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 8, 1997
JAMES RIVER CORPORATION OF VIRGINIA
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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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Item 5. Other Events.
Included in this filing is James River Corporation of Virginia ("James
River" or the "Company") unaudited pro forma condensed combined financial
information prepared in connection with the proposed merger of James River and
Fort Howard Corporation ("Fort Howard"). The proposed merger is pursuant to an
Agreement and Plan of Merger, dated as of May 4, 1997, by and among James River,
James River Delaware, Inc. (a wholly-owned subsidiary of James River and Fort
Howard) (the "Merger"). The unaudited pro forma financial information contains
the condensed combined results of operations of James River and Fort Howard for
the six months (26 weeks) ended June 29, 1997, and June 30, 1996, as well as a
condensed combined balance sheet as of June 29, 1997. A copy of the unaudited
pro forma condensed combined financial information is filed herewith as Exhibit
99.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
99 Unaudited pro forma condensed combined financial
information - 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.
JAMES RIVER CORPORATION OF VIRGINIA
By:/s/Clifford A. Cutchins, IV
Clifford A. Cutchins, IV
Senior Vice President, General Counsel
Date: August 8, 1997
Exhibit 99
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 estimated impact of the Merger and the issuance of
1.375 shares of James River common stock for each share of Fort Howard common
stock issued and outstanding. As of June 29, 1997, there were approximately 76.2
million shares 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.
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<TABLE>
<CAPTION>
JAMES RIVER AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Six Months Ended June 29, 1997
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Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
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(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 102.6 107.1 (d) 209.7
================= ================ ==============
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
JAMES RIVER AND CONSOLIDATED SUBSIDIARIES
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
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(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 85.5 107.1 (d) 192.6
=============== =================== =================
</TABLE>
The accompanying notes are an integral part of this pro forma information.
<PAGE>
<TABLE>
<CAPTION>
JAMES RIVER AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in millions)
June 29, 1997
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Pro Forma Pro Forma
James River Fort Howard Adjustments Combined
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<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 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 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 104.7 million shares of
James River common stock in exchange for approximately 76.2 million shares of
Fort Howard common stock outstanding as of June 29, 1997, utilizing the exchange
ratio of 1.375 shares of James River 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. The actual number shares to be issued
and options to be assumed pursuant to the Merger will be based upon the actual
number of shares of Fort Howard common stock and options issued and outstanding
immediately prior to the effective time of the merger.
(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.
