SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED COMMISSION FILE
DECEMBER 25, 1994 NUMBER 1-7911
JAMES RIVER CORPORATION
OF VIRGINIA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 54-0848173
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
120 TREDEGAR STREET, RICHMOND, VIRGINIA 23219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(804) 644-5411
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, $.10 par value New York Stock Exchange
Rights to Purchase Series M New York Stock Exchange
Cumulative Participating
Preferred Stock, $10 par value
Series K $3.375 Cumulative New York Stock Exchange
Convertible Exchangeable
Preferred Stock, $10 par value
Depositary Shares Representing New York Stock Exchange
Series L $14.00 Cumulative
Convertible Exchangeable
Preferred Stock, $10 par value
Depositary Shares Representing New York Stock Exchange
Series O 8-1/4% Cumulative
Preferred Stock, $10 par value
Depositary Shares Representing New York Stock Exchange
Series P 9% Cumulative Convertible
Preferred Stock, $10 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock, including common stock
and depositary shares representing Series P 9% Cumulative
Convertible Preferred Stock, held by non-affiliates of the
registrant, at close of business, February 13, 1995......... $1,879,999,087
Number of shares of $.10 par value common stock outstanding,
as of February 13, 1995..................................... 81,709,103
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Portions of the registrant's Annual Report to Shareholders for the year
ended December 25, 1994, incorporated into Parts I and II hereof; and (2)
Portions of the registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on April 20, 1995, incorporated into Part III hereof.
JAMES RIVER CORPORATION OF VIRGINIA
Annual Report on Form 10-K
December 25, 1994
TABLE OF CONTENTS
PART I
Page
Item 1. Business 3
Item 2. Properties 13
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Executive Officers of the Registrant 16
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 19
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 20
PART III
Item 10. Directors and Executive Officers of the Registrant 20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners
and Management 20
Item 13. Certain Relationships and Related Transactions 20
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 21
PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
James River Corporation of Virginia (together with its subsidiaries,
"James River" or the "Company") was founded in 1969 and is
incorporated in the Commonwealth of Virginia. 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 flexible packaging, folding cartons, and
packaging papers; and communications papers, including business
papers, printing papers, premium printing papers and technical and
converting specialty papers. James River is one of the industry
leaders in terms of sales within the United States and Europe in towel
and tissue products. James River is also one of the industry leaders,
in terms of sales within the United States, for disposable food
service items, folding cartons and flexible packaging, and, on the
West Coast, in uncoated business papers. Disclosures made herein are
as of December 25, 1994, or for the 52-week year then ended. Portions
of the James River Corporation of Virginia Annual Report to
Shareholders for the year ended December 25, 1994, (the "1994 Annual
Report") are incorporated in this Form 10-K by specific reference.
During its twenty-six year history, James River has pursued a strategy
of internal growth and acquisition which has allowed the Company to
significantly expand its business and broaden its product lines.
Acquisition and investment opportunities have been pursued which were
designed to result in production of high value-added products,
complement existing product lines, optimize geographical expansion, or
achieve backward or forward integration, in order to maximize overall
profitability. The Company's most significant investment during the
last five years was in Jamont N.V. ("Jamont"), a European consumer
products joint venture. James River had a 43% ownership interest in
Jamont prior to July 1994, when the Company increased its share of
ownership in Jamont to 86% for approximately $575 million. Jamont
manufactures and markets hygienic products, including tissue, feminine
hygiene items and food service products, through its facilities
located in 11 European countries. With annual sales of approximately
$1.5 billion, Jamont is currently the third largest producer of towel
and tissue products in Europe. Other acquisitions and investments
consummated during the three years ended December 25, 1994, are
discussed in Note 2 of Notes to Consolidated Financial Statements in
the 1994 Annual Report, which information is incorporated herein by
reference.
In September 1994, James River announced plans to explore strategic
options to sharpen the Company's business focus, reduce debt, reduce
cyclicality and improve profitability. These options included
spinning off certain business units, forming joint ventures or selling
certain business units. This announcement is a part of James River's
continuing effort to evaluate operations in order to enhance
shareholder value by divesting certain non-strategic assets and
refocusing the Company's resources. In 1990 and 1991 the Company
exited the specialty industrial papers market and the coated free
sheet market through the disposition of 26 mills. In 1993 and 1994,
James River continued its productivity enhancement program, pursuant
to which ten under-performing operations and related assets were
disposed of or consolidated with other similar facilities. The
Company's restructuring programs and related dispositions are
described in more detail in Note 2 of Notes to Consolidated Financial
Statements in the 1994 Annual Report, which information is
incorporated herein by reference.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
James River currently conducts its business in three major segments:
(i) the Consumer Products segment in North America and Europe, which
manufactures and markets towel and tissue and foodservice and tabletop
products; (ii) the Food and Consumer Packaging segment, which provides
retail packaging for food and consumer products; and (iii) the
Communications Papers segment, which manufactures and markets business
papers, printing papers, premium printing papers and technical and
converting specialty papers. Financial information on the Company's
segments for the three years ended December 25, 1994, is presented in
Note 15 of Notes to Consolidated Financial Statements in the 1994
Annual Report, which information is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS
Principal Products
James River processes basic raw materials, such as wood, wood pulp,
wastepaper, paperboard and plastic resins and films, into products
which generally are close to or in their end use form. These include
towel and tissue products, foodservice and tabletop items, food
packaging, and business and printing papers.
Consumer Products Business - North America. The North American
Consumer Products Business, headquartered in Norwalk, Connecticut,
representing approximately 43% of the Company's consolidated sales in
1994, produces towel and tissue products such as bathroom tissues,
household roll towels and wipes, and foodservice and tabletop products
such as paper and plastic cups, paper plates, napkins and plastic
cutlery. The North American Consumer Products Business is organized
along retail and commercial market channels, with each channel
carrying both towel and tissue products and foodservice and tabletop
products. The retail group markets a number of popular national
brands of towel and tissue and tabletop products including QUILTED
NORTHERN, MARINA and NICE'N SOFT bathroom tissue; BRAWNY paper
towels; VANITY FAIR premium foodservice products; and DIXIE plates,
cups and cutlery; as well as a number of regional brands. Retail
products are marketed either nationally or regionally, principally
through grocery stores, mass merchants, warehouse clubs and drug
stores. The commercial group markets the broadest line of towel and
tissue and foodservice products in the industry under the DIXIE,
MARATHON, HANDI-KUP, and JAMES RIVER - CANADA brand names, as well as
a variety of regional brands. A national sales force sells these
products to fast food chains, sanitary paper distributors, janitorial
supply distributors and foodservice distributors for use in
restaurants, hotels, offices, factories and schools.
Consumer Products Business - Europe. The European Consumer
Products Business, Jamont, headquartered in Brussels, Belgium,
comprised approximately 11% of the Company's consolidated sales in
1994 which reflected five months of Jamont sales since consolidation
July 1994. On an annualized basis, Jamont would have comprised
approximately 23% of the Company's 1994 consolidated sales. Jamont is
currently the third largest European producer of towel and tissue
products based on sales. Jamont's product lines, which are sold in
both the retail and away-from-home markets, include bathroom and
facial tissue, handkerchiefs and paper towels for personal care, and
tabletop products for food service. Jamont also produces feminine
hygiene products, as well as various nonwoven products and pharmacy
supplies. Jamont's branded products include LOTUS bathroom tissue and
VANIA feminine hygiene products, both of which occupy leading
positions in the French market, TENDERLY bathroom tissue sold in Italy
and COLHOGAR bathroom tissue sold in Spain.
Food and Consumer Packaging Business. The Food and Consumer
Packaging Business headquartered in Milford, Ohio, offers a broad
range of packaging alternatives for food and other consumer products.
This business accounted for approximately 29% of the Company's
consolidated sales in 1994. Products of this business include folding
cartons (such as ice cream cartons, cereal boxes, and microwave
packages), flexible packaging (such as snack food packaging, bread
bags, frozen vegetable packages and cheese packages), and barrier
papers (such as food wrap and cereal box liners). 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. 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 which incorporate unique packaging properties designed
to 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.
The Company's folding carton and flexible packaging operations serve
both regional and national markets.
Communications Papers Business. The Company's Communications
Papers Business, which is headquartered in Oakland, California,
represented approximately 17% of the Company's consolidated sales in
1994. The Communications Papers Business is primarily focused on
three major product lines: business papers, printing papers and
premium printing papers. Business and printing papers serve the
commercial printing and office markets. These products meet the needs
of the printing and publishing markets and are sold either on a direct
basis or through merchants and brokers to consumers, publishers and
printers. The Company's WORD PRO, XEROBOND 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! copy paper, formsbond
and offset printing papers; ECHO web offset printing papers; and
RECLAIM copy paper, formsbond and lightweight opaque web printing
papers. James River's printing papers, including DELTA BRITE and
MONTEREY produced at the 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 text and cover papers. These papers are
produced at six 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
cast-coated papers. The Company also produces a variety of recycled
premium printing papers including RETREEVE and GRAPHIKA! cover text
and writing papers, as well as recycled papers included in the CURTIS
and KING JAMES lines.
Marketing
Marketing of the Company's domestic consumer products, food and
consumer packaging, and communications papers is managed along
channels or at the product group level in order to supply customers
with a broad line of products and to focus on national and regional
market needs. The Company's products are marketed directly to
customers both through national and regional sales organizations as
well as through outside distributors who focus on specific market
segments, including James River's Commercial Products sales force
which markets both towel and tissue and foodservice products to the
away-from-home markets. Regional distribution centers located
throughout the United States are utilized to minimize inventories and
customer transportation costs.
Marketing of the Company's products within Europe is similar to the
United States. National (i.e. individual country) sales organizations
are necessary due to the customer, consumer and cultural differences
among countries. Additionally, despite the recent elimination of many
tariffs and trade barriers, logistics costs remain much higher than in
the United States due to infrastructure differences, language
problems, varying customer service requirements, and local delivery
customs or preferences. Thus, the majority of products are produced
and sold locally. As customers move in a more pan-European direction
via expansion, mergers and cross border alliances, multi-national
sales force cooperation and pan-European sales, marketing and
logistics efforts are established to service their changing needs.
New Products
James River is continually improving the quality and design of its
products, and expanding its product offerings to meet various customer
needs. During 1994, each of the Company's three businesses introduced
new products to the marketplace, including a number of recycled
products to meet the growing demands of environmentally-conscious
consumers.
Within the North American Consumer Products Business, the Company
introduced for the retail market, QUILTED NORTHERN WET OR DRY bathroom
tissue, improved BRAWNY with ULTRA THIRST POCKETS paper towels and the
DIXIE KIDS line of plates, bowls and cups. The Company's 100%
recycled versions of QUILTED NORTHERN bathroom tissue and BRAWNY paper
towels achieved national distribution during the year. In the
commercial consumer products market, the Company introduced COMPACT
coreless bathroom tissue which eliminated over 90 percent of the
packaging commonly used for bathroom tissue, MULTILAYER bathroom
tissue, which is made using a unique process that bonds two layers of
fiber together to produce a softer commercial tissue, and DIXIE
recycled content commercial food service products.
The Company's European Consumer Products Business expanded its napkin
capacity to meet growing demand. The Company introduced numerous new
products in 1994 including LOTUS packet tissues with a new embossed
pattern which were introduced in the French market. DIXCEL EXTRA 100%
recycled bathroom tissue was introduced in the United Kingdom offering
a new concept in environmental performance and COLHOGAR ACQUA moist
wipes was introduced in Spain and Portugal. Other products introduced
in 1994 include VANIA ULTRA feminine hygiene products, KITTENSOFT
kitchen towels, TENDERLY GRAN ROTOLO large roll kitchen towels, and
MARATHON and EXTRA MARATHON couch covers.
The Company's Food and Consumer Packaging Business continued to
provide superior microwave packaging with its patented QWIK WAVE
family of products, which includes, QWIK CRISP, MICRO FLEX Q and QWIK
TENNA. The materials in these microwave packages use microwave energy
to crisp and brown foods. QWIK BALANCE, another packaging innovation,
allows food to cook in the microwave without stirring or rotating,
which reduces cooking time and eliminates frozen centers and burned
edges. The Company's Food and Consumer Packaging Business also
introduced the new stand-up pouch system that provides high quality
graphics and superior product protection with less packaging material.
The new stand-up pouch offers an alternative to such containers as
jugs, bottles and cartons, as well as multi-wall paper bags.
During 1994, the Communications Papers Business continued to reinforce
its commitment to expanding its recycled printing and writing papers
product lines. The Company's recycled line includes EUREKA! premium
recycled copy paper in new colors, sizes and weights. The Company
also introduced a line of offset and opaque papers for the commercial
printing and publishing market. These papers will be marketed under
the names CROWN BRITE, EUREKA!, SOVEREIGN and SCEPTER.
Raw Materials and Supplies
James River utilizes a variety of raw materials in its manufacturing
processes. These include wood, wood pulp, wastepaper, other natural
and synthetic fibrous materials, selected base papers and boards,
plastic films, resins and chemicals. James River believes there is
generally a sufficient supply of these or substitutable raw materials.
Fiber supplies in the Pacific Northwest continue to be affected by
reductions in the amount of federal forest land available for harvest
resulting from environmental pressures.
In addition to these materials, pulp and paper production depends on
an adequate supply of water, electric power, and various forms of
fuel. The Company currently generates slightly less than one-half of
its electrical power needs internally through turbine-generators and
hydroelectric stations, which are located principally in New England
and the Southeast. The Company operates or is associated with a
number of cogeneration facilities which produce electricity for
internal use or for sale to local utilities and which effectively
generate steam used in the papermaking process, while reducing both
air and water emissions. James River generates more than one-half of
its fuel needs through the utilization of black liquor (which is a by-
product of the pulping process), wood waste and other residue.
The Company's paper products are manufactured principally from wood
pulp which is produced internally or is purchased from external
sources. James River's virgin pulping facilities include those
producing both chemical and mechanical pulp. Additionally, the
Company produces secondary fiber pulp through the recycling of
wastepaper and other reclaimable fiber sources; this secondary fiber
pulp is generally used internally for paper production processes. The
capacity of James River's pulping facilities, domestic and foreign, is
summarized as follows:
Capacity
Pulp Type (Tons Per Year)
Chemical ..........................................2,190,000
Mechanical.......................................... 185,000
Secondary .......................................... 861,000
Total ..........................................3,236,000
In addition to the Company's internal sources, several types of pulp
are purchased from other suppliers in the United States, Canada, and
other parts of the world. Purchased pulp is used to supply partially
integrated paper mills, to obtain types of pulp not produced by the
Company, or to minimize transportation costs. James River pulp
production is balanced with its paper machine fiber demand
domestically. The Company's paper machines in Europe are supplied
through a combination of self produced secondary fiber pulp and
purchased chemical pulp. Substantially all of the pulp acquired
within the United States is purchased at or below prevailing market
prices through the use of volume discounts. The Company also sells
market pulp from integrated mills with excess pulp capacity.
James River purchases wastepaper from a variety of collection agents
and outside vendors for use in the production of secondary fiber pulp.
Secondary fiber pulp represents approximately 25% of James River's
total pulp production. As the Company continues to expand its usage
of secondary fiber pulp, James River may be impacted to a greater
extent by fluctuation in wastepaper prices. Throughout 1994, market
prices for wastepaper increased significantly and may continue to
increase as recycling capacity in the paper industry expands and puts
supply pressures on the nation's collection system.
Pulpwood and woodchips which are used in James River's pulp mills are
obtained from a combination of owned and leased lands, lands covered
by long-term cutting rights agreements, pulpwood and woodchip supply
contracts, and open market purchases. All of the timberlands
controlled by James River or its affiliates are managed on a sustained-
yield basis, and the rate of harvesting is generally equal to or less
than the average growth rate. James River presently has controlled
access to the timber supply from a total of approximately 3.2 million
acres of timberland. Of this total, approximately 420,000 acres
located in New England, the Southeast and the Northwest were acquired
by James River as part of its acquisition of Diamond Occidental Forest
Inc. ("Diamond") in November 1993. An additional 2.6 million acres
located in Canada are leased by James River-Marathon, Ltd.
("Marathon") and its joint venture affiliate, Dubreuil Forest Products
Limited. The remaining 180,000 acres include lands which are the
subject of cutting rights contracts and managed land programs.
James River also purchases paper and paperboard from outside vendors
for use in its converting plants. The largest of these items is
bleached paperboard used for folding cartons, plates, and cups and as
a coating base stock. These products utilize bleached paperboard with
weights ranging from standard to very lightweight cup stock. James
River produces over 80% of its bleached paperboard needs at its
Naheola, Alabama, and St. Francisville, Louisiana, mills. The balance
of the Company's requirements is purchased from outside bleached paper
board producers, over one-half of which is acquired pursuant to a
long-term contract with prices that are at or below prevailing market
prices.
James River is a significant purchaser of plastic resins, which are
utilized in the production of both flexible packaging products and
foodservice/tabletop products. In the Food and Consumer Packaging
Business, the Company utilizes approximately 370 million pounds of
plastic resins annually. Low-density and high-density polyethylene
represent approximately two-thirds of the resins used in this
business, with the remainder including polypropylene and a variety of
specialty resins. The North American Consumer Products Business uses
approximately 150 million pounds per year of polystyrene plastic
resins in producing plastic and foam cups and containers; lids for
plastic, foam and paper containers; and plastic cutlery. The Company
purchases plastic resins pursuant to negotiated arrangements with a
variety of suppliers.
Trademarks and Patents
James River has a large number of trademarks and trade names
registered domestically and in certain foreign countries under which
it conducts its business. Trademarks include, among others, QUILTED
NORTHERN, BRAWNY, VANITY FAIR, NICE'N SOFT, VANIA, MARINA, DIXIE,
SUPERWARE, LOTUS, COLHOGAR, TENDERLY, DIXIE/MARATHON, QUILT-RAP, QWIK
WAVE, EUREKA!, and WORD PRO. The Company considers its trademarks, in
the aggregate, to be material to its business, and consequently, seeks
trademark protection by all available means. The Company also has a
variety of material patents and licenses related to its business.
While, in the aggregate, the foregoing are of material importance to
James River's business, the loss of any one or any related group of
such intellectual property rights would not have a material adverse
effect on the operations of James River.
Seasonal Business
While seasonal variation in demand is not a major factor in the
Company's business, the first and fourth quarters of the year are
generally the lowest in net sales and operating income. Net sales and
profit margins in the Consumer Products Business are generally higher
in the spring and summer (second and third quarters) compared to the
winter (fourth and first quarters) due to the seasonal volume strength
of the retail dixie paper cup and plate business during the summer
months. In addition, the commercial tissue portion of the Consumer
Products Business generally experiences softer sales volumes in the
fourth quarter, when many industrial customers are on extended holiday
shutdowns. Profit margins for the Company have also historically been
lower in the fourth and first quarters because of holiday, vacation,
and maintenance shutdowns and seasonal energy costs.
Customers
Sales to James River's five largest customers in the aggregate
accounted for approximately 17.1% of consolidated net sales in 1994,
18.0% in 1993, and 16.7% in 1992. For 1994, sales to the five largest
customers of the Consumer Products Business in North America and
Europe accounted for approximately 29% and 17% of sales, respectively;
sales to the five largest customers of the Food and Consumer Packaging
Business represented approximately 21% of its sales; and sales to the
five largest customers of the Communications Papers Business accounted
for approximately 35% of its sales. There were no individual
customers, however, to which sales exceeded 10% of James River's
consolidated net sales. The Company's loss of any customer would not
have a material adverse effect on the financial condition of the
Company.
Order Backlog
In the Consumer Products and Food and Consumer Packaging Businesses,
the Company produces to order and maintains product inventories to
meet delivery requirements of its customers; therefore, the backlog of
customer orders for these segments is not significant. In the
Communications Papers Business, the Company's backlogs were generally
20 to 50 days and 10 to 30 days depending on the product, as of
December 25, 1994, and December 26, 1993, respectively. The rebound
in world wide demand for Communications Papers products which
strengthened in the last quarter of 1994, provided for this increase
in backlog. Order backlog does not vary substantially on a seasonal
basis.
Competition
James River competes in several domestic and European markets and is
among the largest suppliers of paper products within the major markets
that they serve. Depending upon the characteristics of the particular
market involved, the Company competes on the basis of price, product
quality and performance, product development effectiveness, service,
and sales and distribution support. In addition, advertising and
promotion are important tools for competing in consumer markets. The
Company's Consumer Products and Packaging Businesses are only
nominally impacted by imports into the United States from
international competitors. However, the market in which
Communications Papers Business operates has been impacted by an
increased level of imports in 1993 and 1994 into the United States
from European and other producers.
Consumer Products Business - North America. James River
competes in both the retail and commercial channels of the U.S. tissue
market. The retail channel, which is primarily tied to population
growth and new household growth, is mature with an annual growth rate
of 1% to 2%. The commercial channel has had a slightly higher annual
growth rate in recent years; however, it is more significantly
affected by downturns in the economy. Marketing of towel and tissue
products is generally characterized as being highly competitive.
During 1994, approximately two-thirds of the Company's net sales of
towel and tissue products were to retail markets and one-third to
commercial markets. Towel and tissue production in the U.S. is
concentrated among a few large manufacturers; based on sales, the top
five companies maintain over 72% of the U.S. market share. Based on
industry sales volume statistics, James River is one of the three U.S.
manufacturers with towel and tissue capacity in excess of one billion
tons. In the retail tissue market, James River and Scott Paper
Company have approximately the same capacity following the number one
ranked producer, The Procter & Gamble Company. In the commercial
tissue market, James River's primary competitors include Fort Howard
Paper Company and Scott Paper Company.
James River has one of the broadest and most diversified product lines
serving both the retail and commercial segments of the
foodservice/tabletop market. The Company's sales of
foodservice/tabletop products are slightly higher in the retail
market. In the retail tabletop market, James River believes it holds
the leading position. In the commercial foodservice market, James
River also believes it holds the leading market position, slightly
ahead of Sweetheart Cup Company, Inc. The remainder of both the
retail and commercial markets is generally served by smaller,
regional, non-integrated producers.
Several factors contribute to James River's competitive strengths in
both the tissue and foodservice markets. These include superior
product quality, significant research and development efforts, broad
product lines, well-known brand franchises, innovative graphic design,
and full-service distribution. The Company is continually improving
product quality and design in order to deliver greater value to
customers while reducing cost. In addition, James River's emphasis on
increasing its usage of recycled fiber enhances its ability to produce
recycled tissue, responding to environmentally conscious consumers.
Consumer Products Business - Europe. Jamont holds the overall number
three position in the European tissue market with a market share of
approximately 15%, slightly behind Scott Paper Company and Molnycke -
PWA, assuming the Molnycke and PWA merger is consummated. The
European tissue market has been generally more fragmented compared to
the U.S. market, with a few, large pan-European producers and many
smaller, regional producers. The European market is currently
undergoing a transition towards larger consolidated producers as
evidenced by the Molnycke and PWA merger. Jamont's products generally
hold either the number one or number two positions in each market in
which they compete, and Jamont's LOTUS brand holds the leading
position in the French market. Jamont currently has no operations in
Germany and has minimal export sales to that market. Jamont continues
to seek to increase the value of its business by focusing on the
development and implementation of a pan-European brand strategy and
maintaining its low cost position through continuing productivity
improvements, cost reductions and commercialization of new
technologies.
Food and Consumer Packaging Business. The Food and Consumer
Packaging industry is generally characterized by relatively non-
cyclical demand. The Company is the second largest manufacturer,
based on sales, of folding cartons, slightly behind Jefferson Smurfit
Corporation. James River is one of the few folding carton producers
with integrated manufacturing facilities for both bleached and
recycled paperboard. In flexible packaging, the Company estimates
that it along with Bemis Company, Inc., with approximately the same
sales levels, are the largest producers of laminated and coextruded
packaging products. The Company believes that it is the largest
producer of barrier papers used in food packaging.
James River's folding carton and flexible packaging operations offer
food processors the broadest line of food packaging products
available. The Company has a well-established customer base that
enables it to provide enhanced packaging products for a significant
number of new product offerings. The Company also believes it is one
of the technological leaders in this industry. Through its pioneered
enhanced microwave cooking packaging for both folding carton and
flexible packaging applications, the Company is well situated to
strengthen its leadership position in this fast-growing segment of the
market. James River is also well-known for its superior graphic
design and its web litho and flexographic printing capabilities.
Communications Papers Business. The Company has two large,
integrated mills serving the western business papers market: its
Camas, Washington, mill and its Wauna, Oregon, mill. The Company
estimates that it is one of the largest producers of business papers
in the western business papers market. Major competitors in western
business papers include Weyerhaeuser Company, Boise Cascade
Corporation and Georgia-Pacific Corporation. James River's printing
papers are produced at the Company's St. Francisville, Louisiana,
mill, which is located in a site that is able to service all portions
of the country, with particular emphasis on the mid-western printing
and publication markets. Major competitors in the printing papers
market include Champion International Corporation, International Paper
Company and Consolidated Papers, Inc. In premium printing papers,
James River has a substantial share of the high end of the text and
cover market and is the second largest producer of cast-coated papers
behind Champion International Corporation. James River believes that
it is generally equal or superior to its competitors in product
development effectiveness, product quality and service.
Research and Development
The Company's major research and development centers are located in
Neenah, Wisconsin; Kunheim, France; Cincinnati, Ohio; and Camas,
Washington. The Company has pilot plants located in Camas,
Washington, Kunheim, France, and Neenah, Wisconsin, providing pulp and
papermaking developmental work and experimental trials; pilot plant
facilities for film and board packaging, laminating, and printing are
located in the Company's Technology and Business Center in Cincinnati,
Ohio. Additionally, James River has engineering centers in Neenah,
Wisconsin; Kunheim, France; Camas, Washington; Antioch, California;
Corte Madera, California; Easton, Pennsylvania; and Toronto, Canada.
Other information with respect to James River's research and
development efforts is set forth in Note 1 of Notes to Consolidated
Financial Statements in the 1994 Annual Report, which information is
incorporated herein by reference.
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 increasingly stringent
standards for air, water, and solid and hazardous waste regulations.
During 1994, capital expenditures totaling approximately $34 million
were made by James River for pollution control facilities and
equipment. Additionally, capital expenditures for such purposes on
existing facilities are estimated to be approximately $55 million for
1995, primarily due to $21 million required to complete a waste water
treatment plant. The estimated 1995 capital expenditures exclude any
expenditures which may be required by the U.S. Environmental
Protection Agency's ("EPA's") draft rules or "cluster rules" as set
forth in "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Environmental Matters," which information
is incorporated herein by reference. 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
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.
Further information pertaining to hazardous substance cleanup, accrued
environmental liabilities and other environmental matters affecting
the Company is set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Environmental Matters"
and Note 14 of Notes to Consolidated Financial Statements is the 1994
Annual Report, which information in incorporated herein by reference.
Personnel
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Contractual Labor Agreements" on page 43 of
the 1994 Annual Report, which information is incorporated herein by
reference.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
Financial information regarding the Company's domestic and foreign
operations is included in Note 15 of Notes to Consolidated Financial
Statements in the 1994 Annual Report, which information is
incorporated herein by reference. International operations are
generally characterized by the same conditions discussed in the
narrative description of business and may also be affected by
additional elements including changing currency values and different
rates of inflation and economic growth. The effects of these
additional elements is more significant in the Consumer Products
segment, which comprises most of the Company's international business.
ITEM 2. PROPERTIES
The pulp and papermaking facilities of James River, the number of
paper or paperboard machines, and the principal types of products
produced at each facility are as follows:
Paper
or
Pulp Board
Location Mills Paper Mach-
(Facility Name)(A) (B) Mills ines Principal Products
Domestic:
Alabama
Pennington (Naheola) 1 1 7 Tissue; bleached
paperboard
Delaware
Newark (Curtis) 1 2 Premium printing
papers
Louisiana
St. Francisville 2(E) 2 4 Coated groundwood;
specialty
packaging papers;
bleached bristols;
bleached packaging
Maine
Old Town 1 1 2 Tissue
Massachusetts
Adams 1 3 Premium printing
papers
Michigan
Kalamazoo
(Board & Carton) 1(C) 2 2 Recycled paperboard
Parchment 1 6 Specialty packaging
papers;
uncoated freesheet
Port Huron 1 4 Specialty packaging
papers
Ypsilanti (Peninsular) 1 1 Premium printing
papers
New Hampshire
Berlin/Gorham 1 1 6 Uncoated freesheet;
tissue
New Jersey
Milford (Reigel) 1 4 Specialty packaging
papers;
uncoated freesheet
New York
Carthage 1(C) 1 2 Tissue
Gouverneur(Natural Dam) 1 1 Tissue
Oregon
Halsey 1(C) 1 2 Tissue
Clatskanie (Wauna) 2(E) 1 5 Tissue; uncoated
freesheet;
uncoated groundwood
Washington
Camas 1 1 12 Uncoated freesheet;
tissue;
specialty packaging
papers
Wisconsin
Ashland 1(C) 1 2 Tissue
Green Bay 1(C) 1 6 Tissue
Total domestic 13 20 71
Paper
or
Pulp Board
Location Mills Paper Mach-
(Facility Name)(A) (B) Mills ines Principal Products
International:
Canada
Marathon 1 Kraft pulp
Finland
Nokia (F) 1(C) 1 3 Tissue
France
Gien (F) 1 3 Tissue
Grenoble (F) 1 1 Tissue
Louviers
(Hondouville) (F) 2(D) 1 2 Tissue
Muntzenheim (Kunheim)(F) 1 2 Tissue
Greece
Patras (Achaia) (F) 1 1 Tissue
Italy
Castelnuovo (F) 1 1 Tissue
Cava dei Tirreni (F) 1 1 Tissue
Potenza (Avigliano) (F) 1 1 Tissue
Netherlands
Cuijk (F) 2(D) 1 2 Tissue
Spain
Allo (F) 1 2 Tissue
Turkey
Karamursel (F) 1(C) 1 2 Tissue
United Kingdom
Mid-Glamorgan
(Bridgend) (F) 1(C) 1 3 Tissue
St. Andrews 1 3 Premium printing
(Guardbridge) papers
Larne (F) 1(C) 1 2 Tissue
North Sheffield
(Oughtibridge) (F) 1(C) 1 2 Tissue
Penicuik (Sommerville) 1 2 Premium printing
papers
Total international 10 17 33
Total 23 37 104
(A) The locations listed for James River's consolidated subsidiaries
are held in fee by the Company.
(B) Unless otherwise indicated, represents a chemical pulp facility.
(C) Includes one secondary fiber facility.
(D) Includes two secondary fiber facilities.
(E) Includes one groundwood pulp facility.
(F) Represents an operating facility of Jamont, the Company's 86%
owned consolidated subsidiary.
James River's network of manufacturing facilities provides for an
annual virgin and recycled pulp capacity of approximately 3.2 million
tons and an annual paper and paperboard capacity of approximately 4.1
million tons. The Company believes that its production facilities are
suitable for their purposes and are adequate to support their
businesses. The extent of utilization of individual facilities
varies; however, during 1994, James River's pulp and paper mills
generally had production levels of approximately 90% of capacity.
James River also operates both integrated and non-integrated
converting plants which perform a variety of converting operations.
These converting plants (excluding converting operations which may be
performed at pulp and papermaking facilities already listed on the two
previous pages) are summarized as follows:
Number of Converting Plants
Principal Products Domestic International Total
Paper and plastic foodservice 12 5 17
products
Folding cartons 15 15
Flexible packaging 10 1 11
Ink manufacturing and blending 6 6
Paper converting and other 4 10 14
Total 47 16 63
James River's manufacturing and converting facilities are complemented
by an integrated network of sales offices and distribution terminals.
Other Properties
The Company operates a trucking company and two short-line railroads,
primarily used to transport shipments of raw materials and finished
goods between plants and to distribution centers. The Company also
operates a public warehouse and terminal service that provides tug,
barge, freight interchange and other services on the Columbia,
Willamette and Snake Rivers in the Pacific Northwest.
ITEM 3. LEGAL PROCEEDINGS
James River has been notified by the EPA of a proposed civil action
relating to certain environmental violations at the Company's Berlin,
New Hampshire, mill. The Company is currently negotiating a
settlement with the EPA and the Department of Justice relating to this
action which may involve penalties of approximately $200,000.
Further information with respect to legal proceedings is set forth in
Note 14 of Notes to Consolidated Financial Statements in the Company's
1994 Annual Report, which information is incorporated herein by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
last quarter of 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table reflects the name, age, length of service as an
officer of James River, and current position for each of the current
executive officers of the Company as of February 13, 1995. Previous
positions and areas of responsibility over the past five years are
included in the footnotes that follow the table. Each officer is
elected by the Board of Directors to serve a one-year term. There is
no family relationship between any of these officers or between any
such officer and any director of the Company; nor is there any
arrangement or understanding between any officer and any other person
pursuant to which the officer was selected.
<TABLE>
<CAPTION>
Calendar
Year First
Elected as
Name Age an Officer Current Position
<S> <C> <C> <C>
Robert C. Williams (1) 65 1969 Chairman of the Board of Directors, President
and Chief Executive Officer
James K. Goodwin (2) 48 1991 Executive Vice President, Consumer Products
Ernest S. Leopold (3) 61 1986 Executive Vice President, Communications Papers
Norman K. Ryan (4) 58 1980 Executive Vice President, Food & Consumer Packaging
Clifford A. Cutchins, IV (5) 46 1990 Senior Vice President, General Counsel,
Corporate Secretary
Daniel J. Girvan (6) 46 1993 Senior Vice President, Human Resources
Stephen E. Hare (7) 41 1990 Senior Vice President, Corporate Finance and
Chief Financial Officer
Richard K. Lee (8) 54 1987 Senior Vice President, Group Executive,
Flexible Packaging
John M. Nevin (9) 59 1990 Senior Vice President, Strategic Services
E. Lee Showalter (10) 58 1971 Senior Vice President, Fiber Business
Ronald L. Singer (11) 50 1982 Chief Executive Officer, Jamont N.V.
</TABLE>
(1) Mr. Williams was elected Chairman of the Board of Directors,
President and Chief Executive Officer effective August 1, 1992.
Since November 1, 1990, he had served as President and Chief
Executive Officer. Prior to November 1, 1990, he had served as
President, Chief Operating Officer.
(2) Mr. Goodwin joined James River in May 1991 as Vice President,
Corporate Marketing Strategy. From January 1992 to April 1992,
he served as Vice President, Dixie Business. Effective May 1992,
he was elected to his current position. Prior to joining James
River, he was Vice President, Corporate Sales for The Procter &
Gamble Company which he joined in 1968.
(3) Mr. Leopold joined James River in May 1986 as Senior Vice
President, Communications Papers, in connection with the
Company's acquisition of Crown Zellerbach Corporation, which he
had joined in 1959. Effective September 1, 1990, he was elected
to his current position.
(4) Mr. Ryan joined James River in December 1980 in connection with
the Company's acquisition of Brown Company, which he had joined
in 1954. From 1983 to June 1989, he served in several managerial
and executive positions in the Paperboard Packaging Group. In
July 1989, Mr. Ryan was elected Senior Vice President, Paperboard
Packaging Group. Effective September 1, 1990, he was elected to
his current position.
(5) Mr. Cutchins joined James River in February 1990 in his current
position. From 1982 until joining James River, he was a Partner
with the law firm of McGuire, Woods, Battle & Boothe, L.L.P.,
which he had joined in 1975.
(6) Mr. Girvan joined James River in May 1986 as Director, Human
Resources (Communications Papers) in connection with the
Company's acquisition of Crown Zellerbach Corporation, which he
joined in 1977. From 1989 to 1991, he served as Director,
Organizational Development (Communications Papers), and from 1991
to 1992, he served as Vice President, Human Resources Development
(Corporate). He served as Vice President, Human Resources
(Consumer Products) from 1992 until November 1993, when he was
elected to his current position.
(7) Mr. Hare joined James River in June 1990 as Vice President,
Treasurer. From February 1992 to September 1992, he served as
Vice President, Corporate Finance. Effective October 1992, he
was elected to his current position. Prior to joining the
Company, Mr. Hare served as a Senior Vice President with Kidder,
Peabody & Co., Inc., which he had joined in 1981.
(8) Mr. Lee joined James River in October 1987 and served as Vice
President, Business Development, Packaging Business from that
time until November 1988 and as Group Vice President, Flexible
Packaging Group from November 1988 to December 1989. As of
December 14, 1989, he was elected to his current position. Prior
to joining James River, Mr. Lee had extensive experience in the
paper industry with the Marathon Division of American Can
Corporation, Champion International Corporation and Waldorf
Corporation.
(9) Mr. Nevin joined James River in September 1990 as Senior Vice
President, Strategic Services. From May 1992 to October 1992, he
served as Senior Vice President, Towel & Tissue Operations and
Strategic Services. From November 1992 to February 1994, he
served as Senior Vice President, Tissue Operations and Corporate
Logistics. Effective in March 1994, he was elected to his
current position. Prior to joining James River, he served as
Vice President and Group Executive, Coated Publication Papers and
Pulp for International Paper Company, which he joined in 1957.
(10) Mr. Showalter joined James River in 1969. From 1987 to November
1992, he served as Senior Vice President, Corporate Development.
He served as Senior Vice President, Strategic Services from
November 1992 until March 1994, when he was elected to his
current position.
(11) Mr. Singer joined James River in 1982 as Senior Vice President,
Group Executive, Towel and Tissue Business in connection with the
Company's acquisition of the Dixie-Northern Division of American
Can Company. He served in various executive positions from 1982
until 1990, when he was elected to his current position.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed on the New York Stock Exchange.
Information with respect to quarterly high and low sales prices for
James River's common stock, quarterly dividends and other quarterly
information related to common shares is contained in Note 16 of Notes
to Consolidated Financial Statements in the 1994 Annual Report, which
information is incorporated herein by reference. The payment of
dividends and the amounts thereof will be dependent upon James River's
earnings, financial position, cash requirements and other relevant
factors. Common shares of the Company reserved for issuance are
described in Note 11 of Notes to Consolidated Financial Statements in
the 1994 Annual Report, which information is incorporated herein by
reference. In addition, covenants of certain of the Company's senior
note agreements impose restrictions on the amount of net worth which,
in turn, may limit the funds available for the payment of dividends;
these covenants are described under the heading "Liquidity and Capital
Resources - Financing Activities" in Management's Discussion and
Analysis of Financial Condition and Results of Operations and in Note
9 of Notes to Consolidated Financial Statements in the 1994 Annual
Report, which information is incorporated herein by reference. On
February 13, 1995, there were approximately 19,300 shareholders of
record of the Company's common stock.
ITEM 6. SELECTED FINANCIAL DATA
See "Selected Financial Data - Operations" and "Selected Financial
Data - Financial Position, End of Year" on pages 76 through 79 of the
1994 Annual Report, which information for fiscal years 1990 through
1994 is incorporated herein by reference. The data presented for each
period reflects operations acquired from the respective acquisition
dates. Acquisitions, dispositions and other transactions from 1992
through 1994 are described in Note 2 of Notes to Consolidated
Financial Statements in the 1994 Annual Report, which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 37 through 47 of the 1994 Annual
Report, which information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the consolidated financial statements and selected quarterly
financial information, under the headings "Consolidated Statements of
Operations," "Consolidated Balance Sheets," "Consolidated Statements
of Cash Flows," "Consolidated Statements of Changes in Capital
Accounts" and "Notes to Consolidated Financial Statements" on pages 48
through 74 of the 1994 Annual Report, which information is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on
accounting and financial disclosures within the twenty-four months
prior to the date of the most recent financial statements included
herein.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the Company's Directors, see "Election
of Directors," "Information on Nominees," "Board of Directors and
Committees" and "Compensation of Directors" on pages 1 through 3 and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934"
on page 15 of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 20, 1995 (the "1995 Proxy
Statement"), which information is incorporated herein by reference.
Information with respect to the Company's Executive Officers is
contained under the heading "Executive Officers of the Registrant" on
pages 16 through 18 of Part I of this Form 10-K Annual Report.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Directors" on pages 3 and 4, "Stock Option Plan
for Outside Directors" and "Retirement Plan for Outside Directors" on
page 4, "Executive Compensation" on pages 7 through 11, "Performance
Graph" on page 12, and "Compensation Committee Report on Executive
Compensation" on pages 13 through 15 of the Company's 1995 Proxy
Statement, which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Stock Ownership of Management" and "Principal Shareholders" on
pages 5 and 6 of the Company's 1995 Proxy Statement, which information
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Information on Nominees" on page 2 of the Company's 1995 Proxy
Statement, which information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of This Report:
1) Financial Statements:
The Consolidated Financial Statements of James River
Corporation of Virginia and Subsidiaries, the Notes to
Consolidated Financial Statements, and the Report of
Independent Accountants listed below are incorporated herein
by reference from pages 48 through 75 of the Company's 1994
Annual Report. With the exception of the aforementioned
information, and the information incorporated by reference
in numbered Items 1, 3, 5, 6, 7 and 8, no other data
appearing in the 1994 Annual Report is deemed to be "filed"
as part of this Form 10-K Annual Report.
"Consolidated Statements of Operations" for each of the
three years in the period ended December 25, 1994 (see page
48 of the 1994 Annual Report)
"Consolidated Balance Sheets" as of December 25, 1994
and December 26, 1993 (see page 49 of the 1994 Annual
Report)
"Consolidated Statements of Cash Flows" for each of the
three years in the period ended December 25, 1994 (see page
50 of the 1994 Annual Report)
"Consolidated Statements of Changes in Capital
Accounts" for each of the three years in the period ended
December 25, 1994 (see page 51 of the 1994 Annual Report)
"Notes to Consolidated Financial Statements" (see pages
52 through 74 of the 1994 Annual Report)
"Report of Independent Accountants" (see page 75 of the
1994 Annual Report) with respect to the financial statements
listed above
2) Financial Statement Schedules:
None required
3) Exhibits:
Each Exhibit is listed according to the number assigned to it in
the Exhibit Table of Item 601 of Regulation S-K. The Exhibits
identified with an asterisk (*) are management contracts or
compensatory plans available to
certain key employees or directors.
Exhibit
Number Description Section
3(a) James River Corporation of Virginia Amended and
Restated Articles of Incorporation,
as amended effective January 4, 1990 (incorporated by
reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended December 26, 1993).
3(b) James River Corporation of Virginia Articles of
Amendment to the Amended and Restated Articles of
Incorporation Designating the Series O 8-1/4% Cumulative
Preferred Stock ($10.00 par value), effective October 1,
1992 (incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended
December 26, 1993).
3(c) Articles of Amendment to the Amended and Restated
Articles of Incorporation of James River Corporation
of Virginia Designating the Series P 9% Cumulative
Convertible Preferred Stock ($10.00 par value)
(incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K dated
June 29, 1994).
3(d) Amended and Restated Bylaws of James River E-1
Corporation of Virginia, with the last amendment to
be effective as of April 20, 1995, filed herewith.
4(a) Amended and Restated Rights Agreement dated May 12,
1992, between James River Corporation of Virginia and
NationsBank of Virginia, N.A., as Rights Agent,
and Amendment No. 1 to such Agreement, dated June 8,
1992 (incorporated by reference to Exhibits 2 and 3,
respectively, to the Company's filing of Amendment 1
dated July 28, 1992, to its Form 8-A dated March 3, 1989).
4(b) In reliance upon Item 601(b)(4)(iii)(A) of Regulation
S-K, various instruments defining the rights of holders
of long-term debt of the Registrant and its subsidiaries
are not being filed because the total amount of securities
authorized and outstanding under each such instrument does
not exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis. The Registrant hereby
agrees to furnish a copy of any such instrument to the
Commission upon request.
Exhibit
Number Description Section
10(a) * Employment contract for Robert C. Williams, dated
January 1, 1993 (incorporated by reference to Exhibit
10(a) to the Company's Annual Report on Form 10-K for
the year ended December 27, 1992).
10(b) * Ancillary letter agreement with Robert C. Williams,
dated January 1, 1993 (incorporated by reference to
Exhibit 10(b) to the Company's Annual Report on Form
10-K for the year ended December 27, 1992).
10(c) * Employment Agreement with Ernest S. Leopold, dated
June 11, 1986 (incorporated by reference to Exhibit
10(d) to the Company's Annual Report on Form 10-K
for the year ended April 29, 1990).
10(d) * Ancillary letter agreement with Ernest S. Leopold,
dated October 26, 1992 (incorporated by reference to
Exhibit 10 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 27, 1992).
10(e) * Employment Agreement with Ronald L. Singer, dated
December 15, 1993 (incorporated by reference to
Exhibit 10(e) to the Company's Annual Report
on Form 10-K for the year ended December 26, 1993).
10(f) * James River Corporation of Virginia Deferred
Compensation Plan for Outside Directors,
amended and restated effective as of July 1, 1989
(incorporated by reference to Exhibit
10(c) to the Company's Annual Report on Form 10-K for
the year ended April 30, 1989).
10(g) * James River Corporation of Virginia Stock Option Plan
for Outside Directors, amended and restated as of April 11,
1991 (incorporated by reference to Exhibit 10(e) to the
Company's Transition Report on Form 10-K for the
transition period from April 30, 1990 to December 30, 1990).
10(h) * James River Corporation of Virginia Retirement Plan
for Outside Directors, 1994 Amendment and Restatement,
effective February 18, 1994 (incorporated by
reference to Exhibit 10(h) to the Company's Annual
Report on Form 10-K for the year ended December 26, 1993).
10(i) * James River Corporation of Virginia Amended and
Restated Stock Option Plan, dated April 12, 1984,
and subsequently amended through October 1, 1990
(incorporated by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8
(Post-Effective Amendment No. 1 to Registration
Statement No. 2-83979), dated December 18, 1984,
and Exhibit 10(c) to the Company's Quarterly
Report on Form 10-Q for the quarter ended October 28, 1990).
Exhibit
Number Description Section
10(j) * James River Corporation of Virginia 1987 Stock Option
Plan, 1993 Amendment and Restatement, effective as of
December 16, 1993 (incorporated by reference to
Exhibit 10(j) to the Company's Annual Report on Form
10-K for the year ended December 26, 1993).
10(k) * James River Corporation of Virginia Stock Appreciation
Rights Plan, dated April 9, 1987, and subsequently
amended through October 1, 1990 (incorporated by
reference to Exhibit 10(f) to the Company's Annual
Report on Form 10-K for the year ended April 26, 1987,
and Exhibit 10(e) to the Company's Quarterly Report on
Form 10-Q for the quarter ended October 28, 1990).
10(l) * James River Corporation of Virginia Deferred Stock
Plan, 1993 Amendment and Restatement, effective
December 16, 1993 (incorporated by reference to
Exhibit 10(l) to the Company's Annual Report on Form
10-K for the year ended December 26, 1993).
10(m) * James River Corporation of Virginia Supplemental
Deferral Plan, 1993 Amendment and Restatement,
effective as of January 1, 1994 (incorporated by reference to
Exhibit 10(m) to the Company's Annual Report on Form
10-K for the year ended December 26, 1993).
10(n) * James River Corporation of Virginia 1995 Profit E-2
Sharing Plan for Salaried Employees,
effective as of December 26, 1994, filed herewith.
10(o) * James River Corporation of Virginia Performance E-3
Bonus Plan, effective as of December 26, 1994,
filed herewith.
10(p) * James River Corporation of Virginia Supplemental
Benefit Plan, amended and restated effective June 1,
1991 (incorporated by reference to Exhibit 10(m) to
the Company's Annual Report on Form 10-K for the year
ended December 29, 1991).
10(q) * 1994 Amendment to the James River Corporation of E-4
Virginia Supplemental Benefit Plan,
dated March 1, 1994, filed herewith.
11 Computation of Earnings Per Share, filed herewith. E-5
12 Computation of Ratio of Earnings to Fixed Charges, E-6
filed herewith.
13 Certain sections of the Company's Annual Report to E-7
Shareholders for the year ended
December 25, 1994, filed herewith.
Exhibit
Number Description Section
21 Subsidiaries of the Company as of December 25, 1994, E-8
filed herewith.
23 Consent of Independent Accountants, filed herewith. E-9
27 Financial Data Schedules for the year ended December
25, 1994 (incorporated by reference to Exhibit 27 to
the Company's Current Report on Form 8-K dated January
25, 1995).
(b) Reports on Form 8-K:
During the last quarter of 1994 and subsequent thereto, the
company filed the following Current Reports on Form 8-K:
Date of Report Event Reported
September 28, 1994 The Company published a press release announcing
that it is exploring strategic
options including possible divestiture of
certain assets, formation of joint
ventures, and the sale of business unit equity
in the U.S. and Europe.
October 26, 1994 The Company reported that it implemented a
program to modify its currency
hedge and interest rate swap position.
November 22, 1994 The Company announced price increases on certain
James River consumer products effective beginning
December 26, 1994.
December 6, 1994 The Company published a press release announcing
its estimate of fourth quarter results. The
resolution of a previously reported labor strike was
also reported.
January 25, 1995 The Company published a press release announcing
its results of operations for the fourth quarter
and year ended December 25, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
James River Corporation of Virginia
Registrant
By:/s/ Stephen E. Hare
Date: March 24, 1995 Stephen E. Hare
Senior Vice President, Corporate
Finance and Chief Financial Officer
(Principal Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date: March 24, 1995 Signature and Title
By:/s/ Robert C. Williams
Robert C. Williams
Chairman, President and
Chief Executive Officer
By:/s/ Stephen E. Hare
Stephen E. Hare
Senior Vice President, Corporate
Finance and Chief Financial Officer
(Principal Financial and Accounting
Officer)
Pursuant to General Instruction D to Form 10-K, this report has been
signed below by a majority of the Board of Directors:
/s/ FitzGerald Bemiss March 14, 1995
FitzGerald Bemiss Date
/s/ William T. Burgin March 15, 1995
William T. Burgin Date
/s/ Worley H. Clark, Jr. March 15, 1995
Worley H. Clark, Jr. Date
/s/ William T. Comfort, Jr. March 14, 1995
William T. Comfort, Jr. Date
/s/ William V. Daniel March 21, 1995
William V. Daniel Date
/s/ Bruce C. Gottwald March 14, 1995
Bruce C. Gottwald Date
/s/ Robert M. O'Neil March 14, 1995
Robert M. O'Neil Date
/s/ Joseph T. Piemont March 14, 1995
Joseph T. Piemont Date
/s/ Anne Marie Whittemore March 22, 1995
Anne Marie Whittemore Date
/s/ Robert C. Williams March 24, 1995
Robert C. Williams Date
Exhibit 3(d)
AMENDED AND RESTATED
BYLAWS OF
JAMES RIVER CORPORATION OF VIRGINIA
(amended as of March 23, 1995, except as otherwise noted herein)
ARTICLE I - MEETINGS OF STOCKHOLDERS
Section 1.1 Closing of Transfer Books and Fixing of Record
Date. For the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of stockholders for
any other proper purpose, the Board of Directors or the Executive
Committee shall fix in advance a date as the record date for any
such determination of stockholders, such date to be not more than
70 days before the meeting or action. When a determination of
stockholders entitled to vote at any meeting of stockholders has
been made as provided in this article, such determination shall
apply to any adjournment thereof, except as is otherwise provided
by law.
Section 1.2 Place and Time of Meetings. Meetings of
stockholders shall be held at such place, either within or
without the Commonwealth of Virginia, and at such time, as may be
provided in the notice of the meeting.
Section 1.3. Organization and Order of Business. The
Chairman of the Board of Directors (the "Chairman") or, in his
absence, the President shall serve as chairman at all meetings of
the stockholders. In the absence of both of the foregoing
officers or if both of them decline to serve, a majority of the
shares entitled to vote at such meeting may appoint any person to
act as Chairman. The Secretary of the Corporation or, in his
absence, an Assistant Secretary, shall act as secretary at all
meetings of the stockholders. In the event that neither the
Secretary nor any Assistant Secretary is present, the Chairman
may appoint any person to act as secretary of the meeting.
The Chairman shall have the authority to make such rules and
regulations, to establish such procedures and to take such steps
as he may deem necessary or desirable for the proper conduct of
each meeting of the stockholders, including, without limitation,
the authority to make the agenda and to establish procedures for
(i) the dismissal of business not properly presented, (ii) the
maintenance of order and safety, (iii) placing limitations on the
time allotted to questions or comments on the affairs of the
Corporation, (iv) placing restrictions on attendance at a meeting
by persons or classes of persons who are not stockholders or
their proxies, (v) restricting entry to a meeting after the time
prescribed for the commencement thereof and (vi) the
commencement, conduct and close of voting on any matter.
Section 1.4 Annual Meeting. The annual meeting of
stockholders shall be held on the third or fourth Thursday in
April of each year as set by the Board of Directors or on such
other dates as shall be approved by the Board of Directors.
At each annual meeting of stockholders, only such business
shall be conducted as is proper to consider and has been brought
before the meeting (i) by or at the direction of the Board of
Directors or (ii) by a stockholder of the Corporation who is a
stockholder of record of a class of shares entitled to vote on
such business at the time of the giving of the notice hereinafter
described in this Section 1.4 and who complies with the notice
procedures set forth in this Section 1.4. In order to bring
business before an annual meeting of stockholders, a stockholder,
in addition to complying with any other applicable requirements,
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must have given timely written notice of his intention to bring
such business before the meeting to the Secretary of the
Corporation. To be timely, a stockholder's notice must be given,
either by personal delivery or by United States certified mail,
postage prepaid, addressed to the Secretary of the Corporation at
the principal office of the Corporation and received (i) on or
after December 1st of the year immediately preceding the year in
which the meeting will be held and before January 1st of the year
in which the meeting will be held or (ii) not less than 60 days
before the date of the annual meeting if the date of such
meeting, as prescribed in these Bylaws, has been changed by more
than 30 days.
Each such stockholder's notice shall set forth as to each
matter the stockholder proposes to bring before the annual
meeting (i) the name and address, as they appear on the
Corporation's stock transfer books, of the stockholder proposing
such business, (ii) the class and number of shares of stock of
the Corporation beneficially owned by such stockholder, (iii) a
representation that such stockholder is a stockholder of record
and intends to appear in person or by proxy at such meeting to
bring before the meeting the business specified in the notice,
(iv) a brief description of the business desired to be brought
before the meeting, including the complete text of any
resolutions to be presented at the meeting and the reasons for
wanting to conduct such business, and (v) any material interest
which the stockholder has in such business.
The Secretary of the Corporation shall deliver each such
stockholder's notice that has been timely received to the
Chairman or a committee designated by the Board of Directors for
review.
Notwithstanding the foregoing provisions of this
Section 1.4, a stockholder seeking to have a proposal included in
the Corporation's proxy statement for an annual meeting of
stockholders shall comply with the requirements of Regulation 14A
under the Securities Exchange Act of 1934, as amended from time
to time, or with any successor regulation.
Section 1.5 Special Meetings. Special meetings of the
stockholders may be called by the Chairman, the President or the
Board of Directors. Only business within the purpose or purposes
described in the notice for a special meeting of stockholders may
be conducted at the meeting.
Section 1.6 Notice of Meetings. Written notice stating the
place, day and hour of each meeting of stockholders and, in the
case of a special meeting, the purpose or purposes for which the
meeting is called, shall be given by mail not less than ten nor
more than 60 days before the date of the meeting (except when a
different time is required in these Bylaws or by law) to each
stockholder of record entitled to vote at such meeting and to
such nonvoting stockholders as may be required by law. Such
notice shall be deemed to be effective when deposited in the
United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer
books of the Corporation.
Notice of a stockholders' meeting to act on (i) an amendment
of the Articles of Incorporation; (ii) a plan of merger or share
exchange; (iii) the sale, lease, exchange or other disposition of
all or substantially all the property of the Corporation
otherwise than in the usual and regular course of business, or
(iv) the dissolution of the Corporation, shall be given, in the
manner provided above, not less than 25 nor more than 60 days
before the date of the meeting. Any notice given pursuant to
this paragraph shall state that the purpose, or one of the
purposes, of the meeting is to consider such action and shall be
accompanied by (x) a copy of the proposed amendment, (y) a copy
of the proposed plan of merger or share exchange, or (z) a
summary of the agreement pursuant to which the proposed
transaction will be effected. If only a summary of the agreement
is sent to the stockholders, the Corporation shall also send a
copy of the agreement to any stockholder who requests it.
If a meeting is adjourned to a different date, time or
place, notice need not be given if the new date, time or place is
announced at the meeting before adjournment. However, if a new
record date for an adjourned meeting is fixed (which shall be
done if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting), notice of such
date shall be given to those persons entitled to notice who are
stockholders as of the new record date, unless a court provides
otherwise.
Section 1.7 Quorum and Voting Requirements. Each
outstanding share of common stock shall be entitled to one vote
on each matter submitted to a vote at a meeting of stockholders.
Shares of other classes and series shall be entitled to such vote
as may be provided in the Articles of Incorporation.
Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares
exists with respect to that matter. Unless otherwise required by
law, a majority of the votes entitled to be cast on a matter by a
voting group constitutes a quorum of that voting group for action
on that matter. Once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the
remainder of the meeting and for any adjournment of that meeting
unless a new record date is or shall be set for that adjourned
meeting. If a quorum exists, action on a matter, other than the
election of directors, by a voting group is approved if the votes
cast within the voting group favoring the action exceed the votes
cast opposing the action, unless a greater number of affirmative
votes is required by law or by the Articles of Incorporation.
Directors shall be elected by a plurality of the votes cast by
the shares entitled to vote in the election at a meeting at which
a quorum is present unless a different vote in required by the
Articles of Incorporation. Less than a quorum may adjourn a
meeting.
Section 1.8 Proxies. A stockholder may vote his shares in
person or by proxy. A stockholder may appoint a proxy to vote or
otherwise act for him by signing an appointment form, either
personally or by his attorney-in-fact. An appointment of a proxy
is effective when received by the Secretary or other officer or
agent authorized to tabulate votes and is valid for 11 months
unless a longer period is expressly provided in the appointment
form. An appointment of a proxy is revocable by the stockholder
unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest.
The death or incapacity of the stockholder appointing a
proxy does not affect the right of the Corporation to accept the
proxy's authority unless notice of the death or incapacity is
received by the Secretary or other officer or agent authorized to
tabulate votes before the proxy exercises his authority under the
appointment. An irrevocable appointment is revoked when the
interest with which it is coupled is extinguished. A transferee
for value of shares subject to an irrevocable appointment may
revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable
appointment was not noted conspicuously on the certificate
representing the shares. Subject to any legal limitations on the
right of the Corporation to accept the vote or other action of a
proxy and to any express limitation on the proxy's authority
appearing on the face of the appointment form, the Corporation is
entitled to accept the proxy's vote or other action as that of
the stockholder making the appointment. Any fiduciary entitled
to vote any shares may vote such shares by proxy.
Section 1.9 Waiver of Notice; Attendance at Meeting. A
stockholder may waive any notice required by law, the Articles of
Incorporation or these Bylaws before or after the date and time
of the meeting that is the subject of such notice. The waiver
shall be in writing, be signed by the stockholder entitled to the
notice, and be delivered to the Secretary of the Corporation for
inclusion in the minutes or filing with the corporate records.
A stockholder's attendance at a meeting (i) waives objection
to lack of notice or defective notice of the meeting, unless the
stockholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting, and (ii)
waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering
the matter when it is presented.
Section 1.10 Action Without Meeting. Action required or
permitted to be taken at a stockholders' meeting may be taken
without a meeting and without action by the Board of Directors if
the action is taken by all the stockholders entitled to vote on
the action. The action shall be evidenced by one or more written
consents describing the action taken, signed by all the
stockholders entitled to vote on the action, and delivered to the
Secretary of the Corporation for inclusion in the minutes or
filing with the corporate records. Action taken under this
section shall be effective according to its terms when all
consents are in the possession of the Corporation. A stockholder
may withdraw a consent only by delivering a written notice of
withdrawal to the Corporation prior to the time that all consents
are in the possession of the Corporation.
If not otherwise fixed pursuant to the provisions of Section
1.1, the record date for determining stockholders entitled to
take action without a meeting is the date the first stockholder
signs the consent described in the preceding paragraph.
If notice of proposed action is required to be given to
nonvoting stockholders and the action is to be taken by unanimous
consent of the voting stockholders, the Corporation shall give
its nonvoting stockholders written notice of the proposed action
at least ten days before the action is taken. The notice shall
contain or be accompanied by the same material that would have
been required by law to be sent to nonvoting stockholders in a
notice of a meeting at which the proposed action would have been
submitted to the stockholders for action.
Section 1.11 Voting List. The officer or agent having
charge of the stock transfer books of the Corporation shall make,
at least ten days before each meeting of stockholders, a complete
list of the stockholders entitled to vote at such meeting or any
adjournment thereof, with the address of and the number of shares
held by each. The list shall be arranged by voting group and
within each voting group by class or series of shares. Such list
shall be kept on file at the registered office of the
Corporation, or at its principal office or at the office of its
transfer agent or registrar, for a period of ten days prior to
such meeting and shall be subject to the inspection of any
stockholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
during the whole time of the meeting for the purposes thereof.
The original stock transfer books shall be prima facia evidence
as to who are the stockholders entitled to examine such list or
transfer books or to vote at any meeting of the stockholders.
The right of a stockholder to inspect such list at any other time
shall be subject to the limitations established by law.
If the requirements of this section have not been
substantially complied with, the meeting shall, on the demand of
any stockholder in person or by proxy, be adjourned until such
requirements are met. Refusal or failure to prepare or make
available the stockholders' list does not affect the validity of
action taken at the meeting prior to the making of any such
demand, but any action taken by the stockholders after the making
of any such demand shall be invalid and of no effect.
ARTICLE II - DIRECTORS
Section 2.1 General Powers. The Corporation shall have a
Board of Directors. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the
Corporation managed under the direction of, its Board of
Directors, subject to any limitation set forth in the Articles of
Incorporation.
Section 2.2 Number and Term. The number of directors of
the Corporation shall be 9.* This number may be changed from
time to time by amendment to these Bylaws to increase or decrease
by 30 percent or less the number of directors last elected by the
stockholders, but only the stockholders may increase or decrease
the number by more than 30 percent. No decrease in number shall
have the effect of shortening the term of any incumbent director.
Each director shall hold office until his death, resignation or
removal or until his successor is elected.
* This amendment shall not become effective until April 20, 1995.
Section 2.3 Nomination of Candidates. No person shall be
eligible for election as a director unless nominated (i) by the
Board of Directors upon recommendation of the Nominating
Committee or otherwise or (ii) by a stockholder entitled to vote
on the election of directors pursuant to the procedures set forth
in this Section 2.3.
Nominations, other than those made by the Board of
Directors, may be made only by a stockholder who is a stockholder
of record of a class of shares entitled to vote for the election
directors at the time of the giving of the notice hereinafter
described in this Section 2.3 and only if written notice of the
stockholder's intent to nominate one or more persons for election
as directors at a meeting of stockholders has been given, either
by personal delivery or by United States certified mail, postage
prepaid, addressed to the Secretary of the Corporation at the
principal office of the Corporation and received (i) on or after
December 1st of the year immediately preceding the year in which
the meeting will be held and before January 1st of the year in
which the meeting will be held, if the meeting is to be an annual
meeting and clause (ii) is not applicable, or (ii) not less than
60 days before an annual meeting, if the date of the applicable
annual meeting, as prescribed in these Bylaws, has been changed
by more than 30 days, or (iii) not later than the close of
business on the tenth day following the day on which notice of a
special meeting of stockholders called for the purpose of
electing directors is first given to stockholders.
Each such stockholder's notice shall set forth the
following: (i) as to the stockholder giving the notice (a) the
name and address of such stockholder as they appear on the
Corporation's stock transfer books, (b) the class and number of
shares of stock of the Corporation beneficially owned by such
stockholder, (c) a representation that such stockholder is a
stockholder of record and intends to appear in person or by proxy
at such meeting to nominate the person or persons specified in
the notice, and (d) a description of all arrangements or
understandings, if any, between such stockholder and each nominee
and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made;
and (ii) as to each person whom the stockholder wishes to
nominate for election as a director (a) the name, age, business
address and, if known, residence address of such person, (b) the
principal occupation or employment of such person, (c) the class
and number of shares of the Corporation which are beneficially
owned by such person, and (d) all other information that is
required to be disclosed about nominees for election as directors
in solicitations of proxies for the election of directors under
the Securities Exchange Act of 1934, as amended, or otherwise by
the rules and regulations of the Securities and Exchange
Commission. In addition, each such notice shall be accompanied
by the written consent of each proposed nominee to serve as a
director if elected. Each such consent shall also contain a
statement from the proposed nominee to the effect that the
information about him contained in the notice is correct.
Section 2.4 Election. Except as provided in Section 2.5 of
this Article and in the Articles of Incorporation, the directors
shall be elected by the common stockholders and preferred
stockholders entitled to vote with the common stockholders at the
annual meeting of stockholders, and those nominees who receive
the greatest number of votes shall be deemed elected even though
they do not receive a majority of the votes cast. No individual
shall be named or elected as a director without his prior
consent.
Section 2.5 Removal; Vacancies. The stockholders may
remove one or more directors, with or without cause. If a
director is elected by a voting group, only the stockholders of
that voting group may vote to remove him. Unless the Articles of
Incorporation require a greater vote, a director may be removed
if the number of votes cast to remove him constitutes a majority
of the votes entitled to be cast at an election of directors of
the voting group or voting groups by which such director was
elected. A director may be removed by the stockholders only at a
meeting called for the purpose of removing him and the notice of
the meeting must state that the purpose, or one of the purposes
of the meeting, is removal of the director.
A vacancy on the Board of Directors, including a vacancy
resulting from the removal of a director or an increase in the
number of directors, may be filled by (i) the stockholders, (ii)
the Board of Directors or (iii) the affirmative vote of a
majority of the remaining directors though less than a quorum of
the Board of Directors, and may, in the case of a resignation
that will become effective at a specified later date, be filled
before the vacancy occurs but the new director may not take
office until the vacancy occurs.
Section 2.6 Compensation. The Board of Directors may fix
the compensation of directors for their services and may provide
for the payment of all expenses incurred by directors in
attending regular and special meetings of the Board of Directors.
ARTICLE III - DIRECTORS' MEETINGS
Section 3.1 Annual and Regular Meetings. An annual meeting
of the Board of Directors, which shall be considered a regular
meeting, shall be held immediately following each annual meeting
of stockholders, for the purpose of electing officers and
carrying on such other business as may properly come before the
meeting. The Board of Directors may also adopt a schedule of
additional meetings which shall be considered regular meetings.
Regular meetings shall be held at such times and at such places,
within or without the Commonwealth of Virginia, as the Chairman
or, in his absence, the President, shall designate. If no place
is designated, regular meetings shall be held at the principal
office of the Corporation.
Section 3.2 Special Meetings. Special meetings of the
Board of Directors shall be held on the call of the Chairman, the
President or any three members of the Board of Directors at the
principal office of the Corporation or at such other place as the
Chairman, or in his absence, the President, shall designate.
Section 3.3 Telephone Meetings. The Board of Directors may
permit any or all directors to participate in a regular or
special meeting by, or conduct the meeting through the use of,
any means of communication by which all directors participating
may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be
present in person at the meeting.
Section 3.4 Notice of Meetings. No notice need be given of
regular meetings of the Board of Directors.
Notice of special meetings of the Board of Directors shall
be given to each director in person or delivered to his residence
or business address, or such other place as he may have directed
in writing, not less than 24 hours before the meeting by mail,
messenger, telecopy, telegraph, or other means of written
communication or by telephoning such notice to him. Any such
notice shall set forth the time and place of the meeting and
state the purpose for which it is called.
Section 3.5 Quorum; Voting. A majority of the number of
directors fixed in these Bylaws shall constitute a quorum for the
transaction of business at a meeting of the Board of Directors.
If a quorum is present when a vote is taken, the affirmative vote
of a majority of the directors present is the act of the Board of
Directors unless the act of a greater number is required by law,
the Articles of Incorporation or these Bylaws. A director who is
present at a meeting of the Board of Directors when corporate
action is taken is deemed to have assented to the action taken
unless (i) he objects at the beginning of the meeting, or
promptly upon his arrival, to holding it or transacting specified
business at the meeting; or (ii) he votes against, or abstains
from, the action taken.
Section 3.6 Waiver of Notice; Attendance at Meeting. A
director may waive any notice required by law, the Articles of
Incorporation, or these Bylaws before or after the date and time
stated in the notice, and such waiver shall be equivalent to the
giving of such notice. Except as provided in the next paragraph
of this section, the waiver shall be in writing, signed by the
director entitled to the notice and filed with the minutes or
corporate records.
A director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless the
director at the beginning of the meeting or promptly upon his
arrival objects to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to action
taken at the meeting.
Section 3.7 Action Without Meeting. Action required or
permitted to be taken at a Board of Directors' meeting may be
taken without a meeting if the action is taken by all members of
the Board. The action shall be evidenced by one or more written
consents describing the action taken, signed by each director
either before or after the action taken, and included in the
minutes or filed with the corporate records reflecting the action
taken. Action taken under this section shall be effective when
the last director signs the consent unless the consent specifies
a different effective date in which event the action taken is
effective as of the date specified therein, provided the consent
states the date of execution by each director.
ARTICLE IV - COMMITTEE OF DIRECTORS
Section 4.1 Committees. The Board of Directors may create
one or more committees and appoint members of the Board of
Directors to serve on them. Unless otherwise provided herein,
each committee shall have two or more members who serve at the
pleasure of the Board of Directors. The creation of a committee
and appointment of members to it shall be approved by the number
of directors required to take action under Section 3.5 of these
Bylaws.
Section 4.2 Authority of Committees. To the extent
specified by the Board of Directors, each committee may exercise
the authority of the Board of Directors, except that a committee
may not (i) approve or recommend to stockholders action that is
required by law to be approved by stockholders; (ii) fill
vacancies on the Board of Directors or any of its committees;
(iii) amend the Articles of Incorporation without stockholder
approval; (iv) adopt, amend, or repeal these Bylaws; (v) approve
a plan of merger not requiring stockholder approval; (vi)
authorize or approve a distribution, except according to a
general formula or method prescribed by the Board of Directors;
or (vii) authorize or approve the issuance, or sale or contract
for sale of stock, or determine the designation and relative
rights, preferences, and limitations of a class or series of
stock, except that the Board of Directors may authorize a
committee, or a senior executive officer of the Corporation, to
do so within limits specifically prescribed by the Board of
Directors.
Section 4.3 Executive Committee. The Board of Directors
shall appoint an Executive Committee consisting of two or more
directors, which committee shall have all of the authority of the
Board of Directors except to the extent such authority is limited
by the provisions of Section 4.2.
Section 4.4 Audit Committee. The Board of Directors shall
appoint an Audit Committee consisting of not less than three
directors, none of whom shall be officers, which committee shall
regularly review the adequacy of the Corporation's internal
financial controls, review with the Corporation's independent
public accountants the annual audit and other financial
statements, and recommend the selection of the Corporation's
independent public accountants.
Section 4.5 Nominating Committee. The Board of Directors
shall appoint a Nominating Committee consisting of not less than
three directors, a majority of whom shall not be officers or
employees, which committee shall recommend to the Board of
Directors the names of persons to be nominated for election as
directors of the Corporation.
Section 4.6 Compensation Committee. The Board of Directors
shall appoint a compensation committee consisting of not less
than three directors, none of whom shall be officers, which
committee shall recommend to the Board of Directors the
compensation of directors and those officers of the Corporation
who are directors, make awards under the Corporation's
discretionary employee benefit plans, and make recommendations
from time to time to the Board of Directors regarding the
Corporation's compensation program.
Section 4.7 Committee Meetings; Miscellaneous. The
provisions of these Bylaws which govern meetings, action without
meetings, notice and waiver of notice, and quorum and voting
requirements of the Board of Directors shall also apply to
committees of directors and their members.
ARTICLE V - OFFICERS
Section 5.1 Officers. The officers of the Corporation
shall be a Chairman, a Chief Executive Officer, a President, a
Secretary, a Chief Financial Officer, and such additional
officers, including Vice Presidents and other officers, as the
Chief Executive Officer or the Board of Directors may deem
necessary or advisable to conduct the business of the
Corporation. The Chairman and the President shall be members of
the Board of Directors and one of them shall be designated as
Chief Executive Officer. The Board of Directors shall also
designate those officers who are deemed to be "Executive
Officers." Any two offices may be combined except the offices of
President and Secretary.
Section 5.2 Election, Term. Executive Officers shall be
elected at each annual meeting of the Board of Directors and
shall hold office, unless removed, until the next annual meeting
of the Board of Directors or until their successors are elected.
All other officers shall be appointed by the Chief Executive
Officer and shall hold office, unless removed, until their
successors are appointed. Any officer may resign at any time
upon written notice to the authority which appointed him.
Section 5.3 Removal of Officers. Officers elected by the
Board of Directors may be removed, with or without cause, at any
time by the Board of Directors. Appointed officers may be
similarly removed by the person having the authority to appoint
them.
Section 5.4 Duties of the Chief Executive Officer. The
Chief Executive Officer shall have general charge of, and be
charged with, the duty of supervision of the business of the
Corporation. In addition, he shall perform such duties, from
time to time, as may be assigned to him by the Board of
Directors.
Section 5.5 Duties of the Chairman. Unless he declines to
serve, the Chairman shall preside at all meetings of the
stockholders and the Board of Directors and perform such duties,
from time to time, as may be assigned to him by the Board of
Directors.
Section 5.6 Duties of the President. The President shall
have such powers and duties as generally pertain to that position
and, in the absence of the Chairman, unless he declines to serve,
he shall preside at all meetings of the stockholders and the
Board of Directors. He shall further perform such duties as may,
from time to time, be assigned to him by the Chief Executive
Officer or the Board of Directors.
Section 5.7 Duties of the Secretary. The Secretary shall
have the duty to see that a record of the proceedings of each
meeting of the stockholders and the Board of Directors, and any
committee of the Board of Directors, is properly recorded and
that notices of all such meetings are duly given in accordance
with the provisions of these Bylaws or as required by law; he may
affix the corporate seal to any document the execution of which
is duly authorized, and when so affixed may attest the same; and,
in general, he shall perform all duties incident to the office of
secretary of a corporation, and such other duties as, from time
to time, may be assigned to him by the Chief Executive Officer or
the Board of Directors, or as may be required by law.
Section 5.8 Duties of the Chief Financial Officer. The
Chief Financial Officer shall have charge of and be responsible
for all securities, funds, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the
name of the Corporation, all monies or valuable effects in such
banks, trust companies or other depositories as shall, from time
to time, be selected by or under authority granted by the Board
of Directors; he shall be custodian of the financial records of
the Corporation; he shall keep or cause to be kept full and
accurate records of all receipts and disbursements of the
Corporation and shall render to the Chairman, the President and
the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; and shall perform such
duties as may be assigned to him by the Chief Executive Officer
or the Board of Directors.
Section 5.9 Duties of Other Officers. The other officers
of the Corporation shall have such authority and perform such
duties as shall be prescribed by the Board of Directors or by
officers authorized to appoint them to their respective offices.
To the extent that such duties are not so stated, such officers
shall have such authority and perform the duties which generally
pertain to their respective offices, subject to the control of
the Chief Executive Officer or the Board of Directors.
Section 5.10 Voting Securities of Other Corporations. Any
one of the Chairman, the President or the Chief Financial Officer
shall have power to act for and vote on behalf of the Corporation
at all meetings of the stockholders of any corporation in which
this Corporation holds stock, or in connection with any consent
of stockholders in lieu of any such meeting.
Section 5.11 Certain Agents. The Chief Executive Officer
or such other officer as he may authorize may from time to time
engage employees of subsidiaries of the Corporation to be agents
for the Corporation to perform staff or operational functions.
Such persons may act on behalf of the Corporation under such
titles (including designations as divisional officers) as may be
specified from time to time by the Chief Executive Officer, but
no engagement under this section shall constitute such agent an
employee or officer of the Corporation. Such agents shall
perform the duties assigned to them from time to time by the
Chief Executive Officer or by any other officer of the
Corporation authorized to make such assignments. Any such agent
may be removed, with or without cause, at any time by the Chief
Executive Officer. This section shall not limit the authority
any officer or any other employee of the Corporation may
otherwise have respecting the engagement of agents for the
Corporation.
Section 5.12 Bonds. The Board of Directors may require
that any or all officers, employees and agents of the Corporation
give bond to the Corporation, with sufficient sureties,
conditioned upon the faithful performance of the duties of their
respective offices or positions.
ARTICLE VI - CERTIFICATES OF STOCK
Section 6.1 Form. Stock of the Corporation shall, when
fully paid, be evidenced by certificates containing such
information as is required by law and approved by the Board of
Directors. Certificates shall be signed by the President or any
Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and may (but need not) be
sealed with the seal of the Corporation. Any such signature may
be a facsimile, engraved or printed, if the certificate is
countersigned by a transfer agent, or registered by a registrar,
other than the Corporation itself or an employee of the
Corporation. In case any such officer who has signed or whose
facsimile signature has been placed upon any such certificate
shall have ceased to hold office before such certificate is
issued, the certificate shall, nevertheless, be valid.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates.
The Corporation may issue a new stock certificate in the place of
any certificate theretofore issued which is alleged to have been
lost, stolen or destroyed and may require the owner of such
certificate, or his legal representative, to give the Corporation
a bond, sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such
new certificate.
Section 6.3 Transfer. The Board of Directors may make such
rules and regulations concerning the issue, registration and
transfer of certificates representing the stock of the
Corporation as it deems necessary or proper and may appoint
transfer agents and registrars. Unless otherwise provided,
transfers of stock and of the certificates representing such
stock shall be made upon the books of the Corporation by
surrender of the certificates for the stock transferred,
accompanied by written assignments given by the owners or their
attorneys-in-fact.
ARTICLE VII - VIRGINIA CONTROL
SHARE ACQUISITION STATUTE
The provisions of Article 14.1 of the Virginia Stock
Corporation Act (13.1-728.1 et seq.) in effect on the 8th day of
February, 1990, shall not apply to the acquisition of shares of
this Corporation.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
Section 8.1 Corporate Seal. The corporate seal of the
Corporation shall be circular and shall have inscribed thereon,
within and around the circumference, "JAMES RIVER CORPORATION OF
VIRGINIA". In the center shall be the word "SEAL".
Section 8.2 Fiscal Year. The fiscal year of the
Corporation shall be determined in the discretion of the Board of
Directors, but in the absence of any such determination it shall
be a fiscal year of either 52 or 53 weeks ending on the last
Sunday in December.
Section 8.3 Amendments. These Bylaws may be amended or
repealed, and new Bylaws may be made, at any regular or special
meeting of the Board of Directors by a majority of the Board.
Bylaws made by the Board of Directors may be repealed or changed
and new Bylaws may be made by the stockholders, and the
stockholders may prescribe that any Bylaw made by them shall not
be altered, amended or repealed by the Board of Directors.
Exhibit 10(n) 3/06/95
JAMES RIVER CORPORATION OF VIRGINIA
1995 PROFIT SHARING PLAN
FOR SALARIED EMPLOYEES
Effective as of December 26, 1994
JAMES RIVER CORPORATION OF VIRGINIA, a Virginia corporation
(the "Company"), hereby adopts the 1995 Profit Sharing Plan for
Salaried Employees (the "Plan"). This Plan supersedes the
Company's prior Profit Sharing Plan for Salaried Employees, and
is effective for the Company's fiscal year beginning December 26,
1994 and subsequent years. The Plan has been adopted by the
Board of Directors of the Company.
1. Purpose. The Plan is a bonus plan and is intended to
advance the interests of the Company by providing eligible
salaried employees with annual incentives to increase the
productivity of the Company and its Subsidiaries.
2. Definitions. Whenever used in the Plan, the following
terms shall have the meanings set forth below unless the context
clearly requires a different meaning:
(a) Business. Each of the Company's principal U.S.,
Canadian and Mexican businesses, which presently consist of the
Communications Papers Business, the Consumer Products Business
and the Food and Consumer Packaging Business.
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(b) Business Pool. The amount designated to be paid as
profit sharing awards for eligible employees of a Business
pursuant to Section 6.
(c) Committee. The compensation committee appointed
by the Board to administer this Plan pursuant to Section 8.
(d) Company. James River Corporation of Virginia and any
successor by merger or otherwise.
(e) Corporate Staff. The departments of the Company's
central corporate staff.
(f) Corporate Staff Pool. The amount designated to be paid
as profit sharing awards for eligible Corporate Staff employees
pursuant to Section 5.
(g) Disabled. The meaning given this term in the James
River Corporation of Virginia Long Term Disability Plan, as in
effect from time to time.
(h) Divestiture. A sale or other divestiture by the
Company of all or a significant part of the business unit in
which an employee is employed.
(i) Early Retirement Date. The meaning given this
term in the James River Corporation of Virginia Retirement
Plan for Salaried and Other Non-Bargaining Unit Employees,
as in effect from time to time.
(j) Free Cash Flow. Cash flow from operations, less
capital spending, and less preferred and common stock dividends.
(k) Internal Revenue Code. The Internal Revenue Code
of 1986, as amended.
(l) Job Elimination. The elimination of an employee's
position under circumstances in which the employee is
entitled to salary continuation under the terms of the James
River Corporation of Virginia Salary Continuation Plan, as
in effect from time to time.
(m) Maximum Pool. The maximum amount that may be paid as
profit sharing awards under the Plan for a year.
(n) Normal Retirement Date. The meaning given this
term in the James River Corporation of Virginia Retirement
Plan for Salaried and Other Non-Bargaining Unit Employees,
as in effect from time to time.
(o) Performance Graph. The objective formula, as
described on the attached Chart 1 (and as modified from time
to time), that will be used to determine eligible employees'
profit sharing awards for a fiscal year.
(p) Plan. The James River Corporation of Virginia
1995 Profit Sharing Plan for Salaried Employees.
(q) RL. The responsibility level assigned to an
employee pursuant to the attached Chart 2.
(r) Salary. An employee's base salary in effect as of
the last day of the fiscal year (pro rated for employees who
are entitled only to a pro rata distribution), plus, in the
case of a non-exempt employee, any overtime paid to the
employee during the fiscal year. A non-exempt employee is
an employee who is not exempt from the minimum wage and
maximum hour requirements of the Fair Labor Standards Act.
(s) Subsidiary. An entity that is included as a
consolidated subsidiary in the Company's consolidated
financial statements for the year. The term "Subsidiary"
does not include a joint venture or any other entity for any
period in which it is not included as a consolidated
subsidiary in the Company's consolidated financial statements.
3. Eligibility.
(a) Except as provided below, all regular non-bargaining
unit salaried employees of the Company and its U.S., Canadian and
Mexican Subsidiaries are eligible to participate in the Plan.
The Committee may exclude specified groups of employees from
participation in the Plan for a particular fiscal year. At the
beginning of each fiscal year, the Committee will identify in
writing the eligible group of employees for the year and any
employees who are to be excluded.
(b) Employees who transfer to eligible status during a
fiscal year will be eligible to participate in the Plan on a time-
weighted basis from the first day of the month following their
date of eligibility. Employees who transfer to an ineligible
status will be eligible to receive pro rata awards for the
portion of the fiscal year (including the month in which the
transfer occurs) in which the employees were actively at work in
an eligible position.
(c) Except as set forth below, only employees who are
employed by the Company or a U.S., Canadian or Mexican Subsidiary
through the end of the applicable fiscal year shall be eligible
to receive awards for the fiscal year. Employees who are hired
during the fiscal year in an eligible position will participate
in the Plan on a time-weighted basis from the first day of the
month following their date of employment. Employees who die,
become Disabled or retire on or after their Early Retirement Date
or Normal Retirement Date, and employees whose employment is
terminated on account of temporary layoff, Job Elimination or a
Divestiture of the business unit in which the employee is
employed, will be eligible to receive pro rata awards for the
portion of the fiscal year (including the month in which the
event occurs) during which the employees were actively employed
by the Company or a Subsidiary in an eligible position. For
purposes of the Plan, an employee's employment in an eligible
position will be considered to be terminated on account of a
Divestiture if the employee ceases to be employed by the Company
and its Subsidiaries as of the date of, and as a direct result
of, the Divestiture of the business unit in which the employee is
employed.
(d) Employees of Jamont N.V. and other foreign operations
(other than employees of Canadian and Mexican Subsidiaries) will
not be eligible to participate in the Plan.
4. Criteria for Profit Sharing Awards.
(a) At the beginning of each fiscal year, the Committee will
establish a Performance Graph for the year, which will indicate
the percentage of pre-tax, pre-profit sharing, post-preferred
stock dividend profits that will be available for profit sharing
awards, based on return on equity for the year. The attached
Chart 1 will be the Performance Graph for the fiscal year
beginning in December, 1994 and each subsequent year until the
Committee revises Chart 1.
(b) At the end of each fiscal year, the Committee will
determine a Maximum Pool by applying the Company's consolidated
pre-tax, pre-profit sharing, post-preferred stock dividend
profits and return on equity for the year to the Performance
Graph. The Committee will make this determination based on the
Company's audited consolidated financial statements, excluding
extraordinary charges and income. The financial performance of
Jamont N.V. and other foreign operations will be taken into
account for purposes of calculating the Maximum Pool. The
Maximum Pool will be the maximum amount that will be available
for profit sharing awards for the year.
(c) Notwithstanding anything in the Plan to the contrary:
(i) The Committee may reduce the Maximum Pool, the
Corporate Staff Pool or any Business Pool before the end of the
fiscal year if the Committee deems a reduction to be in the best
interests of the Company.
(ii) If the Company, on a consolidated basis, has
no Free Cash Flow for the year, then no profit sharing awards
will be paid for the year.
(iii) If a Business has no Free Cash Flow for
the year, then no profit sharing awards will be paid with respect
to that Business for the year.
(d) Each eligible employee will be assigned to one or more
of the Businesses or to the Corporate Staff, based on the
employee's work responsibilities. An employee who works for more
than one Business or for a Business and the Corporate Staff will
be assigned to each group on a pro rata basis. Employees of the
Company's Fiber Business, including the Fiber Procurement and
Fiber Sales groups, will be assigned to one or more of the
Businesses or to the Corporate Staff, based on the employee's
work responsibilities.
(e) Each eligible employee will be assigned a
responsibility level ("RL") equating to the employee's salary
grade level according to Chart 2.
(f) Awards will be calculated for each eligible employee
based on the employee's Salary multiplied by the applicable bonus
percentage. The bonus percentage will be determined by the
applicable formula described in Section 5 or 6 below.
5. Profit Sharing Pool for Corporate Staff Employees.
(a) At the end of each fiscal year, after the Maximum Pool
is determined pursuant to Section 4, the Committee shall compute
the Corporate Staff Pool by the following formula, which shall be
based on the total eligible Corporate Staff payroll expense for
the year and the total payroll expense for all eligible employees
(including Corporate Staff and Business employees) for the year:
Corporate Corporate Staff
Staff Pool = Payroll Expense / X Maximum Pool
Payroll Expense for
All Eligible Employees
(b) The Committee will then calculate individual awards for
all eligible Corporate Staff employees by applying the following
formula:
Individual = Employee's X Employee's RL / X Corporate Staff Pool
Award Salary Total Eligible
Corporate Staff
Employees' RL-
Adjusted Salaries
The profit sharing award for each eligible Corporate Staff
employee for the year will be the amount computed for the
employee according to the foregoing formula.
6. Profit Sharing Pool for Business Employees.
(a) At the end of each fiscal year, the Committee will
compute a preliminary Business Pool for each Business, based on
Chart 1 and the pre-tax, pre-profit sharing, post-preferred stock
dividend profits and return on equity of each Business for the
year. The pre-tax, pre-profit sharing, post-preferred stock
dividend profits and return on equity of each Business will be
determined by the Committee based on stand-alone Business
financials. Stand-alone Business financials will include the
allocation of the Fiber Business balance sheet and profit and
loss statement, as well as the allocation of those balance sheet
and profit and loss items not directly attributable to a
Business. The allocation of these items will be based on agreed
upon methodologies.
(b) The sum of the Business Pools may not exceed the
Maximum Pool for the year. If the sum of the Business Pools
would otherwise exceed the Maximum Pool, each Business Pool will
be reduced, pro rata, so that the total amount of the Business
Pools is equal to the Maximum Pool. Each adjusted Business Pool
will be further adjusted by a proportional allocation of the
Corporate Staff Pool. Allocation of the Corporate Staff Pool
will be determined according to stand-alone Business
methodologies.
(c) After each Business Pool is determined, individual
awards will be calculated for all eligible employees of that
Business, as follows:
Individual = Employee's X Employee's RL / X Business Pool
Award Salary Total Eligible
Business
Employees' RL-
Adjusted Salaries
The profit sharing award for each eligible Business employee for
the year will be the amount computed according to the foregoing
formula.
7. Payment of Awards.
(a) An employee's profit sharing award for a fiscal year
will be the award computed for the employee pursuant to Section 5
or 6, as applicable. Awards shall be paid in cash as soon as is
practicable following the end of the fiscal year for which they
are computed. All awards under the Plan shall be paid subject to
federal, state and local income and payroll tax withholding.
(b) An employee shall receive no profit sharing award for a
year if the employee's employment with the Company and its
Subsidiaries terminates before the last day of the fiscal year
for any reason other than death, Disability, retirement on or
after the employee's Early Retirement Date or Normal Retirement
Date, temporary layoff, Job Elimination or a Divestiture of the
business unit in which the employee is employed. An employee who
terminates employment for one of the reasons described in the
preceding sentence shall receive a pro rata award to the extent
described in Section 3(c). An employee shall not forfeit an
award if the employee terminates employment after the end of the
applicable fiscal year but before the distribution of the award
for such year.
(c) If an employee dies and is subsequently entitled to
receive an award under the Plan, the award shall be paid to the
personal representative of the employee's estate.
8. Administration.
(a) The Plan shall be administered by a compensation
committee (the "Committee") appointed by the Board of Directors
of the Company to administer the Plan.
(b) The Committee may adopt rules and regulations for
carrying out the Plan, and the Committee may take such actions as
it deems appropriate to ensure that the Plan is administered in
the best interests of the Company. The Committee has the express
discretionary authority to construe and interpret the Plan, to
resolve any ambiguities, and to make determinations with respect
to the eligibility for, amount of and payment of benefits. The
interpretation, construction and administration of the Plan by
the Committee shall be final and conclusive. The Committee may
consult with counsel, who may be counsel to the Company, and
shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel.
9. Rights. Participation in the Plan and the right to
receive compensation under the Plan shall not give an employee
any proprietary interest in the Company, any Subsidiary or any of
their assets. No trust fund shall be created in connection with
the Plan, and there shall be no required funding of amounts that
may become payable under the Plan. An employee shall for all
purposes be a general creditor of the Company. The interests of
an employee cannot be assigned, anticipated, sold, encumbered or
pledged and shall not be subject to the claims of his creditors.
Nothing in the Plan shall confer upon any employee the right to
continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the right of the Company
and its Subsidiaries to discharge an employee at any time for any
reason whatsoever, with or without cause.
10. Claims Procedure.
(a) Each eligible employee shall be entitled to file with
the Committee a written claim for benefits under this Plan. The
Committee will review the claim. If the claim is denied, in
whole or in part, the Committee will furnish the claimant, within
90 days after the Committee's receipt of the claim (or within 180
days after such receipt, if special circumstances require an
extension of time), a written notice of denial of the claim
containing the following:
(i) Specific reasons for the denial,
(ii) Specific reference to the pertinent Plan
provisions on which the denial is based,
(iii) A description of any additional material
or information necessary for the claimant to perfect the claim,
and an explanation of why the material or information is
necessary, and
(iv) An explanation of the claims review
procedure.
(b) The claimant may request a review of the claim denial
by an appeals committee appointed by the Board of Directors of
the Company. The review may be requested in writing at any time
within 90 days after the claimant receives written notice of the
denial of his claim. The committee shall afford the claimant a
full and fair review of the decision denying the claim and, if so
requested, shall:
(i) Permit the claimant to review any documents that are
pertinent to the claim,
(ii) Permit the claimant to submit to the
committee issues and comments in writing, and
(iii) Afford the claimant an opportunity to
meet with a quorum of the committee as part of the review
procedure.
The committee's decision on review shall be made in writing and
shall be issued within 60 days following receipt of the request
for review. The period for decision may be extended to a date
not later than 120 days after such receipt if the committee
determines that special circumstances require an extension. The
decision on review shall include specific reasons for the
decision and specific references to the Plan provisions on which
the decision of the committee is based.
11. Successors. The Plan shall be binding on the employees
and their personal representatives. If the Company becomes a
party to any merger or consolidation, the Plan shall remain in
full force and effect as an obligation of the Company or its
successor in interest.
12. Amendment and Termination. The Board may amend or
terminate the Plan at any time as it deems appropriate; provided
that no amendment or termination of the Plan after the end of a
fiscal year may increase or decrease the total profit sharing
awards for the fiscal year just ended.
13. Interpretation. The Plan shall be interpreted
according to the laws of the Commonwealth of Virginia, except to
the extent that federal law applies.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed this 23rd day of March, 1995.
JAMES RIVER CORPORATION OF VIRGINIA
By: /s/ Robert C. Williams
Appendix (1) Exhibit 10(n)
Narrative description of graphic material pursuant to Rule 304(a)
of Regulation S-T
Chart 1: A graph showing the corporate return on equity on the x-
axis ranging from zero to thirty and the profit sharing pool as a
percent of pretax dollars on the y-axis ranging from zero to ten.
The curve starts at two on the x-axis and intersects at 8.5%
pretax dollars and 10% corporate return on equity and then
flattens out at 9% net pretax profit from 14% to 30% corporate
return on equity.
Chart 2: A chart showing salary grades (SG), ranging from 20 to
39, A to M, and E1 to E6 with the corresponding responsibility
levels (RL) for each grade ranging from .50 to .61, .64 to 4.00,
and 4.40 to 6.35, respectively.
Exhibit 10(o)
James River Corporation
Performance Bonus Plan
Objective: To recognize and reward individuals for their
successful achievement of pre-established goals and objectives.
Effective Date: The initial Plan year is from December 26, 1994
through December 31, 1995 and thereafter for each fiscal year of
the Company, unless terminated by the Board of Directors. The
terms and conditions of the Plan are subject to review and
modification by the Board of Directors, from time to time, to
ensure Plan criteria are consistent with Business strategies and
objectives.
Definition of Terms:
Base Salary: Annual fixed salary as of the last day of the Plan
year, or in the case of employees terminating employment during a
Plan year, the last day of employment.
Company: James River Corporation of Virginia and its majority
owned U.S., Canadian and Mexican subsidiaries.
Plan: Performance Bonus Plan.
Target Award: The award paid to an employee based on his or her
meeting individual performance objectives consistent with the
objectives of the business and Company.
Participants: Employees in position levels G-E6, and certain
positions by exception, are eligible to participate in the Plan.
Exceptions must be approved by the Administrator of the Plan.
Performance Criteria: Pre-established individual performance
objectives.
Performance Award:
Levels Minimum Target Maximum
G - E1 0% 10.0% 20.0%
E2 - E5 0% 20.0% 40.0%
E6 *
* Percentage award to be determined by the James River
Corporation Compensation Committee
E-3
Payment Method and Frequency: Awards shall be (i) determined by
supervisors, whose determination shall be final and binding
except for changes made and approved by the CEO and the
Compensation Committee, (ii) approved by the Senior Vice
President Human Resources, the Chief Executive Officer and the
Compensation Committee and (iii) paid as soon as practicable in
January subsequent to the Plan year.
Administrative Guidelines:
Eligibility
An employee will participate in the Plan beginning on the first
day of the month following the date on which he becomes a
participant through employment or promotion into an eligible
grade (see Participants).
A participant must be actively employed on the last business day
of the year to receive the award; except under the following
circumstances:
death,
disability,
retirement with full pension rights or
layoff for other than cause
Under these circumstances, the participant, or his beneficiaries,
receives a prorated award that is calculated based on the number
of months as a participant (including the month in which the
event occurred), divided by twelve months.
Participants in any business unit sold during the Plan year who
do not remain employees of the Company shall not participate in
the Plan or be entitled to any award under the Plan.
Administration
The SVP - Human Resources is the Administrator of the Plan.
Rights
Participation in the Plan and the opportunity to receive an award
under the Plan, as outlined in the Eligibility section of this
document, does not give an employee any proprietary interest in
the Company, any subsidiary or any of their assets.
No trust fund shall be created in connection with the Plan, and
there shall be no required funding of amounts that become payable
under the Plan. An employee, for all purposes, is a general
creditor of the Company. The interests of a participant cannot
be assigned, anticipated, sold, encumbered or pledged and are not
subject to the claims of his or her creditors.
Approvals:
/s/ Robert C. Williams /s/ Daniel J. Girvan
Robert C. Williams Daniel J. Girvan
Chairman, Chief Executive Officer Senior Vice President
Exhibit 10(q)
1994 AMENDMENT
TO THE
JAMES RIVER CORPORATION OF VIRGINIA
SUPPLEMENTAL BENEFIT PLAN
AMENDMENT, dated as of March 1, 1994 to the James River
Corporation of Virginia Supplemental Benefit Plan, by James River
Corporation of Virginia (the "Company").
The Company maintains the James River Corporation of
Virginia Supplemental Benefit Plan (the "Plan") as amended and
restated effective June 1, 1991. The Company now wishes to amend
the Plan.
NOW, THEREFORE, the Plan is amended as follows:
I. Effective as of January 1, 1994, Section 1.2(b) is
amended to read as follows:
(b) A plan for a select group of management
or highly compensated employees that provides benefits in excess
of the amount of compensation that may be used to determine
benefits under 401(a)(17) of the Code (the "Section 401(a)(17)
Plan"), as set forth in Section IV below, and
II. Effective as of January 1, 1994, Section 2.2 is
amended to read as follows:
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2.2 Section 401(a)(17) Plan. Each salaried
employee of the Company or a subsidiary who receives compensation
from the Company and its subsidiaries in excess of the
compensation limit under Section 401(a)(17) of the Code shall be
a Participant in the Section 401(a)(17) Plan.
III. Effective as of March 1, 1994, Section 2.3 is
amended by revising the last sentence and adding a new paragraph
to the end to read as follows:
Attached as Exhibit A is a list of the Participants in the
Minimum Benefit Plan as of December 31, 1988.
In addition, the senior executive officers of the
Company and its subsidiaries who are members of the
Company's Corporate Business Council ("CBC Members") as of
March 1, 1994 or as of any date thereafter shall be
Participants in the Minimum Benefit Plan and shall be
entitled to receive benefits as described in Sections 5.3
and 5.4.
IV. Effective as of January 1, 1994, Section 2.5 is amended
to read as follows:
2.5 Employee Contributions. If a Participant is
not permitted to make employee contributions to the Retirement
Plan or any Other Plan (as defined in Section 3.1(a)) with
respect to his annual compensation in excess of the compensation
limit under Section 401(a)(17) of the Code, his benefit under
this Plan will be determined as if the Participant had continued
to make contributions to the Retirement Plan or any Other Plan
with respect to his compensation above that limit.
V. Effective as of March 1, 1994, Section V is
amended by adding new Sections 5.3 and 5.4 to the end to read as
follows:
5.3 Retirement Benefit for CBC Members. If
a Participant in the Minimum Benefit Plan who is a CBC Member
begins receiving a retirement benefit from the Retirement Plan,
the Participant shall receive an annual supplemental benefit
under this Plan equal to the amount (if any) determined as
follows:
(a) The annual retirement benefit that would have been paid
from the Retirement Plan, pursuant to the formula in Section
5.1(a)(A) of the Retirement Plan and without regard to the limits
of Sections 415 and 401(a)(17) of the Code, had the Participant's
Service with a Predecessor Company (as defined below) been taken
into account for purposes of computing the Participant's benefit
under the Retirement Plan,
REDUCED BY
(b) The sum of (i) the total annual retirement benefit that
is payable to the Participant under the Retirement Plan, the JRII
Plan and the Other Plans, (ii) the annual supplemental benefit
(if any) that is payable to the Participant under the Section 415
Plan, the Section 401(a)(17) Plan and the other provisions of the
Minimum Benefit Plan, plus (iii) the total annual retirement
benefit that is payable to the Participant from the Company, a
subsidiary, a Predecessor Company, or another employer pursuant
to a defined benefit plan or agreement (collectively "Other
Sources") with respect to the Participant's Service with a
Predecessor Company.
A "Predecessor Company" is a corporation whose stock or
assets were acquired by the Company or a subsidiary by
purchase, merger or a similar transaction, if the
Participant was employed by the Predecessor Company at the
time of the acquisition. A Participant's Service with a
Predecessor Company will be computed in the same manner as
benefit accrual service is computed for purposes of the
Retirement Plan and will be determined as if the Participant
had made contributions to the Retirement Plan with respect
to his period of Service with the Predecessor Company.
5.4 Death Benefit for CBC Members. If a Participant
in the Minimum Benefit Plan who is a CBC Member dies before
benefits have begun to be paid to the Participant under the
Retirement Plan and at a time when a survivor annuity is
payable to his Beneficiary under the Retirement Plan, the
Participant's Beneficiary will be entitled to receive an
annual supplemental survivor benefit under this Plan equal
to the amount (if any) determined as follows:
(a) The annual survivor benefit that would
have been payable to the Beneficiary under the
Retirement Plan, pursuant to the formula in Section
5.1(a)(A) of the Retirement Plan and without regard to
the limits of Sections 415 and 401(a)(17) of the Code,
had the Participant's Service with a Predecessor
Company been taken into account for purposes of
computing the Participant's benefit under the
Retirement Plan,
REDUCED BY
(b) The sum of (i) the total annual benefit
that is payable to the Beneficiary (and any other
beneficiaries) under the Retirement Plan, the JRII Plan
and the Other Plans, (ii) the annual benefit that is
payable to the Beneficiary under the Section 415 Plan,
the Section 401(a)(17) Plan, and the other provisions
of the Minimum Benefit Plan, plus (iii) the total
annual survivor benefit that is payable to the
Beneficiary (and any other beneficiaries) from Other
Sources with respect to the Participant's Service with
a Predecessor Company.
VI. Effective as of March 1, 1994, Section 8.2 is amended
by deleting the last sentence and adding two new sentences to the
end to read as follows:
The Plan Administrator will have the express
discretionary authority to interpret and administer the Plan, to
make all decisions with respect to eligibility for and amount of
benefits, and to make all decisions with respect to the
interpretation and administration of the Plan. The Plan
Administrator is authorized to make such estimates and
assumptions with respect to the computation of benefits as it may
deem appropriate.
VII. In all respects not amended, the Plan is hereby
ratified and confirmed.
* * * * * *
To record the adoption of the Amendment as set forth above,
the Company has caused this document to be signed on this 1st day
of March, 1994.
JAMES RIVER CORPORATION OF VIRGINIA
By: /s/ Daniel J. Girvan
Exhibit 11
JAMES RIVER CORPORATION
of Virginia
COMPUTATION OF EARNINGS PER SHARE (a)
For the Three Years Ended December 25, 1994
(in thousands, except per share data)
Year Ended
December December December
PRIMARY 25, 1994 26, 1993 27, 1992
Net loss $(12,959) $(346) $(427,340)
Less preferred stock dividend
requirements (b) (45,839) (32,822) (26,494)
Net loss, as adjusted for
the primary calculation $(58,798) $(33,168) $(453,834)
Weighted average number of
common shares and common
share equivalents:
Common shares outstanding 81,671 81,609 81,559
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 1,048
Less assumed acquisition of
common shares, using proceeds
from stock options and a
deferred stock award plan,
under the treasury stock method (851)
81,671 81,609 81,756
Primary loss per share $(.72) $(.40) $(5.55)
(a) See Note 1 of Notes to Consolidated Financial Statements in the
1994 Annual Report.
(b) See Note 12 of Notes to Consolidated Financial Statements in the
1994 Annual Report.
E-5
Exhibit 11 (Continued)
JAMES RIVER CORPORATION
of Virginia
COMPUTATION OF EARNINGS PER SHARE (a)
For the Three Years Ended December 25, 1994
(in thousands, except per share data)
Year Ended
December December December
FULLY DILUTED 25, 1994 26, 1993 27, 1992
Net loss $(12,959) $(346) $(427,340)
Less preferred stock dividend
requirements (b) (45,839) (32,822) (26,494)
Net loss, as adjusted for
the fully diluted
calculation $(58,798) $(33,168) $(453,834)
Weighted average number of
common shares and common share
equivalents:
Common shares outstanding 81,671 81,609 81,559
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 1,048
Less assumed acquisition of
common shares, using
proceeds from stock options
and a deferred stock award
plan, under the treasury stock
method (851)
81,671 81,609 81,756
Fully diluted loss per share $(.72) $(.40) $(5.55)
(a) See Note 1 of Notes to Consolidated Financial Statements in the
1994 Annual Report.
(b) See Note 12 of Notes to Consolidated Financial Statements in the
1994 Annual Report.
Exhibit 12
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in 000's)
<TABLE>
<CAPTION>
Fiscal Year Ended
April December December December December December
29, 1990 30, 1990 29, 1991 27, 1992 26, 1993 25, 1994
(52 (35 (52 (52 (52 (52
weeks) weeks) weeks) weeks) weeks) weeks)
(b) (c,d) (e)
<S> <C> <C> <C> <C> <C> <C>
Pretax income (loss) from
continuing operations,
before minority interests $371,501 $44,352 $115,170 $(182,817) $14,115 $(15,693)
Add:
Interest charged to operations 198,743 133,716 191,344 192,962 183,035 210,063
Portion of rental expense
representative of interest
factor (assumed to be one-
third) 23,400 15,100 19,891 19,426 19,094 24,224
Total earnings, as adjusted $593,644 $193,168 $326,405 $29,571 $216,244 $218,594
Fixed charges:
Interest charged to operations $198,743 $133,716 $191,344 $192,962 $183,035 $210,063
Capitalized interest 25,475 10,759 31,740 12,778 5,291 3,080
Portion of rental expense
representative of interest
factor (assumed to be one-
third) 23,400 15,100 19,891 19,426 19,094 24,224
Total fixed charges $247,618 $159,575 $242,975 $225,166 $207,420 $237,367
Ratio 2.40 1.21 1.34 -- 1.04 --
</TABLE>
See accompanying footnote explanations.
E-6
Exhibit 12 (continued)
JAMES RIVER CORPORATION of Virginia
NOTES TO COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(a) In computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes,
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% and distributed income from less
than 50% owned affiliates.
(b) During 1990, the Company changed its fiscal year from
one ending on the last Sunday in April to one ending on
the last Sunday in December. 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 ratio of earnings to fixed charges
for this period.
(c) During 1992, the Company initiated a productivity
enhancement program and recorded a $112 million pretax
charge which has been included in the calculation of
the ratio of earnings to fixed charges for this year.
(d) For the year ended December 27, 1992, earnings were
inadequate to cover fixed charges by $195.6 million.
(e) For the year ended December 25, 1994, earnings were
inadequate to cover fixed charges. The amount of the
deficiency was $18.8 million.
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - 1994 COMPARED WITH 1993
OVERVIEW
James River's 1994 consolidated net sales increased 16.5% to $5,417 million
compared with $4,650 million in 1993. Net sales increased by $631 million, or
13.6%, due to the consolidation of Jamont N.V. ("Jamont"), the company's
European Consumer Products Business, during the third quarter (see below).
Income from operations totaled $147 million in 1994, a 29% improvement over the
$114 million reported in the prior year. The company reported a net loss of $13
million, or $.72 per share after preferred dividends, in 1994, versus a net loss
of $0.3 million, or $.40 per share after preferred dividends, in 1993.
The 1994 results included nonrecurring pretax charges of $24.2 million ($16.2
million net of tax benefits, or $.20 per share) for severance costs, asset
write-offs, and litigation and environmental accruals, partially offset by the
reversal of remaining 1992 restructuring program reserves. Results for 1994
also included nonrecurring pretax income of $9 million ($5.4 million after
taxes, or $.07 per share) for interest income on tax refunds. Results for 1993
included nonrecurring pretax income of $12.1 million ($7.4 million after taxes,
or $. 09 per share) for interest income on tax refunds, net of the write-off of
an investment. Results for 1993 also included $11 million of income tax expense
($.13 per share) resulting from the increase in the federal statutory income tax
rate pursuant to the Omnibus Budget Reconciliation Act of 1993.
Excluding nonrecurring gains and charges in both years, the company lost $2.2
million, or $.59 per share after preferred dividends, in 1994, compared with net
income of $3.3 million, or a loss of $.36 per share after preferred dividends,
in 1993.
[Operating Income -- Consumer Products bar chart which appears in the margin is
omitted here; see description in Appendix A to this Exhibit 13]
ACQUISITION AND CONSOLIDATION OF JAMONT N.V.
On July 5, 1994, James River purchased an additional 43.2% interest in the
European consumer products company, Jamont, bringing the company's total
ownership interest to 86.4%. The purchase price of $575 million was financed
approximately one-half with proceeds from the issuance of the new Series P 9%
Cumulative Convertible Preferred Stock and one-half with debt. This negotiated
purchase price saved the company in excess of $200 million compared to potential
put obligations in 1996 and 1998 of over $800 million. Jamont, which had
previously been treated as an equity investment and which is accounted for on a
one-month lag, has been reflected as a consolidated subsidiary for five months
of 1994. With annual sales of $1.5 billion from 24 manufacturing facilities
located in 11 countries, Jamont is currently the number three tissue producer in
Europe.
E-7
SELECTED INDUSTRY SEGMENT DATA
(in millions) 1994 1993 1992
Net sales:
Consumer Products:
North America $2,423 $2,358 $2,404
Europe 631
Food and Consumer Packaging 1,610 1,569 1,565
Communications Papers 929 901 918
Intersegment elimination (176) (178) (159)
Total net sales $5,417 $4,650 $4,728
Income (loss) from operations:
Consumer Products:
North America $ 143 $ 111 $ 71
Europe 7
Food and Consumer Packaging 97 104 89
Communications Papers (36) (58) (55)
Restructuring, severance and other (9) (117)
General corporate expenses (55) (43) (50)
Income (loss) from operations 147 114 (62)
Interest expense (186) (137) (149)
Other income and minority interests 30 42 24
Income tax (expense) benefit (4) (19) 65
Net loss before extraordinary item
and accounting changes (13) 0 (122)
Extraordinary item, net of tax (31)
Cumulative effect of accounting
changes, net of taxes (274)
Net loss $ (13) $ 0 $ (427)
CONSUMER PRODUCTS BUSINESS - NORTH AMERICA
Net sales for the North American Consumer Products Business increased by 2.7%,
from $2,358 million in 1993 to $2,423 million in 1994. During the same period,
operating profits increased by 29%, from $111.3 million in 1993 to $143.4
million in 1994. Volumes in retail towel and tissue were approximately 2% higher
than the prior year, while retail tabletop posted volume increases of over 10%,
largely attributable to the introduction of new products and designs. Commercial
tissue and foodservice volumes were comparable with prior year levels. The North
American Consumer Products Business has integrated pulping and deinking capacity
sufficient to meet its fiber needs, and therefore was not negatively affected by
the dramatic increases in the cost of market pulp during 1994. However, during
the second half of 1994, results were impacted by sharply higher costs for waste
paper, plastic resins, pulping chemicals and packaging materials. Pricing in
commercial product categories strengthened significantly in the second half of
the year, pushed by increasing costs. During 1994, list prices for retail towel
and tissue products were reduced; however, corresponding reductions were taken
in promotional costs, resulting in net realizations per unit comparable to 1993
levels. Net pricing did not improve in retail product categories until the end
of 1994, when list price increases of between 5% and 7% were announced,
effective for early 1995.
CONSUMER PRODUCTS BUSINESS - EUROPE
Operating results for Jamont declined in 1994 from the prior year due to a
combination of factors. Overcapacity in the European tissue market combined with
pressure from increasingly cost-conscious consumers and major retailers
resulted in declining prices for finished goods during the first half of the
year. This continued a trend begun in 1992. Costs for market pulp increased
significantly during 1994, doubling by the end of the year. Similar to many
other European tissue producers, Jamont is a net buyer of market pulp. Tissue
pricing began to increase in late 1994, keeping pace with continuing market pulp
cost increases. Further price increases have been announced effective for early
1995. Overall, 1994 results reflected the effects of cost reductions plus volume
gains of 8% (3% in finished goods and over 50% in semi-finished goods), which
were more than offset by lower average selling prices and soaring raw materials
costs. Jamont operating profits for the last five months of 1994, totaling $6.9
million, have been included in consolidated income from operations.
FOOD AND CONSUMER PACKAGING BUSINESS
Sales in the company's Food and Consumer Packaging Business increased by 2.6% to
$1,610 million in 1994 from $1,569 million in 1993. For the year, operating
profits declined slightly, from $103.8 million in 1993 to $97.4 million in 1994.
Operating profit improvements of 15% in the first half of 1994 were more than
offset by severe raw material cost escalation experienced in the second half of
the year. Raw materials generally comprise between 50% and 70% of the total cost
of packaging products and include significant amounts of purchased plastic
resins, waste paper, bleached paperboard and pulp. As of end of 1994, the
annualized rate of raw material cost increases totaled approximately $175
million. In the first half of 1994, unit pricing continued to decline, similar
to 1993. Pricing improved in the second half of the year, but significantly
lagged cost increases. Results for 1994 were also negatively impacted by a
strike at the Kalamazoo, Michigan, recycled paperboard mill and by the
implementation of new federal regulations on food labeling. While certain raw
material costs may continue to trend higher, the company expects resin costs to
stabilize in 1995 as new industry resin capacity comes on-line.
[Operating Income -- Food and Consumer Packaging bar chart which appears in
the margin is omitted here; see description in Appendix A to this Exhibit 13]
COMMUNICATIONS PAPERS BUSINESS
Net sales reported in 1994 for the Communications Papers Business increased by
3.1% over the prior year, while annual operating losses were cut from $58.4
million in 1993 to $35.8 million in 1994. In addition, operating profits of $20
million were reported in the fourth quarter of 1994, marking the first
profitable quarter for this business since late 1991. Unit volumes averaged 6%
higher in 1994 versus 1993, with volume gains of 10% experienced in the second
half of the year. Early in 1994, pricing for uncoated free sheet and coated
groundwood papers continued to decline, following the trend of the previous
three years. Beginning in mid-year, however, pricing began to improve
dramatically, pushed by a combination of rising prices for market pulp, an
improved balance between industry capacity and demand, and decreasing
competition from imports. Fourth quarter average pricing improved by close to
$150 per ton in business papers and $80 per ton in lightweight printing papers,
compared to the cyclical trough pricing in the second quarter of the year.
Further pricing increases have been announced in all grades of communications
papers, effective for early 1995, as demand and order backlogs remained strong.
The cost of wood fiber in the Pacific Northwest, where James River is a
significant purchaser, continues to be higher than in other areas of the U.S.
due to environmental restrictions on harvesting of timber. The company expects
the cost of wood fiber may increase in 1995 due to further supply constraints.
[Operating Income -- Communications Papers bar chart which appears in the
margin is omitted here; see description in Appendix A to this Exhibit 13]
OTHER INCOME AND EXPENSE ITEMS
General corporate expenses increased to $55.3 million in 1994 compared to $42.7
million in 1993. Corporate expenses for 1994 included $10.7 million of
nonrecurring litigation and environmental cost accruals. Litigation costs
include legal fees for defense of a bondholder suit (see below).
Income from operations for 1994 included a separately reported net charge of
$9.6 million, consisting of $16.4 million of severance costs, $28.9 million of
asset write-offs, and the reversal of reserves of $35.7 million previously
accrued in connection with the 1992 restructuring program. Severance accruals
relate to the termination of 664 employees, principally in the Communications
Papers and the Food and Consumer Packaging Businesses. The asset write-offs
relate to the phase-out of rotogravure operations in the Packaging Business and
the consolidation of certain operations in Europe. The company expects to incur
additional severance expenses in 1995 associated with these consolidations.
Interest expense of $185.6 million in 1994 was $48 million greater than in
the prior year. Approximately $35 million of this increase resulted from a
combination of the additional debt issued to purchase Jamont and the
consolidation of Jamont's interest expense for five months of 1994. The
remainder of the increase was principally caused by rising interest rates on
variable rate borrowings.
Other income of $28.9 million in 1994 declined $11.3 million from the $40.2
million recorded in 1993. Interest income declined by $15 million, partially
due to a smaller amount of nonrecurring interest received in 1994 on income tax
refunds. This decline was partially offset by improvements in equity earnings of
unconsolidated affiliates, which increased by $5.9 million principally from the
improved performance of Aracruz Celulose S.A. ("Aracruz"). Results for
Aracruz, the world's largest producer of eucalyptus market pulp, are closely
tied to the trend in worldwide market pulp prices.
In 1994, the company reported a pretax loss of $9.8 million and income tax
expense of $4.4 million, resulting in an effective tax rate of (45.2)%. This
differed from the federal statutory rate, primarily because of the relative size
of nondeductible goodwill amortization expense and certain foreign net losses
for which no tax benefits are currently available. Goodwill amortization
expense increased from $4.7 million in 1993 to $12.1 million in 1994 due to the
acquisition of Jamont. For 1993, the company reported pretax income of $16.7
million and income tax expense of $7.9 million, excluding the impact of the
increase in the federal income tax rate. The resulting effective tax rate of
47.6% differed from the federal statutory rate, primarily due to the relative
size of nondeductible goodwill amortization.
Preferred dividend requirements, which are deducted from net earnings in
calculating earnings per share, increased to $45.8 million in 1994 compared to
$32.8 million in 1993. This increase resulted from the June 1994 issuance of the
Series P Preferred Stock. Based on preferred shares outstanding at the end of
1994, annual preferred dividend requirements currently total $58.6 million.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Cash provided by operations declined to $411 million in 1994, from $441 million
in 1993. However, free cash flow (cash provided by operations, less cash used
for investing activities and dividends) remained positive in 1994 at $1.5
million, excluding the investment in Jamont. This compared to $24.9 million of
positive free cash flow in 1993.
INVESTING ACTIVITIES
Net cash used for investing activities during 1994 of $859.2 million included
capital expenditures of $351.7 million, cash paid for Jamont (net of cash
acquired) of $538 million, and proceeds from asset sales and other investing
activities of $30.4 million. During 1993, net cash used for investing
activities was $334 million and included capital expenditures of $331.1 million,
cash paid for Diamond Occidental Forest Inc. ("Diamond") of $192.7 million, and
cash received from asset sales and other investing activities of $189.8 million.
Asset sales in 1993 included proceeds from the sale of over 300,000 acres of
Diamond timberlands and the redemption of preferred stock held as an investment.
Capital expenditures increased by $21 million compared to 1993; however, 1994
spending included $32 million attributable to Jamont subsequent to its
consolidation. Capital spending in 1994 also included approximately $148
million in the North American Consumer Products Business, $99 million in the
Food and Consumer Packaging Business, $61 million in the Communications Papers
Business, and $11 million of corporate and other expenditures. Capital spending
in both 1994 and 1993 was significantly lower than spending in prior years. This
was due to the 1993 completion of a multi-year program to replace or rebuild
chemical recovery units at all major pulping facilities, as well as the 1992
completion of capacity expansions for deinked pulp, recycled paperboard and
tabletop products. The company currently expects 1995 spending to total between
$400 and $450 million. Contractual capital commitments as of December 25, 1994,
were not material.
[Capital Expenditures and Cash Flow from Operations bar chart which appears
in the margin is omitted here; see description in Appendix A to this
Exhibit 13]
FINANCING ACTIVITIES
Total indebtedness increased from $2,040 million as of December 26, 1993, to
$3,114 million as of December 25, 1994, principally from the acquisition and
consolidation of Jamont. As of the initial date of its consolidation, Jamont
had outstanding debt of $771 million. In addition, approximately $300 million
of debt was issued by James River to finance this purchase.
Additions to long-term debt totaled approximately $350 million during 1994
and included the issuance of $135 million of floating rate notes; a net increase
in combined commercial paper, money market and revolver borrowings of $190
million (excluding Jamont balances outstanding on the initial consolidation
date); and the issuance of $25 million of revenue bonds. Short-term borrowings
at Jamont increased by $90 million between the acquisition date and year end.
Approximately $145 million of payments on long-term debt were made during 1994,
including scheduled maturities of $22 million and reductions in Jamont long-term
debt balances of $123 million. Floating rate notes totaling $75 million, which
were originally scheduled to mature in 1994, were extended to 1996.
As of December 25, 1994, James River and its subsidiaries had domestic and
foreign revolving credit facilities that provided for unsecured borrowings of up
to $1,487 million, of which $1,177 million expire in December 1999, and the
remaining $310 million expire between 1995 and 1997. James River also had
domestic and foreign commercial paper programs, supported by the revolving
credit facilities, providing for issuances of up to $776 million. In addition,
James River has agreements with several banks under which it may borrow funds on
an uncommitted basis at below-prime rates. On December 25, 1994, the company
had outstanding borrowings of $860 million that were supported by the revolving
credit facilities, including $280 million outstanding under such facilities,
$182 million of commercial paper, and $398 million of money market notes.
Total outstanding debt of $3,114 million on December 25, 1994, included
approximately $1,583 million of fixed rate debt and $1,531 million of floating
rate debt. In addition, as of the end of 1994, the company had outstanding
interest rate swap agreements that effectively converted $1,286 million of fixed
rate financial obligations to variable rate obligations. The effect of the swaps
was an increase in interest expense of approximately $4 million during 1994.
These contracts expire between September 1998 and January 1999. Additional
information on the interest rate swaps is provided in Note 10 of Notes to
Consolidated Financial Statements. As of the end of 1994, James River's
weighted-average interest rate was 7.74% (including the impact of interest rate
swaps), compared to 7.37% as of the end of 1993.
[Total Capitalization bar chart which appears in the margin is omitted here;
see description in Appendix A to this Exhibit 13]
The company's ratio of total debt to total capitalization increased to 57.4%
as of the end of 1994 from 50.8% as of the end of 1993, principally due to the
financing and consolidation of Jamont. The company defines total capitalization
as the sum of current and long-term debt, preferred and common equity, and
minority interests.
The company's most restrictive covenants contain limitations on borrowings
and require the maintenance of a minimum amount of net worth. As of December
25, 1994, under the most restrictive provisions of the company's debt
agreements, the company had additional borrowing capacity in excess of $525
million and net worth in excess of the minimum requirement of approximately $425
million.
The company's debt ratings are investment grade. In June 1994, following the
company's announcement of its intent to acquire a controlling interest in
Jamont, Standard & Poor's down-graded the company's senior debt rating to BBB-
from BBB, its preferred stock rating to BB+ from BBB-, and its commercial paper
rating to A-3 from A-2, with a stable outlook. At the same time, Moody's
Investors Services Inc. downgraded the company's senior debt rating to Baa3
from Baa1, its preferred stock rating to ba2 from baa2, and its commercial paper
rating to Prime-3 from Prime-2, with a stable outlook.
As of December 25, 1994, the company had registered for sale up to $600
million of debt securities under a shelf registration with the Securities and
Exchange Commission.
As of the end of 1994, the company had outstanding foreign currency contracts
totaling $470 million that were designated as a hedge of a portion of the
investment in Jamont. These contracts are principally denominated in French
francs, British pounds, Belgian francs and Spanish pesetas and expire on
September 1, 1998. The company currently intends to reduce these contracts to
$330 million, denominated only in French francs. In addition, Jamont had $127
million of hedges on foreign currency transactions as of the end of 1994.
[Annual Rate of Cash Dividends Per Common Share bar chart which appears in the
margin is omitted here; see description in Appendix A to this Exhibit 13]
STRATEGIC INITIATIVES UNDER CONSIDERATION
In September 1994, James River announced that it was exploring strategic options
to sharpen the company's business focus, reduce debt, reduce cyclicality and
improve profitability. Options under consideration include an exit from the
Communications Papers Business through either sale, joint venture or spin-off to
shareholders, and the creation of a separate equity position for the Food and
Consumer Packaging Business.
CONTRACTUAL LABOR AGREEMENTS
James River currently employs approximately 33,800 people,including 24,400
hourly employees and 9,400 salaried employees. The majority of hourly employees
are members of unions. During 1994, contracts covering over 10,000 employees at
27 domestic operating locations (including six major pulp and papermaking sites)
were renegotiated, representing approximately one-half of the company's domestic
hourly workforce. Contracts covering approximately 5,000 domestic employees are
scheduled for renegotiation in 1995, including contracts at two major pulp and
paper-making sites. While James River generally considers its employee
relationships to be good, strikes occurred during 1994 at the company's
Kalamazoo, Michigan, paperboard packaging mill, its Lexington, Kentucky,
tabletop plant, and at a group providing warehousing and distribution services
to the North American Consumer Products and the Communications Papers
Businesses. All labor outages were resolved prior to the end of the year. On a
combined basis, the company estimates these strikes reduced operating profits by
approximately $12 million.
PUT AND CALL AGREEMENTS
James River is a party to a put and call agreement with EuroPaper Inc.
("EuroPaper"), which owns the remaining 13.6% interest in Jamont. EuroPaper may
put its interest in Jamont to James River in May 1996, and James River may call
these shares in August 1996, each at a fixed price of 1.04 billion French francs
(equivalent to $191.3 million as of December 25, 1994). In addition, Jamont has
a separate call agreement with EuroPaper under which it may call EuroPaper's
interest through April 1996 at a formula price. Management believes that while
operating conditions were depressed in the European tissue industry in 1993 and
1994, pricing and economic recovery are currently underway, and that, by the put
exercise date, the proportionate value of Jamont will not be significantly less
than the put price.
In November 1994, James River exercised its call option on its partner's 50%
interest in the Naheola Cogereration Limited Partnership. The company's partner
has refused to recognize the validity of the call and the parties are currently
in litigation over this matter. After resolution of the litigation and the
closing of this purchase, the company plans to remarket the interest, taking
advantage of favorable market conditions while maintaining a partnership
structure.
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, 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, to
comply with increasingly stringent standards for air, water, and solid and
hazardous waste regulations. During 1994, capital expenditures totaling
approximately $34 million were made by James River for pollution control
facilities and equipment.
In December 1993, the U.S. Environmental Protection Agency ("EPA") published
draft rules, informally referred to as the "cluster rules," implementing
portions of the Clean Air Act of 1990 and the Clean Water Act applicable to pulp
and paper facilities. These regulations 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. The company is evaluating the
potential impact of the proposed regulations and possible changes to its capital
expenditures. Based on its evaluation, the company expects that such capital
expenditures could be at least $300 million for James River, if the regulations
are approved as originally proposed. This estimate could change, depending on
several factors, including changes to the proposed regulations, new developments
in control and process technology, and inflation. The final rules are scheduled
to be issued in late 1995; however, their issuance may be delayed into 1996.
Compliance with the final rules will be required three years following their
issuance.
[Total Assets bar chart which appears in the margin is omitted here; see
description in Appendix A to this Exhibit 13]
As of December 25, 1994, James River had been identified as a potentially
responsible party ("PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act or similar federal and state laws regarding the
past disposal of wastes at approximately 45 sites in the United States. 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. At the Solvent Recovery Services of New England site in Connecticut,
James River has been notified that it appears to be one of the largest
"potentially responsible parties." Note 14 of Notes to Consolidated Financial
Statements, which should be read in conjunction herewith, provides information
on the company's accrued environmental liabilities. While the company cannot
predict with certainty its ultimate costs for such sites, based on its
investigations and cleanup experience and the number of other solvent PRP's,
James River does not currently believe its share of the costs will have a
material adverse effect on its financial condition. Such costs could, however,
have a material effect on the consolidated results of operations in a given
year. There can be no assurance that the company will not be named as a PRP at
additional sites in the future or that the cost associated with such additional
sites would not be material.
CONTINGENT LIABILITIES
During 1994, James River was sued in a class action brought by certain former
holders of James River's 10-3/4% debentures due October 1, 2018. Most of these
debentures were retired by means of a tender offer to all holders commenced on
September 18, 1992. The remainder were redeemed on November 2, 1992. In
general, the complaint alleges violations of a covenant prohibiting the use of
lower cost borrowed funds to redeem the debentures before October 1, 1998, and
violations of various disclosure obligations, and seeks damages in excess of $50
million plus punitive damages in excess of $500 million. James River believes
that these claims are without merit and intends to defend them vigorously.
In December 1994, James River, along with other producers, received a request
for information from the U.S. Department of Justice concerning the company's
sales and pricing of sanitary paper products to the industrial and commercial
markets. The company intends to fully cooperate with this request. It is
unknown what the potential outcome, if any, of this request will be.
EFFECTS OF CHANGING PRICES
Prior to 1994, the company had experienced only moderate levels of inflation for
several years. Although the replacement cost of assets increases during
inflationary periods, cash flow and earnings can generally be maintained through
the ability to increase selling prices, when market conditions permit, and also
through the repayment of debt with dollars that have reduced purchasing power.
During 1994, the company experienced significant increases in the cost of many
of its base raw materials, such as plastic resins, waste paper, and purchased
pulp and paperboard, which were not fully recovered in increased selling prices.
The company believes this to be a temporary condition and that such cost
increases will ultimately be reflected in selling prices.
RESULTS OF OPERATIONS - 1993 COMPARED WITH 1992
OVERVIEW
James River's consolidated net sales of $4,650 million in 1993 were 1.6% lower
than 1992 net sales of $4,728 million. Operating earnings of $114 million in
1993 improved over the loss from operations of $62.4 million (including a
$111.7 million restructuring charge) reported in 1992. The company reported a
net loss of $0.3 million in 1993, or $.40 per share after preferred dividends,
compared to a net loss of $427.3 million in 1992, or $5.55 per share after
preferred dividends.
The 1992 reported loss included charges for nonrecurring or unusual items
consisting of (i) an after-tax net charge of $273.8 million, or $3.35 per share,
for the combined effects of changes in accounting for income taxes and
postretirement benefits other than pensions; (ii) an after-tax charge of $31.4
million, or $.38 per share, on the early extinguishment of debt; and (iii) a
restructuring charge of $111.7 million ($71.4 million net of tax benefits, or
$.87 per share) associated with the 1992 restructuring program. In addition,
the company recorded one-time environmental and other costs of $31.0 million
($19.7 million net of tax benefits, or $.25 per share) during 1992.
Excluding nonrecurring and unusual items, the company had net income of $3.3
million, or a loss of $.36 per share, in 1993 compared to a net loss of $31.0
million, or $.70 per share, in 1992.
The goal of the 1992 restructuring program was to reduce annual operating
expenses by $200 million, principally through the disposal and consolidation of
under-performing assets and other cost reduction and productivity initiatives.
During 1993, the company sold, closed or reduced operations at several
locations, as further described in Note 2 of Notes to Consolidated Financial
Statements, and achieved staffing reductions of 2,240. The affected facilities
generally represented smaller, higher cost, less efficient operations and
included plants from each of the company's three business segments. The majority
of the business previously conducted at these facilities was transferred to
other less than fully utilized James River manufacturing sites. While the
company realized significant cost reductions in 1993 from these restructuring
efforts, weaknesses in pricing and continued competitive conditions in many
product lines partially offset the benefits.
CONSUMER PRODUCTS BUSINESS
In 1993, net sales for the Consumer Products Business declined approximately 2%
compared to the prior year, while operating profits increased over 56%, from $71
million in 1992 to $111.3 million in 1993. Volumes in the retail business
increased approximately 2% over the prior year, while retail tissue posted
modest improvements in net realizations. The company's successful rollout of new
QUILTED NORTHERN bathroom tissue and a new promotional campaign for BRAWNY paper
towels increased market shares during the year. In commercial tissue, while
volume slightly trailed the prior year, net pricing increased by approximately
5%. Volumes in the DIXIE commercial business were level compared to the prior
year; however, pricing continued to decline, primarily due to downward pressures
from falling bleached paperboard prices. The Consumer Products Business made
significant progress in reducing costs, and staffing was reduced by
approximately 700 employees during the year.
FOOD AND CONSUMER PACKAGING BUSINESS
Sales in the Food and Consumer Packaging Business remained level at
approximately $1,565 million in both 1992 and 1993. Unit volume increases of
approximately 6% during 1993 were substantially offset by continuing declines in
pricing. Pricing remained under pressure throughout 1993, as food packaging
customers continued to reduce their base of packaging suppliers and to form
long-term strategic supplier relationships, while demanding margin concessions.
Operating profits of $104 million in 1993 increased 16% compared to $89 million
in 1992, and operating margins improved. Increased operating profits were
attributable to both reduced costs and to the absence of the one-time events
that negatively affected the second half of 1992. These events included a strike
at certain Midwest converting plants, extended downtime taken in Kalamazoo,
Michigan, to complete the capacity-doubling rebuild of the K-1 recycled
paperboard machine, and an unusually high level of customer inventory balancing
which occurred at the end of 1992. Total staffing in the Food and Consumer
Packaging Business was reduced by over 450 employees during 1993 in connection
with the restructuring program. In addition, several plants were closed or
downsized, with production transferred to other facilities. Average resin costs
for 1993 were slightly lower than the prior year.
COMMUNICATIONS PAPERS BUSINESS
Sales in the Communications Papers Business decreased from $918 million in 1992
to $901 million in 1993, while operating losses increased slightly from $55
million to $58 million. The Communications Papers Business continued to
experience extremely difficult market conditions, which caused a steady decline
in profitability since 1990. This business was hurt by significant levels of
industry overcapacity and reduced worldwide demand, resulting in an extremely
competitive pricing environment. During the first half of 1993, pricing
increases were put in place in both uncoated free sheet and coated groundwood
papers. However, new industry capacity, increasing competition from imports,
and a lack of significant improvement in worldwide demand resulted in an
inability to sustain the increases. As of the end of 1993, pricing levels for
many of the company's grades had deteriorated to beginning-of-year levels. The
company's cost reduction efforts somewhat softened the impact of weakening
prices, with staffing reduced by more than 950 employees during 1993. This
business also focused on upgrading its product mix and targeting niche markets.
Fiber supply costs in the Pacific Northwest continued to be significantly higher
than in other portions of the U.S., due to reductions in the amount of federal
forest land available for harvest resulting from environmental pressures.
OTHER INCOME AND EXPENSE ITEMS
Gross interest costs declined by $19 million, from $161.9 million in 1992 to
$142.9 million in 1993. Net interest expense decreased by only $11.5 million,
however, reflecting reduced levels of capitalized interest in 1993. The
decreased gross interest costs were principally the result of the company's
refinancing of $567 million of debt at lower interest rates.
Other income increased significantly, from $24.7 million in 1992 to $42.1
million in 1993, principally due to $14.3 million of interest income received in
1993 on income tax refunds. Equity in earnings of affiliates decreased from
$10.2 million in 1992 to $7.8 million in 1993. Earnings of Jamont were
significantly below the prior year's, reflecting the effects of substantially
weaker tissue pricing resulting from recessionary economic conditions and excess
tissue capacity across Europe. Earnings of Aracruz were also below those of the
prior year, reflecting the declines in worldwide market pulp prices.
The effective tax rate was 47.6% in 1993, excluding the cumulative impact of
the increase in the federal tax rate, compared to 34.4% in 1992. The effective
tax rate increased in 1993, principally due to the increased relative size of
nondeductible items.
CONSOLIDATED STATEMENTS OF OPERATIONS
JAMES RIVER CORPORATION OF VIRGINIA AND SUBSIDIARIES
<TABLE>
<CAPTION>
52 WEEKS 52 Weeks 52 Weeks
ENDED Ended Ended
DECEMBER 25, December 26, December 27,
(in thousands, except per share amounts) 1994 1993 1992
<S> <C> <C> <C>
Net sales $5,417,275 $4,650,195 $4,728,179
Cost of goods sold 4,451,977 3,858,586 3,976,714
Selling and administrative expenses 808,718 677,586 702,145
Restructuring, severance and other items 9,607 111,720
Income (loss) from operations 146,973 114,023 (62,400)
Interest expense 185,624 137,594 149,087
Other income, net 28,900 40,235 23,387
Income (loss) before income taxes, minority
interests, extraordinary item and the
cumulative effect of accounting changes (9,751) 16,664 (188,100)
Income tax expense (benefit):
Tax on current income or loss 4,407 7,927 (64,721)
Effect of tax rate change 10,981
Total income tax expense (benefit) 4,407 18,908 (64,721)
Loss before minority interests, extraordinary
item and the cumulative effect of accounting changes (14,158) (2,244) (123,379)
Minority interests 1,199 1,898 1,304
Net loss before extraordinary item and
the cumulative effect of accounting changes (12,959) (346) (122,075)
Extraordinary loss on early extinguishment of debt,
net of income tax benefit of $19,227 (31,423)
Cumulative effect of changes in accounting principles:
Change in accounting for income taxes 35,923
Change in accounting for postretirement benefits
other than pensions, net of income tax
benefit of $189,534 (309,765)
Net loss $ (12,959) $ (346) $ (427,340)
Preferred dividend requirements (45,839) (32,822) (26,494)
Net loss applicable to common shares $ (58,798) $ (33,168) $ (453,834)
Net income (loss) per common share:
Before extraordinary item and the cumulative effect
of accounting changes $(.72) $(.40) $(1.82)
Extraordinary loss on early extinguishment of debt (.38)
Cumulative effect of change in accounting
for income taxes .44
Cumulative effect of change in accounting for
postretirement benefits other than pensions (3.79)
Net loss per share $(.72) $(.40) $(5.55)
Weighted-average number of common shares 81,671 81,609 81,756
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED BALANCE SHEETS
JAMES RIVER CORPORATION OF VIRGINIA AND SUBSIDIARIES
<TABLE>
<CAPTION>
(in thousands) DECEMBER 25, 1994 December 26, 1993
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 59,296 $ 23,620
Accounts receivable 913,501 422,894
Inventories 844,111 666,464
Prepaid expenses and other current assets 63,496 22,939
Deferred income taxes 95,126 83,538
Net assets held for sale 62,868
Total current assets 1,975,530 1,282,323
Net property, plant and equipment 4,679,899 3,571,492
Investments in affiliates 125,097 519,448
Other assets 367,770 324,724
Goodwill 776,032 153,315
Total assets $7,924,328 $5,851,302
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 597,141 $ 252,144
Accrued liabilities 513,599 364,048
Income taxes payable 11,647 4,463
Short-term borrowings 225,132
Current portion of long-term debt 221,367 97,287
Accrued restructuring liability 63,134
Total current liabilities 1,568,886 781,076
Long-term debt 2,667,960 1,942,836
Accrued postretirement benefits other than pensions 545,009 541,823
Other long-term liabilities 231,129 179,956
Deferred income taxes 594,793 430,421
Minority interests 154,930 7,009
Total liabilities 5,762,707 3,883,121
Shareholders' equity:
Preferred stock 740,303 454,108
Common stock, $.10 par value; shares outstanding,
1994-81,695 and 1993-81,628 8,170 8,163
Additional paid-in capital 1,211,904 1,219,043
Retained earnings 201,244 286,867
Total shareholders' equity 2,161,621 1,968,181
Total liabilities and shareholders' equity $7,924,328 $5,851,302
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
JAMES RIVER CORPORATION OF VIRGINIA AND SUBSIDIARIES
<TABLE>
<CAPTION>
52 WEEKS 52 Weeks 52 Weeks
ENDED Ended Ended
DECEMBER 25, December 26, December 27,
(in thousands) 1994 1993 1992
<S> <C> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $ (12,959) $ (346) $(427,340)
Items not affecting cash:
Extraordinary loss on early extinguishment of debt,
net of income tax benefit 31,423
Cumulative effect of change in accounting principles,
net of income tax benefit 273,842
Depreciation expense and cost of timber harvested 398,422 358,431 356,448
Deferred income tax provision (benefit) (4,598) 11,856 (75,726)
Restructuring, severance and other items 9,607 111,720
Undistributed earnings of unconsolidated affiliates (13,698) (6,582) (9,872)
Retirement benefit funding (in excess of) less than
expense 14,165 34,688 (6,811)
Amortization of goodwill and other intangibles 15,639 7,422 8,078
Other noncash items 8,034 8,086 15,235
Change in current assets and liabilities, net of
effects of acquisitions and dispositions:
Accounts receivable (25,452) (4,132) (8,439)
Inventories 46,250 13,796 9,995
Other current assets (17,583) 14,944 20,428
Accounts payable and accurued liabilities 920 25,513 34,610
Other current liabilities (20,212) (25,887) (13,231)
Other, net 12,606 2,787 (7,396)
Cash provided by operating activities 411,141 440,576 312,964
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (351,656) (331,065) (469,681)
Cash paid for acquisitions, net (538,009) (192,736) (31,734)
Cash received from sale of assets 34,573 130,650 21,844
Cash received from redemption of SCI preferred stock 47,050
Other, net (4,157) 12,116 4,723
Cash used for investing activities (859,249) (333,985) (474,848)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Increase in short-term borrowings 89,982
Additions to long-term debt 349,490 456,220 948,830
Payments of long-term debt (145,191) (808,848) (493,101)
Preferred stock issued, net of issuance costs 278,754 96,566
Common and preferred stock cash dividends paid (88,371) (81,713) (73,517)
Other, net (880) (24,122) (26,486)
Cash provided by (used for) financing activities 483,784 (458,463) 452,292
Increase (decrease) in cash and cash equivalents 35,676 (351,872) 290,408
Cash and cash equivalents, beginning of year 23,620 375,492 85,084
Cash and cash equivalents, end of year $ 59,296 $ 23,620 $ 375,492
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL ACCOUNTS
JAMES RIVER CORPORATION OF VIRGINIA AND SUBSIDIARIES
<TABLE>
<CAPTION>
52 WEEKS 52 Weeks 52 Weeks
ENDED Ended Ended
DECEMBER 25, December 26, December 27,
(in thousands) 1994 1993 1992
<S> <C> <C> <C>
PREFERRED STOCK
Balance, beginning of year $ 454,108 $ 454,348 $ 354,588
Issuance of Series O preferred stock 100,000
Issuance of Series P preferred stock 287,500
Redemption of Series D preferred stock (1,240)
Conversion of Series K preferred stock (5)
Preferred stock sinking fund requirements (60) (240) (240)
Balance, end of year $ 740,303 $ 454,108 $ 454,348
COMMON SHAREHOLDERS' EQUITY
Common stock:
Balance, beginning of year $ 8,163 $ 8,158 $ 8,150
Exercise of stock options and awards 7 5 8
Balance, end of year 8,170 8,163 8,158
Additional paid-in capital:
Balance, beginning of year 1,219,043 1,217,859 1,219,997
Exercise of stock options and awards 1,602 1,229 1,296
Conversion of Series K preferred stock 5
Preferred stock issuance costs (8,746) (45) (3,434)
Balance, end of year 1,211,904 1,219,043 1,217,859
Retained earnings:
Balance, beginning of year 286,867 433,297 992,651
Net loss (12,959) (346) (427,340)
Common stock cash dividends declared (48,993) (48,963) (48,942)
Preferred stock cash dividends declared (45,820) (32,818) (26,583)
Change in equity component of minimum
pension liability 14,946 (6,768) (21,011)
Foreign currency translation 7,203 (57,535) (35,478)
Balance, end of year 201,244 286,867 433,297
Common shareholders' equity,
end of year $1,421,318 $1,514,073 $1,659,314
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements present the operating results and
financial position of James River Corporation of Virginia and its majority owned
subsidiaries ("James River" or the "Company"). Significant intercompany balances
and transactions have been eliminated. Investments in unconsolidated affiliates
which are at least 20% owned are accounted for using the equity method and are
stated at cost plus the Company's share of undistributed earnings and foreign
currency translation adjustments, as applicable, since acquisition.
FISCAL YEAR
James River's fiscal year includes the 52 or 53 weeks ending on the last Sunday
in December. The years ended December 25, 1994, December 26, 1993, and December
27, 1992, each included 52 weeks. To facilitate timely reporting of the
Company's financial statements, certain foreign subsidiaries and affiliates have
been included on the basis of closing dates which lag the Company's fiscal year
end by one month.
CASH AND CASH EQUIVALENTS
The Company invests excess cash in marketable securities, including commercial
paper, government repurchase agreements, and time deposits, with original
maturities of three months or less. The carrying value of cash and cash
equivalents approximates fair value because of the short maturity of these
investments.
INVENTORIES
Inventories are stated at the lower of cost or market and include the cost of
materials, labor and manufacturing overhead. The last-in, first-out cost flow
assumption is used for valuing substantially all domestic inventories other than
stores and supplies. Other inventories, including all inventories held by
foreign subsidiaries, are valued using first-in, first-out or average cost
assumptions.
NET ASSETS HELD FOR SALE
Net assets held for sale represent total assets less liabilities of operations
to be divested or phased out by the Company as part of its 1992 restructuring
program.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, less accumulated depreciation.
Expenditures for improvements which increase asset values or extend useful lives
are capitalized. Maintenance and repair costs are expensed as incurred. For
financial reporting purposes, depreciation is computed using the straight-line
method over the estimated useful lives of the respective assets, which range
from 20 to 45 years for buildings and 5 to 20 years for machinery and equipment.
For income tax purposes, depreciation is calculated using accelerated methods.
Certain assets are depreciated using composite depreciation methods;
accordingly, no gain or loss is recognized on partial sales or retirements of
these assets.
TIMBER AND TIMBERLANDS
Timber and timberlands are stated at cost less accumulated cost of timber
harvested. Cost of timber harvested is recorded as timber is cut at rates which
are determined annually based on the relationship of unamortized timber cost to
the estimated volume of recoverable timber.
INTANGIBLE ASSETS
The excess of the purchase price over the fair value of identifiable net assets
of acquired companies is allocated to goodwill and amortized over 40 years.
Goodwill is presented net of accumulated amortization of $77.5 million as of
December 25, 1994, and $38.6 million as of December 26, 1993. Differences
between the Company's carrying value of investments in unconsolidated affiliates
and its share of the underlying net assets of such affiliates are amortized over
periods of up to 40 years. The recoverability of goodwill is periodically
evaluated to determine whether current events or circumstances warrant
adjustments to the carrying value. Such evaluation is based upon whether the
goodwill is fully recoverable from the projected undiscounted cash flows of the
assets and businesses to which the goodwill relates. On December 25, 1994, and
December 26, 1993, the Company believes that no significant impairment of
goodwill is indicated.
INTEREST COSTS
The Company capitalizes interest costs as part of the cost of constructing
certain facilities and equipment.
(in thousands) 1994 1993 1992
Total interest costs $188,704 $142,885 $161,865
Interest capitalized (3,080) (5,291) (12,778)
Net interest expense $185,624 $137,594 $149,087
Interest paid $168,314 $151,563 $171,089
RESEARCH AND DEVELOPMENT
Research and development expenditures are expensed as incurred. Direct and
readily identifiable indirect research and development costs totaled $47.0
million in 1994, $41.8 million in 1993 and $43.8 million in 1992.
FOREIGN CURRENCY TRANSLATION
The accounts of most foreign subsidiaries and affiliates are measured using
local currency as the functional currency. For those entities, assets and
liabilities are translated into U.S. dollars at period-end exchange rates, and
income and expense accounts are translated at average monthly exchange rates.
Net exchange gains or losses resulting from such translation are excluded from
net earnings and accumulated as a separate component of retained earnings. Gains
and losses from foreign currency transactions are included in other income. The
U.S. dollar is used as the functional currency for subsidiaries and affiliates
operating in highly inflationary economies, for which both translation
adjustments and gains and losses on foreign currency transactions are included
in other income.
The change in retained earnings resulting from the translation of assets and
liabilities of foreign subsidiaries and affiliates, net of the effect of
exchange rate hedges, was as follows:
(in thousands) 1994 1993
Balance, beginning of year $(38,545) $ 18,990
Translation adjustments (6,460) (59,003)
Related income tax effect 13,663 1,468
Balance, end of year $(31,342) $(38,545)
DERIVATIVE FINANCIAL INSTRUMENTS
The Company's debt structure and international operations give rise to exposure
to market risks from changes in interest rates and foreign exchange rates. To
manage these risks, derivative financial instruments are utilized by the Company
including interest rate swaps and options on its long-term debt and foreign
exchange contracts on certain of its net investments in foreign operations. The
Company does not hold or issue financial instruments for trading purposes.
Translation gains and losses on hedges of net foreign investments are deferred
and accumulated in the foreign currency translation component of retained
earnings. Gains and losses on transactional hedges are recognized in income and
offset the foreign exchange gains and losses on the related transaction. The
gains and losses on interest rate swap and option agreements are recognized in
interest expense as incurred.
NET INCOME (LOSS) PER COMMON SHARE AND COMMON SHARE EQUIVALENT
Net income (loss) per common share is computed based on the weighted-average
number of common shares and dilutive common share equivalents outstanding during
the period. Net income (loss) used in these computations is reduced by preferred
dividend requirements. Fully diluted earnings per share are considered to be
equal to primary earnings per share in all periods presented because the assumed
conversion of potentially dilutive securities which are not common share
equivalents was not dilutive.
RECLASSIFICATIONS
Certain amounts in the prior years' financial statements and supporting
footnote disclosures have been reclassified to conform to the current
year's presentation.
NOTE 2. ACQUISITIONS, DISPOSITIONS AND OTHER TRANSACTIONS
1994
Prior to July 5, 1994, James River and Rayne Holdings Inc. ("Rayne") each
owned 50% of Jamont Holdings N.V. ("Jamont Holdings") which, in turn, owned
86.4% of Jamont N.V. ("Jamont"). With annual sales of $1.5 billion, Jamont
produces branded and private label tissue, feminine hygiene and foodservice
products for the retail and away-from-home markets in Europe. On July 5, 1994,
James River completed the acquisition of Rayne's 50% ownership interest in
Jamont Holdings for approximately $575 million in cash. Jamont, which is
currently accounted for on a one-month lag, was included as a consolidated
subsidiary beginning in July 1994; prior to that time, Jamont was accounted for
using the equity method.
In March 1994, the Company sold its 50% interest in Coastal Paper Company, a
Mississippi-based producer of lightweight papers. The Company also completed the
sale of certain assets of its inactive Fitchburg, Massachusetts, facility in
September 1994, and the sale of its Sandston, Virginia, specialty tabletop
facility in November 1994. During 1994, James River also completed the sale of
47,000 acres of timberlands. In August 1994, the Company sold a United Kingdom
investment of Jamont.
The Company recorded a nonrecurring charge of $9.6 million which included
severance charges for announced reductions-in-force of $16.4 million, asset
write-offs of $28.9 million, and the reversal of $35.7 million of reserves
associated with the 1992 restructuring program. Severance charges represent the
costs related to the termination of approximately 650 employees primarily
located at Communications Papers and Food and Consumer Packaging facilities.
Asset write-offs relate to the phase-out of certain packaging equipment and
planned asset consolidations in Europe. The reversal of a portion of the 1992
restructuring charge results from the Company's decision not to dispose of
certain facilities.
1993
The Company sold its Pepperell, Massachusetts, specialty papers mill, its
Groveton, New Hampshire, communications papers mill, and its 49% interest in
Fabrica de Papel, a Mexican tissue producer. In March 1993, the Company received
$47 million in cash in connection with the redemption of its shares of Specialty
Coatings International, Inc. ("SCI") preferred stock which had been received as
part of the consideration for the sale of the Company's Specialty Papers
Business in 1990.
In November 1993, the Company completed its purchase of the remaining 77%
ownership interest in Diamond Occidental Forest Inc. ("Diamond") for $198
million pursuant to an existing put and call agreement. The purchase included
820,000 acres of timberlands located in the Northeast and Southeast. James River
sold 300,000 acres of such timberlands for proceeds of $100 million.
During 1993, James River also closed certain facilities pursuant to its 1992
restructuring program, including the Williamsport, Pennsylvania, party goods
facility; the Sunnyside,Washington, flexible packaging plant; the Modesto,
California, folding carton plant and the Minerva, Ohio, food-wrap plant; while
operations at the Dayton, Ohio, flexible packaging plant were reduced. Most of
the products previously manufactured at these facilities were relocated to other
James River plants.
1992
In December 1992, James River recorded a $111.7 million restructuring charge
($71.4 million net of tax benefits, or $.87 per share) in connection with the
implementation of its 1992 restructuring program. This restructuring charge
covered the costs of a productivity enhancement plan which included the disposal
and consolidation of certain under-performing operations and assets, related
severance expenses and organizational streamlining.
In March 1992, James River completed the sale of the assets of its South Glens
Falls, New York, tissue mill. In September 1992, James River acquired the paper
products business of The Mennen Company; this business produces a premium line
of party goods.
SUMMARY
The purchase prices of acquisitions were allocated to the acquired net assets
based on their respective fair values as summarized below.
(in thousands) 1994 1993 1992
Acquisitions of consolidated entities:
Fair value of assets acquired $ 2,119,962 $241,598 $46,477
Liabilities assumed or created (1,543,035) (43,898) (6,936)
Cash paid for acquisitions 576,927 197,700 39,541
Cash acquired (38,918) (4,964) (7,807)
Cash paid for acquisitions, net $ 538,009 $192,736 $31,734
Dispositions:
Fair value of assets sold $ 36,973 $135,350 $26,844
Noncash consideration received (2,400) (4,700) (5,000)
Cash received from sale of assets $ 34,573 $130,650 $21,844
PRO FORMA OPERATING DATA
The following pro forma information assumes that the acquisition of the
additional indirect interest in Jamont had occurred as of the beginning of the
year indicated and had resulted in the consolidation of Jamont Holdings by
James River. The pro forma information presented does not purport to be
indicative of the results which would actually have been reported if the
transaction had occurred for the periods indicated or which may be reported in
the future. The aggregate pro forma effect of other acquisitions or dispositions
was not material.
Pro forma consolidated operating data (unaudited)
(in millions, except per share data) 1994 1993
Net sales $6,232.5 $6,030.7
Income from operations 176.2 178.9
Net loss (23.0) (9.9)
Net loss per common share (1.00) (.84)
NOTE 3. OTHER INCOME
(in thousands) 1994 1993 1992
Equity in earnings of unconsolidated
affiliates $13,698 $ 7,771 $10,194
Interest income 9,851 24,864 14,641
Gain on sale of assets 5,178 2,924
Foreign currency exchange losses (552) (3,281) (9,571)
Other, net 725 7,957 8,123
Total other income $28,900 $40,235 $23,387
NOTE 4. INCOME TAXES
The components of income (loss) before income taxes, minority interests,
extraordinary item and accounting changes were as follows:
(in thousands) 1994 1993 1992
Domestic $ 7,167 $24,777 $ (85,009)
Foreign (16,918) (8,113) 8,629
Restructuring charge, principally domestic (111,720)
Income (loss) before income taxes,
minority interests, extraordinary
item and accounting changes $ (9,751) $16,664 $(188,100)
Income tax expense (benefit), excluding income taxes on the extraordinary item
and accounting changes, consisted of the following:
(in thousands) 1994 1993 1992
Current:
Federal $ 3,548 $ 1,293 $ 1,677
State 1,319 2,780 5,265
Foreign 4,138 2,979 4,063
Total current income tax provision 9,005 7,052 11,005
Deferred:
Federal (3,343) 18,311 (59,567)
State (559) (1,811) (12,496)
Foreign (696) (4,644) (3,663)
Total deferred income tax provision
(benefit) (4,598) 11,856 (75,726)
Income tax expense (benefit) $ 4,407 $18,908 $(64,721)
Cash payments for income taxes totaled $14.1 million in 1994, $6.6 million in
1993 and $8.6 million in 1992.
Effective as of the beginning of 1992, James River adopted the provisions of
Statement of FinancialAccounting Standards No. 109,"Accounting for Income Taxes"
("SFAS 109"), which requires the use of the liability method of accounting for
income taxes. Under this approach, the deferred taxes must be based on the
enacted tax rates in effect for the years in which the assets and liabilities
are expected to reverse. In connection with the adoption of SFAS 109, the
Company recorded a credit of $35.9 million, or $.44 per share, in 1992; the net
impact on the net deferred tax liability was a credit of $141 million.
No provision for income taxes has been made for $58.8 million of
undistributed earnings of certain of the Company's foreign subsidiaries and
affiliates which have been indefinitely reinvested. It is not practicable to
determine the amount of U.S. income tax which would be payable if such
undistributed foreign earnings were repatriated through dividend remittances
because any U.S. taxes payable on such dividends would be offset, at least in
part, by foreign tax credits.
Principal reasons for the difference between the federal statutory income tax
rate on income (loss) before income taxes, minority interests, extraordinary
item and accounting changes and the Company's effective income tax rate were as
follows:
Percent of Pretax Income or (Loss)
1994 1993 1992
Federal statutory income tax rate (35.0)% 35.0% (34.0)%
State income taxes, net of federal
income tax effect 5.1 3.4 (2.6)
Charitable contributions fair market
value in excess of basis (22.9)
Foreign losses not benefitted 63.4
Amortization of goodwill 43.3 8.6 .9
Other items, net (8.7) .6 1.3
Effective income tax rate on
current income (loss) 45.2% 47.6% (34.4)%
Effect of increase in federal
income tax rate 65.9%
Effective income tax rate 45.2% 113.5% (34.4)%
In August 1993, the federal statutory income tax rate was increased from 34% to
35%. James River recorded an $11 million charge to increase its deferred tax
liability for the effect of this increase in the tax rate.
The income tax effects of temporary differences that gave rise to the net
deferred tax liability as of December 25, 1994, and December 26, 1993, were as
follows:
(in thousands) 1994 1993
Excess of book over tax basis of property,
plant and equipment $ 913,973 $ 731,867
Pension benefits 77,321 69,555
Other items 46,435 60,385
Total deferred tax liabilities 1,037,729 861,807
Postretirement benefits other than pensions (220,099) (215,243)
Alternative minimum tax credit carryforwards (125,801) (87,328)
Accrued liabilities (92,628) (88,576)
Tax loss carryforwards (80,711) (65,406)
Other items (54,462) (58,371)
Total deferred tax assets (573,701) (514,924)
Valuation allowance 35,639
Net deferred tax liability $ 499,667 $ 346,883
The valuation allowance reflects the impact of foreign net operating losses of
$31.9 million and foreign tax credits of $3.7 million for which the Company does
not currently anticipate receiving future tax benefits; if recognized in the
future, $27.5 million of these tax benefits will be allocated to reduce goodwill
of certain acquired subsidiaries.
During 1994 and 1993, the Company received tax refunds from the Internal
Revenue Service as a result of the favorable settlement of certain prior years'
income tax returns. The principal amount of such refunds, totaling $12.9 million
and $10.6 million, respectively, was credited to deferred income taxes, as a
deferred tax asset had been previously recorded to provide for these refunds.
The Internal Revenue Service is currently reviewing the Company's federal income
tax returns for the years 1990 through 1992. In the opinion of management,
potential adjustments resulting from these examinations will not have a material
effect on the Company's financial condition.
As of December 25, 1994, for federal income tax purposes, the Company had a
domestic net operating loss carryforward, which expires in 2009, of $47.4
million available to offset future regular taxable income. In addition, the
Company had $151.3 million of foreign net operating loss carryforwards which
expire primarily from 1995 through 2000 and $8.7 million of general business
tax and foreign tax credit carryforwards for tax purposes which expire from 1995
through 2008. The Company also had alternative minimum tax ("AMT") credit
carryforwards of $125.8 million which have been reflected as a reduction of
deferred taxes. AMT credits may generally be carried forward indefinitely and
used in future years to the extent the Company's regular tax liability exceeds
the AMT liability for such future years.
NOTE 5. PENSION PLANS
James River sponsors various contributory and noncontributory pension plans
which cover substantially all employees. The Company also participates in
several multiemployer retirement plans which provide defined benefits to
employees covered under certain collective bargaining agreements. Benefits
under the majority of plans for hourly employees are primarily based on stated
benefits per year of credited service. Benefits for salaried employees are
primarily related to compensation and years of credited service. The Company
makes contributions to its plans sufficient to meet the minimum funding
requirements of applicable laws and regulations plus additional amounts, if any,
as the Company, in consultation with its actuaries, deems to be appropriate.
Contributions to multiemployer plans are generally based on negotiated labor
contracts. Plan assets consist principally of equity securities and corporate
and government obligations.
The components of net pension cost were as follows:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
<S> <C> <C> <C>
Service cost $ 20,756 $ 18,376 $ 19,239
Interest accrued on projected benefit obligation 94,956 94,149 88,692
Net investment (income) loss on plan assets:
Actual (12,771) (163,730) (125,709)
Deferral of difference between actual and
expected investment income (97,415) 50,643 16,328
Net amortization 19,787 13,806 6,955
Contributions to multiemployer pension plans 5,149 5,588 5,829
Net pension cost $ 30,462 $ 18,832 $ 11,334
</TABLE>
Net amortization included amortization of the net transition assets,net
experience gains and losses, and prior service costs over 15 to 20 years.
The actuarial assumptions used in determining net pension costs were as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Discount rate 7.4% 8.0% 8.5%
Assumed rate of increase in compensation levels 5.5% 5.5% 6.0%
Expected long-term rate of return on plan assets 10.0% 10.5% 10.5%
</TABLE>
As of December 25, 1994, benefit obligations were determined using a discount
rate of 8.6% and an assumed rate of increase in compensation levels of 5.0%. The
effect of the changes in these assumptions was a decrease in the projected
benefit obligation of $171.4 million.
The following table sets forth the funded status of the Company's plans:
<TABLE>
<CAPTION>
1994 1993
ASSETS ACCUMULATED Assets Accumulated
EXCEED BENEFITS Exceed Benefits
ACCUMULATED EXCEED Accumulated Exceed
(in thousands) BENEFITS ASSETS Benefits Assets
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 810,545 $288,067 $ 904,738 $315,562
Nonvested benefits 28,129 24,914 34,550 27,574
Accumulated benefit obligation 838,674 312,981 939,288 343,136
Effect of projected future
salary increases 25,593 306 27,067 382
Projected benefit obligation 864,267 313,287 966,355 343,518
Plan assets at fair value 1,027,044 269,349 1,079,680 273,905
Plan assets in excess of (less than)
projected benefit obligation 162,777 (43,938) 113,325 (69,613)
Unrecognized net loss 25,760 45,158 82,258 70,919
Unrecognized prior service cost 29,784 32,588 31,149 28,060
Unrecognized net transition asset (11,911) (3,914) (13,678) (4,686)
Minimum pension liability (73,526) (93,924)
Net pension asset (liability) $ 206,410 $(43,632) $ 213,054 $(69,244)
</TABLE>
Other assets included net noncurrent pension assets of $236.3 million as of
December 25, 1994, and $237.7 million as of December 26, 1993, exclusive of the
additional minimum pension liabilities. As of December 25, 1994, $73.5 million
of additional minimum pension liabilities for underfunded plans were included
in other long-term liabilities, offset by an intangible asset of $34.2 million
and a charge of $24.0 million to retained earnings, net of deferred taxes of
$15.3 million. As of December 26, 1993, the additional minimum pension liability
of $93.9 million was offset by an intangible asset of $30.1 million and a charge
to retained earnings of $39.0 million, net of deferred taxes of $24.8 million.
NOTE 6. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
James River provides certain medical and life insurance benefits to eligible
retired employees. Salaried employees hired before January 1, 1993, generally
become eligible for retiree medical benefits after reaching age 55 with 15 years
of service or after reaching age 65. Under the salaried plan, post-age 65
eligible retirees are reimbursed for a portion of the cost of premiums of
Medicare supplement insurance policies, based upon vested years of service.
Post-age 65 salaried retirees are also reimbursed for certain prescription drug
costs, less deductibles. Pre-age 65 eligible retirees are paid a stated
percentage of covered medical expenses, less deductibles. Salaried employees
hired after January 1, 1993, are not eligible for retiree medical benefits.
Benefits, eligibility and cost-sharing provisions for hourly employees vary by
location and collective bargaining unit. All of the Company's retiree medical
plans are unfunded.
In December 1992, James River adopted Statement of Financial Accounting
Standards No.106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ("SFAS 106"), effective as of the first day of that year. The Company
elected immediate recognition of the cumulative effect of the change in
accounting for postretirement benefits of $499.3 million ($309.8 million net of
income tax benefits of $189.5 million,or $3.79 per share), which represented the
accumulated benefit obligation existing as of the first day of 1992.
The components of net periodic postretirement benefit cost were as follows:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
<S> <C> <C> <C>
Service cost $11,367 $12,362 $13,510
Interest cost on accumulated
postretirement benefit obligation 38,795 43,059 41,205
Net amortization (7,361) (5,078) (2,038)
Net periodic postretirement benefit cost $42,801 $50,343 $52,677
</TABLE>
Net amortization included amortization of prior service costs and gains and net
experience gains and losses over 15 years. The discount rate used in determining
the net periodic postretirement benefit cost was 7.5% for 1994 and 8.5% for 1993
and 1992. The discount rate used in determining the accumulated postretirement
benefit obligation was 8.5% as of December 25, 1994. The effect of the increase
in the discount rate was a decrease in the accumulated benefit obligation of
$43.3 million. In addition, other actuarial assumptions were changed to reflect
current trends. The effect of these changes was a decrease in the accumulated
benefit obligation of $29.0 million.
Summary information on the Company's plans was as follows:
<TABLE>
<CAPTION>
(in thousands) 1994 1993
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $247,863 $246,053
Fully eligible active participants 91,105 109,350
Other active participants 162,698 226,995
Total accumulated postretirement benefit obligation 501,666 582,398
Unrecognized net loss (18,872) (87,694)
Unrecognized prior service gain 90,215 75,119
Accrued postretirement benefit obligation $573,009 $569,823
</TABLE>
As of December 25, 1994, and December 26, 1993, the Company has included $28.0
million of accrued postretirement benefit costs in accrued liabilities,
representing the estimated current portion of this liability.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 11.0% in 1994, declining by .5% per year
through 2003 to an ultimate rate of 6.5%. If the health care cost trend rate
assumptions were increased by 1%, the accumulated postretirement benefit
obligation as of December 25, 1994, would have increased by $92.0 million. The
effect of this change on the sum of the service cost and interest cost
components of net periodic postretirement benefit cost for 1994 would have been
an increase of $8.9 million.
NOTE 7. SUPPLEMENTAL BALANCE SHEET INFORMATION
INVENTORIES
(in thousands) 1994 1993
Raw materials $187,634 $161,093
Finished goods and work in process 543,872 425,640
Stores and supplies 184,457 139,457
915,963 726,190
Subtraction to state certain inventories at
last-in, first-out cost (71,852) (59,726)
Total inventories $844,111 $666,464
Valued at lower of cost or market:
Last-in, first-out $467,220 $522,483
First-in, first-out or average 376,891 143,981
Total inventories $844,111 $666,464
In 1994, certain inventory quantities were reduced, resulting in liquidations of
last-in, first-out inventory quantities carried at lower costs prevailing in
prior years. The effect was to decrease the net loss by $6.8 million.
PROPERTY, PLANT AND EQUIPMENT
(in thousands) 1994 1993
Land and improvements $ 211,333 $ 147,805
Buildings 978,648 622,509
Machinery and equipment 5,412,186 4,364,416
Construction in progress 204,843 119,431
6,807,010 5,254,161
Accumulated depreciation (2,245,137) (1,829,267)
4,561,873 3,424,894
Timber and timberlands, net 118,026 146,598
Net property, plant and equipment $ 4,679,899 $3,571,492
ACCRUED LIABILITIES
(in thousands) 1994 1993
Taxes payable, other than income taxes $ 91,005 $ 30,983
Compensated absences 73,233 73,471
Employee insurance benefits 69,276 63,009
Other items 280,085 196,585
Total accrued liabilities $513,599 $364,048
NOTE 8. INVESTMENTS IN AFFILIATES
As of December 25, 1994, James River's principal investments in affiliates
accounted for using the equity method included investments in Aracruz Celulose
S.A. ("Aracruz"), the Naheola Cogeneration Limited Partnership (the "Naheola
Partnership"), Dubreuil Forest Products Limited ("Dubreuil"), and Ipek Kagit
Sanayi ve Ticaret A.S. ("Ipek Kagit").
During 1994, James River acquired an additional 43.2% indirect ownership
interest in Jamont, which was previously accounted for under the equity method
(see Note 2). Aracruz, in which James River has a 5.2% indirect ownership
interest, is a major Brazilian eucalyptus pulp producer. James River's
investment in Aracruz is accounted for using the equity method, as the Company
has direct ownership interests in excess of 20% in certain intervening holding
companies. James River has a 50% ownership interest in the Naheola Partnership,
which owns and operates a $300 million chemical recovery cogeneration facility
at the Company's Pennington, Alabama, pulp and paper mill. Dubreuil, in which
James River has a 40% indirect ownership interest, operates a sawmill in
Dubreuilville, Ontario. James River has a 43.2% indirect ownership interest in
Ipek Kagit, a Turkish producer of sanitary paper products.
During 1994, James River sold its 50% ownership of Coastal Paper Company and
its 43.2% indirect interest in Morgan-Varylease, Ltd, a leasing company
investment of Jamont. During 1993, James River acquired the remaining 77%
interest in Diamond and consolidated its operations which were previously
accounted for under the equity method. Also during 1993,the Company sold its 49%
interest in Fabrica de Papel.
Changes in James River's investments in affiliates during 1994 and 1993 were
as follows:
(in thousands) 1994 1993
Balance, beginning of year $519,448 $587,756
Consolidation of net assets of affiliates (433,955) (19,616)
Foreign currency translation adjustments, net 18,741 (49,775)
Equity in net income 13,698 7,771
Additional investments, at cost 11,906
Sale of investments (7,936) (2,967)
Other, net 3,195 (3,721)
Balance, end of year $125,097 $519,448
James River's share of undistributed earnings of affiliates included in
consolidated retained earnings was $45.5 million as of December 25, 1994, and
$96.8 million as of December 26, 1993.
The summarized financial information presented below represents an
aggregation of 100% of the principal companies accounted for by the equity
method.
(in thousands) 1994 1993
Condensed income statement information:
Revenues $175,628 $1,524,932
Gross profit 62,132 358,881
Net earnings 31,433 23,752
Condensed balance sheet information:
Current assets $109,979 $ 771,385
Noncurrent assets, including intangibles 471,439 2,102,622
Current liabilities 41,972 657,590
Noncurrent liabilities 239,215 891,524
Minority interests 189,397
Equity 300,231 1,135,496
James River's share of equity $135,620 $ 561,603
NOTE 9. INDEBTEDNESS
(in thousands) 1994 1993
Money market notes $ 398,000 $ 103,300
Revolving credit facilities, 6.63% average
interest rate, payable in 1999 280,445 33,084
Commercial paper 181,707 150,716
Notes and debentures:
Floating rate notes, payable from 1995 to 1997 385,000 250,000
6.7% notes, payable in 2003 249,500 249,444
6.75% notes, payable in 1999 199,625 199,547
7.57% average interest rate medium-term notes,
payable from 1997 to 2004 200,000 200,000
7.75% debentures, payable in 2023 149,695 149,685
7.86% average interest rate notes, payable to 2009 148,329 30,848
8.375% notes, payable in 2001 199,311 199,211
9.25% debentures, payable in 2021 200,000 200,000
9.77% note, payable from 2005 to 2014 200,000 200,000
Revenue bonds, average interest rate 7.57%,
payable to 2028 97,715 74,288
Short-term borrowings 225,132
Total 3,114,459 2,040,123
Less current portion and short-term borrowings 446,499 97,287
Long-term debt $2,667,960 $1,942,836
MINIMUM PRINCIPAL PAYMENTS
Minimum principal payments on long-term debt, excluding commercial paper, money
market notes and revolving credit borrowings, for the next five years are as
follows:
(in millions) 1995 1996 1997 1998 1999
Scheduled maturities $221.3 $127.0 $223.5 $18.1 $202.3
If the current level of commercial paper, money market notes and revolving
credit agreements remains outstanding until the expiration of the underlying or
supporting agreements, additional payments of $860 million would be required in
1999. It is the Company's current intention to refinance or renew such
agreements prior to their expiration.
REVOLVING CREDIT FACILITIES
On December 14,1994,the Company refinanced its $750 million revolver and
Jamont's European currency unit ("ECU") borrowing facility. The ECU facility was
reduced in size from ECU 400 million to ECU 330 million. The Company refinanced
these facilities to reduce financing costs and increase financial flexibility.
As of December 25, 1994, James River and its consolidated subsidiaries had
revolving credit agreements with various domestic and foreign banks providing
for unsecured borrowings of up to approximately $1,487 million.
The interest rates associated with the revolving credit agreements are
primarily based, at the option of the Company, on the prime rate, the London
Interbank Offered Rate ("LIBOR"), certificate of deposit rates, or bankers'
acceptance rates. Annual commitment fees of up to .338% of the unused portion of
the commitments may be incurred during the revolving loan periods; additionally,
certain agreements provide for facility fees which may range from .10% to .20%
of the committed amounts. The majority of the Company's domestic and foreign
revolving credit agreements, totaling $1,177 million, expire in December 1999;
the remaining agreements expire between 1995 and 1997.
COMMERCIAL PAPER AND MONEY MARKET NOTES
As of December 25, 1994, James River had domestic and foreign commercial paper
programs providing for commercial paper issuances of up to $776 million. In
addition, James River had agreements with several banks providing for other
borrowings, dependent upon bank availability. Commercial paper and money market
notes generally bear interest at below-prime rates. As of December 25, 1994, the
Company had $182 million of outstanding commercial paper and $398 million of
outstanding money market notes at average interest rates of 5.8% and 6.34%,
respectively. Money market note issuances in 1994 included $200 million of notes
which were used, in part, to finance the acquisition of Jamont (see Note 2). As
of December 26, 1993, the Company had $151 million of outstanding commercial
paper and $103 million of outstanding money market notes at average interest
rates of 3.47% and 3.29%, respectively. Because of the availability of long-term
financing under the terms of the domestic and foreign revolving credit
agreements and the Company's intention to refinance commercial paper and money
market notes, these borrowings have been classified as long-term debt. Foreign
short-term borrowings of $225 million with an average interest rate of 7.72% as
of December 25, 1994, were reported in current liabilities.
NOTES AND DEBENTURES
During the summer of 1994, James River acquired an additional $135 million of
floating rate bank financing increasing the total floating rate bank notes
outstanding to $385 million, with an average interest rate of 6.45% as of
December 25, 1994. Portions of the proceeds from this issuance were used to
finance part of the acquisition of Jamont (see Note 2).
The Company's most restrictive debt agreements contain limitations on
borrowings and require maintenance of a minimum amount of net worth. As of
December 25, 1994, under the most restrictive provisions of the Company's debt
agreements, the Company had additional borrowing capacity in excess of $525
million and net worth in excess of the minimum requirement of approximately $425
million.
Certain of the Company's notes and revenue bonds are collateralized by assets
consisting of property, plant and equipment, accounts receivable and
inventories. Such assets are immaterial in relation to total assets.
NOTE 10. FINANCIAL INSTRUMENTS
The Company is subject to market rate risk from exposure to changes in interest
rates and currency exchange rates and enters into various interest rate and
foreign exchange contracts to manage this exposure. Financial instruments used
for these purposes are evaluated against the Company's policies for managing
this risk, including counterparty performance and hedging practices, and are
monitored using techniques such as market valuations and sensitivity analysis.
INTEREST RATE INSTRUMENTS
The Company's strategy is to optimize the ratio of the Company's fixed to
variable rate financing consistent with maintaining an acceptable level of
exposure to the risk of interest rate fluctuation. To obtain this mix, the
Company primarily uses interest rate swaps and options that have the effect of
converting specific debt obligations of the Company from fixed to variable rate,
or vice versa, as required.
The Company has entered into interest rate swap agreements under which it
pays to counterparties a variable interest rate based on LIBOR and the
counterparties pay the Company a fixed interest rate on a notional principal
amount of $1,286 million. Additionally during 1994, the Company entered into
options under which premiums are paid to a counterparty in exchange for
protection from paying the LIBOR based rates in excess of 6.5% up to 8.01% on
$646 million of the $1,286 million in notional amount of interest rate
swaps. These contracts mature in September 1998 and January 1999. The weighted
average pay rate and receive rate under the interest rate contracts were 4.97%
and 4.31%, respectively, for the year ended December 25, 1994.
The fair value of the Company's financial instruments related to its
indebtedness were as follows:
1994
CARRYING
VALUE OR
GROSS NOTIONAL FAIR
(in millions) AMOUNT VALUE
Long-term debt, including current maturities $(2,889) $(2,828)
Interest rate swaps 1,286 (128)
As of December 26, 1993, the estimated fair value of the Company's total
indebtedness was $2,192 million. The estimates of fair values of the Company's
financial instruments related to indebtedness are based on quoted market prices
of comparable instruments or on current rates available to the Company for
financial instruments with similar terms and remaining maturities.
CURRENCY INSTRUMENTS
In 1993, the Company entered into foreign exchange contracts that hedge a
portion of its net investment in Jamont. In connection with these contracts,the
Company has entered into interest rate swap agreements to manage the related
interest rate exposure of the hedge. The total notional amount of such hedges
was $470 million and $488 million as of December 25, 1994, and December 26,
1993, respectively, denominated primarily in French francs, British pounds,
Belgian francs and Spanish pesetas. These contracts mature on September 1, 1998.
The Company's Jamont subsidiary entered into foreign exchange contracts which
mature in one year or less to hedge its market rate risk from exposure to
changes in foreign currency exchange rates primarily resulting from intercompany
financings and commercial transactions. As of December 25, 1994, the Company had
net unrealized gains of $.5 million on a notional amount of $127 million for
these hedge instruments.
As of December 25, 1994, and December 26, 1993, the carrying value of foreign
exchange contracts was a net liability of $39.6 million and $4.1 million,
respectively, and the fair value, based on quoted market prices of comparable
instruments, was a net liability of $73.0 million and $11.8 million,
respectively.
CREDIT RISK
The counterparties to the Company's interest rate and foreign exchange contracts
consist of a number of major financial institutions. The Company continually
monitors its positions with,and the credit quality of,these institutions and
does not anticipate nonperformance by the counterparties.
NOTE 11. COMMON STOCK
The Company has 150 million authorized shares of common stock, $.10 par value
("Common Stock"), of which 81,695,419 shares were outstanding on December 25,
1994. Common shares reserved for issuance as of December 25, 1994, were as
follows:
1994
Stock option plans 8,152,589
Deferred stock plan 1,657,686
Conversion of Series K preferred stock 2,453,859
Conversion of Series L preferred stock 5,000,000
Conversion of Series N preferred stock 1,320,210
Conversion of Series P preferred stock 14,245,000
Total common shares reserved for issuance 32,829,344
SHAREHOLDER RIGHTS PLAN
Under a shareholder rights plan, 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. 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, expire on March 1, 1999, 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 have no effect on earnings per share until they
become exercisable.
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 owner- ship 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.
NOTE 12. PREFERRED STOCK
The Company is authorized to issue up to five million shares of preferred stock,
$10 par value. The preferred shares are issuable with varying dividend rates,
redemption rights, conversion terms, sinking fund provisions, liquidation values
and voting rights. Outstanding preferred stock was as follows:
<TABLE>
<CAPTION>
Depositary Shares Preferred Shares
Liquidation Shares Liquidation Shares Annual Liquidation Value
Value Outstanding Value Outstanding Dividend (in thousands)
Per Share 1994 Per Share 1994 Requirement 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Series D $ 100 $ 1,300
Series K 50 1,999,895 $ 6,749,645 $ 99,995 100,000
Series L $ 50 4,000,000 200 1,000,000 14,000,000 200,000 200,000
Series N 50 1,056,168 200 264,042 3,696,588 52,808 52,808
Series O 25 4,000,000 500 200,000 8,250,000 100,000 100,000
Series P 17.25 16,666,666 1,725 166,667 25,875,000 287,500
Total 3,630,604 $58,571,233 $740,303 $ 454,108
</TABLE>
The Company has reserved 150,000 preferred shares for the issuance of Series M
preferred stock under the Shareholder Rights Plan. The Series D Cumulative
Preferred Stock ("Series D") was redeemed in July 1994,and is no longer
outstanding.
The Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock
("Series K") is convertible at the option of the holder into Common Stock at
$40.75 per share (approximately 1.23 shares of Common Stock per share of Series
K). The Series K is redeemable by the Company at a per share price declining
from $50.68 as of December 25, 1994, to $50 in November 1996, and thereafter,
plus accrued dividends. The Series K is exchangeable at the option of the
Company for 6.75% Convertible Subordinated Debentures due November 1, 2016 (the
"6.75% Debentures") at $50 principal amount per share of Series K. The 6.75%
Debentures, if issued, will be convertible at the option of the holder into
Common Stock on the same terms as the Series K.
The Series L $14.00 Cumulative Convertible Exchangeable Preferred Stock
("Series L") and the Series N $14.00 Cumulative Convertible Exchangeable
Preferred Stock ("Series N") are each held in the form of depositary shares,
with each depositary share representing a one-quarter interest in a preferred
share. The Series L and the Series N are convertible at the option of the holder
into Common Stock at $10 per depositary share (or 1.25 shares of Common Stock
per depositary share). The Series L and Series N are each redeemable by the
Company at a per depositary share price declining from $51.05 as of December 25,
1994, to $50 in October 1997, and thereafter, plus accrued dividends. The Series
L and Series N are each exchangeable at the option of the Company for 7%
Convertible Subordinated Debentures due October 1, 2017 (the "7% Debentures") at
$50 principal amount per depositary share. The 7% Debentures, if issued, will be
convertible at the option of the holder into Common Stock on the same terms as
the depositary shares.
The Series O 8-1/4% Cumulative Preferred Stock ("Series O") is also held in
the form of depositary shares, with each depositary share representing a
one-twentieth interest in a preferred share. The Series O is not redeemable
prior to October 1, 1997. On or after that date, it will be redeemable by the
Company at $25 per depositary share, plus accrued dividends.
In June 1994, James River issued its Series P 9% Cumulative Convertible
Preferred Stock ("Series P") as a Dividend Enhanced Convertible Stock ("DECS"),
in the form of depositary shares, with each depositary share representing a
one-hundredth interest in a preferred share. Each depositary share is entitled
to .8547 of a vote, voting as a single group with holders of Common Stock. The
DECS are convertible into Common Stock at the option of the holder, at anytime,
at a rate of .8547 common shares for each depositary share, subject to
adjustment in certain events, and are redeemable by the Company beginning in
July 1997, at a call price payable in shares of Common Stock. The number of
shares to be issued upon redemption is tied to the market value of Common Stock
at the time of redemption. If still outstanding, the DECS will automatically
convert into Common Stock on a one-for-one basis in July 1998.
NOTE 13. EMPLOYEE BENEFIT PLANS
STOCK OPTIONS
The Company's stock option plans provide for the granting of options to purchase
Common Stock to certain directors, officers and key employees. Options are
granted at exercise prices equal to the fair market value of such stock as of
the date of grant and have terms of ten years. As of December 25, 1994, there
were 830 employees and directors holding options.
Stock option activity was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
(in thousands, OPTION PRICE Option Price Option Price
except per share amounts) SHARES PER SHARE Shares Per Share Shares Per Share
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of
year 5,408 $16.25 - 41.38 5,285 $16.25 - 41.38 4,899 $ 6.17 - 41.38
Granted 938 15.88 - 24.13 631 17.88 - 22.63 1,064 17.63 - 22.81
Canceled (200) 16.13 - 41.06 (378) 17.33 - 35.75 (565) 18.13 - 41.19
Exercised (23) 16.13 - 23.63 (18) 17.46 - 20.06 (57) 6.17 - 20.06
Expired (231) 16.13 - 41.06 (112) 20.06 - 39.69 (56) 20.13 - 41.06
Balance, end of year 5,892 $15.88 - 41.38 5,408 $16.25 - 41.38 5,285 $16.25 - 41.38
Exercisable 4,178 $16.13 - 41.38 3,476 $16.25 - 41.38 2,364 $16.25 - 41.38
Available for grant 2,261 2,781 936
</TABLE>
STOCK APPRECIATION RIGHTS
Under the Company's stock appreciation rights plan, officers and key employees
were granted stock appreciation rights ("SAR's") with terms of ten years. Upon
exercise, holders of SAR's are paid cash or, at the option of the Company,
Common Stock in an amount equal to the apprecia- tion in market value of such
stock between the grant date and the exercise date. Beginning in 1987, the
granting of additional SAR's was discontinued. As of December 25, 1994, there
were 250 employees holding SAR's. Compensation expense for SAR's was not
material for each of the three years in the period ended December 25, 1994.
SAR's activity was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
GRANT DATE Grant Date Grant Date
(in thousands, MARKET VALUE Market Value Market Value
except per share amounts) SHARES PER SHARE Shares Per Share Shares Per Share
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 221 $16.42 - 34.19 260 $16.25 - 34.19 299 $ 6.17 - 34.19
Canceled (8) 21.33 - 32.69 (14) 16.96 - 31.75 (24) 16.96 - 33.56
Exercised (29) 16.96 - 19.00 (14) 16.25 - 19.21 (10) 6.17 - 19.21
Expired (37) 17.46 - 34.19 (11) 19.06 - 30.54 (5) 22.37 - 30.54
Balance, end of year 147 $16.42 - 33.94 221 $16.42 - 34.19 260 $16.25 - 34.19
Exercisable 147 $16.42 - 33.94 221 $16.42 - 34.19 222 $16.25 - 34.19
</TABLE>
DEFERRED STOCK PLAN
The Company's Deferred Stock Plan provides for the award of hypothetical shares
of Common Stock ("Units") to certain officers and key employees. The value of
each Unit on the award date is equal to the current market value of a share of
Common Stock. Benefits will be paid in cash and Common Stock as vested or, at
the option of the holder, over varying periods after retirement. As of December
25, 1994, Units were held by 57 employees. The Company recognized compensation
expense under the Deferred Stock Plan of $3.4 million in 1994, $2.2 million in
1993 and $.8 million in 1992.
Deferred Stock Plan activity was as follows:
1994 1993 1992
Outstanding Units, beginning of year 630,505 324,436 377,585
Granted 8,000 351,500 22,400
Accrued dividends 16,036 17,406 10,715
Distributed (73,775) (47,416) (57,253)
Canceled (22,004) (15,421) (29,011)
Outstanding Units, end of year 558,762 630,505 324,436
STOCK PLANS FOR EMPLOYEES
The Company's StockPlus investment plan (formerly stock purchase plan) is
available to substantially all domestic employees. As of July 1, 1994, several
alternative investment funds were available, including an investment fund
consisting of Common Stock (the "James River Stock Fund"). Participating
employees may contribute, through periodic payroll deductions, up to 10% of
their compensation. Participant contributions to the James River Stock Fund of
up to 6% of compensation are matched by the Company at rates ranging from 60%
to 120%. As of December 25, 1994, there were 23,000 participants in the plan,
and the plan held 14 million shares of Common Stock and $34 million of other
investments. Company contributions to this plan totaled $16.1 million in 1994,
$16.4 million in 1993 and $17.4 million in 1992.
In addition,the Company maintains two stock purchase plans for the benefit
of certain foreign employees. As of December 25, 1994, 140,000 shares of Common
Stock were held in these plans.
NOTE 14. COMMITMENTS AND CONTINGENT LIABILITIES
LEASES
The Company leases certain facilities, vehicles and equipment over varying
periods. None of the agreements contain unusual renewal or purchase options. As
of December 25, 1994, future minimum rental payments under noncancelable
operating leases were as follows:
Minimum
(in thousands) Rentals
1995 $ 52,022
1996 36,303
1997 28,827
1998 22,352
1999 17,959
Later years 83,367
Total future minimum rentals $240,830
Rent expense totaled $72.7 million in 1994, $57.3 million in 1993 and $58.3
million in 1992. Leases which may be considered capital leases are not material.
LITIGATION AND ENVIRONMENTAL MATTERS
The Company is a party to various legal proceedings generally incidental to its
business and is subject to a variety of environmental and pollution control laws
and regulations. As is the case with other companies in similar industries,
James River faces exposure from actual or potential claims and legal proceedings
involving environmental matters. During 1994, James River was sued in Morgan
County, Alabama, in a purported class action and in Bridgeport, Connecticut, by
certain former holders of James River's 10-3/4% Debentures due October 1, 2018.
Most of these Debentures were retired by means of a tender offer to all holders
commenced on September 18, 1992. The remainder were redeemed on November 2,
1992. Merrill Lynch & Co., which acted as James River's dealer manager for the
tender, is also named as a defendant in the Alabama case. In general, the
complaints allege violations of a covenant prohibiting use of lower cost
borrowed funds to redeem the Debentures before October 1, 1998, and of various
disclosure obligations, and seek damages in excess of $50 million plus punitive
damages in excesss of $500 million. James River believes that these claims are
without merit and intends to defend them vigorously. Although the ultimate
disposition of legal proceedings cannot be predicted with certainty, it is the
present opinion of the Company's management that the outcome of any claim which
is pending or threatened, either individually or on a combined basis, will not
have a materially adverse effect on the consolidated financial condition of
James River but could materially affect consolidated results of operations in a
given year.
In addition, James River has been identified as a potentially responsible
party, along with others, at various U. S. Environmental Protection Agency
("EPA") designated superfund sites and is involved in remedial investigations
and actions under federal and state laws. It is the Company's policy to accrue
remediation costs when it is probable that such costs will be incurred and when
they can be reasonably estimated. James River's accrued environmental
liabilities, including remediation and landfill closure costs, totaled $37.5
million and $36.0 million as of December 25, 1994, and December 26, 1993,
respectively. The Company periodically reviews the status of all significant
existing or potential environmental issues and adjusts its accruals as
necessary. The accruals do not reflect any possible future insurance recoveries.
Estimates of costs for future remediation are necessarily imprecise due to,
among other things, the identification of presently unknown remediation sites
and the allocation of costs among potentially responsible parties. The Company
believes that its share of the costs of cleanup for its current remediation
sites will not have a material adverse impact on its consolidated financial
position but could have a material effect on consolidated results of operations
in a given year. 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 potentially
responsible party at additional sites in the future or that the costs associated
with such additional sites would not be material.
In December 1993, the EPA published draft rules which contain proposed
regulations affecting pulp and paper industry discharges of wastewater and
gaseous emissions ("cluster rules"). The final rules are likely to be issued in
late 1996, with a nominal compliance date of 1999. These 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. The
implementation of the rules could materially increase the Company's capital
expenditures between 1997 and 1999.
PUT AND CALL AGREEMENTS
James River is a party to a put and call arrangement related to the 13.6%
minority interest in Jamont currently owned by EuroPaper Inc. ("EuroPaper").
Pursuant to the agreement, EuroPaper may put its interest in Jamont (the
"EuroPaper Shares") to James River during May 1996 and James River may call the
EuroPaper Shares during August 1996, each at a fixed price of 1.04 billion
French francs ($191.3 million using exchange rates in effect as of December 25,
1994). In addition, Jamont Holdings has a separate call agreement with EuroPaper
under which it may call the EuroPaper Shares through April 1996 at a formula
price. While it is not practicable to estimate the fair value of this put and
call arrangement, as it relates to an untraded entity, management believes that
a European economic recovery is currently underway and that, by the defined put
exercise dates, the value of the EuroPaper Shares will not be significantly less
than the put price, excluding the potential impact of currency translation
losses, if any.
James River and CRSS Capital, Inc. ("CRSS") each own 50% of the Naheola
Partnership. In November 1994, James River exercised its call option for CRSS's
50% interest in the Naheola Partnership, with closing anticipated in the spring
of 1995. The call price will be determined based on a formula established at the
inception of the partnership. James River's exercise of its call option has
terminated a put option held by CRSS. CRSS has refused to recognize the validity
of the call by James River and the parties are currently in litigation over the
call and the valuation of the CRSS interest in the Naheola Partnership.
NOTE 15. SEGMENT INFORMATION
The Company operates in the following industry segments: (i) the Consumer
Products segment, which consists of the manufacture and marketing of towel and
tissue and disposable foodservice products; (ii) the Food and Consumer Packaging
segment, which manufactures folding cartons, flexible packaging and barrier
packaging papers, principally for food and other consumer products; and (iii)
the Communications Papers segment, which manufactures and markets uncoated
business and printing papers, coated groundwood printing and publishing papers,
and premium printing papers. The Company's operations are principally domestic,
except the Consumer Products segment which includes Jamont's European
operations. Jamont's results have been included beginning in July 1994, when it
became a consolidated subsidiary.
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales:
Consumer products:
North America $2,422,723 $2,358,136 $2,404,364
Europe 630,844
Food and consumer packaging 1,609,901 1,568,454 1,565,054
Communications papers 929,701 901,326 917,974
Intersegment elimination (175,894) (177,721) (159,213)
Total net sales $5,417,275 $4,650,195 $4,728,179
Operating profit (loss):
Consumer products:
North America $143,412 $ 111,286 $ 71,048
Europe 6,896
Food and consumer packaging 97,388 103,827 89,168
Communications papers (35,820) (58,400) (55,028)
Restructuring, severance and other items (9,607) (117,851)
General corporate expenses (55,296) (42,690) (49,737)
Income (loss) from operations 146,973 114,023 (62,400)
Interest expense 185,624 137,594 149,087
Other income, net 28,900 40,235 23,387
Income tax expense (benefit) 4,407 18,908 (64,721)
Minority interests 1,199 1,898 1,304
Net loss before extraordinary item and
accounting changes $(12,959) $ (346) $ (122,075)
Depreciation and amortization:
Consumer products:
North America $ 164,799 $ 174,798 $ 176,541
Europe 46,070
Food and consumer packaging 70,793 65,764 61,237
Communications papers 125,432 117,775 119,467
Corporate 6,967 7,516 7,281
Total depreciation and amortization $ 414,061 $ 365,853 $ 364,526
Capital expenditures:
Consumer products:
North America $ 148,730 $ 140,263 $ 213,370
Europe 32,411
Food and consumer packaging 99,156 63,742 146,748
Communications papers 60,017 123,286 96,698
Corporate 11,342 3,774 12,865
Total capital expenditures $ 351,656 $ 331,065 $ 469,681
Total assets, end of year:
Consumer products:
North America $2,230,555 $2,201,555 $2,227,238
Europe 2,495,163
Food and consumer packaging 1,079,899 1,088,977 1,071,188
Communications papers 1,457,408 1,511,022 1,468,649
Corporate 661,303 1,049,748 1,569,261
Total assets $7,924,328 $5,851,302 $6,336,336
</TABLE>
Intersegment sales are recorded at market prices and are eliminated in
consolidation. Corporate assets consist primarily of cash and cash equivalents,
current deferred income taxes, investments in unconsolidated affiliates, and the
net pension asset. Prior to July 1994, investments in unconsolidated affiliates
included the Company's 43.2% owership interest in Jamont. During each of the
three years in the period ended December 25, 1994, export sales to foreign
markets from the Company's domestic operations represented less than 10% of
total sales to unaffiliated customers; no single customer accounted for more
than 10% of total sales in any year.
NOTE 16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Per Common Share
Net Income Net Income
(Loss) Before (Loss) Before
Extraordinary Extraordinary
Item and Item and
(in thousands, Gross Accounting Net Income Accounting Dividends Stock Price
except per share amounts) Net Sales Profit Changes (Loss) Changes Declared High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 1994: (a,b,c)
1st Quarter $1,105,503 $170,637 $ (7,086) $ (7,086) $ (.19) $.15 $20-1/4 $18
2nd Quarter 1,198,145 207,448 12,900 12,900 .06 .15 19 15-5/8
3rd Quarter 1,444,773 261,819 (99) (99) (.18) .15 24-3/4 17
4th Quarter 1,668,854 325,394 (18,674) (18,674) (.41) .15 24-1/2 19-7/8
December 1993:(d,e)
1st Quarter 1,113,625 178,905 (10,130) (10,130) (.22) .15 19-7/8 16-1/4
2nd Quarter 1,198,134 214,797 13,736 13,736 .06 .15 23-3/8 18-5/8
3rd Quarter 1,183,507 211,254 1,185 1,185 (.08) .15 23 19-1/2
4th Quarter 1,154,929 186,653 (5,137) (5,137) (.16) .15 22 18-1/4
December 1992:(f,g,h,i)
1st Quarter 1,136,353 187,958 (14,001) (287,843) (.25) .15 23-3/8 19-1/8
2nd Quarter 1,236,625 233,453 10,299 10,299 .06 .15 22-5/8 20
3rd Quarter 1,213,523 201,331 3,025 3,025 (.04) .15 21-7/8 18
4th Quarter 1,141,678 128,723 (121,398) (152,821) (1.59) .15 19-1/4 17
</TABLE>
(a) Jamont is currently accounted for on a one-month lag and has been included
as a consolidated subsidiary for five months of 1994.
(b) During the second quarter of 1994, James River received $9.0 million of
interest income ($5.4 million after taxes, or $.07 per share) on income tax
refunds.
(c) During the fourth quarter of 1994, James River recorded nonrecurring pretax
charges of $24.2 million ($16.2 million net of tax benefits, or $.20 per
share) for severance costs, asset write-offs, and litigation and
environmental accruals, partially offset by the reversal of remaining 1992
restructuring program reserves.
(d) During the second quarter of 1993, James River received $8.9 million of
interest income ($5.4 million after taxes, or $.07 per share) on income tax
refunds. Also during the second quarter, the Company recorded a pretax
impairment loss of $2.2 million ($1.3 million net of tax benefits, or $.02
per share) related to the write-off of an investment.
(e) During the third quarter of 1993, James River recorded a charge of $11
million, or $.13 per share, to increase its deferred tax liability as of
the beginning of the year for the effect of the 1% increase in the
statutory federal income tax rate. Also during the third quarter, the
Company received an additional $5.4 million of interest income ($3.3
million after taxes, or $.04 per share) on income tax refunds.
(f) Effective as of the beginning of 1992, James River adopted SFAS 109. This
change in accounting principle decreased the net loss for the first quarter
by $35.9 million ($.44 per share).
(g) During the fourth quarter of 1992, James River adopted SFAS 106,
retroactive to the beginning of 1992. The Company recorded a charge of
$499.3 million ($309.8 million net of tax benefits, or $3.79 per share) in
the first quarter for the cumulative effect of this change in accounting
principle. Results for the first three quarters of 1992 were restated for
the effect of this change.
(h) During the first quarter of 1992, James River accrued $13 million of pretax
charges ($8.7 million net of tax benefits, or $.11 per share) for the
refinement of estimates of restructuring costs and environmental and
litigation costs. During the fourth quarter of 1992, the Company accrued $18
million of pretax charges ($11 million net of tax benefits, or $.14 per
share) including accruals for landfill closure costs and certain
environmental liabilities associated with divested operations.
(i) During the fourth quarter of 1992, the Company recorded an extraordinary
loss of $50.6 million ($31.4 million net of tax benefits, or $.38 per share)
on the early extinguishment of $567 million principal amount of notes and
debentures. Also during the fourth quarter, the Company recorded a pretax
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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders of James River Corporation of Virginia:
We have audited the accompanying consolidated balance sheets of James River
Corporation of Virginia and Subsidiaries as of December 25, 1994, and December
26, 1993, and the related consolidated statements of operations, cash flows, and
changes in capital accounts for each of the three fiscal years in the period
ended December 25, 1994. These financial statements are the responsibility of
the management of James River Corporation of Virginia. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of James River
Corporation of Virginia and Subsidiaries as of December 25, 1994, and December
26, 1993, and the consolidated results of their operations and their cash flows
for each of the three fiscal years in the period ended December 25, 1994, in
conformity with generally accepted accounting principles.
As discussed in Notes 4 and 6 to the consolidated financial statements,
effective as of the beginning of 1992, the company changed its method of
accounting for income taxes to conform with Statement of Financial Accounting
Standards No. 109 and its method of accounting for postretirement benefits other
than pensions to conform with Statement of Financial Accounting Standards
No. 106.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
January 25, 1995
SELECTED FINANCIAL DATA-OPERATIONS (a)
<TABLE>
<CAPTION>
DECEMBER December December December December April
(in thousands, except per share amounts) 1994 1993 1992 1991 1990(b) 1990
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $5,417,275 $4,650,195 $4,728,179 $4,561,726 $3,391,481 $5,949,987
Cost of goods sold 4,451,977 3,858,586 3,976,714 3,551,875 2,564,024 4,664,351
Selling and administrative expenses 808,718 677,586 702,145 765,871 499,922 825,837
Restructuring, severance and other items 9,607 111,720 199,976
Income (loss) from operations 146,973 114,023 (62,400) 243,980 127,559 459,799
Interest expense 185,624 137,594 149,087 138,004 104,207 182,155
Other income, net 28,900 40,235 23,387 26,969 28,263 94,549
Income (loss) before income taxes,
minority interests, extraordinary
items and accounting changes (9,751) 16,664 (188,100) 132,945 51,615 372,193
Income tax expense (benefit) 4,407 18,908 (64,721) 54,464 41,809 146,243
Net income (loss) before minority interests,
extraordinary items and accounting changes (14,158) (2,244) (123,379) 78,481 9,806 225,950
Minority interests 1,199 1,898 1,304 (190) (128) (4,386)
Net income (loss) before extraordinary items
and accounting changes (12,959) (346) (122,075) 78,291 9,678 221,564
Extraordinary items and accounting changes,
net of income tax benefits (305,265)
Net income (loss) $ (12,959) $ (346) $ (427,340) $ 78,291 $ 9,678 $ 221,564
Interest on convertible notes, net of income
taxes
Preferred dividend requirements (45,839) (32,822) (26,494) (24,613) (16,578) (21,589)
Net income (loss) applicable to common shares $ (58,798) $ (33,168) $ (453,834) $ 53,678 $ (6,900) $ 199,975
OTHER DATA
Per common share (fully diluted):
Net income (loss) before extraordinary items
and accounting changes $ (.72) $ (.40) $ (1.82) $ .66 $ (.08) $ 2.45
Extraordinary items and accounting changes (3.73)
Net income (loss) $ (.72) $ (.40) $ (5.55) $ .66 $ (.08) $ 2.45
Annual rate of dividends declared per share $ .60 $ .60 $ .60 $ .60 $ .60 $ .60
Weighted average number of common shares
and equivalents (fully diluted) 81,671 81,609 81,756 81,871 81,783 81,702
Common shares outstanding at year end 81,695 81,628 81,578 81,504 81,295 81,181
Cash dividend payout ratio +100% +100% +100% 88.6% +100% 34.4%
Ratio of earnings to interest .9 1.1 .5 1.6 2.8 2.6
Effective income tax rate 45.2% 47.6% (34.4)% 41.0% 81.0% 39.3%
</TABLE>
<TABLE>
<CAPTION>
April April April April April April
(in thousands, except per share amounts) 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $5,871,773 $5,097,978 $4,479,001 $2,606,950 $2,492,009 $2,301,076
Cost of goods sold 4,508,603 3,918,701 3,404,032 1,964,910 1,895,647 1,728,243
Selling and administrative expenses 798,398 751,556 667,106 456,772 385,816 355,620
Restructuring, severance and other items
Income (loss) from operations 564,772 427,721 407,863 185,268 210,546 217,213
Interest expense 161,535 115,527 111,564 44,281 52,310 55,796
Other income, net 38,043 65,324 59,982 9,057 12,687 11,652
Income (loss) before income taxes,
minority interests, extraordinary
items and accounting changes 441,280 377,518 356,281 150,044 170,923 173,069
Income tax expense (benefit) 182,310 168,508 186,417 54,756 69,572 72,592
Net income (loss) before minority interests,
extraordinary items and accounting changes 258,970 209,010 169,864 95,288 101,351 100,477
Minority interests (3,905) (2,482)
Net income (loss) before extraordinary items
and accounting changes 255,065 209,010 169,864 95,288 101,351 97,995
Extraordinary items and accounting changes,
net of income tax benefits
Net income (loss) $ 255,065 $ 209,010 $ 169,864 $ 95,288 $ 101,351 $ 97,995
Interest on convertible notes, net of income
taxes 1,498 5,381 7,659
Preferred dividend requirements (21,418) (15,230) (4,000) (7,577) (9,082) (7,664)
Net income (loss) applicable to common shares $ 233,647 $ 193,780 $ 165,864 $ 89,209 $ 97,650 $ 97,990
OTHER DATA
Per common share (fully diluted):
Net income (loss) before extraordinary items
and accounting changes $ 2.87 $ 2.36 $ 2.03 $ 1.73 $ 1.93 $ 1.97
Extraordinary items and accounting changes
Net income (loss) $ 2.87 $ 2.36 2.03 $ 1.73 $ 1.93 $ 1.97
Annual rate of dividends declared per share $ .48 $ .40 .40 $ .37 $ .37 $ .27
Weighted average number of common shares
and equivalents (fully diluted) 81,471 82,272 81,838 51,525 50,579 49,695
Common shares outstanding at year end 81,060 81,193 82,354 51,672 43,575 39,729
Cash dividend payout ratio 23.5% 22.5% 21.4% 27.2% 18.2% 13.6%
Ratio of earnings to interest 3.1 3.6 3.6 3.2 3.6 3.7
Effective income tax rate 41.3% 44.6% 52.3% 36.5% 40.7% 41.9%
</TABLE>
(a) Adjusted for three-for-two common stock splits on June 23, 1986, and June
20, 1983.
(b) Represents the 35-week transition period resulting from the change in fiscal
year.
CASH DIVIDEND PAYOUT RATIO:
The sum of common and preferred stock cash dividends declared, divided by net
income (loss).
RATIO OF EARNINGS TO INTEREST:
Income (loss) before restructuring charges, extraordinary items, the
cumulative effect of accounting changes, interest expense and income taxes,
divided by total interest cost. Total interest cost is interest expense, plus
capitalized interest, plus interest charged to the accrued restructuring
liability, as applicable.
EFFECTIVE INCOME TAX RATE:
Income tax expense (benefit) before the cumulative effect of changes in
statutory income tax rates, divided by income (loss) before income taxes,
minority interests, extraordinary items and the cumulative effect of
accounting changes.
SELECTED FINANCIAL DATA-FINANCIAL POSITION, END OF YEAR(a)
<TABLE>
<CAPTION>
DECEMBER December December December December April
(in thousands, except per share amounts) 1994 1993 1992 1991 1990(b) 1990
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION,END OF YEAR
Cash and cash equivalents $ 59,296 $ 23,620 $ 375,492 $ 85,084 $ 31,923 $ 75,580
Accounts receivable 913,501 422,894 414,773 389,633 394,804 544,020
Inventories 844,111 666,464 686,704 631,608 673,924 783,072
Other current assets 158,622 169,345 220,197 426,970 810,050 51,695
Total current assets 1,975,530 1,282,323 1,697,166 1,533,295 1,910,701 1,454,367
Property, plant and equipment, net 4,679,899 3,571,492 3,502,809 2,933,098 2,843,402 3,491,938
Investments in affiliates 125,097 519,448 587,756 619,692 600,874 494,957
Other assets 367,770 324,724 390,576 368,071 205,383 175,254
Goodwill 776,032 153,315 158,029 172,438 181,041 201,879
Total assets $7,924,328 $5,851,302 $ 6,336,336 $5,626,594 $5,741,401 $5,818,395
Accounts payable and accrued liabilities $1,110,740 $ 616,192 $ 604,767 $ 481,872 $ 501,393 $ 631,331
Current portion of long-term debt 221,367 97,287 212,734 130,949 86,145 156,086
Other current liabilities 236,779 67,597 110,716 92,670 201,225 24,384
Total current liabilities 1,568,886 781,076 928,217 705,491 788,763 811,801
Long-term debt 2,667,960 1,942,836 2,153,868 1,758,125 1,801,926 1,771,185
Other long-term liabilities 776,138 721,779 695,195 111,123 139,796 120,828
Deferred income taxes 594,793 430,421 435,202 474,125 441,558 537,826
Minority interests 154,930 7,009 10,192 2,344 2,285 18,788
Preferred stock 740,303 454,108 454,348 354,588 354,828 355,008
Common shareholders' equity 1,421,318 1,514,073 1,659,314 2,220,798 2,212,245 2,202,959
Total liabilities and shareholders' equity $7,924,328 $5,851,302 $ 6,336,336 $5,626,594 $5,741,401 $5,818,395
Working capital $ 406,644 $ 501,247 $ 768,949 $ 827,804 $1,121,938 $ 642,566
OTHER DATA
Capital expenditures (excluding acquisitions) 351,656 331,065 469,681 467,474 272,144 574,599
Depreciation expense 398,422 358,431 356,448 291,601 198,066 300,907
Per common share:
Market Price: High $ 24.75 $ 23.38 $ 23.38 $ 29.25 $ 27.12 $ 34.38
Low 15.63 16.25 17.00 17.00 18.50 22.75
Year-end 21.00 18.50 18.00 19.88 26.38 22.88
Book value 17.40 18.55 20.34 27.25 27.21 27.14
Return on average capital employed 3.1% 2.9% 1.4% 6.0% 11.1% 10.8%
Return on average common equity (4.0)% (2.1)% (3.6)% 2.4% 8.8% 9.4%
Ratio of long-term debt to total capitalization 53.5% 49.6% 50.4% 40.6% 41.2% 40.7%
Current ratio 1.26 1.64 1.83 2.17 2.42 1.79
</TABLE>
<TABLE>
<CAPTION>
April April April April April April
(in thousands, except per share amounts) 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION,END OF YEAR
Cash and cash equivalents $ 24,424 $ 42,636 $ 116,764 $ 36,125 $ 32,090 $ 24,978
Accounts receivable 567,072 532,922 439,784 248,445 235,901 212,319
Inventories 799,434 802,047 713,690 395,955 401,702 379,817
Other current assets 65,207 66,309 72,876 63,237 72,029 18,183
Total current assets 1,456,137 1,443,914 1,343,114 743,762 741,722 635,297
Property, plant and equipment, net 3,385,977 2,935,738 2,529,563 1,205,792 984,017 811,599
Investments in affiliates 376,657 269,333
Other assets 114,121 132,112 97,083 22,672 15,151 12,973
Goodwill 225,241 224,620 240,712
Total assets $5,558,133 $5,005,717 $ 4,210,472 $1,972,226 $1,740,890 $1,459,869
Accounts payable and accrued liabilities $ 605,781 $ 618,591 $ 546,548 $ 269,215 $ 257,649 $ 270,255
Current portion of long-term debt 102,640 81,413 69,438 10,064 9,098 5,720
Other current liabilities 26,164 30,110 15,301 23,722 26,116 8,174
Total current liabilities 734,585 730,114 631,287 303,001 292,863 284,149
Long-term debt 1,918,288 1,622,990 1,280,428 646,498 563,132 442,917
Other long-term liabilities 84,166 95,588 172,589 69,044 56,955 69,681
Deferred income taxes 460,693 366,785 266,147 197,941 144,879 89,229
Minority interests 12,171 7,845 5,925 2,659 4,397 3,119
Preferred stock 302,440 304,918 106,898 8,879 96,838 104,082
Common shareholders' equity 2,045,790 1,877,477 1,747,198 744,204 581,826 466,692
Total liabilities and shareholders' equity $5,558,133 $5,005,717 $ 4,210,472 $1,972,226 $1,740,890 $1,459,869
Working capital $ 721,552 $ 713,800 $ 711,827 $ 440,761 $ 448,859 $ 351,148
OTHER DATA
Capital expenditures (excluding acquisitions) 684,613 623,079 508,973 281,058 218,221 132,988
Depreciation expense 245,549 201,960 162,606 81,739 66,432 53,064
Per common share:
Market Price: High $ 30.75 $ 39.00 $ 43.75 $ 31.12 $ 23.00 $ 28.12
Low 21.12 18.50 22.00 17.12 15.63 18.12
Year-end 28.50 24.63 36.00 30.75 17.33 19.50
Book value 25.24 23.12 21.22 14.40 13.35 11.63
Return on average capital employed 12.8% 12.2% 17.4% 12.2% 16.7% 21.1%
Return on average common equity 11.9% 10.7% 10.0% 13.2% 17.7% 22.4%
Ratio of long-term debt to total capitalization 44.8% 42.6% 40.8% 46.1% 45.2% 43.6%
Current ratio 1.98 1.98 2.13 2.45 2.53 2.24
</TABLE>
(a) Adjusted for three-for-two common stock splits on June 23, 1986, and June
20, 1983.
(b) Represents the 35-week transition period resulting from the change in fiscal
year.
BOOK VALUE PER COMMON SHARE:
Common shareholders' equity less unrecognized accretion or unamortized discount
on preferred stock, divided by outstanding shares of common stock.
RETURN ON AVERAGE CAPITAL EMPLOYED:
Income (loss) before restructuring charges, extraordinary items, the cumulative
effect of accounting changes, interest expense and income taxes, divided by
average capital employed. Capital employed is calculated as total assets,
excluding assets held for sale, minus non-interest bearing current liabilities.
Income for the 35-week transition period ended December 1990 has been
annualized.
RETURN ON AVERAGE COMMON EQUITY:
Income (loss) applicable to common shares before after-tax restructuring
charges, extraordinary items, and the cumulative effect of accounting changes,
divided by average common shareholders' equity. Common shareholders' equity has
been adjusted to exclude net restructuring charges, extraordinary items, and
accounting changes which occurred in that year. Income for the 35-week
transition period ended December 1990 has been annualized.
RATIO OF LONG-TERM DEBT TO TOTAL CAPITALIZATION:
Long-term debt divided by the sum of long-term debt, minority interests,
preferred stock and common shareholders' equity.
CURRENT RATIO:
Total current assets divided by total current liabilities.
Exhibit 13 - Appendix A
Operating Income - Consumer Products bar chart as defined by the
following data points:
(in millions) 1992 1993 1994
North America:
lst Quarter $15.3 $23.2 $28.3
2nd Quarter 30.8 33.9 47.0
3rd Quarter 32.8 33.6 44.0
4th Quarter (7.8) 20.6 24.1
Europe:
3rd Quarter $0.5
4th Quarter 6.4
Operating Income - Food and Consumer Packaging bar chart as defined by
the following data points:
(in millions) 1992 1993 1994
1st Quarter $31.8 $23.3 $26.6
2nd Quarter 33.7 29.7 34.3
3rd Quarter 16.9 22.3 16.5
4th Quarter 6.7 28.5 20.0
Operating Income - Communications Papers bar chart as defined by the
following data points:
(in millions) 1992 1993 1994
1st Quarter $(15.4) $(20.3) $(25.1)
2nd Quarter (6.4) (12.3) (26.5)
3rd Quarter (6.3) (6.4) (4.1)
4th Quarter (26.9) (19.4) 19.9
Capital Expenditures and Cash Flow from Operations bar chart as defined
the following data points:
(in millions) 1990 1991 1992 1993 1994
Capital expenditures $457 $468 $470 $331 $352
Cash - flow from operations 431 289 313 441 411
Total Capitalization bar chart as defined by the following data points:
(in billions) 1990 1991 1992 1993 1994
Total debt $1.89 $1.89 $2.37 $2.04 $3.11
Minority interests .00 .00 .01 .01 .15
Total preferred stock .36 .35 .45 .45 .74
Common sharehalders' equity 2.21 2.22 1.66 1.51 1.42
Annual Rate of Cash Dividends Per Common Share bar chart as defined by
the following data points:
(in dollars) 1990 1991 1992 1993 1994
Annual rate of cash dividends $.60 $.60 $.60 $.60 $.60
Total Assets bar chart as defined by the following data points:
(in billions) 1990 1991 1992 1993 1994
Current assets $1.91 $1.53 $1.70 $1.28 $1.98
Net fixed and other assets 3.83 4.09 4.64 4.57 5.95
Exhibit 21
JAMES RIVER CORPORATION of Virginia
SUBSIDIARIES (a)(b)
as of December 25, 1994
James River Corporation of Virginia, a corporation organized
under the laws of Virginia, has the following majority-owned
subsidiaries:
Organized Under
Name the Laws of
Berlin Mills Railway, Inc. New Hampshire
Brusara Participacoes, Ltda Brazil
Cartellas S.A. Greece
Celtona B.V. Netherlands
Crown Zellerbach A.G. Switzerland
Crown Zellerbach International, Inc. Delaware
Diamond Occidental Forest Inc. Delaware
GB Papers Limited Scotland
Historic Upper Brandon, Inc. Virginia
ILC Inc. Virginia
James River Acquisition, Inc. Virginia
James River Canada, Inc. Canada
James River de Mexico SA de CV Mexico
James River Fiber Company Virginia
James River Fine Papers Limited Scotland
James River International Holdings, Ltd. Virginia
James River-Marathon, Ltd. Ontario
James River New Castle, Inc. Delaware
E-8
Exhibit 21 (continued)
Organized Under
Name the Laws of
James River Packaging de Mexico SA de CV Mexico
James River-New Hampshire Electric, Inc. New Hampshire
James River Paper Company, Inc. Virginia
James River-Pennington, Inc. Alabama
James River Timber Corporation Alabama
James River Tredegar, Inc. Virginia
James River UK Holdings Limited England
Jamont, N.V. Netherlands
Jamont Holdings N.V. Netherlands
Jamont Ireland Ltd. Ireland
Jamont Tisu S.A. Spain
Jamont UK Limited United Kingdom
Jarapar Participacoes, Ltda Brazil
JRF Immobiliere S.A. Belgium
JRFP International Limited Scotland
Kaysersberg, S.A. France
Meridian & Bigbee Railroad Company Mississippi
Mid-South Lumber Company, Inc. Virginia
Nokian Paperi Oy Finland
Riverside Transportation, Inc. Virginia
St. Francis Insurance Company Ltd. Bermuda
Exhibit 21 (continued)
Organized Under
Name the Laws of
Scotflow Limited Scotland
Servicios James River SA de CV Mexico
Sodipan S.A. France
Unikay S.r.L. Italy
William Sommerville & Son, Ltd. Scotland
(a) Certain subsidiaries which, if considered in the aggregate,
would not constitute a significant subsidiary are not listed.
(b) Unconsolidated affiliates for which the Company owns, directly
or indirectly, 50% or less of the outstanding voting stock and
which are not controlled by the Company have been excluded from
this listing.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference:
(i) in Registration Statement No. 33-54491 on Form S-8
pertaining to the James River Corporation of Virginia StockPlus
Investment Plan;
(ii) in Registration Statement No. 33-45079 on Form S-8
pertaining to the James River Corporation of Virginia UK Employee
Share Accumulation Plan;
(iii) in Registration Statement No. 33-57153 on Form S-8
pertaining to the James River Corporation of Virginia Canadian
Employees Stock Purchase Plan;
(iv) in Registration Statement No. 33-43894 on Form S-8
pertaining to the James River Corporation of Virginia Stock Option
Plan for Outside Directors;
(v) in Post-Effective Amendment No. 1 to Registration Statement
No. 2-83979 on Form S-8, serving as Post-Effective Amendment No. 5 to
Registration Statement No. 2-64057, and as Post-Effective Amendment
No. 2 to Registration Statement No. 2-76900, each pertaining to the
James River Corporation of Virginia Stock Option Plan;
(vi) in Registration Statement No. 33-56657 on Form S-8
pertaining to the James River Corporation of Virginia 1987 Stock
Option Plan; and
(vii) in Registration Statement No. 33-53413 on Form S-3
pertaining to the shelf registration of $600,000,000 of debt securities
of James River Corporation of Virginia
of our report, dated January 25, 1995 on our audits of the
consolidated financial statements of James River Corporation of
Virginia and Subsidiaries as of December 25, 1994 and December 26,
1993, and for each of the three fiscal years in the period ended
December 25, 1994, which report is incorporated by reference in this
Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
March 24, 1995
E-9
