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 31, 1995 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 20, 1996........................................ $2,401,988,920
Number of shares of $.10 par value common stock outstanding, as of
February 20, 1996........................................ 84,921,918
Documents Incorporated by Reference:
(1) Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 1995, 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 25, 1996, incorporated into
Part III hereof.
JAMES RIVER CORPORATION OF VIRGINIA
Annual Report on Form 10-K
December 31, 1995
TABLE OF CONTENTS
PART I
Page
Item 1. Business 3
Item 2. Properties 12
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Executive Officers of the Registrant 15
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 17
Item 6. Selected Financial Data 17
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 18
PART III
Item 10. Directors and Executive Officers of the Registrant 18
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain Beneficial Owners
and Management 18
Item 13. Certain Relationships and Related Transactions 18
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 19
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
marketer and manufacturer of consumer products, including towel and
tissue and disposable food and beverage service products; as well as
packaging, including folding cartons, flexible packaging and
foodservice products; and communications papers, including business
papers and 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 an industry leader, as measured
by sales of disposable foodservice items, folding cartons and flexible
packaging, within the United States, and, on the West Coast, in
uncoated business papers. During its twenty-seven 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. Disclosures made herein are as of December
31, 1995, or for the 53-week year then ended. Portions of the James
River Corporation of Virginia Annual Report to Shareholders for the
year ended December 31, 1995, (the "1995 Annual Report") are
incorporated in this Form 10-K by specific reference.
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. In July 1994, the Company increased its share
of ownership in Jamont from 43% to 86% for approximately $575 million.
Jamont is reported as the European Consumer Products segment. Other
acquisitions, dispositions and investments consummated or in progress
during the three years ended December 31, 1995, are discussed in Notes
2 and 17 of Notes to Consolidated Financial Statements in the 1995
Annual Report, which information is incorporated herein by reference.
During the past few years, James River has redirected its strategy,
initiating a series of initiatives designed to recreate the Company
and establish a more cost-efficient operating structure. James River
is committed to exploring and implementing strategic options which
will sharpen the Company's business focus, reduce debt, reduce
cyclicality and improve profitability. In 1995 James River completed
the spin-off of Crown Vantage Inc. ("Crown Vantage") which consisted
of a large part of its Communications Papers Business along with the
specialty paper-based portion of the Packaging Business. As a result
of this spin-off, the Company dramatically decreased its exposure to
the cyclical white papers market and reduced debt by $500 million.
James River's announcement of the signed letter of intent to sell its
CZ Inks division and its intention to sell the Flexible Packaging
division represent important steps toward further refining the
Company's portfolio and achieving additional debt reduction. These
recent activities build upon productivity enhancement programs in 1995
and 1994, pursuant to which ten under-performing operations and
related assets were disposed of or consolidated with similar
facilities. These actions reinforced the 1991 and 1990 strategy to
exit the specialty industrial papers market and the coated free sheet
market through the disposition of 26 mills. Additionally, James River
has established ongoing cost reduction efforts which were accelerated
during 1995 when the Company initiated a major integrated cost
reduction program. The related severance and exit cost components of
this program are described in more detail in Note 3 of Notes to
Consolidated Financial Statements in the 1995 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 disposable foodservice
products; (ii) the Packaging segment, which provides retail packaging
for food and consumer products; and (iii) the Communications Papers
segment, which manufactures and markets uncoated business and printing
papers serving the commercial printing and office markets. Financial
information on the Company's segments for the three years ended
December 31, 1995, is presented in Note 16 of Notes to Consolidated
Financial Statements in the 1995 Annual Report and Supplemental Pro
Forma Financial Information (Unaudited) in the 1995 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,
represented approximately 38% of the Company's consolidated sales in
1995 and would have comprised 43% of consolidated sales as the Company
is configured at December 31, 1995. This business produces towel and
tissue products such as bathroom tissue, 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 24% of the Company's consolidated sales in
1995 and would have comprised 26% of consolidated sales as the Company
is configured at December 31, 1995. Based on sales, Jamont is
currently the third largest European producer of towel and tissue
products. 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, and tabletop products. 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.
Packaging Business. The Packaging Business headquartered in
Milford, Ohio, offers a broad range of packaging alternatives for food
and other consumer products. This business accounted for
approximately 23% of the Company's consolidated sales in 1995 and
would have comprised 22% of consolidated sales as the Company is
configured at December 31, 1995. Products provided by this business
include folding cartons and paperboard (such as ice cream cartons,
cereal boxes and microwave packages), flexible packaging (such as
snack food packaging, bread bags, cereal box liners and cheese
packages), and foodservice products (such as QUILT-RAP and other
sandwich wraps, freezer papers, interfolded paper products and TITEPAK
institutional frozen food packaging). 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 that 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.
Foodservice products utilize paper or paperboard based substrates that
are coated, treated, or laminated to create packaging materials
suitable for "ready to serve" food products.
Communications Papers Business. The Company's Communications
Papers Business, which is headquartered in Norwalk, Connecticut,
represented approximately 15% of the Company's consolidated sales in
1995 and would have comprised 9% of consolidated sales as the Company
is configured at December 31, 1995. The Communications Papers
Business, after the spin-off of Crown Vantage, is primarily focused on
two major product lines: printing and publishing papers and converting
and specialty papers. Printing and publishing papers serve the
commercial printing and office markets. These products are designed
to 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, XEROXBOND
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! 20, recycled-content office papers, printing papers, forms and
envelope converting papers; and EUREKA! copy paper, formsbond and
offset printing papers.
Marketing
Marketing of the Company's North American consumer products, packaging
products, and communications papers is managed along distribution
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
commercial 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 elimination of many
tariffs and trade barriers in Europe, 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 1995, 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 ULTRA bathroom
tissue, improved BRAWNY with ULTRA THIRST POCKETS paper towels, and
DIXIE SUPERSTRONG plates. Additionally, the Company introduced the
DIXIE SELECT line of coordinated designs for commercial foodservice
products. The Company's new QUILTED NORTHERN ULTRA bathroom tissue, a
premium tissue product, is an enhancement to the Company's QUILTED
NORTHERN tissue line. Through the acquisition of Benchmark
Corporation's cutlery, straw and thermoforming operations, the Company
increased its cutlery and straw capabilities making James River the
leading supplier of plastic cutlery.
The Company's European Consumer Products Business continued to
leverage the strength of its LOTUS brand. The Company launched a new
line of toilet tissue and kitchen towel products under the LOTUS brand
in Sweden, Denmark, Russia, and the Baltics, and LOTUS MAESTRO premium
air laid kitchen towels were launched in the Netherlands. In the
commercial market, a range of premium, innovative hot embossed air
laid napkins was introduced in the LOTUS PROFESSIONAL product line.
Several new products were introduced in France including OKAY kitchen
towels with improved print patterns, and VANIA CONFORM and NETT
feminine hygiene products.
The Company's Packaging Business provided superior microwave packaging
with its patented QWIK WAVE family of products, which were expanded to
include, QWIK BAKE microwave baking cups and new applications for QWIK
CRISP. The materials in these microwave packages use microwave energy
to crisp and brown foods. In addition, the Packaging Business has
expanded its patented QUILT-RAP products to replace foil laminations
in fast-food applications.
During 1995, 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 the addition of
EUREKA! 20 recycled-content office, printing and forms papers, and
envelope converting papers, as well as previously introduced EUREKA!
premium recycled copy paper. The Company also introduced the ECLIPSE
line of forms and ledger papers for forms converting and ALERT safety
and security papers in 1995.
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, in North America and
Europe, is summarized as follows:
Capacity
Pulp Type (Tons Per Year)
Chemical 1,729,000
Mechanical 105,000
Secondary 886,000
Total 2,720,000
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. Following the spin-off
of Crown Vantage, James River is a net seller in North America of
approximately 200,000 tons per year of market pulp. These market pulp
sales are reported in the North American Consumer Products business.
The Company's paper machines in Europe are supplied through a
combination of James River's North American pulp production, 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. 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 30% of James River's total
worldwide pulp production.
Pulpwood and woodchips 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 3.0 million
acres of timberland, subsequent to the spin-off of approximately
115,000 acres to Crown Vantage. Of the total current timber supply,
approximately 290,000 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. 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 110,000 acres include lands which are
subject to 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.
Subsequent to the spin-off of the St. Francisville mill to Crown
Vantage, James River produces over 68% of its bleached paperboard
needs at its Naheola, Alabama, mill. The balance of the Company's
requirements is purchased from outside bleached paperboard producers,
over two-thirds of which is acquired pursuant to long-term contracts
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 Packaging Business, the Company
utilizes approximately 350 million pounds of plastic resins annually.
Low-density and high-density polyethylene represents 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 over 100 million pounds per
year of polystyrene plastic resins in producing plastic containers;
lids for plastic 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
CRISP, 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 patents and licenses
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 first and fourth 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 16% of consolidated net sales in 1995, 17%
in 1994, and 18% in 1993. For 1995, sales to the five largest
customers of the Consumer Products Business in North America and
Europe accounted for approximately 28% and 23% of sales, respectively;
sales to the five largest customers of the Packaging Business
represented approximately 23% of its sales; and sales to the five
largest customers of the Communications Papers Business accounted for
approximately 41% 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 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
depending on the product, as of December 25, 1994. As of December 31,
1995, subsequent to the spin-off of Crown Vantage, the Company's
backlogs were generally 5 to 20 days depending on the product. 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 the
Communications Papers Business operates can be impacted by increased
levels of imports from European and other producers when pulp prices
are low.
Consumer Products Business - North America. James River
competes in 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 1995, 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 75% of the North American market share. Based
on industry sales volume statistics, James River is one of the three
largest U.S. manufacturers, along with Kimberly-Clark Corporation and
Fort Howard Paper Company, each with towel and tissue capacity in
excess of one million tons. Based on sales, the Company's primary
competitors in the retail market include The Proctor & Gamble Company
and Kimberly-Clark Corporation. In the commercial market, James
River's primary competitors include Fort Howard Paper Company and
Kimberly-Clark Corporation.
James River has one of the broadest and most diversified product lines
serving the foodservice and tabletop markets. Approximately 59% of
the Company's sales are to the retail segment of the tabletop market
and 41% are to the commercial segment of the foodservice 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, tabletop 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. Competition in the
European tissue market consists of three large pan-European producers
with market shares of 15% or above, and a multitude of small regional
producers, none of which has a European market share exceeding 5%.
Jamont holds the number three position in the European tissue market,
with a market share of 15%, behind Svenska Cellulosa Aktiebolaget
(SCA), which completed its merger in the beginning of 1995 and the
recently merged Kimberly Clark/Scott Paper Co. Jamont's products
generally hold either the number one or number two position 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 is seeking to increase its market share by adding value through
aggressive product development and providing high quality products and
superior service to its customers. Simultaneously, Jamont continues
to seek the strongest competitive cost position in each country
through continuing productivity improvements, further manufacturing
efficiencies, and reduced material and procurement costs.
Packaging Business. The 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. James River
estimates it is one of the four largest manufacturers of flexible
packaging products with market share behind Bemis Company, Inc. and
market share approximately equivalent to American National Can and
W.R. Grace & Co. The Company believes that it is an industry leader
in many of the flexible packaging technologies including flexographic
printing and coextrusion. James River, as a national manufacturer of
foodservice products, competes with numerous small regional and local
manufacturers.
James River forms long-term relationships with leading food and
consumer products companies to integrate packaging and marketing
initiatives. The Company also believes it is one of the technological
leaders in this industry. Through its pioneering of enhanced
microwave cooking packaging for both folding carton and flexible
packaging applications, the Company has strengthened 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 mill in Clatskanie, Oregon. The
Company estimates that it is one of the largest producers of uncoated
freesheet papers in the west. Major competitors in the uncoated
freesheet segment include Weyerhaeuser Company, Boise Cascade
Corporation, International Paper Co. and Georgia-Pacific 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;
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 1995 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 order to comply with increasingly stringent standards
for air, water, and solid and hazardous waste regulations. During
1995, capital expenditures totaling approximately $51 million were
made by James River for pollution control facilities and equipment.
Capital expenditures for such purposes on existing facilities are
estimated to be approximately $49 million for 1996. The estimated
1996 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.
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 15 of Notes to Consolidated Financial Statements in the 1995
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 30 of
the 1995 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 16 of Notes to Consolidated Financial
Statements in the 1995 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 includes substantially all 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:
Pulp Paper or
Location Mills Paper Board
(Facility Name)(A) (B) Mills Machines Principal Products
Alabama
Pennington (Naheola) 1 1 7 Tissue; bleached
Maine
Old Town 1 1 2 Tissue
Michigan
Kalamazoo
(Board & Carton) 1(C) 2 2 Recycled paperboard
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
Washington
Camas 1 1 12 Uncoated freesheet;
tissue
Wisconsin
Ashland 1(C) 1 2 Tissue
Green Bay 1(C) 1 6 Tissue
Canada
Marathon 1 Kraft pulp
Total North America 11 11 41
Finland
Nokia 1(C) 1 3 Tissue
France
Gien 1 3 Tissue
Louviers (Hondouville) 2(D) 1 2 Tissue
Muntzenheim (Kunheim) 1 2 Tissue
Greece
Patras (Achaia) 1 1 Tissue
Italy
Castelnuovo 1 1 Tissue
Cava dei Tirreni 1 1 Tissue
Potenza (Avigliano) 1 1 Tissue
Netherlands
Cuijk 2(D) 1 2 Tissue
Spain
Allo 1 2 Tissue
Turkey
Karamursel 1(C) 1 2 Tissue
United Kingdom
Mid-Glamorgan
(Bridgend) 1(C) 1 3 Tissue
Larne 1(C) 1 2 Tissue
North Sheffield
(Oughtibridge) 1(C) 1 2 Tissue
Total Europe 9 14 27
Total 20 25 68
(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.
James River's network of manufacturing facilities provides for an
annual virgin and recycled pulp capacity of approximately 2.7 million
tons and an annual paper and paperboard capacity of approximately 3.1
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 1995, James River's pulp and paper mills
generally had production levels of over 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 above) are
summarized as follows:
Number of Converting Plants
Principal Products Domestic International Total
Paper and plastic foodservice products 11 5 16
Folding cartons 15 15
Flexible packaging 10 1 11
Ink manufacturing and blending 6 6
Paper converting and other 2 10 12
Total 44 16 60
James River's manufacturing and converting facilities are complemented
by an integrated network of sales offices and distribution terminals.
The Company operates a trucking company and a short-line railroad,
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
The Company is not involved in any litigation the outcome of which
management believes would have a materially adverse effect on the
Company's results of operations, financial position, or competitive
position other than the information with respect to legal proceedings
set forth in Note 15 of Notes to Consolidated Financial Statements in
the Company's 1995 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 1995.
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 20, 1996. 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.
Calendar
Year First
Elected as
Name Age an Officer Current Position
Miles L. Marsh (1) 48 1995 Chairman of the Board of
Directors, President and
Chief Executive Officer
James K. Goodwin (2) 49 1991 President, North American
Consumer Products
John F. Lundgren (3) 44 1995 President, European Consumer
Products
Norman K. Ryan (4) 59 1980 President, Packaging
Clifford A.
Cutchins, IV (5) 47 1990 Senior Vice President, General
Counsel, Corporate Secretary
Daniel J. Girvan (6) 47 1993 Senior Vice President, Human
Resources
Ernst A. Haberli (7) 47 1996 Senior Vice President, Strategic
Planning
Stephen E. Hare (8) 42 1990 Senior Vice President, Corporate
Finance and Chief Financial Officer
(1) Mr. Marsh was elected as President and Chief Executive Officer in
October 1995. He was appointed to the position of Chairman of
the Board of Directors in January 1996. From 1991 to 1995, he
served as Chairman and Chief Executive Officer of Pet Inc. Mr.
Marsh served as President and Chief Operating Officer of Pet's
former parent company, Whitman Corporation, from 1989 to 1991.
Prior to that, he spent eight years in executive positions with
various divisions of Dart & Kraft Inc., Kraft Inc. and General
Foods USA, all of which are part of Philip Morris Companies Inc.
(2) Mr. Goodwin was elected to his current position in 1992. He
joined James River in 1991 as Vice President, Corporate Marketing
Strategy. Prior to joining James River, he served as Vice
President, Corporate Sales, for The Procter & Gamble Company,
which he joined in 1968.
(3) Mr. Lundgren was elected to his current position in 1995. He
joined James River in 1982 as Director of Marketing for Northern
paper products, in connection with the acquisition of American
Can Company. He served in various managerial and executive
positions from 1982 to 1995.
(4) Mr. Ryan was elected to his current position in 1990. He joined
James River in 1980 as Manager/Vice President, Kalamazoo
Operations, in connection with the Company's acquisition of Brown
Company, which he joined in 1954. He served in various
managerial and executive positions from 1980 to 1990.
(5) Mr. Cutchins joined James River in 1990 in his current position.
From 1982 until joining James River, he served as Partner with
the law firm of McGuire, Woods, Battle & Boothe, L.L.P., which he
joined in 1975.
(6) Mr. Girvan was elected to his current position in 1993. He
joined James River in 1986 as Director, Human Resources,
Communications Papers, in connection with the acquisition of
Crown Zellerbach Corporation, which he joined in 1977.
(7) Mr. Haberli joined James River in his current position in January
1996. From 1990 to 1995, he served as President of Pet
International. Prior to that, since 1985, he held various
executive positions in strategic planning and development with
Kraft General Foods, Kraft International and Kraft Inc.
(8) Mr. Hare was elected to his current position in 1992. He joined
James River in 1990 as Vice President, Treasurer. Prior to
joining James River, he served as a Senior Vice President with
Kidder, Peabody & Co., which he had joined in 1981.
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 18 of Notes
to Consolidated Financial Statements in the 1995 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 12 of Notes to Consolidated Financial Statements in
the 1995 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
10 of Notes to Consolidated Financial Statements in the 1995 Annual
Report, which information is incorporated herein by reference. On
February 20, 1996, there were approximately 11,700 shareholders of
record of the Company's common stock.
ITEM 6. SELECTED FINANCIAL DATA
See Selected Financial Data on pages 62 and 63 of the 1995 Annual
Report, which information for fiscal years 1991 through 1995 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 1993 through
1995 are described in Note 2 of Notes to Consolidated Financial
Statements in the 1995 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 25 through 33 of the 1995 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," "Notes to Consolidated Financial Statements" and
"Supplemental Pro Forma Financial Information (Unaudited)" on pages 34
through 60 of the 1995 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 4 and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934"
on page 18 of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 25, 1996 (the "1996 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 15 and 16 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 8 through 13, "Performance
Graph" on page 14, and "Compensation Committee Report on Executive
Compensation" on pages 15 through 17 of the Company's 1996 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 through 7 of the Company's 1996 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 1996 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 34 through 61 of the Company's 1995
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 1995 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 31, 1995 (see page
34 of the 1995 Annual Report)
"Consolidated Balance Sheets" as of December 31, 1995
and December 25, 1994 (see page 35 of the 1995 Annual
Report)
"Consolidated Statements of Cash Flows" for each of the
three years in the period ended December 31, 1995 (see page
36 of the 1995 Annual Report)
"Consolidated Statements of Changes in Capital
Accounts" for each of the three years in the period ended
December 31, 1995 (see page 37 of the 1995 Annual Report)
"Notes to Consolidated Financial Statements" (see pages
38 through 59 of the 1995 Annual Report)
"Supplemental Pro Forma Financial Information (Unaudited)"
(see page 60 of the 1995 Annual Report)
"Report of Independent Accountants" (see page 61 of the
1995 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, amended as of February 15,
1996, filed herewith.
4(a) Amended and Restated Rights Agreement dated May 12,
1992, between James River Corporation of Virginia
and Nations Bank 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) Amendment No. 2 to Amended and Restated Rights E-2
Agreement dated May 12, 1992, as amended by
Amendment No. 1, dated June 8, 1992, between James
River Corporation of Virginia and Wachovia Bank
of North Carolina, N.A. dated January 31, 1996, filed
herewith.
4(c) 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.
10(a) * Employment arrangement for Miles L. Marsh, dated E-3
August 9, 1995, filed herewith.
10(b) * 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(c) * 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(d) * 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(e) * James River Corporation of Virginia Director Stock
Ownership Plan, effective April 25, 1996, pending
shareholder approval (incorporated by reference to
Exhibit B to the Company's Proxy Statement dated
March 13, 1996).
10(f) * James River Corporation of Virginia Amended and
Restated Stock Option Plan, dated April 12, 1984,
and subsequently amended throug 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).
10(g) * 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(h) * 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(i) * James River Corporation of Virginia 1996 Stock
Incentive Plan, effective April 25, 1996,
pending shareholder approval (incorporated by
reference to Exhibit A to the Company's
Proxy Statement dated March 13, 1996.)
10(j) * 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(k) * 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(l) * James River Corporation of Virginia Management E-4
Incentive Plan, effective as of January 25, 1996,
filed herewith.
10(m) * 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(n) * 1994 Amendment to the James River Corporation of
Virginia Supplemental Benefit Plan, dated March 1,
1994 (incorporated by reference to Exhibit 10(q) to
the Company's Annual Report on Form 10-K for the
year ended December 25, 1994).
10(o) * James River Corporation of Virginia Miles L. Marsh E-5
Supplemental Retirement Plan, effective as of
December 7, 1995, filed herewith.
11 Computation of Earnings Per Share, filed herewith. E-6
12 Computation of Ratio of Earnings to Fixed Charges, E-7
filed herewith.
13 Certain sections of the Company's Annual Report to E-8
Shareholders for the year ended December 31, 1995,
filed herewith.
21 Subsidiaries of the Company as of December 31, 1995, E-9
filed herewith.
23 Consent of Independent Accountants, filed herewith. E-10
27 Financial Data Schedules for the year ended December
31, 1995 (filed electronically only)
(b) Reports on Form 8-K:
During the last quarter of 1995 and subsequent thereto, the
Company filed the following Current Report on Form 8-K:
Date of Report Event Reported
November 1, 1995 On November 1, 1995, the Company published a
press release announcing the signing of two
definitive agreements related to the plastic
cutlery and foam cup operations of Benchmark
Corporation of Delaware. On November 7,
1995, the Company published a press release
announcing the completion of the plastic
cutlery acquisition.
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 27, 1996 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 27, 1996 Signature and Title
By:/s/ Miles L. Marsh
Miles L. Marsh
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/ William T. Burgin March 26, 1996
William T. Burgin Date
/s/ Worley H. Clark, Jr. March 21, 1996
Worley H. Clark, Jr. Date
/s/ William T. Comfort, Jr. March 27, 1996
William T. Comfort, Jr. Date
/s/ William V. Daniel March 22, 1996
William V. Daniel Date
/s/ Bruce C. Gottwald March 27, 1996
Bruce C. Gottwald Date
/s/ Miles L. Marsh March 27, 1996
Miles L. Marsh Date
/s/ Robert M. O'Neil March 27, 1996
Robert M. O'Neil Date
/s/ Joseph T. Piemont March 27, 1996
Joseph T. Piemont Date
/s/ Anne Marie Whittemore March 26, 1996
Anne Marie Whittemore Date
/s/ Robert C. Williams March 25, 1996
Robert C. Williams Date
Exhibit 3(d)
AMENDED AND RESTATED
BYLAWS OF
JAMES RIVER CORPORATION OF VIRGINIA
(amended as of February 15, 1996)
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.
E-1
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,
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 10. 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.
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, manually or by facsimile, by a tranfer agent, or
registered by a registrar, other than the Corporation itself or
an employee of the Corporation. In case any such officer or
authorized officer of the transfer agent or registrar who has
signed or whose facsimile signature has been placed upon any such
certificate shall have ceased to be such officer or authorized
officer of the transfer agent or registrar 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 Constitutive Resolutions. A "Constitutive
Resolution" is a resolution of the Board of Directors which is
(i) designated therein as a "Constitutive Resolution" and (ii)
adopted by the unanimous vote of the directors present and voting
if a quorum is present when a vote is taken. Notwithstanding
anything in Section 3.5 or any other provision of these Bylaws to
the contrary, a Constitutive Resolution can only be rescinded,
revoked, amended or modified by the affirmative vote of all the
directors then in office and the quorum of the Board of Directors
which shall be present to consider such action shall be the
number of directors then in office.
Section 8.4 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
except that action to adopt or amend a bylaw that changes the
quorum or voting requirement applicable to meetings of the Board
of Directors must meet the quorum requirement and be adopted by
the vote required to take action under the quorum and voting
requirement then in effect. 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 4(b)
AMENDMENT NO. 2
TO
AMENDED AND RESTATED RIGHTS AGREEMENT DATED MAY 12, 1992
AS AMENDED BY AMENDMENT NO. 1 DATED JUNE 8, 1992
This Amendment No. 2 executed between James River
Corporation of Virginia (the "Company") and Wachovia Bank of
North Carolina, N. A. ("Wachovia") dated January 31, 1996 amends
the Amended and Restated Rights Agreement between the Company and
NationsBank of Virginia, N. A. dated May 12, 1992 (the "Original
Agreement") as amended by Amendment No. 1 dated June 8, 1992,
between the Company and NationsBank of Virginia, N.A. ("Amendment
No. 1"). Together, the Original Agreement and Amendment No. 1
are herein considered the Amended Agreement.
RECITALS
A. Section 21 of the Original Agreement permits the
Company to remove a Rights Agent (as defined in the Amended
Agreement) and appoint a successor Rights Agent.
B. Pursuant to the terms of Amendment No. 1, Wachovia
serves as the Rights Agent.
C. The Company has appointed Norwest Bank of Minnesota, N.
A. ("Norwest") as its transfer agent and registrar, dividend
disbursing agent, dividend reinvestment agent, and Rights Agent
pursuant to a resolution adopted by the Board of Directors of the
Company on December 14, 1995.
D. Pursuant to Section 21 of the Original Agreement, the
Company has provided notification to Wachovia on December 20,
1995 that it has appointed Norwest as Rights Agent effective
January 31, 1996.
NOW, THEREFORE, the Company and Wachovia agree as follows:
Effective January 31, 1996, the term "Rights Agent"
shall be amended to mean Norwest and its successors and
assigns or any successor entity appointed by the
Company.
The fifth sentence of Section 21 is deleted and is
replaced with the following:
Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation
organized and doing business under the laws of the
United States or of any state of the United States so
long as such corporation is in good standing, and is
authorized under such laws to exercise corporate trust
powers and is subject to supervision or examination by
federal or state authority and which has at the time of
its appointment as Rights Agent a combined capital and
surplus of at least $50 million.
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Section 26 is amended by deleting the address for the Rights
Agent provided for and inserting instead:
Norwest Bank of Minnesota, N.A.
161 North Concord Exchange
South St. Paul MN 55075
This amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
This amendment may be executed in counterparts and each such
counterpart shall be deemed to be an original.
The Amended Agreement as amended by this Amendment No. 2
shall be read together to constitute one agreement.
JAMES RIVER CORPORATION WACHOVIA BANK OF
OF VIRGINIA NORTH CAROLINA, N. A.
By: /s/ Clifford A. Cutchins, IV By: /s/ Robert W. Seifert
Title: Senior Vice President Title: Vice President
August 9, 1995
Exhibit 10(a)
SUMMARY OF TERMS OF EMPLOYMENT FOR MILES MARSH
1. To become President and CEO, and Director on October 1,
1995 and Chairman January 1, 1996.
2. Base salary of $800,000 subject to periodic review by
the Board.
3. Bonus program at a guaranteed rate of $50,000 per month
through 1996, paid in January of 1996 (3 months) and
January, 1997 (12 months).
Following this, current Performance Bonus and Profit
Sharing Plans will apply.
4. Stock Plan to include 250,000 shares of Unrestricted
Stock Options at market price as of October 1, 1995,
with shares vesting over three years and 50,000 shares
of Deferred Stock also vesting over three years.
5. Change of control would trigger immediate vesting of
all Unrestricted Options and Deferred Stock Shares.
Change of control and involuntary termination (not for
cause) would also cause payment of two years of
additional salary and target bonus.
6. Moving costs will be reimbursed for relocation to
Richmond and extra temporary living expenses in
Richmond will be paid all according to company policy.
Closing costs of one of two existing homes will be
paid.
7. Life insurance coverage by the Company will include
either the current $3 million term life insurance
policy or the coverage provided by the James River Plan
(up to 3x salary), the CEO to choose.
8. Retirement plan to include SERP benefits that vest in
10 years with retirement possible at age 58 without
reduction of benefits, but actuarially reduced for
retirement prior to age 58 using the same rate of
reduction that James River uses for retirement prior to
65.
9. Vacation benefits as needed, but not to exceed 5 weeks
per year.
10. Other benefits (see book) according to company policy
including a company car.
Please initial your approval for submission to the
James River Board at its special meeting to be held on
Tuesday, August 15, 1995.
Miles L. Marsh
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Exhibit 10(l)
JAMES RIVER CORPORATION OF VIRGINIA
MANAGEMENT INCENTIVE PLAN
1. Purpose. The Compensation Committee adopted on January 25, 1996
the Management Incentive Plan (the "Plan"). The Plan is intended to
provide an additional incentive to certain key management employees
through whose increased efforts the Company's financial performance
can be increased and to reward such participants with a cash payment
if the performance goals fixed by the Committee pursuant to the terms
of the Plan are met.
2. Definitions. As used in the Plan, the following terms
have the meanings indicated:
(a) "Award Table" means a table similar in type to Exhibit
A with changes necessary to adapt the table to the performance
criteria selected by the Committee for the Performance Year and
to display other objective factors necessary to determine the
amount, if any, of the award for the Performance Year.
(b) "Board" means the board of directors of the Company.
(c) "Cause" means gross malfeasance or unsatisfactory performance.
(d) "Committee" means the committee appointed by the Board
as described in Section 6.
(e) "Company" means James River Corporation of Virginia, a Virginia
corporation.
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(f) "Disability" means a condition that entitles the Participant
to disability payments under the terms of the Company's long term
disability plan as determined by the Committee.
(g) "Earnings" means the after-tax, post-preferred dividends
consolidated net income of the Company computed in accordance with
generally accepted accounting principles and adjusted to eliminate
(i) any gain or loss attributable to the disposition of investment
in subsidiaries, and (ii) extraordinaryand non-recurring items of
income or loss, if appropriate.
(h) "Earnings per Share" means that portion of the
Company's Earnings allocable to each outstanding share of common
stock during the Performance Period based on the average number
of shares outstanding, applicable equivalents (stock options) and
additional contingently issuable shares (related to conversion of
debentures).
(i) "Incentive Base Salary" means the salary applicable for
or within the grade to which the Participant has been assigned at
the end of the Performance Year for which a cash award is being
determined.
(j) "Individual Performance Factor" means an evaluation by
senior management or the Committee (in the case of senior
management) of a Participant's contribution to the achievement
(or failure to achieve) the Performance Goal or Goals for the
Performance Year expressed as a ranking number.
(k) "Layoff" means job elimination resulting from
downsizing initiatives or divestiture of a business segment.
(l) "Operating Income " means income attributable to the
ongoing operations of the Company or Business, computed in
accordane with generally accepted accounting principles and
adjusted for extraordinary and non-recurring items of income or
loss, if appropriate.
(m) "Participant" means any person eligible to receive a
cash award under the Plan.
(n) "Performance Goal" means one or more of Earnings Per
Share, Return on Equity, Targeted Earnings, Return on Average
Assets or Return on Long Term Capital, which may be used
singularly or in combination, as the Committee determines, to
measure the performance of the Company for the purpose of
determining whether a cash award will be payable under the Plan
for the Performance Year. When more than one factor is selected,
the Committee shall at the time establish a formula for
determining a composite goal.
(o) "Performance Year" means the Company's fiscal year.
The initial Performance Year is the Company's 1996 fiscal year.
(p) "Plan" means the James River Corporation of Virginia
Management Incentive Plan.
(q) "Retirement" or "Retires" means the termination of
employment of a Participant on or after the Participant's Early
Retirement Date under the Company's Retirement Plan for reasons
other than death.
(r) "Return on Average Assets" means Earnings for the
Performance Period of computation expressed as a percentage of
the total average assets of the Company for the Performance Year.
(s) "Return on Equity" or "ROE" means the Company's
Earnings for the Performance Year of computation expressed as a
percentage of the average common stock ownership during the
Performance Year as set forth in the Company's annual report.
(t) "Return on Long-Term Capital" means Earnings for the
Performance Period of computation expressed as a percentage of
the total of the Company's long-term debt and equity.
(u) "Targeted Earnings" means the level of Earnings of the
Company's fixed by the Committee as the goal to be achieved for
the Performance Year.
3. Participation.
(a) Participation in the Plan shall be limited to salaried
employees of the Company and its subsidiary corporations assigned
to salary grades I and above (with exceptions below salary grade
I for individuals selected by the Committee employed in positions
that can impact Performance Goals), regardless of where employed,
during and at the end of the Performance Year. A person who
becomes a Participant after the commencement of a Performance
Year or a Participant whose employment terminates during a
Performance Year because of death, Retirement or Disability shall
be eligible to receive a pro rata award pursuant to Section 4
based on the ratio that the Participant's number of full months
of participation during the Performance Year bears to the number
12. A Participant who ceases to be within the eligible salary
grades or whose employment terminates during the Performance Year
for reasons other than death, Retirement, Disability, or Layoff
other than for Cause shall not be eligible to receive a cash award.
(b) A Participant in this Plan shall not be eligible to
participate in any other cash incentive or profit sharing plan
established or maintained by the Company.
4. Determination of Cash Awards.
(a) Before or within sixty days of the beginning of each
Performance Year, the Committee (in consultation with senior
management executives) will adopt one or more Performance Goals,
an Award Table substantially in the form attached as Exhibit A
and an Individual Performance Factor Table in the form attached
as Exhibit B. The Award Table will fix the objective components
for determining whether an award will be paid and, if so, the
amount of the award. Awards are based on a percentage of each
Participant's Incentive Base Salary for the Performance Year if
and to the extent the Performance Goal is achieved. The
Performance Goal shall be the attainment of a target percentage
or range of target percentages of the Performance Goal or Goals
for the Performance Year. The amount payable to a Participant
for the Performance Year will be determined from the Award Table
as a percentage of Incentive Base Salary if the target
percentages expressed as a percentage of the Performance Goal are
within the range of percentages fixed by the Committee for the
Performance Year. The amount determined for each Participant
will be adjusted for the Individual Performance Factor as
determined from the Individual Performance Factor Table depending
on the Participant's ranking evaluation by management and the
Committee.
(b) The Committee may establish such threshold requirements
for the payment of an award and limitations on the amount of the
award as the Committee shall deem appropriate. Once fixed, the
Performance Goals and targets for a Performance Year may not be
modified after the Performance Year begins.
(c) Before any award may be paid for a Performance Year,
the Committee shall certify that the Performance Goals and any
other requirements of the Plan have been satisfied for the
Performance Year. No payments shall be made unless and until the
Committee makes this certification.
(d) Even though the Performance Goals have been met, the
Committee expressly reserves the right to reduce or eliminate
entirely any award to a Participant if it determines it is in the
best interests of the Company to do so. Such determination shall
be conclusive and binding.
5. Payment of Awards.
(a) If the Committee has made the certification required
pursuant to Section 4(b), subject to Section 4(c), awards shall
be payable not later than 75 days following the last day of the
Performance Year for which they are computed. All awards under
the Plan are subject to federal, state and local income and
payroll tax withholding when paid.
(b) If a Participant dies and is subsequently entitled to
receive an award under the Plan, the award shall be paid to the
personal representative of the Participant's estate.
6. Administration.
(a) The Plan shall be administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Board
from time to time may appoint members previously appointed and
may fill vacancies, however caused, in the Committee.
(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
authority to construe and interpret the Plan, resolve any
ambiguities, and make determinations with respect to the
eligibility for or amount of any award. 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.
7. Rights. Participation in the Plan and the right to
receive cash awards under the Plan shall not give a Participant
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. A Participant shall for all
purposes be a general creditor of the Company. The interests of
a Participant 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 Participant
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 a
Participant at any time for any reason whatsoever, with or
without cause.
8. Successors. The Plan shall be binding on the
Participants and their personal representatives. If the Company
becomes a party to any merger, consolidation, reorganization or
other corporate transaction, the Plan shall remain in full force
and effect as an obligation of the Company or its successor in
interest.
9. 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
Performance Year may increase or decrease the awards for the
Performance Year just ended.
Exhibit 10(o)
JAMES RIVER CORPORATION OF VIRGINIA
MILES L. MARSH
SUPPLEMENTAL RETIREMENT PLAN
1. Purpose. The Plan is an unfunded deferred compensation
arrangement established for the benefit of Miles L. Marsh
("Executive"), one of a select group of management or highly
compensated Employees, intended to be excluded from the
participation and vesting, funding and fiduciary responsibility
provisions of ERISA. The Board has determined that the benefits
to be paid to Executive constitute reasonable compensation for
the services rendered and to be rendered by such Executive.
2. Definitions. As used in the Plan, the following terms
have the meanings indicated:
(a) "Actuarial Equivalent" means an amount or benefit
equal in value to the aggregate amounts expected to be
received under different forms of payment based on
assumptions as to the occurrence of future events. The
future events to be taken into account are mortality for
Executive, mortality for Beneficiaries, and an interest
discount for the time value of money. For this Plan, the
actuarial assumptions are the same as those defined in the
Pension Plan.
(b) "Beneficiary" means the person or entity who is to
receive benefits attributable to the Executive under the
Pension Plan after the Executive's death.
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(c) "Board" means the Board of Directors of the
Company.
(d) "Cause" means (i) fraud or material
misappropriation with respect to the business or assets of
the Company, (ii) persistent refusal or willful failure of
the Executive to perform his duties and responsibilities to
the Company, which continues after the Executive receives
written notice of such refusal or failure, (iii) willful
misconduct that materially harms or has the potential to
cause material harm to the Company, (iv) breach of a
fiduciary duty, which has a material adverse effect on the
Company, (v) conviction of a felony or crime involving moral
turpitude, or (vi) the use of drugs or alcohol that
interferes materially with the Executive's performance of
his duties.
(e) "Change of Control" means (i) the acquisition by
any unrelated person of beneficial ownership (as that term
is used for purposes of the Act) of 20% or more of the then
outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors. The term "unrelated person" means
any person other than (x) the Company and its Subsidiaries,
(y) an employee benefit plan or trust of the Company or its
Subsidiaries, and (z) a person who acquires stock of the
Company pursuant to an agreement with the Company that is
approved by the Board in advance of the acquisition, unless
the acquisition results in a Change of Control pursuant to
subsection (ii) below. For purposes of this subsection, a
"person" means an individual, entity or group, as that term
is used for purposes of the Act; or (ii) any tender or
exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of
the Company before such transactions shall cease to
constitute a majority of the Board of Directors of the
Company or any successor to the Company.
(f) "Code" means the Internal Revenue Code, as amended
from time to time, and regulations thereunder.
(g) "Committee" means the Compensation Committee of
the Board of Directors.
(h) "Company" means James River Corporation of
Virginia or any successor by merger or otherwise.
(i) "Compensation" means an amount equal to the sum of
(i) twelve times Executive's monthly salary at the highest
rate in effect during the Compensation Period, (ii) cash
incentive compensation paid during the Compensation Period
(or due and unpaid) under any cash incentive compensation
plan in which Executive is then a Participant with respect
to an incentive performance period that immediately precedes
or ends within the Compensation Period, and (iii) any
prorated incentive compensation authorized under the terms
of any cash incentive compensation plan in which Executive
is then a participant with respect to an incentive
performance period that began during the Compensation
Period. The term "Compensation" does not include income
recognized upon the exercise of any stock option granted by
the Company or any subsidiary of the Company, and any
contributions for benefits under this Plan or any other plan
of deferred compensation maintained by the Company. The
term "Compensation" also does not include special
allowances, such as amounts paid to Executive during an
authorized leave of absence, moving expenses, car expenses,
tuition reimbursement, meal allowances, the cost of excess
group life insurance income includable in taxable income,
and similar items.
(j) "Compensation Period" means the twelve full months
immediately preceding the date of Executive's Retirement.
(k) "Effective Date" means December 7, 1995.
(l) "ERISA" means the Employee Retirement Income
Security Act of 1974.
(m) "Normal Retirement Date" means the first day of
the month coinciding with or next following the attainment
of age 58.
(n) "Pension Benefit" in general means the benefit
payable to Executive under the Pension Plan in the normal
form at his Normal Retirement Date. If the Executive
participates in a defined contribution plan maintained by
the Company or a subsidiary of the Company, the actuarial
equivalent annuity for life that can be purchased with the
value in his plan accounts at his Normal Retirement Date
attributable to Company contributions and earnings thereon.
The benefits payable at his Normal Retirement Date to
Executive who has participated in both such types of plan
shall be aggregated to determine his Pension Benefit. In
computing the benefit offsets pursuant to Section 3(c), if
Executive becomes entitled to benefits under this Plan
before he is eligible to receive benefits under the Pension
Plan, his Pension Benefit means the amount of the benefit
that will be payable at the earliest possible date under (i)
the Pension Plan, and (ii) the annuitized actuarial
equivalent of Executive's benefits (attributed to Company
contributions and earnings thereon) under any defined
contribution plan in which Executive participated.
(o) "Pension Plan" means the James River Corporation
of Virginia Retirement Plan for Salaried and Other Non-
Bargaining Unit Employees, as amended and in effect from
time to time.
(p) "Plan" means the James River Corporation of
Virginia Miles L. Marsh Supplemental Retirement Plan.
(q) "Plan Year" means a calendar year.
(r) "Preretirement Death Benefit" means an amount,
payable to Executive's surviving Spouse pursuant to Section
7 in the event of Executive's death before his retirement
while employed by the Company.
(s) "Retirement or Retires" means the termination of
Executive's employment for reasons other than death or
Cause, except as provided in Section 6.
(t) "Service" means years of employment in years and
completed full months with the Company or any subsidiary of
the Company.
(u) "Spouse" means the person who is the Executive's
"spouse" as such term is defined in the Pension Plan.
3. Benefits at Retirement.
(a) The Basic Benefit. If Executive Retires and he
has completed 10 years of Service, he will be entitled to receive
a lifetime annual benefit (payable monthly) beginning on the date
of his Retirement that is equal to 50% of his Compensation,
subject to the adjustments and offsets as provided in 3(b), (c)
and (d).
(b) Service Adjustment. If at the time of Retirement
Executive has completed fewer than 10 years of Service, the
amount determined in (a) shall be reduced proportionately to the
extent that Executive has less than 10 years Service.
(c) Benefit Offsets. The amount of the benefit
determined under the preceding paragraphs shall be offset by the
sum of the amount of (i) Executive's Pension Benefit then payable
or payable in the future if Executive is not then eligible for
payment of benefits, and (ii) the amount of Executive's Social
Security benefit at time of Retirement. If Executive Retires
before he is eligible to receive a Social Security benefit, the
amount of the Social Security reduction shall be the amount which
will become payable at the earliest date when a Social Security
benefit could become payable to Executive, as determined by the
Committee.
(d) Form of Benefit Adjustment. If instead of
lifetime payments Executive elects to receive the benefit
determined under the preceding paragraphs in one of the optional
forms of payment permitted under the Pension Plan, the benefit
shall further be actuarially reduced in accordance with the
factors, methods and assumptions then used under the Pension Plan
for determining optional forms of benefit payments.
4. Benefits for Retirement Before Age 58. If Executive
Retires before attaining age 58 and benefits are to commence, the
amount determined under Section 3 shall be further adjusted to
reflect the earlier payment commencement date and longer period
of payment as follows:
(a) Age 58-53. If Executive's Retirement occurs
between the ages of 58 and 53, his benefits will be reduced
by 4% for each year by which Executive's age at Retirement
is less than 58 and more than 52.
(b) Prior to Age 53. If Executive's Retirement occurs
and his age is less than 53, his benefits will be further
reduced (in addition to the reduction pursuant to (a)) by 6%
for each year by which the Executive's age at Retirement is
less than age 53.
5. Benefit Enhancements Upon Change of Control. If a
Change of Control occurs, the following adjustments and
enhancements will apply:
(a) Benefit Accrual. At Retirement, Executive will be
credited with up to an additional two full years of Service
if at the time he has less than 10 years of Service.
(b) Benefit Rate Increase. The Basic Benefit
determined under Section 3(a) shall be increased by (i) 5%
if Executive Retires at age 57, and (ii) 10% if Executive
Retires at or after age 58.
(c) Payment Reduction Factors. If payment of benefits
begins before Executive has attained age 58, the reduction
factors for early payment set forth in Section 4 shall not
apply.
(d) Lump Sum Payment. The present value of the
benefits which Executive would be entitled to receive over
time upon his Retirement, as determined under Sections 4 and
5, shall be paid in a lump sum. The determination of the
amount of lump sum payment shall be made by the Company's
actuaries in accordance with the methods, factors and
assumptions used in determining contributions and benefits
under the Pension Plan.
6. Termination of Employment for Cause. If Executive's
employment is terminated by the Company for Cause, as determined
by the Committee, and a Change of Control has not occurred,
Executive's rights under the Plan shall immediately terminate and
either Executive or his Spouse shall be entitled to any benefits
under the Plan.
7. Death Before Retirement/Preretirement Death Benefit.
(a) If Executive dies before Retirement and while
still an employee of the Company, Executive's Spouse shall be
entitled to receive a Preretirement Death Benefit beginning with
the first day of the month coinciding with or next following the
date of the Executive's death. The Preretirement Death Benefit
is an annual benefit (payable monthly) equal to 50% of the Basic
Benefit (determined under Sections 3(a) and (b), before offsets
under 3(c) and (d), and with adjustments and enhancements
pursuant to Section 5, if applicable) that would have been
payable to Executive had he Retired the day before his death.
(b) The monthly Preretirement Death Benefit payment
will then be reduced by an amount equal to the sum of (i) the
surviving Spouse's preretirement monthly benefit when payable
under the Pension Plan, (ii) the Spouse's monthly benefit under
Social Security, and (iii) the amount of the monthly death
benefit payable (or annuitized monthly equivalent of the death
benefit if paid in a lump sum) to the Executive's Spouse under
any other plan maintained by the Company qualified under Section
401(a) of the Internal Revenue Code in which the Executive
participated. If as to the Executive and his Spouse the
preretirement death benefit provisions of the Pension Plan do not
apply, the Preretirement Death Benefit will be reduced at the
time and in the amount equal to the preretirement death benefit
under the Pension Plan that would have otherwise been payable to
the Spouse if it had applied.
8. Exclusion from Supplemental Benefit Plan. The benefits
provided to Executive and his Spouse under the Plan are in lieu
of benefits that might otherwise be available to Executive and
his Spouse, or either of them, under the Company's Supplemental
Benefit Plan (or any of its component parts), as amended and
restated June 1, 1995, or as later amended, and Executive's
participation in the Plan and the attendant benefits available to
Executive and his Spouse that thereby accrue, constitutes a
waiver of all his and his Spouse's rights under the Supplemental
Plan.
9. Lump Sum Payment. The Company reserves the right in
its sole discretion to pay in a lump sum the Actuarial Equivalent
of any amounts due the Executive (or the Executive's Spouse, as
the case may be) under the Plan.
10. Administration.
(a) This Plan shall be administered by the Committee.
Subject to the Plan's provisions, the Committee may adopt rules
and regulations necessary to carry out the Plan's purposes. The
amount of and entitlement to the payment of benefits under, and
the general administration of, this Plan with respect to the
computation and entitlement to benefits in determining offsets
and adjustments shall be determined by the provisions of the
Pension Plan, and the rules, regulation and interpretations
adopted in administering the Pension Plan. Beneficiary
designations made with respect to benefits payable under the
Pension Plan shall apply to this Plan unless otherwise
specifically designated by the Executive.
(b) If for any reason a benefit under the Plan is not
paid when due, the individual entitled to the benefit may file a
written claim with the Committee. If the claim is denied or if
no response is received within 90 days (in which case the claim
will be deemed to have been denied), the individual may appeal
the denial to the Committee within 60 days of the denial. In
pursuing an appeal, an individual may request that the Committee
review the denial and the individual may review pertinent
documents and submit issues and comments in writing. A decision
on appeal will be made within 60 days after the appeal is made,
unless special circumstances require the Committee to extend the
period for another 60 days.
11. Restrictions and Transfer. Any benefits to which
Executive or his Spouse or Beneficiary may become entitled under
this Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, or encumbrance,
and any attempt to do so is void. Benefits are not subject to
attachment or legal process for the debts, contracts,
liabilities, engagements or torts of Executive or his Spouse or
Beneficiary. This Plan does not give Executive or his Spouse or
Beneficiary any interest, lien, or claim against any specific
assets of the Company, and they have only the rights of a general
creditor of the Company.
12. Amendment and Termination. The Board reserves the
right to amend or terminate the Plan at any time without the
consent of Executive, but no amendment or termination shall
deprive Executive or his Spouse of the right to continue to
receive payments under Section 4 or 7 once payments have begun.
Notwithstanding the foregoing, if a Change of Control occurs,
Executive, regardless of age or Service, shall be eligible for
benefits under the Plan when such Executive ceases to be an
employee, and the Plan may not be terminated and no amendment may
be made that would adversely affect the right of Executive or his
Spouse to receive a benefit under the Plan.
13. Method of Payment of Benefits. The Company has the
obligation to pay all benefits provided for in the Plan as they
become due. Without affecting its obligations to or rights of
Executive under the Plan, the Company may establish a grantor
trust (within the meaning of Sections 671 through 679 of the
Internal Revenue Code) for Executive and deposit funds with the
trustee of such trust for investment to provide the benefits to
which the Executive (or the Executive's Spouse) may be entitled
under the Plan. The funds deposited with the trustee or trustees
of any such trust, and the earnings thereon, will be dedicated to
the payment of the benefits under the Plan but shall remain
subject to the claims of the general creditors of the Company.
The expenses of establishing and maintaining such trust shall be
paid by the Company. When Executive (or Executive's Spouse)
becomes eligible for payment of benefits under the Plan, such
benefits will be paid out of the trust fund or funds unless paid
directly by the Company.
14. Construction. This Plan shall be construed in
accordance with the laws of the Commonwealth of Virginia. The
headings in this Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provision. If a provision of this Plan is not valid, that
invalidity does not affect other provisions.
Exhibit 11
JAMES RIVER CORPORATION
of Virginia
COMPUTATION OF EARNINGS PER SHARE (a)
For the Three Years Ended December 31, 1995
(in millions, except per share data)
Year Ended
December December December
PRIMARY 31, 1995 25, 1994 26, 1993
Net income (loss) $126.4 $(13.0) $(.3)
Less preferred stock dividend
requirements (b) (58.5) (45.8) (32.8)
Net income (loss), as adjusted for
the primary calculation $67.9 $(58.8) $(33.1)
Weighted average number of common
shares and common share
equivalents:
Common shares outstanding 83.0 81.7 81.6
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 3.7
Less assumed acquisition of
common shares, using proceeds
from stock options and a defer-
red stock award plan, under the
treasury stock method (2.6)
84.1 81.7 81.6
Primary income (loss) per share $.81 $(.72) $(.40)
(a) See Note 1 of Notes to Consolidated Financial Statements in the
1995 Annual Report.
(b) See Note 13 of Notes to Consolidated Financial Statements in the
1995 Annual Report.
E-6
Exhibit 11 (Continued)
JAMES RIVER CORPORATION
of Virginia
COMPUTATION OF EARNINGS PER SHARE (a)
For the Three Years Ended December 31, 1995
(in millions, except per share data)
Year Ended
December December December
FULLY DILUTED 31, 1995 25, 1994 26, 1993
Net income (loss) $126.4 $(13.0) $(.3)
Less preferred stock dividend
requirements (b) (58.5) (45.8) (32.8)
Net income (loss), as adjusted for
the fully diluted calculation $67.9 $(58.8) $(33.1)
Weighted average number of common
shares and common share
equivalents:
Common shares outstanding 83.0 81.7 81.6
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 3.8
Less assumed acquisition of
common shares, using proceeds
from stock options and a defer-
red stock award plan, under the
treasury stock method (2.7)
84.1 81.7 81.6
Fully diluted income (loss) per share $.81 $(.72) $(.40)
(a) See Note 1 of Notes to Consolidated Financial Statements in the
1995 Annual Report.
(b) See Note 13 of Notes to Consolidated Financial Statements in the
1995 Annual Report.
Exhibit 12
<TABLE>
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in millions)
<CAPTION>
Fiscal Year Ended
December December December December December
29, 1991 27, 1992 26, 1993 25, 1994 31, 1995
(52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks)
(b,c) (d)
<S> <C> <C> <C> <C> <C>
Pretax income (loss) from
continuing operations,
before minority interests $115.2 $(182.8) $14.1 $(15.7) $220.4
Add:
Interest charged to operations 191.3 193.0 183.0 210.1 236.0
Portion of rental expense
representative of interest
factor (assumed to be one-third) 19.9 19.4 19.1 24.2 23.9
Total earnings, as adjusted $326.4 $29.6 $216.2 $218.6 $480.3
Fixed charges:
Interest charged to operations $191.3 $193.0 $183.0 $210.1 $236.0
Capitalized interest 31.8 12.8 5.3 3.1 6.9
Portion of rental expense
representative of interest
factor (assumed to be one-third) 19.9 19.4 19.1 24.2 23.9
Total fixed charges $243.0 $225.2 $207.4 $237.4 $266.8
Ratio 1.34 -- 1.04 -- 1.80
See accompanying footnote explanations.
</TABLE>
E-7
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 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.
(c) For the year ended December 27, 1992, earnings were
inadequate to cover fixed charges by $195.6 million.
(d) 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--1995 Compared to 1994
Overview
James River's 1995 consolidated net sales increased 25% to $6,800 million
compared with $5,417 million in 1994. The change in results was impacted by (i)
the effect of the inclusion of Jamont N.V.'s ("Jamont") sales for a full year in
1995, (ii) the spin-off to shareholders of a portion of the company in August
1995, and (iii) the impact of higher pricing for many of James River's products.
Income from operations totaled $423 million in 1995, a nearly three-fold
improvement over the $147 million reported in 1994. The company reported net
income of $126 million, or $.81 per share, in 1995, versus a net loss of $13
million, or $(.72) per share, in 1994.
The 1995 results included $32 million, net of taxes and minority interests,
primarily for severance and related costs and $6 million, net of minority
interests, for the cumulative effect of an increase in the French income tax
rate. Non-recurring items reported in 1994 included $16 million, net of taxes,
for severance, litigation and environmental costs and after-tax income of $5
million for interest income on tax refunds. Excluding non-recurring items, net
income was $165 million, or $1.26 per share, in 1995 compared to a net loss of
$2 million, or $(.59) per share, in 1994.
Financial information on the company's business segments, presented in Note 16
of Notes to Consolidated Financial Information, should be read in conjunction
herewith.
Transactions Effecting Comparability
In July 1994, James River increased its ownership interest in Jamont (the
company's European Consumer Products Business) from 43.2% to 86.4% for a
purchase price of approximately $575 million. Jamont was included in James
River's consolidated results for all of 1995, compared to only five months in
1994. Approximately $815 million of the increase in net sales and $35 million of
the increase in operating profits between 1994 and 1995 was attributable to the
inclusion of a full year of Jamont in 1995. In addition, interest expense and
preferred dividend requirements increased by approximately $39 million and $13
million, respectively, due to this purchase.
As of August 25, 1995, James River completed the spin-off of Crown Vantage Inc.
("Crown Vantage") to the company's common shareholders. Crown Vantage included a
large part of what was formerly James River's Communications Papers Business, as
well as the specialty paper-based portion of the Packaging Business. In
connection with the spin-off, James River received approximately $480 million in
cash and pay-in-kind notes valued at $85 million, which, depending on market
conditions, may be remarketed. The results of the facilities spun off to Crown
Vantage were included in James River's consolidated results for the first eight
months of 1995. On a pro forma basis, assuming the spin-off had occurred as of
the beginning of the year, 1995 net sales would have been reduced by $637
million, operating profits by $52 million and net income by $14 million, or $.17
per share.
25
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Pro Forma Segment Data
The pro forma information presented in the section "Supplemental Pro Forma
Financial Information" on page 60 herein should be read in conjunction herewith.
The following pro forma information is presented as if Jamont was included and
Crown Vantage was excluded from 1994 and 1995 results.
<TABLE>
<CAPTION>
% Change % of 1995
Pro Forma Net Sales (Dollars in millions): 1995 1994 vs. 1994 Consolidated
<S> <C> <C> <C> <C>
Consumer:
North America $2,697.1 $2,431.4 10.9% 43.8%
Europe 1,654.7 1,446.0 14.4 26.8
Packaging 1,418.5 1,333.4 6.4 23.0
Communications Papers 592.9 411.4 44.1 9.6
Eliminations (200.4) (172.5) (3.2)
Consolidated $6,162.8 $5,449.7 13.1% 100.0%
</TABLE>
<TABLE>
<CAPTION>
% Change % of 1995
Pro Forma Operating Profit (Dollars in millions): 1995 1994 vs. 1994 Consolidated
<S> <C> <C> <C> <C>
Consumer:
North America $ 237.1 $ 145.1 63.4% 63.9%
Europe 45.9 42.1 9.0 12.4
Packaging 65.4 84.4 (22.5) 17.6
Communications Papers 126.7 (21.8) NM 34.2
Other (104.2) (56.9) (28.1)
Consolidated $ 370.9 $ 192.9 92.3% 100.0%
</TABLE>
Consumer Products Business--North America
Reported net sales for the North American Consumer Products Business increased
by 11%, to $2,689 million in 1995 from $2,423 million in 1994. Net sales of
retail products increased by 7% over the prior year, principally due to higher
net selling prices. For the first nine months of 1995, retail product volumes
averaged approximately 2.5% higher than the prior year; however, fourth quarter
retail volumes were significantly below the prior year's due to reduced
promotional spending in the quarter. Net sales of commercial products increased
by 11% over the prior year, reflecting significantly higher selling prices,
partially offset by lower volumes. Price increases were implemented in
commercial markets several times during the first half of 1995, following a
sharp escalation in wastepaper costs. Commercial product volumes declined by
approximately 8% compared to 1994 levels, resulting from a combination of the
company's decision to reduce its product line offerings and more competitive
pricing conditions experienced in the second half of 1995. Net sales of
warehouse club products increased by 15% reflecting both higher volumes and
higher average selling prices.
Operating profits for the North American Consumer Products Business
increased to $235 million in 1995 from $143 million in 1994, while operating
margins improved to 8.7% from 5.9%. The improved profitability was driven by
cost reduction initiatives combined with pricing gains which outpaced raw
material cost increases. This business has integrated pulping and deinking
capabilities to meet its virgin and recycled pulp needs. In addition, following
the spin-off of Crown Vantage, this business became a net seller of
approximately 200,000 tons per year of market pulp.
The company currently plans to increase its spending on advertising and
market-related costs supporting its consumer branded products in 1996. Increased
spending will be made on a discretionary basis, based on market conditions, and
will be funded with a portion of the savings expected to be realized from the
company's cost reduction initiatives.
26
<PAGE>
Consumer Products Business--Europe
Reported 1995 net sales for the European Consumer Products Business were up
sharply due to the inclusion of Jamont in consolidated results for all of 1995,
versus only five months in 1994. On a pro forma basis, reflecting a full year of
results in both 1994 and 1995, sales increased by 14%, from $1,446 million in
1994 to $1,655 million in 1995. Increased pro forma sales were driven by a
combination of price increases, implemented to recover sharply higher raw
material costs, and mix improvements, partially offset by lower shipments.
Similar to most of its European competitors, Jamont is not an integrated tissue
producer. Approximately two-thirds of Jamont's pulp requirements are met with
purchased market pulp (some of which is purchased from James River's domestic
business), while the remaining one-third is provided by its deinking pulp
facilities. Market pulp and wastepaper cost increases during 1994 and 1995
outpaced tissue price increases, resulting in a contraction in Jamont's margin.
In addition, Jamont experienced a decline in volumes in response to its
aggressive program to increase pricing. The negative impact of these items was
largely offset by cost reduction program benefits, as Jamont reduced its work
force by approximately 10% during 1995. On a pro forma basis, operating profits
improved slightly from $42 million in 1994 to $46 million in 1995.
Beginning in late 1995, market pulp costs began to fall dramatically. Since
European tissue industry utilization rates are relatively low, falling raw
material costs will likely put downward pressure on Jamont's tissue prices in
1996; however, margins should still improve if price reductions lag raw material
cost reductions.
Packaging Business
Reported net sales for the Packaging Business were relatively level, at $1,620
million in 1995 compared to $1,610 million in 1994. On a pro forma basis,
excluding the specialty packaging papers facilities spun off to Crown Vantage,
net sales increased by 6%, from $1,333 million in 1994 to $1,419 million in
1995. Net sales increases reflected higher average prices for most products, on
relatively level shipments. Price increases were implemented in all major
product categories, including folding cartons, paperboard and flexible
packaging, in an effort to pass through the cost escalation in major raw
material inputs, such as wastepaper, plastic resins, and paperboard, experienced
in the first half of 1995. Operating profits declined from $97 million in 1994
to $61 million in 1995. On a pro forma basis, excluding the spun off facilities,
the decline in profitability was less sharp, falling from $84 million in 1994 to
$65 million in 1995. While the spun off operations contributed approximately $13
million to 1994 profits, they generated an operating loss during the eight
months they were included in 1995 results, due to unrecovered escalating pulp
costs. Flexible packaging 1995 results were also below 1994 levels, and were
negatively affected by unrecovered raw material cost increases, competitive
markets caused in part by new industry capacity and higher manufacturing costs.
Communications Papers Business
Net sales for the Communications Papers Business increased to $1,039 million in
1995 from $930 million in 1994, despite the exclusion of the facilities spun off
to Crown Vantage during the last four months of 1995. On a pro forma basis,
assuming the spin-off had occurred at the beginning of 1994, net sales would
have totaled $593 million in 1995 versus $411 million in 1994.
Selling prices for uncoated free sheet papers increased sharply during the
first nine months of 1995, before falling slightly in the fourth quarter.
Average selling prices for the retained uncoated free sheet operations increased
from $600 per ton in 1994 to $970 per ton in 1995. During the first half of
1995, shipments for the retained uncoated free sheet operations were comparable
to the prior year. However, shipments fell approximately 20% during the second
half of the year due to major customer inventory corrections and weaker economic
growth, causing James River to curtail production by 28,000 tons in the fourth
quarter. Market conditions are expected to soften further in the first half of
1996.
Average selling prices for uncoated groundwood papers increased from $445 per
ton in 1994 to $675 per ton in 1995, while shipments were comparable with those
of the prior year. Market conditions in
27
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
uncoated groundwood papers remained favorable throughout 1995 but are expected
to weaken somewhat in the first half of 1996.
Reported operating results improved from a loss of $36 million in 1994 to a
profit of $191 million in 1995. On a pro forma basis, excluding facilities spun
off to Crown Vantage, this business had an operating loss of $22 million in 1994
compared to a profit of $127 million in 1995. The improved profitability was
driven principally by significantly higher pricing, partially offset by higher
raw material costs.
Following the spin-off of Crown Vantage, all of the company's communications
papers operations are located in the Pacific Northwest. James River does not own
a material amount of timberlands in this region and therefore relies on
purchased wood chips to supply its integrated virgin pulp operations.
Northwestern wood chip costs, which have been higher than in other regions
because of environmental restrictions on timber harvesting, increased sharply
during the first nine months of 1995, before stabilizing in the fourth quarter.
These costs are expected to decline somewhat in early 1996 as supply constraints
are eased due to softening conditions in pulp and paper markets.
Other Income and Expense Items
General corporate expenses increased to $58 million in 1995 from $55 million in
1994. Corporate expenses for 1994 included $11 million of non-recurring
litigation and environmental costs, while 1995 expenses included more than $10
million of costs for systems redesign efforts related to cost reduction
initiatives. General corporate expenses are expected to trend higher in 1996,
principally due to additional costs to be incurred in installing new integrated
management information systems.
Income from operations included a separately reported charge for severance
and related costs of $52 million in 1995, compared to $10 million in 1994. These
charges, which are more fully described in Note 3 of Notes to Consolidated
Financial Statements, principally related to work force reductions associated
with the company's cost reduction programs. Additional severance and related
costs are anticipated in 1996, associated with company-wide plans for further
work force reductions.
Interest expense increased by $41 million, from $185 million in 1994 to $226
million in 1995. The majority of the increase was due to the full year's impact
of the Jamont consolidation, partially offset by the debt reduction following
the Crown Vantage spin-off. On a pro forma basis, assuming the consolidation of
Jamont and the spin-off of Crown Vantage had occurred at the beginning of 1994,
interest expense would have increased from $199 million in 1994 to $204 million
in 1995, due to higher average short-term interest rates.
Other income increased to $40 million in 1995, from $29 million in 1994.
Substantially all of the increase was attributable to higher equity earnings of
unconsolidated affiliates, principally from the improved performance of Aracruz
Celulose S.A. ("Aracruz"). Results for Aracruz, the world's largest producer of
eucalyptus market pulp, followed the sharp upturn in worldwide market pulp
prices in 1995. Other income will likely be lower in 1996, following the late
1995 downturn in the pulp market.
In 1995, the company reported total income tax expense of $109 million,
including the charge resulting from the French income tax rate increase.
Excluding this charge, the effective tax rate was 43%. This differed from the
combined federal and state statutory rate primarily because of the relative size
of nondeductible goodwill amortization expense and certain foreign pretax losses
for which no tax benefit was currently available. At 45.2%, the 1994 effective
tax rate was slightly higher than the 1995 rate, principally because of the
smaller absolute pretax results.
Liquidity and Capital Resources
Operating Activities
Cash provided by operations increased to $609 million in 1995, nearly 50% higher
than the $411 million provided in 1994. Free cash flow (cash provided by
operations, less cash used for investing activities and dividends) increased to
$57 million in 1995, from $2 million in 1994, excluding the net cash paid for
Jamont.
28
<PAGE>
Investing Activities
Net cash used for investing activities during 1995 of $432 million included
capital spending of $441 million, cash paid for the Benchmark Holdings Inc.
cutlery business acquisition of $53 million and proceeds from asset sales and
other items of $62 million. During 1994, net cash used for investing activities
was $859 million and included capital spending of $352 million, cash paid for
Jamont (net of cash acquired) of $538 million and proceeds from assets sales and
other items of $31 million.
Capital expenditures increased by $89 million compared to 1994. On a
consistent basis, including Jamont and excluding Crown Vantage operations from
both years, spending was approximately $410 million in 1995 compared to $350
million in 1994. The company currently expects 1996 capital spending to total
between $400 million and $450 million. Contractual capital commitments as of
December 31, 1995, were not material.
Financing Activities
Total indebtedness decreased by $566 million, from $3,114 million as of December
25, 1994, to $2,548 million as of December 31, 1995, principally from the use of
the $480 million of proceeds from the Crown Vantage spin-off to pay down a
combination of floating rate notes, money market notes and commercial paper.
During 1995, new borrowings totaled $9 million, debt payments totaled $608
million and debt spun-off to Crown Vantage totaled $25 million. In addition,
changes in foreign currency translation rates increased debt denominated in
foreign currencies by $58 million.
As of December 31, 1995, James River and its subsidiaries had domestic and
foreign revolving credit facilities providing for unsecured borrowings of up to
$1,516 million, of which $1,203 million expire in 1999 and the balance expire
between 1996 and 1998. The company also had domestic and foreign commercial
paper programs, supported by the revolving credit facilities, providing for
issuances of up to $674 million. In addition, James River had agreements with
several banks under which it may borrow funds on an uncommitted basis at
below-prime rates. On December 31, 1995, the company had outstanding borrowings
of $923 million that were supported by the revolving credit facilities,
including $498 million outstanding under such facilities, $120 million of
commercial paper and $305 million of money market notes.
Total outstanding debt of $2,548 million on December 31, 1995, included
approximately $1,522 million of fixed rate and $1,026 million of floating rate
obligations. As of December 31, 1995, the company also had outstanding interest
rate swap agreements that effectively converted $1,286 million of fixed rate
debt and other financial obligations to variable rate obligations. The effect of
the swaps was an increase in interest expense of approximately $8 million in
1995 and $4 million in 1994. These contracts expire between September 1998 and
January 1999. However, portions of these swap agreements may be unwound before
their expiration dates, depending on the amount of proceeds realized from
planned asset divestitures which are used to pay down debt. As of December 31,
1995, the interest rate swaps had a fair value of $(3) million. Additional
information on the interest rate swaps is provided in Note 11 of Notes to
Consolidated Financial Statements. As of the end of 1995, James River's
weighted-average interest rate was 7.38% (including the impact of the interest
rate swaps), compared to 7.74% as of the end of 1994.
The company's ratio of total debt to total capitalization decreased to 51.3%
as of the end of 1995, from 57.4% as of the end of 1994, resulting from the
decrease in debt levels. 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 debt covenants contain limitations on
borrowings and require the maintenance of a minimum amount of net worth. As of
December 31, 1995, under the most restrictive provisions of the company's debt
agreements, the company had additional borrowing capacity in excess of $960
million and net worth in excess of the minimum requirement of approximately $490
million.
As of December 31, 1995, the company had registered for sale up to $600
million of debt securities under a shelf registration with the Securities and
Exchange Commission.
29
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
As of December 31, 1995, the company's debt ratings were investment grade and
were as follows:
Senior Preferred Commercial
Debt Stock Paper
Moody's Investors Services Baa3 ba2 Prime-3
Standard & Poor's BBB- BB+ A-3
As of the end of 1995, the company had outstanding foreign currency contracts
totaling $470 million, which 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. Dependent upon favorable exchange rate conditions, the
company may reduce its foreign currency contracts to $330 million. In addition,
Jamont had $81 million in notional amount of hedges on foreign currency
transactions as of the end of 1995.
Announced Divestitures
In December 1995, James River announced it was proceeding with plans for the
sales of its Flexible Packaging and CZ Inks divisions, which are part of the
Packaging Business. The company expects the sales will be completed in the first
half of 1996, and that proceeds will be used to reduce long-term debt. These
divisions had combined sales of approximately $540 million in 1995. The Flexible
Packaging division is one of the three largest U.S. producers of flexible
packaging. As these divisions generated a net operating loss in 1995, the
company expects their sale will be accretive to 1996 earnings.
The company's goal for 1996 is to generate funds totaling at least $500
million from divestitures, to be used for further debt reduction.
Contractual Labor Agreements
James River currently employs approximately 27,000 people, including 18,800
hourly employees and 8,200 salaried employees. The majority of hourly employees
are members of unions. During 1995, union contracts covering approximately 3,800
domestic employees were renegotiated. Contracts covering approximately 2,000
domestic and Canadian employees are scheduled for renegotiation in 1996.
Put and Call Agreement
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 for settlement in September 1996 at a fixed
price of 1.04 billion French francs (equivalent to $212 million as of December
31, 1995). If the put is exercised, management believes that, given Jamont's
current rate of profitability, it will result in modest near-term earnings
dilution.
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 1995, capital expenditures totaling
approximately $51 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, generally referred to as the "Cluster Rules," regulating wastewater
and gaseous emissions from pulp and paper
30
<PAGE>
mills. The final rules are expected to be issued in the fall of 1996, with a
nominal compliance date of 1999. These rules are likely to require changes in
the pulping and bleaching process presently used in some U.S. pulp mills,
including several of James River's mills. Based on its evaluation of the rules
as they are currently expected to be issued, the company believes that capital
expenditures of less than $100 million may be required to bring James River's
facilities into compliance. This amount is lower than the company's original
spending estimate of at least $300 million because of expected changes in the
rules from their published draft form and the exclusion of facilities spun off
to Crown Vantage.
As of December 31, 1995, James River had been identified as a "potentially
responsible party," along with others, under federal or state laws with respect
to approximately 50 sites where hazardous substances or other contaminants are
located. The company has settled or resolved issues related to certain sites at
minimal cost. The company believes it has minimal or no responsibility with
regard to certain other sites. In most cases, James River is one of many
potentially responsible parties, and its relative contributions to these sites
have been minor. At certain sites, however, James River has been notified that,
based on records available at this time, the company appears to be one of the
largest "potentially responsible parties." Note 15 of Notes to Consolidated
Financial Statements provides information on the company's accrued remediation
liabilities.
Based on its investigations and experience, the time necessary to complete
the cleanups, and the number of other solvent 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. In addition, 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 cost associated with such additional sites would not
be material.
Contingent Liabilities
During 1994, James River was sued 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 which commenced on September 18, 1992.
The remainder were redeemed on November 2, 1992. In general, the complaints
allege 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 seek 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. Further information on
James River's contingent liabilities is included in Note 15 of Notes to
Consolidated Financial Statements.
Effect of New Accounting Standard
In October 1995, the Financial Accounting Standards Board issued a new standard
on the accounting for stock-based compensation, effective beginning in 1996. The
new standard requires fair value accounting for stock-based compensation. It
also requires that companies must either recognize compensation expense for
employee stock based compensation or, alternatively, provide pro forma
disclosures of earnings information as if such compensation cost had been
recognized. James River has not yet determined the method of adoption or the
impact of this standard on its financial statements.
Effect 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.
Between mid-1994 and mid-1995, the company experienced significant increases in
the cost of many of its base raw materials. In almost all cases, selling price
increases followed these cost increases, although on a lag basis. In the second
half of 1995, costs of many of these same raw materials began to decline.
31
<PAGE>
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%, to $5,417 million
compared with $4,650 million in 1993. Net sales increased by $631 million, or
14%, due to the consolidation of Jamont during the third quarter. 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.
Non-recurring items reported in 1994 included $16 million, net of taxes, of
severance, litigation and environmental costs and after-tax income of $5 million
for interest received on income tax refunds. Non-recurring items in 1993
included after-tax income of $7 million for interest received on income tax
refunds, net of the write-off of an investment, and $11 million of income tax
expense related to the 1% increase in the U.S. corporate income tax rate.
Excluding non-recurring items, the company lost $2 million, or $(.59) per share
after preferred dividends, in 1994, compared with net income of $3 million, or a
loss of $(.36) per share after preferred dividends, in 1993.
Consumer Products Business--North America
Net sales for the North American Consumer Products Business increased by 3%,
from $2,358 million in 1993 to $2,423 million in 1994. During the same period,
operating profits increased by 29%, from $111 million in 1993 to $143 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. Because of its
fully integrated pulp position, this business was not negatively effected by the
dramatic increases in the cost of market pulp beginning in early 1994. However,
during the second half of 1994, results were impacted by sharply higher costs
for wastepaper, plastic resins, pulping chemicals, and packaging materials.
Pricing in commercial product categories strengthened significantly in the
second half of 1994, pushed by increasing costs. During 1994, list prices for
retail towel and tissue products were reduced at the same time that promotional
spending was cut, resulting in net realizations per unit comparable to 1993
levels. Retail product list prices were not raised until the beginning of 1995.
Consumer Products Business--Europe
Operating results for Jamont declined in 1994 from the prior year due to a
combination of factors. Over-capacity in the European tissue market continued
which, combined with increasingly cost-conscious consumers and pressure from
major retailers, resulted in declining prices for finished goods during the
first half of 1994. This continued a trend begun in 1992. Costs for market pulp
increased significantly during 1994, doubling by the end of the year, while
tissue pricing did not begin to increase until late 1994. Overall, 1994 results
reflected the effects of cost reductions plus volume gains of 8% (3% in finished
good and over 50% in semi-finished goods), which were more than offset by lower
average pricing and soaring raw material costs. Jamont operating profits for the
last five months of 1994 totaling $7 million were included in consolidated
income from operations.
Packaging Business
Sales in the company's Packaging Business increased by 3% to $1,610 million in
1994 from $1,569 million in 1993. For the year, operating profits declined
slightly, from $104 million in 1993 to $97 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 over 50% of the total cost of packaging products
and include significant amounts of purchased plastic resins, wastepaper,
bleached paperboard and pulp. As of the end of 1994, the annualized
32
<PAGE>
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 at a significant lag to 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.
Communications Papers Business
Net sales reported in 1994 for the Communications Papers Business increased by
3% over the prior year, while annual operating losses were cut from $58 million
in 1993 to $36 million in 1994. 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 dramatically improve, 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 realizations per ton 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.
Other Income and Expense Items
General corporate expenses increased to $55 million in 1994 compared to $43
million in 1993. Corporate expenses for 1994 included $11 million of
non-recurring litigation and environmental cost accruals.
Income from operations for 1994 included a separately reported net charge of
$10 million, which is detailed in Note 3 of Notes to Consolidated Financial
Statements. No severance or related costs were incurred in 1993.
Interest expense of $186 million in 1994 was $48 million greater than in the
prior year. Approximately $35 million of this increase resulted from the Jamont
ownership interest increase and resulting consolidation. The remainder of the
increase was principally caused by rising interest rates on variable rate
borrowings.
Other income of $29 million in 1994 declined by $11 million compared to the
$40 million recorded in 1993. Interest income declined by $15 million, partially
due to a smaller amount of non-recurring interest received in 1994 on income tax
refunds. This decline was partially offset by improvements in equity in earnings
of unconsolidated affiliates, which increased by $6 million principally from the
improved performance of Aracruz.
In 1994, the company had an effective tax rate of 45.2%, compared to 47.6% in
1993, before the impact of the income tax rate change. In both years, this rate
was higher than the combined federal and state 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.
Preferred dividend requirements, which are deducted from net earnings in
calculating earnings per share, increased to $46 million in 1994 compared to $33
million in 1993 due to a new series of preferred stock issued in July 1994.
33
<PAGE>
<TABLE>
Consolidated Statements of Operations
James River Corporation of Virginia and Subsidiaries
<CAPTION>
(In millions, except per share amounts) 53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
December 31, December 25, December 26,
1995 1994 1993
<S> <C> <C> <C>
Net sales $6,799.5 $5,417.3 $4,650.2
Cost of goods sold 5,258.9 4,452.0 3,858.6
Selling and administrative expenses 1,065.4 808.7 677.6
Severance and other items 51.9 9.6
Income from operations 423.3 147.0 114.0
Interest expense 226.4 185.6 137.6
Other income, net 40.3 28.9 40.3
Income (loss) before income taxes and minority interests 237.2 (9.7) 16.7
Income tax expense:
Tax on current income or loss 102.0 4.4 7.9
Effect of tax rate change 7.4 11.0
Total income tax expense 109.4 4.4 18.9
Income (loss) before minority interests 127.8 (14.1) (2.2)
Minority interests (1.4) 1.1 1.9
Net income (loss) $ 126.4 $ (13.0) $ (0.3)
Preferred dividend requirements (58.5) (45.8) (32.8)
Net income (loss) applicable to common shares $ 67.9 $ (58.8) $ (33.1)
Net income (loss) per share $ .81 $ (.72) $ (.40)
Weighted average number of common shares
and common share equivalents 84.1 81.7 81.6
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
34
<PAGE>
Consolidated Balance Sheets
James River Corporation of Virginia and Subsidiaries
(In millions) December 31, December 25,
1995 1994
Assets
Current assets:
Cash and cash equivalents $ 66.1 $ 59.3
Accounts receivable 847.3 913.5
Inventories 821.4 844.1
Prepaid expenses and other current assets 52.3 63.5
Deferred income taxes 83.4 95.1
Total current assets 1,870.5 1,975.5
Net property, plant and equipment 4,074.1 4,679.9
Investments in affiliates 146.8 125.1
Other assets 395.8 367.8
Goodwill 771.7 776.0
Total assets $7,258.9 $7,924.3
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 560.5 $ 597.1
Accrued liabilities 493.7 525.3
Short-term borrowings 225.1
Current portion of long-term debt 44.8 221.4
Total current liabilities 1,099.0 1,568.9
Long-term debt 2,503.0 2,668.0
Accrued postretirement benefits other than pensions 464.7 545.0
Deferred income taxes 489.3 594.8
Other long-term liabilities 283.4 231.1
Minority interests 165.3 154.9
Total liabilities 5,004.7 5,762.7
Shareholders' equity:
Preferred stock 740.3 740.3
Common stock, $.10 par value; shares outstanding,
1995-84.9 million and 1994-81.7 million 8.5 8.2
Additional paid-in capital 1,294.1 1,211.9
Retained earnings 211.3 201.2
Total shareholders' equity 2,254.2 2,161.6
Total liabilities and shareholders' equity $7,258.9 $7,924.3
The accompanying notes are an integral part of the consolidated financial
statements.
35
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
James River Corporation of Virginia and Subsidiaries
<CAPTION>
(In millions) 53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
December 31, December 25, December 26,
1995 1994 1993
<S> <C> <C> <C>
Cash provided by (used for) operating activities:
Net income (loss) $ 126.4 $ (13.0) $ (0.3)
Items not affecting cash:
Depreciation expense and cost of timber harvested 461.4 398.4 358.4
Amortization of goodwill 24.4 12.1 4.7
Deferred income tax provision (benefit) 33.0 (4.6) 11.9
Severance and other items 51.9 9.6
Undistributed earnings of unconsolidated affiliates (1.9) (13.7) (6.6)
Change in current assets and liabilities, net of effects
of acquisitions and dispositions:
Accounts receivable (6.6) (25.5) (4.1)
Inventories (48.3) 46.3 13.8
Other current assets (0.8) (17.6) 14.9
Accounts payable and accrued liabilities (30.7) (19.3) (0.4)
Other, net 0.5 38.4 48.3
Cash provided by operating activities: 609.3 411.1 440.6
Cash provided by (used for) investing activities:
Expenditures for property, plant and equipment (441.2) (351.7) (331.1)
Cash paid for acquisitions, net (52.5) (538.0) (192.7)
Cash received from sale of assets 10.9 34.6 130.7
Cash received on redemption of SCI preferred stock 47.1
Other, net 50.9 (4.1) 12.0
Cash used for investing activities (431.9) (859.2) (334.0)
Cash provided by (used for) financing activities:
Additions to long-term debt and short-term borrowings 9.1 439.5 456.2
Payments of long-term debt (608.5) (145.2) (808.9)
Cash received from spin-off of Crown Vantage Inc. 480.4
Preferred stock issued, net of issuance costs 278.8
Common and preferred stock cash dividends paid (120.4) (88.4) (81.7)
Common stock issued on exercise of stock options 68.8 0.4 0.4
Other, net (1.3) (24.5)
Cash provided by (used for) financing activities (170.6) 483.8 (458.5)
Increase (decrease) in cash and cash equivalents 6.8 35.7 (351.9)
Cash and cash equivalents, beginning of year 59.3 23.6 375.5
Cash and cash equivalents, end of year $ 66.1 $ 59.3 $ 23.6
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
36
<PAGE>
<TABLE>
Consolidated Statements of Changes
in Capital Accounts
James River Corporation of Virginia and Subsidiaries
<CAPTION>
(In millions) 53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
December 31, December 25, December 26,
1995 1994 1993
<S> <C> <C> <C>
Preferred stock
Balance, beginning of year $ 740.3 $ 454.1 $ 454.3
Issuance of Series P preferred stock 287.5
Other (1.3) (0.2)
Balance, end of year $ 740.3 $ 740.3 $ 454.1
Common shareholders' equity
Common stock:
Balance, beginning of year $ 8.2 $ 8.2 $ 8.2
Exercise of stock options and awards 0.3
Balance, end of year 8.5 8.2 8.2
Additional paid-in capital:
Balance, beginning of year 1,211.9 1,219.0 1,217.9
Exercise of stock options and awards, net of tax effect 82.2 1.6 1.2
Preferred stock issuance costs (8.7) (0.1)
Balance, end of year 1,294.1 1,211.9 1,219.0
Retained earnings:
Balance, beginning of year 201.2 286.9 433.3
Net income (loss) 126.4 (13.0) (0.3)
Common stock cash dividends declared (50.0) (49.0) (49.0)
Preferred stock cash dividends declared (58.5) (45.8) (32.8)
Spin-off of Crown Vantage Inc. (38.2)
Change in equity component of minimum pension liability .5 14.9 (6.8)
Foreign currency translation and other 29.9 7.2 (57.5)
Balance, end of year 211.3 201.2 286.9
Common shareholders' equity, end of year $1,513.9 $1,421.3 $1,514.1
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
37
<PAGE>
Notes to 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 year ended December 31, 1995, included 53 weeks while the years
ended December 25, 1994, and December 26, 1993, each included 52 weeks. In 1995,
the Company changed the fiscal year end of Jamont N.V. ("Jamont"), the Company's
European Consumer Products subsidiary from November 30 to December 31 to
eliminate the one-month lag in reporting. The one-month lag was eliminated
during the fourth quarter as an adjustment to retained earnings of $8 million.
Use of Estimates
Financial statements prepared in conformity with generally accepted accounting
principles require management to make estimates and assumptions that affect
amounts reported therein. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company invests 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.
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.
38
<PAGE>
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 $92.2 million as of
December 31, 1995, and $77.5 million as of December 25, 1994. 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 31, 1995, and December 25, 1994, the Company
believes that no significant impairment of goodwill was indicated.
Interest Costs
The Company capitalizes interest costs as part of the cost of constructing
certain facilities and equipment.
(In millions) 1995 1994 1993
Total interest costs $233.3 $188.7 $142.9
Interest capitalized (6.9) (3.1) (5.3)
Net interest expense $226.4 $185.6 $137.6
Interest paid $233.9 $168.3 $151.6
Other Operating Expenses
Research and development expenditures are expensed as incurred. Direct and
readily identifiable indirect research and development costs totaled $53.5
million in 1995, $47.0 million in 1994 and $41.8 million in 1993. Advertising
costs are expensed as incurred and amounted to $100.2 million in 1995, $82.8
million in 1994 and $65.0 million in 1993.
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 millions) 1995 1994
Balance, beginning of year $(31.3) $(38.5)
Translation adjustments 19.8 (6.5)
Related income tax effect 24.6 13.7
Balance, end of year $ 13.1 $(31.3)
39
<PAGE>
Notes to Consolidated Financial Statements
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 currency 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 related transactions.
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
1995
On August 25, 1995, the Company completed the spin-off to shareholders of Crown
Vantage Inc. ("Vantage") which included a large part of the Company's
Communications Papers Business, along with the specialty paper-based portion of
its Packaging Business. Net proceeds from Vantage's financings totaling $480
million and pay-in-kind notes valued at $85 million were received by James River
as a result of the spin-off. These amounts were treated as a return of the
Company's investment. The book value of net assets spun off to Vantage less
proceeds received totaled $38 million which was recorded as an adjustment to
retained earnings. Net assets spun off included total current assets of $220
million, net property, plant and equipment of $679 million, and other long-term
assets of $71 million, net of total current liabilities of $102 million and
long-term liabilities of $265 million. The operating results of the facilities
which now make up Vantage were included in the consolidated statement of
operations and the consolidated statement of cash flows for the eight months (35
weeks) ended August 27, 1995. Pro forma results for 1995 and 1994, adjusted for
the Vantage spin-off, are presented under the heading Supplemental Pro Forma
Financial Information, herein.
In November 1995, the Company acquired the cutlery division of Benchmark
Holdings, Inc. for $52.5 million. In May 1995, James River sold its option to
purchase its partners' 50% interest in the chemical recovery and cogeneration
facility at the Pennington, Alabama, pulp and paper mill for $22.2 million. The
net proceeds were recognized as a deferred gain and are being amortized over 18
years. James River retained ownership of the remaining 50% interest in this
facility.
40
<PAGE>
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. 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 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.
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 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.
Summary
The purchase prices of acquisitions were allocated to the acquired net assets
based on their respective fair values as summarized below.
(In millions) 1995 1994 1993
Acquisitions of consolidated entities:
Fair value of assets acquired $55.2 $2,119.9 $241.6
Liabilities assumed or created (2.7) (1,543.0) (43.9)
Cash paid for acquisitions 52.5 576.9 197.7
Cash acquired (38.9) (5.0)
Cash paid for acquisitions, net $52.5 $ 538.0 $192.7
Dispositions (other than Vantage spin-off):
Fair value of assets sold $13.7 $ 37.0 $135.4
Noncash consideration received (2.8) (2.4) (4.7)
Cash received from sale of assets $10.9 $ 34.6 $130.7
41
<PAGE>
Notes to Consolidated Financial Statements
Note 3 Severance and Other
1995
During 1995, the Company recorded $51.9 million which included severance charges
for announced reductions in work force of $42.7 million, related fixed asset
write-offs of $4.2 million and transaction costs associated with the Vantage
spin-off of $5.0 million (see Note 2). Severance charges were primarily related
to the termination of approximately 1,050 employees located in Europe and 370
employees located at domestic manufacturing and corporate facilities. The
Company has made severance payments of $25.1 million to approximately 900
terminated employees for whom severance costs have been accrued since the
beginning of December 1994.
1994
In December 1994, the Company recorded a nonrecurring charge of $9.6 million
which included severance charges for announced reductions in work force of $16.4
million, related asset write-offs of $28.9 million, and the reversal of $35.7
million of remaining reserves associated with a 1992 restructuring program.
Severance charges represent the costs related to the termination of
approximately 650 employees primarily located at Communications Papers and
Packaging facilities. Asset write-offs relate to the phase-out of certain
packaging equipment and planned asset consolidations in Europe. The reversal of
the remaining 1992 restructuring reserve resulted from the Company's decision to
retain certain facilities.
Note 4 Other Income
(In millions) 1995 1994 1993
Equity in earnings of unconsolidated affiliates $25.7 $13.7 $ 7.8
Interest income 11.2 9.9 24.9
Gain on sale of assets 4.3 5.2 2.9
Foreign currency exchange losses (.3) (.6) (3.3)
Other, net (.6) .7 8.0
Total other income $40.3 $28.9 $40.3
Note 5 Income Taxes
The components of income (loss) before income taxes and minority interests were
as follows:
(In millions) 1995 1994 1993
Domestic $197.2 $7.2 $24.8
Foreign 40.0 (16.9) (8.1)
Income (loss) before income taxes
and minority interests $237.2 $(9.7) $16.7
42
<PAGE>
Income tax expense (benefit) consisted of the following:
(In millions) 1995 1994 1993
Current:
Federal $66.5 $ 3.6 $ 1.3
State 6.3 1.3 2.8
Foreign 3.6 4.1 3.0
Total current income tax provision 76.4 9.0 7.1
Deferred:
Federal 1.3 (3.3) 18.3
State 8.1 (.6) (1.8)
Foreign 23.6 (.7) (4.7)
Total deferred income tax provision (benefit) 33.0 (4.6) 11.8
Income tax expense $109.4 $ 4.4 $18.9
During 1995, tax benefits credited to stockholders' equity were $12.4 million
primarily related to the redemption of stock options. Cash payments for income
taxes totaled $78.7 million in 1995, $14.1 million in 1994 and $6.6 million in
1993.
No provision for income taxes has been made for $52.6 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 because any U.S. taxes payable
on such repatriation 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 and minority interests and the
Company's effective income tax rate were as follows:
<TABLE>
<CAPTION>
Percent of Pretax Income or (Loss)
1995 1994 1993
<S> <C> <C> <C>
Federal statutory income tax rate 35.0% (35.0)% 35.0%
State income taxes, net of federal income tax effect 3.9 5.1 3.4
Charitable contributions fair market value in excess of basis (22.9)
Foreign losses not benefitted 4.4 63.4
Amortization of goodwill 3.3 43.3 8.6
Other items, net (3.6) (8.7) .6
Effective income tax rate on current income (loss) 43.0% 45.2% 47.6%
Effect of increase in income tax rates 3.1 65.9
Effective income tax rate 46.1% 45.2% 113.5%
</TABLE>
In August 1995, the French Parliament passed a law imposing a 10% tax
surcharge on the normal corporate tax rate, effectively increasing this rate 3%.
The Company recorded a $7.4 million charge ($6.3 million, net of minority
interests) to increase the deferred tax liability for the effect of this
increase in tax rates. 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 this tax
rate.
43
<PAGE>
Notes to Consolidated Financial Statements
The income tax effects of temporary differences that gave rise to the net
deferred tax liability as of December 31, 1995, and December 25, 1994, were as
follows:
<TABLE>
<CAPTION>
(In millions) 1995 1994
<S> <C> <C>
Excess of book over tax basis of property, plant and equipment $ 785.8 $ 914.0
Pension benefits 72.5 77.3
Other items 49.9 46.5
Total deferred tax liabilities 908.2 1,037.8
Postretirement benefits other than pensions (184.3) (220.1)
Alternative minimum tax credit carryforwards (126.5) (125.8)
Accrued liabilities (105.2) (92.6)
Tax loss carryforwards (63.3) (80.7)
Other items (66.8) (54.5)
Total deferred tax assets (546.1) (573.7)
Valuation allowance 43.8 35.6
Net deferred tax liability $ 405.9 $ 499.7
</TABLE>
The increase in the valuation allowance from December 24, 1994, to December
31, 1995, reflects the impact of foreign net operating losses and foreign tax
credits for which the Company does not currently anticipate receiving future tax
benefits. If recognized in the future, $13 million of these tax benefits will be
allocated to reduce goodwill of certain acquired subsidiaries. The net impact on
deferred tax liabilities related to the spin-off of Vantage was $96.5 million.
During 1994, 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 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 adverse effect on the Company's financial
condition.
As of December 31, 1995, the Company had $166.0 million of foreign net
operating loss carryforwards which expire primarily from 1996 through 2005 and
$11.5 million of general business tax and foreign tax credit carryforwards for
tax purposes which expire from 1996 through 2008. The Company also had
alternative minimum tax ("AMT") credit carryforwards of $126.5 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 6 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. The Company's contributions totaled $32.6 million, $26.7 million and
$12.7 million in 1995, 1994 and 1993, respectively. Plan assets consist
principally of equity securities and corporate and government obligations.
44
<PAGE>
The components of net pension cost were as follows:
(In millions) 1995 1994 1993
Service cost $ 16.2 $ 20.8 $ 18.4
Interest accrued on projected benefit obligation 95.5 95.0 94.1
Net investment (income) loss on plan assets:
Actual (246.0) (12.8) (163.7)
Deferral of difference between actual and expected
investment income 137.0 (97.4) 50.6
Net amortization 8.8 19.8 13.8
Contributions to multiemployer pension plans 5.1 5.1 5.6
Net pension cost $ 16.6 $ 30.5 $ 18.8
Net amortization included amortization of the net transition assets, net
experience gains and losses, and prior service costs over 15 to 20 years. The
Company incurred termination benefit and settlement costs associated with
enhanced benefits in the 1995 and 1994 severance programs. Charges of $8.0
million and $4.1 million are included with severance and other expenses for the
years ended December 31, 1995, and December 25, 1994, respectively.
The actuarial assumptions used in determining net pension costs were as
follows:
1995 1994 1993
Discount rate 8.6% 7.4% 8.0%
Assumed rate of increase in compensation levels 5.0% 5.5% 5.5%
Expected long-term rate of return on plan assets 10.0% 10.0% 10.5%
As of December 31, 1995, benefit obligations were determined using a discount
rate of 7.5% and an assumed rate of increase in compensation levels of 5.0%. The
effect of the changes in these assumptions was an increase in the projected
benefit obligation of $125.2 million.
The following table sets forth the funded status of the Company's plans:
<TABLE>
<CAPTION>
1995 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
(In millions) Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 859.9 $216.4 $ 810.6 $288.1
Nonvested benefits 29.8 23.3 28.1 24.9
Accumulated benefit obligation 889.7 239.7 838.7 313.0
Effect of projected future salary increases 25.0 .5 25.6 .3
Projected benefit obligation 914.7 240.2 864.3 313.3
Plan assets at fair value 1,067.6 198.7 1,027.0 269.3
Plan assets in excess of (less than)
projected benefit obligation 152.9 (41.5) 162.7 (44.0)
Unrecognized net loss 10.0 31.9 25.8 45.2
Unrecognized prior service cost 30.9 40.6 29.8 32.6
Unrecognized net transition asset (8.7) (4.4) (11.9) (3.9)
Minimum pension liability (67.6) (73.5)
Net pension asset (liability) $ 185.1 $(41.0) $ 206.4 $(43.6)
</TABLE>
Other assets included net noncurrent pension assets of $211.7 million as of
December 31, 1995, and $236.3 million as of December 25, 1994, exclusive of the
additional minimum pension liabilities. As of December 31, 1995, $67.6 million
of additional minimum pension liabilities for underfunded plans were included in
other long-term liabilities, offset by an intangible asset of $40.2 million and
a charge of $16.7 million to retained earnings, net of deferred taxes of $10.7
million. As of December 25, 1994, the additional minimum pension liability of
$73.5 million was offset by an intangible asset of $34.2 million and a charge to
retained earnings of $24.0 million, net of deferred taxes of $15.3 million.
45
<PAGE>
Notes to Consolidated Financial Statements
Net noncurrent pension assets and minimum pension liabilities were reduced by
$28.7 million and $22.2 million, respectively, reflecting plans spun off with
Vantage. Under certain conditions, including the inability of Vantage to fund
required contributions, the Company has agreed to assume the liability for any
underfunded benefits for the plans spun off. In the opinion of the Company's
management, it is unlikely that these conditions will occur.
Note 7 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.
The components of net periodic postretirement benefit cost were as follows:
<TABLE>
<CAPTION>
(In millions) 1995 1994 1993
<S> <C> <C> <C>
Service cost $10.4 $11.4 $12.3
Interest cost on accumulated postretirement benefit obligation 39.7 38.8 43.1
Net amortization (8.4) (7.4) (5.1)
Net periodic postretirement benefit cost $41.7 $42.8 $50.3
</TABLE>
Net amortization included amortization of prior service costs and gains and
net experience gains and losses over 15 years. Payments for postretirement
benefits were $28.5 million in 1995, $28.5 million in 1994 and $24.9 million in
1993. The discount rate used in determining the net periodic postretirement
benefit cost was 8.5% for 1995, 7.5% for 1994 and 8.5% for 1993. The discount
rate used in determining the accumulated postretirement benefit obligation was
7.4% as of December 31, 1995. The net effect of the decrease in the discount
rate and health care cost trend rates was a decrease in the accumulated benefit
obligation of $31.1 million. The accrued postretirement benefit obligation spun
off to Vantage totaled $100.2 million.
Summary information on the Company's plans was as follows:
(In millions) 1995 1994
Accumulated postretirement benefit obligation:
Retirees $179.0 $247.9
Fully eligible active participants 50.3 91.1
Other active participants 157.5 162.7
Total accumulated postretirement benefit obligation 386.8 501.7
Unrecognized net gain (loss) 18.4 (18.9)
Unrecognized prior service gain 81.5 90.2
Accrued postretirement benefit obligation $486.7 $573.0
As of December 31, 1995, and December 25, 1994, the Company has included
$22.0 million and $28.0 million, respectively, of accrued postretirement benefit
costs in accrued liabilities, representing the estimated current portion of this
liability.
46
<PAGE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 9% in 1995, declining by .5% per year
through 2003 and .25% thereafter through 2005 to an ultimate rate of 5.0%. If
the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefit obligation as of December 31, 1995, would
have increased by $36 million. The effect of this change on the sum of the
service cost and interest cost components of the net periodic postretirement
benefit cost for 1995 would have been an increase of $5 million.
Note 8 Supplemental Balance Sheet Information
<TABLE>
Inventories
<CAPTION>
(In millions) 1995 1994
<S> <C> <C>
Raw materials $197.1 $187.6
Finished goods and work in process 557.6 543.9
Stores and supplies 151.4 184.5
906.1 916.0
Subtraction to state certain inventories at last-in, first-out cost (84.7) (71.9)
Total inventories $821.4 $844.1
Valued at lower of cost or market:
Last-in, first-out $482.9 $467.2
First-in, first-out or average 338.5 376.9
Total inventories $821.4 $844.1
</TABLE>
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 before income taxes and
minority interests by $6.8 million.
Property, Plant and Equipment
(In millions) 1995 1994
Land and improvements $ 177.5 $ 211.3
Buildings 894.9 978.7
Machinery and equipment 4,788.7 5,412.2
Construction in progress 226.8 204.8
6,087.9 6,807.0
Accumulated depreciation (2,106.9) (2,245.1)
3,981.0 4,561.9
Timber and timberlands, net 93.1 118.0
Net property, plant and equipment $ 4,074.1 $ 4,679.9
Accrued Liabilities
(In millions) 1995 1994
Taxes payable, other than income taxes $ 93.3 $ 91.0
Compensated absences 61.7 73.2
Employee insurance benefits 63.6 69.3
Other items 275.1 291.8
Total accrued liabilities $493.7 $525.3
47
<PAGE>
Notes to Consolidated Financial Statements
Note 9 Investments in Affiliates
As of December 31, 1995, 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"). 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 acquired an additional 43.2% indirect ownership
interest in Jamont (see Note 2) and sold its 50% ownership of Coastal Paper
Company.
Changes in James River's investments in affiliates during 1995 and 1994 were
as follows:
(In millions) 1995 1994
Balance, beginning of year $125.1 $519.5
Consolidation of net assets of affiliates (434.0)
Foreign currency translation adjustments, net 1.2 18.7
Equity in net income 25.7 13.7
Dividends received (23.8)
Additional investments, at cost 11.9
Sale of investments (7.9)
Other, net 18.6 3.2
Balance, end of year $146.8 $125.1
James River's share of undistributed earnings of affiliates included in
consolidated retained earnings was $61.9 million as of December 31, 1995, and
$45.5 million as of December 25, 1994.
The summarized financial information presented below represents an
aggregation of 100% of the principal companies accounted for by the equity
method.
(In millions) 1995 1994
Condensed income statement information:
Revenues $184.5 $175.6
Gross profit 62.1 62.1
Net earnings 74.2 31.4
Condensed balance sheet information:
Current assets $70.6 $110.0
Noncurrent assets, including intangibles 509.9 471.4
Current liabilities 45.0 42.0
Noncurrent liabilities 193.6 239.2
Equity 341.9 300.2
James River's share of equity $153.4 $135.6
48
<PAGE>
Note 10 Indebtedness
<TABLE>
<CAPTION>
(In millions) 1995 1994
<S> <C> <C>
Money market notes, 6.69% average interest rate $ 305.0 $ 398.0
Revolving credit facilities, 5.82% average interest rate 498.6 280.5
Short-term borrowings 225.1
Commercial paper, 4.68% average interest rate 119.7 181.7
Notes and debentures:
Floating rate notes, payable from 1995 to 1997,
6.45% average interest rate 385.0
6.7% notes, payable in 2003 249.6 249.5
6.75% notes, payable in 1999 199.7 199.6
7.57% average interest rate medium-term notes,
payable from 1997 to 2004 200.0 200.0
7.75% debentures, payable in 2023 149.7 149.7
8.29% average interest rate notes, payable to 2009 153.9 148.4
8.375% notes, payable in 2001 199.4 199.3
9.25% debentures, payable in 2021 200.0 200.0
9.77% note, payable from 2005 to 2014 200.0 200.0
Revenue bonds, average interest rate 7.15%, payable to 2028 72.2 97.7
Total 2,547.8 3,114.5
Less current portion and short-term borrowings 44.8 446.5
Long-term debt $2,503.0 $2,668.0
</TABLE>
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) 1996 1997 1998 1999 2000
Scheduled maturities $44.8 $121.3 $19.6 $217.7 $42.4
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 $923 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
As of December 31, 1995, James River and its consolidated subsidiaries had
revolving credit agreements with various domestic and foreign banks providing
for unsecured borrowings of up to approximately $1,516 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"), the Paris Interbank Offered Rate, certificate of deposit rates, or
bankers' acceptance rates. Annual commitment fees of up to .25% 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 $1,203 million, expire in
December 1999; the remaining agreements expire between 1996 and 1998.
Commercial Paper and Money Market Notes
As of December 31, 1995, James River had domestic and foreign commercial paper
programs providing for commercial paper issuances of up to $673.8 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
outstanding commercial paper and money market notes had average interest rates
of 5.8% and 6.34%,
49
<PAGE>
Notes to Consolidated Financial Statements
respectively. Because of the availability of long-term financing through the
Company's global revolving credit capacity 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
In August 1995, approximately $24.9 million in revenue bonds and other senior
notes were spun off to Vantage (see Note 2). Additionally, net proceeds of $480
million received by James River from the spin-off were used to pay down $285
million in floating rate notes, $118 million in money market notes and $77
million in commercial paper.
The Company's most restrictive debt agreements contain limitations on
borrowings and require maintenance of a minimum amount of net worth. As of
December 31, 1995, under the most restrictive provisions of the Company's debt
agreements, the Company had additional borrowing capacity in excess of $960
million and net worth in excess of the minimum requirement of approximately $490
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 11 Financial Instruments
The Company is subject to market rate risk from exposure to changes in interest
rates and currency exchange rates and therefore 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.
The Company utilizes options to reduce the impact of increases in interest
rates on its variable rate positions, 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 4.0% and 3.73%, and 4.97% and 4.31%, respectively, for the
years ended December 31, 1995, and December 25, 1994, respectively.
The fair value of the Company's financial instruments related to its
indebtedness were as follows:
<TABLE>
<CAPTION>
1995 1994
Carrying Carrying
Value or Value or
Gross Notional Fair Gross Notional Fair
(In millions) Amount Value Amount Value
<S> <C> <C> <C> <C>
Long-term debt, including current maturities $(2,548) $(2,700) $(2,889) $(2,828)
Interest rate swaps 1,286 (3) 1,286 (128)
</TABLE>
50
<PAGE>
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. Based on the Company's total indebtedness at
December 31, 1995, a 10 basis point interest rate change would impact the fair
market value of the total debt portfolio by approximately $10.6 million. This
exposure would be mitigated by a $3.7 million change to the fair market value of
the swap portfolio.
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 as of December 31, 1995, and December 25, 1994, 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 31, 1995, and December
25, 1994, the Company had net unrealized gains of $.4 million and $.5 million,
respectively, on a notional amount of $81 million and $127 million,
respectively, for these hedge instruments.
As of December 31, 1995, and December 25, 1994, the carrying value of foreign
exchange contracts was a net liability of $86.7 million and $39.6 million,
respectively, and the fair value, based on quoted market prices of comparable
instruments, was a net liability of $108.0 million and $73.0 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 12 Common Stock
The Company has 150 million authorized shares of common stock, $.10 par value
("Common Stock"), of which 84,890,342 shares were outstanding on December 31,
1995. Common shares reserved for issuance as of December 31, 1995, were as
follows:
1995
Stock option plans 4,746,203
Deferred stock plan 1,580,510
Conversion of Series K preferred stock 2,675,087
Conversion of Series L preferred stock 5,451,077
Conversion of Series N preferred stock 1,439,313
Conversion of Series P preferred stock 15,341,215
Total common shares reserved for issuance 31,233,405
51
<PAGE>
Notes to Consolidated Financial Statements
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 ownership other than through a cash tender
offer providing fair value to all holders of Common Stock, each Right will
entitle its holder (other than the acquiring person or group) to purchase, at
the then-current exercise price, Common Stock having a value of twice the
exercise price.
Note 13 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 Annual
Liquidation Shares Liquidation Shares Dividend Liquidation Value
Value Outstanding Value Outstanding Requirement (in millions)
Per Share 1995 Per Share 1995 (in millions) 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Series K $ 50 1,999,895 $ 6.7 $100.0 $100.0
Series L $50 4,000,000 200 1,000,000 14.0 200.0 200.0
Series N 50 1,056,168 200 264,042 3.7 52.8 52.8
Series O 25 4,000,000 500 200,000 8.2 100.0 100.0
Series P 17.25 16,664,366 1,725 166,644 25.9 287.5 287.5
Total 3,630,581 $58.5 $740.3 $740.3
</TABLE>
The Company has reserved 150,000 preferred shares for the issuance of Series
M preferred stock under the Shareholder Rights Plan.
The spin-off of Vantage required adjustments to the conversion price of each
series of convertible preferred stock pursuant to formulas specified in the
Articles of Serial Designation for each series.
The Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock
("Series K") is convertible at the option of the holder into Common Stock at
$37.38 per share (approximately 1.34 shares of Common Stock per share of Series
K). The Series K is redeemable by the Company at a per share price declining
from $50.34 as of December 31, 1995, 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 at
$50 principal amount per share of Series K. If issued, these debentures will be
convertible at the option of the holder into Common Stock on the same terms as
the Series K.
52
<PAGE>
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 $36.69 per common share (or 1.36 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 $50.70 as of December 31, 1995,
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 at $50 principal amount per
depositary share. If issued, these debentures 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.
The Series P 9% Cumulative Convertible Preferred Stock ("Series P") is held
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
Series P is convertible into Common Stock at the option of the holder, at
anytime, at a rate of .9206 common shares for each depositary share, subject to
adjustment in certain events, and is 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 on July 1, 1998, the Series P will
automatically convert into Common Stock at 1.08 shares of Common Stock per
depositary share.
Note 14 Employee Benefit Plans
The number of stock options, stock appreciation rights and deferred stock
hypothetical shares held prior to the spin-off of Vantage were increased by a
factor of 1.016 per share, while the corresponding share prices related to the
stock options and stock appreciation rights were reduced by a factor of .984 per
share in order to preserve the economic benefit of these options and grants.
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 31, 1995, there
were 760 employees and directors holding options.
Stock option activity was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
(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 5,892 $15.88-41.38 5,408 $16.25-41.38 5,285 $16.25-41.38
Granted 1,203 15.88-38.14 938 15.88-24.13 631 17.88-22.63
Canceled (217) 15.88-38.14 (200) 16.13-41.06 (378) 17.33-35.75
Exercised (3,477) 15.63-33.84 (23) 16.13-23.63 (18) 17.46-20.06
Expired (128) 15.88-38.14 (231) 16.13-41.06 (112) 20.06-39.69
Balance, end of year 3,273 $15.63-40.73 5,892 $15.88-41.38 5,408 $16.25-41.38
Exercisable 1,555 $15.63-40.73 4,178 $16.13-41.38 3,476 $16.25-41.38
Available for grant 1,473 2,261 2,781
</TABLE>
53
<PAGE>
Notes to Consolidated Financial Statements
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 appreciation 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 31, 1995, there
were 180 employees holding SAR's. Compensation expense for SAR's was not
material for each of the three years in the period ended December 31, 1995.
SAR's activity was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
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 147 $16.42-33.94 221 $16.42-34.19 260 $16.25-34.19
Canceled (9) 20.99-30.93 (8) 21.33-32.69 (14) 16.96-31.75
Exercised (30) 16.16-30.06 (29) 16.96-19.00 (14) 16.25-19.21
Expired (5) 16.16-33.41 (37) 17.46-34.19 (11) 19.06-30.54
Balance, end of year, fully
exercisable 103 $24.85-32.85 147 $16.42-33.94 221 $16.42-34.19
</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
31, 1995, Units were held by 60 employees. The Company recognized compensation
expense under the Deferred Stock Plan of $2.1 million in 1995, $3.4 million in
1994 and $2.2 million in 1993.
Deferred Stock Plan activity was as follows:
1995 1994 1993
Outstanding Units, beginning of year 558,762 630,505 324,436
Granted 108,000 8,000 351,500
Accrued dividends 19,624 16,036 17,406
Distributed (77,176) (73,775) (47,416)
Canceled (71,881) (22,004) (15,421)
Outstanding Units, end of year 537,329 558,762 630,505
Available for grant 1,043,181 1,098,924 1,100,956
Stock Plans for Employees
The Company's StockPlus investment plan is available to substantially all
domestic employees. Several alternative investment funds are 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 31, 1995, there were 18,000
participants in the plan, and the plan held 11 million shares of Common Stock
and $78 million of other investments. Company contributions to this plan totaled
$15.2 million in 1995, $16.1 million in 1994 and $16.4 million in 1993.
In addition, the Company maintains a stock purchase plan for the benefit of
certain Canadian employees. As of December 31, 1995, approximately 63,000 shares
of Common Stock were held in this plan.
54
<PAGE>
Accounting Standards Changes
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), which is effective for fiscal years beginning after
December 15, 1995. SFAS 123 requires a fair value based method of accounting for
stock based compensation, and provides an option to the Company to either
recognize compensation expense for employee stock based compensation or provide
pro forma earnings information as if such compensation cost had been recognized.
The Company has not yet determined the various assumptions that will be used in
the fair value calculations, the method of adoption nor the impact this
statement will have on its financial statements.
Note 15 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 31, 1995, future minimum rental payments under noncancelable
operating leases were as follows:
Minimum
(In millions) Rentals
1996 $ 26.9
1997 22.8
1998 18.0
1999 12.6
2000 10.7
Later years 52.4
Total future minimum rentals $143.4
Rent expense totaled $71.6 million in 1995, $72.7 million in 1994 and $57.3
million in 1993. 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
which 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,
55
<PAGE>
Notes to Consolidated Financial Statements
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
excess 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. Included in James River's accrued liabilities
were environmental liabilities, including remediation and landfill closure
costs, totaling $24.2 million (approximately $10.5 million of accrued
environmental liabilities were spun off to Vantage--see Note 2) and $37.5
million as of December 31, 1995, and December 25, 1994, 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, commonly referred to as the "cluster rules." The final rules
are likely to be issued in the fall of 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. Based on its evaluation of the rules as they are currently
expected to be issued, the Company believes that capital expenditures of less
than $100 million may be required to bring James River's facilities into
compliance. This amount is lower than the Company's original spending estimate
of at least $300 million because of expected changes in the rules from their
published draft form and the exclusion of facilities spun off to Vantage.
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, which would be exercised in
September 1996, and James River may call the EuroPaper Shares during August
1996, each at a fixed price of 1.04 billion French francs ($212.5 million using
exchange rates in effect as of December 31, 1995). If the put is exercised,
management believes that, given Jamont's current rate of profitability, it will
result in an immaterial amount of near-term earnings dilution.
56
<PAGE>
Note 16 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 organized along retail and commercial
market channels; (ii) the Packaging segment, which manufactures folding cartons,
flexible packaging and foodwrap papers, principally for food and other consumer
products manufacturers; and (iii) the Communications Papers segment, which after
the spin-off of Vantage (see Note 2) manufactures and markets uncoated business
and printing papers serving the commercial printing and office markets. The
Company's operations other than the Consumer Products segment which includes
Jamont's European operations are principally domestic. Jamont's results have
been included beginning in July 1994, when it became a consolidated subsidiary.
(In millions) 1995 1994 1993
Net sales:
Consumer products:
North America $2,689.1 $2,422.7 $2,358.1
Europe 1,654.7 630.9
Packaging 1,620.4 1,609.9 1,568.5
Communications papers 1,038.8 929.7 901.3
Intersegment elimination (203.5) (175.9) (177.7)
Total net sales $6,799.5 $5,417.3 $4,650.2
Operating profit (loss):
Consumer products:
North America $ 235.1 $ 143.4 $ 111.3
Europe 45.9 6.9
Packaging 61.0 97.4 103.8
Communications papers 191.2 (35.8) (58.4)
Severance and other items (51.9) (9.6)
General corporate expenses (58.0) (55.3) (42.7)
Income from operations $ 423.3 $ 147.0 $ 114.0
Depreciation and amortization:
Consumer products:
North America $ 179.3 $ 164.8 $ 174.8
Europe 128.9 46.1
Packaging 72.2 70.8 65.8
Communications papers 103.1 125.4 117.8
Corporate 4.3 7.0 7.5
Total depreciation and amortization $ 487.8 $ 414.1 $ 365.9
Capital expenditures:
Consumer products:
North America $203.5 $ 148.7 $ 140.3
Europe 91.2 32.4
Packaging 99.5 99.2 63.7
Communications papers 45.7 60.0 123.3
Corporate 1.3 11.4 3.8
Total capital expenditures $ 441.2 $ 351.7 $ 331.1
Total assets, end of year:
Consumer products:
North America $2,378.7 $2,230.5 $2,201.6
Europe 2,631.1 2,495.2
Packaging 879.6 1,079.9 1,089.0
Communications papers 672.4 1,457.4 1,511.0
Corporate 697.1 661.3 1,049.7
Total assets $7,258.9 $7,924.3 $5,851.3
57
<PAGE>
Notes to Consolidated Financial Statements
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, and the net pension asset. Prior to
July 1994, investments in unconsolidated affiliates included the Company's 43.2%
ownership interest in Jamont. During each of the three years in the period ended
December 31, 1995, 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 17 Subsequent Events
On January 30, 1996, the Company signed a letter of intent to sell its specialty
operations business to The Fonda Group, Inc. The specialty operations business,
which is currently part of the Consumer Products Business, consists of a party
goods business in Indianapolis, Indiana, a specialty tissue mill in Gouverneur,
New York, and a foodservice specialties plant in Rancho Dominguez, California.
On a combined basis, these three facilities have annual sales of approximately
$125 million. In connection with this sale, James River will receive
consideration totaling approximately $50 million, including cash and other
securities. It is anticipated that the cash proceeds will be used to reduce
long-term debt. This sale is subject to certain conditions including the
execution of a definitive agreement and the receipt of certain approvals.
Also in January 1996, the Company completed the formation of a joint venture
of its Handi-Kup foam cup operations with Benchmark Corporation of Delaware's
WinCup foam cup operations. The Handi-Kup operations contributed to the joint
venture included four foam cup plants, located in Corte Madera, California;
Jacksonville, Florida; Metuchen, New Jersey and West Chicago, Illinois. James
River received consideration of $26 million of cash and short-term notes,
approximately $10 million face value of subordinated long-term notes and a 45%
minority interest in the joint venture. Proceeds from this transaction will be
used to reduce long-term debt.
58
<PAGE>
Note 18 Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Per Common Share
(In millions Net Income Net Income Dividends Stock Price
except per share amounts) Net Sales Gross Profit (Loss) (Loss) Declared High Low
<S> <C> <C> <C> <C> <C> <C> <C>
December 1995, as restated:(a,b,c,d)
1st Quarter $1,667.6 $347.9 $26.5 $.14 $.15 $25-5/8 $20
2nd Quarter 1,817.9 410.9 41.0 .32 .15 28-5/8 23-1/4
3rd Quarter 1,734.7 412.0 37.3 .27 .15 37-3/8 25-3/8
4th Quarter 1,579.3 369.8 21.6 .08 .15 33-3/4 22-1/4
December 1994:(e,f)
1st Quarter 1,105.5 170.6 (7.1) (.19) .15 20-1/4 18
2nd Quarter 1,198.1 207.5 12.9 .06 .15 19 15-5/8
3rd Quarter 1,444.8 261.8 (.1) (.18) .15 24-3/4 17
4th Quarter 1,668.9 325.4 (18.7) (.41) .15 24-1/2 19-7/8
</TABLE>
(a) During 1994, Jamont was accounted for on a one-month lag and was included as
a consolidated subsidiary for five months of 1994.
(b) During the fourth quarter of 1995, James River changed the fiscal year end
of Jamont from November 30 to December 31 to eliminate the one-month
reporting lag (see Note 1). Results for the first three quarters of 1995
have been restated. The impact of the accounting change on net income was an
increase (decrease) of $4.4 million ($.05 per share), $(.8) million ($(.01)
per share) and $1.0 million ($.02 per share) in the first, second and third
quarters of 1995, respectively.
(c) During the fourth quarter of 1995, James River recorded nonrecurring charges
of $26.1 million ($13.8 million net of taxes and minority interests, or $.17
per share) primarily for severance and related exit costs in connection with
work force reductions.
(d) During the third quarter of 1995, as restated James River recorded severance
charges of $16.0 million ($9.9 million net of taxes and minority interests,
or $.12 per share) for work force reductions and $4.8 ($4.1 million net of
taxes) for Vantage transaction costs. Also during the third quarter of 1995,
the Company recorded a charge of $8.3 million ($7.1 million net of minority
interests) for an increase in the French corporate tax rate.
(e) During the fourth quarter of 1994, James River recorded nonrecurring pretax
charges of $24.2 million ($16.2 million net of taxes, 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.
(f) During the second quarter of 1994, James River received $9.0 million of
interest income ($5.4 million net of taxes, or $.07 per share) on income tax
refunds.
59
<PAGE>
Supplemental Pro Forma Financial Information (Unaudited)
In the third quarter of 1995, James River completed the spin-off to shareholders
of a large part of the Company's Communications Papers Business, along with the
specialty paper-based portion of its Packaging Business (see Note 2). In July
1994, James River increased its ownership interest in Jamont from 43% to 86% and
began accounting for Jamont as a consolidated subsidiary. The following pro
forma information is presented to report 1995 and 1994 on a more comparable
basis. The pro forma information is presented as if these transactions had been
completed as of the beginning of each period for which pro forma consolidated
operating data is presented. The pro forma financial information does not
purport to be indicative of the results of operations which would actually have
been reported if the transactions had occurred on the dates or for the periods
indicated, or which may be reported in the future.
(In millions, except per share data) 1995 1994
Net sales:
Consumer Products:
North America $2,697.1 $2,431.4
Europe 1,654.7 1,446.0
Packaging 1,418.5 1,333.4
Communications papers 592.9 411.4
Intersegment elimination (200.4) (172.5)
Total net sales $6,162.8 $5,449.7
Operating profit (loss):
Consumer Products:
North America $ 237.1 $ 145.1
Europe 45.9 42.1
Packaging 65.4 84.4
Communications Papers 126.7 (21.8)
Severance and other items (51.9) (9.6)
General corporate expenses (52.3) (47.3)
Income from operations $ 370.9 $ 192.9
Net income $ 112.7 $ 18.9
Net income (loss) per common share $ .64 $ (.48)
60
<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 31, 1995, and December
25, 1994, 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 31, 1995. 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 31, 1995, and December
25, 1994, and the consolidated results of their operations and their cash flows
for each of the three fiscal years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Richmond, Virginia
January 25, 1996, except as to the
information presented in Note 17,
for which the date is
January 30, 1996
61
<PAGE>
<TABLE>
Selected Financial Data(a)
<CAPTION>
(In millions, except ratios and per share amounts) 1995 1994 1993 1992
<S> <C> <C> <C> <C>
OPERATIONS
Net sales $6,799.5 $5,417.3 $4,650.2 $4,728.2
Cost and expenses 6,324.3 5,260.7 4,536.2 4,678.9
Restructuring, severance and other items 51.9 9.6 111.7
Interest expense 226.4 185.6 137.6 149.1
Income (loss) before income taxes, minority interests,
extraordinary items and accounting changes 237.2 (9.7) 16.7 (188.1)
Extraordinary items and accounting changes,
net of income tax benefits (305.3)
Net income (loss) 126.4 (13.0) (0.3) (427.3)
Net (loss) applicable to common shares 67.9 (58.8) (33.1) (453.8)
FINANCIAL POSITION, END OF YEAR
Total current assets $1,870.5 $1,975.5 $1,282.3 $1,697.2
Property, plant and equipment, net 4,074.1 4,679.9 3,571.5 3,502.8
Investments in affiliates 146.8 125.1 519.4 587.8
Goodwill 771.7 776.0 153.3 158.0
Total assets 7,258.9 7,924.3 5,851.3 6,336.3
Total current liabilities 1,099.0 1,568.9 781.1 928.2
Current debt 44.8 446.5 97.3 212.7
Long-term debt 2,503.0 2,668.0 1,942.8 2,153.9
Minority interests 165.3 154.9 7.0 10.2
Preferred stock 740.3 740.3 454.1 454.3
Common shareholders' equity 1,513.9 1,421.3 1,514.1 1,659.3
COMMON STOCK INFORMATION
PER SHARE OF COMMON STOCK (FULLY DILUTED)
Net income (loss) before extraordinary items
and accounting changes $0.81 $(0.72) $(0.40) $(1.82)
Extraordinary items and accounting changes (3.73)
Net income (loss) 0.81 (0.72) (0.40) (5.55)
Annual rate of dividends declared 0.60 0.60 0.60 0.60
Book value 17.84 17.40 18.55 20.34
COMMON STOCK MARKET PRICE
High $37.38 $24.75 $23.38 $23.38
Low 20.00 15.63 16.25 17.00
Year-end 24.13 21.00 18.50 18.00
Weighted average number of common shares and
equivalents (fully diluted) 84.1 81.7 81.6 81.8
OTHER DATA
Capital expenditures (excluding acquisitions) $441.2 $351.7 $331.1 $469.7
Depreciation and amortization expense 487.8 414.1 365.9 364.5
Return on average capital employed 7.1% 3.1% 2.9% 1.4%
Return on average common equity 4.6% (4.0)% (2.1)% (3.6)%
Ratio of total debt to total capitalization 51.3% 57.4% 50.8% 52.7%
Current ratio 1.70 1.26 1.64 1.83
Cash dividend payout ratio 85.9% +100% +100% +100%
Ratio of earnings to interest 2.0 .9 1.1 .5
</TABLE>
(a) Adjusted for three-for-two common stock splits on June 23, 1986.
(b) Represents the 35-week transition period resulting from the change in fiscal
year from April to December.
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.
62
<PAGE>
<TABLE>
Selected Financial Data(a)
James River Corporation of Virginia and Subsidiaries
<CAPTION>
(In millions, except ratios and per share amounts) 1991 1990(b) 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $4,561.7 $3,391.5 $5,950.0 $5,871.8 $5,098.0 $4,479.0 $2,607.0 $2,492.0
Cost and expenses 4,317.7 3,063.9 5,490.2 5,307.0 4,670.3 4,071.1 2,421.7 2,281.5
Restructuring, severance and other items 200.0
Interest expense 138.0 104.2 182.2 161.5 115.5 111.6 44.3 52.3
Income (loss) before income taxes, minority
interests, extraordinary items and accounting
changes 132.9 51.6 372.2 441.3 377.5 356.3 150.0 170.9
Extraordinary items and accounting changes,
net of income tax benefits
Net income (loss) 78.3 9.7 221.6 255.1 209.0 169.9 95.3 101.4
Net (loss) applicable to common shares 53.7 (6.9) 200.0 233.6 193.8 165.9 89.2 97.7
FINANCIAL POSITION, END OF YEAR
Total current assets $1,533.3 $1,910.7 $1,454.4 $1,456.1 $1,443.9 $1,343.1 $743.8 $741.7
Property, plant and equipment, net 2,933.1 2,843.4 3,491.9 3,386.0 2,935.7 2,529.6 1,205.8 984.0
Investments in affiliates 619.7 600.9 495.0 376.7 269.3
Goodwill 172.4 181.0 201.9 225.2 224.6 240.7
Total assets 5,626.6 5,741.4 5,818.4 5,558.1 5,005.7 4,210.5 1,972.2 1,740.9
Total current liabilities 705.5 788.8 811.8 734.6 730.1 631.3 303.0 292.9
Current debt 131.0 86.2 156.1 102.6 81.4 69.5 10.1 9.1
Long-term debt 1,758.1 1,801.9 1,771.2 1,918.3 1,623.0 1,280.4 646.5 563.1
Minority interests 2.3 2.3 18.8 12.2 7.8 5.9 2.7 4.4
Preferred stock 354.6 354.8 355.0 302.4 304.9 106.9 8.9 96.8
Common shareholders' equity 2,220.8 2,212.2 2,203.0 2,045.8 1,877.5 1,747.2 744.2 581.8
COMMON STOCK INFORMATION
PER SHARE OF COMMON STOCK (FULLY DILUTED)
Net income (loss) before extraordinary items
and accounting changes $0.66 $(0.08) $2.45 $2.87 $2.36 $2.03 $1.73 $1.93
Extraordinary items and accounting changes
Net income (loss) 0.66 (0.08) 2.45 2.87 2.36 2.03 1.73 1.93
Annual rate of dividends declared 0.60 0.60 0.60 0.48 0.40 0.40 0.37 0.37
Book value 27.25 27.21 27.14 25.24 23.12 21.22 14.40 13.35
COMMON STOCK MARKET PRICE
High $29.25 $27.12 $34.38 $30.75 $39.00 $43.75 $31.12 $23.00
Low 17.00 18.50 22.75 21.12 18.50 22.00 17.12 15.63
Year-end 19.88 26.38 22.88 28.50 24.63 36.00 30.75 17.33
Weighted average number of common shares and
equivalents (fully diluted) 81.9 81.8 81.7 81.5 82.3 81.8 51.5 50.6
OTHER DATA
Capital expenditures (excluding acquisitions) $467.5 $272.1 $574.6 $684.6 $623.1 $509.0 $281.1 $218.2
Depreciation and amortization expense 298.6 202.1 307.6 253.3 209.5 175.1 82.5 59.8
Return on average capital employed 6.0% 11.1% 10.8 % 12.8% 12.2% 17.4% 12.2% 16.7%
Return on average common equity 2.4% 8.8% 9.4 % 11.9% 10.7% 10.0% 13.2% 17.7%
Ratio of total debt to total capitalization 42.3% 42.4% 42.8 % 46.1% 43.8% 42.1% 46.5% 45.6%
Current ratio 2.17 2.42 1.79 1.98 1.98 2.13 2.45 2.53
Cash dividend payout ratio 88.6% +100% 34.4 % 23.5% 22.5% 21.4% 27.2% 18.2%
Ratio of earnings to interest 1.6 2.8 2.6 3.1 3.6 3.6 3.2 3.6
</TABLE>
Ratio of total debt to total capitalization:
Total debt divided by the sum of total debt, minority interests, preferred stock
and common shareholders' equity.
Current Ratio:
Total current assets divided by total current liabilities.
Cash dividend payout ratio:
The sum of common and preferred stock cash dividends, 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.
63
Exhibit 13 - Appendix A
Operating Income - North American Consumer Products bar chart as defined by the
following data points:
(in millions) 1993 1994 1995
1st Quarter $23.2 $28.3 $38.4
2nd Quarter 33.9 47.0 58.4
3rd Quarter 33.6 44.0 77.2
4th Quarter 20.6 24.1 61.1
Operating Income - European Consumer Products bar chart as defined by the
following data points:
(in millions) 1993 1994 1995
1st Quarter $8.8
2nd Quarter 12.9
3rd Quarter $0.5 8.5
4th Quarter 6.4 15.7
Operating Income - Packaging bar chart as defined by the following data points:
(in millions) 1993 1994 1995
1st Quarter $23.3 $26.6 $18.0
2nd Quarter 29.7 34.3 16.5
3rd Quarter 22.3 16.5 8.5
4th Quarter 28.5 20.0 18.0
Operating Income - Communications Papers bar chart as defined by the following
data points:
(in millions) 1993 1994 1995
1st Quarter $(20.3) $(25.1) 44.5
2nd Quarter (12.3) (26.5) 60.2
3rd Quarter (6.4) (4.1) 60.8
4th Quarter (19.4) 19.9 25.7
Capital Expenditures and Cash Flow from Operations bar chart as defined by the
following data points:
(in millions) 1991 1992 1993 1994 1995
Capital expenditures $468 $470 $331 $352 $441
Cash flow from operations 289 313 441 411 609
Total Capitalization bar chart as defined by the following data points:
(in billions) 1991 1992 1993 1994 1995
Total debt $1.89 $2.37 $2.04 $3.11 $2.55
Minority interests .00 .01 .01 .15 .17
Total preferred stock .35 .45 .45 .74 .74
Common shareholders' equity 2.22 1.66 1.51 1.42 1.51
Working Capital bar chart as defined by the following data points:
(in millions) 1991 1992 1993 1994 1995
Working capital $828 $769 $501 $407 $772
Total Assets bar chart as defined by the following data points:
(in billions) 1991 1992 1993 1994 1995
Current assets $1.53 $1.70 $1.28 $1.98 $1.87
Net fixed and other assets 4.09 4.64 4.57 5.95 5.39
Annual Rate of Cash Dividends Per Common Share bar chart as defined by the
following data points:
(in dollars) 1991 1992 1993 1994 1995
Annual rate of cash dividends $.60 $.60 $.60 $.60 $.60
Exhibit 21
JAMES RIVER CORPORATION of Virginia
SUBSIDIARIES (a)(b)
as of December 31, 1995
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
Brusara Participacoes, Ltda. Brazil
Cartellas S.A. Greece
Celtona B.V. Netherlands
Crown Zellerbach AG Zug Switzerland
Crown Zellerbach International, Inc. Delaware
Diamond Occidental Forest Inc. Delaware
ILC Inc. Virginia
James River Canada Inc. Canada
James River de Mexico, S.A. de C.V. Mexico
James River Fiber Company Virginia
James River International Holdings, Ltd. Virginia
James River-Marathon, Ltd. Ontario
James River New Castle, Inc. Delaware
James River Packaging de Mexico, S.A. de C.V. Mexico
James River Paper Company, Inc. Virginia
James River-Pennington, Inc. Alabama
James River Timber Corporation Alabama
E-9
Exhibit 21 (continued)
Organized Under
Name the Laws of
James River Tredegar, Inc. Virginia
Jamont N.V. Netherlands
JAMONT Services S.N.C. Belgium
Jamont Ireland Ltd. Ireland
Jamont Tisu S.A. Spain
Jamont UK Limited United Kingdom
Jarapar Participacoes, Ltda. Brazil
JRF Immobiliere S.A. Belgium
Kaysersberg, S.A. France
Meridian & Bigbee Railroad Company Mississippi
MidSouth Lumber Company Virginia
Nokian Paperi Oy Finland
Riverside Transportation, Inc. Virginia
St. Francis Insurance Company Ltd. Bermuda
Servicios James River de Mexico, S.A. de C.V. Mexico
Sodipan S.A. France
Unikay S.r.L. Italy
(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. 33-57153 on Form S-8
pertaining to the James River Corporation of Virginia Canadian
Employees Stock Purchase Plan;
(iii) in Registration Statement No. 33-43894 on Form S-8
pertaining to the James River Corporation of Virginia Stock Option
Plan for Outside Directors;
(iv) 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;
(v) in Registration Statement No. 33-56657 on Form S-8
pertaining to the James River Corporation of Virginia 1987 Stock
Option Plan; and
(vi) 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, 1996 (except as to the information
presented in Note 17, for which the date is January 30, 1996), on our
audits of the consolidated financial statements of James River
Corporation of Virginia and Subsidiaries as of December 31, 1995 and
December 25, 1994, and for each of the three fiscal years in the
period ended December 31, 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
March 28, 1996
E-10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from James River
Corporation of Virginia's December 31, 1995 Form 10-K financial statements and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000053117
<NAME> JAMES RIVER CORPORATION OF VIRGINIA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 66
<SECURITIES> 0
<RECEIVABLES> 847
<ALLOWANCES> 0
<INVENTORY> 821
<CURRENT-ASSETS> 1871
<PP&E> 6181
<DEPRECIATION> 2107
<TOTAL-ASSETS> 7259
<CURRENT-LIABILITIES> 1099
<BONDS> 2503
0
740
<COMMON> 9
<OTHER-SE> 1505
<TOTAL-LIABILITY-AND-EQUITY> 7259
<SALES> 6800
<TOTAL-REVENUES> 6800
<CGS> 5259
<TOTAL-COSTS> 5259
<OTHER-EXPENSES> 52
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226
<INCOME-PRETAX> 237
<INCOME-TAX> 109
<INCOME-CONTINUING> 126
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
