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 ATLANTA, Oct. 19 /PRNewswire/ -- Riverwood International Corp. (NYSE: RVW) today reported third quarter net sales of $295.6 million, down $5.6 million, or 1.9 percent, from the third quarter of 1992. Income from operations for the three months ended Sept. 25, 1993 was $23.9 million, down $9.3 million, or 28.0 percent, from the like period last year. Riverwood reported a net loss for the quarter of $1.8 million, or $0.03 loss per share, compared with net income of $7.8 million, or $0.13 per share, in 1992. During the quarter, Riverwood recorded a one-time adjustment to existing balance sheet deferred tax accounts, reducing net earnings by approximately $4.1 million, or about $0.07 per share, primarily due to recent changes in U.S. federal and Australian tax regulations. Without this tax charge, Riverwood would have reported net income of $2.3 million or $0.04 per share. The weighted average common shares outstanding used to compute earnings per share were approximately 62 million.
 For the first nine months of 1993, net sales were $849.5 million, up 2.0 percent compared with $832.7 million for the first nine months of 1992. Income from operations for the first nine months of 1993 was $73.5 million, down 33.7 percent compared with $110.8 million for the corresponding period in 1992. Net income was $7.8 million, or $0.13 per share, down 78.1 percent from $35.6 million, or $0.66 per share, last year. The weighted average common shares outstanding used to compute earnings per share were approximately 62 million in 1993 and approximately 54 million in 1992.
 Net income for the first nine months of 1993 was reduced by the third quarter one-time tax charges of approximately $4.1 million. This was offset by a $4.8 million net reduction in deferred income tax expense due to Brazilian tax law changes recorded in the first quarter of 1993.
 Net sales in the third quarter were down by approximately $7.6 million in the Coated Board System. Weaker foreign currencies in the quarter compared with the third quarter of 1992 resulted in a decline of approximately $15 million in reported Coated Board System net sales, partially offset by an increase in North American beverage packaging volume. Net sales in the U.S. Timberlands/Wood Products segment were up due to price improvement compared with 1992.
 The reduction in income from operations for the third quarter was due mainly to a loss in the Containerboard segment. The Containerboard segment reported a loss from operations of $10.0 million, compared with a loss from operations of $0.7 million in the third quarter of 1992. This reflects both the effects of lower linerboard prices and downtime taken during August and September at the Macon mill. During the third quarter of 1993, due to the continued weakness in linerboard markets and to manage inventory levels, Riverwood shut down its Macon, Ga. mill for an eight-day period in each of August and September. The Brazilian operations continued to be profitable, despite weak worldwide linerboard markets.
 The Coated Board System segment decline in earnings was due primarily to higher expenses for packaging machinery development and expansion of multiple packaging markets, and to the impact of unfavorable foreign exchange rates on Riverwood's large international business, particularly in Europe.
 Income from operations in the third quarter for the company's third business segment, U.S. Timberlands/Wood Products, increased by approximately $3 million, or 36 percent, due to higher lumber and plywood selling prices and improved productivity compared with a year ago.
 "Linerboard markets have been weak for the first nine months of 1993. Therefore, Riverwood will show a significant annual decrease in income from operations and net income compared with 1992," said Thomas H. Johnson, Riverwood International president and chief executive officer.
 "Our expectation for the remainder of the year and into 1994 is that the trends experienced in the first nine months will continue, with some potential relief coming from a $25 per ton linerboard price increase effective Oct. 1.
 "Our capital expenditure program to upgrade and convert the Macon mill to coated board production is on budget and on schedule. We anticipate having limited coated board production available to meet the 1994 beverage season.
 "We remain confident about the business outlook for our primary business segment -- the Coated Board System -- for 1994 and beyond. On Oct. 1, we announced a $25 per ton beverage carrier grade price increase, effective for Jan. 1, 1994 shipments. In addition, the marketplace is responding favorably to our investment in packaging machinery design and development, as sales in our key machinery-based packaging segment continued to show solid growth."
 Riverwood International is a global paperboard, packaging and packaging machinery company headquartered in Atlanta with 1992 annual sales of $1.1 billion, assets of $1.9 billion and 8,500 employees worldwide.
 (In millions of dollars, except per share amounts)
 Three Months Pct. Nine Months Pct.
 Ended Inc./ Ended Inc./
 9/25/93 9/26/92 (Dec.) 9/25/93 9/26/92 (Dec.)
 Net Sales $295.6 $301.2 (1.9) $849.5 $832.7 2.0
 Cost of Sales 236.2 236.6 (.2) 669.9 632.4 5.9
 Selling, General and
 Administrative 31.1 27.3 13.9 91.1 79.3 14.9
 Research, Development
 and Engineering 2.3 1.9 24.1 6.6 5.0 32.1
 Other Expense, net 2.1 2.2 (3.1) 8.4 5.2 61.1
 Income from
 Operations 23.9 33.2 (28.0) 73.5 110.8 (33.7)
 Interest Income .7 2.6 (74.5) 3.0 3.3 (10.1)
 Interest Expense 20.2 23.9 (15.3) 62.9 51.6 21.9
 Income before
 Income Taxes 4.4 11.9 (63.5) 13.6 62.5 (78.2)
 Income Tax Expense 6.2 4.1 49.1 5.8 26.9 (78.4)
 Net Income (Loss) $(1.8) $7.8 -- $7.8 $35.6 (78.1)
 Earnings (Loss) per
 Common Share Data:
 Weighted Average
 Common Shares
 (000) 62,392 62,051 -- 62,167 54,208 --
 Earnings (Loss) per
 Common Share $(0.03) $ 0.13 -- $ 0.13 $ 0.66 --
 (In millions of dollars)
 Three Months Pct.
 Ended Inc./
 9/25/93 9/26/92 (Dec.)
 Coated Board System $192.5 $200.1 (3.8)
 Containerboard 70.0 72.0 (2.9)
 U. S. Timberlands/Wood Products 37.7 33.7 11.7
 Eliminations (4.6) (4.6) .6
 $295.6 $301.2 (1.9)
 Coated Board System $ 27.9 $ 30.9 (9.8)
 Containerboard (10.0) (0.7) --
 U. S. Timberlands/Wood Products 11.5 8.4 36.4
 Eliminations (5.5) (5.4) --
 $ 23.9 $ 33.2 (28.0)
 Nine Months Pct.
 Ended Inc./
 9/25/93 9/26/92 (Dec.)
 Coated Board System $562.6 $599.5 (6.1)
 Containerboard 191.7 153.9 24.6
 U. S. Timberlands/Wood Products 109.1 92.5 17.9
 Eliminations (13.9) (13.2) 5.7
 $849.5 $832.7 2.0
 Coated Board System $ 78.4 $ 97.5 (19.6)
 Containerboard (22.0) 7.6 --
 U. S. Timberlands/Wood Products 34.7 21.7 59.7
 Eliminations (17.6) (16.0) 9.9
 $ 73.5 $110.8 (33.7)
 Notes to Consolidated Statements of Income (Loss)
 Note 1
 On Sept. 17, 1993, Riverwood International completed the sale of $125 million of 6.75 percent ten-year Convertible Subordinated Notes. Also on Sept. 17, 1993, Manville Corp. purchased an additional 3,448,276 shares of Riverwood's common stock at a price of $14.50 per share, for a total of approximately $50 million. Manville now owns 81.5 percent of Riverwood International common stock.
 On June 24, 1992, Riverwood completed an initial public offering of 19.5 percent of its common stock, or 12,100,000 shares, for gross proceeds of $172 million and issued $400 million of notes in a public debt offering. The debt offering consisted of $150 million, 10.75 percent, Senior Notes due 2000 and $250 million, 11.25 percent, Senior Subordinated Notes due 2002.
 Note 2
 During the third quarter of 1993, the U.S. government enacted the Revenue Reconciliation Act of 1993, which among other things increases the corporate income tax rate to 35 percent from 34 percent. As a result of this and changes in Australian tax regulations, Riverwood recorded a charge to income taxes of $4.1 million, or $0.07 per share, in the third quarter of 1993.
 Due to recent changes in Brazil's tax laws, Riverwood recognized a net $4.8 million deferred tax benefit in the first quarter of 1993. The primary effect of the tax law changes allowed Riverwood to accelerate its payments of deferred income taxes on inflationary profits at reduced tax rates.
 Excluding the Brazilian tax benefit and the one-time charge to income taxes in the third quarter for changes in U.S. federal and Australian tax regulations, Riverwood's 1993 effective tax rate is approximately 48 percent.
 -0- 10/19/93
 /CONTACT: Jim Caverlee (Financial), 404-644-3023; or Jonna Manes (Media), 404-644-3014, both of Riverwood International/

CO: Riverwood International Corp. ST: Georgia IN: PAP CST SU: ERN

MC -- DV002 -- 3685 10/19/93 06:01 EDT
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Publication:PR Newswire
Date:Oct 19, 1993

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