SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 13, 1997
FORT JAMES CORPORATION
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(Exact name of registrant as specified in its charter)
Virginia
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(State or other jurisdiction of incorporation)
1-7911 54-0848173
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(Commission File Number) (IRS Employer Identification Number)
120 Tredegar Street, Richmond, Virginia 23219
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (804) 644-5411
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JAMES RIVER CORPORATION OF VIRGINIA
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(Former name, if changed since last report)
<PAGE>
Item 2. Acquisitions and Dispositions of Assets
On August 13, 1997, Fort James Corporation ("Fort James" or the "Company")
filed a press release announcing the completion of the merger between James
River Corporation of Virginia ("James River") and Fort Howard Corporation ("Fort
Howard") pursuant to which Fort Howard became a wholly-owned subsidiary of the
Company (the "Merger"). The Company issued 104.8 million shares of its common
stock for all of the outstanding common stock of Fort Howard Corporation. In
connection with the Merger, the Company's corporate name was changed from James
River Corporation of Virginia to Fort James Corporation. A copy of the press
release is filed herewith as exhibit 99.2.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of business acquired
It is not practical for Fort James to provide at this
time the financial statement of Fort Howard Corporation
required by this item. Such financial statements are
expected to be filed in a Form 8-K no later than
September 8, 1997; and in no event will it be filed
later than October 13, 1997.
(b) Pro forma financial information
Unaudited pro forma financial information for Fort
James reflecting the condensed combined results of
operations of James River and Fort Howard for the
years ended December 29, 1996, December 31, 1995 and
December 25, 1994, and for the six months (26 weeks)
ended June 29, 1997, and June 30, 1996, as well as an
unaudited pro forma condensed combined balance sheet
as of June 29, 1997 is filed herewith as exhibit 99.1.
(c) Exhibits:
99.1 Unaudited pro forma condensed combined
financial information as described in Item 7
(b) - filed herewith.
99.2 Press release dated August 13, 1997 - filed
herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FORT JAMES CORPORATION
By:/s/Clifford A. Cutchins, IV
---------------------------
Clifford A. Cutchins, IV
Senior Vice President, General Counsel
Date: August 21, 1997
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
(the "Unaudited Pro Forma Information") gives effect to the Merger under the
pooling of interests method of accounting. The Unaudited Pro Forma Information
is presented to reflect the issuance of 104.8 million shares of Fort James
common stock in exchange for 76.2 million shares of Fort Howard common stock
outstanding as of August 13, 1997, utilizing the exchange ratio of 1.375 shares
of Fort James common stock for each share of Fort Howard common stock issued and
outstanding.
The Unaudited Pro Forma Information is presented as if the Merger had been
consummated as of the beginning of each period presented for the unaudited pro
forma condensed combined statements of operations and as of June 29, 1997, for
the unaudited pro forma condensed combined balance sheet. James River financial
statements are prepared on a 52- or 53- week basis for year end reporting. Fort
Howard is on a calendar year end basis of reporting. For ease of reference, all
column headings used in the Unaudited Pro Forma Information refer to the
period-end date of James River.
The Unaudited Pro Forma Information gives effect only to the
reclassifications and adjustments set forth in the accompanying Notes to
Unaudited Pro Forma Condensed Combined Financial Statements and does not reflect
anticipated cost savings and other synergies anticipated as a result of the
Merger. The Unaudited Pro Forma Information is not necessarily indicative of the
operating results and financial position that might have been achieved had the
Merger been consummated on the dates or as of the beginning of each period
indicated, nor is it necessarily indicative of operating results and financial
position which may occur in the future.
The Unaudited Pro Forma Information should be read in conjunction with the
historical consolidated financial statements of James River and Fort Howard as
contained in their respective Annual Reports on Form 10-K and the unaudited
consolidated interim financial statements contained in their respective
Quarterly Reports on Form 10-Q for the six months ended June 29, 1997, and June
30, 1997.
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Year Ended December 29, 1996
-------------------------------------------------------------------
Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
-------------------------------------------------------------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $5,971.9 $1,580.8 $54.1 (a) $7,707.1
100.3 (b)
Cost of goods sold 4,483.1 962.3 100.3 (b) 5,564.2
18.5 (c)
Selling and administrative expenses 1,045.2 142.1 54.1 (a) 1,222.9
(18.5)(c)
Severance and other items (income) expense 10.7 10.7
---------------- --------------- ---------------- --------------
Income from operations 432.9 476.4 909.3
Interest expense 165.4 259.0 424.4
Other income (expense), net 21.6 (2.9) 18.7
---------------- --------------- ---------------- --------------
Income before income taxes, minority interests,
and extraordinary item 289.1 214.5 503.6
Income tax expense 127.2 43.8 171.0
---------------- --------------- ---------------- --------------
Income before minority interests and
extraordinary item 161.9 170.7 332.6
Minority interests (4.6) (4.6)
---------------- --------------- ---------------- --------------
Income before extraordinary item $157.3 $170.7 $328.0
================ =============== ================ ==============
Preferred dividend requirements (58.5) (58.5)
---------------- --------------- ---------------- --------------
Income before extraordinary item
applicable to common shares $98.8 $170.7 $269.5
================ =============== ================ ==============
Income per share before extraordinary item $1.15 $1.39
================ ==============
Weighted average number of common
shares and common share equivalents 86.0 107.2 (d) 193.2
================= ================ ==============
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Year Ended December 31, 1995
--------------------------------------------------------------------
Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
--------------------------------------------------------------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $7,141.2 $1,620.9 $32.9 (a) $8,887.9
92.9 (b)
Cost of goods sold 5,585.5 1,139.4 92.9 (b) 6,835.2
17.4 (c)
Selling and administrative expenses 1,080.5 121.4 32.9 (a) 1,217.4
(17.4)(c)
Severance and other items (income) expense 51.9 51.9
--------------- --------------- ------------------- -----------------
Income from operations 423.3 360.1 783.4
Interest expense 226.4 309.9 536.3
Other income, net 40.3 1.7 42.0
--------------- --------------- ------------------- -----------------
Income before income taxes, minority interests,
and extraordinary item 237.2 51.9 289.1
Income tax expense 109.4 18.4 127.8
--------------- --------------- ------------------- -----------------
Income before minority interests and
extraordinary item 127.8 33.5 161.3
Minority interests (1.4) (1.4)
--------------- --------------- ------------------- -----------------
Income before extraordinary item $126.4 $33.5 $159.9
=============== =============== =================== =================
Preferred dividend requirements (58.5) (58.5)
--------------- --------------- ------------------- -----------------
Income before extraordinary item
applicable to common shares $67.9 $33.5 $101.4
=============== =============== =================== =================
Income per share before extraordinary item $.81 $.53
=============== =================
Weighted average number of common
shares and common share equivalents 84.1 107.2 (d) 191.3
=============== =================== =================
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Year Ended December 25, 1994
--------------------------------------------------------------------
Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
--------------------------------------------------------------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $5,706.4 $1,274.4 $33.9 (a) $7,103.7
89.0 (b)
Cost of goods sold 4,734.1 887.3 89.0 (b) 5,727.1
16.7 (c)
Selling and administrative expenses 815.7 110.3 33.9 (a) 943.2
(16.7)(c)
Severance and other items (income) expense 9.6 9.6
--------------- --------------- ------------------- -----------------
Income from operations 147.0 276.8 423.8
Interest expense 185.6 337.7 523.3
Other income, net 28.9 (.1) 28.8
--------------- --------------- ------------------- -----------------
Income before income taxes, minority interests,
and extraordinary item (9.7) (61.0) (70.7)
Income tax expense 4.4 (18.9) (14.5)
--------------- --------------- ------------------- -----------------
Income before minority interests and
extraordinary item (14.1) (42.1) (56.2)
Minority interests 1.1 1.1
--------------- --------------- ------------------- -----------------
Income before extraordinary item $(13.0) $(42.1) $(55.1)
=============== =============== =================== =================
Preferred dividend requirements (45.8) (45.8)
--------------- --------------- ------------------- -----------------
Income before extraordinary item
applicable to common shares $(58.8) $(42.1) $(100.9)
=============== =============== =================== =================
Income per share before extraordinary item $(.72) $(.53)
=============== =================
Weighted average number of common
shares and common share equivalents 81.7 107.2 (d) 188.9
=============== =================== =================
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Six Months Ended June 29, 1997
-------------------------------------------------------------------
Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
-------------------------------------------------------------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $2,794.3 $812.2 $14.1 (a) $3,672.1
51.5 (b)
Cost of goods sold 2,048.3 454.9 51.5 (b) 2,564.2
9.5 (c)
Selling and administrative expenses 501.2 65.4 14.1 (a) 571.2
(9.5)(c)
Severance and other items income (57.7) (57.7)
---------------- --------------- ---------------- --------------
Income from operations 302.5 291.9 594.4
Interest expense 75.3 115.0 190.3
Other income (expense), net 12.7 (1.5) 11.2
---------------- --------------- ---------------- --------------
Income before income taxes, minority interests,
and extraordinary item 239.9 175.4 415.3
Income tax expense 100.8 66.8 167.6
---------------- --------------- ---------------- --------------
Income before minority interests and
extraordinary item 139.1 108.6 247.7
Minority interests (.8) (.8)
---------------- --------------- ---------------- --------------
Income before extraordinary item $138.3 $108.6 $246.9
================ =============== ================ ==============
Preferred dividend requirements (16.3) (16.3)
---------------- --------------- ---------------- --------------
Income before extraordinary item
applicable to common shares $122.0 $108.6 $230.6
================ =============== ================ ==============
Income per share before extraordinary item $1.19 $1.10
================ ==============
Weighted average number of common
shares and common share equivalents 102.6 107.2 (d) 209.8
================= ================ ==============
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Six Months Ended June 30, 1996
--------------------------------------------------------------------
Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
--------------------------------------------------------------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $3,125.6 $788.1 $33.0 (a) $3,995.6
48.9 (b)
Cost of goods sold 2,359.9 481.8 48.9 (b) 2,899.6
9.0 (c)
Selling and administrative expenses 560.1 67.4 33.0 (a) 651.5
(9.0)(c)
Severance and other items expense 30.4 30.4
--------------- --------------- ------------------- -----------------
Income from operations 175.2 238.9 414.1
Interest expense 88.1 137.0 225.1
Other income (expense), net 8.4 (1.0) 7.4
--------------- --------------- ------------------- -----------------
Income before income taxes, minority interests,
and extraordinary item 95.5 100.9 196.4
Income tax expense 42.0 37.6 79.6
--------------- --------------- ------------------- -----------------
Income before minority interests and
extraordinary item 53.5 63.3 116.8
Minority interests (2.5) (2.5)
--------------- --------------- ------------------- -----------------
Income before extraordinary item $51.0 $63.3 $114.3
=============== =============== =================== =================
Preferred dividend requirements (29.3) (29.3)
--------------- --------------- ------------------- -----------------
Income before extraordinary item
applicable to common shares $21.7 $63.3 $85.0
=============== =============== =================== =================
Income per share before extraordinary item $.25 $.44
=============== =================
Weighted average number of common
shares and common share equivalents 85.5 107.2 (d) 192.7
=============== =================== =================
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in millions)
June 29, 1997
-----------------------------------------------------------------------
Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $213.1 $4.1 $217.2
Accounts receivable 696.5 77.5 774.0
Inventories 683.2 150.0 833.2
Deferred income taxes 77.4 48.0 125.4
Other current assets 41.4 41.4
--------------- --------------- ---------------- -------------------
Total current assets 1,711.6 279.6 1,991.2
Property, plant and equipment 5,781.4 2,092.3 7,873.7
Less accumulated depreciation 2,249.6 856.1 3,105.7
--------------- --------------- ---------------- -------------------
Net property, plant and equipment 3,531.8 1,236.2 4,768.0
Investments in affiliates 161.5 161.5
Other assets 428.6 70.0 498.6
Goodwill 663.8 663.8
--------------- --------------- ---------------- -------------------
Total assets $6,497.3 $1,585.8 $8,083.1
=============== =============== ================ ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $502.0 $106.4 $608.4
Accrued liabilities 570.7 142.4 $50.0 (e) 763.1
Long term debt, current portion 126.0 7.0 133.0
--------------- --------------- ---------------- -------------------
Total current liabilities 1,198.7 255.8 50.0 1,504.5
Long-term debt 1,824.2 2,332.2 4,156.4
Accrued postretirement benefits other
than pensions 457.8 17.4 475.2
Other long-term liabilities 224.2 31.1 255.3
Deferred income taxes 488.3 259.5 747.8
Shareholders' equity:
Preferred stock 738.4 738.4
Common shareholders' equity (deficit) 1,565.7 (1,310.2) (50.0)(e) 205.5
--------------- --------------- ---------------- -------------------
Total shareholders' equity 2,304.1 (1,310.2) (50.0) 943.9
--------------- --------------- ---------------- -------------------
Total liabilities and
shareholders' equity $6,497.3 $1,585.8 $8,083.1
=============== =============== ================ ===================
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
JAMES RIVER AND CONSOLIDATED SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined financial statements reflect the
Merger under the pooling-of-interests method of accounting. The unaudited pro
forma condensed combined statements of operations for the years ended December
29, 1996 , December 31, 1995, and December 25, 1994, and the six month periods
ended June 29, 1997, and June 30, 1996, give effect to the Merger as though it
had occurred as of the beginning of each period presented. The unaudited pro
forma condensed combined balance sheet as of June 29, 1997, assumes that the
Merger had been consummated on that date.
The unaudited pro forma condensed combined statements of operations
exclude: (1) the positive effects of potential cost savings which may be
achieved upon combining the resources of the companies; (2) non-recurring
transaction costs of approximately $50 million to $60 million, including
investment banking, legal and accounting fees and (3) potential interest cost
savings as a result of anticipated debt refinancing and a continuation of the
combining companies' overall debt reduction programs. Further, James River
expects to restructure the combined operations, resulting in additional
nonrecurring charges in 1997. The range of amounts of such charges cannot be
reasonably estimated until an analysis of the newly combined operations is
completed and a detailed restructuring plan is developed.
Certain amounts in the James River 1996, 1995 and 1994 financial statements
have been reclassified to conform to the 1997 presentation.
2. PRO FORMA ADJUSTMENTS
(a) Represents reclassifications of certain Fort Howard trade promotions
and allowances from net sales to selling and administrative expenses to conform
to James River's accounting classification.
(b) Represents reclassifications of Fort Howard customer freight costs from
net sales to cost of goods sold to conform to James Rivers accounting
classification.
(c) Represents reclassifications of Fort Howard shipping expenses from
selling and administrative expenses to cost of goods sold to conform to James
River's accounting classification.
(d) Represents an adjustment to reflect the combined weighted average
number of common shares and common share equivalents of James River and Fort
Howard, reflecting the assumed issuance of approximately 104.8 million shares of
Fort James common stock in exchange for approximately 76.2 million shares of
Fort Howard common stock outstanding as of August 13, 1997, utilizing the
exchange ratio of 1.375 shares of Fort James common stock for each share of
Fort Howard common stock. The effect of incremental shares to reflect the impact
of Fort Howard's stock option plans as of June 29, 1997, was also included
because the effect is dilutive on a pro forma basis.
(e) Reflects an accrual for the minimum of the estimated range of $50
million to $60 million for transaction costs related to the Merger.
3. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The unaudited pro forma condensed combined financial statements assume that
the Merger qualifies as a tax-free reorganization for federal income tax
purposes.
Exhibit 99.2
FORT JAMES
News Release
Richmond Media Contact: Green Bay Media Contact: Financial Contact:
Dick Elder Clifford A. Bowers Celeste Gunter
(804) 343-4785 (414) 435-2281 (804) 649-4307
FORT JAMES CORPORATION COMPLETES MERGER
INTERNATIONAL CONSUMER PRODUCTS COMPANY UNVEILS NEW IDENTITY
CHICAGO--Aug. 13, 1997--Fort James Corporation, an international
consumer products company, announced today the completion of the merger between
James River Corporation and Fort Howard Corporation and said trading will begin
under the FJ symbol on the New York Stock Exchange tomorrow. The company also
unveiled its corporate identity and announced the location of its executive
headquarters in suburban Chicago.
"We are delighted that the merger has been completed rapidly, and we
are eager to move ahead to realize the opportunities before us," said Miles L.
Marsh, chairman and chief executive officer of Fort James. "We are determined
that Fort James will be one of the best-performing consumer products companies
in the world, excelling in product innovation, responsive service to our
customers and value creation for our shareholders."
Stockholders of Fort Howard and James River approved the merger
Tuesday, and regulatory clearance has been received in both the United States
and Europe. Fort James will replace James River in the Standard & Poor's 500
Index, where it will be included in the household products (non-durables)
industry group.
<PAGE>
Page 2
Fort James will benefit from the complementary strengths of James
River's strong retail brands and marketing skills and Fort Howard's low-cost
manufacturing base and leadership in commercial products. With geographic reach
across North America and Europe and a fiber supply that is uniquely balanced
between virgin and recycled, Fort James is ideally positioned for efficient
distribution, low-cost production and long-term growth.
The new corporate logo is comprised of the name Fort James in bold
capitalized letters, and a symbol representing two birds flying in harmony. The
two birds share a wing, suggesting balance and partnership. The configuration of
the birds shows a strong sense of purpose and direction, with a focused goal
orientation. The symbol itself is created from a paper puzzle game known as
Tangram, communicating Fort James' ability to act with innovation, imagination
and flexibility in the paper-based consumer products business.
"The interlocking birds symbolize our company's focus on building
partnerships with our customers and suppliers," said Michael T. Riordan,
president and chief operating officer of Fort James. "The Tangram image connotes
our ability to be problem solvers, developing creative solutions to meet our
customers' needs."
Fort James also announced that the company has chosen a building
currently under construction at 1650 Lake Cook Road in Deerfield, Ill., to be
the company's executive headquarters. Approximately 250 employees will move into
the building beginning early in 1998.
The new company, whose annual sales will be in excess of $7 billion, is
expected to realize operating cost savings estimated to total at least $150
million in 1998, increasing to at least $200 million per year over time. It will
pay an initial quarterly cash dividend of $.15 per share.
<PAGE>
Page 3
Fort James is a preeminent international consumer products company,
serving consumers at home with paper towels, napkins, plates and cups for the
kitchen, and bath and facial tissue products for the bathroom. Fort James also
offers tissue, towels, and napkins for the away-from-home market as well as
commercial foodservice products. The company's popular brands include BRAWNY,
QUILTED NORTHERN, VANITY FAIR, DIXIE, MARDI GRAS, GREEN FOREST, SOFT 'N GENTLE
and SO-DRI in North America and LOTUS, TENDERLY, KITTENSOFT and COLHOGAR in
Europe.
Fort James also produces folding cartons used to package foods and
pharmaceuticals, and communications papers including printing and publishing
papers and office printing and copying papers.
Fort James has approximately 30,000 employees and more than 65
manufacturing facilities in the United States, Canada and 12 European countries.
# # #
For additional information, media contacts are Dick Elder in Richmond at
804-343-4785 or Clifford Bowers in Green Bay at 414-435-8821; financial contact
is Celeste Gunter at 804-649-4307, all of Fort James; or visit the Fort James
website at www.fortjames.com.
