SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: June 29, 1997 Commission File 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, VA 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 644-5411
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Number of shares of $.10 par value common stock outstanding as of August 1,
1997:
90,031,822 shares
<PAGE>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
June 29, 1997
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of June 29, 1997 and
December 29, 1996 3
Consolidated Statements of Operations for the quarters
and six months ended June 29, 1997 and June 30, 1996 5
Consolidated Statements of Cash Flows for the six months
ended June 29, 1997 and June 30, 1996 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 14
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 18
ITEM 2. Changes in Securities 18
ITEM 3. Defaults Upon Senior Securities 18
ITEM 4. Submission of Matters to a Vote of Security Holders 18
ITEM 5. Other Information 18
ITEM 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 20
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 29, 1997 and December 29,1996
(in millions, except share data)
June December
1997 1996
- -------------------------------------------------------------------------------------------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $213.1 $33.8
Accounts receivable 696.5 717.9
Inventories 683.2 650.4
Prepaid expenses and other current assets 41.4 39.1
Deferred income taxes 77.4 78.5
- -------------------------------------------------------------------------------------------------
Total current assets 1,711.6 1,519.7
- -------------------------------------------------------------------------------------------------
Property, plant and equipment 5,781.4 5,867.2
Accumulated depreciation (2,249.6) (2,115.7)
- -------------------------------------------------------------------------------------------------
Net property, plant and equipment 3,531.8 3,751.5
Investments in affiliates 161.5 154.6
Other assets 428.6 385.7
Goodwill 663.8 730.0
- -------------------------------------------------------------------------------------------------
Total assets $6,497.3 $6,541.5
=================================================================================================
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED BALANCE SHEETS, Continued
(in millions, except share data)
June December
1997 1996
- -------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Accounts payable $502.0 $507.8
Accrued liabilities 570.7 595.6
Current portion of long-term debt 126.0 116.9
- -------------------------------------------------------------------------------------------------
Total current liabilities 1,198.7 1,220.3
- -------------------------------------------------------------------------------------------------
Long-term debt 1,824.2 1,853.9
Accrued postretirement benefits
other than pensions 457.8 458.0
Deferred income taxes 488.3 443.0
Other long-term liabilities 224.2 259.9
- -------------------------------------------------------------------------------------------------
Total liabilities 4,193.2 4,235.1
- -------------------------------------------------------------------------------------------------
Preferred stock, $10 par value, 5,000,000
shares authorized, issuable in series;
shares outstanding, 3,626,811 738.4 738.4
Common stock, $.10 par value, 150,000,000
shares authorized; shares outstanding,
June 29, 1997 -- 86,666,827 and
December 29, 1996 -- 86,194,612 8.7 8.6
Additional paid-in capital 1,321.2 1,307.6
Retained earnings 235.8 251.8
- -------------------------------------------------------------------------------------------------
Total shareholders' equity 2,304.1 2,306.4
- -------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $6,497.3 $6,541.5
=================================================================================================
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters (13 Weeks) and Six Months (26 Weeks) Ended
June 29, 1997 and June 30, 1996
(in millions, except per share amounts)
Second Quarter Six Months
-------------------------------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,412.4 $1,570.2 $2,794.3 $3,125.6
Cost of goods sold 1,029.1 1,177.9 2,048.3 2,359.9
Selling and administrative expenses 251.0 286.5 501.2 560.1
Severance and other items (income) expense (57.7) 7.0 (57.7) 30.4
- -------------------------------------------------------------------------------------------------------------------------------
Income from operations 190.0 98.8 302.5 175.2
Interest expense 37.4 42.7 75.3 88.1
Other income, net 4.9 4.4 12.7 8.4
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes
and minority interests 157.5 60.5 239.9 95.5
Income tax expense 66.2 26.6 100.8 42.0
- -------------------------------------------------------------------------------------------------------------------------------
Income before minority interests 91.3 33.9 139.1 53.5
Minority interests (.5) (3.4) (.8) (2.5)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $90.8 $30.5 $138.3 $51.0
===============================================================================================================================
Preferred dividend requirements (8.1) (14.6) (16.3) (29.3)
- -------------------------------------------------------------------------------------------------------------------------------
Net income applicable
to common shares $82.7 $15.9 $122.0 $21.7
===============================================================================================================================
Net income per common share
and common share equivalent $.81 $.18 $1.19 $.25
===============================================================================================================================
Cash dividends per common share $.15 $.15 $.30 $.30
Weighted average number of common
shares and common share equivalents 102.7 85.5 102.6 85.5
===============================================================================================================================
Net income per common share
and common share equivalents, assuming full dilution $.78 $.18 $1.16 $.25
===============================================================================================================================
Weighted average number of common
shares and common share equivalents,
assuming full dilution 115.2 85.5 105.6 85.5
===============================================================================================================================
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months (26 Weeks) Ended
June 29, 1997 and June 30, 1996
(in millions)
1997 1996
- -------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) operating activities:
<S> <C> <C>
Net income $138.3 $51.0
Depreciation expense and cost of timber harvested 190.6 205.3
Amortization of goodwill 10.2 10.3
Deferred income tax provision 53.6 4.8
Equity in earnings of unconsolidated affiliates (4.9) (1.4)
Dividends received from unconsolidated affiliates 3.2 5.3
Severance and other items (57.7) 30.4
Retirement benefits expense in excess of funding (5.0) 2.0
Change in current assets and liabilities:
Accounts receivable (31.8) (24.8)
Inventories (47.9) 67.0
Prepaid expenses and other current assets 5.4 (.3)
Accounts payable and accrued liabilities 23.2 31.5
Foreign currency hedge (31.5)
Other, net (37.6) (22.6)
- -------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 208.1 358.5
- -------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) investing activities:
Expenditures for property, plant and equipment (133.7) (185.7)
Cash received from sale of assets 113.3 66.5
Other, net 7.9 3.0
- -------------------------------------------------------------------------------------------------------------------
Cash used for investing activities (12.5) (116.2)
- -------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) financing activities:
Additions to long-term debt 38.9 1.6
Payments of long-term debt (10.5) (192.6)
Common and preferred stock cash dividends paid (54.8) (55.2)
Other, net 10.1 1.7
- -------------------------------------------------------------------------------------------------------------------
Cash used for financing activities (16.3) (244.5)
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 179.3 (2.2)
Cash and cash equivalents, beginning of period 33.8 66.1
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $213.1 $63.9
===================================================================================================================
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Presentation:
In the opinion of management, the accompanying unaudited consolidated
financial statements of James River Corporation of Virginia and Subsidiaries
(the "Company" or "James River") contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the Company's
consolidated financial position as of June 29, 1997, and its results of
operations and cash flows for the quarters (13 weeks) and six months (26 weeks)
ended June 29, 1997, and June 30, 1996. The balance sheet as of December 29,
1996, was derived from audited financial statements as of that date. The results
of operations for the six months ended June 29, 1997, are not necessarily
indicative of the results to be expected for the full year.
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 may be
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. Occasionally, the Company may terminate a derivative
financial instrument. If an interest rate swap or an option is terminated
because related debt no longer exists, any gain or loss is recognized into
income immediately; otherwise, the gain or loss is deferred and amortized to
interest expense over the remaining periods originally covered by the derivative
contract. If a foreign exchange contract is terminated, the gain or loss is
recognized in a separate component of equity, net of tax, consistent with the
accounting treatment of the hedged item.
Reclassifications:
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year's presentation including a
reclassification of customer freight charges from net sales to cost of sales of
$68.8 million, $73.4 million, $71.4 million and $67.8 million for the first,
second, third and fourth quarters of 1996, respectively. Reportable segments for
all periods have been reconfigured to include bleached board operations
(formerly in the North American Consumer Products segment) in the Packaging
segment and to include the foodwrap operations (formerly in the Packaging
segment) in the North American Consumer Products segment.
Adoption of Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" ("SFAS 130") which is effective for
periods beginning after December 15, 1997, including interim periods. SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements, either in the
statement of operations or a separate statement. Additionally, SFAS 130 requires
the display of the accumulated balance of other comprehensive income. On a pro
forma basis, for the quarters and six months ended June 29, 1997, and June 30,
1996, comprehensive income is a follows (in millions):
7
<PAGE>
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------------------------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 90.8 $ 30.5 $ 138.3 $ 51.0
Other comprehensive income, net of tax:
Foreign currency translation (27.0) (4.9) (112.8) (24.9)
Unrealized gain (loss) on securities 18.3 2.6 13.9 (0.6)
- ------------------------------------------------------------------------------------------------------------------
Other comprehensive income (8.7) (2.3) (98.9) (25.5)
- ------------------------------------------------------------------------------------------------------------------
Comprehensive income $ 82.1 $ 28.2 $ 39.4 $ 25.5
==================================================================================================================
</TABLE>
In June 1997, the Financial Accounting Standards Board also issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") which is effective for periods beginning after
December 15, 1997, including interim periods after the year of initial adoption.
SFAS 131 establishes standards for the way public companies report information
about operating segments in both interim and annual financial statements,
including related disclosures about products and services, geographic areas, and
major customers. The Company has not determined what, if any, impact SFAS 131
will have on the operating segments reported nor the impact SFAS 131 will have
on the related disclosures.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share ("SFAS 128"), which is effective for periods ending
after December 15, 1997", including interim periods. SFAS 128 establishes
standards for computing and presenting earnings per share ("EPS") by replacing
primary EPS with the presentation of basic EPS and requiring dual presentation
of basic and diluted EPS on the face of the income statement. On a pro forma
basis, for the quarters and six months ended June 29, 1997, and June 30, 1996,
EPS as reported would have been:
Second Quarter Six Months
-------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------
Basic earnings per share $.89 $.19 $1.28 $.26
Diluted earnings per share .78 .19 1.18 .25
- -------------------------------------------------------------------------------
2. Acquisitions and Dispositions
On May 4, 1997, the Company, Fort Howard Corporation ("Fort Howard"), and a
newly formed wholly-owned subsidiary of the Company entered into an Agreement
and Plan of Merger (the "Agreement") pursuant to which Fort Howard would become
a subsidiary of the Company in a merger transaction. Under the Agreement,
shareholders of Fort Howard will receive 1.375 shares of the Company's common
stock for each share of Fort Howard common stock. The transaction is structured
to qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended, and it is anticipated that the merger will be
accounted for as a pooling of interests. The merger, which is expected to be
completed shortly after the special meeting of shareholders on August 12, 1997,
is conditioned on, among other things, receiving requisite regulatory clearances
and obtaining the requisite approvals of the shareholders of both companies.
8
<PAGE>
As a part of the Company's ongoing program of timberland divestitures, on
April 29, 1997, pursuant to an offering memorandum dated September 12, 1996,
James River completed the sale of approximately 95,000 acres of timberlands
located in Alabama and Mississippi for cash proceeds of $111 million. The
Company recorded a gain of $57.7 million ($35.2 million net of taxes, or $.34
per share) in severance and other items.
3. Other Income
The components of other income were as follows for the six months ended
June 29, 1997, and June 30, 1996 (in millions):
June June
1997 1996
- -------------------------------------------------------------------------------
Interest and investment income $4.3 $3.3
Equity in earnings of
unconsolidated affiliates 4.9 1.5
Gain on sale of assets 2.6 4.6
Foreign currency exchange gain (loss) (.4) 1.2
Other, net 1.3 (2.2)
- -------------------------------------------------------------------------------
Total other income $12.7 $8.4
===============================================================================
4. Income Taxes
The Company's effective income tax rate was 42% for the six months ended
June 29, 1997, compared to 44% for the first six months of 1996. The decrease in
the effective tax rate from the prior year was primarily due to the relative
size of non-tax-deductible permanent differences to pretax income.
5. Inventories
The components of inventories were as follows as of June 29, 1997, and
December 29, 1996 (in millions):
June December
1997 1996
- -------------------------------------------------------------------------------
Raw materials $137.1 $135.7
Finished goods and work in process 456.7 418.2
Stores and supplies 127.7 131.6
- ------------------------------------------------------------------------------
721.5 685.5
Reduction to state certain inventories
at last-in, first-out cost (38.3) (35.1)
- -------------------------------------------------------------------------------
Total inventories $683.2 $650.4
===============================================================================
9
<PAGE>
6. Financial Instruments
The Company held $638 million and $1,286 million in notional amount of
interest rate swaps with fair value liabilities of $9 million and $15 million as
of June 29, 1997 and December 29, 1996, respectively. During the first quarter
of 1997, the Company effectively unwound $648 million in notional amount of
interest rate swaps at a cost of approximately $8 million. The cost of unwinding
the interest rate swaps will be amortized to interest expense over the remaining
periods originally covered by the contracts. The original maturity dates were
between September 1998 and January 1999.
During the first quarter of 1997, the Company unwound $470 million in
notional amount of foreign exchange contracts, along with interest rate
agreements, at a cost of $31 million, net of tax benefits. The foreign exchange
contracts were designated as hedges of a portion of the Company's net investment
in its European Consumer Products Business. The net termination cost was
recorded as a component of equity. The Company terminated such contracts prior
to their original expiration in September 1998.
The fair value of the Company's debt was $2,033 million and $2,065 million
as of June 29, 1997, and December 29, 1996, respectively. Additionally, as of
June 29, 1997, the pay-in-kind notes received from the spin-off of Crown Vantage
Inc., valued at $89 million, are carried on the books at a fair value of
approximately $109 million.
The estimated fair values of the Company's financial instruments were based
on quoted market prices of comparable instruments and current market rates as of
June 29, 1997, and December 29, 1996, respectively.
7. Commitments and Contingent Liabilities
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. Future regulations could materially increase the Company's
capital requirements and certain operating expenses in future years.
In December 1993, the U.S. Environmental Protection Agency ("EPA")
published draft rules which contain proposed regulations affecting pulp and
paper industry discharges of wastewater and gaseous emissions, generally
referred to as "Cluster Rules". The final rules are likely to be issued in 1997,
with a nominal compliance date of 2000. These rules may require significant
changes in the pulping and/or bleaching process presently used in some U.S. pulp
mills, including several of James River's mills. The implementation of the rules
could materially increase the Company's capital expenditures between 1998 and
2000. Based on its evaluation of the rules as they are currently expected to be
issued, the Company believes that capital expenditures of approximately $100
million may be required to bring James River's facilities into compliance. This
estimate could change, depending on several factors, including changes to the
proposed regulations, new developments in control and process technology, and
inflation.
In addition, James River has been identified as a potentially responsible
party ("PRP"), along with others, at various EPA designated Superfund sites and
is involved in remedial investigations and actions under federal and state laws.
It is James River's policy to accrue remediation costs when it is probable that
such costs will be incurred and when they can be reasonably estimated. As of
June 29, 1997, James River's accrued environmental liabilities, including
remediation and landfill closure costs, totaled $21.3 million. The Company
periodically reviews the status of all significant existing or potential
environmental issues and adjusts its accrual as necessary. 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 PRP's. 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 quarter or 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 PRP at additional sites in the future or that
the costs associated with such additional sites would not be material.
10
<PAGE>
Litigation:
In 1994, James River was sued in Morgan County, Alabama, in a 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, 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. The
Alabama case has been certified as a class action and holders of approximately
one-half of the Debentures elected not to be part of the class. In June 1997,
the Alabama court granted James River summary judgement on the remaining claims,
and dismissed the action. The plaintiffs have appealed to the Alabama Supreme
Court. Most of the holders electing out of the Alabama class are plaintiffs in
the Connecticut case. James River believes that all these claims are without
merit and intends to defend them vigorously. In May 1996, James River settled
the claim of an institutional holder of approximately 16.54% of the Debentures
for $425,000 plus reimbursement of attorney's fees.
In May 1997, the Attorney General of the State of Florida filed a civil
action in the Gainesville Division of the United States District Court for the
Northern District of Florida against the Company and nine other manufacturers of
sanitary paper products alleging violations of federal and state antitrust and
unfair competition laws. The complaint seeks civil penalty under Florida law of
$1 million for each alleged violation against each defendant, an unspecified
amount of treble damages and injunctive relief. Over the following weeks,
additional civil class actions were filed in various federal and state courts
against the same defendants alleging violations of federal and state antitrust
statutes and seeking treble damages and injunctive relief. The actions are the
subject of a motion for transfer and consolidation before the Joint Panel of
Multidistrict Litigation. The litigation is in its earliest stages. The Company
intends to defend the litigation vigorously.
Although the ultimate disposition of legal proceedings cannot be predicted
with certainty, it is the 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 quarter or year.
11
<PAGE>
8. Segment Information
James River's net sales and income from operations by business segment were
as follows for the quarters and six months ended June 29, 1997, and June 30,
1996 (in millions):
<TABLE>
<CAPTION>
CONSUMER PRODUCTS Communi- Intersegment
North cations elimination/
America Europe Packaging Papers Corporate Total
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter ended June 1997
<S> <C> <C> <C> <C> <C> <C>
Net sales $733.6 $417.1 $198.3 $112.0 $(48.6) $1,412.4
Segment results before severance
and other items 84.0 42.0 23.8 .4 (17.9) 132.3
Severance and other items income 57.7 57.7
_______ _______ _______ _______ _______ _______
Income from operations 141.7 42.0 23.8 .4 (17.9) 190.0
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter ended June 1996
Net sales $745.2 $452.4 $319.9 $113.8 $(61.1) $1,570.2
Segment results before severance
and other items 60.4 41.8 24.0 3.2 (23.6) 105.8
Severance and other items expense (3.3) (3.0) (.7) (7.0)
_______ _______ _______ _______ _______ _______
Income from operations 57.1 41.8 21.0 3.2 (24.3) 98.8
- -----------------------------------------------------------------------------------------------------------------------------------
Six months ended June 1997
Net sales $1,421.1 $843.7 $395.0 $231.3 $(96.8) $2,794.3
Segment results before severance
and other items 152.4 87.3 45.0 (3.2) (36.7) 244.8
Severance and other items income 57.7 57.7
_______ _______ _______ _______ _______ _______
Income from operations 210.1 87.3 45.0 (3.2) (36.7) 302.5
- -----------------------------------------------------------------------------------------------------------------------------------
Six months ended June 1996
Net sales $1,456.1 $917.3 $661.1 $226.0 $(134.9) $3,125.6
Segment results before severance
and other items 124.0 66.6 53.8 7.4 (46.2) 205.6
Severance and other items expense (26.0) (3.3) (1.1) (30.4)
_______ _______ _______ _______ _______ _______
Income from operations 98.0 66.6 50.5 7.4 (47.3) 175.2
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
9. Subsequent Event
In July 1997, James River announced that as of September 2, 1997, it is
calling its Series P 9% Cumulative Convertible Preferred Stock for conversion
into common stock at a conversion ratio of .9206 shares of common stock for each
Series P depositary share. The conversion of the Series P depositary shares will
reduce the Company's aggregate cash dividends by approximately $16.5 million per
year. The conversion of Series P into common shares is not expected to have a
material impact on the Company's calculation of earnings per share.
In August 1997, James River announced that as of October 1, 1997, it is
calling its Series O 8 1/4% Cumulative Preferred Stock for redemption at its
face value of $98.1 million.
13
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Overview
James River reported net income of $90.8 million, or $.81 per share, for
the second quarter ended June 29, 1997, compared with $30.5 million, or $.18 per
share for the same quarter of the prior year. Net sales for the second quarter
were $1,412 million, compared to $1,570 million in the prior year. For the six
months ended June 29, 1997, net income was $138.3 million, or $1.19 per share,
compared with $51.0 million, or $.25 per share in 1996. Net sales for the first
six months of 1997 were $2,794 million compared to $3,126 million in 1996. The
comparability of these results was impacted by nonrecurring charges and the 1996
divestitures of the Flexible Packaging and related Inks divisions, as well as
several small domestic Consumer Products facilities.
Items Affecting Comparability
Nonrecurring charges for the quarters and six months ended June 29, 1997,
and June 30, 1996, were as follows (in millions, except per share amounts):
<TABLE>
<CAPTION>
June 29, 1997 June 30, 1996
--------------------------------------- --------------------------------------
Net Net
Income Per Income Per
Gross Impact Share Gross Impact Share
- ------------------------------------------------------------------------------------------------------------------------
Quarters ended:
<S> <C> <C> <C> <C> <C> <C>
Severance costs $4.9 $3.0 $.04
Net (gain) loss on asset divestitures ($57.7) ($35.2) ($.34) 2.1 1.2 .02
- --------------------------------------------------------------------------------- --------------------------------------
Total (income) expense ($57.7) ($35.2) ($.34) $7.0 $4.2 $.06
========================================================================================================================
Six months ended:
Severance costs $18.7 $11.4 $.14
Net (gain) loss on asset divestitures ($57.7) ($35.2) ($.34) 11.7 7.1 .08
- ------------------------------------------------------------------------------------------------------------------------
Total (income) expense ($57.7) ($35.2) ($.34) $30.4 $18.5 $.22
========================================================================================================================
</TABLE>
Net income for the quarters and six months ended June 29, 1997, excluding
nonrecurring items, was $55.6 million or $.47 per share, and $103.1 million, or
$.85 per share, respectively, compared with $34.7 million, or $.24 per share,
and $69.5 million, or $.47 per share in the same periods of 1996. Net sales for
the second quarter and six months, excluding divested operations, were $1,412
million and $2,794 million in 1997, respectively, compared with $1,438 million
and $2,829 million for the comparable periods in 1996.
North American Consumer Products Business
Operating profits before severance and other items for the North American
Consumer Products Business, excluding results from divestitures, increased by
37%, from $61.5 million in the second quarter of 1996 to $84.0 million in the
current quarter. Net sales for the quarters were similar, excluding revenues
from divested operations, at $734 million in 1997, compared to $733 million in
1996. Second quarter results reflect volume gains in retail and commercial towel
and tissue and retail tabletop categories, reduced manufacturing and raw
material costs, and benefits of cost reduction initiatives, partially offset by
foodservice volume declines of 5% and lower average selling prices led by
competitors in the second quarter of 1996 for retail towel and tissue products.
14
<PAGE>
For the six months ended June 29, 1997, operating profits, excluding
divestitures, were $152.4 million, an increase of 22% over the comparable six
months in 1996. Excluding divestitures, revenues for the first six months of
1997 increased nearly 2% over the prior year. The increase in profitability over
the first half of 1997 as compared to the prior year was also attributable to
strong sales volumes, and reduced wood costs, combined with continued cost
reduction benefits. Overall increased operating profits were partially offset by
a decline in earnings attributable to market pulp sales. This business has
approximately 200,000 tons of pulp capacity in excess of its annual
requirements, which is sold as market pulp. Market pulp volume improvements of
10% over prior year's first six months levels were more than offset by average
net selling price declines.
European Consumer Products Business
Operating profits for the European Consumer Products Business increased
slightly to $42.0 million, compared to $41.8 million in the second quarter of
1996. Operating profits of $87.3 million for this business for the six months
ended June 29, 1997, were 31% above the $66.6 million reported in the prior
year. The improvement in the European Consumer Products Business' operating
profits was attributable to a combination of stronger volumes and lower raw
material costs and other cost reductions, partially offset by the strengthening
of the U.S. dollar, lower average pricing and additional promotional costs. The
net impact of foreign currency translation to the U.S. dollar for the six months
ended June 29, 1997, was a reduction in profits of approximately 6%. As a net
buyer of approximately 450,000 tons per year of market pulp, the European
Consumer Products Business continues to benefit from year over year declines in
the cost of this raw material. Net sales declined 8% in both the second quarter
and the first six months of 1997 to $417 million and $844 million from $452
million and $917 million in the comparable periods of 1996. While finished
product sales volumes improved more than 4% over the first half of 1996,
revenues continue to be negatively impacted by the strengthening of the U.S.
dollar and a decline in average pricing. Improved finished product sales volumes
reflect a continued volume growth in nearly all geographic markets.
Packaging Business
Excluding the results attributable to the divestitures of the Flexible
Packaging and Inks divisions in the second half of 1996, operating profits
before severance and other items for the Packaging Business improved by 18% to
$23.8 million in the current quarter from $20.1 million in the second quarter of
1996 while profits for the first six months decreased 2% to $45.0 million in
1997 from $45.9 million in the prior year. Net sales, adjusted for the Flexible
Packaging and Inks transactions, were flat in the second quarters at $198
million in 1997 compared to $200 million in the prior year and decreased 6% to
$395 million from $420 million for the six months ended June 29, 1997 and June
30, 1996, respectively. The current quarter's and six months' results reflect
increased volumes for folding cartons and paperboard, lower manufacturing and
raw material costs, partially offset by lower average selling prices.
Communications Papers Business
Operating profits for the Communications Papers Business declined to $.4
million from $3.2 million in the second quarter of 1996. The operating profits
for the six months decreased to a loss of $3.2 million from a profit of $7.4
million for the same period in 1996. Net sales for the second quarter were
similar at $112 million in 1997 and $114 million in 1996, while net sales for
the six months improved more than 2% to $231 million from $226 million in the
prior year. The improvement in net sales for the first half of 1997 over the
prior year is attributable to increased volumes of 24% due primarily to
market-related production curtailments, which occurred in the first half of
1996. However, volume gains were more than offset by selling price declines.
15
<PAGE>
Other Income and Expense Items
General corporate expenses, before severance and other items, totaled $17.9
million and $36.7 million in the second quarter and first six months of 1997,
respectively, compared to $23.6 million and $46.2 million for the same periods
in the prior year. The majority of the decrease was related to reductions in
spending on new integrated management information systems, as design and
installation projects are being completed and systems become operational.
Interest expense decreased from $88.1 million to $75.3 million between the first
six months of 1996 and the first six months of 1997. This decrease was
attributable to the reduction in average outstanding debt since the second
quarter of 1996. Other income increased to $12.7 million in 1997 from $8.4
million in 1996, principally due to improved earnings of unconsolidated
affiliates. The change in the effective tax rate for 1997 is discussed in Note 4
of Notes to Consolidated Financial Statements.
Adoption of Accounting Pronouncement
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" ("SFAS 130") which is effective for
periods beginning after December 15, 1997, including interim periods. SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements, either in the
statement of operations or a separate statement. Additionally, SFAS 130 requires
the display of the accumulated balance of other comprehensive income. Note 1 of
Notes to Consolidated Financial Statements describes the pro forma impact of
SFAS 130 for the quarters and six months ended June 29, 1997, and June 30, 1996.
In June 1997, the Financial Accounting Standards Board also issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") which is effective for periods beginning after
December 15, 1997, including interim periods after the year of initial adoption.
SFAS 131 established standards for the way public companies report information
about operating segments in both interim and annual financial statements,
including related disclosures about products and services, geographic areas, and
major customers. The Company has not determined what, if any, impact SFAS 131
will have on the operating segments reported nor the impact SFAS 131 will have
on the related disclosures.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("SFAS 128"), which is effective for periods
ending after December 15, 1997, including interim periods. SFAS 128 establishes
standards for computing and presenting earnings per share ("EPS") by replacing
primary EPS with the presentation of basic EPS and requiring dual presentation
of basic and diluted EPS on the face of the income statement. Note 1 of Notes to
Consolidated Financial Statements describes the pro forma impact of SFAS 128 for
the quarters and six months ended June 29, 1997, and June 30, 1996.
Financial Condition
Cash provided by operating activities totaled $208.1 million in the first
half of 1997, compared with the $358.5 million provided in the prior year. This
decrease in cash provided by operating activities resulted from a payment on the
unwinding of the Company's foreign currency hedge (See Note 6 of Notes to
Consolidated Financial Statements) and increases in working capital. The
Company's current ratio was 1.4 as of June 29, 1997, and 1.2 as of December 29,
1996, reflecting a working capital increase to $513 million from $299 million
for the same periods primarily due to a temporary increase in cash balances.
Capital expenditures were $133.7 million in the current quarter, compared to
$185.7 million in the first half of 1996 reflecting divested operations and
timing of expenditures.
16
<PAGE>
Total indebtedness decreased modestly from $1,971 million as of December
29, 1996, to $1,950 million as of June 29, 1997. As of June 29, 1997, the
Company had outstanding borrowings of approximately $383 million supported by
revolving credit facilities. These borrowings included $242 million outstanding
under such facilities, $89 million of commercial paper and $52 million of money
market notes. Total outstanding debt as of June 29, 1997, included approximately
$1,492 million of fixed rate and $458 million of floating rate obligations. Note
6 of Notes to Consolidated Financial Statements describes the Company's interest
rate swap agreements.
James River's ratio of net debt to total capitalization decreased to 42.9%
as of the end of the second quarter, from 45.5% as of the prior year end,
resulting from a temporary increase in cash balances and a modest decrease in
debt levels. For purposes of this calculation, the Company defines total
capitalization as the sum of current and long-term debt, preferred and common
equity and minority interests and net debt as total debt less cash and cash
equivalents. As of June 29, 1997, under the most restrictive provisions of the
Company's debt agreements, James River had additional borrowing capacity of
approximately $1.6 billion and net worth in excess of the minimum requirements
specified by such agreements of approximately $390 million.
In August 1997, James River announced that as of October 1, 1997, it is
calling its Series O 8 1/4% Cumulative Preferred Stock for redemption at its
face value of $98.1 million.
In July 1997, James River announced that as of September 2, 1997, it is
calling its Series P 9% Cumulative Convertible Preferred Stock for conversion
into common stock at a conversion ratio of .9206 shares of common stock for each
Series P depositary share. The conversion of the Series P depositary shares will
reduce the Company's aggregate cash dividends by approximately $16.5 million per
year. The conversion of Series P into common shares is not expected to have a
material impact on the Company's calculation of earnings per share.
On May 4, 1997, the Company, Fort Howard Corporation ("Fort Howard"), and a
newly formed wholly-owned subsidiary of the Company entered into an Agreement
and Plan of Merger (the "Agreement") pursuant to which Fort Howard would become
a subsidiary of the Company in a merger transaction. Under the Agreement,
shareholders of Fort Howard will receive 1.375 shares of the Company's common
stock for each share of Fort Howard common stock. The transaction is structured
to qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended, and it is anticipated that the merger will be
accounted for as a pooling of interests. The merger, which is expected to be
completed shortly after the special meeting of shareholders on August 12, 1997,
is conditioned on, among other things, receiving requisite regulatory clearances
and obtaining the requisite approvals of the shareholders of both companies.
As a part of the Company's ongoing program of timberland divestitures, on
April 29, 1997, pursuant to an offering memorandum dated September 12, 1996,
James River completed the sale of approximately 95,000 acres of timberlands
located in Alabama and Mississippi for cash proceeds of $111 million. The
Company recorded a second quarter after-tax gain of $35.2 million on this sale.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results and Company
plans and objectives to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, the ability to affect the merger
of James River and Fort Howard; general business and economic conditions;
competitive pricing pressures for the Company's products; changes in raw
material, energy and other costs; and opportunities that may be presented to and
pursued by the Company.
17
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
The exhibits listed below are filed as part of this quarterly report.
Each exhibit is listed according to the number assigned to it in the
Exhibit Table of Item 601 of Regulation S-K.
Exhibit Starts
Number Description on Page
11 Computation of Earnings per Share -- filed herewith. 21
12 Computation of Ratio of Earnings to Fixed Charges --
filed herewith. 24
27(a) Financial Data Schedules for the six months ended
June 29, 1997,(filed electronically only).
27(b) Financial Data Schedules restated for the six months
ended June 30, 1996, (filed electronically only).
18
<PAGE>
(b) Reports on Form 8-K:
During the quarter ended June 29, 1997, and subsequent thereto, the
Company filed the following Current Reports on Form 8-K:
Date of Report Event Reported
May 4, 1997 The Company filed an Agreement and Plan of
Merger with Fort Howard Corporation dated
May 4, 1997.
July 2, 1997 The Company filed a Registration Statement
on Form S-4 relating to the proposed merger
with Fort Howard Corporation.
July 24, 1997 The Company published a press release
announcing its results of operations for
the second quarter and six months ended
June 29, 1997.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JAMES RIVER CORPORATION of Virginia
By:/s/William A. Paterson
William A. Paterson
Senior Vice President & Controller
(Principal Financial and Accounting Officer)
Date: August 7, 1997
20
Exhibit 11
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF EARNINGS PER SHARE
For the Quarters (13 Weeks) and Six Months (26 Weeks) Ended
June 29, 1997 and June 30, 1996
(in millions, except per share amounts)
Second Quarter Six Months
---------------------------- ----------------------------
PRIMARY: 1997 1996 1996 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings applicable
to common shares $82.7 $15.9 $122.0 $21.7
============================================================================================================================
Weighted average number of common
shares and common share equivalents:
Common shares outstanding 86.5 85.0 86.4 85.0
Assumed conversion of convertible preferred stock 15.3 15.3
Issuable upon exercise of outstanding
stock options and pursuant to a
deferred stock award plan 3.3 2.0 3.4 2.0
Less assumed acquisition of common
shares, using proceeds from stock
options and the impact of a deferred
stock award plan, under the treasury
stock method (2.4) (1.5) (2.5) (1.5)
- ----------------------------------------------------------------------------------------------------------------------------
102.7 85.5 102.6 85.5
============================================================================================================================
Primary earnings per common share $.81 $.18 $1.19 $.25
============================================================================================================================
</TABLE>
21
<PAGE>
Exhibit 11 (continued)
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF EARNINGS PER SHARE
For the Quarters (13 Weeks) and Six Months (26 Weeks) Ended
June 29, 1997 and June 30, 1996
(in millions, except per share amounts)
Second Quarter Six Months
------------------------------- -------------------------------
FULLY DILUTED: 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings applicable
to common shares $88.7 $15.9 $122.0 $21.7
===========================================================================================================================
Weighted average number of common
shares and common share equivalents:
Common shares outstanding 86.5 85.0 86.4 85.0
Assumed conversion of convertible preferred stocks 27.5 17.9
Issuable upon exercise of outstanding
stock options and pursuant to a
deferred stock award plan 3.8 2.1 3.9 2.1
Less assumed acquisition of common
shares, using proceeds from stock
options and the impact of a deferred
stock award plan, under the treasury
stock method (2.6) (1.6) (2.6) (1.6)
- ---------------------------------------------------------------------------------------------------------------------------
115.2 85.5 105.6 85.5
===========================================================================================================================
Fully diluted earnings per common share $.78 $.18 $1.16 $.25
===========================================================================================================================
</TABLE>
22
<PAGE>
Exhibit 11 (continued)
JAMES RIVER CORPORATION of Virginia
NOTES TO COMPUTATIONS OF EARNINGS
PER SHARE
Primary earnings per common share is computed by dividing net income, after
deducting dividends on outstanding preferred shares, by the weighted average
number of common shares and dilutive common share equivalents outstanding during
the period. Common share equivalents consist of shares issuable pursuant to
stock options and a deferred stock award plan, and are calculated using an
average market price for the period. Common share equivalents also include the
assumed conversion of the Company's Series P 9% Cumulative Convertible Preferred
Stock, if dilutive.
Fully diluted earnings per common share is computed using the same method
as for the primary computation except that (i) common share equivalents are
computed using the higher of the market price at the end of the period or the
average market price for the period, and (ii) the average number of common
shares and dilutive common share equivalents outstanding is increased by the
assumed conversion, if dilutive, of the Company's Series K $3.375 Cumulative
Convertible Exchangeable Preferred Stock, its Series L $14.00 Cumulative
Convertible Exchangeable Preferred Stock, its Series N $14.00 Cumulative
Convertible Exchangeable Preferred Stock, and its Series P 9% Cumulative
Convertible Preferred Stock ("Series P"). Dilutive conversions have been assumed
for all of the Company's convertible preferred stocks for the second quarter and
for its Series P for the six months both ended June 29, 1997. No conversions of
any of the convertible preferred stocks have been assumed for the quarter or six
months ended June 30, 1996, as such conversions were not dilutive.
23
Exhibit 12
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in millions)
Fiscal Year Ended
-----------------------------------------------------------------------------------
December December December December December
27, 1992 26, 1993 25, 1994 31, 1995 29, 1996
(52 weeks) (52 weeks) (52 weeks) (53 weeks) (52 weeks)
- -------------------------------------------------------------------------------------------------------------------------------
(b,c) (c)
Pretax income (loss) from continuing
<S> <C> <C> <C> <C> <C>
operations, before minority interests $(182.8) $14.1 $(15.7) $220.4 $284.1
Add:
Interest charged to operations 193.0 183.0 210.1 236.0 174.7
Portion of rental expense representative
of interest factor (assumed to be one-third) 9.4 19.1 24.2 23.9 23.4
- -------------------------------------------------------------------------------------------------------------------------------
Total earnings, as adjusted $29.6 $216.2 $218.6 $480.3 $482.2
===============================================================================================================================
Fixed charges:
Interest charged to operations $193.0 $183.0 $210.1 $236.0 $174.7
Capitalized interest 12.8 5.3 3.1 6.9 5.1
Portion of rental expense representative
of interest factor (assumed to be one-third) 19.4 19.1 24.2 23.9 23.4
- -------------------------------------------------------------------------------------------------------------------------------
Total fixed charges $225.2 $207.4 $237.4 $266.8 $203.2
===============================================================================================================================
Ratio - - 1.04 - - 1.80 2.37
==============================================================================================================================
</TABLE>
See accompanying footnote explanations.
24
<PAGE>
Exhibit 12 (continued)
<TABLE>
<CAPTION>
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in millions)
Quarter Ended
-------------------------------------------
June 30, June 29,
1997 1996
(26 Weeks) (26 Weeks)
- ---------------------------------------------------------------------------------------------------------------
Pretax income from continuing operations,
<S> <C> <C>
before minority interests $236.0 $97.0
Add:
Interest charged to operations 79.7 92.8
Portion of rental expense representative of
interest factor (assumed to be one-third) 11.8 11.9
- ---------------------------------------------------------------------------------------------------------------
Total earnings, as adjusted $327.5 $201.7
===============================================================================================================
Fixed charges:
Interest charged to operations $79.7 $92.8
Capitalized interest 2.6 2.4
Portion of rental expense representative of
interest factor (assumed to be one-third) 11.8 11.9
- ---------------------------------------------------------------------------------------------------------------
Total fixed charges $94.1 $107.1
===============================================================================================================
Ratio 3.48 1.88
===============================================================================================================
</TABLE>
See accompanying footnote explanations.
25
<PAGE>
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% or more 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 following periods, earnings were inadequate to cover fixed charges,
and the amounts of the deficiencies were: year ended December 27, 1992 -
$195.6 million; year ended December 25, 1994 - $18.8 million.
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information originally extracted
from James River Corporation of Virginia's June 29, 1997, Form 10-Q Financial
Statements and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000053117
<NAME> JAMES RIVER COPORATION OF VIRGINIA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> JUN-29-1997
<CASH> 213
<SECURITIES> 0
<RECEIVABLES> 697
<ALLOWANCES> 0
<INVENTORY> 683
<CURRENT-ASSETS> 1712
<PP&E> 5781
<DEPRECIATION> 2249
<TOTAL-ASSETS> 6497
<CURRENT-LIABILITIES> 1199
<BONDS> 1824
0
738
<COMMON> 9
<OTHER-SE> 1557
<TOTAL-LIABILITY-AND-EQUITY> 6497
<SALES> 2794
<TOTAL-REVENUES> 2794
<CGS> 2048
<TOTAL-COSTS> 2048
<OTHER-EXPENSES> (58)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> 240
<INCOME-TAX> 101
<INCOME-CONTINUING> 138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from James
River Corporation of Virginia's June 30, 1996, Form 10-Q Financial Statements as
restated in the June 29, 1997, Form 10-Q financial statements and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000053117
<NAME> JAMES RIVER COPORATION OF VIRGINIA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> JUN-30-1996
<CASH> 64
<SECURITIES> 0
<RECEIVABLES> 843
<ALLOWANCES> 0
<INVENTORY> 714
<CURRENT-ASSETS> 1746
<PP&E> 6181
<DEPRECIATION> 2216
<TOTAL-ASSETS> 6990
<CURRENT-LIABILITIES> 1085
<BONDS> 2295
0
740
<COMMON> 9
<OTHER-SE> 1479
<TOTAL-LIABILITY-AND-EQUITY> 6990
<SALES> 3126
<TOTAL-REVENUES> 3126
<CGS> 2360
<TOTAL-COSTS> 2360
<OTHER-EXPENSES> 30
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> 96
<INCOME-TAX> 42
<INCOME-CONTINUING> 51
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
