<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 1-8247
MANVILLE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0856796
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
717 17th Street
Denver, Colorado 80202
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(303) 978-2000
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
----- -----
At August 9, 1995, 122,928,549 shares of the registrant's common stock
were outstanding.
<PAGE> 2
*PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
* "Manville" or the "Company" when used in this report
refers to Manville Corporation, incorporated in the State of Delaware
in 1981, and includes where applicable its consolidated subsidiaries.
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<PAGE> 3
MANVILLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 183,495 $ 322,003
Marketable securities, at cost which
approximates market 62,145 20,311
Receivables, net of allowances 394,455 335,772
Inventories 254,966 212,774
Prepaid expenses 28,992 28,015
Deferred tax assets 42,898 44,854
-----------------------------------
Total Current Assets 966,951 963,729
Property, Plant and Equipment,
net of accumulated depreciation
and depletion of $1,044,694 and
$963,603, respectively 2,128,645 2,063,557
Deferred Tax Assets 254,989 281,874
Other Assets 513,257 490,451
-----------------------------------
$3,863,842 $3,799,611
=========================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-2
<PAGE> 4
MANVILLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Accounts and notes payable $ 308,071 $ 295,510
Compensation and employee benefits 156,814 157,574
Income taxes 28,594 28,739
Other accrued liabilities 114,855 130,748
-----------------------------------
Total Current Liabilities 608,334 612,571
Long-Term Debt, less current portion 1,404,786 1,423,995
Postretirement Benefits Other Than Pensions 247,538 243,986
Deferred Income Taxes and Other Noncurrent
Liabilities 372,801 359,978
-----------------------------------
2,633,459 2,640,530
-----------------------------------
Profit Sharing Obligation (Note 2)
Commitments and Contingencies (Note 2)
Minority Interest in Consolidated
Subsidiary 101,652 95,610
STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------
Cumulative Preference Stock, Series B 178,638 178,638
Common Stock 1,228 1,228
Treasury Stock, at cost (856) (407)
Capital in Excess of Par Value 1,012,341 1,011,310
Unearned Restricted Stock Compensation (4,648) (6,013)
Accumulated Deficit (80,033) (130,394)
Pension Liability Adjustment (435) (435)
Cumulative Currency Translation
Adjustment 22,496 9,544
-----------------------------------
1,128,731 1,063,471
-----------------------------------
$3,863,842 $3,799,611
=========================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-3
<PAGE> 5
MANVILLE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
AND ACCUMULATED DEFICIT
(Thousands of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------------------------------------------------
INCOME 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net Sales $ 720,316 $ 637,165 $1,361,893 $1,168,842
Cost of Sales 532,470 477,838 1,004,919 889,588
Selling, General and
Administrative 85,573 68,395 154,282 130,293
Research, Development
and Engineering 10,170 9,642 20,504 18,506
Other Income (Loss), net (2,462) (3,937) (8,797) (8,155)
--------------------------------------------------------------------
Income from Operations 89,641 77,353 173,391 122,300
Interest Income 4,331 2,166 9,096 4,337
Interest Expense 38,655 34,213 77,130 66,150
Profit Sharing Expense
(Note 2) 8,071 5,233 15,558 7,310
--------------------------------------------------------------------
Income before Income Taxes 47,246 40,073 89,799 53,177
Income Taxes 21,473 17,370 40,409 22,628
--------------------------------------------------------------------
Income before Equity in
Earnings of Affiliate
and Minority Interest 25,773 22,703 49,390 30,549
Equity in Earnings of
Affiliate, net of taxes 10,913 18,653
Minority Interest in
Consolidated Subsidiary (3,195) (2,042) (5,221) (2,502)
--------------------------------------------------------------------
Net Income 33,491 20,661 62,822 28,047
Preference Stock Dividends (6,230) (6,230) (12,461) (12,461)
--------------------------------------------------------------------
Net Income Applicable to
Common Stock $ 27,261 $ 14,431 $ 50,361 $ 15,586
===========================================================================================================================
ACCUMULATED DEFICIT
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Deficit at
Beginning of Period $(107,294) $(141,312) $ (130,394) $ (142,467)
Net Income 33,491 20,661 62,822 28,047
Preference Stock Dividends (6,230) (6,230) (12,461) (12,461)
--------------------------------------------------------------------
Accumulated Deficit at
End of Period $ (80,033) $(126,881) $ (80,033) $ (126,881)
- ---------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON
SHARE (AFTER PREFERENCE
STOCK DIVIDENDS)
- ---------------------------------------------------------------------------------------------------------------------------
Primary:
Net Income Applicable to
Common Stock $.22 $.12 $.41 $.13
===========================================================================================================================
Fully Diluted:
Net Income Applicable to
Common Stock $.22 $.12 $.40 $.13
===========================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-4
<PAGE> 6
MANVILLE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income(before Preference Stock Dividends) $ 62,822 $ 28,047
Non-cash items included in net income:
Depreciation, depletion and amortization 75,328 73,750
Deferred taxes 26,408 10,260
Roofing guarantee income 3,855 2,306
Pensions and postretirement benefits expense 14,778 13,785
Provision for furnace rebuild 4,196 4,255
Interest expense 873
Profit sharing expense 15,558 7,310
Translation loss 4,432
Equity in earnings of affiliate, net of dividends (16,924)
Minority interest in net income of
consolidated subsidiary 5,221 2,502
Other, net 4,199 7,425
Profit sharing paid (18,259) (12,933)
(Increase) decrease in current assets:
Receivables (48,130) (48,368)
Inventories (35,120) 4,771
Prepaid expenses (136) (6,739)
Increase (decrease) in current liabilities:
Accounts payable 1,840 (8,526)
Compensation and employee benefits (10,087) (13,562)
Income taxes 240 (573)
Other accrued liabilities (14,475) 10,154
Decrease in postretirement benefits
other than pensions (6,770) (4,239)
Decrease in other noncurrent liabilities (2,373) (6,950)
---------------------------
Net cash provided by operating activities 63,044 67,107
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------------------
Purchases of property, plant and equipment (128,998) (162,662)
Proceeds from sales of assets 16,791 35,514
Proceeds from sales of held-to-maturity
marketable securities 42,630 109,993
Purchases of held-to-maturity marketable
securities (84,463) (72,728)
Increase in other assets (391) (25,413)
---------------------------
Net cash used in investing activities (154,431) (115,296)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------------------
Issuance of debt 11,234 48,438
Payments on debt (47,242) (44,572)
Dividends on Preference Stock (12,461) (10,384)
Dividends to minority stockholders of
consolidated subsidiary (979) (968)
Treasury stock (449) (407)
Other stock transactions 2,175
---------------------------
Net cash used in financing activities (47,722) (7,893)
---------------------------
Effect of Exchange Rate Changes on Cash 601 165
---------------------------
Net Decrease in Cash and Equivalents (138,508) (55,917)
Cash and Equivalents at Beginning of Period 322,003 153,093
---------------------------
Cash and Equivalents at End of Period $ 183,495 $ 97,176
============================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-5
<PAGE> 7
MANVILLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Manville Corporation is an international holding company with two
principal operating subsidiaries, Riverwood International Corporation
("Riverwood") and Schuller International Group, Inc. ("Schuller"), collectively
referred to as the "Company." When referring to the holding company only,
Manville Corporation is defined as the "Manville holding company." The
Manville holding company owns 100 percent of Schuller and approximately 81.3
percent of Riverwood.
Manville Personal Injury Settlement Trust (the "PI Trust") owns
approximately 78 percent of the Company's Common Stock. In addition, the
Company has a debt obligation to the PI Trust and an obligation to pay annually
20 percent of its net earnings, as adjusted, to the PI Trust (see Note 2).
On December 29, 1994, Riverwood sold just under 50 percent of its
investment in its Brazilian operations (Igaras) after first spinning off a
wholly owned subsidiary to operate Riverwood's packaging machinery operations
in Brazil. Prior to that date, Riverwood owned 100 percent of Igaras and
included the results of operations of Igaras in the Containerboard business
segment through the date of sale. Subsequent to December 29, 1994, Riverwood
no longer consolidates Igaras, but instead reports its investment in Igaras
using the equity method of accounting.
The condensed consolidated financial statements as of June 30, 1995 and
December 31, 1994 and for the three and six month periods ended June 30, 1995
and 1994 reflect all normal, recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the financial condition and
the results of operations for the periods presented. The year-end condensed
consolidated balance sheet was derived from audited financial statements, and
as presented does not include all disclosures required by generally accepted
accounting principles.
The Company has reclassified the presentation of certain prior period
information to conform with the current presentation format.
Additional information regarding the Company's accounting policies,
operations, financial position, reorganization proceedings and the PI Trust is
contained or incorporated in the Company's Form 10-K for the year ended
December 31, 1994 filed with the Securities and Exchange Commission.
I-6
<PAGE> 8
Note 1 - Inventories
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
(Thousands of dollars)
June 30, December 31,
1995 1994
-------------------------------
<S> <C> <C>
Finished goods $103,026 $ 83,922
Work-in-process 31,859 28,517
Raw materials 74,931 56,934
Supplies 45,150 43,401
------------------------------
$254,966 $212,774
==============================
</TABLE>
Note 2 - Commitments and Contingencies
The Company has an obligation to pay annually 20 percent of its net
earnings (as adjusted) to the PI Trust. Payments to the PI Trust are due each
year based on the prior year's net earnings and will continue for as long as the
PI Trust is in existence. After termination of the PI Trust, an independent
profit sharing obligation on the same terms arises in favor of Manville Property
Damage Settlement Trust, if it is in existence after the termination of the PI
Trust. Based upon a review of the existing and potential claims facing the two
trusts, the Company believes that profit sharing, for all practical purposes,
will be payable in perpetuity unless the Company and one or both of the trusts
agree to a restructuring or modification of the profit sharing obligation at
some future date. In the first half of 1995, the Company recorded $15.6 million
of profit sharing expense to be paid in 1996.
Between 1988 and 1992, the Company manufactured phenolic roofing
insulation which, the Company has learned, contributes to the corrosion of metal
decks on which it is installed. Subsequently, the Company exited the phenolic
roofing insulation business and embarked upon a voluntary sampling and
inspection program of such metal decks.
Based on statistics and other information compiled from the voluntary
sampling and inspection program, at June 30, 1995 the Company estimates that
approximately 72 million square feet of metal roof deck were insulated with the
Company's phenolic roof product, of which approximately 45 percent had been
inspected. Based on the inspection and sampling program and the Company's claims
experience through June 30, 1995 and assuming this experience continues into the
future, approximately 1.9 million square feet of roof deck have been remediated
or will require remediation. In most cases only "spot remediation" has been
required to address the damage to the roof decks. However, the exact square
footage of roof deck that will require remediation and the actual type and cost
of such remediation are dependent
I-7
<PAGE> 9
upon a number of variables and cannot be determined at this time.
Through June 30, 1995, the cumulative cash expended by the Company for
sampling, inspection, remediation and claims settlement was approximately $12.1
million.
At June 30, 1995, the Company's accrual for future sampling,
inspection, remediation and present and anticipated claims totaled $6.6
million. This amount was computed by giving effect to information available
from the Company's inspection and sampling program conducted through June 30,
1995, remediation experience, historical claims experience, the types of roofs
on which phenolic insulation has been installed and the average cost of
remediation, as well as the Company's assumption that its past remediation
experience will continue into the future.
The Company has insurance that applies to property damage resulting
from metal deck corrosion. During the first quarter of 1995, the Company and
its primary insurance carrier reached a settlement regarding the extent of
coverage. Under the terms of a confidential settlement agreement, the
Company's insurance carrier will reimburse the Company for a portion of certain
phenolic- related costs. The insurance carrier's portion of costs under the
settlement agreement is expected to exceed the $7 million receivable previously
recorded by the Company for future expected recoveries.
Based upon the Company's settlement agreement with its primary
insurance carrier and the experience, information and assumptions referred to
above, in management's opinion the range of the Company's portion of the
ultimate gross loss with respect to sampling, inspection, remediation and
claims settlement in excess of amounts previously accrued is between zero and
$20 million.
In 1993, the Company filed a lawsuit against the former owner of the
phenolic roofing insulation business. Subsequent to June 30, 1995, the
Company and the former owner of the business reached a settlement with respect
to this litigation.
The Company is engaged in environmental remediation projects for
properties currently owned or operated by the Company and properties divested
by the Company for which responsibility was retained for preexisting
conditions. In addition, the Company has been identified as a potentially
responsible party at a number of non-Company owned or operated sites under the
federal Comprehensive Environmental Response, Compensation and Liability Act or
similar state legislation, and as such could be jointly and severally liable
for the costs of remediating these sites. The Company's actual final cost in
some instances cannot be estimated until the remediation process is
substantially completed.
I-8
<PAGE> 10
Environmental law is dynamic, and as a result, costs that are
unforeseeable at this time may be incurred when new laws are enacted and when
environmental agencies promulgate or revise regulations in furtherance of such
legislation. In response to the implementation of the 1990 amendments to the
federal Clean Air Act and requirements of various state air emissions
regulations, the Company will be obligated to monitor emissions at its
manufacturing sites. Because many of the anticipated regulations have not yet
been proposed, neither the costs nor timing of compliance can be reasonably
anticipated at this time. Provisions of the 1990 amendments and the related
regulations will likely require capital expenditures in the years 1995 to 2001,
with most of the expenditures occurring in the latter part of that time frame.
In addition, the federal Environmental Protection Agency will soon issue new
proposed regulations for the pulp and paper industry, although it is expected
that the earliest time for industry compliance with these proposed regulations
should not be prior to the first quarter of 2000. At this time, Riverwood
estimates capital spending that may be required to comply with the pulp and
paper industry proposed regulations could be between $20 million and $40
million to be spent over a three-year period beginning in 1997.
The Company periodically reviews and, as appropriate, revises its
environmental accruals. Based on current information and regulatory
requirements, the Company believes that to the extent additional costs may be
incurred that might exceed the accrued amounts, such amounts are not expected
to have a material adverse effect on the Company's financial condition,
liquidity or results of operations.
Note 3 - Income Taxes
In the first quarter of 1994, the Company recognized a deferred tax
benefit of $0.8 million primarily related to a tax law change in Sweden
that reduced the statutory Swedish federal tax rate to 28 percent from 30
percent.
Exclusive of the tax benefit on the Swedish tax law change, the
Company's tax rates for the first six months of 1995 and 1994 were 45 percent
and 44 percent, respectively. These are higher than the U.S. federal statutory
rate primarily due to higher foreign effective tax rates and U.S. state and
local taxes.
Note 4 - Earnings Per Common Share
For the second quarter of 1995, primary and fully diluted earnings per
common share amounts were based on 124,684,000 and 125,301,000 weighted average
common equivalent shares outstanding, respectively. Primary and fully diluted
earnings per common share amounts for the first six months of 1995 were based
on 123,774,000 and 125,303,000 weighted average common equivalent shares
outstanding, respectively.
I-9
<PAGE> 11
The 1994 second quarter primary and fully diluted earnings per common
share amounts were based on 122,321,000 and 122,312,000 weighted average common
equivalent shares outstanding, respectively. Primary and fully diluted
earnings per common share amounts for the first six months of 1994 were based
on 122,408,000 weighted average common equivalent shares outstanding.
Earnings per share amounts were calculated after the deduction for
preference stock dividends.
Note 5 - Acquisition
In January 1995, Riverwood acquired a 70 percent interest in the
Lemaire Group, a French company which supplies beverage and folding cartons in
France and central Europe from four carton converting facilities in France.
Terms of the acquisition require Riverwood to purchase the Lemaire Group's
remaining 30 percent interest prior to 1998. Accordingly, Riverwood recorded a
$10.2 million note payable for the unpaid portion of the purchase price which
bears interest at six percent per annum. This acquisition involved the
purchase of assets with a fair value of $27 million and the assumption of
liabilities of $16.9 million.
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<PAGE> 12
Note 6 - Business Segment Information
<TABLE>
<CAPTION>
(Thousands of dollars)
Manville Corporation Three Months
Consolidated Major Business Segments Ended June 30,
1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales
- ----------------------------------------------------------------------------------------------------
Riverwood International:
Coated Board System $272,338 $211,397
Containerboard 56,514 65,420
U.S. Timberlands/Wood Products 42,866 42,285
Corporate and Eliminations (5,453) (5,107)
- ----------------------------------------------------------------------------------------------------
366,265 313,995
- ----------------------------------------------------------------------------------------------------
Schuller International:
Building Products 198,335 185,933
Engineered Products 162,374 144,330
Corporate and Eliminations (6,658) (7,092)
- ----------------------------------------------------------------------------------------------------
354,051 323,171
Manville Corporate and Eliminations (1)
- ----------------------------------------------------------------------------------------------------
Total Company Net Sales $720,316 $637,165
====================================================================================================
Income (Loss) From Operations
- ----------------------------------------------------------------------------------------------------
Riverwood International:
Coated Board System $ 30,248 $ 31,359
Containerboard 11,962 1,222
U.S. Timberlands/Wood Products 14,502 14,453
Corporate and Eliminations (20,062) (6,255)
- ----------------------------------------------------------------------------------------------------
36,650 40,779
- ----------------------------------------------------------------------------------------------------
Schuller International:
Building Products 34,587 29,540
Engineered Products 31,611 21,898
Corporate and Eliminations (7,560) (9,963)
- ----------------------------------------------------------------------------------------------------
58,638 41,475
Manville Corporate and Eliminations (5,647) (4,901)
- ----------------------------------------------------------------------------------------------------
Total Company Income from
Operations $ 89,641 $ 77,353
====================================================================================================
</TABLE>
Net sales included in Corporate and Eliminations relate primarily to
the elimination of intersegment sales (at prices approximating market).
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<PAGE> 13
<TABLE>
<CAPTION>
(Thousands of dollars)
Manville Corporation Six Months
Consolidated Major Business Segments Ended June 30,
1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales
- ----------------------------------------------------------------------------------------------------
Riverwood International:
Coated Board System $ 490,628 $ 381,349
Containerboard 115,207 129,841
U.S. Timberlands/Wood Products 83,902 76,811
Corporate and Eliminations (10,296) (9,098)
- ----------------------------------------------------------------------------------------------------
679,441 578,903
- ----------------------------------------------------------------------------------------------------
Schuller International:
Building Products 377,467 331,514
Engineered Products 318,573 270,422
Corporate and Eliminations (13,588) (11,735)
- ----------------------------------------------------------------------------------------------------
682,452 590,201
Manville Corporate and Eliminations (262)
- ----------------------------------------------------------------------------------------------------
Total Company Net Sales $1,361,893 $1,168,842
===================================================================================================
Income (Loss) from Operations
- ----------------------------------------------------------------------------------------------------
Riverwood International:
Coated Board System $ 46,827 $ 55,012
Containerboard 20,824 (5,777)
U.S. Timberlands/Wood Products 30,727 26,670
Corporate and Eliminations (30,826) (12,628)
- ----------------------------------------------------------------------------------------------------
67,552 63,277
- ----------------------------------------------------------------------------------------------------
Schuller International:
Building Products 64,435 44,539
Engineered Products 63,812 37,253
Corporate and Eliminations (13,889) (16,792)
- ----------------------------------------------------------------------------------------------------
114,358 65,000
Manville Corporate and Eliminations (8,519) (5,977)
- ----------------------------------------------------------------------------------------------------
Total Company Income from
Operations $ 173,391 $ 122,300
====================================================================================================
</TABLE>
Net sales included in Corporate and Eliminations relate primarily to the
elimination of intersegment sales (at prices approximating market).
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<PAGE> 14
Report of Independent Accountants
To the Stockholders and Directors
of Manville Corporation:
We have reviewed the accompanying condensed consolidated balance sheet
of Manville Corporation as of June 30, 1995 and the related condensed
consolidated statement of income and accumulated deficit for the three month
and six month periods ended June 30, 1995 and 1994 and condensed consolidated
statement of cash flows for the six month periods ended June 30, 1995 and 1994.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31, 1994, and
the related consolidated statements of income, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our report dated
February 6, 1995, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1994, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
Denver, Colorado
August 11, 1995
I-13
<PAGE> 15
ITEM 2.
MANVILLE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Manville Corporation is an international holding company with two
principal operating subsidiaries, Riverwood International Corporation
("Riverwood") and Schuller International Group, Inc. ("Schuller"), collectively
referred to as the "Company." When referring to the holding company only,
Manville Corporation is defined as the "Manville holding company." The
Manville holding company owns 100 percent of Schuller and approximately 81.3
percent of Riverwood. The Company reports the results of Riverwood's and
Schuller's operations in five business segments.
Riverwood reports its results in three business segments: Coated Board
System, Containerboard and U.S. Timberlands/Wood Products. The Coated Board
System segment includes the production and sale of coated board from paperboard
mills in the United States and Europe; converting operations at facilities in
the United States, Australia and Europe; and worldwide packaging machinery
operations related to the production and sale of beverage and folding cartons.
The Containerboard segment includes the production and sale of linerboard,
corrugating medium and kraft paper from two paperboard mills in the United
States. The U.S. Timberlands/Wood Products segment includes timberlands and
operations engaged in the supply of pulpwood to the West Monroe, Louisiana mill
from Riverwood's
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<PAGE> 16
U.S. timberlands, as well as the manufacture and sale of lumber and
plywood. Prior to December 29, 1994, the Containerboard business segment
included timberlands and associated containerboard mills and corrugated box
plants at Igaras Papeis e Embalagens S.A. ("Igaras") in Brazil. At that date,
Riverwood owned 100 percent of Igaras and included the results of operation of
Igaras in the Containerboard business segment. On December 29, 1994, Riverwood
sold just under 50 percent of its investment in Igaras, after first spinning
off a wholly owned subsidiary to operate Riverwood's packaging machinery
operations in Brazil. Subsequent to that date, Riverwood no longer
consolidates Igaras, but instead reports its investment in Igaras using the
equity method of accounting since Riverwood no longer controls Igaras.
In 1994, Riverwood completed a two-year construction project to convert
over half of the 525,000 ton annual linerboard capacity at its Macon, Georgia,
paperboard mill to coated board production (the "Macon Conversion"). With this
accomplished, Riverwood's dedicated annual linerboard capacity was decreased by
275,000 tons and will gradually be replaced as Riverwood's production of coated
board at the Macon mill reaches the machine's design capacity of 300,000 tons
in 1996. Riverwood's coated board capacity can also be used for linerboard
production when market conditions warrant.
Schuller manufactures and markets insulation for buildings and
equipment, commercial roofing systems, high-efficiency air
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<PAGE> 17
filtration media, and fibers and nonwoven mats used as reinforcements
in building and industrial applications. Schuller operates 35 manufacturing
facilities in the United States, Canada and Germany, and is comprised of two
principal business segments: Building Products and Engineered Products. The
Building Products segment consists of Schuller's building insulation business,
which manufactures fiberglass wool insulation for walls and attics in
residential and commercial buildings; the commercial and industrial roofing
systems business, which supplies roofing membranes, insulations, accessories
and related guarantees; and the mechanical insulations business, which
manufactures pipe and duct insulation for use in commercial buildings,
factories, refineries and other industrial applications. The Engineered
Products segment consists of Schuller's specialty insulations and filtration
business which manufactures thermal and acoustic insulation for aircraft,
appliances, automobiles and heating, ventilating and air conditioning
equipment; air filtration media for commercial and industrial buildings; and
microfibers for clean room air filters. The Engineered Products segment also
includes Schuller's mats and fibers business which manufactures continuous
filament fiberglass-based products used for reinforcing roofing, flooring, wall
covering and plastic products. The mats and fibers business includes
Schuller's German subsidiary, Schuller GmbH.
Financial results for the Manville holding company's interest in
Stillwater Mining Company, a company engaged in the exploration,
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<PAGE> 18
development, mining and production of palladium, platinum and
associated metals, are included in Manville Corporate and Eliminations for
business segment reporting purposes.
RIVERWOOD RESULTS OF OPERATIONS BY SEGMENT
Riverwood reported its results of operations in its second quarter 1995
Form 10-Q substantially as presented below.
Second Quarter 1995 Compared With Second Quarter 1994
Net sales in the second quarter of 1995 increased $52.3 million, or
16.6 percent, compared with the second quarter of 1994. Net sales in the
Coated Board System segment increased $60.9 million in the second quarter of
1995, or 28.8 percent, due principally to increased volume in worldwide
beverage markets and coated board open markets outside of North America. Also
contributing to the higher sales level in the second quarter of 1995 were
higher selling prices in coated board open markets and the effect of recent
acquisitions of converting operations. These increases were partially offset
by selling price pressures in international folding carton markets and by a
reduction in packaging machinery leasing revenues due to the introduction of a
new packaging machinery program in 1994. Net sales in the Containerboard
segment in the second quarter of 1995 decreased $8.9 million, or 13.6 percent,
compared with the second quarter of 1994. Excluding the operations of Igaras
which were included in this business segment in the second quarter of 1994,
net sales in the Containerboard segment
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<PAGE> 19
increased $18.9 million, or 50.2 percent, primarily due to selling
price increases which more than offset the volume decrease that resulted from
the Macon Conversion. Net sales in the U.S. Timberlands/Wood Products segment
increased by $0.6 million, or 1.4 percent, due principally to an increase in
timber sales, as well as selling price increases for plywood. These increases
were largely offset by lower selling prices for lumber.
Gross profit for the second quarter of 1995 increased $11.7 million, or 15.9
percent, from the second quarter of 1994. The gross profit margin remained
relatively unchanged at 23.4 percent for 1995. Gross profit in the Coated
Board System segment increased $5.2 million, or 9.9 percent, while its gross
profit margin decreased to 21.4 percent in 1995 from 25.1 percent in 1994.
Gross profit and the gross profit margin were primarily impacted by increased
volume in worldwide beverage markets, increased selling prices in coated board
open markets and the effects of recent acquisitions. These increases were
largely offset by lower packaging machinery leasing revenues, by certain cost
increases and by selling price pressures in international folding carton
markets. The cost increases were principally the result of increased recycled
fiber costs and higher fixed costs at the Macon mill. In the Containerboard
segment, gross profit increased $7.3 million to over twice the 1994 level,
while the gross profit margin increased to 24.1 percent in 1995 from 9.6
percent in 1994. Excluding the operations of Igaras, which were included in
this business segment in the second quarter of 1994, gross profit increased
$15.4 million from a loss in 1994. The
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<PAGE> 20
increase in gross profit was due primarily to higher Containerboard
selling prices worldwide that more than offset the increased cost of recycled
fiber, higher fixed costs at the Macon mill and the volume decrease that
resulted from the Macon Conversion. Gross profit in the U.S. Timberlands/Wood
Products segment decreased by $0.4 million, or 3 percent, and the gross profit
margin decreased to 33.5 percent from 35 percent. Lower selling prices for
lumber more than offset increased timber sales, increased selling prices for
plywood and lower log costs as Riverwood used a greater portion of logs from
its own timberlands in the second quarter of 1995 than in the second quarter of
1994.
Total board mill shipments for the second quarters of 1995 and 1994,
including shipments to Riverwood's integrated converting plants and including
88,000 tons of Containerboard shipments from Igaras in 1994, were as follows:
<TABLE>
<CAPTION>
(In thousands of tons)
1995 1994
------------------------------
<S> <C> <C>
Coated Board 275.5 232.3
Containerboard 121.0 243.2
------------------------------
396.5 475.5
==============================
</TABLE>
I-19
<PAGE> 21
Excluding the stock-based compensation and accrued expenses discussed
below and the operations of Igaras, which were reported on a consolidated basis
in the second quarter of 1994, selling, general and administrative expenses
increased $4.9 million, or 17.7 percent while net sales increased 28 percent.
The increase in selling, general and administrative expenses was primarily due
to increases in selling, marketing and administrative expenses to penetrate
worldwide coated board markets. Additionally, other costs and expenses
associated with stock-based compensation plans and accrued expenses related to
Riverwood's review of strategic alternatives for the second quarter of 1995
increased $13.1 million from the second quarter of 1994. The closing price of
Riverwood's common stock traded on the New York Stock Exchange increased from
$19.00 per share at the end of the first quarter of 1995 to $23.25 per share at
the end of the second quarter of 1995, resulting in an increase in stock-based
compensation expense. Research, development and engineering expenses remained
relatively unchanged at $2.3 million for the second quarter of 1995.
Other income (loss), net, decreased $1.2 million to a net loss of $0.4
million in the second quarter of 1995, resulting primarily from higher net
exchange losses on foreign currency transactions and lower income from oil and
gas mineral rights, offset in part by a gain on the sale of certain
timberlands.
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<PAGE> 22
Income from operations in the second quarter of 1995 decreased $4.1
million, or 10.1 percent, compared with the second quarter of 1994, while the
operating margin as a percent of net sales decreased to 10 percent from 13
percent. The Coated Board System segment's income from operations decreased
$1.1 million, or 3.5 percent, to $30.2 million in the second quarter of 1995,
and the operating margin decreased to 11.1 percent from 14.8 percent. In
addition to manufacturing-related cost increases and lower packaging machinery
leasing revenues, increased volume and selling prices in certain coated board
markets were more than offset by increases in selling, marketing and
administrative expenses incurred to penetrate worldwide coated board markets
and higher net exchange losses on foreign currency transactions. Income from
operations in the Containerboard segment increased $10.7 million to $12 million
in the second quarter of 1995 from the second quarter of 1994. Excluding the
operations of Igaras, which were included in this business segment in the
second quarter of 1994, income from operations increased $15.8 million from the
second quarter of 1994, due principally to increased selling prices that more
than offset cost increases in recycled fiber, higher fixed costs and the
decrease in containerboard volume at the Macon mill. Income from operations in
the U.S. Timberlands/Wood Products segment remained unchanged at $14.5 million
in the second quarter of 1995, and the operating margin decreased to 33.8
percent from 34.2 percent in the second quarter of 1994 due principally to
lower selling prices for lumber, offset in part by a gain on the sale of
timberlands.
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<PAGE> 23
Fluctuations in U.S. dollar currency exchange rates did not have a
significant impact on net sales, gross profit, operating expenses or income
from operations of Riverwood or any of its business segments during the second
quarter of 1995 when compared to the same period of 1994.
First Six Months of 1995 Compared With First Six Months of 1994
Net sales in the first six months of 1995 increased $100.5 million, or
17.4 percent, compared with the same period of 1994. Net sales in the Coated
Board System segment increased $109.3 million in the first half of 1995, or
28.7 percent, due principally to increased worldwide volume in all coated board
markets, as well as increased selling prices in coated board open markets and
the effect of recent acquisitions. These increases were partially offset by
pricing pressures in international folding carton markets and by lower
packaging machinery leasing revenues. Net sales in the Containerboard segment
in the first six months of 1995 decreased $14.6 million, or 11.3 percent,
compared with the first six months of 1994. Excluding the operations of Igaras
which were included in this business segment in 1994, net sales in the
Containerboard segment increased $37.3 million, or 47.8 percent, primarily due
to selling price increases which more than offset the volume decrease that
resulted from the Macon Conversion. Net sales in the U.S. Timberlands/Wood
Products segment increased by $7.1 million, or 9.2 percent, due principally to
an increase in timber sales, increased volume for lumber and plywood and
selling price increases for
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<PAGE> 24
plywood. These increases were partially offset by lower selling prices
for lumber.
Gross profit for the first six months of 1995 increased $22.7 million,
or 17.2 percent, from the first six months of 1994. The gross profit margin
remained constant at 22.8 percent. Gross profit in the Coated Board System
segment increased $3.2 million, or 3.3 percent, while its gross profit margin
decreased to 20.5 percent from 25.5 percent. Higher volume in worldwide coated
board markets, the effects of recent acquisitions and selling price increases
in coated board open markets were largely offset by certain cost increases and
lower packaging machinery revenues. The cost increases were principally the
result of increased recycled fiber costs and higher fixed costs at the Macon
mill. In the Containerboard segment, gross profit increased $16.1 million to
almost three times the 1994 amount, while the gross profit margin increased to
21 percent from 6.2 percent. Excluding the operations of Igaras, which were
included in this business segment in 1994, gross profit increased $29.3 million
from a loss in 1994. The increase in gross profit was due primarily to higher
containerboard selling prices worldwide that more than offset the increased
cost of recycled fiber and the volume decrease that resulted from the Macon
Conversion. Gross profit in the U.S. Timberlands/Wood Products segment
increased by $3.9 million, or 14.1 percent, and the gross profit margin
increased to 37.3 percent from 35.7 percent. In addition to volume increases
for plywood and lumber,
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<PAGE> 25
and selling price increases for plywood, gross profit and the gross
profit margin in this business segment increased due to lower raw materials
costs as Riverwood used a greater portion of logs from its own timberlands in
the first six months of 1995 compared to the first half of 1994. These
increases were partially offset by lower selling prices for lumber.
Total board mill shipments for the first six months of 1995 and 1994,
including shipments to Riverwood's integrated converting plants and including
169,400 tons of containerboard shipments from Igaras in 1994, were as follows:
<TABLE>
<CAPTION>
(In thousands of tons)
1995 1994
------------------------------
<S> <C> <C>
Coated Board 527.5 416.2
Containerboard 250.5 486.8
------------------------------
778.0 903.0
==============================
</TABLE>
Excluding the stock-based compensation and accrued expenses discussed
below and the operations of Igaras, which were reported on a consolidated basis
in 1994, selling, general and administrative expenses increased $6.3 million,
or 11.2 percent, while net sales increased 28.9 percent. The increase in
selling, general and administrative expenses was primarily due to increases in
selling, marketing and administrative expenses to penetrate worldwide coated
board markets. Additionally, other costs and
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<PAGE> 26
expenses associated with stock-based compensation plans and accrued
expenses related to Riverwood's review of strategic alternatives for the first
six months of 1995 increased $15.5 million from the first six months of 1994.
The closing price of Riverwood's common stock traded on the New York Stock
Exchange increased from $15.625 per share at December 31, 1994, to $23.25 per
share at the end of the second quarter of 1995, resulting in an increase in
stock-based compensation expense. Research, development and engineering
expenses increased by $1.6 million to $6.2 million, primarily due to a higher
level of packaging machinery engineering costs associated with expanding
packaging machinery operations.
Other income (loss), net, decreased $1.7 million to a net loss of $2.2
million in the first six months of 1995, resulting primarily from higher net
exchange losses on foreign currency transactions and lower income from oil and
gas mineral rights, offset in part by a gain on the sale of certain
timberlands.
Income from operations in the first six months of 1995 increased $4.3
million, or 6.8 percent, compared with the first six months of 1994, while the
operating margin as a percent of net sales decreased to 9.9 percent from 10.9
percent. The Coated Board System segment's income from operations decreased
$8.2 million, or 14.9 percent, to $46.8 million in the first six months of
1995, and the operating margin decreased to 9.5 percent from 14.4 percent. In
addition to manufacturing-related cost increases and lower
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<PAGE> 27
packaging machinery leasing revenues, increased worldwide coated board
volume and higher selling prices in coated board open markets were more than
offset by increases in selling, marketing and administrative expenses incurred
to penetrate worldwide coated board markets and higher net exchange losses on
foreign currency transactions. Income from operations in the Containerboard
segment increased $26.6 million to $20.8 million in the first six months of
1995 from a loss of $5.8 million in the first half of 1994. Excluding the
operations of Igaras, which were included in this business segment in 1994,
income from operations increased $32.3 million from the first six months of
1994, due principally to increased selling prices that more than offset cost
increases in recycled fiber and the decrease in containerboard volume at the
Macon mill. Income from operations in the U.S. Timberlands/Wood Products
segment increased $4.1 million, or 15.2 percent, in the first six months of
1995, and the operating margin increased to 36.6 percent from 34.7 percent in
the first six months of 1994. These increases were due principally to
increased lumber, plywood and pulpwood volume, increased plywood selling prices
and lower log costs, as Riverwood used a greater portion of logs from its own
timberlands in the first six months of 1995 than in the same period of 1994.
These increases were partially offset by lower selling prices for lumber and a
decrease in income from oil and gas mineral rights.
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<PAGE> 28
Fluctuations in U.S. dollar currency exchange rates did not have a
significant impact on net sales, gross profit, operating expenses or income
from operations of Riverwood or any of its business segments for the six months
ended June 30, 1995.
SCHULLER RESULTS OF OPERATIONS BY SEGMENT
Schuller reported its results of operations in its second quarter 1995
Form 10-Q substantially as presented below.
Second Quarter 1995 Compared With Second Quarter 1994
Income from operations for the second quarter of 1995 increased $17
million, or 41 percent, and net sales increased $31 million, or 10 percent,
compared with the same period of 1994. Gross profit for the second quarter of
1995 increased $17 million, or 20 percent, compared with the second quarter of
1994. The year-over-year improvement in operating results for substantially
all of Schuller's business operations reflects increased commercial and
industrial construction activity.
In the Building Products segment income from operations increased $5
million, or 17 percent, and net sales increased $12 million, or 7 percent,
compared with the same period of 1994. Operating results of the building
insulation business reflected increased sales which were primarily attributable
to higher selling prices. Sales volume increased slightly as increases in the
commercial and industrial construction markets were offset by declines in
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<PAGE> 29
housing starts in the U.S. and Canada. The mechanical insulations business
reported improved operating results due to increased U.S. non-residential
construction and market share gains as a result of a competitor's exit from
this market. Operating results of the roofing systems business reflected
higher volumes from increased U.S. commercial and industrial construction
activity, offset by the increased cost of certain raw materials and startup
costs associated with new equipment.
In the Engineered Products segment income from operations increased $10
million, or 44 percent, and net sales increased $18 million, or 13 percent,
compared with the same period of 1994. The increase was primarily attributable
to Schuller's mats and fibers business, which experienced increased sales
volume and higher selling prices, reflecting higher levels of U.S. and European
construction activity. The industry continued to operate at full capacity
which also contributed to improved pricing in most markets. In addition, the
weakening of the U.S. dollar against the German mark resulted in higher
reported U.S. dollar income from operations in the German mats and fibers
business. Operating profits in the filtration business reflected continued
strong demand for Schuller's microfibers used in high-efficiency air filtration
and battery separators. In the specialty insulations business operating
profits were flat reflecting weakness in the automotive market.
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<PAGE> 30
Other operating expenses include selling, general, administrative,
research, development and engineering expenses. These expenses increased $2
million during the quarter and remained constant as a percentage of net sales
at 12 percent compared with the same period of 1994.
Other loss for the second quarter of 1995 decreased $2 million from $5
million recorded in the second quarter of 1994, which included $3 million for
the 1994 write-down of excess leased office space.
First Six Months of 1995 Compared With First Six Months of 1994
Schuller reported an increase in income from operations of $49 million,
or 76 percent, and an increase in net sales of $92 million, or 16 percent, for
the six months ended June 30, 1995 compared with the same period of 1994.
Gross profit for the period increased $55 million, or 37 percent.
The Building Products segment reported an increase in income from
operations of $20 million, or 45 percent, and an increase in net sales of $46
million, or 14 percent, compared with the same period of 1994. This segment's
businesses benefited from increases in both commercial and residential
construction during the first half of 1995 compared with the same period of
1994. Strong demand coupled with the building insulation industry operating at
or near full capacity resulted in substantial price increases and improved
operating results in the building insulation business. Sales
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<PAGE> 31
volume also increased as a result of these market conditions and
technological improvements which were made during the first half of the year to
increase production capacity. The mechanical insulations business reported
improved operating results due primarily to higher sales volume, as a result of
increased commercial and industrial construction activity. In the roofing
systems business operating results for the first half of the year were
comparable to those reported for the same period of 1994, as higher sales
volumes from increased commercial and industrial construction were almost
entirely offset by the increased cost of certain raw materials and startup
costs associated with new equipment.
The Engineered Products segment reported an increase in income from
operations of $27 million, or 71 percent, and an increase in net
sales of $48 million, or 18 percent, compared with the same period of 1994.
The increase was primarily attributable to Schuller's mats and fibers business,
which experienced increased sales volume and higher selling prices, reflecting
higher levels of U.S. and European construction activity, as well as the
continuing high capacity utilization of continuous filament glass. In
addition, the weakening of the U.S. dollar against the German mark resulted in
higher reported U.S. dollar income from operations in the German mats and
fibers business. Operating results of Schuller's specialty insulations and
filtration businesses also increased
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<PAGE> 32
during the first half of 1995 compared with 1994 reflecting continued
strong demand for Schuller's microfibers.
Other operating expenses increased $6 million during the first six
months of 1995 and decreased as a percentage of net sales to 12 percent in 1995
from 13 percent in 1994.
Other loss totalled $8 million for the first six months of 1995 and
1994. Other loss reported for 1995 included $3 million for additional legal
costs incurred and anticipated in connection with litigation against the former
owner of the phenolic roofing insulation business, while amounts reported in
1994 included $3 million for the write-down of excess leased office space.
TOTAL COMPANY RESULTS
Total Company net sales in the second quarter of 1995 increased $83.2
million, or 13.1 percent, from the second quarter of 1994 and increased $193.1
million, or 16.5 percent, in the first six months of 1995 over the same period
of 1994. Income from operations increased $12.3 million to $89.6 million in the
second quarter and increased $51.1 million to $173.4 million for the first six
months of 1995 over the same periods of 1994.
Compared with the corresponding periods of 1994, interest income for
the second quarter and first six months of 1995 increased by $2.2 million and
$4.8 million, respectively, primarily due to
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<PAGE> 33
higher average cash and marketable securities balances and higher
interest rates during 1995.
Interest expense increased $4.4 million to $38.7 million for the second
quarter of 1995 and increased $11 million to $77.1 million for the first six
months of 1995 over the corresponding periods of 1994. During the second
quarter and first six months of 1995, the Company capitalized interest totaling
$1.5 million and $2.3 million, respectively, on construction projects. During
the second quarter and first six months of 1994 the Company capitalized
interest totaling $6.8 million and $12.9 million, respectively, of which the
majority was capitalized in connection with the Macon Conversion, which was
completed in late 1994. Gross interest expense incurred, before capitalization
of interest, was $79.5 million for the first six months of 1995, a slight
increase when compared with $79 million for the same period in 1994.
Profit sharing expense for the second quarters of 1995 and 1994 totaled
$8.1 million and $5.2 million, respectively. Year-to-date profit sharing
expense for 1995 totaled $15.6 million compared with $7.3 million for the same
period in 1994, an increase of $8.2 million. Both the quarterly and
year-to-date increases in profit sharing expense are principally due to higher
operating income in 1995 over 1994.
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<PAGE> 34
In the first quarter of 1994, the Company recognized a deferred tax
benefit of $0.8 million primarily related to a tax law change in Sweden that
reduced the statutory Swedish federal tax rate to 28 percent from 30 percent.
Exclusive of the tax benefit on the Swedish tax law change, the
Company's tax rates for the first six months of 1995 and 1994 were 45 and 44
percent, respectively. These are higher than the U.S. federal statutory rate
primarily due to higher foreign effective tax rates and U.S. state and local
taxes.
The Company's equity in earnings of affiliate, which was $10.9 million
and $18.7 million for the second quarter and first six months of 1995,
respectively, is comprised of Riverwood's proportionate share of the net
earnings of Igaras.
Net income applicable to common stock for the second quarter of 1995
increased $12.8 million to $27.3 million from the same period in 1994.
Year-to-date net income applicable to common stock for 1995 increased $34.8
million to $50.4 million from the same period in 1994.
Primary and fully diluted earnings per common share for the second
quarter of 1995 were both $0.22 as compared with primary and fully diluted
earnings per common share of $0.12 each for the same period in 1994. Primary
earnings per common share for the six month
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<PAGE> 35
periods ended June 30, 1995 and 1994 were $0.41 and $0.13,
respectively. Fully diluted earnings per common share for the six month
periods ended June 30, 1995 and 1994 were $0.40 and $0.13, respectively.
Earnings per common share amounts were calculated after deducting preference
stock dividends.
LIQUIDITY AND CAPITAL RESOURCES
The Company broadly defines liquidity as its ability to generate
sufficient cash flow to satisfy operating requirements, fund capital
expenditures and meet its existing obligations and commitments. In addition,
liquidity includes the ability to obtain appropriate debt and equity financing
and to convert into cash those assets that are no longer required to meet
existing strategic and financial objectives. Therefore, liquidity should not
be considered separately from capital resources, which consist of current or
potentially available funds for use in achieving long-range business objectives
and meeting debt service commitments. Additionally, the Company's relationship
with Manville Personal Injury Settlement Trust (the "PI Trust") should be
considered in analyzing liquidity.
As a result of the Riverwood public offerings completed during 1992 and
issuance of Schuller Senior Notes in 1994, the Manville holding company no
longer has unrestricted access to cash flows generated by Riverwood and
Schuller. In addition, certain of the Company's subsidiaries may be restricted
in the amount of dividends that can
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<PAGE> 36
be repatriated due to governmental regulations, economic conditions or
provisions contained in financing agreements. The Manville holding company's
ability to generate sufficient cash in 1995 and beyond is dependent upon funds
generated from tax sharing agreements with Riverwood and Schuller, dividends
declared by Riverwood and Schuller, asset dispositions and capital raised
through external sources.
Tax sharing agreements between the Manville holding company and Riverwood and
Schuller provide that their U.S. federal and state income taxes be calculated
as if they were independent entities and that such tax amounts be remitted to
the Manville holding company. The Company is able to apply tax benefits to
reduce the consolidated domestic tax obligation, allowing the Manville holding
company to retain a large portion of the cash remitted by Riverwood and
Schuller. The Manville holding company has maintained at least an 80 percent
ownership interest in Riverwood and Schuller in order to preserve the
consolidated tax entity and utilize existing tax benefits.
Riverwood's ability to generate cash in 1995 and beyond is dependent upon funds
generated from operations, including the flow of funds from subsidiaries.
While Igaras has strong liquidity, Riverwood shares control of Igaras with its
joint venture partner and future dividend payments from Igaras, if any, would
be subject
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<PAGE> 37
to restrictions in the joint venture agreement and would reflect only
Riverwood's remaining interest of just over 50 percent.
Riverwood's cash flows from operations are influenced by selling prices and
costs and are subject to moderate seasonality with demand usually increasing in
the spring and summer. Riverwood's beverage carton products historically have
experienced stable pricing while folding cartons and open market coated board
sold to folding carton markets have experienced some moderate cyclical pricing.
Linerboard and wood products prices have also experienced cyclicality.
Linerboard prices increased significantly during the first six months of 1995
compared with the first six months of 1994. The cost of recycled fiber used in
Riverwood's paperboard production has also increased in 1995 compared with
1994. Riverwood implemented a U.S. linerboard price increase of $50 per ton
beginning April 1, 1995, and increases in the price of its open market coated
board grades by $50 per ton beginning June 12, 1995. The U.S. Timberlands/Wood
Products segment has experienced higher prices for plywood and lower prices for
lumber in the first six months of 1995 compared with the same period of 1994.
Schuller's cash flows generated by operating activities are primarily
influenced by sales volume and sales pricing which
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<PAGE> 38
have historically experienced cyclicality due to macroeconomic factors
affecting residential and commercial construction markets. In addition,
changes in Schuller's inventory and accounts receivable balances reflect
changes in actual and anticipated sales levels. Lower inventory balances at
the beginning of 1995, resulting from strong 1994 sales, coupled with
technological improvements which increased production capacity during the first
half of 1995 resulted in a larger increase in inventories during the first half
of 1995 than was reported for the same period of 1994. In addition,
unseasonably strong sales during the first quarter of 1995 were comparable to
the prior quarter resulting in a smaller increase in accounts receivable than
was reported for the first six months of 1994.
During the first half of 1995, most of Schuller's businesses benefited from
higher sales volume while Schuller's building insulation and mats and fibers
businesses also benefited from higher pricing. In the building insulation
business, sales volume for the second quarter of 1995 reflected declines in
residential housing starts in the U.S. and Canada which were offset by
increased commercial and industrial construction and the use of more
insulation as a result of continued energy conservation trends. Schuller
estimates that approximately half of its annual sales are made to commercial
and industrial construction markets, while approximately one-third are made to
residential markets, and the remainder are made to original equipment
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<PAGE> 39
manufacturers. Although 1995 U.S. housing starts are expected to decline
slightly from 1994 levels, energy conservation trends, repair and remodel
activity and growing commercial activity may offset the effects of such a
decline.
Riverwood paid quarterly cash dividends of $0.04 per share on its common stock
during the first and second quarters of both 1995 and 1994. As a result, the
Manville holding company received $2 million during both the second quarters of
1995 and 1994 and $4 million in the first six months of 1995 and 1994 in
connection with the payment of Riverwood common dividends. Riverwood currently
intends to continue paying quarterly dividends of $0.04 per share on its common
stock subject to a number of conditions, including declaration by Riverwood's
Board of Directors and compliance with covenants in debt instruments and other
agreements.
Manville paid a cash dividend of $6.2 million, or $0.675 per share, in both
the second quarter of 1995 and 1994 to Cumulative Preference Stock, Series B,
stockholders. Manville paid cash dividends totaling $12.5 million and $10.4
million during the first six months of 1995 and 1994, respectively, to
Cumulative Preference Stock, Series B, stockholders.
At June 30, 1995 the Company had net working capital of $358.6 million,
including cash and marketable securities of $245.6 million. Total cash and
marketable securities located outside of
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<PAGE> 40
the United States and Canada were approximately $51.7 million. Approximately
$32.5 million of cash and marketable securities is held by Riverwood and $88.7
million is held by Schuller.
Cash and equivalents decreased by $138.5 million during the first six months of
1995. This decrease is primarily attributable to cash used for capital
spending, purchases of marketable securities and payments on long-term debt,
offset in part by cash generated by operating activities.
Overall, the Company's debt decreased during the first six months of 1995 by
$29.3 million. Principal reductions on long-term debt are expected to be
approximately $70 million during 1995, prior to any refinancings. Riverwood
foreign notes payable amounting to $30.1 million at June 30, 1995, which by
their terms are payable in 1995, are classified as current portion of long-term
debt. Riverwood intends to refinance these notes during 1995 to extend their
maturities.
At June 30, 1995, Riverwood and its U.S. and international subsidiaries had
approximately $198 million in revolving credit facilities, of which
approximately $116 million was available for borrowing. In addition, Riverwood
had arrangements with certain international banks for discounting receivables.
As of June 30, 1995, approximately $1 million of overseas receivables were
discounted.
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<PAGE> 41
At June 30, 1995, Schuller had a $100 million domestic receivables sale
facility (the "Receivables Facility") available for its short-term working
capital needs. There have been no borrowings under the Receivables Facility.
Schuller's foreign subsidiaries also had working capital facilities totaling
$72 million, of which $71 million was available for borrowing at June 30, 1995.
The Manville holding company had no credit facilities as of June 30, 1995.
However, as of June 30, 1995 the Manville holding company had $124.5 million of
cash and marketable securities and had a total of $37.6 million of
intercompany notes receivable from Riverwood and Schuller. The Manville
holding company has no debt or other agreements that place significant
restrictions on its or its operating subsidiaries' ability to incur additional
indebtedness.
Excluding capitalized interest, Riverwood's 1995 capital expenditures are
expected to be approximately $165 million to $185 million, related primarily to
increasing paper production efficiencies, increasing converting capacity and
producing packaging machinery. In April 1995, Riverwood announced plans to
invest approximately $30 million to build a new carton converting plant in
Georgia. The new carton plant is anticipated to start up in March 1996 and
produce cartons for the 1996 beverage season.
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<PAGE> 42
Schuller's capacity expansion programs are periodically revised to reflect
changes in demand, industry capacity and the results of productivity and
technology innovations. Management currently plans to continue to increase
capacity incrementally through technology and productivity innovation and
capital programs designed to increase the output of existing plant facilities
with minimal fixed cost growth.
Schuller currently estimates capital spending in 1995 of approximately $100
million, half of which will be used in capacity expansion programs. Capital
expenditures for the six months ended June 30, 1995 totaled $46.5 million, of
which approximately $29 million was attributable to capacity expansion
projects. Schuller plans to fund future capital spending from existing cash
balances and cash flows generated by operations.
In total, Manville's 1995 capital expenditures are expected to be approximately
$265 million to $295 million, exclusive of capitalized interest.
At June 30, 1995, Schuller had $6.6 million accrued for future sampling,
inspection, remediation and present and anticipated claims related to
Schuller's former phenolic roofing insulation business. See Note 2 to the
Consolidated Financial Statements.
I-41
<PAGE> 43
The Company is engaged in environmental remediation projects for properties
currently owned or operated by the Company and properties divested by the
Company for which responsibility was retained for preexisting conditions. In
addition, the Company has been identified as a potentially responsible party at
a number of non-Company owned or operated sites under the federal Comprehensive
Environmental Response, Compensation, and Liability Act or similar state
legislation, and as such could be jointly and severally liable for remediation
costs at these sites. The Company's actual final costs in some instances
cannot be estimated until the remediation process is substantially completed.
Environmental law is dynamic, and as a result, costs that are unforeseeable at
this time may be incurred when new laws are enacted and when environmental
agencies promulgate or revise regulations in furtherance of such legislation.
In response to the implementation of the 1990 amendments to the federal Clean
Air Act and requirements of various state air emission regulations, the Company
will be obligated to monitor and reduce air emissions at its manufacturing
sites. The regulations will likely require capital expenditures in the years
1995 to 2001, with most of the expenditures occurring in the latter part of
that time frame. Because many of the anticipated regulations have not yet been
proposed, neither the costs nor timing of compliance can be reasonably
estimated at this time. In addition, the federal Environmental Protection
Agency will soon issue new proposed
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<PAGE> 44
regulations for the pulp and paper industry (the "Proposed Regulations"). It
is expected that the earliest time for industry compliance with the Proposed
Regulations should not be prior to the first quarter of 2000. At this time,
Riverwood estimates capital spending that may be required to comply with the
Proposed Regulations could be between $20 million and $40 million to be spent
over a three-year period beginning in 1997.
The Company periodically reviews and, as appropriate, revises its environmental
accruals. Based on current information and regulatory requirements, the
Company believes that to the extent additional costs may be incurred that might
exceed the accrued amounts, such amounts are not expected to have a material
adverse effect on the Company's financial condition, liquidity or results of
operations.
The Company believes that with its current cash position and existing credit
facilities, cash generated from operations, proceeds from the sale of
nonstrategic assets, and access to private and public capital markets, it can
adequately fund normal debt service requirements, its planned capital spending
program, environmental compliance and its other commitments.
RELATIONSHIP OF MANVILLE TO THE PERSONAL INJURY TRUST
The PI Trust owns approximately 78 percent of Manville's Common Stock. The PI
Trust is an irrevocable trust formed under the laws
I-43
<PAGE> 45
of the State of New York, pursuant to a trust agreement dated as of November
28, 1988, as amended (the "Trust Agreement"), to implement certain portions of
the Company's Second Amended and Restated Plan of Reorganization (the "Plan"),
in particular, those relating to the settlement of asbestos health claims
against Manville and certain of its affiliates. As the owner of approximately
78 percent of Manville's Common Stock, the PI Trust has effective voting
control over the Company, including the power to nominate and elect Manville
directors as the trustees of the PI Trust determine. Three trustees of the PI
Trust currently serve as members of Manville's Board of Directors.
In furtherance of its purposes under the Trust Agreement of enhancing and
preserving its trust estate and providing compensation to bona fide asbestos
health claimants, the PI Trust has an interest in maximizing the value of, and
at times increasing the liquidity of, its investment in the Company. The PI
Trust may from time to time consider and discuss with management various means
by which the Company might seek to maximize stockholder value and enhance
stockholder liquidity. The Company conducts all negotiations with the PI Trust
on an arm's-length basis, with both parties being represented by their own
legal and financial advisors. Significant transactions with the PI Trust are
reviewed by the Board of Directors, after consultation with appropriate
external advisors and experts, to determine that the transactions
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<PAGE> 46
are fair. In addition, the Audit Committee of the Board of Directors reviews
the accounting treatment for such transactions.
Beginning in 1992, the Company became obligated under the Plan to pay annually
to the PI Trust 20 percent of net earnings (adjusted as specified in the
definition of "Profits" in the Amended and Restated Supplemental Agreement
between the PI Trust and Manville). Payments are due each year based on the
prior year's net earnings. The profit sharing obligation will continue for as
long as the PI Trust is in existence. After termination of the PI Trust, an
independent profit sharing obligation on the same terms arises in favor of
Manville Property Damage Settlement Trust, if it is in existence after the
termination of the PI Trust. Based upon a review of the existing and potential
claims facing the two trusts, the Company believes that the profit sharing, for
all practical purposes, will be payable in perpetuity unless the Company and
one or both of the trusts agree to a restructuring or modification of the
profit sharing obligation at some future date. The Company paid $18.3 million
to the PI Trust in April 1995 related to 1994 profit sharing.
ADDITIONAL INFORMATION
On April 17, 1995, the Company announced that it is exploring strategic
alternatives which may be available with respect to its investment in
Riverwood. These alternatives may include the possible sale or other
disposition of its investment. No decision
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<PAGE> 47
has been made to enter into any transaction, or as to what form any such
transaction might take. Moreover, any sale by the Company of its investment in
Riverwood or any other transaction involving the sale or merger of Riverwood
would require, among other things, resolution of a number of issues relating to
contractual relationships between the Company and the PI Trust. The PI Trust
has stated that it supports Manville's exploration of its strategic
alternatives.
Additional information regarding the Company's accounting policies, operations,
financial position, reorganization proceedings and the PI Trust is contained or
incorporated in the Company's Form 10-K for the year ended December 31, 1994
filed with the Securities and Exchange Commission.
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<PAGE> 48
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 2, 1995, the Company's Annual Meeting of Stockholders was held in
Atlanta, Georgia and the following items were voted upon and approved by the
stockholders.
1. The following Directors were elected by the stockholders:
<TABLE>
<CAPTION>
NAME FOR VOTE WITHHELD
---- --- -------------
<S> <C> <C>
John C. Burton 117,943,860 108,684
Robert A. Falise 117,954,845 97,699
Robert E. Fowler, Jr. 117,865,890 186,654
Todd Goodwin 117,963,087 89,457
Michael N. Hammes 117,842,291 210,253
John N. Hanson 117,949,651 102,893
Kathryn R. Harrigan 117,949,528 103,016
Louis Klein, Jr. 117,952,087 100,457
Stanley J. Levy 117,950,839 101,705
Christian E. Markey, Jr. 117,953,818 98,726
W. Thomas Stephens 117,962,111 90,433
Will M. Storey 117,960,011 92,533
Raymond S. Troubh 117,810,921 241,623
</TABLE>
2. Ratification of Appointment of Coopers & Lybrand as Independent
Accountants of the Company for the fiscal year ending December 31,
1995.
For: 117,937,729 Abstained: 55,014
Against: 59,801 Broker non-votes: -0-
ITEM 5. OTHER INFORMATION.
Not applicable.
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<PAGE> 49
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 3.1, Amended and Restated By-Laws, as amended May 17, 1995.
Exhibit 10.1, Amendment No. 2 to Manville Corporation Stock Incentive
Plan.
Exhibit 15, Letter of Coopers and Lybrand L.L.P.
Exhibit 27.2, Financial Statement Schedules, dated as of June 30, 1995.
(b) Reports on Form 8-K.
Not applicable.
II-2
<PAGE> 50
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.
MANVILLE CORPORATION
(Registrant)
Date: August 11, 1995 By: /s/ R. B. Von Wald
------------------------------------
R. B. Von Wald
Senior Vice President,
General Counsel and Secretary
Date: August 11, 1995 By: /s/ Robert E. Cole
------------------------------------
Robert E. Cole
Senior Vice President and
Chief Financial Officer
II-3
<PAGE> 51
EXHIBIT INDEX
Exhibit Description Page
3.1 Amended and Restated By-Laws, as amended May 17, 1995.
10.1 Amendment No. 2 to Manville Corporation Stock Incentive Plan.
15 Letter of Coopers and Lybrand L.L.P.
27.2 Financial Statement Schedules, dated as of June 30, 1995.
<PAGE> 1
Exhibit 3.1
================================================================================
BY-LAWS
OF
MANVILLE CORPORATION
As Amended and Restated on May 17, 1995
================================================================================
<PAGE> 2
BY-LAWS
of
MANVILLE CORPORATION
(A Delaware Corporation)
------------
ARTICLE I
Meetings of Shareholders
Section 1.01. Annual Meetings. The annual meeting of shareholders for
the election of Directors and for the transaction of such other business as may
come before the meeting shall be held at such place within or without the State
of Delaware as may be designated in the notice of such meeting on the first
Friday in May of each year (unless said day shall be a legal holiday, in which
case the annual meeting shall be held on the next preceding day not a holiday),
at such hour stated in the notice of the meeting as the Directors may
determine.
SECTION 1.02. Special Meetings. Special meetings of the shareholders
may be called for any purpose at any time by the chief executive officer of the
Corporation or by the Board of Directors and shall be called by the chief
executive officer or the Secretary of the Corporation upon the written request
of shareholders owning 15 percent or more of the outstanding shares entitled to
vote. Such written request shall specify the purpose or purposes of, and a
proposed date for, the meeting and shall be sent to the Corporation at its
principal offices, addressed to the attention of the chief executive officer or
Secretary, by first class mail, return receipt requested, postage prepaid, or
by facsimile or hand delivery. Upon receipt of such written request, the chief
executive officer or Secretary shall promptly give notice of, and shall
convene, a special meeting of the shareholders for the purpose or purposes set
forth in such written request to be held on a date within five days of the
proposed date specified in the written request (or the date closest to such
date which complies with applicable law, regulations and the rules of any
exchange on which the Corporation's voting shares are then listed). Special
meetings may be held at such place within or without the State of Delaware and
at such hour as may be designated in the notice of such meeting.
Section 1.03. Notice of Shareholders' Meetings. The notice of all
meetings of shareholders shall be in writing and shall state the place, date
and hour of the meeting and the name and capacity of the person issuing the
notice. The notice of an annual meeting shall state that the meeting is called
for the election of Directors and for the transaction of other business which
may properly come before the meeting and, if any other action which could be
taken as a special meeting is to be taken at such annual meeting, shall state
the additional purpose or purposes of the meeting. The notice of special
meeting shall state the purpose or purposes for which the meeting is called and
shall also indicate that it is being issued by or at the direction of the
person or persons calling the meeting.
<PAGE> 3
A copy of the notice of each meeting of shareholders shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, to each shareholder at his record address or at such
other address which he may have furnished by request in writing to the
Secretary of the Corporation. If a meeting is adjourned to another time or
place, and, if any announcement of the adjourned time or place is made at the
meeting, it shall not be necessary to give notice of the adjourned meeting
unless the adjournment is for more than thirty days or the Directors, after
adjournment, fix a new record date for the adjourned meeting.
Notice of a meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of a shareholder at a meeting, in person or by proxy,
shall constitute a waiver, except when the shareholder attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 1.04. Quorum at Shareholders' Meetings: Vote Required. At
any meeting of the shareholders the holders of a majority of the outstanding
shares entitled to vote at such meeting and present in person or by proxy shall
constitute a quorum. If there shall be less than a quorum at any meeting of
the shareholders, a majority of those present may adjourn the meeting.
Directors shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election. Whenever any corporate action, other than the election of Directors,
is to be taken by vote of the shareholders, it shall, except as otherwise
required by the General Corporation Law of the State of Delaware, be authorized
by a majority of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote thereon.
Section 1.05. Inspectors at Shareholders' Meetings. The Board of
Directors or the Chairman of the Board, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding
at the shareholders' meeting may, and on the request of any shareholders
entitled to vote thereat shall, appoint one or more inspector. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors or the Chairman of the Board in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by
them and execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facie evidence of the facts stated and
of the vote as certified by them.
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<PAGE> 4
Section 1.06. Presiding Officer and Secretary of Meetings. At each
meeting of the shareholders, the chief executive officer of the Corporation
shall preside. If the Chairman of the Board is the chief executive officer and
is not present, then the President, or if neither be present, a Vice President,
shall preside. If none of such officers be present, a presiding officer shall
be elected at the meeting. The Secretary of the Corporation shall act as
secretary of such meetings, if present, and if not, a secretary for the meeting
shall be appointed by the presiding officer thereat.
ARTICLE II
Directors
Section 2.01. Qualifications and Number. A Director need not be a
shareholder, a citizen of the United States or a resident of the State of
Delaware. The number of Directors constituting the whole Board of Directors
shall be not less than two nor more than nineteen, the precise number to be
fixed from time to time by resolution of the Board of Directors. The number of
Directors may be increased or decreased by action of Directors, provided that
any such increase or decrease shall require the vote of a majority of the whole
Board of Directors. No decrease shall shorten the term of any incumbent
Director. Any Director may be removed with or without cause by the holders of
a majority of the shares then entitled to vote at an election of directors.
Section 2.02. Term. Directors who are elected at an annual meeting of
shareholders, and Directors who are elected in the interim to fill vacancies
and newly created directorships, shall hold office until the next annual
meeting of shareholders and until their successors have been elected and
qualified. In the interim between annual meetings of shareholders, newly
created directorships and any vacancies in the Board of Directors, including
vacancies resulting from the resignation or removal of Directors, may be filled
by the vote of the remaining Directors then in office, although less than a
quorum exists.
Section 2.03. Place and Time of Meetings of the Board. Regular and
special meetings of the Board of Directors shall be held at such places (within
or without the State of Delaware) and at such times as may be fixed by the
Board of Directors or upon call of the chief executive officer of the
Corporation or of the executive committee or, in the case of special meetings,
upon call of at least two Directors.
Section 2.04. Quorum and Manner of Acting. One-third of the whole
Board of Directors shall constitute a quorum for the transaction of business,
but if there shall be less than a quorum at any meeting of the Board of
Directors, a majority of those present (or if only one be present, then that
one) may adjourn the meeting from time to time and the meeting may be held as
adjourned without further notice. At all meetings of Directors, a quorum being
present, all matters shall be decided by the vote of a majority of the
Directors present at the time of the vote.
Section 2.05. Unanimous Written Consent. Any action required or
permitted to be taken by the Board of Directors or any of its committees may be
taken without a meeting if all members of the Board of Directors or the
committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consent thereto by the members of the
Board of Directors or the committee shall be filed with the minutes of the
proceedings of the Board of Directors or committee.
-4-
<PAGE> 5
Section 2.06. Attendance by Electronic Means. Any one or more members
of the Board of Directors or any committee thereof may participate in a meeting
of such Board or committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
Section 2.07. Remuneration of Directors. In addition to reimbursement
for his reasonable expenses incurred in attending meetings or otherwise in
connection with his attention to the affairs of the Corporation, each Director
as such, and as a member of any committee of the Board of Directors, shall be
entitled to receive such remuneration as may be fixed from time to time by the
Board of Directors.
Section 2.08. Notice of Meetings. Regular meetings of the Board of
Directors may be held without notice if the time and place of such meetings are
fixed by the Board. All regular meetings of the Board of Directors, the time
and place of which have not been fixed by the Board of Directors, and all
special meetings of the Board of Directors shall be held upon at least two
hours' notice to the Directors given by letter, telegram or telephone. No
notice need specify the purpose of the meeting. Any requirement of notice
shall be effectively waived by any Director who signs a waiver of notice before
or after the meeting. Attendance of any Director at a meeting shall constitute
a waiver of any requirement of notice, except when such Director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened.
Section 2.09. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the whole Board, may
designate from among its members an executive committee and other committees to
serve at the pleasure of the Board of Directors. Each committee shall consist
of three or more Directors and shall be empowered to perform such functions as
may, by resolution, be delegated to it by the Board, except that no committee
shall have authority with respect to the following matters:
(1) amending the certificate of incorporation;
(2) adopting an agreement of merger or consolidation or
recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and
assets or a dissolution of the Corporation or a revocation of
a dissolution;
(3) amending the by-laws of the Corporation; or
(4) declaring a dividend or authorizing the issuance of stock.
The Board of Directors may designate one or more Directors as alternate
members of any such committee, who may replace any absent member or members at
any meetings of such committee. In the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of the absent or disqualified member.
-5-
<PAGE> 6
ARTICLE III
Officers
Section 3.01. Officers. The Board of Directors, at its first meeting
held after the annual meeting of shareholders in each year, shall appoint a
President, one or more Vice Presidents, a Secretary and a Treasurer and may
appoint, in its discretion, a Chairman of the Board. The Board of Directors
may also appoint from time to time such other officers or agents as they may
deem proper. The President and the Chairman of the Board shall be appointed
from among the members of the Board of Directors. The Board of Directors may
specify which officer shall be chief executive officer of the Corporation.
Any two or more offices may be held by the same person.
Section 3.02. Term of Office. Unless otherwise provided in the
resolution or election or appointment, each officer should hold office until
the meeting of the Board of Directors following the next annual meeting of
shareholders and until his successor has been elected and qualified, provided,
the Board of Directors may remove any officer for cause or without cause.
Section 3.03. Powers and Duties. Officers shall have such powers and
duties as generally pertain to their respective offices and such further powers
and duties as from time to time shall be conferred by the Board of Directors.
ARTICLE IV
Indemnification
Section 4.01. Indemnification. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a Director, officer, employee or agent,
of the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such
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<PAGE> 7
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper.
To the extent that a Director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the first two paragraphs of this
Section 4.01 or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Any indemnification under the first two paragraphs of this Section 4.01
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the Director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in the first two paragraphs of
this Section 4.01. Such determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (3) by the
shareholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the Director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Section 4.01.
The indemnification provided by Section 4.01 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of shareholders or disinterested
Directors or otherwise, both as to action in their official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a Director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Section 4.01.
For purposes of this Section 4.01, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its Directors, officers, and
employees, or agents, so that any person who is or was a Director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a Director, officer, employee or
agent of another corporation, partnership,
-7-
<PAGE> 8
joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Section 4.01 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
For purposes of this Section 4.01, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a Director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such Director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Section 4.01.
ARTICLE V
Capital Stock
Section 5.01. Share Certificates. Each certificate representing
shares of the Corporation shall be in such form as may be approved by the Board
of Directors. Each such certificate shall be signed by the Chairman of the
Board or the President or a Vice President and by the Secretary or Treasurer or
an Assistant Secretary or an Assistant Treasurer. The signatures of said
officers upon a certificate may be facsimile, engraved or printed, to the
extent permitted by law. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effects as if he were such officer at the date of issue.
Section 5.02. Lost, Destroyed or Stolen Certificates. No certificate
representing shares shall be issued in place of any certificate alleged to have
been lost, destroyed or stolen, except on production of such evidence of such
loss, destruction or theft and on delivery to the Corporation, if the Board of
Directors shall so require, of a bond of indemnity in such amount, upon such
terms and secured by such surety as the Board of Directors may in its
discretion require.
Section 5.03. Transfer of Shares. The shares of stock of the
Corporation shall be transferable or assignable on the books of the Corporation
only by the person to whom they have been issued or his legal representative
and only upon surrender of the certificate or certificates representing such
shares.
Section 5.04. Record Dates. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof or for the purpose of determining shareholders entitled
to receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board may fix, in advance, a date as the
record date for any such determination of shareholders. Such date shall not be
more than sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action.
-8-
<PAGE> 9
ARTICLE VI
Miscellaneous
Section 6.01. Signing of Instruments. All checks, drafts, notes,
acceptances, bills of exchange and orders for the payment of money shall be
signed in such manner and by such person or persons as may be authorized from
time to time by resolution of the Board of Directors.
Section 6.02. Corporate Seal. The seal of the Corporation shall be in
such form as the Board of Directors shall approve.
ARTICLE VII
Amendments to By-laws
Section 7.01. Amendments. These by-laws or any of them may be amended
or repealed, and new by-laws adopted, at any annual meeting of the
shareholders, or at any special meeting called for that purpose, by a vote of a
majority of the shares represented and entitled to vote. The Board of
Directors shall have power, by a majority vote of the whole Board, to amend or
repeal these by- laws, or any of them, or to adopt new by-laws if notice of the
proposed change has been delivered or mailed to each Director with the notice
of the meeting or if all the Directors are present or have all assented in
writing to such change, but any such action of the Board of Directors may be
amended or repealed by the shareholders at any annual meeting or any special
meeting called for that purpose. If any by-law regulating an impending
election of Directors is adopted, amended or repealed by the Board, there shall
be set forth in the notice of the next meeting of shareholders for the election
of Directors the by-law so adopted, amended or repealed, together with a
concise statement of changes made.
-9-
<PAGE> 1
Exhibit 10.1
Amendment No. 2 to the
Manville Corporation Stock Incentive Plan
WHEREAS, pursuant to Section 11 of the Manville Corporation Stock
Incentive Plan (as previously amended, the "Plan"), the Board of Directors (the
"Board") of Manville Corporation (the "Company") may amend the Plan, subject to
certain requirements contained therein (which are not applicable to the
amendment contemplated hereby); and
WHEREAS, pursuant to a resolution dated April 7, 1995, the Board has
determined to amend the Plan as hereinafter set forth and the undersigned is
authorized to execute this Amendment No. 2 on behalf of the Company.
NOW, THEREFORE:
Section 3.2 of the Plan is hereby amended in its entirety to read as
follows:
3.2 Adjustments. In the event of any merger,
reorganization, consolidation, recapitalization, stock
dividend, extraordinary cash dividend, stock split, spin-off,
spin-out, distribution of assets to stockholders or other
change in corporate structure or similar corporate transaction
or event affecting the Stock, such substitution or adjustments
shall be made in the aggregate number of shares of Stock
reserved for issuance under the Plan, in the number and
exercise price of shares subject to outstanding Options, and
in the number of shares subject to other outstanding Awards or
to which Stock Appreciation Rights relate, as may be
determined to be appropriate by the Committee, in its sole
discretion; provided, that the number of shares subject to any
Award shall always be rounded down to the nearest whole
number. Such adjusted exercise price shall also be used to
determine the amount payable by the Company upon the exercise
of any Stock Appreciation Right associated with any Option.
<PAGE> 1
Exhibit 15
August 11, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Manville Coroporation
Registrations: on Form S-8 (File No. 33-29389)
and Form S-3 (File No. 33-43912)
Gentlemen:
We are aware that our report dated August 11, 1995 on our review of interim
financial information of Manville Corporation for the three and six month
periods ended June 30, 1995 and included in the Company's quarterly report on
Form 10-Q for the quarter then ended is incorporated by reference in the above
referenced registration statements. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statements prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
JUNE 30, 1995 FORM 10Q OF MANVILL CORPORATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 183,495
<SECURITIES> 62,145
<RECEIVABLES> 394,749
<ALLOWANCES> 8,851
<INVENTORY> 254,966
<CURRENT-ASSETS> 966,951
<PP&E> 3,173,339
<DEPRECIATION> 1,044,694
<TOTAL-ASSETS> 3,863,842
<CURRENT-LIABILITIES> 608,334
<BONDS> 1,404,786
<COMMON> 1,228
0
178,638
<OTHER-SE> 948,865
<TOTAL-LIABILITY-AND-EQUITY> 3,863,842
<SALES> 1,361,893
<TOTAL-REVENUES> 1,361,893
<CGS> 1,004,919
<TOTAL-COSTS> 1,004,919
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 77,130
<INCOME-PRETAX> 89,799
<INCOME-TAX> 40,409
<INCOME-CONTINUING> 49,390
<DISCONTINUED> 0
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<NET-INCOME> 62,822
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