Initial Analysis of Eastvaco and the Charlotte Facility

Read the financial statements and supplemental information provided by the 10-K submission and the Charlotte facility schedules. Attempt to gain some insight into how the company and its Charlotte plant are doing. Specifically, answer the following:

What do you see as Eastvaco’s strengths and weaknesses?

Eastvaco Corporation is a leader in manufacturing paper, packaging, and chemicals. The company has three business segments based on their product categories. The company has been affected by different micro and macroeconomic conditions. Based on the financial statements and supplemental information provided by the 10-K submission, the strengths and weaknesses of Eastvaco are:

Strengths:
1. Strong brand recognition being the largest manufacturer of paper, packaging, and chemicals
2. Eastvaco owns 1,466,000 acres of land forest land in the United States and southern Brazil
3. Aggressive focus on innovation (245 scientists were employed in research activities)
4. Eastvaco has obtained a number of foreign and domestic patents as a result of their R&D
5. Currently operating in the United States and in 30 foreign countries
6. Eastvaco has invested in clean energy by making the Charlotte facility “green”
7. The inventory of growing has steadily increased over the last decade

Weaknesses:
1. High costs in research and development ($47.3 million)
2. Increased world pressure and bad publicity over depleting the Brazilian rain forest
3. Faced with macroeconomic conditions: industry capacity, economic growth in US, currency exchange rates
4. Several anticipated costs associated with legal proceedings
5. Large nominal fees looming from unused revolving credit