income before taxes 111,368 42,395 191,093 82,517
Income taxes 41,200 15,100 70,700 30,000
Net income before
extraordinary charge 70,168 27,295 120,393 52,517
Extraordinary charge -
extinguishment of
debt, net of taxes (8,803) - (8,803) -
Net income $ 61,365 $ 27,295 $ 111,590 $ 52,517
Net income per share:
Basic:
Income before
extraordinary item $ .70 $ .27 $ 1.20 $ .52
Extraordinary item (.09) - (.09) -
Net income $ .61 $ .27 $ 1.11 $ .52
Net income per share:
Diluted:
Income before
extraordinary item $ .70 $ .27 $ 1.20 $ .52
Extraordinary item (.09) - (.09) -
Net income $ .61 $ .27 $ 1.11 $ .52
Shares used to compute net income per share:
Basic 100,607 100,111 100,501 100,188
Diluted 100,978 100,145 100,963 100,308
Consolidated balance sheet
[Unaudited] In thousands At April 30
2000 1999
ASSETS
Cash and marketable securities $ 124,645 $ 91,405
Receivables 352,552 277,971
Inventories 296,701 283,746
Prepaid expenses 69,704 65,611
Current assets 843,602 718,733
Plant and timberlands - net 4,121,163 3,724,542
Other assets 826,653 529,405
$5,791,418 $4,972,680
Liabilities and shareholders' equity
Current liabilities $ 446,675 $ 484,917
Long-term obligations 2,238,841 1,515,121
Deferred income taxes 848,354 792,794
Shareholders' equity 2,257,548 2,179,848
$5,791,410 $4,972,680
Westvaco Corporation and consolidated subsidiary companies
CONSOLIDATED STATEMENT OF CASH FLOWS
[Unaudited] In thousands Six months
ended April 30
2000 1999
Cash flows from operating activities:
Net income $ 111,590 $ 52,517
Reconciliation to operating cash flows:
Provision for depreciation and amortization 150,809 138,117
Provision for deferred income taxes 48,528 26,620
Loss on extinguishment of debt 8,803 -
Pension credit and other employee benefits (48,726) (38,921)
Net changes in assets and liabilities 8,338 (27,723)
Other, net (15,173) (2,050)
Net cash provided by operating activities 264,169 148,560
Cash flows from investing activities:
Additions to plant and timberlands (71,986) (125,470)
Payments for acquisitions (765,060) (22,659)
Proceeds from sales of plant and timberlands 25,294 11,635
Other, net (1,315) (172)
Net cash used in investing activities (813,067) (136,666)
Cash flows from financing activities:
Proceeds from issuance of common stock 8,137 5,777
Proceeds from issuance of debt 1,408,765 498,205
Dividends paid (44,201) (44,071)
Treasury stock purchases (1,255) (9,608)
Repayment of debt (807,150) (462,621)
Net cash provided by (used in)
financing activities 564,296 (12,318)
Effect of exchange rate changes on cash 455 (13,221)
Increase (decrease) in cash and
marketable securities 15,853 (13,645)
Cash and marketable securities:
At beginning of period 108,792 105,050
At end of period $ 124,645 $ 91,405
Segment information
Second quarter Six months
[Unaudited] In millions ended April 30 ended
April 30
Sales 2000 1999 2000 1999
Packaging $494.3 $332.1 $ 882.0 $ 627.8
Rigesa 42.1 30.3 79.3 69.8
Packaging total 536.4 362.4 961.3 697.6
Paper 287.7 241.7 582.5 483.2
Chemical 84.0 75.0 165.4 148.4
Corporate and other 21.0 19.0 42.1 39.9
Total 929.1 698.1 1,751.3 1,369.1
Intersegment eliminations (24.4) (18.6) (47.0) (38.9)
Consolidated totals $904.7 $679.5 $1,704.3 $1,330.2
Operating profit
Packaging $ 82.6 $ 44.5 $ 140.4 $ 77.0
Rigesa 4.6(a) 6.9 10.1(a) 10.6
Packaging total 87.2 51.4 150.5 87.6
Paper 35.4 5.7 68.4 18.6
Chemical 18.3 14.0 31.0 25.3
Corporate and other (29.5) (28.7) (58.8) (49.0)
Consolidated totals $111.4 $ 42.4 $ 191.1 $ 82.5
(a) Includes the writedown of certain underutilized assets of $4.7
million.
Westvaco Corporation and consolidated subsidiary companies
