EXHIBIT 99.1
[FORT JAMES LOGO]
NEWS RELEASE
FORT JAMES CORPORATION
POST OFFICE BOX 89
DEERFIELD, ILLINOIS 60015
CONTACT:
CELESTE GUNTER, FINANCIAL 847.317.5355
MARK LINDLEY, MEDIA 847.317.5280
FORT JAMES REPORTS SECOND QUARTER 2000 RESULTS
DEERFIELD, IL., July 19, 2000 - Fort James Corporation today announced
second quarter 2000 net earnings, excluding unusual and non-recurring items, of
$110.8 million, or $0.54 per diluted share. This compares to net earnings of
$135.2 million, or $0.62 per diluted share, reported on the same basis in the
second quarter of 1999. Net sales for the second quarter increased modestly to
$1,756.6 million versus $1,718.5 million in 1999. Excluding the effects of
currency translation and divested operations, net sales increased approximately
7 percent. Compared to the first quarter of 2000, net sales increased by more
than 4 percent and net earnings, excluding unusual and nonrecurring items,
increased approximately 15 percent.
"Strong cost reduction and improved product pricing combined to strengthen
Fort James' results for the second quarter," said Miles L. Marsh, Chairman and
Chief Executive Officer of Fort James. "We are still, however, feeling the
effects of higher raw material costs on a worldwide basis."
SECOND QUARTER RESULTS BY SEGMENT
Income from operations, excluding unusual and non-recurring items,
declined to $225.8 million in the second quarter of 2000 from $252.2 million in
1999. The decline was principally attributable to reduced earnings in the
Tissue - North America and Tissue - Europe businesses, driven by escalating
costs in key raw materials, partially offset by increased earnings in the
Communications Papers and Fiber businesses.
Sales for the TISSUE - NORTH AMERICA business increased 4 percent in the
second quarter of 2000 to $951.0 million compared to $913.7 million a year ago.
Income from operations of $172.1 million was 6 percent lower than the $183.5
million reported in 1999, but represented a 19 percent increase over the $144.1
million posted in the first quarter of 2000. Compared to the prior year, the
decline in income from operations was primarily attributable to increased raw
material costs, principally recycled paper. However, strong improvements in
manufacturing cost reductions and the benefits of pricing initiatives partially
offset the higher raw material costs. Distribution and warehousing costs
continued to decline compared to both the prior year and the first quarter of
2000, despite rising fuel costs, as product flow improvement programs took
effect. In addition, three major mill maintenance outages were successfully
completed in the second quarter, in a shorter timeframe and with less expense
than originally anticipated.
The away-from-home category experienced top-line growth driven by higher
pricing and mix improvements from our Sofpull(R) and NuRoll(R) towels, coreless
Compact(R) tissue and CoolColor(TM) dispenser product lines. Volumes declined
slightly compared to the prior year, as the company pursued pricing policies to
help alleviate the impacts of the significant raw material inflation.
Volume in the retail category was comparable to 1999 with gains in bath
tissue offset by lower napkin volumes. During the quarter, list price increases
were implemented across all product lines.
Second quarter sales and income from operations of the TISSUE - EUROPE
business declined to $433.6 million and $24.4 million, respectively, compared
to $456.3 million and $57.4 million in the prior year. Changes in currency
exchange rates negatively affected sales and operating profits by approximately
$44 million and $5 million, respectively, compared to last year's quarter. The
second quarter 2000 operating profits were negatively impacted by continued raw
material inflation, partially offset by finished good pricing increases which
have been initiated in all countries. Europe also experienced good volume
growth in all countries, except the United Kingdom, with notable gains in
France and the Nordic region compared to a year ago.
Sales in the DIXIE business increased 9 percent in the second quarter of
2000 to $240.6 million, compared to $220.3 million in 1999, while income from
operations in the current quarter was generally consistent with last year at
$37.3 million compared to $38.6 million. The current quarter sales improvement
was driven by volume gains in excess of 6 percent for both the retail and
foodservice categories, with notable gains in retail plates, the club channel
and foodservice plastic cutlery and cups. Income from operations was affected
by strong sales growth and cost reduction efforts, offset by raw material
inflation, particularly in plastic resins. Dixie has announced price increases
in all channels to recover raw material inflation. Dixie's Rinse & ReUse, a new
disposable stoneware product launched in the first quarter, had strong
acceptance in virtually every launch area and has achieved market share in line
with that of its premium competitors.
Second quarter 2000 sales for the COMMUNICATIONS PAPERS AND FIBER
businesses increased 13 percent to $226.8 million from $200.9 million a year
ago. Income from operations in the current quarter increased to $10.2 million,
compared to a loss from operations of $8.6 million in 1999. The improved
earnings were the result of significantly higher pulp and uncoated freesheet
prices, partially offset by the effect of lower pulp volumes as a result of the
January 2000 sale of Marathon, LTD ("Marathon") the company's non-integrated
pulp mill located in Ontario, Canada. Although uncoated freesheet prices are
significantly higher than last year, they leveled in the second quarter after
increasing steadily from the third quarter of 1999.
OTHER ITEMS
Other expense for the quarter was $3.1 million compared to other income
of $14.2 million in 1999. This decrease was primarily due to foreign currency
losses in the current quarter compared to foreign currency gains in the prior
year and interest income received in 1999 related to prior year tax refunds.
Cash provided by operations totaled $338.3 million for the first six
months of 2000, compared to $308.1 million in 1999. The increase was primarily
due to lower investments in working capital partially offset by lower income
from operations.
As part of the company's $500 million stock purchase program, the company
purchased 3.3 million common shares at a total cost of $75.2 million in the
quarter, 9.4 million common shares at a total cost of $198.9 million for the
year, and 16.5 million common shares at a total cost of $398.6 million since
the inception of the program in August 1999.
UNUSUAL AND NON-RECURRING ITEMS
Second quarter income from operations included non-recurring income of
$8.6 million ($5.6 million after taxes, or $0.03 per diluted share) related to
the settlement of divestiture liabilities on terms more favorable than
anticipated. These divestiture liabilities, recorded in 1999, related to the
closure of the groundwood paper business and the sale of Marathon.
SIX MONTHS RESULTS
For the first six months of 2000, the company generated net earnings,
excluding unusual and non-recurring items, of $207.2 million, or $0.99 per
diluted share, compared to $252.8 million, or $1.15 per diluted share in 1999.
COMMENT
"After a difficult period, largely resulting from very significant raw
material cost increases, there is progress in our second quarter results," said
Miles Marsh. "Some pricing has been achieved to partially offset the cost
increases, although full recovery remains some way off. Our cost reduction
programs have been successfully accelerated and our distribution costs are
meaningfully down despite rising fuel costs.
"We strongly believe the company's strategies and programs are sound and
are seeing the evidence of this in a variety of ways. Our positions in the
market remain very solid and our new marketing initiatives are meeting with
considerable success. However, we also believe the Georgia-Pacific initiative
to acquire Fort James represents strong immediate value to our shareholders and
removes execution risk. With this in mind, management has worked diligently to
bring this opportunity to our shareholders."
Fort James is a leading international consumer products company, serving
consumers both at home and away-from-home with bathroom and facial tissue,
paper towels, napkins, and cups, plates, cutlery and food wrap products. The
company's popular brands include QUILTED NORTHERN, BRAWNY, DIXIE, VANITY FAIR,
MARDI GRAS, SOFT `N GENTLE and SO-DRI in North America and LOTUS, COLHOGAR,
TENDERLY, EMBO, and KITTENSOFT in Europe. The company currently has
approximately 50 manufacturing facilities in the U.S., Canada and 11 other
countries around the world and had $6.8 billion of net sales in 1999.
Forward-looking statements in this release 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, general business and economic
conditions; competitive pricing pressures for the company's products; the
ability to successfully introduce new products; changes in raw material, energy
and other costs; the ability to achieve net costs reductions; opportunities
that may be presented to and pursued by the company; and determinations by
regulatory and governmental authorities.
# # #
COPIES OF TODAY'S NEWS RELEASE, ALONG WITH ADDITIONAL INFORMATION ON FORT
JAMES, IS AVAILABLE, AT NO CHARGE, BY CALLING (888) 526 3711. YOU MAY ALSO
ACCESS THE COMPANY'S WEB SITE AT INTERNET ADDRESS http://www.fortjames.com.
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<PAGE>
FINANCIAL SUMMARY
FORT JAMES CORPORATION
FOR THE QUARTERS AND SIX MONTHS
ENDED JUNE 25, 2000 AND JUNE 27, 1999
<TABLE>
<CAPTION>
Quarter Six Months
------------------------ ------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA) 2000 (a) 1999 (b) 2000 (a) 1999 (b)
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<S> <C> <C> <C> <C>
Net Sales $ 1, 756.6 $ 1,718.5 $ 3,433.2 $ 3,387.5
Income from operations, before unusual and non-recurring items $ 225.8 $ 252.2 $ 413.0 $ 488.6
Net earnings, before unusual and non-recurring items $ 110.8 $ 135.2 $ 207.2 $ 252.8
Diluted earnings per share:
Net earnings, before unusual and non-recurring items $ 0.54 $ 0.62 $ 0.99 $ 1.15
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Discontinued operations $ - $ (0.04) $ - $ (0.02)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Net Income $ 0.57 $ 0.44 $ 1.02 $ 0.88
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</TABLE>
(a)Net income for the second quarter and first six months of 2000 included
non-recurring income of $8.6 million ($5.6 million after taxes, or $0.03 per
diluted share) for the settlement of divestiture liabilities on terms more
favorable than anticipated.
(b)Net income for the second quarter and first six months of 1999 included
non-recurring income of $1.1 million ($0.7 million after taxes), a loss from
discontinued operations of $9.3 million and $4.9 million, or $0.04 and $0.02
per diluted share, and an extraordinary loss on the early extinguishment of
debt of $31.0 million and $33.2 million, or $0.14 and $0.15 per diluted
share, respectively. Net income for the first six months also included a
charge for the cumulative effect of a change in accounting for start-up
costs of $22.1 million, or $0.10 per diluted share.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FORT JAMES CORPORATION
FOR THE QUARTERS AND SIX MONTHS
ENDED JUNE 25, 2000 AND JUNE 27, 1999
<TABLE>
<CAPTION>
Quarter Six Months
------------------------ ------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA) 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net Sales $ 1, 756.6 $ 1,718.5 $ 3,433.2 $ 3,387.5
Cost of goods sold (1,231.7) (1,175.2) (2,433.0) (2,310.7)
Selling and administrative expenses (299.1) (291.1) (587.2) (588.2)
Restructure and other items 8.6 1.1 8.6 1.1
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Income from operations 234.4 253.5 421.6 489.7
Interest expense (58.6) (59.4) (115.6) (121.9)
Other income (expense), net (3.1) 14.2 11.7 18.1
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Income from continuing operations before income taxes,
extraordinary items, and cumulative effect of a change
in accounting principle 172.7 208.1 317.7 385.9
Income tax expense (56.3) (72.2) (104.9) (132.4)
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Income from continuing operations before extraordinary
items and cumulative effect of a change in accounting principle 116.4 135.9 212.8 253.5
Loss from discontinued operations, net of taxes - (9.3) - (4.9)
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Income before extraordinary items and cumulative effect
of a change in accounting principle 116.4 126.6 212.8 248.6
Extraordinary loss on early extinguishment of debt, net of taxes - (31.0) - (33.2)
Cumulative effect of a change in accounting principle, net of taxes - - - (22.1)
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Net income $ 116.4 $ 95.6 $ 212.8 $ 193.3
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Basic earnings per share:
Income from continuing operations before extraordinary items
and cumulative effect of a change in accounting principle $ 0.57 $ 0.62 $ 1.02 $ 1.15
Loss from discontinued operations, net of taxes - (0.04) - (0.02)
Extraordinary loss on early extinguishment of debt, net of taxes - (0.14) - (0.15)
Cumulative effect of a change in accounting principle, net of taxes - - - (0.10)
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Net income $ 0.57 $ 0.44 $ 1.02 $ 0.88
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Weighted average common shares outstanding 205.5 219.6 207.8 219.6
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Diluted earnings per share:
Income from continuing operations before extraordinary items
and cumulative effect of a change in accounting principle $ 0.57 $ 0.62 $ 1.02 $ 1.15
Loss from discontinued operations, net of taxes - (0.04) - (0.02)
Extraordinary loss on early extinguishment of debt, net of taxes - (0.14) - (0.15)
Cumulative effect of a change in accounting principle, net of taxes - - - (0.10)
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Net income $ 0.57 $ 0.44 $ 1.02 $ 0.88
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Weighted average common shares and
common shares equivalents outstanding 205.9 220.9 208.1 220.6
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</TABLE>
<PAGE>
SEGMENT INFORMATION
FORT JAMES CORPORATION
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA) First Quarter Second Quarter Third Quarter Fourth Quarter Year
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<S> <C> <C> <C> <C> <C>
2000 NET SALES:
Tissue - North America $ 913.2 $ 951.0 $ - $ - $ 1,864.2
Tissue - Europe 449.9 433.6 - - 883.5
Dixie 179.2 240.6 - - 419.8
Communications Papers and Fiber 237.2 226.8 - - 464.0
Intercompany (102.9) (95.4) - - (198.3)
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Total net sales $ 1,676.6 $ 1,756.6 $- $- $ 3,433.2
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1999 NET SALES:
Tissue - North America $ 899.4 $ 913.7 $ 950.3 $ 910.5 # 3,673.9
Tissue - Europe 465.9 456.3 452.1 459.7 1,834.0
Dixie 175.6 220.3 195.2 195.8 786.9
Communications Papers and Fiber 196.0 200.9 209.3 228.3 834.5
Intercompany (67.9) (72.7) (67.6) (93.7) (301.9)
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Total net sales $1,669.0 $1,718.5 $1,739.3 $1,700.6 $6,827.4
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2000 INCOME (LOSS) FROM OPERATIONS:
Tissue - North America $ 144.1 $ 172.1 $ - $ - $ 316.2
Tissue - Europe 29.1 24.4 - - 53.5
Dixie 19.4 37.3 - - 56.7
Communications Papers and Fiber 14.3 10.2 - - 24.5
Corporate (19.7) (18.2) - - (37.9)
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Income from operations
before restructure and other items $ 187.2 $ 225.8 $ - $ - $ 413.0
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1999 INCOME (LOSS) FROM OPERATIONS (A):
Tissue - North America $ 192.1 $ 183.5 $ 125.6 $ 143.5 $ 644.7
Tissue - Europe 61.1 57.4 50.8 41.1 210.4
Dixie 19.3 38.6 20.3 26.9 105.1
Communications Papers and Fiber (14.2) (8.6) 1.8 12.3 (8.7)
Corporate (21.9) (18.7) (30.3) (22.2) (93.1)
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Income from operations
before restructure and other items $ 236.4 $ 252.2 $ 168.2 $ 201.6 $ 858.4
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</TABLE>
(a) Third quarter and full year 1999 income from operations included $46.0
million of unusual items for severance and litigation accruals.
Details by segment are as follows:
<TABLE>
<CAPTION>
1999 Income From Operations
Unusual Excluding Unusual Items
--------------------------------
Items Third Quarter Year
---------------------------------------------------- -------------------------------------------------------
<S> <C> <C> <C>
Tissue - North America $ 34.7 $ 160.3 $ 679.4
Tissue - Europe - 50.8 210.4
Dixie 0.9 21.2 106.0
Communications Papers and Fiber 2.1 3.9 (6.6)
Corporate 8.3 (22.0) (84.8)
---------------------------------------------------- --------------------------------------------------------
Total $ 46.0 $ 214.2 $ 904.4
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</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
FORT JAMES CORPORATION
AS OF JUNE 25, 2000, DECEMBER 26, 1999, AND JUNE 27, 1999
<TABLE>
<CAPTION>
(IN MILLIONS) June December June
2000 1999 1999
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ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 4.6 $ 10.3 $ 7.7
Accounts receivable 895.5 880.5 920.3
Inventores 801.4 790.4 819.2
Other current assets 129.8 147.2 145.4
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Total current assets 1,831.3 1,828.4 1,892.6
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Net property, plant and equipment 4,273.8 4,352.1 4,160.7
Goodwill, net 497.8 528.8 552.4
Net assets of discontinued operations - - 426.2
Other assets 502.7 548.9 551.4
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Total assets $ 7,105.6 $ 7,258.2 $ 7,583.3
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued liabilities $ 1,150.5 $ 1,187.8 $ 1,174.7
Current portion of long-term debt 70.3 81.9 235.8
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Total current liabilities 1,220.8 1,269.7 1,410.5
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Long-term debt 3,449.1 3,432.0 3,658.5
Deferred income taxes 726.6 748.6 733.6
Accrued postretirement benefits other
than pensions 406.4 417.1 438.9
Other long-term liabilities 256.3 263.5 281.6
Common shareholders' Equity 1,046.4 1,127.3 1,060.2
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Total liabilities and shareholders' equity $ 7,105.6 $ 7,258.2 $ 7,583.3
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</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FORT JAMES CORPORATION
FOR THE SIX MONTHS ENDED JUNE 25, 2000 AND JUNE 27, 1999
<TABLE>
<CAPTION>
(IN MILLIONS) 2000 1999
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<S> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net income $ 212.8 $ 193.3
Depreciation expense 232.8 220.4
Amortization of goodwill 8.7 9.3
Deferred income tax provision 8.1 38.2
Restructure and other items (8.6) (1.1)
Loss from discontinued operations, net of taxes - 4.9
Loss on early extinguishment of debt, net of taxes - 33.2
Cumulative effect of a change in accounting
principle, net of taxes - 22.1
Change in current assets and liabilities, excluding
effects of acquisitions and dispositions:
Accounts receivable (43.2) (115.7)
Inventories (18.9) ( 28.1)
Other current assets ( 6.1) ( 12.3)
Accounts payable and accrued liabilities (11.7) ( 30.0)
Other, net (35.6) ( 26.1)
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Cash provided by operating activities 338.3 308.1
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CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (222.5) (220.7)
Proceeds from sale of assets 94.4 3.5
Increase in net assets of discontinued operations - (34.5)
Other, net (0.5) (1.0)
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Cash used for investing activities (130.6) (252.7)
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CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Additions to long-term debt 4.0 19.9
Payments of long-term debt (30.8) (333.4)
Net increase in revolving debt 74.5 361.0
Premiums paid on early extinguishment of debt
and debt issuance costs - (54.2)
Common stock dividends paid (63.7) (65.9)
Proceeds from exercise of stock options 1.5 8.6
Common stock purchases (198.9) -
Other, net - 11.0
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Cash used for financing activities (213.4) (53.0)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5.7) 2.4
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10.3 5.3
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4.6 $ 7.7
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</TABLE>
