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: March 30, 1997 Commission File Number: 1-7911
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JAMES RIVER CORPORATION of Virginia
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(Exact name of registrant as specified in its charter)
Virginia 54-0848173
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 Tredegar Street, Richmond, VA 23219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 644-5411
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Not Applicable
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(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 May 1, 1997:
86,350,913 shares
<PAGE>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
March 30, 1997
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of
March 30, 1997 and December 29, 1996 3
Consolidated Statements of Operations for the
quarters ended March 30, 1997 and March 31, 1996 5
Consolidated Statements of Cash Flows for the
quarters ended March 30, 1997 and March 31, 1996 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 15
ITEM 2. Changes in Securities 15
ITEM 3. Defaults Upon Senior Securities 15
ITEM 4. Submission of Matters to a Vote of Security Holders 15
ITEM 5. Other Information 15
ITEM 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 30, 1997 and December 29, 1996
(in millions, except share data)
March December
1997 1996
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ASSETS
Current assets:
Cash and cash equivalents $58.1 $33.8
Accounts receivable 691.6 717.9
Inventories 662.4 650.4
Prepaid expenses and other current assets 33.3 39.1
Deferred income taxes 80.0 78.5
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Total current assets 1,525.4 1,519.7
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Property, plant and equipment 5,800.8 5,867.2
Accumulated depreciation (2,173.9) (2,115.7)
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Net property, plant and equipment 3,626.9 3,751.5
Investments in affiliates 159.5 154.6
Other assets 368.3 385.7
Goodwill 681.7 730.0
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Total assets $6,361.8 $6,541.5
================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED BALANCE SHEETS, Continued
(in millions, except share data)
March December
1997 1996
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $478.4 $507.8
Accrued liabilities 563.5 595.6
Current portion of long-term debt 116.3 116.9
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Total current liabilities 1,158.2 1,220.3
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Long-term debt 1,848.7 1,853.9
Accrued postretirement benefits
other than pensions 457.3 458.0
Deferred income taxes 454.4 443.0
Other long-term liabilities 202.5 259.9
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Total liabilities 4,121.1 4,235.1
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Preferred stock, $10 par value, 5,000,000
shares authorized, issuable in series;
shares outstanding, 3,630,581 738.4 738.4
Common stock, $.10 par value, 150,000,000
shares authorized; shares outstanding,
March 30, 1997 -- 86,347,359 and
December 29, 1996 -- 86,194,612 8.6 8.6
Additional paid-in capital 1,312.3 1,307.6
Retained earnings 181.4 251.8
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Total shareholders' equity 2,240.7 2,306.4
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Total liabilities and shareholders' equity $6,361.8 $6,541.5
================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters (13 Weeks) Ended
March 30, 1997 and March 31, 1996
(in millions, except per share amounts)
1997 1996
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Net sales $1,381.9 $1,555.4
Cost of goods sold 1,019.2 1,182.0
Selling and administrative expenses 250.2 273.6
Severance and other items 23.4
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Income from operations 112.5 76.4
Interest expense 37.9 45.4
Other income, net 7.8 4.0
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Income before income taxes and minority interests 82.4 35.0
Income tax expense 34.6 15.4
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Income before minority interests 47.8 19.6
Minority interests (.3) .9
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Net income $47.5 $20.5
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Preferred dividend requirements (14.6) (14.7)
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Net income applicable to common shares $32.9 $5.8
================================================================================
Net income per common share
and common share equivalent $.38 $.07
================================================================================
Cash dividends per common share $.15 $.15
Weighted average number of common shares
and common share equivalents 87.2 85.5
================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters (13 Weeks)
Ended March 30, 1997 and March 31, 1996
(in millions)
1997 1996
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Cash provided by (used for) operating activities:
Net income $47.5 $20.5
Depreciation expense and cost of timber harvested 96.2 101.7
Amortization of goodwill 5.2 5.2
Deferred income tax provision (benefit) 20.0 (2.4)
Equity in earnings of unconsolidated affiliates (3.5) (.8)
Dividends received from unconsolidated affiliates 1.4 1.5
Severance and other items 23.4
Change in current assets and liabilities:
Accounts receivable (14.8) (31.7)
Inventories (23.5) 9.7
Prepaid expenses and other current assets 12.8 4.4
Accounts payable and accrued liabilities (20.5) 37.5
Foreign currency hedge (31.5)
Other, net (18.8) (20.3)
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Cash provided by operating activities 70.5 148.7
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Cash provided by (used for) investing activities:
Expenditures for property, plant and equipment (60.4) (81.7)
Cash received from sale of assets 1.6 26.1
Other, net 7.1 1.7
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Cash used for investing activities (51.7) (53.9)
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Cash provided by (used for) financing activities:
Additions to long-term debt 35.2 .9
Payments of long-term debt (5.4) (92.1)
Common and preferred stock cash dividends paid (27.4) (27.8)
Other, net 3.1 .8
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Cash provided by (used for) financing activities 5.5 (118.2)
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Increase (decrease) in cash and cash equivalents 24.3 (23.4)
Cash and cash equivalents, beginning of period 33.8 66.1
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Cash and cash equivalents, end of period $58.1 $42.7
================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
<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 March 30, 1997, and its results of
operations and cash flows for the quarters (13 weeks) ended March 30, 1997, and
March 31, 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
quarter ended March 30, 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
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 Pronouncement:
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("SFAS 128" or the "Statement"), 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. The Company estimates the calculations will not have a material
impact on EPS as currently reported. On a pro forma basis, for the periods ended
March 30, 1997, and March 31, 1996, EPS as reported would have been $.01 higher
and the same amount as reported, respectively, for basic EPS, and would have
been the same amount as reported, for both periods for diluted EPS.
<PAGE>
2. Other Income
The components of other income were as follows for the quarters ended March
30, 1997, and March 31, 1996 (in millions):
March March
1997 1996
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Interest and investment income $1.6 $2.3
Equity in earnings of
unconsolidated affiliates 3.5 .8
Gain on sale of assets 2.1
Foreign currency exchange gain (loss) (.3) 1.0
Other, net .9 (.1)
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Total other income $7.8 $4.0
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3. Income Taxes
The Company's effective income tax rate was 42% for the quarter ended March
30, 1997, compared to 44% for the first quarter of 1996. The decrease in the
effective tax rate from the prior year was primarily due to the relative size of
permanent differences to pretax income.
4. Inventories
The components of inventories were as follows as of March 30, 1997, and
December 29, 1996 (in millions):
March December
1997 1996
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Raw materials $135.9 $135.7
Finished goods and work in process 442.6 418.2
Stores and supplies 126.2 131.6
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704.7 685.5
Reduction to state certain inventories
at last-in, first-out cost (42.3) (35.1)
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Total inventories $662.4 $650.4
================================================================================
5. Financial Instruments
The Company held $638 million and $1,286 million in notional amount of
interest rate swaps with fair values of $11 million and $15 million as of March
30, 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. The cost of unwinding the interest rate swaps approximated $8 million and
<PAGE>
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 less than $100 million above book
value of $2.0 billion as of March 30, 1997 and December 29, 1996, respectively.
Additionally, as of March 30, 1997, the pay-in-kind notes received from the
spin-off of Crown Vantage Inc., originally valued at $85 million, are carried on
the books at a fair value of approximately $79 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
March 30, 1997 and December 29, 1996, respectively.
6. 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 ("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
March 30, 1997, James River's accrued environmental liabilities, including
remediation and landfill closure costs, totaled $21.0 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
<PAGE>
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.
Bondholder 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. Most of the
holders electing out of the class are plaintiffs in the Connecticut case. James
River believes that 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. 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.
7. Segment Information
James River's net sales and income from operations by business segment were
as follows for the quarters ended March 30, 1997, and March 31, 1996 (in
millions):
Consumer Products
----------------- Intersegment
North Communications elimination/
America Europe Packaging Papers Corporate Total
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March 1997
Net sales $687.5 $426.6 $196.7 $119.3 $(48.2) $1,381.9
Segment results before
severance and other items 68.4 45.3 21.2 (3.6) (18.8) 112.5
Severance and other items
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Income from operations 68.4 45.3 21.2 (3.6) (18.8) 112.5
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March 1996
Net sales $710.9 $464.9 $341.2 $112.2 $(73.8) $1,555.4
Segment results before
severance and other items 63.6 24.8 29.8 4.2 (22.6) 99.8
Severance and other items (22.7) (.3) (.4) (23.4)
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Income from operations 40.9 24.8 29.5 4.2 (23.0) 76.4
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<PAGE>
8. Subsequent Events:
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 expects to record a second quarter after-tax gain of approximately $35
million.
On May 4, 1997, the Company, a newly formed wholly owned subsidiary of the
Company and Fort Howard Corporation ("Fort Howard") 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 at the end of the summer 1997, is conditioned on, among other things,
receiving regulatory clearances in the United States and Europe and obtaining
the requisite approvals of the shareholders of both companies.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Overview
James River reported net income of $47.5 million, or $.38 per share, for
the first quarter ended March 30, 1997, compared with $20.5 million, or $.07 per
share for the same quarter of the prior year. Net sales for the first quarter
were $1,382 million, compared to $1,555 million in the prior year. The
comparability of these results was impacted by nonrecurring charges in the first
quarter of 1996.
Items Affecting Comparability
Results for the first quarter of 1996 included nonrecurring charges of
$23.4 million ($14.3 million net of taxes, or $.16 per share), consisting of
domestic severance costs of $13.8 million ($8.4 million net of taxes, or $.10
per share) and net losses on asset dispositions of $9.6 million ($5.9 million
net of taxes, or $.06 per share. The comparability of results was also affected
by the 1996 divestitures of the Flexible Packaging and related Inks divisions,
as well as several small domestic Consumer Products mills.
North American Consumer Products Business
Operating results before severance and other items for the North American
Consumer Products Business increased by 8%, from $63.6 million in the first
quarter of 1996 to $68.4 million in the current quarter. First quarter 1997 net
sales declined to $688 million from $711 million in 1996, due primarily to the
loss of revenue from divested operations. Excluding divestitures, revenues from
ongoing operations increased 3% over the prior year; reflecting an increase in
retail net sales partially offset by a small decline in commercial net sales.
Strong volumes for tissue-based products over prior year's first quarter in both
retail and commercial markets and reduced manufacturing and raw material costs
contributed to the improved results. The volume improvements were partially
offset by lower average selling prices lead by competitors in the second quarter
of 1996 for retail towel and tissue products of approximately 5% to 8%,
respectively.
In addition to strong sales volumes, the increase in profitability over the
prior year was attributable to significantly lower costs for certain raw
materials, including wood and wastepaper costs, coupled with solid cost
reduction performance. Overall increased operating results 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
37% over prior year's levels were partially offset by average net selling price
declines.
European Consumer Products Business
Operating profits for the European Consumer Products Business increased 83%
to $45.3 million, compared to $24.8 million in the first quarter of 1996. Net
sales declined to $427 million in the current quarter from $465 million in 1996.
While finished product sales volumes improved more than 3% over the prior year,
revenues were negatively impacted by a strengthening of the U.S. dollar and a
modest decline in average pricing. Improved finished product sales volumes
reflect a continued volume growth in nearly all markets. The improvement in the
European Consumer Products Business' operating results was attributable to a
combination of stronger volumes and lower raw material costs and other cost
reductions, partially offset by lower average pricing and higher advertising and
related promotional costs. As a net buyer of approximately 450,000 tons per year
of market pulp, the European Consumer Products Business continues to benefit
from declines in the cost of this raw material. <PAGE>
Packaging Business
Excluding the results attributable to the divestitures of the Flexible
Packaging and Inks divisions in the second half of 1996, operating results
before severance and other items for the Packaging Business declined by 18% to
$21.2 million in the current quarter from $25.8 million in the prior year's
first quarter. Net sales, adjusted for the Flexible Packaging and Inks
transactions, decreased 11% to $197 million from $220 million for the same
periods. The decline in profitability was principally due to declining finished
product pricing. Decreases in average prices from prior year levels were
partially offset by the favorable trend in wastepaper costs and manufacturing
cost reductions over the prior year.
Communications Papers Business
Operating profits for the Communications Papers Business declined to a loss
of $3.6 million from income of $4.2 million in the first quarter of 1996, while
net sales improved 6%, to $119 million from $112 million in the prior year. The
improvement in net sales over the prior year's first quarter is attributable to
increased volumes of 43% due primarily to extensive amounts of market-related
production curtailments which occurred in the first quarter of 1996. However,
volume gains were more than offset by selling price declines averaging
approximately $220 per ton.
Other Income and Expense Items
General corporate expenses totaled $18.8 million in the first quarter of
1997, compared to $22.6 million before severance and other items 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 $45.4 million to $37.9 million between the first quarter of 1996 and the
first quarter of 1997. This decrease was attributable to the reduction in
average outstanding debt since the first quarter of 1996. Other income increased
to $7.8 million in the current quarter from $4.0 million in 1996, principally
due to improved earnings of unconsolidated affiliates. The change in the
effective tax rate for 1997 is discussed in Note 3 of Notes to Consolidated
Financial Statements.
Adoption of Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("SFAS 128" or the "Statement"), 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. The Company estimates the calculations will not have a material
impact on EPS as currently reported. On a pro forma basis, for the periods ended
March 30, 1997, and March 31, 1996, EPS as reported would have been $.01 higher
and the same amount as reported, respectively, for basic EPS, and would have
been the same amount as reported, for both periods for diluted EPS.
Financial Condition
Cash provided by operating activities totaled $70.5 million in the first
quarter of 1997, compared with the $148.7 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 5 of Notes to
Consolidated Financial Statements) and increases in working capital. The
Company's current ratio was 1.3 as of March 30, 1997, and 1.2 as of December 29,
1996, while working capital increased to $367 million from $299 million for the
same periods. Capital expenditures were $60.4 million in the current quarter,
compared to $81.7 million in the prior year's first quarter.
<PAGE>
Total indebtedness decreased slightly from $1,971 million as of December
29, 1996, to $1,965 million as of March 30, 1997. As of March 30, 1997, the
Company had outstanding borrowings of approximately $405 million supported by
revolving credit facilities, these borrowings included $223 million outstanding
under such facilities, $111 million of commercial paper and $71 million of money
market notes. Total outstanding debt as of March 30, 1997, included
approximately $1,538 million of fixed rate and $427 million of floating rate
obligations. Note 5 of Notes to Consolidated Financial Statements describes the
Company's interest rate swap agreements.
James River's ratio of total debt to total capitalization increased
slightly to 46.6% as of the end of the first quarter, from 46% as of the prior
year end, resulting from the equity impact of the strengthening US dollar on
foreign currency translation. 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. As of March 30, 1997, under the most
restrictive provisions of the Company's debt agreements, James River had
additional borrowing capacity of approximately $1.5 billion and net worth in
excess of the minimum requirements specified by such agreements of approximately
$330 million.
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 expects to record a second quarter after-tax gain of approximately $35
million.
On May 4, 1997, the Company, a newly formed wholly owned subsidiary of the
Company and Fort Howard Corporation ("Fort Howard") 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 at the end of the summer 1997, is conditioned on, among other things,
receiving regulatory clearances in the United States and Europe and obtaining
the requisite approvals of the shareholders of both companies.
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.
<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.
The Annual Meeting of Shareholders was held on April 24, 1997, at which
time all of management's nominees for members of the Board of Directors were
elected. Shareholders of record of the Company's common stock and its Series P
9% Cumulative Convertible Preferred Stock at the close of business on February
20, 1997, were entitled to vote at the Annual Meeting. Votes were cast as
follows:
Vote
Voted Voted Withheld or Broker
For Against Abstained Non-Votes
---------------------------------------------------------------------------
Nominees for election of Directors:
Barbara L. Bowles 86,940,121 798,111
William T. Burgin 86,886,028 852,204
Worley H. Clark, Jr. 86,885,019 853,213
William T. Comfort, Jr. 86,881,499 856,733
Gary P. Coughlan 86,939,157 799,075
William V. Daniel 86,836,210 902,022
Bruce C. Gottwald 70,465,390 17,272,842
Miles L. Marsh 86,881,191 857,041
Robert M. O'Neil 86,911,812 826,420
Richard L. Sharp 86,947,918 790,314
Anne M. Whittemore 86,241,317 1,496,915
Item 5. OTHER INFORMATION.
None.
<PAGE>
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 on Page
- --------------------------------------------------------------------------------
10 James River Corporation of Virginia Supplemental Retirement E-1
Plan, for Miles L. Marsh, effective as of May 1, 1997,
filed herewith.
11 Computation of Earnings per Share -- filed herewith. 18
27(a) Financial Data Schedules for the quarter ended March 30, 1997
(filed electronically only).
27(b) Financial Data Schedules restated for the quarter ended March 31,
1996 (filed electronically only).
(b) Reports on Form 8-K:
During the quarter ended March 30, 1997, and subsequent thereto, the
Company filed the following Current Report on Form 8-K:
Date of Report Event Reported
- --------------------------------------------------------------------------------
May 4, 1997 The Company issued a press release announcing the
signing of an Agreement and Plan of Merger with Fort
Howard Corporation.
<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 and Controller
(Principal Accounting Officer)
Date: May 9, 1997
JAMES RIVER CORPORATION OF VIRGINIA
SUPPLEMENTAL RETIREMENT PLAN
FOR MILES L. MARSH
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. The Plan is intended to be exempt
from the participation, vesting, funding and fiduciary
responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended. 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. The Plan is effective as of May
1, 1997.
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.
<PAGE>
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.
c) "Board" means the Board of Directors of the Company.
d) "Cause" means fraud or material misappropriation with
respect to the business or assets of the Company; 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; willful misconduct that materially harms or has
the potential to cause material harm to the Company; breach
of a fiduciary duty which has a material adverse effect on
the Company; conviction of a felony or crime involving moral
turpitude; or 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
Securities Exchange Act of 1934 (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
<PAGE>
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;
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 of 1986, as
amended from time to time, and regulations thereunder.
g) "Committee" means the Compensation Committee of the
Board.
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
<PAGE>
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) "Normal Retirement Date" means the first day of the
month coinciding with or next following the date on which
Executive attains age 55.
l) "Pension Benefit" means the benefit payable to
Executive under the Pension Plan as a single life annuity at
<PAGE>
his Normal Retirement Date. 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 the Pension Plan.
m) "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.
n) "Plan" means the James River Corporation of Virginia
Supplemental Retirement Plan for Miles L. Marsh.
o) "Plan Year" means a calendar year.
p) "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.
q) "Retirement" or "Retirees" means the termination of
Executive's employment for reasons other than death or
Cause.
r) "Service" means years of employment in years and
completed full months with the Company or any subsidiary of
the Company.
s) "Social Security Benefit" means the benefit payable to
Executive under the Social Security Act at the time of
Executive's Retirement. In computing the benefit offsets
<PAGE>
pursuant to Section 3(c), if Executive becomes entitled to
benefits under this Plan before he is eligible to receive
benefits under the Social Security Act, his Social Security
Benefit means the amount of the benefit that will be payable
at the earliest date when benefits could become payable to
Executive under the Social Security Act, based solely on
amounts accrued or earned for purposes of the Social
Security Act at the time of Executive's Retirement, as
determined by the Committee.
t) "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, 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 described in 3(b), (c) and (d). If Executive
retires at any time after his Normal Retirement Date, his
benefit shall be at least equal to the benefit that he would
have received had he retired as of his Normal Retirement
Date, subject to the adjustments and offsets described in
3(b), (c) and (d).
b) Service Adjustment. If at the time of Retirement
Executive has completed fewer than 7 years of Service, the
amount determined in (a) shall be reduced proportionately to
the extent that Executive has less than 7 years of Service.
<PAGE>
c) Benefit Offsets. The amount of the benefit determined
under the preceding paragraphs shall be offset by the sum of
the amount of Executive's Pension Benefit and the amount of
Executive's Social Security Benefit.
d) Form of Benefit Adjustment. If instead of a lifetime
annual benefit 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 adjusted in
accordance with the factors, methods and assumptions then
used under the Pension Plan for determining optional forms
of benefit payments.
4. Commencement and Form of Benefit. Executive may elect
when payment of his benefit will commence after Retirement.
Executive may elect to have his benefit under this Plan paid
in any one of the forms of payment described in the Pension
Plan when benefits under this Plan commence. If payment of
Executive's benefit is to commence before his Normal
Retirement Date, 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 53 to Normal Retirement Date. If commencement of
Executive's benefit occurs before his Normal Retirement Date
and after attainment of age 53, his benefit will be reduced
by 4% for each year (calculated monthly) by which
<PAGE>
Executive's age at commencement of his benefits is less than
55 and more than 52.
b) Prior to Age 53. If commencement of Executive's
benefits occurs before attainment of age 53, his benefit
will be further reduced (in addition to the reduction
pursuant to (a)) by 6% for each year (calculated monthly) by
which the Executive's age at commencement of his benefits 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 an additional two full 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 54, and (ii) 10% if Executive Retires at or
after his Normal Retirement Date.
c) Payment Reduction Factors. If payment of Executive's
benefit begins before Executive has attained his Normal
Retirement Date, the reduction factors for early payment set
forth in Section 4 shall not apply.
d) Lump Sum Payment. The present value of the benefit
which Executive would be entitled to receive over time upon
his Retirement, as determined under Sections 4 and 5, shall
<PAGE>
be paid in a lump sum. The determination of the amount of
the lump sum payment shall be made by the Company's
actuaries in accordance with the methods, factors and
assumptions used in determining lump sum payments 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 neither Executive nor his Spouse
shall be entitled to any benefit 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 the
<PAGE>
surviving Spouse's preretirement monthly benefit when
payable under the Pension Plan and the Spouse's monthly
benefit when payable under Social Security, as determined by
the Committee. 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 benefit
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 benefit available to Executive and his Spouse that
thereby accrue, constitutes a waiver of all his and his
Spouse's rights under the Supplemental Benefit 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 Executive (or 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
<PAGE>
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,
regulations 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,
<PAGE>
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 his age or Service,
shall be eligible for benefits under the Plan when 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 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)
<PAGE>
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.
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 and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
For the Quarters Ended March 30, 1997 and March 31, 1996
(in millions, except per share data)
First Quarter
PRIMARY 1997 1996
Net earnings applicable
to common shares $32.9 $5.8
========================================================
Weighted average number of
common shares and common share
equivalents:
Common shares outstanding 86.3 85.0
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 3.4 2.0
Less assumed acquisition of
common shares, using proceeds
from stock options and a defer-
red stock award plan, under the
treasury stock method (2.5) (1.5)
- --------------------------------------------------------
87.2 85.5
========================================================
Primary earnings
per common share $.38 $.07
<PAGE>
Exhibit 11 (continued)
JAMES RIVER CORPORATION
of Virginia and Subisdiaries
COMPUTATION OF EARNINGS PER SHARE
For the Quarters Ended March 30, 1997 and March 31, 1996
(in millions, except per share data)
First Quarter
FULLY DILUTED 1997 1996
Net earnings applicable
to common shares $32.9 $5.8
========================================================
Weighted average number of
common shares and common share
equivalents:
Common shares outstanding 86.3 85.0
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 3.4 2.0
Less assumed acquisition of
common shares, using proceeds
from stock options and a defer-
red stock award plan, under the
treasury stock method (2.5) (1.5)
- --------------------------------------------------------
87.2 85.5
========================================================
Fully diluted earnings
per common share $.38 $.07
<PAGE>
Exhibit 11 (continued)
JAMES RIVER CORPORATION
of Virginia and Subisdiaries
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.
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. No conversions of any of
the convertible preferred stocks have been assumed for the periods
presented, as such conversions are not dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JAMES RIVER
CORPORATION OF VIRGINIA'S MARCH 30, 1997, FORM 10-Q 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> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> MAR-30-1997
<CASH> 58
<SECURITIES> 0
<RECEIVABLES> 692
<ALLOWANCES> 0
<INVENTORY> 662
<CURRENT-ASSETS> 1,525
<PP&E> 5,801
<DEPRECIATION> 2,174
<TOTAL-ASSETS> 6,362
<CURRENT-LIABILITIES> 1,158
<BONDS> 1,849
0
738
<COMMON> 9
<OTHER-SE> 1,494
<TOTAL-LIABILITY-AND-EQUITY> 6,362
<SALES> 1,382
<TOTAL-REVENUES> 1,382
<CGS> 1,019
<TOTAL-COSTS> 1,019
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 82
<INCOME-TAX> 35
<INCOME-CONTINUING> 48
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION ORIGINALLY EXTRACTED FROM
JAMES RIVER CORPORATION OF VIRGINIA'S MARCH 31, 1996, FORM 10-Q FINANCIAL
STATEMENTS AS RESTATED IN THE MARCH 30, 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 CORPORATION OF VIRGINIA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> MAR-31-1996
<CASH> 43
<SECURITIES> 0
<RECEIVABLES> 863
<ALLOWANCES> 0
<INVENTORY> 798
<CURRENT-ASSETS> 1,830
<PP&E> 6,159
<DEPRECIATION> 2,152
<TOTAL-ASSETS> 7,071
<CURRENT-LIABILITIES> 1,094
<BONDS> 2,414
0
740
<COMMON> 9
<OTHER-SE> 1,477
<TOTAL-LIABILITY-AND-EQUITY> 7,071
<SALES> 1,555
<TOTAL-REVENUES> 1,555
<CGS> 1,182
<TOTAL-COSTS> 1,182
<OTHER-EXPENSES> 23
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45
<INCOME-PRETAX> 35
<INCOME-TAX> 15
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
