Prospectus Supplement filed pursuant to Rule 424(b)(3) relating to Registration
Statement No. 33-53411
<PAGE>
SUBJECT TO COMPLETION
MAY 31, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 9, 1994)
15,000,000 DEPOSITARY SHARES
[LOGO] JAMES RIVER CORPORATION
OF VIRGINIA
DEPOSITARY SHARES EACH REPRESENTING A ONE-HUNDREDTH INTEREST IN A SHARE OF
SERIES P % CUMULATIVE CONVERTIBLE PREFERRED STOCK
(DIVIDEND ENHANCED CONVERTIBLE STOCK(SM) - DECS(SM))
(PAR VALUE $10 PER SHARE)
(SUBJECT TO CONVERSION INTO OR REDEMPTION FOR SHARES OF COMMON STOCK, PAR VALUE
$.10 PER SHARE)
Each of the 15,000,000 Depositary Shares offered hereby (the "Depositary Shares
") represents a one-hundredth interest in a share of Series P %
Cumulative Convertible Preferred Stock (the "Dividend Enhanced Convertible
Stock" or "DECS") of James River Corporation of Virginia, a Virginia corporation
("James River" or the "Company"), to be deposited with Wachovia Bank of North
Carolina, N.A., as Depositary, and entitles its holder to all proportional
rights and preferences of the DECS (including dividend, voting, redemption and
liquidation rights). The Depositary Shares are evidenced by the Depositary
Receipts (as defined herein). See "Description of Depositary Shares."
On (the "Mandatory Conversion Date"), each of the outstanding
Depositary Shares will automatically convert into one share of Common Stock of
the Company, par value $.10 per share (the "Common Stock"), subject to
adjustment in certain events, if not previously redeemed by the Company or
converted at the option of the holder. The DECS (and the related Depositary
Shares) are redeemable, at the option of the Company on or after
(the "Initial Redemption Date"), at a call price payable in
shares of Common Stock and are convertible at the option of the holder of the
Depositary Shares at any time into shares of Common Stock, in each case as
described herein. The number of shares of Common Stock a holder of a Depositary
Share will receive upon redemption, and the value of the shares received upon
conversion, will vary depending on the market price of the Common Stock at the
time of redemption or conversion, all as set forth herein. See "Description of
DECS."
Dividends on the Depositary Shares are cumulative and accrue at the annual rate
of $ per share and are payable quarterly in arrears on each January 1, April
1, July 1, and October 1, beginning October 1, 1994. Each Depositary Share has a
liquidation preference equal to the sum of (i) the per share price to public
shown below and (ii) the amount of accrued and unpaid dividends thereon to the
date of liquidation, dissolution or winding up.
The Depositary Shares are convertible at the option of the holder, at any time
prior to the Mandatory Conversion Date, into of a share of Common Stock for
each Depositary Share (equivalent to a conversion price of $ per share of
Common Stock (the "Conversion Price")), subject to adjustment in certain events.
The opportunity for equity appreciation afforded by an investment in the
Depositary Shares is less substantial than the opportunity for equity
appreciation afforded by an investment in the Common Stock because the Company
may, at its option, redeem the Depositary Shares at any time on or after the
Initial Redemption Date and before the Mandatory Conversion Date, and may be
expected to do so if before the Mandatory Conversion Date the Current Market
Price (as defined herein) of the Common Stock exceeds the Conversion Price.
Because the price of the Common Stock is subject to market fluctuations, the
value of the Common Stock received by an owner of Depositary Shares upon
mandatory conversion of the Depositary Shares may be more or less than the
amount paid for the Depositary Shares offered hereby.
The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol JR. On May 27, 1994, the last reported sale price of the Common Stock on
the NYSE was $16.375 per share. See "Price Range of Common Stock and Dividends."
The Company will apply to list the Depositary Shares on the NYSE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT COMPANY(2)
<S> <C> <C> <C>
Per Share.................................... $ $ $
Total(3)..................................... $ $ $
</TABLE>
(1) Plus accrued dividends, if any, from the date of issue.
(2) Before deducting expenses payable by James River estimated to be $475,000.
(3) James River has granted the several Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
2,250,000 additional Depositary Shares at the Price to Public, less
Underwriting Discount, for the purpose of covering over-allotments, if any.
If the Underwriters exercise such option in full, the total Price to Public,
Underwriting Discount, and Proceeds to the Company will be $ ,
$ , and $ , respectively. See "Underwriters."
The Depositary Shares are offered, subject to receipt and acceptance by the
Underwriters, to prior sale, and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel, or modify the offer without notice.
It is expected that delivery of the Depositary Shares will be made at the
offices of Salomon Brothers Inc, Seven World Trade Center, New York, New York,
or through the facilities of the Depositary Trust Company, on or about
, 1994.
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
The date of this Prospectus Supplement is , 1994.
Information contained herein is subject to completion or amendment. This
prospectus shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction.
<PAGE>
OVERVIEW OF JAMES RIVER BUSINESS SEGMENTS
<TABLE>
<CAPTION>
MAJOR MARKETS MAJOR PRODUCTS SELECTED BRANDS
<S> <C> <C> <C>
CONSUMER PRODUCTS Retail Towel and Tissue Bathroom Tissue Quilted Northern(Register mark)
Retail Tabletop Household Roll Towels Brawny(Register mark)
Commercial Towel and Tissue Napkins Dixie(Register mark)
Commercial Tabletop Paper and Plastic Cups and Plates Vanity Fair(Register mark)
Plastic Cutlery Marathon(Register mark)
Party Goods Handi-Kup(Register mark)
Canada-Cup(Register mark)
Paper Art(Register mark)
FOOD AND CONSUMER PACKAGING Packaged Food Products Flexible Packaging Pacesetter(Register mark) paperboard
Packaged Consumer Products Folding Cartons Quilt-Rap(Trade mark) sandwich wrap
Packaging Papers Qwik-Crisp(Register mark) microwave
packaging
Paperboard Mini-Pouch(Trade mark) liquid
container
COMMUNICATIONS PAPERS Business Papers Uncoated Business Papers Word Pro(Register mark)
Printing Papers Commercial Printing Eureka!(Trade mark)
Premium Printing Papers Papers (coated and Monterey(Register mark)
uncoated groundwood) King James(Register mark)
Premium Printing Papers Retreeve(Register mark)
Graphika!(Register mark)
JAMONT1 Retail Towel and Tissue Towel and Tissue Products Lotus
Commercial Towel and Feminine Hygiene Products Vania
Tissue Air-Laid Parent Rolls Colhogar
Feminine Hygiene Pharmacy Supplies Tenderly
Ancillary Products
</TABLE>
SELECTED BUSINESS SEGMENT FINANCIAL DATA 2
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
(UNAUDITED)
FISCAL YEARS ENDED MAR MAR
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
NET SALES:
Consumer Products............... $2,394.8 $2,404.4 $2,358.1 $558.8 $557.2
Food and Consumer Packaging..... 1,560.9 1,565.1 1,568.5 387.4 375.7
Communications Papers........... 775.0 918.0 901.3 215.9 215.0
Jamont1......................... 1,848.8 1,736.5 1,482.1 380.0 362.7
OPERATING PROFITS (LOSSES):
Consumer Products............... 128.8 71.0 111.3 23.2 28.3
Food and Consumer Packaging..... 141.9 89.2 103.8 23.3 26.6
Communications Papers........... 33.0 (55.0) (58.4) (20.3) (25.1)
Jamont1......................... 155.9 112.8 68.1 15.3 16.3
</TABLE>
1 Unconsolidated affiliate.
2 Includes certain intersegment sales that are eliminated on a consolidated
basis.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES AND THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
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SUMMARY OF PROSPECTUS SUPPLEMENT
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY REFERENCE HEREIN. CERTAIN
TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE HEREIN. UNLESS OTHERWISE
INDICATED, ALL INFORMATION IN THIS PROSPECTUS SUPPLEMENT ASSUMES THAT THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED.
THE COMPANY
James River is a manufacturer and marketer of (i) consumer products,
including towel and tissue and disposable food and beverage service products,
(ii) food and consumer packaging, including folding cartons, flexible packaging,
and barrier packaging papers, and (iii) communications papers, including
uncoated business papers and coated printing papers. James River is one of the
industry leaders, in terms of sales within the United States, in towel and
tissue products, disposable foodservice items, folding cartons, and flexible
packaging and, on the West Coast, in uncoated business papers. Each of the
Company's businesses produces an increasing number of recycled paper products to
meet growing customer demand. James River, through its consolidated subsidiaries
and its unconsolidated affiliates, including Jamont N.V. ("Jamont"), a
pan-European consumer products joint venture, operates 116 manufacturing
facilities located in 28 states, Canada, and 12 European countries.
The Company's strategy is to focus on the development of its core
businesses: Consumer Products, Food and Consumer Packaging, and Communications
Papers. The primary objective of this strategy is to deliver to the Company's
customers the highest value products produced at the lowest possible cost. In
pursuit of this strategy, the Company has strengthened and leveraged brands,
improved processes and productivity, reduced costs, and invested in new product
development, and will continue to pursue this strategy. Despite a very difficult
business environment during the past three years, the Company believes that
these accomplishments have positioned it to benefit from an improvement in
business conditions. The Company has substantially completed a profit
improvement program, initiated at the beginning of 1993, designed to reduce
annual operating costs by $200 million. This program included the closure and
consolidation of certain smaller, less efficient facilities, staffing
reductions, and productivity improvements. Although the savings from this
program have been partially offset by weaker pricing in certain product lines,
the benefits from this program derived in 1993 and the first quarter of 1994
have helped to significantly improve the Company's operating results.
RECENT DEVELOPMENTS
On April 27, 1994, James River announced the signing of a share acquisition
agreement with Montedison S.p.A. and Rayne Holdings Inc. ("Rayne"), whereby
James River will acquire the 50% ownership interest in Jamont Holdings N.V.
("Jamont Holdings") currently owned by Rayne for approximately $575 million in
cash (the "Acquisition"). James River currently owns the remaining 50% of Jamont
Holdings. Jamont Holdings owns 86.4% of Jamont, which has operations in 12
European countries and produces branded and private label tissue and foodservice
products for the retail and away-from-home markets. Jamont had sales of $1.5
billion in 1993, and currently holds the overall second position in the European
tissue market with a market share of approximately 15%. Upon completion of the
Acquisition, Jamont will become a consolidated subsidiary of James River. James
River intends to finance the Acquisition with a combination of the proceeds from
the issuance of the securities offered hereby and the proceeds from funded
indebtedness, which may include borrowings under existing credit facilities and
issuances of commercial paper and debt securities. The Acquisition, which is
subject to normal closing conditions, as well as obtaining necessary financing
and securing the approval of James River's lenders, is expected to be completed
during James River's third quarter.
James River and Rayne entered into a put and call agreement in 1991 related
to Rayne's interest in Jamont Holdings. Pursuant to that agreement, Rayne has
the option to put its interest in Jamont Holdings to James River during the
summer of 1996 and the summer of 1998 for a total of approximately $820 million.
In addition, James River has a currently exercisable option to call Rayne's
interest in Jamont Holdings at a price of approximately $650 million. The
Acquisition will allow James River to acquire Rayne's interest in Jamont
Holdings at a significant discount to the scheduled put and call prices.
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DEPOSITARY SHARES AND DECS*
GENERAL. The DECS are shares of Series P % Convertible Preferred Stock
and rank prior to the Common Stock (and on a parity with the Preferred Stock of
the Company of every other series) as to payment of dividends and upon
liquidation. Each of the Depositary Shares represents beneficial ownership of a
one-hundredth interest in a share of the DECS. Each of the Depositary Shares
converts automatically into one share of Common Stock on the Mandatory
Conversion Date. The Company has the option to redeem the DECS (and thereby the
Depositary Shares), in whole or in part, at any time or from time to time on or
after the Initial Redemption Date and before the Mandatory Conversion Date at
the Call Price, payable in shares of Common Stock. In addition, the DECS (and
thereby the Depositary Shares) are convertible at the option of the holder at
any time before the Mandatory Conversion Date as set forth below.
The DECS are an equity security of the Company designed to provide
investors with a higher dividend per Depositary Share than the dividend per
share currently paid on the Common Stock. The annual dividend rate on the
Depositary Shares is $ per share (equivalent to $ per DECS). Based on
the current annual dividend rate of $0.60 per share of Common Stock, the annual
per share dividend rate on the Depositary Shares is $ greater than the
current annual per share dividend rate on the Common Stock. Further declarations
of dividends on the Common Stock by the Company are at the discretion of its
Board of Directors, and will necessarily depend on the Company's earnings,
capital requirements, financial condition, and other factors. See "Price Range
of Common Stock and Dividends."
The opportunity for equity appreciation afforded by an investment in the
Depositary Shares is less substantial than the opportunity for equity
appreciation afforded by an investment in the Common Stock because the Company
may, at its option, call for redemption of the DECS (and thereby the Depositary
Shares) at any time on or after the Initial Redemption Date and before the
Mandatory Conversion Date, and may be expected to do so before the Mandatory
Conversion Date if the Current Market Price (as defined herein) of the Common
Stock exceeds the Conversion Price. In such event, holders of the Depositary
Shares will receive less than one share of Common Stock for each Depositary
Share. However, holders of Depositary Shares called for redemption will have the
option to surrender Depositary Shares for conversion at the Conversion Price up
to the close of business on the redemption date (and may be expected to do so if
the Current Market Price of the Common Stock exceeds the Conversion Price). A
holder of Depositary Shares that elects to convert will receive of a share
of Common Stock for each Depositary Share. In no event will a holder of
Depositary Shares receive less than of a share of Common Stock (equivalent
to the Conversion Price of $ per share of Common Stock).
DIVIDENDS. The holders of the Depositary Shares are entitled to receive,
when, as, and if dividends are declared on the DECS by the Board of Directors of
the Company out of funds legally available therefor, cumulative preferential
dividends from the issue date of the Depositary Shares, accruing at the rate per
share of $ per annum, payable quarterly in arrears on each January 1, April
1, July 1, and October 1 or, if any such date is not a business day, on the next
succeeding business day. The first dividend payment will be for the period from
the issue date of the Depositary Shares to and including September 30, 1994 and
will be payable on October 1, 1994. Dividends are payable in cash except in
connection with certain redemptions by the Company. Accumulated unpaid dividends
will not bear interest. See "Descriptions of DECS -- Dividends."
*"Dividend Enhanced Convertible Stock" and "DECS" are service marks of Salomon
Brothers Inc.
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MANDATORY CONVERSION OF DECS. On the Mandatory Conversion Date, each
outstanding DECS (and the related Depositary Shares) will convert (the
"Mandatory Conversion") automatically into shares of Common Stock at the Common
Equivalent Rate and the right to receive an amount of cash equal to all accrued
and unpaid dividends on such DECS (and thereby related Depositary Shares), other
than dividends declared for which the record date is before, and the payment
date is after, the Mandatory Conversion Date. The "Common Equivalent Rate" is
initially one share of Common Stock for each Depositary Share, subject to
adjustment in the event of certain stock dividends or distributions,
subdivisions, splits, combinations, issuances of certain rights or warrants, or
distributions of certain assets with respect to the Common Stock. The Mandatory
Conversion, however, is subject to the Company's right to redeem all or a
portion of the outstanding Depositary Shares on or after the Initial Redemption
Date and before the Mandatory Conversion Date, and to the conversion of the
Depositary Shares at the option of the holder at any time before the Mandatory
Conversion Date, as described below in this summary. See "Description of
DECS -- Mandatory Conversion of DECS" and "Description of Depositary
Shares -- Conversion and Call Provision."
Because the price of the Common Stock is subject to market fluctuations,
the value of the Common Stock received upon Mandatory Conversion of the
Depositary Shares may be more or less than the amount paid for the Depositary
Shares offered hereby.
RIGHT TO REDEEM DEPOSITARY SHARES. The DECS (and the related Depositary
Shares) are not redeemable by the Company before the Initial Redemption Date. At
any time or from time to time on or after the Initial Redemption Date and before
the Mandatory Conversion Date, the Company may redeem the outstanding Depositary
Shares in whole or in part. Upon any such redemption, the holder of record of
the Depositary Shares will receive, in exchange for each Depositary Share so
called, a number of shares of Common Stock equal to the greater of (i) the Call
Price of the Depositary Shares in effect on the date of redemption divided by
the Current Market Price of the Common Stock determined as of the date which is
one trading day before the public announcement of the call for redemption or
(ii) shares of Common Stock, subject to adjustment to the same extent as the
Optional Conversion Rate, as defined and described herein (equivalent to the
Conversion Price of $ per share of Common Stock). The "Call Price" of each
Depositary Share is the sum of (i) $ on and after the Initial Redemption
Date through , , $ on and after ,
through , , $ on and after , through
, , $ on and after , through ,
and $ on and after , until the Mandatory Conversion Date,
and (ii) all accrued and unpaid dividends thereon to the date fixed for
redemption (other than dividends declared for which the record date is before,
and the payment date is after, the date fixed for redemption). The Call Price
for each DECS is 100 multiplied by the related Call Price for a Depositary
Share. See "Description of DECS -- Right to Redeem DECS" and "Description of
Depositary Shares -- Conversion and Call Provision."
CONVERSION AT OPTION OF HOLDER. The DECS (and thereby the Depositary
Shares) are convertible, in whole or in part, at the option of the holder at any
time before the Mandatory Conversion Date, unless previously redeemed, into
of a share of Common Stock for each Depositary Share (equivalent to a
Conversion Price of $ per share of Common Stock), subject to adjustment in
the event of certain stock dividends or distributions, subdivisions, splits,
combinations, issuances of certain rights or warrants or distributions of
certain assets with respect to the Common Stock. See "Description of
DECS -- Conversion at Option of Holder" and "Description of Depositary
Shares -- Conversion and Call Provision."
LIQUIDATION PREFERENCE. The DECS (and the related Depositary Shares) rank
senior to the Common Stock and on a parity with every other series of the
Company's Preferred Stock upon liquidation. The liquidation preference of each
of the Depositary Shares will be in an amount equal to the sum of (i) the per
share price to the public of each Depositary Share (shown on the cover page
hereof) and (ii) all accrued and unpaid dividends thereon to the date of
liquidation, dissolution or winding up. See "Description of DECS -- Liquidation
Rights" and "Description of Depositary Shares -- Dividends and Other
Distributions."
VOTING RIGHTS. The holders of DECS (and thereby the holders of Depositary
Shares) shall have the right with the holders of Common Stock to vote in the
election of directors and upon each other matter coming before any meeting of
the stockholders on the basis of votes for each DECS held (equivalent to
of a vote for each Depositary Share). The holders of DECS and the holders
of Common Stock will vote together as a single voting group except as otherwise
required by law or by the Amended and Restated Articles of Incorporation of the
Company. In addition, whenever dividends on the DECS shall be in arrears and
unpaid in an aggregate
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amount of dividends payable thereon for six quarterly dividend periods, the
number of directors of James River will be increased by two and the holders of
the DECS (voting as a separate voting group together with holders of shares of
all other series of Preferred Stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of
those two additional directors until such time as no dividends on any
outstanding shares of any series of such Preferred Stock are in arrears and
unpaid, in whole or in part. The holders of the Depositary Shares will be
entitled to direct the voting of the shares of the DECS represented thereby. See
"Description of DECS -- Voting Rights" and "Description of Depositary
Shares -- Voting of DECS."
LISTING. The Company will apply to list the Depositary Shares on the NYSE.
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THE COMPANY
James River is a manufacturer and marketer of (i) consumer products,
including towel and tissue and disposable food and beverage service products,
(ii) food and consumer packaging, including folding cartons, flexible packaging
and barrier packaging papers, and (iii) communications papers, including
uncoated business papers and coated printing papers. James River is one of the
industry leaders, in terms of sales within the United States, in towel and
tissue products, disposable foodservice items, folding cartons, and flexible
packaging and, on the West Coast, in uncoated business papers. Each of the
Company's businesses produces an increasing number of recycled paper products to
meet growing customer demand. James River, through its consolidated subsidiaries
and its unconsolidated affiliates, including Jamont, a pan-European consumer
products joint venture, operates 116 manufacturing facilities located in 28
states, Canada, and 12 European countries.
The Company's strategy is to focus on the development of its core
businesses: Consumer Products, Food and Consumer Packaging, and Communications
Papers. The primary objective of this strategy is to deliver to the Company's
customers the highest value products produced at the lowest possible cost. In
pursuit of this strategy, the Company has strengthened and leveraged brands,
improved processes and productivity, reduced costs, and invested in new product
development, and will continue to pursue this strategy. Despite a very difficult
business environment during the past three years, the Company believes that
these accomplishments have positioned it to benefit from an improvement in
business conditions. The Company has substantially completed a profit
improvement program, initiated at the beginning of 1993, designed to reduce
annual operating costs by $200 million. This program included the closure and
consolidation of certain smaller, less efficient facilities, staffing
reductions, and productivity improvements. Although the savings from this
program have been partially offset by weaker pricing in certain product lines,
the benefits from this program derived in 1993 and the first quarter of 1994
have helped to significantly improve the Company's operating results.
CONSUMER PRODUCTS BUSINESS
The Consumer Products Business, which represented 49% of James River's 1993
consolidated net sales, produces sanitary paper products such as bathroom
tissue, household roll towels, and wipes, and tabletop products such as paper
and plastic cups, paper plates, napkins, and plastic cutlery. The Consumer
Products Business is organized along distribution channels to the retail and
commercial markets. Each of these channels carries both towel and tissue
products and tabletop products. The Company has been able to capitalize on its
broad product offerings in towel, tissue, and tabletop products to better
service these distribution channels and increase market penetration.
Products sold in the retail market include a number of national and
regional brands of towel and tissue and foodservice products including Quilted
Northern(Register mark), Marina(Register mark) and Nice 'N Soft(Register mark)
bathroom tissue; Brawny(Register mark) paper towels; Vanity Fair(Register mark)
premium foodservice products; and Dixie(Register mark) plates, cups, and
cutlery. Retail products are marketed both nationally and regionally,
principally through grocery stores, mass merchants, warehouse clubs, and drug
stores. The Company believes it has the leading position in the fast-growing
warehouse club market. The commercial group markets the broadest line of towel
and tissue and tabletop products in the industry sold under the
Dixie(Register mark), Marathon(Register mark), Handi-Kup(Register mark), and
Canada Cup(Register mark) brand names, as well as a variety of regional brands.
A national sales force sells these products to fast food chains and sanitary
paper, janitorial supply, and foodservice distributors, for use in restaurants,
hotels, offices, factories, and schools.
James River's strategy for its Consumer Products Business is to focus on
strengthening brand franchises and building brand equity, improving product
performance, and achieving continuous cost reduction and productivity
improvements. During 1993, the Company made a number of significant new product
introductions under existing brands, including Quilted Northern(Register mark)
bathroom tissue, the new Dixie(Register mark) Seasons product line, and a new
Vanity Fair(Register mark) line of cups, plates, and embossed napkins and
introduced Chelsea bathroom tissue, which is marketed by Price Costco warehouse
clubs. The Company is also focusing on developing premium recycled products,
including 100% recycled Quilted Northern(Register mark) bathroom tissue and 100%
recycled Brawny paper towels. New product activity has continued in 1994,
including the rollout of the new Dixie(Register mark) Kids line of cups and
plates designed to appeal to children. These revitalization efforts resulted in
the introduction of new and improved branded products which represented 65% of
1993 retail products sales volume.
As a result of product initiatives, cost reductions, and an improving
business climate, the Company's Consumer Products Business has realized
significant improvements in operating results. Operating profits for 1993
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increased by 56%, to $111.3 million from $71.0 million in 1992. Operating
profits continued to improve in the first quarter of 1994, with profits of $28.3
million compared to $23.2 million in the prior year's first quarter.
FOOD AND CONSUMER PACKAGING BUSINESS
The Food and Consumer Packaging Business, which accounted for 32% of James
River's 1993 consolidated net sales, provides retail packaging for food and
other consumer products which have high-volume distribution. The Company prints
and converts films, paperboard, and paper into the broadest range of packaging
options available to food and consumer products manufacturers.
The Company's packaging operations serve both national and regional
markets. The Company believes its flexible packaging and folding carton
businesses hold the leading and number two position in those respective markets.
James River provides packaging to approximately eighty percent of the top fifty
food processors, including significant amounts of packaging to Kellogg's,
General Mills, General Foods, Kraft, Pillsbury, Nestle, Nabisco and Frito-Lay.
Products of this business include flexible packaging (such as potato chip bags,
bread bags, frozen vegetable bags, and cheese packages), folding cartons (such
as ice cream cartons, cereal boxes, and microwave packages), and barrier papers
(such as food wrap and cereal and cracker box inner liners). Flexible packaging
products include a wide variety of multilayer packaging materials which are made
primarily from plastic films and films combined with paper and foil and are
designed from multiple layers of materials which meet specific needs of the
processed food industry. Flexible packaging operations are supported by ink
manufacturing and blending plants which produce flexographic and rotogravure
inks and lacquers. Folding cartons are produced from both bleached and recycled
paperboard. Folding carton operations are supported by a polyethylene extrusion
coating plant and an automated carton die manufacturing plant.
The Company continues to improve its competitive position by lowering
costs, including closing high-cost facilities and reducing staffing, and by
investing strategically in productivity enhancing machinery. For example, the
Company recently began operating a state-of-the-art coated recycled board
machine in Kalamazoo, Michigan. The Company believes that this $120 million
machine, which is the largest of its kind in the industry, produces the highest
quality recycled paperboard at the lowest cost. James River's Packaging Business
has a long-standing tradition of technological leadership, and it has pioneered
and excelled in areas such as microwave packaging technology. Led by activities
at its advanced research and development facility in Cincinnati, Ohio, the
Company works closely with leading food producers to develop packaging
innovations.
Operating profits for the Food and Consumer Packaging Business increased by
16% in 1993 to $103.8 million from $89.2 million in the prior year. Operating
profits continued to improve in the first quarter of 1994, increasing 14% to
$26.6 million from $23.3 million in the first quarter of the prior year.
COMMUNICATIONS PAPERS BUSINESS
The Company's Communications Papers Business, which represented 19% of 1993
consolidated net sales, has three major product lines: uncoated business and
commercial printing papers, coated groundwood printing papers, and premium
printing papers. Uncoated business and commercial printing papers serve the
office and commercial printing markets. The Company's Word Pro(Register mark)
and private label business papers are used in offices and by retail printers for
copy machines and offset presses. James River also produces numerous recycled
business and printing papers including Eureka!(Trade mark) copy paper,
formsbond, and offset printing papers; Echo(Trade mark) web offset printing
papers; and Reclaim(Register mark) formsbond and lightweight opaque web printing
papers. James River's coated groundwood printing and publishing papers, all
produced at its St. Francisville, Louisiana, pulp and paper mill, serve the
catalog, magazine, and direct mail markets. The Company's premium printing
papers include specialty cast-coated products, writing papers, and cover and
text papers. These papers are produced at a number of smaller mills located in
the eastern United States and the United Kingdom. Branded premium printing
papers include James River's Curtis line of cover, text, and writing papers, and
King James(Register mark) cast-coated papers. The Company also produces a
variety of recycled brands including Retreeve(Register mark) cover, text, and
writing papers and Graphika!(Register mark) laser writing papers, as well as a
number of recycled papers included in the Curtis and King James lines.
Due to intense pricing pressure in the Communications Paper Business, the
Company has intensified its strategy of continuing aggressively to improve
operating efficiencies, quality, and overall productivity through Total Quality
Management techniques and to maintain its status as a preferred supplier to its
customers in its
S-8
<PAGE>
major product lines. The Company has undertaken continuing cost reduction and
performance improvement programs that include facility disposals and closures,
staffing reductions, and operational restructurings. The Company has also
upgraded its product lines to include more value-added grades and targeted new
product areas that offer growth opportunities.
Operating losses generated by the Communications Paper Business increased
6% in 1993 to $58.4 million from $55 million in the prior year. Operating losses
continued to increase in the first quarter of 1994, increasing 24% to $25.1
million from $20.3 million in the prior year, as pricing in most white paper
grades continued to decline during the quarter due to increases in industry
capacity and higher levels of imports.
JAMONT
James River currently owns 43.2% of Jamont, which is accounted for as an
unconsolidated affiliate. James River has entered into an agreement to increase
its ownership interest in Jamont to 86.4%. See "Summary of Prospectus
Supplement -- Recent Developments." Jamont, with annual sales of approximately
$1.5 billion, is a leading producer of branded and private label tissue and
foodservice products for the retail and commercial markets in Europe. Jamont
also produces feminine hygiene products, as well as various nonwoven products
and pharmacy supplies. Jamont, headquartered in Brussels, Belgium, currently
operates 24 manufacturing facilities in 12 European countries and is the second
largest manufacturer of tissue in Europe with an aggregate market share of
approximately 15%. Many of Jamont's products hold the leading market position in
their respective countries. Jamont's consumer products are sold under well-known
brand names such as Lotus bathroom tissue, which currently occupies the leading
position in the French market, Tenderly bathroom tissue sold in Italy, and
Colhogar bathroom tissue sold in Spain. Jamont's retail products include toilet
tissue, kitchen towels, handkerchiefs, facial tissue, napkins, and other
foodservice products sold through retail outlets. In the branded goods segment,
Jamont's national franchises are aimed principally at the premium end of the
market. Jamont is also well established in the private label sector. Jamont's
commercial products include toilet tissue, hand towels and wipes, paper napkins,
tablecloths, placemats, and disposable plates, cups, and cutlery. End users in
this market include offices, factories, restaurants, hotels, hospitals, schools,
and airlines. Jamont's feminine hygiene products are principally sold in the
French and Belgian markets under the Vania brand name.
Jamont's strategic objective is to be the leader in its European markets
with respect to quality, market share, cost, and profitability. Jamont believes
that it is well positioned to achieve these objectives as a result of its
recently completed capital improvement program and its asset rationalization
efforts. In the summer of 1993, Jamont completed a three year, $600 million
capital expenditure program which included the building of four new tissue
machines in France, Spain, and Turkey; the total rebuild of tissue machines in
Italy and Finland; modernizing and expanding a variety of converting plants; and
constructing or expanding de-inking facilities in France and the United Kingdom.
At the same time, Jamont's asset rationalization efforts have resulted in the
closure of six higher-cost plants, with production being transferred to other
more efficient facilities, and a reduction in total staffing from approximately
9,100 to 7,800 employees. Jamont continues to seek to increase the value of its
business by focusing on: higher growth opportunities such as the Southern and
Eastern European and away-from-home markets; the development and implementation
of a pan-European brand strategy; continued strengthening of its private label
business; and maintaining its low cost position through continuing productivity
improvements, cost reduction, and commercialization of new technologies.
USE OF PROCEEDS
The net proceeds from the sale of Preferred Stock to be offered hereby are
estimated to be $242 million ($279.5 million, assuming exercise of the
Underwriters' over-allotment option) and will be applied toward James River's
payment of the purchase price for the Acquisition (approximately $575 million)
during the Company's third quarter. See "Summary of Prospectus
Supplement -- Recent Developments" herein. Pending such application of the net
proceeds, they may be temporarily invested or applied to the reduction of
commercial paper or borrowings under existing credit facilities. Morgan Guaranty
Trust Company of New York, an affiliate of J.P. Morgan Securities Inc., is the
agent bank under the Company's revolving credit facility. See "Underwriters." It
is anticipated that the balance of the purchase price and related expenses for
the Acquisition, of approximately $336 million, will be funded with the proceeds
from the issuance of James River funded indebtedness, which may include
borrowings under existing credit facilities and issuances of commercial paper
and debt securities.
S-9
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
James River's Common Stock is listed on the NYSE under the symbol JR. The
following table sets forth for the periods indicated, the high and low sales
prices of the Common Stock as reported on the NYSE Composite Tape:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
1992:
First Quarter............................................................ $23 3/8 $19 1/8
Second Quarter........................................................... 22 5/8 20
Third Quarter............................................................ 21 7/8 18
Fourth Quarter........................................................... 19 1/4 17
1993:
First Quarter............................................................ 19 7/8 16 1/4
Second Quarter........................................................... 23 3/8 18 5/8
Third Quarter............................................................ 23 19 1/2
Fourth Quarter........................................................... 22 18 1/4
1994:
First Quarter............................................................ 20 1/4 18
Second Quarter through May 27, 1994...................................... 19 15 5/8
</TABLE>
See the cover page of this Prospectus Supplement for a recent price of the
Common Stock.
James River has paid dividends on its Common Stock since its initial public
offering in March 1973. After giving effect to Common Stock splits, the initial
annual dividend rate was $0.01 per share. Annual dividends have been paid at the
current rate of $0.60 per share since 1990. James River's historical dividend
policy is to pay 20% of earnings per share to its common shareholders. Although
the Company's depressed earnings have caused dividends to exceed that rate for
the past four years, the Company's financial condition has not warranted a
reduction in dividends in response to conditions which management believes to be
temporary. The continued payment of common dividends and the amount thereof will
be dependent upon James River's earnings, financial position, cash requirements,
and other relevant factors, including the satisfaction of preferred stock
dividend requirements and compliance with the terms of loan agreements to which
James River is a party. As of March 27, 1994, under the most restrictive
provisions of James River's loan agreements, the Company had net worth in excess
of the minimum requirement specified by such agreements of approximately $250
million.
S-10
<PAGE>
SELECTED FINANCIAL INFORMATION
The following table sets forth certain selected historical financial data
for James River for the fiscal years 1989 through 1993 and for the three months
ended in March 1993 and 1994. Data presented for the fiscal years is derived
from James River's audited consolidated financial statements. Data for interim
periods is derived from unaudited consolidated financial statements. This data
is qualified in its entirety by the detailed information and financial
statements included in the documents incorporated in this Prospectus Supplement
by reference.
All amounts are in millions, except ratios, employees, and per share data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ENDED (UNAUDITED)
APRIL APRIL DEC. DEC. DEC. DEC. MARCH MARCH
1989 1990 1990 1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(A) (B)(C) (C) (D)(E) (F)
INCOME STATEMENT DATA:
Net sales....................... $5,871.8 $5,950.0 $3,391.5 $4,561.7 $4,728.2 $4,650.2 $1,113.6 $1,105.5
Income (loss) from operations:
Before restructuring........ 564.8 459.8 327.5 244.0 49.3 114.0 17.7 20.3
After restructuring......... 564.8 459.8 127.6 244.0 (62.4) 114.0 17.7 20.3
Income (loss) before
extraordinary items and
accounting changes............ 255.1 221.6 9.7 78.3 (122.1) (.3) (10.1) (7.1)
Net income (loss)............... 255.1 221.6 9.7 78.3 (427.3) (.3) (10.1) (7.1)
PER COMMON SHARE:
Net income (loss)
before extraordinary items and
accounting changes............ $2.87 $2.45 $(.08) $.66 $(1.82) $(.40) $(.22) $(.19)
Net income (loss)............... 2.87 2.45 (.08) .66 (5.55) (.40) (.22) (.19)
Annual rate of cash dividends
declared...................... .48 .60 .60 .60 .60 .60 .60 .60
RATIOS (UNAUDITED): (G)
Earnings to fixed charges....... 2.90 2.40 1.21 1.34 -- 1.04 -- --
Earnings to combined fixed
charges and preferred stock
dividends..................... 2.48 2.09 1.03 1.15 -- -- -- --
BALANCE SHEET AND OTHER DATA (AT
END OF PERIOD):
Working capital................. $721.6 $642.6 $1,121.9 $827.8 $768.9 $501.2 $676.7 $554.6
Total assets.................... 5,558.1 5,818.4 5,741.4 5,626.6 6,336.3 5,851.3 6,242.3 5,841.1
Long-term debt.................. 1,918.3 1,771.2 1,801.9 1,758.1 2,153.9 1,942.8 2,037.9 1,999.7
Preferred stock................. 302.4 355.0 354.8 354.6 454.3 454.1 454.3 454.0
Common shareholders' equity..... 2,045.8 2,203.0 2,212.2 2,220.8 1,659.3 1,514.1 1,620.5 1,476.8
Shares used for per share
calculations (h).............. 81.5 81.7 81.8 81.9 81.8 81.9 81.7 81.9
Number of employees (i)......... 42,000 46,000 45,000 39,000 38,600 35,000 37,700 34,500
</TABLE>
(a) During the fiscal year ended April 1990, James River recorded a gain of
$51.6 million ($24.7 million after taxes, or $.30 per share) on the
sale of its Nonwovens Division, and a charge of $62.9 million ($36.0
million net of tax benefits, or $.44 per share) for asset write-offs on
the discontinuation of unprofitable operations and other nonrecurring
items.
(b) During 1990, James River changed its fiscal year from one ending on the
last Sunday in April to one ending on the last Sunday in December.
Accordingly, the transition period ended December 30, 1990 ("Transition
1990"), included 35 weeks, as compared to a full fiscal year consisting
of either 52 or 53 weeks.
(c) In August 1990, James River announced a major restructuring program
designed to focus the Company's operations on those businesses in which
it commands a substantial market share and which are less cyclical.
Pursuant to this program, 29 operating facilities, including the
Company's Specialty Papers Business and certain other operations, were
to be divested. The Company recorded a charge of $200 million ($143.6
million net of tax benefits, or $1.76 per share) in connection with
this program. Beginning in August 1990, results attributable to the
operations to be divested were excluded from James River's income
statement and net assets of such operations were reclassified to a
current asset, net assets held for sale.
S-11
<PAGE>
(d) James River terminated its 1990 restructuring program effective as of
the beginning of 1992, at which time the three facilities which
remained unsold or uncommitted were reconsolidated and the associated
net assets held for sale were reclassified to their applicable balance
sheet classifications.
(e) During 1992, James River recorded several nonrecurring or unusual
charges or credits, as follows:
(Bullet) James River adopted Statement of Accounting Standards
("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," which requires the accrual of
the cost of providing postretirement benefits during the
years that employees render service. The Company recorded a
one-time, non-cash charge of $499.3 million ($309.8 million
net of tax benefits, or $3.79 per share) for the cumulative
effect of this change in accounting principle.
(Bullet) James River adopted SFAS No. 109, "Accounting for Income
Taxes," which requires the adoption of the liability method
of accounting for income taxes. The Company recorded a credit
of $35.9 million, or $.44 per share, in connection with this
change in accounting principle.
(Bullet) James River recorded an extraordinary loss of $50.6 million
($31.4 million net of tax benefits, or $.38 per share) on the
early extinguishment of $566.8 million principal amount of
notes and debentures.
(Bullet) James River recorded a restructuring charge of $111.7 million
($71.4 million net of tax benefits, or $.87 per share) to
cover costs associated with a productivity enhancement
program, which included the planned disposal and
consolidation of several smaller, less efficient operations
in each of the Company's business segments, related severence
expenses, and organizational streamlining.
(Bullet) James River recorded nonrecurring charges totalling $31
million ($19.7 million net of tax benefits, or $.25 per
share) related to the refinement of estimates of final
restructuring costs and environmental and litigation costs.
(f) During 1993, James River recorded a charge of $11 million, or $.13 per
share, to increase its deferred tax liability for the effect of the 1%
increase in the statutory federal income tax rate. Also during 1993,
the Company recognized interest income of $14.3 million ($8.7 million
net of taxes, or $.11 per share) in connection with the favorable
settlement of certain prior year's income tax returns.
(g) In computing the ratios of earnings to fixed charges and of earnings to
combined fixed charges and preferred stock dividends, earnings consist
of income before income taxes, extraordinary items, the cumulative
effect of changes in accounting principles, minority interests, and
fixed charges excluding capitalized interest. Fixed charges consist of
interest expense, capitalized interest, and that portion of rental
expense (one-third) deemed representative of the interest factor.
Earnings and fixed charges also include James River's proportionate
share of such amounts for its unconsolidated affiliates which are owned
50%, and distributed income from less than 50% owned affiliates. For
purposes of the ratio of earnings to combined fixed charges and
preferred stock dividends, fixed charges are increased by the preferred
stock dividend requirements of James River adjusted to amounts
representing the pretax earnings which would be required to cover such
dividend requirements. Earnings were inadequate to cover fixed charges
or combined fixed charges and preferred stock dividends for certain
periods. The amounts of such deficiencies were as follows:
<TABLE>
<CAPTION>
DEC DEC MARCH MARCH
1992 1993 1993 1994
<S> <C> <C> <C> <C>
Earnings to fixed charges $195.6 -- $18.6 $12.2
Earnings to combined fixed charges
and preferred stock dividends 236.1 $48.5 32.7 26.1
</TABLE>
The pretax restructuring charges of $200 million in Transition 1990
and $111.7 million in 1992 have been included in the calculations
of the ratios of earnings to fixed charges and earnings to combined
fixed charges and preferred stock dividends for these respective
periods. Excluding the impact of the Transition 1990 restructuring
charge from earnings, the ratio of earnings to fixed charges would
have been 2.59x and the ratio of earnings to combined fixed charges
and preferred stock dividends would have been 2.19x for Transition
1990. Excluding the impact of the 1992 restructuring charge from
earnings, the amount of the deficiency of earnings compared to
fixed charges would have been $83.9 million and the amount of the
deficiency of earnings compared to combined fixed charges and
preferred stock dividends would have been $123.1 million for 1992.
(h) Weighted-average number of common shares and common share equivalents.
(i) Number of employees is approximate and includes employees of
unconsolidated affiliates.
S-12
<PAGE>
UNAUDITED PRO FORMA JAMES RIVER AND JAMONT HOLDINGS FINANCIAL INFORMATION
The following pro forma consolidated capitalization and condensed balance
sheet as of March 27, 1994, and the pro forma consolidated statements of
operations for the three months ended March 27, 1994, and the year ended
December 26, 1993, give effect to the following transactions:
(a) the proposed acquisition by James River of the remaining 50% ownership
interest in Jamont Holdings for a purchase price of $575 million in
cash; and
(b) the assumed financing of such acquisition with the net proceeds from
the issuance of $250 million of the Depositary Shares and the balance
of proceeds from funded indebtedness, which may include borrowings
under existing credit facilities and issuances of commercial paper and
debt securities.
James River currently owns 50% of Jamont Holdings, which is accounted for
using the equity method of accounting. James River's additional 50% investment
in Jamont Holdings has been accounted for using the purchase method of
accounting and will result in the consolidation of Jamont Holdings.
The unaudited pro forma consolidated condensed financial information is
presented as if these transactions had been completed as of March 27, 1994, for
the pro forma consolidated capitalization and condensed balance sheet and as of
the first day of each period for which pro forma consolidated statements of
operations are presented.
The pro forma financial information does not purport to be indicative of
the actual financial position as it will finally be recorded, or the results of
operations which would actually have been reported if the transactions had
occurred on the dates or for the periods indicated, or which may be reported in
the future. The pro forma financial information should be read in conjunction
with the separate historical consolidated financial statements and the related
notes to such financial statements of James River and of Jamont Holdings,
incorporated by reference herein.
In addition to changes arising from the operation of the business during
the period from December 27, 1993 to March 27, 1994, the pro forma financial
information in this Prospectus Supplement (the "Current Pro Formas") differs
from the pro forma financial information in the Prospectus dated May 9, 1994
(the "Base Pro Formas") of which this Prospectus Supplement is a part as a
result of the following:
(a) The assumed dividend yield on the DECS in the Current Pro Formas has
been estimated to be 8.5%, versus the 7.5% dividend yield on the
additional Preferred Stock contemplated in the Base Pro Formas;
(b) The assumed interest rate on the incremental funded indebtedness of
$336 million incurred in connection with the proposed acquisition of
Jamont Holdings has been increased to 8.0% in the Current Pro Formas
from the 7.0% utilized in the Base Pro Formas; and
(c) Incremental goodwill arising from the proposed acquisition of Jamont
Holdings decreased from $155.9 million in the Base Pro Formas to $122.5
million in the Current Pro Formas, principally as a result of changes
in foreign currency translation and the conversion to equity of certain
convertible advances payable by Jamont Holdings during the first
quarter of 1994.
S-13
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CAPITALIZATION
(UNAUDITED)
MARCH 27, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE)2
Current portion of long-term debt $ 79.4 $ 130.5 $ 209.9
Long-term debt:
Commercial paper and borrowings
supported by revolving credit
facilities 328.4 437.5 $ 11.4 (c) 777.3
Notes and debentures 1,671.3 189.9 325.0 (d) 2,186.2
Total long-term debt (net of
current portion) 1,999.7 627.4 336.4 2,963.5
Minority interests 5.8 149.0 154.8
Shareholders' equity:
Preferred stock 454.0 250.0 (d) 704.0
Common shareholders' equity 1,476.8 884.4 (884.4)(e) 1,468.8
(8.0)(c)
Total shareholders' equity 1,930.8 884.4 (642.4) 2,172.8
Total capitalization $ 4,015.7 $ 1,791.3 $(306.0) $5,501.0
</TABLE>
The accompanying notes are an integral part of this pro forma information.
S-14
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
MARCH 27, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE)2
ASSETS
Current assets:
Cash and short-term securities $ 24.6 $ 40.4 $ 65.0
Accounts receivable 410.1 436.3 846.4
Inventories 707.3 190.2 897.5
Other current assets 164.8 5.9 170.7
Total current assets 1,306.8 672.8 1,979.6
Property, plant, and equipment 5,448.9 1,438.4 6,887.3
Less accumulated depreciation 1,908.2 297.5 2,205.7
Net property, plant, and
equipment 3,540.7 1,140.9 4,681.6
Investments in affiliates 527.1 20.0 $(431.5)(a) 115.6
Other assets 314.4 38.6 3.0 (c) 356.0
Goodwill 152.1 462.9 122.5 (b) 737.5
Total assets $ 5,841.1 $ 2,335.2 $(306.0) $7,870.3
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt $ 79.4 $ 130.5 $ 209.9
Other current liabilities 672.7 417.0 1,089.7
Total current liabilities 752.1 547.5 1,299.6
Long-term debt 1,999.7 627.4 $ 325.0 (d) 2,963.5
11.4 (c)
Other long-term liabilities 734.5 31.1 765.6
Deferred income taxes 418.2 95.8 514.0
Minority interests 5.8 149.0 154.8
Shareholders' equity:
Preferred stock 454.0 250.0 (d) 704.0
Common shareholders' equity 1,476.8 884.4 (884.4)(e) 1,468.8
(8.0)(c)
Total shareholders' equity 1,930.8 884.4 (642.4) 2,172.8
Total liabilities and
shareholders' equity $ 5,841.1 $ 2,335.2 $(306.0) $7,870.3
</TABLE>
The accompanying notes are an integral part of this pro forma information.
S-15
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 27, 1994
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE)3
Net sales $ 1,105.5 $ 362.7 $1,468.2
Cost of goods sold 934.9 228.3 $ 0.8 (a) 1,164.0
Selling and administrative
expenses 150.3 118.1 268.4
Income from operations 20.3 16.3 (0.8) 35.8
Interest expense 34.9 13.9 6.7 (b) 55.5
Other income, net 2.2 2.9 1.7 (c) 6.8
Income (loss) before income
taxes and minority interest (12.4) 5.3 (5.8) (12.9)
Income tax expense (benefit) (5.0) 4.4 (2.6)(d) (3.2)
Income (loss) before minority
interest (7.4) 0.9 (3.2) (9.7)
Minority interest .4 (0.9) (.5)
Net loss $ (7.0) -- $ (3.2) $ (10.2)
Preferred dividend requirements (8.2) (5.3)(e) (13.5)
Net loss applicable to common
shares $ (15.2) -- $ (8.5) $ (23.7)
Net loss per common share and
common share equivalent $ (.19) $ (.29)
Weighted average number of common
shares and common share
equivalents 81.9 81.9
</TABLE>
The accompanying notes are an integral part of this pro forma information.
S-16
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 26, 1993
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE)3
Net sales $ 4,650.2 $ 1,482.1 $6,132.3
Cost of goods sold 3,858.6 947.9 $ 3.1 (a) 4,809.6
Selling and administrative
expenses 677.6 466.1 1,143.7
Income from operations 114.0 68.1 (3.1) 179.0
Interest expense 137.5 72.3 26.9 (b) 236.7
Other income, net 40.0 17.6 (2.5)(c) 55.1
Income before income taxes and
minority interest 16.5 13.4 (32.5) (2.6)
Income tax expense (benefit) 18.9 15.7 (10.5)(d) 24.1
Loss before minority interest (2.4) (2.3) (22.0) (26.7)
Minority interest 2.1 2.0 4.1
Net loss $ (0.3) $ (0.3) $ (22.0) $ (22.6)
Preferred dividend requirements (32.8) (21.3)(e) (54.1)
Net loss applicable to common
shares $ (33.1) $ (0.3) $ (43.3) $ (76.7)
Net loss per common share and
common share equivalent $ (0.40) $ (0.94)
Weighted average number of common
shares and common share
equivalents 81.9 81.9
</TABLE>
The accompanying notes are an integral part of this pro forma information.
S-17
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
1. BASIS OF REPORTING
The accompanying pro forma consolidated capitalization and condensed balance
sheet as of March 27, 1994, and the pro forma consolidated statements of
operations for the three months ended March 27, 1994, and the year ended
December 26, 1993, give effect to the acquisition of the remaining 50% interest
in Jamont Holdings using the purchase method of accounting. The aggregate
purchase price to be paid for the additional interest in Jamont Holdings is
approximately $575 million, excluding estimated acquisition and financing costs
of $11.4 million. The accompanying pro forma consolidated financial statements
give effect to the expected issuances of approximately $250 million of the
Depositary Shares and the incurrence of funded indebtedness of approximately
$336 million, the proceeds of which will be used to finance the acquisition of
Jamont Holdings.
The values assigned to the net assets acquired will be based upon a
determination, after the completion of the transaction, of the fair values of
the assets acquired and liabilities assumed. Jamont Holdings was originally
formed in 1990, at which time its assets and liabilities were adjusted to then
fair values. In 1991, Jamont Holdings commenced a $600 million capital expansion
program which was completed in 1993. Accordingly, based on the relatively recent
valuations of Jamont Holdings' assets and liabilities, for the purpose of these
pro forma consolidated financial statements, the excess of the purchase price
over such estimated fair value of the net assets acquired, approximating $122.5
million, has been allocated to goodwill.
Historical financial information on Jamont Holdings contained in the pro forma
consolidated financial statements has been derived from the audited financial
statements of Jamont Holdings as of December 31, 1993, and for the year then
ended and the unaudited financial statements as of March 31, 1994, and for the
three months then ended, each prepared in accordance with accounting standards
generally accepted in The Netherlands and measured in European Currency Units.
Such financial information has been adjusted to conform to U.S. generally
accepted accounting principles and translated into U.S. dollars.
2. PRO FORMA BALANCE SHEET AND CAPITALIZATION ADJUSTMENTS
The pro forma consolidated capitalization and condensed balance sheet give
effect to the adjustments described below.
(a) To eliminate James River's existing investment in Jamont Holdings as of
March 27, 1994, previously accounted for using the equity method.
(b) To record estimated goodwill, representing the excess of James River's
purchase price over the estimated fair value of Jamont Holdings' net
equity.
(c) To record $11.4 million of estimated acquisition and financing costs,
assumed to be funded through borrowings under the Company's revolving
credit facility, detailed as follows:
(i) $0.4 million related to the acquisition of Jamont Holdings,
excluding financing-related costs;
(ii) $3.0 million related to the incurrence of $325 million of funded
indebtedness; and
(iii) $8.0 million related to the issuance of $250 million of the
Depositary Shares.
(d) To record the assumed incurrence and issuance of the following:
(i) $325 million of funded indebtedness incurred in connection with
the acquisition of Jamont Holdings; and
(ii) $250 million of the Depositary Shares issued in connection with
the acquisition of Jamont Holdings.
(e) To eliminate the Jamont Holdings historical shareholders' equity
balances.
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JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION, CONTINUED
(UNAUDITED)
3. PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS
The pro forma consolidated statement of operations gives effect to the
adjustments described below.
(a) To record amortization of the incremental goodwill, using the
straight-line method over an assumed life of 40 years.
(b) To record interest expense on the $336 million of incremental funded
indebtedness, at an assumed interest rate of 8.0%.
(c) To reverse James River's share of the earnings of Jamont Holdings
associated with its existing 50% ownership interest, previously
accounted for using the equity method.
(d) To record income tax benefits related to the incremental interest
expense.
(e) To reflect increased preferred dividend requirements related to the
issuance of $250 million of the Depositary Shares, at an estimated
dividend yield of 8.5%.
4. LENDER CONSENTS
For purposes of these pro forma consolidated financial statements, it has been
assumed that any necessary consents or waivers which may be required for the
completion of the acquisition of the remaining 50% interest in Jamont Holdings
have been obtained by James River and that no material incremental costs will be
incurred in obtaining such consents or waivers.
5. PRO FORMA CONSOLIDATED SEGMENT INFORMATION
Following the completion of the acquisition of the remaining interest in Jamont
Holdings, James River intends to continue to report its operations in its
existing three business segments. These segments are: Consumer Products, which
includes the manufacture and marketing of towel and tissue and disposable
foodservice products; Food and Consumer Packaging, which includes the
manufacture of folding cartons, flexible packaging, and packaging papers used in
packaging food and other retail consumer goods; and Communications Papers, which
includes the manufacture and marketing of a variety of uncoated business and
printing papers, coated groundwood printing papers, and premium printing papers.
Upon its consolidation, James River intends to report the results of Jamont
Holdings as part of its Consumer Products segment.
6. PRO FORMA RATIOS
On a pro forma basis after reflecting the assumed acquisition and financing of
Jamont Holdings, James River's earnings were inadequate to cover both fixed
charges and combined fixed charges and preferred stock dividends for the year
ended December 26, 1993, and for the three months ended March 27, 1994. For the
year ended December 26, 1993, the amount of the deficiency of pro forma earnings
compared to pro forma fixed charges was $25.7 million, and the amount of the
deficiency of pro forma earnings compared to pro forma combined fixed charges
and preferred stock dividends was $114.2 million. For the three months ended
March 27, 1994, the amount of the deficiency of pro forma earnings compared to
pro forma fixed charges was $14.9 million and the amount of the deficiency of
pro forma earnings compared to pro forma combined fixed charges of preferred
stock dividends was $37.0 million. See "Selected Financial Information" herein.
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DESCRIPTION OF DECS
The following information concerning the DECS supplements the description
of the Preferred Stock in the accompanying Prospectus and should be read in
conjunction with the statements under "Description of Preferred Stock" in the
accompanying Prospectus. The following statements are brief summaries of certain
provisions relating to the DECS represented by the Depositary Shares offered
hereby and are qualified in their entirety by the provisions of James River's
Amended and Restated Articles of Incorporation and the Articles of Amendment
creating the DECS, a copy of which will be filed with the Securities and
Exchange Commission. Each of the Depositary Shares represents a one-hundredth
interest in a share of DECS and entitles the owner to such proportion of all the
rights, preferences and privileges of the share of DECS represented thereby. See
"Description of Depositary Shares."
DIVIDENDS
The holders of DECS (and thereby the Depositary Shares) are entitled to
receive, when, as and if dividends on the DECS are declared by the Board of
Directors of the Company out of funds legally available therefor, cumulative
preferential dividends from the issue date of the DECS, accruing at the rate per
share of $ per annum or $ per quarter (equivalent to $ per annum or $ per
quarter for each Depositary Share), payable quarterly in arrears on each January
1, April 1, July 1 and October 1 or, if any such date is not a business day, on
the next succeeding business day; provided, however, that with respect to any
dividend period during which a redemption occurs, the Company may, at its
option, declare accrued dividends to, and pay such dividends to the redemption
date on, the date fixed for redemption, in which case such dividends would be
payable in cash to the holders of DECS as of the record date for such dividend
payment and would not be included in the calculation of the related Call Price
as set forth below. The first dividend payment will be for the period from the
issue date of the DECS to and including September 30, 1994 and will be payable
on October 1, 1994. Dividends (or amounts equal to accrued and unpaid dividends)
payable on the DECS for any period other than a quarterly dividend period will
be computed on the basis of a 360-day year of twelve 30-day months. Dividends
are payable in cash except in connection with certain redemptions by the
Company.
Dividends on the DECS will accrue whether or not the Company has earnings,
whether or not there are funds legally available for the payment of such
dividends and whether or not such dividends are declared. Dividends accumulate
to the extent they are not paid on the dividend payment date for the quarter for
which they accrue. Accumulated unpaid dividends will not bear interest.
No dividend whatsoever shall be declared or paid upon, or any sum set apart
for the payment of dividends upon, any outstanding share of the DECS or any
shares of any other series of Preferred Stock for any dividend period unless all
dividends for all past dividend periods have been declared and paid upon, or
declared and a sufficient sum set apart for the payment of such dividend upon,
all outstanding shares of the DECS and all outstanding shares of all other
series of Preferred Stock. Unless full cumulative dividends on all outstanding
shares of the DECS and (to the extent that the amount thereof shall have become
determinable) any outstanding shares of any other series of Preferred Stock due
for all past dividend periods shall have been declared and paid, or declared and
a sufficient sum for the payment thereof set apart, then, subject to the rights
of holders of shares of previously issued series of Preferred Stock: (i) no
dividend (other than a dividend payable solely in shares of any class of stock
ranking junior to the DECS as to the payment of dividends or as to rights in
liquidation, dissolution, or winding up of the affairs of James River ("Junior
Stock")) shall be declared or paid upon, or any sum set apart for the payment of
dividends upon, any shares of Junior Stock; (ii) no other distribution shall be
made upon any shares of Junior Stock; (iii) no shares of Junior Stock or any
series of Preferred Stock (except Series D Cumulative Preferred Stock) shall be
purchased, redeemed, or otherwise acquired for value by James River or any of
its subsidiaries; and (iv) no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption, or
other acquisition for value of any shares of Junior Stock by James River or any
of its subsidiaries. The Articles of Amendment creating the DECS do not restrict
the Company's ability to repurchase or redeem on and after the Initial
Redemption Date any of the DECS while there is an arrearage in the payment of
dividends. Holders of the DECS shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative dividends, as
herein described.
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MANDATORY CONVERSION OF DECS
On the Mandatory Conversion Date, each outstanding DECS (and the related
Depositary Shares) will convert automatically into shares of Common Stock at the
Common Equivalent Rate in effect on such date and the right to receive an amount
in cash equal to all accrued and unpaid dividends on such DECS (other than
dividends declared for which the record date is before, and the payment date is
after, the Mandatory Conversion Date) to the Mandatory Conversion Date, whether
or not declared, out of funds legally available for the payment of dividends,
subject to the right of the Company to redeem the DECS on or after the Initial
Redemption Date and before the Mandatory Conversion Date, as described below,
and subject to the conversion of the DECS (and the related Depositary Shares) at
the option of the holder at any time before the Mandatory Conversion Date. The
Common Equivalent Rate is initially one hundred shares of Common Stock for each
DECS (equivalent to one share of Common Stock for each Depositary Share), and is
subject to adjustment as described below.
Because the price of the Common Stock is subject to market fluctuations,
the value of the Common Stock received by a holder of Depositary Shares upon
Mandatory Conversion may be more or less than the amount paid for the Depositary
Shares. Dividends will cease to accrue on the Mandatory Conversion Date in
respect of the DECS (and related Depositary Shares) then outstanding.
RIGHT TO REDEEM DECS
The DECS (and the related Depositary Shares) are not redeemable by the
Company before the Initial Redemption Date. At any time and from time to time on
or after the Initial Redemption Date and before the Mandatory Conversion Date,
the Company may redeem the outstanding DECS (and thereby the Depositary Shares),
in whole or in part. Upon any such redemption, the holder of record of the DECS
will receive, in exchange for each DECS so called, a number of shares of Common
Stock equal to the greater of (i) the Call Price of the DECS in effect on the
date of redemption divided by the Current Market Price of the Common Stock
determined as of the date which is one trading day before the public
announcement of the call for redemption or (ii) shares of Common Stock,
subject to adjustment to the same extent as the Optional Conversion Rate, as
defined and described herein (equivalent to the Conversion Price of $ per
share of Common Stock). The Call Price of each DECS is the sum of (i) $ ($
per Depositary Share) on and after the Initial Redemption Date through ,
, $ ($ per Depositary Share) on and after , through ,
, $ ($ per Depositary Share) on and after , through ,
, $ ($ per Depositary Share) on and after , through ,
, and $ ($ per Depositary Share) on and after , until the
Mandatory Conversion Date, and (ii) all accrued and unpaid dividends thereon to
the date fixed for redemption (other than dividends for which the record date is
before, and the payment date is after, the date fixed for redemption). A public
announcement of any call for redemption shall be made before the mailing of the
notice of such call to holders of the DECS as described below. Dividends will
cease to accrue on the DECS on the date fixed for their redemption.
The term "Current Market Price" per share of the Common Stock on any date
of determination means the lesser of (x) the average of the closing sale prices
of the Common Stock as reported on the NYSE for the fifteen consecutive trading
days ending on and including such date of determination and (y) the closing sale
price of the Common Stock as reported on the NYSE for such date of
determination; provided, however, that, with respect to any redemption of the
DECS, if any event that results in an adjustment of the Common Equivalent Rate
occurs during the period beginning on the first day of such fifteen-day period
and ending on the applicable redemption date, the Current Market Price as
determined pursuant to the foregoing will be appropriately adjusted to reflect
the occurrence of such event.
The opportunity for equity appreciation afforded by an investment in the
DECS is less substantial than the opportunity for equity appreciation afforded
by an investment in the Common Stock because the Company may, at its option,
call for redemption the DECS at any time on or after the Initial Redemption Date
and before the Mandatory Conversion Date, and may be expected to do so before
the Mandatory Conversion Date if the market price of the Common Stock exceeds
the Conversion Price. In such event, holders of the DECS will receive less than
one hundred shares of Common Stock for each DECS (equivalent to less than one
share of Common Stock for each Depositary Share). However, holders of DECS
called for redemption will have the option to surrender DECS for conversion at
the Conversion Price up to the close of business on the redemption date (and may
be expected to do so if the Current Market Price of the Common Stock exceeds the
Conversion Price). A holder of
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DECS that elects to convert will receive shares of Common Stock for each DECS
(equivalent to of a share of Common Stock for each Depositary Share). In no
event will a holder of Depositary Shares receive less than of a share of
Common Stock (equivalent to the Conversion Price of $ per share of Common
Stock). Because the number of shares of Common Stock to be delivered in payment
of the Call Price will be determined on the basis of the Current Market Price,
the value per share of the shares of Common Stock to be delivered may be more or
less than the Call Price on the date of delivery.
CONVERSION AT OPTION OF HOLDER
The DECS (and thereby the Depositary Shares) are convertible, in whole or
in part, at the option of the holder thereof, at any time before the Mandatory
Conversion Date, unless previously redeemed, into shares of Common Stock at a
rate of shares of Common Stock for each DECS (the "Optional Conversion Rate")
(equivalent to of a share of Common Stock for each Depositary Share and
equivalent to a Conversion Price of $ per share of Common Stock), subject to
adjustment as described below. The right to convert DECS called for redemption
will terminate at the close of business on the redemption date.
Conversion of DECS (and thereby the related Depositary Shares) may be
effected by delivering certificates evidencing such DECS (or the Depositary
Receipts evidencing such Depositary Shares), together with written notice of
conversion and a proper assignment of such certificates to the Company or in
blank, to the office or agency to be maintained by the Company for that purpose
(and, if applicable, payment of an amount equal to the dividend payment on such
shares), and otherwise in accordance with conversion procedures established by
the Company. Each conversion shall be deemed to have been effected immediately
before the close of business on the date on which the foregoing requirement
shall have been satisfied. The conversion shall be at the Optional Conversion
Rate in effect at such time and on such date.
Holders of DECS at the close of business on a record date for any payment
of dividends will be entitled to receive the dividend payable on such DECS on
the corresponding dividend payment date notwithstanding the optional conversion
of such DECS following such record date and before such dividend payment date.
However, DECS surrendered for conversion after the close of business on a record
date for any payment of dividends and before the opening of business on the next
succeeding dividend payment date (unless such DECS are subject to redemption on
a redemption date in that period) must be accompanied by payment of an amount
equal to the dividend thereon which is to be paid on such dividend payment date.
Except as provided above, the Company will make no payment or allowance for
unpaid dividends, whether or not in arrears, on converted DECS or for dividends
or distributions on the shares of Common Stock issued upon such conversion.
CONVERSION ADJUSTMENT
The Common Equivalent Rate and the Optional Conversion Rate are subject to
adjustment if the Company shall (i) pay a dividend or make a distribution with
respect to Common Stock in shares of such stock, (ii) subdivide or split its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, (iv) issue by reclassification of
its shares of Common Stock any shares of Common Stock of the Company, (v) issue
rights or warrants to all holders of its Common Stock entitling them (for a
period not exceeding 45 days from the date of such issuance) to subscribe for or
purchase shares of Common Stock at a price per share less than the market price
of the Common Stock or (vi) pay a dividend or make a distribution to all holders
of its Common Stock of evidence of its indebtedness, securities of a subsidiary,
or other assets (excluding any dividends or distributions referred to in clause
(i) above or any cash dividends) or issue to all holders of its Common Stock
rights or warrants to subscribe for or purchase any of its securities (other
than those referred to in clause (v) above). The Company will also be entitled
to make upward adjustments in the Common Equivalent Rate, the Optional
Conversion Rate and the Call Price, as it in its discretion shall determine to
be advisable, so that any stock dividends, subdivision of shares, distribution
of rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock (or any transaction which could be
treated as any of the foregoing transactions pursuant to Section 305 of the
Internal Revenue Code of 1986, as amended) hereafter made by the Company to its
stockholders will not be taxable. All adjustments to the Common Equivalent Rate
and the Optional Conversion Rate will be calculated to the nearest 1/1000th of a
share of Common Stock or if there is not a nearest 1/1000th of a share to the
next lower 1/1000th of a share). No adjustment in the Common Equivalent Rate and
the Optional Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein; provided,
however, that any adjustments which by
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reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
ADJUSTMENT FOR CONSOLIDATION OR MERGER
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the continuing
corporation and in which the Common Stock outstanding immediately before the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another corporation of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), each DECS shall, after consummation of such transaction, be
subject to (i) conversion at the option of the holder into the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into which such
DECS might have been converted immediately before consummation of such
transaction, (ii) conversion on the Mandatory Conversion Date into the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock into which
such DECS would have been converted if the conversion on the Mandatory
Conversion Date had occurred immediately before the date of consummation of such
transaction, and (iii) redemption on any redemption date in exchange for the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock that would have been issuable at the Call Price in effect on such
redemption date upon a redemption of such share immediately before consummation
of such transaction, assuming that the public announcement of such redemption
had been made on the last possible date permitted by the terms of the DECS and
applicable law, assuming in each case that such holder of Common Stock failed to
exercise rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon consummation of such transaction
(provided that if the kind or amount of securities, cash or other property
receivable upon consummation of such transaction is not the same for each
non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into
which the DECS shall be convertible after consummation of such transaction shall
be subject to adjustment as described in the immediately preceding paragraph
following the date of consummation of such transaction. The Company may not
become a party to any such transaction unless the terms thereof are consistent
with the foregoing.
FRACTIONAL SHARES
No fractional shares of Common Stock will be issued upon redemption or
conversion of the DECS. In lieu of any fractional share otherwise issuable in
respect of all DECS of any holder which are redeemed or converted on any
redemption date or upon Mandatory Conversion or any optional conversion, such
holder shall be entitled to receive an amount in cash equal to the same fraction
of the (i) Current Market Price in the case of redemption, or (ii) Closing Price
(as defined in the Articles of Amendment) of the Common Stock determined (A) as
of the fifth trading day immediately preceding the Mandatory Conversion Date, in
the case of Mandatory Conversion, or (B) as of the second trading day
immediately preceding the effective date of conversion, in the case of an
optional conversion by a holder.
RIGHTS AGREEMENT
Reference is made to the description of the Common Stock incorporated
herein by reference for a description of the Rights to buy the Company's Series
M Cumulative Participating Preferred Stock (the "Rights") issued by the Company.
See also "Description of Common Stock -- Shareholder Rights Plan." Shares of
Common Stock issued upon conversion or redemption of the DECS, and before the
Rights are redeemed or expire, shall also be issued with Rights in accordance
with the terms and conditions of the Rights Agreement. The method of calculation
of the Current Market Price of the Common Stock does not take into account the
separate value of the Rights, except to the extent any such value may be
reflected in the Current Market Price.
NOTICE TO HOLDERS OF DECS
The Company will provide notice of any call of the DECS to holders of
record of the DECS (and thereby the Depositary Shares) to be called not less
than 15 nor more than 60 days before the date fixed for redemption.
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Such notice shall be provided by mailing notice of such redemption to the
holders of record of the DECS to be called. Each holder of DECS to be called
shall surrender the certificate evidencing such DECS to the Company at the place
designated in such notice and shall be entitled to receive certificates for
shares of Common Stock following such surrender and the date of such redemption.
If fewer than all the outstanding DECS are to be called, the DECS to be called
shall be selected by the Company from outstanding DECS by lot or pro rata (as
nearly as may be) or by any other method determined by the Board of Directors of
the Company in its sole discretion to be equitable. For a description of notices
to holders of Depositary Shares, see "Description of Depositary Shares -- Record
Date."
LIQUIDATION RIGHTS
In the event of the liquidation, dissolution, or winding up of the business
of the Company, whether voluntary or involuntary, the holders of DECS, after
payment or provision for payment of the debts and other liabilities of the
Company and before any distribution to the holders of the Common Stock, or any
other stock ranking junior to the DECS with respect to distributions upon
liquidation, dissolution or winding up, will be entitled to receive for each
DECS an amount equal to the sum of (i) 100 times the per share price to the
public shown on the cover page of this Prospectus Supplement and (ii) all
accrued and unpaid dividends thereon to the date of payment. If the assets of
the Company available for distribution to the holders of the DECS upon a
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full the liquidation payments payable to the holders of outstanding DECS
and any shares of the Company ranking on a parity with the DECS upon
liquidation, then the holders of all such DECS shall share ratably in such
distribution of assets in accordance with the amount which would be payable on
such distribution if the amounts to which the holders of outstanding DECS and
the holders of outstanding shares of the Company ranking on a parity with the
DECS upon liquidation are entitled were paid in full.
VOTING RIGHTS
The holders of DECS shall have the right with the holders of Common Stock
to vote in the election of directors and upon each other matter coming before
any meeting of the stockholders on the basis of votes for each DECS held
(equivalent to of a vote for each Depositary Share). The holders of DECS, and
the holders of Common Stock will vote together as a single voting group except
as otherwise provided by law or by the Amended and Restated Articles of
Incorporation of the Company.
Whenever dividends on the DECS shall be in arrears and unpaid in an
aggregate amount of dividends payable thereon for six quarterly dividend
periods, the number of directors of James River will be increased by two and the
holders of the DECS (voting as a separate voting group together with holders of
shares of all other series of Preferred Stock upon which like voting rights have
been conferred and are exercisable) will be entitled to vote for the election of
those two additional Directors. Such right shall, when vested, continue until
all dividends in default on the DECS shall have been paid in full and, when so
paid, such right of the holders of the DECS shall cease. The term of office of
all Directors elected by the holders of the DECS and such other series shall
terminate on the earlier of (i) the next annual meeting of shareholders at which
a successor shall have been elected and qualified or (ii) the termination of the
right of holders of the DECS and such other series to vote for such Directors.
The holders of the DECS (and thereby the Depositary Shares) will be
entitled to vote as a separate voting group on certain significant corporate
actions, including certain amendments to James River's Amended and Restated
Articles of Incorporation including, without limitation, any change in the
designation, rights, preferences or limitations of all or part of the DECS.
REISSUANCE
DECS redeemed for or converted into Common Stock or otherwise acquired by
the Company will assume the status of authorized but unissued Preferred Stock
and may thereafter be reissued in the same manner as other authorized but
unissued Preferred Stock.
LISTING
The Company will apply to list the Depositary Shares on the NYSE.
REGISTRAR AND TRANSFER AGENT
Wachovia Bank of North Carolina, N.A. will serve as registrar and transfer
agent for the DECS (and the Depositary Shares).
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DESCRIPTION OF DEPOSITARY SHARES
Each Depositary Share represents a one-hundredth interest in a share of
DECS deposited under the Deposit Agreement ("Deposit Agreement"), dated as of
, 1994, among James River, Wachovia Bank of North Carolina, N.A., as
Depositary ("Depositary"), and the holders from time to time of Depositary
Receipts issued thereunder. Subject to the terms of the Deposit Agreement, each
owner of a Depositary Share is entitled, proportionately, to all of the rights
and preferences of the shares of DECS represented thereby (including dividend,
voting, redemption, and liquidation rights) contained in James River's Amended
and Restated Articles of Incorporation and the Articles of Amendment creating
the DECS and summarized above under "Description of DECS." James River does not
expect that there will be any public trading market for the DECS except as
represented by the Depositary Shares.
The Depositary Shares are evidenced by depositary receipts issued pursuant
to the Deposit Agreement ("Depositary Receipts"). The following description of
the Depositary Shares does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Deposit Agreement (which
contains the form of Depositary Receipt), a copy of which will be filed with the
Commission.
ISSUANCE OF DEPOSITARY RECEIPTS
Immediately following the issuance and delivery of the DECS by James River
to the Underwriters, the Company will deposit the DECS with the Depositary,
which will then execute and deliver the Depositary Receipts to the Company. The
Company will, in turn, deliver the Depositary Receipts to the Underwriters.
Depositary Receipts will be issued evidencing only whole Depositary Shares.
WITHDRAWAL OF DECS
Upon surrender of the Depositary Receipts at the Corporate Trust Office of
the Depositary, the owner of the Depositary Shares evidenced thereby is entitled
to delivery at such office of the number of whole shares of DECS represented by
such Depositary Shares. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of DECS to be withdrawn, the
Depositary will deliver to such holder at the same time a new Depositary Receipt
evidencing such excess number of Depositary Shares. Owners of Depositary Shares
will be entitled to receive only whole shares of DECS on the basis of one share
of DECS for one hundred Depositary Shares. In no event will fractional shares of
DECS (or cash in lieu thereof) be distributed by the Depositary. Consequently, a
holder of a Depositary Receipt representing a fractional share of DECS would be
able to liquidate his position only by sale to a third party (in a public
trading market transaction or otherwise) unless the Depositary Shares are
redeemed by the Company or converted by the holder.
CONVERSION AND CALL PROVISION
MANDATORY CONVERSION OR CALL. As described under "Description of
DECS -- Mandatory Conversion of DECS" and " -- Right to Redeem DECS", the DECS
are subject to mandatory conversion into shares of Common Stock on the Mandatory
Conversion Date, and to the right of the Company to call the DECS, at the
Company's option, for redemption on or after the Initial Redemption Date and
before the Mandatory Conversion Date. The Depositary Shares are subject to
mandatory conversion or call upon substantially the same terms and conditions
(including as to notice to the owners of Depositary Shares) as the DECS, except
that the number of shares of Common Stock received upon mandatory conversion or
redemption of each Depositary Share will be equal to the number of shares of
Common Stock received upon mandatory conversion or redemption of each DECS
divided by one hundred.
If fewer than all of the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be selected by lot or pro rata or by any
other equitable method determined by the Depositary to be consistent with the
method determined by the Board of Directors with respect to the DECS. If fewer
than all of the Depositary Shares evidenced by a Depositary Receipt are called
for redemption, the Depositary will deliver to the holder of such Depositary
Receipt upon its surrender to the Depositary, together with the redemption
consideration, a new Depositary Receipt evidencing the Depositary Shares
evidenced by such prior Depositary Receipt and not called for redemption.
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CONVERSION AT THE OPTION OF HOLDER. As described under "Description of
DECS -- Conversion at the Option of Holder", the DECS may be converted, in whole
or in part, into shares of Common Stock at the option of the holders of DECS at
any time before the Mandatory Conversion Date, unless previously redeemed. The
Depositary Shares may, at the option of holders thereof, be converted into
shares of Common Stock upon the same terms and conditions as the DECS, except
that the number of shares of Common Stock received upon conversion of each
Depositary Share will be equal to the number of shares of Common Stock received
upon conversion of each DECS divided by one hundred. To effect such an optional
conversion, a holder of Depositary Shares must deliver Depositary Receipts
evidencing the Depositary Shares to be converted, together with a written notice
of conversion and a proper assignment of the Depositary Receipts to the Company
or in blank (and, if applicable, payment in cash of an amount equal to the
dividend attributable to the current quarterly dividend period payable on such
Depositary Shares), to the Depositary or its agent. Each optional conversion of
Depositary Shares shall be deemed to have been effected immediately before the
close of business on the date on which the foregoing requirements shall have
been satisfied. The conversion shall be at the Optional Conversion Rate in
effect at such time and on such date, adjusted to reflect the fact that one
hundred Depositary Shares are the equivalent of one DECS.
No fractional share of DECS may be converted. If only a portion of the
Depositary Shares evidenced by a Depositary Receipt is to be converted, a new
Depositary Receipt or Receipts will be issued for any Depositary Shares not
converted. No fractional shares of Common Stock will be issued upon conversion
or redemption of Depositary Shares, and, if such conversion or redemption would
otherwise result in a fractional share of Common Stock being issued, an amount
will be paid in cash in lieu thereof as described in "Description of DECS --
Fractional Shares" or as set forth in the Deposit Agreement.
After the date fixed for conversion or redemption, the Depositary Shares so
converted or called for redemption will no longer be deemed to be outstanding
and all rights of the holders of such Depositary Shares will cease, except the
right to receive the Common Stock and amounts payable on such conversion or
redemption and any money or other property to which the holders of such
Depositary Shares were entitled upon such conversion or redemption, upon
surrender to the Depositary of the Depositary Receipt or Receipts evidencing
such Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions in respect of the DECS to the record holders of Depositary
Receipts in proportion, insofar as practicable, to the number of Depositary
Shares owned by such holders.
In the event of a distribution other than cash in respect of the DECS, the
Depositary will distribute property received by it to the record holders of
Depositary Receipts in proportion, insofar as practicable, to the number of
Depositary Shares owned by such holders, unless the Depositary determines that
it is not feasible to make such distribution, in which case the Depositary may,
with the approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including sale (at
public or private sale) of such property and distribution of the net proceeds
from such sale to such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the DECS, or (ii) the
Depositary shall receive notice of any meeting at which holders of DECS are
entitled to vote or of which holders of DECS are entitled to notice, or of any
election on the part of the Company to call for redemption any DECS, the
Depositary shall in each such instance fix a record date (which shall be the
same date as the record date for the DECS) for the determination of the holders
of Depositary Receipts (x) who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, (y) who shall be entitled to give instructions for the exercise of
voting rights at any such meeting or to receive notice of such meeting, or (z)
who shall be subject to such redemption, subject to the provisions of the
Deposit Agreement.
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<PAGE>
VOTING OF DECS
Upon receipt of notice of any meeting at which holders of DECS are entitled
to vote, the Depositary will mail the information contained in such notice of
meeting to the record holders of Depositary Receipts. Each record holder of
Depositary Receipts on the record date (which will be the same date as the
record date for the DECS) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of DECS represented by
such holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the number of DECS represented by such Depositary Shares in
accordance with such instructions, and the Company has agreed to take all
reasonable action which may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting DECS to
the extent it does not receive specific written voting instructions from the
holders of Depositary Receipts representing such DECS.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment that imposes any fees, taxes or other charges payable by
holders of Depositary Receipts (other than taxes and other governmental charges,
fees and other expenses payable by such holders as stated under "Charges of
Depositary"), or that otherwise prejudices any substantial existing right of
holders of Depositary Receipts, will not take effect as to outstanding
Depositary Receipts until the expiration of 90 days after notice of such
amendment has been mailed to the record holders of outstanding Depositary
Receipts. Every holder of Depositary Receipts at the time any such amendment
becomes effective shall be deemed to consent and agree to such amendment and to
be bound by the Deposit Agreement, as so amended. In no event may any amendment
impair the right of any owner of Depositary Shares, subject to the conditions
specified in the Deposit Agreement, upon surrender of the Depositary Receipts
evidencing such Depositary Shares to receive DECS or, upon conversion of the
DECS represented by the Depositary Receipts, to receive shares of Common Stock,
and in each case any money or other property represented thereby, except in
order to comply with mandatory provisions of applicable law.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record holders
of all Depositary Receipts then outstanding at least 30 days before the date
fixed in such notice for such termination. The Depositary may likewise terminate
the Deposit Agreement if at any time 45 days shall have expired after the
Depositary shall have delivered to the Company a written notice of its election
to resign and a successor depositary shall not have been appointed and accepted
its appointment. If any Depositary Receipts remain outstanding after the date of
termination, the Depositary thereafter will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Depositary will continue (i) to collect
dividends on the DECS and any other distributions with respect thereto and (ii)
to deliver the DECS together with such dividends and distributions and the net
proceeds of any sales of rights, preferences, privileges or other property,
without liability for interest thereon, in exchange for Depositary Receipts
surrendered. At any time after the expiration of two years from the date of
termination, the Depositary may sell the DECS then held by it at public or
private sale, at such place or places and upon such terms as it deems proper and
may thereafter hold the net proceeds of any such sale, together with any money
and other property then held by it, without liability for interest thereon, for
the pro rata benefit of the holders of Depositary Receipts which have not been
surrendered. The Company does not intend to terminate the Deposit Agreement or
to permit the resignation of the Depositary without appointing a successor
depositary. If the Deposit Agreement is terminated and such number of DECS
remains outstanding as is necessary to satisfy the requirements of the NYSE, the
Company will use its best efforts to list the DECS on the NYSE (unless the
holders of a majority of the outstanding DECS shall consent to the Company not
effecting such listing).
CHARGES OF DEPOSITARY
The Company will pay all charges of the Depositary including charges in
connection with the initial deposit of the DECS, the initial execution and
delivery of the Depositary Receipts, the distribution of information to the
holders of Depositary Receipts with respect to matters on which DECS are
entitled to vote, withdrawals of the
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<PAGE>
DECS by the holders of Depositary Receipts or redemption or conversion of the
DECS, except for taxes (including transfer taxes, if any) and other governmental
charges and such other charges as are provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing DECS.
GENERAL
The Depositary will make available for inspection by holders of Depositary
Receipts at its Corporate Office all reports and communications from the Company
that are delivered to the Depositary and made generally available to the holders
of the DECS.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing its
obligations under the Deposit Agreement.
DESCRIPTION OF COMMON STOCK
The following description of the Common Stock is qualified in its entirety
by reference to the more complete description thereof set forth in the documents
incorporated by reference in this Prospectus. See "Incorporation of Certain
Documents by Reference."
The holders of Common Stock are entitled to voting rights for the election
of directors and for other purposes, subject to the voting rights of the holders
of Preferred Stock conferred by law and to the specific voting rights granted to
each series of Preferred Stock and to voting rights which may in the future be
granted to subsequently created series of Preferred Stock. The Common Stock does
not have cumulative voting rights. The rights of the holders of Common Stock may
not be modified other than by the affirmative vote of more than two-thirds of
the holders of the issued and outstanding shares thereof, voting as a single
voting group.
Dividends may be declared on Common Stock out of funds legally available
therefor when all required dividend and redemption requirements for Preferred
Stock have been met. Certain of James River's loan agreements contain
restrictions which may limit the ability of James River to pay dividends. In the
event of any liquidation of James River, the holders of Preferred Stock are
entitled to be paid out of the net assets of James River, before any
distribution is made to the holders of Common Stock, their applicable
liquidation value plus accumulated but unpaid dividends to the date of payment.
Thereafter the holders of Common Stock are entitled to a pro rata distribution
of the remaining assets. The liquidation value per share for each authorized
series of Preferred Stock other than the DECS is set forth in Note 14 to Notes
to Audited Consolidated Financial Statements included in the Annual Report to
Shareholders for the year ended December 26, 1993, which is incorporated by
reference in this Prospectus. The liquidation value per share of the Depositary
Shares is $ , plus accrued and unpaid dividends through the date of
payment.
SHAREHOLDER RIGHTS PLAN
James River has a shareholder rights plan pursuant to which preferred stock
purchase rights ("Rights") are issued at the rate of one Right for each share of
Common Stock. Each Right entitles its holder to purchase one one-thousandth of a
share of Series M Cumulative Participating Preferred Stock ("Series M") at an
exercise price of $150, subject to adjustment. Due to the nature of its
dividend, liquidation, and voting rights, the economic value of one
one-thousandth of a share of Series M that may be acquired upon the exercise of
each Right should approximate the economic value of one share of Common Stock.
The Rights will only be exercisable if a person or group acquires, has the right
to acquire, or has commenced a tender offer for 15% or more of the outstanding
Common Stock. The Rights are nonvoting, pay no dividends, and may be redeemed by
the Company for $.01 per Right at any time before the tenth day (subject to
adjustment) after a 15% position is acquired. The Rights will have no effect on
earnings per share until they become exercisable and expire on March 1, 1999,
unless earlier exercised or redeemed.
After the Rights are exercisable, if the Company is acquired in a merger or
other business combination, or if 50% or more of the Company's assets are sold,
each Right will entitle its holder (other than the acquiring person or group) to
purchase, at the then-current exercise price, common stock of the acquiring
person having a value of twice the exercise price. In addition, in the event a
15% or greater shareholder (i) acquires the Company through a merger where James
River is the surviving corporation, (ii) engages in certain self-dealing
transactions, or (iii) increases his ownership other than through a cash tender
offer providing fair value to all holders of Common Stock, each Right will
entitle its holder (other than the acquiring person or group) to purchase, at
the then-current exercise price, Common Stock having a value of twice the
exercise price.
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<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of McGuire, Woods, Battle & Boothe, counsel to the Company,
the following discussion sets forth the material United States federal income
tax consequences under existing law of the ownership and disposition of DECS
(and thereby the Depositary Shares). This discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations promulgated thereunder, and administrative and judicial
interpretations as of the date hereof, all of which are subject to change,
possibly with retroactive effect.
This discussion relates only to DECS and shares of Common Stock received
upon conversion thereof or in exchange therefor that are held as capital assets
within the meaning of Section 1221 of the Code. It does not address all tax
consequences that may be relevant in the particular circumstances of each holder
(some of which, such as dealers in securities, insurance companies, and
tax-exempt organizations, may be subject to special rules), nor does it address
any state, local or foreign tax considerations that may be relevant to a
particular investor.
The Company does not intend to seek a ruling from the Internal Revenue
Service (the "IRS") as to any tax consequences relating to DECS. Furthermore,
there have been no regulations, rulings or judicial decisions specifically
considering stock having the same terms as DECS, and there can be no assurance
that the IRS will agree with the positions set forth below. PERSONS CONSIDERING
THE PURCHASE OF THE DEPOSITARY SHARES SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF
ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION.
INTRODUCTION
Holders of Depositary Shares will be treated for federal income tax
purposes as if they were owners of the DECS represented by such Depositary
Shares. Accordingly, holders of Depositary Shares will recognize the items of
income, gain, loss, and deduction that they would recognize if they directly
held such DECS. References in the remainder of this "Federal Income Tax
Considerations" section to holders of DECS include holders of Depositary Shares,
and references to DECS include Depositary Shares.
DIVIDENDS
To the extent paid out of the Company's current or accumulated earnings and
profits, dividends received by a holder of DECS will be taxable as ordinary
income. In the case of a corporate holder, such dividend will qualify for the 70
percent intercorporate dividends-received deduction, provided that such
corporate holder meets the minimum holding period requirements (generally at
least 46 days) and other applicable requirements. Under certain circumstances, a
corporate holder may be subject to the alternative minimum tax with respect to
the amount of its dividends-received deduction.
Under certain circumstances, a corporation that receives an "extraordinary
dividend" (as defined in Section 1059(c) of the Code) is required to reduce its
stock basis by the non-taxed portion of such dividend. In addition, Section
1059(f) provides that any dividend with respect to "disqualified preferred
stock" is treated as an extraordinary dividend. Generally, quarterly dividends
not in arrears paid to an original holder of DECS will not constitute
extraordinary dividends as defined in Section 1059(c). Moreover, DECS will not
constitute "disqualified preferred stock" within the meaning of Section 1059(f).
REDEMPTION PREMIUM
Under certain circumstances, Section 305(c) of the Code requires that any
redemption premium with respect to stock (i.e., the excess of the stock
redemption price over its issue price) be included in the holder's income as a
constructive dividend, thereby subjecting the holder to tax prior to actual
receipt of the redemption premium. Under existing administrative guidance,
however, Section 305(c) should not apply to stock with terms such as those of
the DECS.
REDEMPTION OR MANDATORY OR OPTIONAL CONVERSION INTO COMMON STOCK
Gain or loss generally will not be recognized by a holder upon the
redemption of the DECS for shares of Common Stock or the conversion of DECS into
shares of Common Stock. Dividend income will be recognized, however, to the
extent cash or Common Stock is received in payment of dividends. In addition, a
holder who
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<PAGE>
receives cash in lieu of a fractional share will be treated as having received
such fractional share and having exchanged it for cash in a taxable transaction
subject to Section 302 of the Code.
Generally, a holder's basis in the Common Stock received upon the call or
conversion of the DECS (including any fractional share interest and excluding
shares of Common Stock taxed as a dividend upon receipt) will equal the adjusted
tax basis of the called or converted DECS. The holding period of such Common
Stock will include the holding period of the called or converted DECS. A
holder's basis in Common Stock received in payment of dividends will be equal to
the fair market value of that Common Stock, and the holding period for such
Common Stock will begin on the day after the date that the Common Stock is
acquired.
ADJUSTMENT OF CONVERSION RATE
Certain adjustments to the Common Equivalent Rate and the Optional
Conversion Rate to reflect the Company's issuance of certain rights, warrants,
evidences of indebtedness, securities or other assets to holders of Common Stock
may result in constructive distributions taxable as dividends to the holders of
DECS, which may constitute (or may cause other dividends to constitute)
"extraordinary dividends" to corporate holders. See "Federal Income Tax
Considerations -- General -- Dividends."
BACKUP WITHHOLDING
Certain noncorporate holders may be subject to backup withholding at a rate
of 31 percent on dividends received upon the DECS and, after call or conversion,
upon Common Stock. Generally, backup withholding applies to a United States
person only when the taxpayer fails to furnish or certify a proper Taxpayer
Identification Number or when the taxpayer is notified by the IRS that the
taxpayer has failed to report payments of interest and dividends properly.
Holders should consult their tax advisors to ascertain whether they are exempt
from backup withholding and the procedure for obtaining any applicable
exemption.
CERTAIN TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of
Depositary Shares or Common Stock by a non-U.S. holder. For purposes of this
discussion, the term "non-U.S. holder" means any owner of Depositary Shares or
Common Stock that is, for United States federal income tax purposes, (i) a
foreign corporation, (ii) a non-resident alien individual, (iii) a foreign
estate or trust, or (iv) a foreign partnership, except that the term does not
include certain individuals who were United States citizens and who are subject
to the provisions of the Code applicable to certain United States expatriates
whose loss of United States citizenship had as one of its principal purposes the
avoidance of United States taxes.
DIVIDENDS
Dividends paid to a non-U.S holder of Depositary Shares or Common Stock
generally will be subject to withholding of United States federal income tax at
a 30 percent rate. The 30 percent statutory withholding rate may be reduced by
an applicable tax treaty, although the non-U.S. holder may be required to file
certain forms to claim the benefit of the lower treaty rate.
Dividends are exempt from the withholding tax if effectively connected with
the conduct of a trade or business in the United States by the non-U.S. holder
(under certain tax treaties, such trade or business must be conducted through a
permanent establishment in the United States to which such dividends are
attributable), although the non-U.S. holder may be required to file certain
forms (including IRS Form 4224) with the payor of the dividend to obtain the
benefit of the exemption. Dividends that are effectively connected with the
conduct of a trade or business in the United States generally will be taken into
account in determining the non-U.S. holder's United States federal income tax on
its net income derived from such trade or business. In addition, a non-U.S.
holder that is a corporation may be subject to a branch profits tax at a rate of
30 percent (or such lower rate as may be specified by an applicable tax treaty)
on the repatriation from the United States of the earnings and profits
attributable to its income that is effectively connected to a United States
trade or business, subject to certain adjustments and the relevant provisions of
any applicable tax treaty.
GAIN ON DISPOSITION
Generally, a non-U.S. holder will not be subject to United States federal
income tax on any gain realized upon the disposition of Depositary Shares or
Common Stock unless (i) the Company is or has been a "United States real
property holding corporation" as defined in Section 897 of the Code ("USRPHC")
and (A) in the case of Depositary Shares that are regularly traded on an
established securities market (within the meaning of Treasury Regulations), the
non-U.S. holder held, directly or indirectly at any time during the five-year
period ending on the
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<PAGE>
date of disposition, more than five percent of the DECS, (B) in the case of
Depositary Shares that are not regularly traded on an established securities
market (within the meaning of Treasury Regulations), the non-U.S. holder held,
directly or indirectly at any time during the five-year period ending on the
date of disposition, Depositary Shares having a fair market value on the date of
acquisition that exceeded five percent of the fair market value of the Common
Stock, or (C) in the case of Common Stock, the non-U.S. holder held, directly or
indirectly at any time during the five-year period ending on the date of
disposition, more than five percent of the Common Stock; (ii) the non-U.S.
holder is engaged in a trade or business within the United States and the gain
is effectively connected with such business (and, if an applicable tax treaty so
provides, is attributable to a permanent establishment maintained by the
non-U.S. holder in the United States); (iii) the non-U.S. holder is an
individual who is present in the United States for 183 days or more in the
taxable year of the disposition and who meets certain other conditions; or (iv)
the non-U.S. holder is an individual who is subject to tax pursuant to the
provisions of United States tax law applicable to certain United States
expatriates. At present, no determination has been made as to whether the
Company is a USRPHC, and no assurance can be given that it is not now or will
not become a USRPHC.
ESTATE TAX
Depositary Shares or Common Stock owned by an individual non-U.S. holder at
the time of his or her death will be includible in his or her estate for United
States federal estate tax purposes unless an applicable estate tax treaty
provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
DIVIDENDS. The Company or other payor of dividends must report annually to
the IRS and to each non-U.S. holder the amount of dividends paid to and the tax
withheld with respect to such holder. These information reporting requirements
apply regardless of whether United States withholding tax was reduced or
eliminated by an applicable tax treaty. Copies of these information returns may
also be available to the tax authorities of a foreign jurisdiction under the
provisions of a specific tax treaty or exchange of information agreement. In
general, dividends payable to non-U.S. holders are subject to backup withholding
(see "Federal Income Tax Considerations -- In General -- Backup Withholding").
However, dividends that are subject to United States withholding tax at the 30
percent statutory rate or at a reduced tax treaty rate generally are exempt from
backup withholding of United States federal income tax.
BROKER SALES. If a non-U.S. holder sells Depositary Shares or Common Stock
through a United States office of a United States or foreign broker, the broker
is required to file an information return and to withhold 31 percent of the sale
proceeds unless the non-U.S. holder is an exempt recipient or has provided the
broker with the information and statements, under penalties of perjury,
necessary to establish an exemption from backup withholding. If the sale
proceeds realized by the non-U.S. holder are paid to or through the foreign
office of a broker, such broker will not be required to backup withhold or to
file information returns. However, payments of proceeds generally will be
subject to information reporting (but not backup withholding) if made through a
foreign office of (i) a United States broker or (ii) a foreign broker (a) that
is a "controlled foreign corporation" for U.S. tax purposes (generally a
corporation controlled by United States shareholders), or (b) if 50 percent or
more of the broker's gross income for the three-year period ending with the
close of the taxable year preceding the year of payment (or, if shorter, the
period that the broker has been in existence) is effectively connected with the
conduct of a trade of business within the United States (a "Foreign U.S.
Connected Broker"), unless the broker has documentary evidence in its files that
the payee is a non-U.S. holder and certain other conditions are met, or the
payee otherwise establishes an exemption. The Treasury Department has indicated
that it is studying the possible application of backup withholding in the case
of such foreign offices of U.S. brokers and Foreign U.S. Connected Brokers.
REFUNDS. Any amounts withheld under the backup withholding rules from a
payment to a non-U.S. holder may be refunded or credited against the non-U.S.
holder's federal income tax liability, provided that the required information is
furnished to the IRS.
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<PAGE>
UNDERWRITERS
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement with the Company, to purchase from
the Company the number of Depositary Shares set forth opposite their respective
names. The Underwriters are committed to purchase all of the Depositary Shares
if any are purchased.
<TABLE>
<CAPTION>
NUMBER OF
NAME DEPOSITARY SHARES
<S> <C>
Salomon Brothers Inc.....................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................
J.P. Morgan Securities Inc...............................................
Total....................................................... 15,000,000
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Depositary Shares to the public at the public offering price set forth
on the cover page of this Prospectus Supplement and to certain dealers at such
price less a concession not in excess of $ per Depositary Share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per Depositary Share on sales to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Company has agreed not to register for sale, offer, sell, contract to
sell or otherwise dispose of, without the prior written consent (which consent
will not be unreasonably withheld) of Salomon Brothers Inc, any shares of Common
Stock, any securities convertible into or exercisable or exchangeable for Common
Stock, or any rights to acquire Common Stock for a period of 90 days after the
date of this Prospectus Supplement; provided, however, that such restriction
shall not affect the ability of the Company or its subsidiaries to take any such
actions (i) as a consequence of obligations with respect to securities
outstanding before the date of this Prospectus Supplement, (ii) in connection
with any employee benefit or incentive plans of the Company or (iii) in
connection with the offering of the Depositary Shares made hereby or the
conversion thereof.
The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus Supplement (or, if such 30th day shall be
a Saturday, a Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading), to purchase up to an additional
2,250,000 Depositary Shares, at the per share price to public less underwriting
discount. The Underwriters may exercise such rights of purchase only for the
purpose of covering over-allotments, if any, incurred in connection with the
sale of Depositary Shares offered hereby. To the extent that the Underwriters
exercise such options, each Underwriter will become obligated, subject to
certain conditions, to purchase the same proportion of such additional
Depositary Shares as the number of other Depositary Shares to be purchased by
that Underwriter bears to 15,000,000 Depositary Shares.
The Company has agreed to indemnify the Underwriters against certain
liabilities which may be incurred in connection with this offering including
liabilities under the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with and perform
services for the Company in the ordinary course of business. From time to time,
in the ordinary course of their respective businesses, affiliates of J.P. Morgan
Securities Inc. have engaged, and may in the future engage, in commercial
banking and investment banking transactions with the issuer. In particular,
Morgan Guaranty Trust Company of New York is the agent bank under the Company's
revolving credit facility and a lender under certain other agreements. See Note
12 of Notes to Audited Consolidated Financial Statements included in the Annual
Report to Shareholders for the year ended December 26, 1993, incorporated by
reference in this Prospectus.
LEGAL OPINIONS
The legality of the DECS and Depositary Shares in respect of which this
Prospectus Supplement is being delivered will be passed on for the Company by
McGuire, Woods, Battle & Boothe, Richmond, Virginia. Certain legal matters will
be passed on for the Underwriters by Hunton & Williams, Richmond, Virginia. Anne
M. Whittemore, a director of the Company, is a Partner in the law firm of
McGuire, Woods, Battle & Boothe. Lawyers of such firm own an aggregate of
approximately 21,000 shares of Common Stock of the Company.
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<PAGE>
PROSPECTUS
[LOGO]
JAMES RIVER CORPORATION
OF VIRGINIA
PREFERRED STOCK
(CONVERTIBLE OR NON-CONVERTIBLE)
($10 PAR VALUE)
DEPOSITARY SHARES REPRESENTING PREFERRED STOCK
James River Corporation of Virginia ("James River" or the "Company") may
from time to time offer shares of its Preferred Stock, par value $10 per share
(the "Preferred Stock"), in one or more series. The accompanying Prospectus
Supplement (the "Prospectus Supplement") sets forth, as applicable, the specific
designation, voting powers, preferences and relative rights and qualifications,
limitations and restrictions thereof, including dividend rate (or manner of
calculation thereof), time of payment of dividends, liquidation value, terms for
mandatory or optional conversion, listing on a securities exchange, terms for
mandatory or optional redemption, aggregate number of shares sold, purchase
price, public offering price, names of any underwriters or agents, compensation
of such underwriters or agents and other terms in connection with the offering
and sale of the series of Preferred Stock in respect of which this Prospectus is
being delivered. If so specified in the Prospectus Supplement, the Preferred
Stock may be represented by Depositary Shares, each of which may represent the
percentage interest so specified in each share of Preferred Stock described in
the Prospectus Supplement ("Depositary Shares").
The Company may sell shares of Preferred Stock or Depositary Shares
representing Preferred Stock to or through underwriters or dealers, directly to
other purchasers or through agents. See "Plan of Distribution."
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION WHICH SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 9, 1994.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR
THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AT ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements, and
other information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can also
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's
common stock is listed on the New York Stock Exchange, and such reports, proxy
and information statements, and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
This Prospectus does not contain all the information set forth in the
registration statement to which this Prospectus relates (the "Registration
Statement") and the exhibits thereto which the Company has filed with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
and to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are hereby
incorporated by reference into this Prospectus:
(a) the Annual Report on Form 10-K for the fiscal year ended December 26,
1993;
(b) Proxy Statement dated March 14, 1994, in connection with the Company's
Annual Meeting of Shareholders held on April 28, 1994;
(c) the Current Reports on Form 8-K dated January 25, 1994, February 22,
1994, April 21, 1994, and April 27, 1994; and
(d) the description of Common Stock included in Form 8-A filed January 3,
1980 incorporating by reference the description included in Amendment No 1. to
Registration Statement No. 2-63209, as amended by Amendment No. 4 to Application
or Report on Form 8 dated July 28, 1992, and the description of the Rights
included in Form 8-A dated March 3, 1989, as amended by Amendment No. 1 to
Application or Report on Form 8 dated July 28, 1992.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained herein or
in a document all or any portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents referred to above which have been or may be
incorporated in this Prospectus by reference, other than certain exhibits to
such documents. Requests for such copies should be directed to Celeste Gunter,
Director, Investor Relations, James River Corporation of Virginia, 120 Tredegar
Street, Richmond, Virginia 23219 (telephone (804) 649-4307).
2
<PAGE>
THE COMPANY
James River is a manufacturer and marketer of consumer products, including
towel and tissue and disposable food and beverage service products; food and
consumer packaging, including folding cartons, flexible packaging, and barrier
packaging papers; and communications papers, including uncoated business papers
and coated printing papers. James River is one of the industry leaders, in terms
of sales within the United States, in towel and tissue products, disposable food
service items, folding cartons, and flexible packaging, and, on the West Coast,
in uncoated business papers. The Company produces a number of branded products,
which include Quilted Northern(Register mark), Marina(Register mark), and Nice
'N Soft(Register mark) bathroom tissue; Brawny(Register mark) paper towels;
Vanity Fair(Register mark) premium food service products; Dixie(Register mark)
plates, cups, and cutlery; Eureka!(Trade mark) recycled and Word Pro(Register
mark) copy papers; Delta Brite(Register mark) publishing papers;
Monterey(Register mark) magazine paper; Curtis text and cover papers; Qwik
Crisp(Register mark) microwave packaging; and Quilt-Rap(Trade mark) sandwich
wrap. Each of the Company's businesses produces an increasing number of recycled
paper products to meet the growing demands of customers. James River, through
its consolidated subsidiaries and its unconsolidated affiliates, has operations
in 28 states, Canada, and 12 European countries. James River has pursued a
strategy of investment which has allowed the Company to significantly expand its
business and to broaden its product lines.
James River was incorporated under the laws of the Commonwealth of Virginia
in 1969. The Company's principal executive offices are located at 120 Tredegar
Street, Richmond, Virginia 23219 (P.O. Box 2218, Richmond, Virginia 23217), and
its telephone number is (804) 644-5411.
RECENT DEVELOPMENTS
On April 27, 1994, James River announced the signing of a share acquisition
agreement with Montedison S.p.A., and Rayne Holdings Inc. ("Rayne"), whereby
James River will acquire the 50% ownership interest in Jamont Holdings N.V.
("Jamont Holdings") currently owned by Rayne for $575 million in cash. James
River currently owns the remaining 50% of Jamont Holdings. Jamont Holdings owns
86.4% of Jamont N.V. ("Jamont"), which has operations in 12 European countries
and produces branded and private label tissue and foodservice products for the
retail and away-from-home markets. Jamont had sales of $1.5 billion in 1993.
Upon the consummation of the acquisition, Jamont will become a consolidated
subsidiary of James River. James River intends to finance this transaction
through the issuance of a combination of debt and equity securities. See "Use of
Proceeds" herein. The final transaction, which is subject to normal closing
conditions, as well as obtaining necessary financing and securing the approval
of James River's lenders, is expected to be completed during the third quarter
of 1994.
On April 21, 1994, James River published its results for the first quarter
ended March 27, 1994. The Company reported income from operations of $20.3
million and a net loss of $7.1 million, or $0.19 per share. These amounts
compare to income from operations of $17.7 million and a net loss of $10.1
million, or $0.22 per share, in the prior year's first quarter. Operating
results for the Consumer Products Business increased by over 20%, to $28.3
million compared to $23.2 million in the prior year, principally from strong
retail volume and the benefits realized from productivity improvements. Results
for the Food and Consumer Packaging Business increased by 14%, to $26.6 million
in 1994 from $23.3 million in 1993. However, operating losses generated by the
Communications Papers Business increased 24%, to $25.1 million from $20.3
million last year, as pricing in most white paper grades continued to decline
during the quarter due to additional industry capacity and higher levels of
imports.
RATIOS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for the period indicated.
<TABLE>
<CAPTION>
FISCAL PERIODS ENDED(1)
4/30/89 4/29/90 12/30/90 12/29/91 12/27/92 12/26/93
<S> <C> <C> <C> <C> <C> <C>
(2) (3),(4) (5)
Ratio of Earnings to Fixed Charges (unaudited)........... 2.90x 2.40x 1.21x 1.34x -- 1.04x
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends (unaudited)............................ 2.48x 2.09x 1.03x 1.15x -- --
</TABLE>
3
<PAGE>
(1) In computing the ratios of earnings to fixed charges and of earnings to
combined fixed charges and preferred stock dividends, earnings consist of income
before income taxes, extraordinary items, the cumulative effect of changes in
accounting principles, minority interests, and fixed charges excluding
capitalized interest. Fixed charges consist of interest expense, capitalized
interest, and that portion of rental expense (one-third) deemed representative
of the interest factor. Earnings and fixed charges also include the Company's
proportionate share of such amounts for unconsolidated affiliates which are
owned 50% or more and distributed income from less than 50% owned affiliates.
For purposes of the ratio of earnings to combined fixed charges and preferred
stock dividends, fixed charges are increased by the preferred stock dividends
requirements of James River adjusted to amounts representing the pretax earnings
which would be required to cover such dividend requirements.
(2) During 1990, the Company changed its fiscal year from one ending on the
last Sunday of April to one ending on the last Sunday of December. Accordingly,
disclosures for the transition period ended December 30, 1990 include the 35
weeks from April 30 to December 30, 1990. During this period, the Company
initiated an operational restructuring program designed to focus the Company's
operations on those businesses in which it commands a substantial market share
and which are less cyclical. In connection with that program, the Company
recorded a $200 million pretax charge which has been included in the calculation
of the ratios of earnings to fixed charges and earnings to combined fixed
charges and preferred stock dividends for this period. Excluding the impact of
the $200 million pretax restructuring charge from earnings, the ratio of
earnings to fixed charges would have been 2.59x and the ratio of earnings to
combined fixed charges and preferred stock dividends would have been 2.19x for
this period.
(3) For the year ended December 27, 1992, earnings were inadequate to cover
both fixed charges and combined fixed charges and preferred stock dividends. The
amount of the deficiency of earnings compared to fixed charges was $195.6
million, and the amount of the deficiency of earnings compared to combined fixed
charges and preferred stock dividends was $236.1 million for this year.
(4) During 1992, the Company initiated a productivity enhancement program
and recorded a $112 million pretax restructuring charge which has been included
in the calculation of the ratios of earnings to fixed charges and earnings to
combined fixed charges and preferred stock dividends for this year. Excluding
the impact of the $112 million pretax charge from earnings, the amount of the
deficiency of earnings compared to fixed charges would have been $83.9 million,
and the amount of the deficiency of earnings compared to combined fixed charges
and preferred stock dividends would have been $123.1 million for this year.
(5) For the year ended December 26, 1993, earnings were inadequate to cover
combined fixed charges and preferred stock dividends. The amount of the
deficiency of earnings compared to combined fixed charges and preferred stock
dividends was $48.5 million for this year.
INVESTMENT CONSIDERATIONS
RECENT INDUSTRY CONDITIONS
A substantial portion of James River's business is strongly influenced by
conditions in the pulp and paper industry. Beginning in 1990, the financial
performance of the pulp and paper industry began to decline, primarily due to a
combination of (i) significant levels of excess industry capacity, (ii) slowing
demand growth resulting from recessionary conditions in both the U.S. and
Europe, and (iii) foreign currency devaluations which have provided cost
advantages to certain foreign competitors. These conditions resulted in intense
competition, declining utilization rates, increased levels of foreign imports,
and depressed pricing, domestically as well as abroad. The depressed levels of
earnings reported by many pulp and paper producers have continued through 1993.
For James River and other competitors serving the tissue, foodservice,
packaging, and communications papers markets, difficult market conditions
persist. In addition, severely depressed prices for market pulp and bleached
paper board have reduced James River's return on assets compared to competitors
which are less fully integrated and able to purchase these raw materials at
prices which are generally below the Company's total cost of production.
RECENT JAMES RIVER FINANCIAL PERFORMANCE
For the year ended December 26, 1993, James River reported operating income
of $114.0 million and a net loss of $0.3 million, equivalent to a loss of $.40
per share after preferred dividends. Results for 1993 included a
4
<PAGE>
charge of $11.0 million, or $.13 per share, representing the cumulative increase
in the deferred income tax liability resulting from the 1% increase in the
statutory federal income tax rate enacted during 1993. James River's ratio of
earnings to fixed charges for the year ended December 26, 1993, was 1.04x. For
the year ended December 27, 1992, James River reported a loss from operations of
$62.4 million, including a $111.7 million pretax restructuring charge, and a net
loss of $427.3 million, or $5.55 per share. In addition to the restructuring
charge, results for 1992 included a charge of $273.8 million net of income tax
benefits, or $3.35 per share, for the cumulative effect of changes in accounting
principles and an extraordinary loss of $31.4 million net of income tax
benefits, or $.38 per share, on the early extinguishment of debt. For the year
ended December 27, 1992, the Company's earnings were inadequate to cover fixed
charges by $195.6 million. Improvements in both operating and net results during
1993, as compared to 1992, reflect increased productivity, cost reductions, and
limited pricing improvements in certain of the Company's product lines. However,
competitive pricing pressures still exist in each of the Company's business
segments, particularly in communications papers including uncoated free sheet
papers and coated groundwood papers, where excess industry capacity and imports
have resulted in continuing reductions in pricing.
RECENT JAMONT HOLDINGS FINANCIAL PERFORMANCE
For the year ended December 31, 1993, Jamont Holdings reported operating
income of $68 million and a net loss of $0.4 million, after reflecting
adjustments necessary to conform accounting principles to those generally
accepted in the United States. These results represent a significant decline
from those of the prior year. Jamont Holdings was negatively affected in 1993 by
the deep recessionary conditions experienced in Western Europe, as well as by
significant amounts of industry overcapacity. These combined factors caused
tissue pricing to fall steadily beginning in the second half of 1992. As of the
end of 1993, pricing was at a level approximately 13% below that of mid-1992.
However, the negative effects of reduced pricing were partially offset by Jamont
Holdings' cost reduction, productivity improvement, and asset rationalization
programs. During 1993, Jamont Holdings closed three converting plants and
reduced its workforce by approximately 5%, or 450 employees. In addition, Jamont
Holdings completed its $600 million capital investment program during the summer
of 1993. This program, which began in 1991, consisted of a number of capital
projects aimed at enhancing quality, expanding capacity, and reducing costs, and
included the construction of six new paper machines.
ENVIRONMENTAL CONSIDERATIONS
Like its competitors, James River is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations impose
limitations on the discharge of materials into the environment, including
effluent and emission limitations, as well as require the Company to obtain and
operate in compliance with the conditions of permits and other governmental
authorizations. Future regulations could materially increase the Company's
capital requirements in future years. In addition, James River has been
identified as a potentially responsible party and is involved in remedial
investigations and actions under federal and state laws. There can be no
assurance that the Company will not be named as a potentially responsible party
at additional sites in the future or that the costs associated with such
additional sites would not be material. For a further discussion of these
matters, see "Environmental Matters" herein.
LEVEL OF INDEBTEDNESS
As of December 26, 1993, James River's outstanding long-term debt totalled
$1.9 billion and the current portion of long-term debt totalled $97 million. The
Company's ratio of total debt to total capitalization was 50.9% as of this date.
For purposes of this ratio, James River defines total capitalization as the sum
of current and long-term debt and equity accounts. See "Ratios," "Investment
Considerations -- Recent Industry Conditions," and " -- Recent James River
Financial Performance." herein.
FLUCTUATING PRICES OF RAW MATERIALS AND ENERGY
James River obtains its wood, resin, and energy requirements through
periodic purchases reflecting fluctuating market prices. There can be no
assurance that any raw materials and energy price increases experienced by James
River could be passed on to James River's customers.
5
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of Preferred Stock to be offered hereby may be
used for general corporate purposes, which may include capital expenditures,
acquisitions, and working capital requirements. Except as described under
"Recent Developments," the Company has not entered into any agreement with a
third party with respect to any acquisition. The Company estimates that
approximately $250 million of the proceeds from the sale of Preferred Stock to
be offered hereby may be applied toward James River's purchase of the remaining
50% ownership interest in Jamont Holdings from Montedison S.p.A. and Rayne for
approximately $575 million during the third quarter of 1994. See "Recent
Developments" herein. Pending application of the proceeds, they may be
temporarily invested or applied to the reduction of short-term borrowings. It is
anticipated that the balance of the purchase price for the remaining Jamont
Holdings interest, or approximately $325 million, will be funded with the
proceeds from the sale of James River debt securities ("Debt Securities").
Concurrent with the filing of the Registration Statement of which this
Prospectus is a part, the Company has filed a Registration Statement on Form S-3
for the issuance of up to $600 million of Debt Securities to be offered from
time to time.
UNAUDITED PRO FORMA JAMES RIVER AND JAMONT HOLDINGS FINANCIAL INFORMATION
The following pro forma consolidated capitalization and condensed balance
sheet as of December 26, 1993, and the pro forma consolidated statement of
operations for the year then ended give effect to the following transactions:
(a) the acquisition by James River of the remaining 50% ownership interest
in Jamont Holdings for a purchase price of $575 million in cash;
(b) the assumed financing of such acquisition with the proceeds from the
issuance of $325 million of Debt Securities and $250 million of
Preferred Stock.
Prior to the proposed acquisition, James River owned 50% of Jamont
Holdings, which was accounted for using the equity method of accounting. James
River's additional 50% investment in Jamont Holdings has been accounted for
using the purchase method of accounting and will result in the consolidation of
Jamont Holdings.
The unaudited pro forma consolidated condensed financial information is
presented as if these transactions had been consummated as of December 26, 1993,
for the pro forma consolidated capitalization and condensed balance sheet and as
of the first day of the year for the pro forma consolidated statement of
operations.
The pro forma financial information does not purport to be indicative of
the actual financial position as it is finally recorded, or the results of
operations which would actually have been reported if the transactions had
occurred on the dates or for the periods indicated, or which may be reported in
the future. The pro forma financial information should be read in conjunction
with the separate historical consolidated financial statements and the related
notes to such financial statements of James River and of Jamont Holdings,
incorporated by reference herein.
6
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CAPITALIZATION
(UNAUDITED)
DECEMBER 26, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE 2)
Current portion of long-term debt $ 97.3 $ 69.7 $ 167.0
Long-term debt:
Commercial paper and borrowings
supported by revolving credit
facilities 287.1 423.4 $ 11.4 (c) 721.9
Notes and debentures 1,655.7 263.6 325.0 (d) 2,244.3
Total long-term debt (net of
current portion) 1,942.8 687.0 336.4 2,966.2
Minority interests 7.0 158.8 165.8
Shareholders' equity:
Preferred stock 454.1 250.0 (d) 704.1
Common shareholders' equity 1,514.1 843.0 (843.0)(e) 1,506.1
(8.0)(c)
Total shareholders' equity 1,968.2 843.0 (601.0) 2,210.2
Total capitalization $ 4,015.3 $ 1,758.5 $(264.6) $5,509.2
</TABLE>
The accompanying notes are an integral part of this pro forma information.
7
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
DECEMBER 26, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE 2)
ASSETS
Current assets:
Cash and short-term securities $ 23.6 $ 81.4 $ 105.0
Accounts receivable 422.9 396.2 819.1
Inventories 666.5 176.0 842.5
Other current assets 169.3 5.7 175.0
Total current assets 1,282.3 659.3 1,941.6
Property, plant, and equipment 5,400.8 1,378.6 6,779.4
Less accumulated depreciation and
cost of timber harvested 1,829.3 267.5 2,096.8
Net property, plant, and
equipment 3,571.5 1,111.1 4,682.6
Investments in affiliates 519.5 18.5 $(423.5)(a) 114.5
Other assets 324.7 39.2 3.0 (c) 366.9
Goodwill 153.3 451.3 155.9 (b) 760.5
Total assets $ 5,851.3 $ 2,279.4 $(264.6) $7,866.1
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt $ 97.3 $ 69.7 $ 167.0
Other current liabilities 683.8 396.5 1,080.3
Total current liabilities 781.1 466.2 1,247.3
Long-term debt 1,942.8 687.0 $ 325.0 (d) 2,966.2
11.4 (c)
Other long-term liabilities 721.8 34.8 756.6
Deferred income taxes 430.4 89.6 520.0
Minority interests 7.0 158.8 165.8
Shareholders' equity:
Preferred stock 454.1 250.0 (d) 704.1
Common shareholders' equity 1,514.1 843.0 (843.0)(e) 1,506.1
(8.0)(c)
Total shareholders' equity 1,968.2 843.0 (601.0) 2,210.2
Total liabilities and
shareholders' equity $ 5,851.3 $ 2,279.4 $(264.6) $7,866.1
</TABLE>
The accompanying notes are an integral part of this pro forma information.
8
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 26, 1993
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL INCREASE PRO FORMA
JAMES RIVER JAMONT HOLDINGS (DECREASE) CONSOLIDATED
<S> <C> <C> <C> <C>
(NOTE 3)
Net sales $ 4,650.2 $ 1,482.1 $6,132.3
Cost of goods sold 3,858.6 947.9 $ 3.9 (a) 4,810.4
Selling and administrative
expenses 677.6 466.1 1,143.7
Income from operations 114.0 68.1 (3.9) 178.2
Interest expense 137.5 72.3 22.8 (b) 232.6
Other income, net 40.0 17.6 (2.4)(c) 55.2
Income before income taxes and
minority interest 16.5 13.4 (29.1) 0.8
Income tax expense (benefit) 18.9 15.7 (8.9)(d) 25.7
Loss before minority interest (2.4) (2.3) (20.2) (24.9)
Minority interest 2.1 2.0 4.1
Net loss $ (0.3) $ (0.3) $ (20.2) $ (20.8)
Preferred dividend requirements (32.8) (18.8)(e) (51.6)
Net loss applicable to common
shares $ (33.1) $ (0.3) $ (39.0) $ (72.4)
Net loss per common share
and common share equivalent $ (0.40) $ (0.88)
Weighted average number of common
shares and common share
equivalents 81.9 81.9
</TABLE>
The accompanying notes are an integral part of this pro forma information.
9
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
1. BASIS OF REPORTING
The accompanying pro forma consolidated capitalization and condensed
balance sheet as of December 26, 1993, and the pro forma consolidated statement
of operations for the year then ended give effect to the acquisition of the
remaining 50% interest in Jamont Holdings using the purchase method of
accounting. The aggregate purchase price to be paid for the additional interest
in Jamont Holdings is approximately $575 million, excluding estimated
acquisition and financing costs of $11.4 million. The accompanying pro forma
consolidated financial statements give effect to the expected issuances of
approximately $325 million of Debt Securities and approximately $250 million of
Preferred Stock, the proceeds of which will be used to finance the Jamont
Holdings acquisition.
The values assigned to the net assets acquired will be based upon the
determination, after the consummation of the transaction, of the fair values of
the assets acquired and liabilities assumed. Jamont Holdings was originally
formed in 1990, at which time its assets and liabilities were adjusted to then
fair values. In 1991, Jamont Holdings commenced a $600 million capital expansion
program which was completed in 1993. Accordingly, based on the relatively recent
valuations of Jamont Holdings' assets and liabilities, for the purpose of these
pro forma consolidated financial statements, the excess of the purchase price
over such estimated fair value of the net assets acquired, approximating $156
million, has been allocated to goodwill.
Historical financial information on Jamont Holdings contained in the pro
forma consolidated financial statements has been derived from the audited
financial statements of Jamont Holdings as of December 31, 1993, and for the
year then ended, prepared in accordance with accounting standards generally
accepted in The Netherlands and measured in European Currency Units. Such
financial information has been adjusted to conform to U.S. generally accepted
accounting principles and translated into U.S. dollars.
2. PRO FORMA BALANCE SHEET AND CAPITALIZATION ADJUSTMENTS
The pro forma consolidated capitalization and condensed balance sheet give
effect to the adjustments described below.
(a) To eliminate James River's existing investment in Jamont Holdings
as of December 26, 1993, previously accounted for using the equity
method.
(b) To record estimated goodwill, representing the excess of James
River's purchase price over the estimated fair value of Jamont
Holdings' net equity.
(c) To record $11.4 million of estimated acquisition and financing
costs, assumed to be funded through borrowings under the Company's
revolving credit facility, detailed as follows:
(i) $0.4 million related to the acquisition of Jamont Holdings,
excluding financing-related costs;
(ii) $3.0 million related to the issuance of $325 million of Debt
Securities; and
(iii) $8.0 million related to the issuance of $250 million of
Preferred Stock.
(d) To record the assumed issuances of the following James River
securities:
(i) $325 million of Debt Securities issued in connection with the
acquisition of Jamont Holdings; and
(ii) $250 million of Preferred Stock issued in connection with the
acquisition of Jamont Holdings.
(e) To eliminate the Jamont Holdings historical shareholders' equity
balances.
10
<PAGE>
JAMES RIVER AND JAMONT HOLDINGS
AND CONSOLIDATED SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION, CONTINUED
(UNAUDITED)
3. PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
The pro forma consolidated statement of operations gives effect to the
adjustments described below.
(a) To record amortization of the incremental goodwill, using the
straight-line method over an assumed life of 40 years.
(b) To record interest expense on the $325 million of incremental
long-term debt, at an assumed interest rate of 7.0%.
(c) To reverse James River's share of the earnings of Jamont Holdings
associated with its existing 50% ownership interest, previously
accounted for using the equity method.
(d) To record income tax benefits related to the incremental interest
expense.
(e) To reflect increased preferred dividend requirements related to
the issuance of the $250 million of additional Preferred Stock, at
an estimated dividend yield of 7.5%.
4. LENDER CONSENTS
For purposes of these pro forma consolidated financial statements, it has
been assumed that any necessary consents or waivers which may be required for
the consummation of the acquisition of the remaining interest in Jamont Holdings
have been obtained by James River and that no incremental costs will be incurred
in obtaining such consents or waivers.
5. PRO FORMA CONSOLIDATED SEGMENT INFORMATION
Following the consummation of the acquisition of the remaining interest in
Jamont Holdings, James River intends to continue to report its operations in its
existing three business segments. These segments are: Consumer Products, which
includes the manufacture and marketing of towel and tissue and disposable
foodservice products; Food and Consumer Packaging, which includes the
manufacture of folding cartons, flexible packaging, and packaging papers used in
packaging food and other retail consumer goods; and Communications Papers, which
includes the manufacture and marketing of a variety of uncoated business and
printing papers, coated groundwood printing papers, and premium printing papers.
Upon its consolidation, James River intends to report the results of Jamont
Holdings as part of its Consumer Products segment.
6. PRO FORMA RATIOS
On a pro forma basis, after reflecting the assumed acquisition and
financing of Jamont Holdings, James River's earnings were inadequate to cover
both fixed charges and combined fixed charges and preferred stock dividends for
the year ended December 26, 1993. The amount of the deficiency of pro forma
earnings compared to pro forma fixed charges was $13.3 million, and the amount
of the deficiency of pro forma earnings compared to pro forma combined fixed
charges and preferred stock dividends was $97.8 million for this year. See
"Ratios" herein.
11
<PAGE>
ENVIRONMENTAL MATTERS
Like its competitors, James River is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations impose
limitations on the discharge of materials into the environment, including
effluent and emission limitations, as well as require the Company to obtain and
operate in compliance with the conditions of permits and other governmental
authorizations.
James River has made and will continue to make substantial capital
investments and operating expenditures, as well as production adjustments, in
connection with compliance with environmental laws and regulations, including
the Clean Air Act Amendments of 1990 (the "Clean Air Act"), the Clean Water Act,
the Resource Conservation and Recovery Act, and others. During 1993, capital
expenditures totalling approximately $58 million were made by James River for
pollution control facilities and equipment. Estimates of costs for future
environmental compliance are necessarily imprecise due to, among other things,
the continuing emergence of new environmental laws and regulations and
environmental control or process technology developments. While the Company
believes that its environmental control costs are likely to increase as
environmental regulations become broader and more stringent, James River is
unable to predict, except as described below, the amount or timing of such
increases, or the extent to which the impact of any future regulations on James
River would be proportional to the impact on its competitors. Such future
regulations could materially increase the Company's capital requirements in
future years.
In December 1993, the U.S. Environmental Protection Agency (the "EPA")
published draft rules, informally referred to as the "cluster rules", which
contain proposed revisions to the effluent guidelines under the Clean Water Act
in conjunction with new regulations relating to the discharge of certain
substances under the Clean Air Act. The final rules are scheduled to be issued
in late 1995, with a nominal compliance date of 1998. The new rules may require
significant changes in the pulping and/or bleaching process presently used in
some U.S. pulp mills, including several of James River's mills, necessitating
additional capital expenditures to achieve compliance by approximately 1998.
Based on preliminary estimates, the Company anticipates that such capital
expenditures could be at least $300 million for James River. This estimate could
change, depending on several factors, including, among others, (i) the ability
of the Company and other pulp manufacturers to convince the EPA that the
proposed regulations are unnecessarily complex, burdensome, and environmentally
unjustified; (ii) the outcome of potential administrative and judicial
challenges; (iii) new developments in control and process technology; and (iv)
any unfavorable revisions to the proposed cluster rules based on public comment.
In addition, James River has been identified as a potentially responsible
party ("PRP") and is involved in remedial investigations and actions under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, or similar
state laws regarding the past disposal of wastes at approximately 45 sites in
the United States. Such statutes may impose joint and several liability for the
costs of remedial investigations and actions on the entities that arranged for
disposal of the wastes, the waste generators, the waste transporters, and the
owners and operators of waste sites. Responsible parties (or any one of them,
including the Company) may be required to bear all of such costs regardless of
fault, legality of the original disposal, or ownership of the disposal site. The
Company has settled or resolved actions related to certain sites at minimal cost
and has determined that it has no responsibility with regard to certain other
sites for which it has received notification. In most cases, James River is one
of many PRP's, and its relative contributions of waste materials have been
minor. However, at the Solvent Recovery Services of New England site in
Connecticut, James River has been notified by the EPA that, based on records
available at this time, the Company appears to be one of the largest
"potentially responsible parties". As is the case with most manufacturing and
many other entities, there can be no assurance that the Company will not be
named as a PRP at additional sites in the future or that the costs associated
with such additional sites would not be material.
In accordance with financial reporting requirements, including Statement of
Financial Accounting Standards No. 5, James River's policy is to accrue
remediation costs when it is probable that such costs will be incurred and when
they can be reasonably estimated. As of December 26, 1993, James River's accrued
environmental remediation liabilities totalled $22.2 million. This amount
reflects management's best estimate of James River's ultimate liability for such
costs. On a quarterly basis, the Company reviews the status of all significant
existing or potential environmental issues and adjusts its accrual as necessary.
Estimates of costs for future remediation are
12
<PAGE>
necessarily imprecise due to, among other things, the identification of
presently unknown remediation sites and the allocation of costs among PRP's. The
Company believes that its share of the ultimate costs of cleanup for its current
remediation sites will not have a material adverse impact on its financial
condition.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Company is authorized to issue five million shares of Preferred Stock,
par value $10 per share, in series. As of April 29, 1994, the Company had
outstanding the following series of Preferred Stock:
<TABLE>
<CAPTION>
SHARES
OUTSTANDING
<S> <C>
Series D Cumulative Preferred Stock............................................................... 12,400
Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock............................... 1,999,995
Series L $14.00 Cumulative Convertible Exchangeable Preferred Stock............................... 1,000,000
Series N $14.00 Cumulative Convertible Exchangeable Preferred Stock............................... 264,042
Series O 8 1/4% Cumulative Preferred Stock........................................................ 200,000
Total...................................................................................... 3,476,437
</TABLE>
In addition, in connection with its Shareholder Rights Plan, the Company
has reserved 150,000 shares of Preferred Stock for the issuance of Series M
Cumulative Participating Preferred Stock (the "Series M Preferred Stock"). When
exercisable, each share purchase right (a "Right") entitles its holder to
purchase one one-thousandth of a share of Series M Preferred Stock at an
exercise price of $150 per share, subject to adjustment. The Rights will be
exercisable only if a person or group acquires, has the right to acquire, or has
commenced a tender offer for 15% or more of the outstanding common stock of the
Company (the "Common Stock").
The Board of Directors of the Company is authorized by the Company's
Articles of Incorporation to provide, without further shareholder action, for
the issuance of one or more additional series of Preferred Stock. The Board of
Directors, or a duly authorized committee thereof, has the power to fix various
terms with respect to each series, including voting powers, designations,
preferences, dividend rates, conversion and exchange provisions, redemption
provisions, and the amounts which holders are entitled to receive upon any
liquidation, dissolution or winding up of James River. The Preferred Stock of
each series shall rank on a parity with the Preferred Stock of every other
series as to dividends and assets according to the respective dividend rates and
series, and without the preference or priority of any series over any other
series. However, all shares of the Preferred Stock shall be preferred over the
Common Stock, to the extent provided for in any series of Preferred Stock, as to
both dividends and amounts distributable upon any voluntary or involuntary
liquidation of James River. The applicable Prospectus Supplement or Prospectus
Supplements set forth the particular designation, preferences, and rights of the
series of Preferred Stock in respect of which this Prospectus is delivered.
DESCRIPTION OF DEPOSITARY SHARES
Each Depositary Share will represent a fraction of a share of Preferred
Stock deposited under the Deposit Agreement ("Deposit Agreement"), among James
River, Wachovia Bank & Trust Company, N.A., as Depositary ("Depositary") and the
holders from time to time of Depositary Receipts issued thereunder. Subject to
the terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, proportionately, to all of the rights and preferences of the Preferred
Stock represented thereby contained in James River's Articles of Incorporation
and the Articles of Amendment creating the Preferred Stock. James River does not
expect that there will be any public trading market for the Preferred Stock
except as represented by the Depositary Shares.
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). The above description
of the Depositary Shares is not complete and is subject to, and qualified in its
entirety by, the description in the applicable Prospectus Supplement and the
provisions of the Deposit Agreement (which contains the form of Depositary
Receipt), a copy of which has been filed with the Commission as an exhibit to
the Registration Statement of which this Prospectus is a part.
13
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Preferred Stock and Depositary Shares representing
Preferred Stock being offered hereby in any of four ways: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters and (iv) through
dealers.
Offers to purchase Preferred Stock or Depositary Shares representing
Preferred Stock may be solicited directly by the Company or by agents designated
by the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, involved in
the offer or sale of the Preferred Stock or Depositary Shares representing
Preferred Stock in respect of which this Prospectus is delivered is named and
any commissions payable by the Company to such agent are set forth in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment (ordinarily five business days or less). Agents may be customers of,
engage in transactions with or perform services for, the Company in the ordinary
course of business.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them, and the names of the underwriters and the terms of the transaction
are set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Preferred Stock or Depositary Shares
representing Preferred Stock in respect of which this Prospectus is delivered to
the public.
If a dealer is utilized in the sale of the Preferred Stock or Depositary
Shares representing Preferred Stock in respect of which this Prospectus is
delivered, the Company will sell such Preferred Stock or Depositary Shares
representing Preferred Stock to the dealer, as principal. The dealer may then
resell such Preferred Stock or Depositary Shares representing Preferred Stock to
the public at varying prices to be determined by such dealer at the time of
resale.
Agents, underwriters and dealers may be entitled under the relevant
agreements to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act of 1933.
The place and time of delivery for the Preferred Stock or Depositary Shares
representing Preferred Stock in respect of which this Prospectus is delivered
are set forth in the Prospectus Supplement.
LEGAL OPINIONS
The legality of the Preferred Stock or the Depositary Shares representing
Preferred Stock in respect of which this Prospectus is being delivered will be
passed on for the Company by McGuire, Woods, Battle & Boothe, Richmond,
Virginia. Anne M. Whittemore, a director of the Company, is a Partner in the law
firm of McGuire, Woods, Battle & Boothe. Lawyers of such firm own an aggregate
of approximately 33,000 shares of Common Stock of the Company.
EXPERTS
The consolidated financial statements of James River and Subsidiaries
incorporated by reference into its Annual Report on Form 10-K for the year ended
December 26, 1993, and the related financial statement schedules included in
such Form 10-K, have been audited by Coopers & Lybrand, independent accountants,
as set forth in their reports dated January 25, 1994, included therein and
incorporated herein by reference.These consolidated financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The consolidated balance sheet of Jamont Holdings and Subsidiaries as of
December 31, 1993, and the related consolidated profit and loss account for the
year then ended, included in James River's Current Report on Form 8-K dated
April 27, 1994, have been audited by Coopers & Lybrand, independent accountants,
as set forth in their report dated March 14, 1994, included therein and
incorporated herein by reference. The aforementioned financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
14
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Prospectus Supplement.............. S- 3
The Company................................... S- 7
Use of Proceeds............................... S- 9
Price Range of Common Stock and Dividends..... S-10
Selected Financial Information................ S-11
Unaudited Pro Forma James River and Jamont
Holdings Financial Information.............. S-13
Description of DECS........................... S-20
Description of Depositary Shares.............. S-25
Description of Common Stock................... S-28
Federal Income Tax Considerations............. S-29
Underwriters.................................. S-32
Legal Opinions................................ S-32
<CAPTION>
PROSPECTUS
<S> <C>
Available Information......................... 2
Incorporation of Certain Documents by
Reference................................... 2
The Company................................... 3
Recent Developments........................... 3
Ratios........................................ 3
Investment Considerations..................... 4
Use of Proceeds............................... 6
Unaudited Pro Forma James River and Jamont
Holdings Financial Information.............. 6
Environmental Matters......................... 12
Description of Preferred Stock................ 13
Description of Depositary Shares.............. 13
Plan of Distribution.......................... 14
Legal Opinions................................ 14
Experts....................................... 14
</TABLE>
15,000,000 DEPOSITARY SHARES
[LOGO]
JAMES RIVER CORPORATION
OF VIRGINIA
DEPOSITARY SHARES EACH REPRESENTING A
ONE-HUNDREDTH INTEREST IN A SHARE OF
SERIES P % CUMULATIVE CONVERTIBLE PREFERRED STOCK ($10 PAR VALUE)
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
PROSPECTUS SUPPLEMENT
DATED MAY 31, 1994
