10-K 1 UNION CAMP 10-K -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 10-K ----------------------- (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 1-4001 ----------------------- UNION CAMP CORPORATION (Exact name of registrant as specified in its charter) VIRGINIA 13-5652423 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1600 VALLEY ROAD, WAYNE, NEW JERSEY 07470 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(201) 628-2000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, $1 par value New York Stock Exchange Preferred Stock Purchase Rights Pacific Stock Exchange 8 5/8% Sinking Fund New York Stock Exchange Debentures Due April 15, 2016 Pacific Stock Exchange New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE 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 (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] On March 3, 1995, 70,050,045 shares of Registrant's Common Stock, $1 par value, were outstanding. On March 3, 1995, the closing price per share for the Common Stock as reported on the Composite Tape for issues listed on the New York Stock Exchange was $50.00 and the aggregate market value of the Common Stock held by non-affiliates of the Registrant was $3,502,502,250. DOCUMENTS INCORPORATED BY REFERENCE Portions of Registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1994 (the "Union Camp 1994 Annual Report") are incorporated by reference in Parts I, II and IV of this Form 10-K. Portions of Registrant's Proxy Statement, dated March 20, 1995 (the "Union Camp 1995 Proxy Statement"), are incorporated by reference in Part III of this Form 10-K. -------------------------------------------------------------------------------- COPIES OF THE EXHIBITS MAY BE OBTAINED BY STOCKHOLDERS UPON WRITTEN REQUEST DIRECTED TO THE SECRETARY, UNION CAMP CORPORATION, 1600 VALLEY ROAD, WAYNE, NEW JERSEY 07470, ACCOMPANIED BY A CHECK IN THE AMOUNT OF $10.00 PAYABLE TO UNION CAMP CORPORATION TO COVER PROCESSING AND MAILING COSTS. COSTS OF INDIVIDUAL EXHIBITS ARE AVAILABLE UPON REQUEST TO THE SECRETARY. PART I ITEM 1. BUSINESS GENERAL Union Camp Corporation is a Virginia corporation resulting from a merger in 1956 of Union Bag and Paper Corporation and Camp Manufacturing Company, Incorporated. Predecessor businesses were started in 1861 and 1887, respectively. As used in this Report, the terms "Union Camp" and the "Company" mean Union Camp Corporation and its subsidiaries unless the context otherwise requires. Union Camp's principal business segments are the manufacture and sale of paper and paperboard, packaging products and wood products and the production and sale of chemicals, including flavors and fragrances. Information about developments during 1994 relating to Union Camp's business appears in the following portions of the Union Camp 1994 Annual Report and is incorporated by reference in this Item 1: the text under the caption "Packaging Group" on page 9 other than the introductory paragraph and page 11 other than the last paragraph; the text under the caption "Fine Paper" on page 13 and page 15 other than the last paragraph; the text under the caption "Chemical Group" on page 17 other than the introductory, the fourth and last paragraph and the last two sentences of the seventh paragraph, page 18 and page 19 other than the last two sentences of the last paragraph; the text under the caption "Forest Resources Group" on page 21 other than the introductory and last paragraphs, page 22 other than the last sentence of the first paragraph and page 23 other than the last paragraph. Information about the Company's research and development activities appears under the caption "Research and Development Costs" in Note 1 of Notes to Consolidated Financial Statements on page 36 of the Union Camp 1994 Annual Report and is incorporated by reference in this Item 1. Revenue, operating profits and other financial data for the principal business segments and for the foreign and domestic operations and the dollar amounts of export sales of Union Camp for the years ended December 31, 1994, 1993 and 1992 appear in Note 15 of Notes to Consolidated Financial Statements 1 on page 42 of the Union Camp 1994 Annual Report and are incorporated by reference in this Item 1. The international operations of Union Camp and its subsidiaries are subject to the risks of doing business abroad, including currency fluctuations, foreign government regulation and changes in political environments. During 1994, Union Camp's consolidated sales and operating profit were generated primarily by domestic operations. PAPER AND PAPERBOARD Union Camp's Fine Paper Division produces bleached paper and paperboard and its Kraft Paper and Board Division produces unbleached paper and paperboard. Those products are its largest contributors to profits. Union Camp's total production of bleached and unbleached paper and paperboard in 1994 was approximately 3,412,000 tons, of which about 59% was unbleached and 41% was bleached. The Company operates four large paper mills at Savannah, Georgia, Prattville, Alabama, Franklin, Virginia and Eastover, South Carolina. They are fully integrated in that all pulp required to support paper manufacturing is produced at the mill sites. Combined operating capacity is estimated to be approximately 3.6 million tons in 1995. The Savannah, Georgia mill produces unbleached kraft linerboard and paper, including saturating kraft, a specialized paper which is used by others as a backing material for decorative and industrial laminates. Unbleached kraft paper is used primarily in the manufacture of multiwall bags and unbleached kraft linerboard is used primarily in the manufacture of corrugated shipping containers (see the next section entitled "Packaging Products"). There are six operational machines at the Savannah mill. During the third quarter of 1994 the No. 6 machine at the Savannah mill experienced an outage which lasted into November. The two paper machines at the Prattville, Alabama unbleached kraft mill produce kraft linerboard. In 1994, the Company converted about 69% of its unbleached kraft linerboard 2 and paper production into packaging products and sold essentially all of the rest to others for conversion into similar products. The Franklin, Virginia mill produces uncoated free sheet which is sold in roll and sheet form. These sales are principally to converters who use uncoated free sheet primarily to make envelopes and forms and to merchant distributors and major end users who use it in business and printing papers. The mill also produces coated and uncoated bleached bristols which are sold for a variety of end uses, such as publishing, greeting cards, book covers and file folders. There are four paper machines and two board machines at this mill. In December 1994, a fiber recycling facility began operating at the Franklin, Virginia mill. This $84 million facility was constructed as part of $146 million modernization program which also included enhancements to five of the Franklin mill's six paper machines. The fiber recycling facility removes ink from office waste paper and produces recycled pulp for the manufacture of recycled content white paper and board. The Eastover, South Carolina mill produces bleached uncoated free sheet which, like the Franklin product, is sold to others in roll and sheet form for the same end uses. The two-machine Eastover mill has an excess of pulp capacity which is used together with an on-site pulp dryer to produce bleached pulp for sale to others in domestic and international markets. In 1994, Union Camp sold about 26% of its bleached paper and paperboard production in converted or sheet form. This includes approximately 2% converted by its own plants into folding cartons, bags, and stationery. The four integrated mills use sulfate pulping chemistry, also referred to as the kraft process. Both hardwood and pine timber are used at all four mills. Approximately 25% of the Company's wood pulp production utilizes timber harvested from lands owned or controlled by the Company. Timber use at the Prattville and Savannah mills is supplemented with recycled waste paper acquired from others and the Company's converting plants (see the next section entitled "Packaging Products"). 3 PACKAGING PRODUCTS From its mill production of paper and paperboard, Union Camp makes bags and sacks and corrugated and solid fibre containers. Union Camp produces multiwall and consumer bags used to package cement, insulation, feed, fertilizer, clay, pet food, chemical and mineral products and specialty bags used in packaging charcoal, produce, sugar, flour, seed, coffee, cookies, microwaveable popcorn and other miscellaneous items. Union Camp also produces low density plastic products for industrial applications including stretch packaging and plastic shipping sacks to package salt, bark, soil, insulation, resins, chemicals and food grade products. During the third quarter of 1994 Union Camp decided to exit the retail paper bag business operated by the Flexible Packaging Division at two plants in Savannah, Georgia and Richmond, Virginia. The Savannah plant was closed in December 1994 and the Richmond based business was sold as a going operation in February 1995. In September 1994 Union Camp exited the retail plastic bag business. Its Shelbyville, Kentucky plant which produced high density polyethylene plastic bags for retail customers was sold as an ongoing operation. The speciality flexible packaging plant in Asheville, North Carolina which produces extrusion coated and laminated substrates and printed labels for the composite can industry is currently under a contract of sale. Union Camp produces corrugated and solid fibre containers used to ship and store canned, bottled and packaged products for a wide variety of customers, including food processors and textile, furniture, chemical and automotive manufacturers. In March 1994 Union Camp acquired Fleetwood Container & Display, Inc., a Los Angeles, California based manufacturer of corrugated boxes, graphics packaging and display company which operates as part of the Container Division. Other packaging products include folding cartons, on which Union Camp does high quality gravure and lithographic printing, which are used for shelf packaging in retail stores. 4 In addition, corrugated containers are produced by wholly-owned, consolidated subsidiaries in Spain, the Canary Islands, the Republic of Ireland and Puerto Rico. A corrugated container manufacturing plant in Chile, which is owned by a majority owned consolidated subsidiary of Union Camp, serves that country's fresh fruit exporters and the country's expanding industrial base. During 1994 Union Camp acquired a 30% interest in Zucamor S.A., Argentina's leading independent corrugated container company. WOOD PRODUCTS Union Camp produces southern pine lumber, plywood and particleboard. Its wood products mills have the capacity to produce 485,000,000 board feet of lumber, 240,000,000 square feet (3/8" basis) of plywood and 100,000,000 square feet (3/4" basis) of particleboard annually. Union Camp's wood products mills produced at virtually 100% of capacity in 1994. Its wood products are used in home construction and industrial markets such as furniture, cabinets and fixtures. The wood products mills also produce significant quantities of wood chips for use in Union Camp's papermaking operations. CHEMICAL GROUP The Chemical Group consists of two operating units: Chemical Products Division and Bush Boake Allen Inc. The Chemical Products Division produces a variety of wood-based and non-wood-based chemicals. Wood-based chemicals, which are by-products of pulp mill operations, include tall oil and turpentine chemicals. Tall oil is a mixture of rosin and fatty acids which are by-products of the pulping process. Tall oil rosins are converted into rosin-based resins and fatty acids are converted into dimer acids and polyamide resins. These products are used in coatings, adhesives, printing inks, paper sizing and oil field chemicals. Non-wood-based chemicals, which are complementary to Union Camp's pulp-derived tall oil fatty acids, are produced by converting vegetable oils into a variety of esters and other derivatives. These are sold primarily for use in cosmetics, lubricants, plastics, surfactants and rubber. The Chemical Products Division has 5 five processing facilities, three of which are in the United States and two of which are in England. In May 1994 Bush Boake Allen Inc. completed an initial public offering of 32% of its outstanding common stock, with Union Camp continuing to be the owner of the remaining 68% of the stock. Bush Boake Allen Inc. is a producer of flavors (including essential oils, seasonings and spice extracts) and fragrance and aroma chemicals. The flavor products impart a desired taste and smell to a broad range of consumer products, including soft drinks, confections, dietary foods, snack foods, dairy products, pharmaceuticals and alcoholic beverages. The fragrance products are used in a wide variety of items, including fine fragrances, soaps, detergents, air fresheners, cosmetics and toiletries and related products. The flavor and fragrance compounds are sold primarily to major consumer product companies which use these products in conjunction with other natural and synthetic ingredients to make their products more appealing to consumers. The aroma chemicals produced by Bush Boake Allen are primarily used by major multinational consumer product manufacturers as fragrance raw materials or are used by Bush Boake Allen in its own fragrance compounds. Bush Boake Allen has developed a broad-based global presence with operations in 37 countries in North and South America, Europe, Asia, Australia, The Middle East and Africa. CAPITAL EXPENDITURES Information about Union Camp's 1994 and estimated 1995 capital expenditures appears on pages 29 and 30 of the Union Camp 1994 Annual Report in the text under the caption "Capital Expenditures" and is incorporated by reference in this Item 1. 6 MARKETING Most of Union Camp's sales, other than its chemical sales, are made in the United States east of the Rocky Mountains, through a variety of distribution methods. Paper and paperboard are sold both directly to converters and through merchants. Packaging materials are sold directly to the industrial and agricultural trades, primarily by Union Camp sales representatives and to a lesser extent through distributors. Wood products are sold through building supply dealers and directly to industrial users. Union Camp chemicals are sold worldwide with most sales being made to customers in the United States and European Economic Community countries. Through various overseas subsidiaries and related companies of Bush Boake Allen, Union Camp sells in the worldwide markets for flavors and fragrances and related products. Chemical products generally are sold directly to industrial users and to a lesser extent through agents and distributors. During 1994, Union Camp's chemical exports from the United States were about 6% of the total chemical sales of Union Camp and its subsidiaries. In addition, approximately 53% of such total chemical sales originated from the production facilities of subsidiaries located outside the United States. In 1994, Union Camp sold in the export market approximately 14% of its production of paper and paperboard. LAND DEVELOPMENT AND HOUSING Union Camp's real estate subsidiary, The Branigar Organization, Inc., is engaged in the development and sale of land for recreational and residential uses in Georgia and North Carolina. Another subsidiary, Transtates Properties Incorporated, is developing sites for commercial properties at highway interchanges in Georgia and South Carolina. 7 COMPETITION All of Union Camp's products are sold in highly competitive markets in which there are many large and well-established companies, of which Union Camp is one. Competition in each of Union Camp's markets is based on price, quality of product, service and production innovation. TIMBER RESOURCES The basic raw material for Union Camp's business is timber, a renewable resource. Union Camp controls approximately 1,558,000 acres of timberlands in Georgia, Alabama, Virginia, Florida, North Carolina and South Carolina, of which approximately 1,526,000 acres are owned and the balance is held under long-term leases. In 1994, Union Camp obtained approximately 34% of its total timber requirements from its own timberlands and purchased the balance from others. Union Camp operates its timberlands on a sustained yield basis. As Union Camp obtains timber from natural stands of its trees, Union Camp replaces the harvested woodlands with a "plantation" reforestation program. Union Camp began reforestation on its timberlands in the mid-1950's and now has approximately 950,000 acres in plantation growth. It planted about 44,000 acres under the plantation program in 1994 and expects to plant approximately 42,000 acres in 1995. These plantation programs result in increased yield per acre. The current growing cycle for most of Union Camp's plantations averages between 22 and 25 years. Union Camp anticipates that for the foreseeable future there will be an adequate supply of timber for its operations from its own lands and other sources. ENVIRONMENTAL PROTECTION ACTIVITIES Union Camp is committed to complying with applicable environmental protection control laws. Wastewater treatment facilities and/or atmospheric emission control equipment at various Union Camp locations, which currently comply with applicable restrictions, may have to be upgraded to comply with new limitations that may be imposed when federal and state permits are renewed and as regulations are promulgated 8 implementing revisions to federal and state air and water pollution control laws. The development of new analytical capability, over a thousand times more sensitive than previously available, revealed minute, trace amounts of dioxin in the pulp, sludge and wastewater of bleached kraft pulp mills in 1985. This discovery led to intensive studies of the health effects of exposure to these trace amounts and, simultaneously, efforts to reduce the minute quantity of this unwanted by-product which is formed during the bleaching process. The Company believes that human exposure to dioxin in the trace concentrations found in the Company's treated wastewater does not cause any health problem. The basis for the Company's statement that human health problems are not caused by the trace quantities of dioxin discharged with its treated wastewater is its internal technical evaluation of various studies and reports concerning dioxin and the known effects from exposure. Meanwhile, Union Camp's continuing research and development efforts in water conservation methods led to the development of a new bleaching process which has important environmental advantages and, as a collateral benefit, virtually eliminates dioxin. In general terms, C-Free'tm' pulp is produced in this new bleaching process developed by Union Camp, through use of ozone as a primary bleaching agent instead of elemental chlorine, which is used in most conventional operations. This development, including related bleaching process improvements in the use of oxygen and in various extraction steps, resulted in the issuance of fourteen patents, with twenty patent applications currently pending. The most significant environmental achievements of this process are dramatic reductions in chlorinated organics, including dioxin and chloroform, and the ability to recycle most of the bleach plant's wastewater, which is not possible when using chlorine because of its corrosive nature. Following is a list of pollutants and a typical amount that each is reduced by the Company's new bleaching process as compared to conventional bleaching processes. 9 APPROXIMATE POLLUTANT PERCENT REDUCTION Chlorinated organics 95-99% Chloroform 99% Biological oxygen demand (BOD) 70-89% Chemical oxygen demand (COD) 70-91% Color 96-99% Wastewater volume 45-86% These data are based on laboratory and pilot plant testing and measurements and ongoing monitoring of the commercial ozone bleaching line which has been installed at the Company's Franklin mill. The process is available for licensing by others in the industry. During 1994, three other companies obtained a license to use the Company's ozone bleaching technology. Union Camp invested approximately $25 million in environmental control facilities in 1994 and approximately $160 million over the past five years. The five year figure includes environmental control elements of a large modernization and expansion program completed in 1991. Over the next two years, it is estimated that environmental control expenditures will average approximately 11% of projected capital spending. Environmental control expenditures divert capital and may increase operating and financing costs. To that extent, they have an adverse impact on earnings. During the next several years, the cost of compliance with environmental control laws will depend upon the application of existing and new regulations and on revisions to existing statutes. Union Camp believes such costs will not adversely affect its competitive position within the paper and chemical industries since most paper and chemical companies have similar air, water and solid waste disposal concerns. To the extent the current dioxin controversy has an adverse effect on the U.S. bleached kraft pulp industries, Union Camp believes it will not be competitively disadvantaged because it believes it has lower than average dioxin production due to the extensive use of oxygen instead of chlorine bleaching at both its bleached kraft mills, and because of its discovery, 10 introduction and commercialization of the proprietary process for producing C-Free'tm' pulp. In August 1992, Union Camp entered into a Consent Order with Region V of the U.S. Environmental Protection Agency (the "EPA") to conduct an investigation to ascertain existing conditions at the Company's Dover, Ohio facility under the Resource Conservation and Recovery Act. The site investigation and risk assessment report was submitted to the EPA in December 1994 and concluded that conditions at the facility pose no significant risk to human health or the environment. The Company has recently received comments from EPA including requests for a considerable amount of additional information. It is possible that the EPA may not concur with certain of the assumptions stated in the report. The ultimate findings of the site investigation and risk assessment report may not be known for some months after responding to the EPA's comments. Although the final disposition of the foregoing investigation cannot now be predicted with any degree of certainty, on the basis of the information presently available to it, Union Camp believes that it will not result in a material adverse effect on its financial condition. EMPLOYEES Union Camp and its subsidiaries employ approximately 19,000 people, approximately 44% of whom are represented by 65 unions under collective bargaining agreements. Contracts involving approximately 3,400 hourly employees were negotiated during 1994 and contracts involving approximately 2,400 hourly employees are subject to renegotiation and renewal in 1995. Union Camp believes that its relationship with its employees is favorable and it has not experienced a strike at any major facility since mid-1974. 11 ITEM 2. PROPERTIES Union Camp's mills and plants, domestic and foreign, are at the locations listed below and primarily produce the items described in the heading for each group. Union Camp's corporate headquarters is in Wayne, New Jersey and its principal research facilities are located in its corporate technology center in Princeton, New Jersey. Except for a few facilities which in the aggregate are not material, Union Camp owns all of the following mills and plants, in some cases subject to financing leases or similar arrangements. PAPER AND PAPERBOARD INDUSTRY SEGMENT Paper and Paperboard The four paper mills located at the sites listed below are the Company's principal facilities. Reference is made to Item 1 of this Report for information regarding their general character, including the products they produce, their productive capacity and the extent of utilization. Eastover, South Carolina Franklin, Virginia Prattville, Alabama Savannah, Georgia Paper Finishing The three converting plants listed below are part of the Company's Fine Paper Division. They convert large rolls of paper produced by the division into folio sheets for commercial printers and office size sheets for home and business use. The operations of the Normal, Illinois plant are scheduled to be transferred to and consolidated with the Franklin, Virginia converting plant during the second quarter of 1995. Franklin, Virginia Normal, Illinois Sumter, South Carolina PACKAGING PRODUCTS INDUSTRY SEGMENT Multiwall Consumer Bags The plants listed below produce multiwall bags of various substrates for products such as cement, seed, feed, pet food, sugar, cookies and popcorn. 12 Denton, Texas Seymour, Indiana Hanford, California Sibley, Iowa Hazleton, Pennsylvania Spartanburg, South Carolina Monticello, Arkansas Tifton, Georgia St. Louis, Missouri Plastic Products The plants listed below produce polyethylene packaging and roll stock for packaging a variety of agricultural and industrial products and such consumer items as ice, salt, tissues and disposable diapers. Griffin, Georgia Monticello, Arkansas Tomah, Wisconsin Corrugated Containers The plants listed below use a corrugator to manufacture corrugated sheets by gluing a fluted paperboard material called medium between two or more flat facings of linerboard. These corrugated sheets are then sold or made into boxes or corrugated containers in a separate operation at these plants. Ashbourne, Republic of Ireland Lakeland, Florida Atlanta, Georgia Lakeland, Florida Auburn, Maine Las Palmas de Gran Canaria, Spain Bayamon, Puerto Rico Morristown, Tennessee Chicago, Illinois Newtown, Connecticut Cleveland, Ohio Rancagua, Chile Decatur, Alabama Richmond, Virginia Denver, Colorado San Antonio, Texas Gandia, Spain Savannah, Georgia Houston, Mississippi Spartanburg, South Carolina Kalamazoo, Michigan Trenton, New Jersey Kansas City, Missouri Washington, Pennsylvania Lafayette, Louisiana 13 Finishing The plants listed below use equipment that converts corrugated sheets into boxes or laminates a printed sheet of paper to one panel of a box or applies a wax coating to a finished box. Conway, Arkansas Eaton Park, Florida Edinburg, Texas Flint, Michigan Los Angeles, California Kansas City, Missouri Statesboro, Georgia Graphics The plants listed below use a process that adheres medium to a single linerboard sheet to produce singleface and then glues a printed label to the singleface. These sheets are then made into boxes at these plants. Conway, Arkansas Stockton, California Solid Fibre Products The plant listed below manufactures solid fibre sheets by gluing two or more flat linerboard sheets together. These solid fibre sheets are then made into boxes or solid fibre containers in a separate operation. Lancaster, Pennsylvania Folding Cartons and Gravure Printing The plants listed below produce folding cartons with high quality gravure and lithographic printing which are used to package cosmetics, toiletries, pharmaceutical and food products. Clifton, New Jersey Englewood, New Jersey Moonachie, New Jersey 14 WOOD PRODUCTS INDUSTRY SEGMENT Lumber The sawmills listed below produce wood chips, small timbers and/or dimension lumber. Chapman, Alabama Folkston, Georgia Franklin, Virginia Meldrim, Georgia Opelika, Alabama Seaboard, North Carolina Plywood The plants listed below produce veneer and/or plywood panels for sale primarily for industrial applications including furniture, truck trailers and sound equipment. Chapman, Alabama Thorsby, Alabama Particleboard The plant listed below uses wood shavings and other wood residues to produce particleboard which is cut to size and sold primarily to the furniture industry. Franklin, Virginia CHEMICAL INDUSTRY SEGMENT The Chemical industry segment has two operating units, Bush Boake Allen Inc. and the Chemical Products Division. The facilities listed below are part of Bush Boake Allen Inc. which produces aroma chemicals, flavors, fragrances, essential oils, spices and seasonings. The process used and products produced by each facility are shown below.
LOCATION PRODUCTS PROCESS Carrollton, Texas Seasonings Compounding, i.e., mixing and blending Chicago, Illinois Flavors, Vanilla Extraction and Compounding Extract Melbourne, Australia Flavors, fragrances Extraction and Compounding and essential oils
15
LOCATION PRODUCTS PROCESS Jacksonville, Florida Terpene derivatives Chemical Processing and aroma chemicals Johannesburg, South Flavors and Compounding Africa Fragrances Jurong, Singapore Flavors and Compounding Fragrances London, England Flavors and Compounding Fragrances Long Melford, England Spices and Essential Extraction and Oils Compounding Madras, India Flavors and Compounding Fragrances Norwood, New Jersey Fragrances Compounding Sydney, Australia Flavors Compounding Widnes, England Aroma chemicals Chemical Processing Witham, England Flavors Compounding
The chemical processing facilities listed below are part of the Chemical Products Division which produces a variety of wood- based and non-wood-based chemicals. Shown below are the principal products of each facility.
LOCATION PRODUCTS Bedlington, England Ink & Adhesive resins Chester-le-Street, England Tall oil derivatives & adhesive resins Dover, Ohio Adhesive resins, plasticizers and esters Savannah, Georgia Tall oil derivatives, ink and adhesive resins Valdosta, Georgia Printing ink resins
In addition, in the Chemical industry segment, Union Camp has small consolidated subsidiary manufacturing (compounding and mixing) facilities at the following locations: 16 Kingston, Jamaica; Auckland, New Zealand; Istanbul, Turkey; Knislinge, Sweden; Bangkok, Thailand; LaSalle, Canada and Bogor, Indonesia. The aggregate 1994 revenue from these small facilities was approximately $23 million. Also see Item 1 for a discussion of Union Camp's timberland holdings used in Union Camp's Paper and Paperboard and Wood Products industry segments. ITEM 3. LEGAL PROCEEDINGS In addition to the proceeding described below, the Company is also a party to other legal proceeding incidental to its business. Although the final outcome of any legal proceeding is subject to many variables and cannot be predicted with any degree of certainty, the Company presently believes there are no pending legal proceedings to which Union Camp or any of its subsidiaries is a party which will have a material adverse effect on the financial position or results of operations of the Company and its subsidiaries taken as a whole. While Union Camp has been designated a potentially responsible party at a number of hazardous waste sites pursuant to the Comprehensive Environmental Response and Compensation Liability Act and similar state laws, the Company believes that its designation and the pending legal proceedings will not have a material adverse effect on the financial position or results of operations of the Company and its subsidiaries taken as a whole. The bases for the Company's opinion include: (i) the Company's experience defending or settling similar matters, the opinions of counsel representing the Company in such matters and an assessment, to the extent possible, of the claims made against and the defenses available to the Company; and (ii) in the case of environmental claims, an analysis of reasonable estimates, to the extent possible, of the cost of site investigation studies and remedial activities and the existence of other financially viable, potentially responsible parties. No credit has been assumed for any potential insurance reimbursement to the Company when the availability of the insurance coverage is not established. 17 The Company is unable to estimate environmental costs/liabilities for several reasons. In some cases, it has not been established that the Company is a potentially responsible party. In other cases, it is uncertain whether the Company will seek, be offered or accept a de minimis settlement with payment of a premium over otherwise estimated liability in order to secure full release. In many instances, the cost of remediation is speculative because remedial investigations and feasibility studies have not yet been contracted for, have not been completed or, alternatively, have been completed but acceptable remediation has not been chosen. Some settled cases also have "reopeners" for contamination discovered after full implementation of the clean-up remedy. Finally, insurance reimbursement is usually uncertain until matters are finally resolved. In September, 1993, a Company facility in Jacksonville, Florida received a Notice of Violation (the "NOV") from the EPA alleging violation of the EPA's rules governing the burning of a hazardous waste in boilers (the Boiler and Industrial Furnace Rules or "BIF Rules") in connection with the burning by this Jacksonville facility of various turpentine fractions as fuels. In response to the NOV, the Company met with the EPA in November, 1993 to support the facility's position that burning turpentine fractions is not covered by the BIF Rules because the materials burned are not wastes, but historically have been sold as products or burned as fuel when the product's fuel value exceeded its market value. By letter dated February 21, 1995, the EPA advised the Company that it concurs with the Company's view that the turpentine fractions are product fuels and not waste-derived fuels. As such, the EPA agrees that this practice does not violate the BIF Rules. In April 1994, the company's facility in Savannah Georgia received a Notice of Violation and Opportunity to Show Cause ("NOV") from the EPA alleging violations of the EPA's rules governing the treatment of hazardous waste. The allegations involve the applicability of these regulations to the removal of granular impurities from the pulping liquor manufacturing process at the Savannah facility. The Company met with EPA shortly after the NOV was received to support the Company's position that the removal of the granular materials 18 is not covered by the EPA's rules governing the handling of hazardous waste. The Company has not received a response from the EPA to date. While the EPA has not instituted any enforcement action and has not sought penalties in connection with the NOV, there can be no assurance that it will not ultimately do so. The Company remains a defendant in approximately 89 suits filed in federal court in Alabama between October 1990 and January 1992 in which construction workers allege they were exposed to asbestos while performing work at various plant sites throughout Alabama and elsewhere. The many defendants named in each of these suits include owners of the premises where the work was being done, asbestos manufacturers whose equipment was being installed, distributors of asbestos containing products, insurance companies, and a safety equipment manufacturer. Union Camp is included in the premises owner category of defendants. These suits are presently under the jurisdiction of the U.S. District Court for the Eastern District of Pennsylvania and are part of a consolidated proceeding, styled In Re: Asbestos Products Liability Litigation (No. VI), Civil Action No. MDL 875, involving all asbestos cases that are pending in federal courts nationwide. Union Camp was named as a defendant in two law suits brought in Texas state court during the third quarter of 1992 and as a defendant in a third lawsuit brought in Texas state court during the fourth quarter of 1993; approximately 4,400 plaintiffs are currently parties to these law suits. The plaintiffs are, for the most part, construction workers resident in Alabama who allege they sustained personal injuries as a result of exposure to asbestos while performing work at various plant sites in Alabama. Approximately 140 of these plaintiffs claim to have worked on the Company's premises as employees of independent contractors at the Company's Prattville, Alabama mill. These cases are similar to the 89 cases in the paragraph immediately above. Approximately 50 defendants have been named in the cases in Texas. They include asbestos manufacturers, distributors of asbestos-containing products, insurance companies, a manufacturer of safety equipment, parties who allegedly misrepresented the dangers of asbestos exposure, and the owners of the premises where the plaintiffs allege they were working when they were exposed to 19 asbestos. Union Camp is included in the premises owner category of defendants. The amounts of damages sought is unspecified. During the third quarter of 1994 the Company orally agreed in principle with attorneys representing virtually all the plaintiffs to settle the cases pending in Texas for an amount which is not material to the Company. The settlement would also include the dismissal of most of the 89 cases originally filed in federal court in Alabama which are currently part of the Multi-District Litigation in the federal court in Philadelphia. However, settlement agreements have not been finalized at this time. In the first quarter of 1995 the Company was named as one of approximately 60 defendants in a lawsuit filed, but not yet served, by the same attorneys in Texas state court on behalf of over 2,000 additional plaintiffs who, like those in the earlier cases, allege that they were exposed to asbestos while performing work at various plant sites in Alabama. The Company does not believe that these pending legal proceedings in Alabama and Texas are material. An estimate of potential liability cannot be made at this time. In its Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, the Company previously reported that a subsidiary of the Company was added as a defendant in approximately 7,000 asbestos-related cases which had been pending in Mississippi state court for several years. During the third quarter of 1991, this subsidiary was named as a defendant in additional asbestos-related consolidated actions so that the total number of such cases was over 7,000. During the second quarter of 1992, the subsidiary was named in additional similar consolidated actions so that it was a defendant in excess of 10,000 such cases. The subsidiary was named in these cases because it allegedly was part of the chain of distribution of asbestos-containing products to facilities where the plaintiffs worked. The period of alleged exposure is 1930 through the present. The subsidiary did not manufacture asbestos or asbestos-containing products. Approximately 80 defendants have been named in each of these suits, including 20 asbestos manufacturers, distributors, an insurance company and a manufacturer of safety equipment. In March 1993, the Company's subsidiary reached agreement to settle approximately 10,500 of these cases, with the settlement being funded by the Company's insurance carrier. This subsidiary is a defendant in approximately 7,000 cases, of which approximately 5,000 were filed subsequent to the settlement. An estimate of potential liability cannot be made at this time. However, the Company does not believe that these pending legal proceedings are material to it. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS Not applicable. EXECUTIVE OFFICERS OF UNION CAMP The executive officers of Union Camp as of March 1, 1995 were as follows:
NAME AGE POSITION & OFFICES WITH UNION CAMP W. Craig McClelland......60 Chairman of the Board and Chief Executive Officer; Director Jerry H. Ballengee........57 President and Chief Operating Officer; Director James M. Reed.............62 Vice Chairman of the Board and Chief Financial Officer; Director William H. Trice..........61 Executive Vice President Russell W. Boekenheide....64 Senior Vice President Charles H. Greiner, Jr....47 Senior Vice President John T. Heald, Jr.........49 Senior Vice President Robert E. Moore...........60 Vice President and Comptroller Dirk R. Soutendijk........56 Vice President, General Counsel and Secretary Donald W. Barney..........54 Vice President and Treasurer
21 The Company's Articles of Incorporation provide that the Board of Directors shall be divided into three classes, as nearly equal in size as possible. Each year the directors of one class are elected to serve terms of three years. Executive officers are elected for one year and until their successors are elected. There are no family relationships among directors and executive officers. All of the executive officers listed above have held their present positions with Union Camp for the past five years, except as follows. Mr. McClelland became Chairman of the Board and Chief Executive Officer in July 1994. Previously, he had been President and Chief Operating Officer since December 1989. He was an Executive Vice President from November 1988 to December 1989. Mr. Ballengee became President and Chief Operating Officer in July 1994. Previously, he was an Executive Vice President since November 1988. Mr. Reed was named Vice Chairman of the Board and Chief Financial Officer in April 1993. Previously, he had been an Executive Vice President and Chief Financial Officer. Mr. Greiner became Senior Vice President and General Manager, Fine Paper Division in December 1993. He had been a Vice President and General Manager of the Fine Paper Division since April 1991. Prior to that, he was General Manager of Fine Paper Division Sales and Marketing. Mr. Heald became Senior Vice President - Converting Group in June 1993. Prior to that, he had been a Vice President and General Manager of the Container Division since November 1988. Mr. Barney became Vice President and Treasurer in December 1992. Previously, he was the Treasurer since November 1988. 22 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information in response to the disclosure requirements specified by this Item 5 appears under the captions and on the pages of the Union Camp 1994 Annual Report indicated below and is incorporated by reference in this Item 5.
ANNUAL ANNUAL REPORT REPORT REQUIRED INFORMATION CAPTION PAGE Principal markets for Financial Review- 31 Common Stock; high and low Quarterly sales prices Information Dividends per share Financial Review- 31 declared Quarterly Information Approximate number of Financial Review- 31 shareholders of Quarterly recordDecember 31, 1994 Information
ITEM 6. SELECTED FINANCIAL DATA Information in response to the disclosure requirements specified by this Item 6 appears on pages 44 and 45 of the Union Camp 1994 Annual Report and is incorporated by reference in this Item 6. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information in response to the disclosure requirements specified by this Item 7 appears in the text under the caption "Financial Review" on pages 26 to 30 of the Union Camp 1994 Annual Report and in incorporated by reference in this Item 7. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information in response to the disclosure requirements specified by this Item 8 appears on pages 33 to 42 of the Union Camp 1994 Annual Report and is incorporated by reference in this Item 8. 23 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information in response to the disclosure requirements specified by this Item 10, with respect to (i) the directors of Union Camp, appears under the caption "Proposal 1--Election of Directors" on pages 1 to 6 of the Union Camp 1995 Proxy Statement, (ii) the executive officers of Union Camp, appears under the caption "Executive Officers of Union Camp" in Part I of this Annual Report on Form 10-K and (iii) Section 16(a) of the Securities Exchange Act of 1934, as amended, appears under the caption "Section 16(a) Reporting" on page 19 of the Union Camp 1995 Proxy Statement. Such information is incorporated by reference in this Item 10. ITEM 11. EXECUTIVE COMPENSATION Information in response to the disclosure requirements specified by this Item 11 appears under the captions "Board of Directors and Committees", "Executive Compensation", "Retirement Plans" and "Severance Arrangements" on pages 6 to 7, 9 to 12, 17 to 18, and 18 respectively, of the Union Camp 1995 Proxy Statement. Such information is incorporated by reference in this Item 11. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information in response to the disclosure requirements specified by this Item 12 appears under the captions "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management as of December 31, 1994" on page 8 and 9 of the Union Camp 1995 Proxy Statement and is incorporated by reference in this Item 12. 24 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information in response to the disclosure requirements specified by this Item 13 appears in the second footnote under the caption "Proposal 1--Election of Directors" on page 6 of the Union Camp 1995 Proxy Statement and is incorporated by reference in this Item 13. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Index of financial statements The following financial statements are included at the indicated page in the Union Camp 1994 Annual Report and are incorporated by reference in this Annual Report on Form 10-K: PAGE Consolidated Income for the years ended December 31, 1994, 1993 and 1992 .............. 33 Consolidated Balance Sheet--December 31, 1994 and 1993 ................................. 34 Consolidated Statement of Cash Flows for the years ended December 31, 1994, 1993 and 1992 ................................. 35 Notes to Consolidated Financial Statements.. 36-42 Report of Independent Accountants ............. 32 (2) The following schedules, for the three years ended December 31, 1994, to the Financial Statements are included beginning at the indicated page in this Annual Report on Form 10-K: 25 PAGE Report of Independent Accountants on Financial Statement Schedule...................... 31 Schedule VIII--Valuation and Qualifying Accounts.. 32 All schedules other than those indicated above are omitted because of the absence of the conditions under which they are required or because the required information is set forth in the financial statements and their notes. (3) All exhibits, including those incorporated by reference. NO. DESCRIPTION 3.1 Copy of Articles of Incorporation of Union Camp, as amended May 4, 1990 (filed as Exhibit 3(b) to Union Camp's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1990 and incorporated herein by reference). 3.2 Copy of By-Laws of Union Camp, as amended April 27, 1993 (filed as Exhibit 3(b) to Union Camp's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1993 and incorporated herein by reference). 4 Union Camp hereby agrees to furnish copies of instruments defining the rights of holders of long-term debt of Union Camp and its consolidated subsidiaries to the Commission upon its request. 10.1 Copy of Union Camp's 1982 Stock Option Plan, as amended November 29, 1988 (filed as Exhibit 10(b) to Union Camp's Annual Report on Form 10-K for the year ended December 31, 1988 and incorporated herein by reference).* 10.2 Copy of Union Camp's 1989 Stock Option and Stock Award Plan, as amended November 30, 1993 (filed as Exhibit 10.2 to Union Camp's Annual Report on Form 26 10-K for the year ended December 31, 1993 and incorporated herein by reference).* 10.3 Copy of Union Camp's Executive Annual Incentive Plan (filed as Exhibit 10(c) to Union Camp's Annual Report on Form 10-K for the year ended December 31, 1988 and incorporated herein by reference).* 10.4 Copy of Union Camp's Policy Group Long-Term Incentive Plan (filed as Exhibit 19(b) to Union Camp's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993 and incorporated herein by reference).* 10.5 Copy of Union Camp's Directors' Fees Deferral Plan (filed as Exhibit 10(d) to Union Camp's Annual Report on Form 10-K for the year ended December 31, 1982 and incorporated herein by reference).* 10.6 Copy of Union Camp's Retirement Plan for Outside Directors as amended November 26, 1991 (filed as Exhibit 10(g) to Union Camp's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference).* 10.7 Copy of form of Severance Agreement between Union Camp and certain executive officers of Union Camp (filed as Exhibit 10(g) to Union Camp's Annual Report on Form 10-K for the year ended December 31, 1988 and incorporated herein by reference), as amended by Amendment No. 1 to Severance Agreement (filed as Exhibit 19 to Union Camp's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1990 and incorporated herein by reference); as further amended by Amendment No. 2 to Severance Agreement (filed as Exhibit No. 19(a) to Union Camp's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1991 and incorporated herein by reference).* 10.8 Copy of Union Camp's Stock Compensation Plan for Non-Employee Directors as amended January 31, 1995.* 27 10.9 Copy of Agreement between Union Camp and James M. Reed dated May 14, 1991 (filed as Exhibit 19(c) to Union Camp's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1991 and incorporated herein by reference).* 10.10 Copy of Union Camp Corporation Supplemental Retirement Income Plan for Executive Officers as amended and restated April 26, 1994 (filed as Exhibit 10.1 to Union Camp's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1994 and incorporated herein by reference).* 10.11 Description of post-retirement office arrangements between Union Camp Corporation and Raymond E. Cartledge (filed as Exhibit 10.2 to Union Camp's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 and incorporated herein by reference).* 11 Statement re computation of per share earnings. 13 The portion of Union Camp Corporation's 1994 Annual Report to security holders which is incorporated by reference into this filing. 21 List of subsidiaries of Union Camp. 23 Consent of Independent Accountants. 27 Financial Data Schedule. *Denotes a management contract or compensatory plan or arrangement required to be filed as exhibits pursuant to Item 14(c) of Form 10-K. (b) Reports on Form 8-K. No Current Report on Form 8-K was filed by the Registrant during the quarter ended December 31, 1994. 28 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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, IN THE TOWNSHIP OF WAYNE, AND STATE OF NEW JERSEY, ON THE 30TH DAY OF MARCH, 1995. UNION CAMP CORPORATION By /S/ W. Craig McClelland --------------------------- (W. CRAIG MCCLELLAND) Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities stated below on March 30, 1995. SIGNATURE TITLE /S/ W. Craig McClelland Chairman of The Board and --------------------------- Chief Executive Officer and (W. Craig McClelland) Director (Principal Executive Officer) /S/ Jerry H. Ballangee President and Chief Operating --------------------------- Officer and Director (Jerry H. Ballengee) /S/ James M. Reed. Vice Chairman of the Board, --------------------------- Chief Financial Officer and (James M. Reed) Director (Principal Financial Officer) /S/ Robert E. Moore Vice President and Comptroller --------------------------- (Principal Accounting Officer) (Robert E. Moore) 29 SIGNATURE TITLE --------------------------- Director (George D. Busbee) /S/ Raymond E. Cartledge Director --------------------------- (Raymond E. Cartledge) /S/ Sir Colin Corness Director --------------------------- (Sir Colin Corness) /S/ Robert D. Kennedy Director --------------------------- (Robert D. Kennedy) /S/ Gary E. MacDougal Director --------------------------- (Gary E. MacDougal) /S/ Ann D. McLaughlin Director --------------------------- (Ann D. McLaughlin) /S/ James T. Mills Director --------------------------- (James T. Mills) /S/ George J. Sella, Jr. Director --------------------------- (George J. Sella, Jr.) /S/ Ted D. Simmons Director --------------------------- (Ted D. Simmons) 30 Price Waterhouse LLP 4 Headquarters Plaza North P.O. Box 1965 Morristown, NJ 07962-1965 Telephone (201) 540-6980 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To The Board of Directors of Union Camp Corporation Our audits of the consolidated financial statements referred to in our report dated February 7, 1995 appearing on page 32 of the 1994 Annual Report to Stockholders of Union Camp Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10- K) also included an audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /S/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Morristown, New Jersey February 7, 1995 31 SCHEDULE VIII UNION CAMP CORPORATION AND CONSOLIDATED SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS For The Years Ended December 31, 1994, 1993 and 1992 (thousands of dollars)
Column A Column B Column C Column D Column E ------------------------------------------------------------------------------------------------------------------------------------ Additions ----------------------- Charged Balance at Charged to (Credited) Deductions Balance at Beginning Costs and to Other from End Description of Year Expenses(1) Accounts(2) Reserves(3) of Year ------------------------------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1994: Reserves deducted from assets to which they apply: Reserve for doubtful accounts ................. $12,702 $5,489 $121 $4,317 $13,995 Reserve for discounts and allowances ................................... 1,924 600 - - 2,524 ------- ------ ---- ------ ------- Total ..................................... $14,626 $6,089 $121 $4,317 $16,519 ======= ====== ==== ====== ======= YEAR ENDED DECEMBER 31, 1993: Reserves deducted from assets to which they apply: Reserve for doubtful accounts ................. $12,643 $4,235 $(359) $3,817 $12,702 Reserve for discounts and allowances ................................... 1,924 - - - 1,924 ------- ------ ---- ------ ------- Total ..................................... $14,567 $4,235 $(359) $3,817 $14,626 ======= ====== ==== ====== ======= YEAR ENDED DECEMBER 31, 1992: Reserves deducted from assets to which they apply: Reserve for doubtful accounts ................. $10,841 $5,101 $(362) $2,937 $12,643 Reserve for discounts and allowances ................................... 2,125 (201) - - 1,924 ------- ------ ---- ------ ------- Total ..................................... $12,966 $4,900 $(362) $2,937 $14,567 ======= ====== ==== ====== =======
NOTES: (1) Discounts and allowances are charged to income as incurred and not to the reserve. The reserve is adjusted at the end of each period, by a charge or credit to income, for the estimated discounts and allowances applicable to the accounts receivable then outstanding. (2) Foreign currency translation adjustments. (3) Uncollectible accounts written off, net of recoveries. 32 EXHIBIT INDEX
SEQUENTIALLY NUMBERED NO. DESCRIPTION PAGE 3.1 Copy of Articles of Incorporation of Union Camp, as amended May 4, 1990 (incorporated herein by reference). 3.2 Copy of By-Laws of Union Camp, as amended April 27, 1993 (incorporated herein by reference). 10.1 Copy of Union Camp's 1982 Stock Option Plan, as amended November 29, 1988(incorporated herein by reference). 10.2 Copy of Union Camp's 1989 Stock Option Award Plan, as amended November 30, 1993(incorporated herein by reference). 10.3 Copy of Union Camp's Executive Annual Incentive Plan (incorporated herein by reference). 10.4 Copy of Union Camp's Policy Group Long-Term Incentive Plan (incorporated herein by reference). 10.5 Copy of Union Camp's Directors' Fees Deferral Plan (incorporated herein by reference). 10.6 Copy of Union Camp's Retirement Plan for Outside Directors as amended November 26, 1991 (incorporated herein by reference). 10.7 Copy of form of Severance Agreement between Union Camp and certain executive officers of Union Camp (incorporated
SEQUENTIALLY NUMBERED NO. DESCRIPTION PAGE herein by reference), as amended by Amendment No. 1 to Severance Agreement (incorporated herein by reference); as further amended by Amendment No. 2 to Severance Agreement (incorporated herein by reference). 10.8 Copy of Union Camp's Stock Compensation 37 Plan for Non-Employee Directors as amended January 31, 1995. 10.9 Copy of Agreement between Union Camp and James M. Reed dated May 14, 1991 (incorporated herein by reference). 10.10 Copy of Union Camp Corporation Supplemental Retirement Income Plan for Executive Officers as amended and restated April 26, 1994 (incorporated herein by reference). 10.11 Description of post-retirement office arrangements between Union Camp Corporation and Raymond E. Cartledge (incorporated herein by reference). 11 Statement re computation of per share 40 earnings. 13 The portion of Union Camp Corporation's 41 1994 Annual Report to security holders which is incorporated by reference into this filing. 21 List of subsidiaries of Union Camp. 91 23 Consent of Independent Accountants. 93 27 Financial Data Schedule. 94
STATEMENT OF DIFFERENCES The registered trademark symbol shall be expressed as....'tm'
EX-10 2 EXHIBIT 10.8 EXHIBIT 10.8 STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS OF UNION CAMP CORPORATION 1. The purpose of the Stock Compensation Plan for Non-Employee Directors (the "Plan") of Union Camp Corporation (the "Corporation") is to provide competitive remuneration to the Corporation's non-employee directors so as to maintain the Corporation's ability to attract and retain highly qualified individuals to serve on the Board of Directors and to relate the compensation of non-employee directors more closely to the interests of the shareholders of the Corporation by increasing the amount of stock ownership of the Corporation held by non-employee directors. 2. This Plan shall become effective on April 24, 1990, provided the Plan is approved by shareholders on such date. If this Plan is not so approved, the Plan shall not become effective. 3. If the Plan becomes effective, each member of the Board of Directors who is not an employee of the Corporation immediately after each annual meeting of the stockholders of the Corporation, beginning with the 1990 Annual Meeting, shall receive whole shares of Common Stock of the Corporation having a fair market value of approximately $5,000. The number of shares of Common Stock each non- employee director shall be entitled to receive following each annual meeting thereafter shall be the number specified in an amendment to the Plan adopted as an Appendix thereto by the Board of Directors at any time prior to, and in the same calendar year as, such annual meeting; provided, however, if the Plan is not so amended, each non-employee director shall receive whole shares of Common Stock having a fair market value of approximately $5,000. If the Plan is so amended, each non-employee director shall receive an equal number of whole shares of Common Stock the fair market value of which shall not exceed $40,000 per calendar year. The total number of shares that may be awarded under this Plan is 150,000, provided that if during any fiscal year of the Corporation the shares of Common Stock issued and outstanding at the beginning of such fiscal year increase or decrease by more than 10% by reason of a stock dividend, stock split, reverse split, subdivision, merger, recapitalization, consolidation (whether or not the corporation is the surviving corporation), combination or exchange of shares, separation, reorganization, liquidation or like action, the total number of shares which may be granted under this Plan shall be correspondingly adjusted. The shares of stock awarded under this Plan shall be delivered to each non-employee director as soon as practicable following the applicable annual meeting. 4. The Plan shall be administered by the Chief Executive Officer of the Corporation (the "CEO") whose interpretation and decision as to any question arising under the Plan shall be conclusive. Recommendations as to annual awards under the Plan may be made by the CEO to the Board of Directors. In making any such recommendation, the CEO shall consider (a) the performance of the Corporation and (b) the remuneration paid to non-employee directors by other corporations of similar size. 5. All shares of Common Stock of the Corporation to be used for purposes of this Plan shall either be newly issued stock or stock purchased by the Corporation for the benefit of each non-employee Director or both. The fair market value of newly issued or purchased Common Stock shall be the mean of the high and low sales prices for the Common Stock as reported on the Composite Tape for New York Stock Exchange issues on the trading date preceding the applicable annual meeting of stockholders of the Corporation or if there is no sale of the shares on such Exchange on said date, the mean of the bid and asked prices on such Exchange at the close of the market on such date shall be deemed to be the fair market value of the shares. 6. This Plan shall be construed in accordance with the laws of the Commonwealth of Virginia. The Plan may be amended, suspended or terminated at any time by action of the Board of Directors of the Corporation, provided no amendment may (a) increase the maximum number of shares which may be awarded under this Plan, (b) increase the fair market value of awards to an annual amount greater than $40,000 for each non-employee director, (c) change the eligibility for awards to individuals other than non-employee directors, or (d) more than once every six months, change the number of shares of Common Stock each non-employee director shall be entitled to receive following each annual meeting. -2- AMENDMENT JANUARY 31, 1995 TO STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS OF UNION CAMP CORPORATION Appendix Number Four Immediately after the 1995 Annual Meeting of the Stockholders of the Corporation each member of the Board of Directors of the Corporation who is not an employee of the Corporation shall receive under the Plan whole shares of Common Stock of the Corporation having a fair market value of approximately $9,000. EX-11 3 EXHIBIT 11 EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
1994 1993 1992 ---- ---- ---- Net Income ($000) ................. $113,510 $50,043 $76,233 Weighted Average Common Shares Outstanding .............. 69,954,082 69,740,458 69,604,174 Earnings Per Share ................ $1.62 $0.72 $1.10 Weighted Average Common Shares Outstanding Including Common Stock Equivalents - Primary Basis...... 70,325,502 70,048,604 70,131,230 Primary Earnings Per Share ........ $1.61 $0.71 $1.09 Weighted Average Common Shares Outstanding Including Common Stock Equivalents - Fully Diluted Basis ................... 70,326,104 70,189,459 70,131,230 Fully Diluted Earnings Per Share .. $1.61 $0.71 $1.09
EX-13 4 EXHIBIT 13 Packaging group The Packaging Group is Union Camp's largest operating unit, accounting for roughly half our total sales. The Group is one of the country's largest integrated manufacturers of linerboard, kraft paper and packaging and one of the largest U.S. linerboard exporters. It's a major manufacturer of corrugated containers, heavy-duty shipping sacks and other packaging. Kraft Paper and Board Division. Three of the Group's four packaging divisions are supplied by mills in Savannah, Georgia and Prattville, Alabama, which produce nearly 1.8 million tons of linerboard a year. The Company's divisions use about two thirds of that output, with the rest sold in both U.S. and international markets. The Container Division, the largest of the Company's converting operations, makes corrugated containers, and solid fiber shipping containers and slipsheets. These products are used for packaging virtually every product manufactured or grown in the world--from chemicals to appliances to food products. Union Camp is also entering the corrugated pallet business--products which perform like wood, but offer a range of safety, cost and environmental advantages. The Flexible Packaging Division, the Packaging Group's second largest operation, produces industrial bags made from paper or film and other non-rigid packaging. Multi-wall and consumer bags are made with two or more layers of paper to provide strength and offer a high-quality printing surface. The Folding Carton Division produces consumer packaging for the cosmetics, toiletries, pharmaceutical and food products industries. Leadership is based on quality structural and graphic design, as well as advanced printing, stamping, embossing and die cutting. The International Packaging Division operates corrugated container plants in Puerto Rico, Chile, Spain, Ireland and the Canary Islands, and is a minority partner with Zucamor S.A., a leading container business in Argentina. 9 1994 results led by record performances in linerboard, strong packaging shipments... Performance for the Packaging Group was led by record sales and a dramatic increase in operating earnings in linerboard, mainly resulting from higher prices. The Packaging Divisions within the Group had a sales growth of 10% on strong demand. Although the Container Division experienced another record year in volume, operating income was down due mainly to the closing of the Centerville, Ohio plant. Flexible Packaging's performance was affected by lower margins in its industrial/consumer paper operations. International packaging businesses, however, turned in strong operating earnings on an 11% increase in sales. 11 Fine Paper Demand is growing ...operating rates are in the mid-90's...backlogs are tightening. Prices are moving toward their 1989 peak... and new near-term capacity additions should be limited. The Fine Paper Division produces uncoated bleached paper, market pulp and coated and uncoated bleached paperboard. Its main business is uncoated free sheet used for business communications and direct mail. The Division also sells high-quality coated and uncoated paperboard for such premium applications as greeting cards and book covers. Manufacturing is centered in two mills: Franklin, Virginia, and Eastover, South Carolina, two of the most efficient operations in the industry. Eight paper machines have a capacity of over 1.3 million tons per year. This flexible, low-cost and high-quality system includes three machines for utility grades, three for value-added papers and two for premium paperboard. Flexibility allows positioning in the highest-opportunity markets. The Division also operates facilities that produce packaged sheet products for printing and business communications--one at the Franklin mill and another in Sumter, South Carolina. In addition, the Division produces about 100,000 tons of bleached market pulp which is sold in both U.S. and international markets. About half of the Fine Paper Division's production is sold directly to manufacturers, who convert it into envelopes, computer paper and direct mail. Union Camp is the largest envelope paper producer in the world. The Division has recently introduced recycled-content papers into a number of its markets. Business and printing papers are sold through paper distributors throughout the U.S. and Canada. An area of increased focus is the Division's line of home and office business papers for copiers, laser and ink jet printers and plain-paper faxes. These growing product lines are sold under the trademark brands of Yorktown'r', Jamestown'r', Union Camp Top Gun'tm', and Lightning'tm' Laser Opaque. Among the newest product successes is Great White'tm' Recycled Content Xerographic paper, which contains 25% post-consumer fiber. 13 Rising prices plus operating strength equal performance improvement...total tons shipped were up 4% for the year. The Division's total sales were up 7% to $824 million. The results reflected a mix of a difficult first half of the year and a very strong second half. In the first six months... over capacity and severe winter weather hurt the market. In the second six months...demand began to rise, as imports leveled and inventories declined. Prices rebounded strongly. Uncoated free sheet shipments rose 6% during the year...market pulp volume was up 15%, with strong pricing. Board shipments were down 6%, but prices recovered in the second half of the year. 15 Chemical group Union Camp's Chemical Group is made up of two separate organizations--Bush Boake Allen Inc. and the Chemical Products Division. Bush Boake Allen is one of the world's leading producers of aroma chemicals and manufactures a wide range of compounded flavors and fragrances, natural extracts and essential oils. The Chemical Products Division converts by-products of the pulping process into a variety of chemical products--tall oil fatty acids, rosin acid, dimer acid, rosin-based ink resins and adhesive tackifiers and polyamide adhesives. BBA has operations worldwide. The Company produces aroma chemicals at large-scale distillation plants in the U.K. and U.S. and compounded flavors and fragrances in countries around the world. Chemical Products, with plants in the U.S. and U.K., primarily converts the by-products of the pulping process into higher-value materials for world markets. It's one of the largest wood-based chemical operations in the forest products industry. The main markets for its key products, rosins and fatty acids, and their upgraded derivatives, are adhesives, inks, coatings, lubricants, soaps and personal care products. 17 Chemical markets benefiting from global economic gains...Economic recovery in industrialized countries is strengthening BBA's flavor and fragrance markets, with gains throughout the year in all regions. Highlights of world market growth...Asia/Pacific, where demand is growing for flavors used in beverages, dairy products and prepared foods and for aroma chemicals used in detergents, soaps, air fresheners and fragrances. Flavor and fragrance markets were both strong in the Americas. Chemical Products markets improved along with world economies. Commodity and performance chemical prices gained as both the faster-growing adhesive and ink markets showed solid year-to-year growth. BBA sales increased 11% to $375 million in 1994, while operating income rose 24% for the year. Key factors...strong aroma chemical sales and firming prices throughout the year, growing demand for proprietary musk grades, production increases at the Widnes plant, the competitive advantage of leading technologies in fragrance and flavor compounding and geographic expansion. Chemical Products sales hit $200 million, an 11% gain, while operating income was up strongly. Key factors in two years of improvement...growing world markets, better pricing and the new service and efficiency impacts of the Division's reorganization. Strong markets, operational gains drive improvement... 18 Expansion, process improvements help meet growing global demand...While continuing its aggressive global expansion, BBA is also upgrading operations at both its Widnes, U.K. and Jacksonville, Florida aroma chemical plants to meet growing market demand for synthetic and musk grades. Chemical Products continued the operational cost control, communication and organizational improvements that turned the business around last year. Modernizations and expansions in the U.S. and U.K. improved both production efficiency and quality. New rosin resin and polyamide resin capacity in the U.S. and the U.K. will help meet growing market demand worldwide. BBA has well-balanced sales in major geographic and economic markets. Key to strategies...an aggressive international presence to create a network of local service in growing markets. New locations in the past five years...Bulgaria, China, the Czech Republic, Ireland, Mexico, Pakistan, Poland, Russia and the United Arab Emirates. BBA now has a presence in 37 countries and operations in 19 of them. Chemical Products generates 35% of its sales in international markets. Again...strategies center on creating a presence close to customer need. Chemical Products' network is branching out from its U.S. and European base to markets in South America and Asia. 19 Forest Resources group The Forest Resources Group is charged with obtaining maximum long term value from Union Camp's 1.5 million acres of woodlands in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia. Advanced forestry techniques have made Union Camp's woodlands among the most productive in the nation. As mature trees are harvested, they're replaced by genetically superior seedlings that produce maximum yield. More than half of Union Camp's acreage is planted with seedlings that produce triple the yield of natural stands. The Wood Products business produces southern pine lumber, plywood and particleboard panels primarily for industrial and home improvement markets. About 40% of its output goes to furniture, transportation and other industries. The rest is sold to manufacturers of engineered systems and lumber treating plants. Nine facilities in Alabama, Georgia, North Carolina and Virginia have the capacity to produce 485 million board feet of lumber, 240 million square feet of plywood and 100 million square feet of particleboard per year. Some holdings have highest value in land development. The Branigar Organization, a subsidiary, is a highly-regarded developer of residential and resort communities. Two major projects are the award-winning Landings, a golf and recreation community on Skidaway Island near Savannah; and Champion Hills, a golf club community in Hendersonville, North Carolina. 21 Forest Resources markets continue gains in 1994...Lumber markets are seeing a combination of growing demand and tightening supplies...prices were up significantly. Industrial markets and pricing were also strong in plywood and particleboard. Commodity lumber prices have hit a plateau with a softening in the home construction markets...average prices are still up over year-ago levels. Industrial market prices are continuing to increase. Wood Products turned in its fourth consecutive year of record sales and earnings. Sales were up 12% to $292 million, while operating earnings increased 14%. Keys to the improvement...strength in attractive industrial niches, streamlined cost-effective operations and demand that continues to run ahead of supply. The major factor in the performance of all three product lines was higher prices, with higher wood prices offsetting some of the gain. Volumes were flat over 1993. The main reason...the short-term production impact of asset changes in the Division's productivity and quality programs. 1994 Another record year... 22 Reorganization focuses on creating the most value from woodland resources...A rethinking of the role of the Forest Resources Group two years ago concentrated all activities on two overriding responsibilities: providing internal customers with cost-competitive, high-quality fiber and getting the maximum return from the land. More than 50 teams are involved in continuous improvement through our total quality philosophy. A 1994 review of the organization's structure streamlined the fiber supply chain from the stump to the digester in Savannah. Branigar's land operations were brought into the Forest Resources Group, consolidating high-value land development in one organization. 23 Financial Review Union Camp Corporation Results of Operations After four consecutive years of price and profit erosion, earnings rebounded sharply late in 1994 as paper product prices staged a long-awaited recovery. Final quarter earnings were more than triple the same period last year. Overall, the improvement reflected strengthening sales and earnings performances by all the company's businesses, in particular, the paper and paperboard segment. Total paper products shipments reached a record 3.5 million tons in 1994, an increase of 5% over 1993, reflecting improved global demand for paper and packaging. Total company sales were $3.4 billion in 1994, 9% above 1993 and 11% over 1992. In 1994, the company earned $114 million or $1.62 per share, more than double the $50 million or $.72 per share reported in 1993 and almost 50% higher than the $1.10 per share earned in 1992. The 1994 results include a gain of $.30 per share on the sale of a minority interest in the company's Bush Boake Allen flavor and fragrance business. Offsetting this gain were non-recurring charges of $.31 per share; $.26 per share relating to the write down of assets and disposal of a business and $.05 per share for implementation of SFAS No. 112, "Accounting for Postemployment Benefits". Earnings in 1993 included a charge of $.23 per share to reflect the increase in the corporate income tax rate and a $.04 per share loss from the sale of the school supplies business, mitigated partially by a gain of $.17 per share from the sale of land. In 1993, conditions which had adversely affected results of operations in 1992, namely, slow growth in U.S. markets and excess paper industry capacity were compounded by economic weakness overseas. Total paper product shipments in 1993 were level with the prior year. Consolidated net sales in 1993 increased slightly, mostly the result of the wood products business which benefited from continuing tight lumber supply. Operating profits in the Wood Products and Chemical segments during 1993 were up significantly over 1992. Operating results and other financial information for the company's principal business segments are presented on page 42. A discussion of results of operating segments follows. Paper and Paperboard The principal operating units in this segment are the two kraft paper and board mills, the two white paper mills, and the woodlands operations which support the mills and the wood products operation. Sales in 1994 were $1.8 billion, an increase of 10% over 1993 and 6% above 1992. Total mill shipments were up 3% in 1994 and operating profit was $182 million compared to $101 million in 1993 and $193 million in 1992. [Chart Omitted: Paper & Paperboard Operating Profit (millions of dollars) 1992 $193 1993 $101 1994 $182]. The improvement in 1994 reflects a strong cyclical upturn driven by global economic expansion and tight supplies all of which led to higher prices in both domestic and export markets. The decline in operating profit in 1993 reflected lingering economic softness and new industry capacity in uncoated business papers which was absorbed later in the economic recovery. Kraft Paper & Board Operating profits at the kraft paper and board mills increased six-fold in 1994, due almost entirely to higher linerboard prices. Robust global demand, a strong U.S. economy and minimal new capacity created a favorable operating climate. Domestic linerboard prices began to recover in September 1993 and moved steadily upward through year-end 1994. Selling prices at the end of 1994 were up over 40% from the prior year-end. Price gains in the export markets were even higher. Tight supply conditions in domestic and export markets have continued into 1995. Company linerboard shipments in 1994 were 8% below the prior year primarily as a result of a paper machine outage at the Savannah, Georgia mill during the third quarter and much of the fourth quarter. Shipments of other kraft mill products, saturating and unbleached paper, were up 37% and 5%, respectively. Direct manufacturing costs per ton increased 4% in 1994. This increase is primarily the result of higher wood and waste fiber costs. Fixed costs rose 5% in 1994 reflecting higher selling and salary incentive costs. Operating profits in 1993 declined by 85% from 1992. Weakness in linerboard export markets and lingering softness in the U.S. economy combined to exert pressure on domestic linerboard prices. Domestic linerboard prices averaged 11% below 1992 and volume was down 9%. Bleached Paper and Board Printing and writing paper, and market pulp are produced at the mill in Eastover, South Carolina. The company's Franklin, Virginia mill produces uncoated white paper, and coated and uncoated board. Total shipments of white paper products in 1994 increased 4% to 1.34 million tons, mostly the result of uncoated free sheet volume which was up 6%. Net sales were 7% above 1993 and 9% over 1992. 26 The year 1994 began with severe pricing pressure in the white paper markets. Harsh winter weather constrained white paper consumption and shipments, leading to a further buildup of already high industry inventories. However, demand strengthened rapidly at the end of the second quarter and prices began a steady rise. The improvement accelerated in the second half of the year, as uncoated free sheet demand strengthened, backlogs climbed, imports leveled off, and total mill inventories came down. Operating profits increased as a result. Prices increased over $200 per ton from their depressed level at mid-year and as 1995 began further increases were being implemented. Direct manufacturing costs per ton increased 3% in 1994 primarily attributable to a higher level of waste fiber and maintenance material costs. Fixed costs excluding depreciation were down slightly in 1994. Depreciation expense was up 8%. In 1993, white paper selling prices faltered as a sluggish economy, new industry capacity and a notable increase in imports combined to reverse an upward trend in uncoated business paper prices which occurred during the first half of the year. Bleached board and market pulp prices were also unfavorable compared to the prior year. Operating profits in 1993 declined 25% from the prior year. Packaging The Packaging segment consists of corrugated container, flexible packaging and folding carton operations. Demand for these products was strong in 1994. Sales increased 10% to $1.4 billion after an increase of 1% in 1993. Shipments were up 7% in 1994 and 5% in 1993. Operating profit in 1994 was $26 million before the inclusion of special items. These included a charge of $14 million to write down the value of certain non-strategic assets and a $3 million charge to close one container plant and relocate another operation. Operating profit in 1993 was $29 million compared to $37 million in 1992. [Chart Omitted: Packaging Operating Profit (millions of dollars) 1992 $37 1993 $29 1994 $26]. The Container Division is the largest unit in this segment operating 24 plants in the domestic market with sales of $700 million in 1994. Primary products are corrugated and solid fibre shipping containers. Shipments for 1994 were up 8% and at record levels. Prices rose 7% from the depressed levels of the previous year. Most of the price improvement occurred in the second half of the year. Direct profit margins increased 2% in 1994. Operating earnings were reduced $3 million in 1994 by the closure of the Centerville, Ohio plant and the relocation of a pre-print operation. In 1993, operating margins benefited from 4% higher volume and declining raw material prices compared to 1992. These factors more than offset a 3% decline in average selling prices. Operating profit for the company's international packaging group continued to increase. Excellent improvements were made in Chile and Puerto Rico. Operations in Spain, the Canary Islands and Ireland also contributed solid operating performances in 1994. Revenues from these international converters increased 11% in 1994 and 13% in 1993. Operating profits for the company's Flexible Packaging operations were down in 1994. The decrease reflects lower margins in the industrial/consumer paper operations. This business had a 4% increase in volume but prices declined 2%, the result of a change in product mix. This was reflected in a 3% decline in profit margins. Partially offsetting this decrease was a 7% volume gain in the polyethylene films side of the industrial/consumer business. Prices increased 4% with most of the advance coming in the fourth quarter as raw material resin price increases were passed through to the end product. In the third quarter of 1994, the company announced its withdrawal from the retail paper bag market. The company recorded an $11.7 million charge relating to the shutdown of retail bag manufacturing plants in Savannah, Georgia and Richmond, Virginia. This charge is included in other (income) expense-net in the accompanying statement of income. Sales for this business were $85 million in 1994. The company's Folding Carton operations produce packaging with high quality graphics, mostly for such high value consumer goods as cosmetics, pharmaceuticals, and food products. Operating profit in 1994 was 12% above the prior two years. 27 Wood Products The Wood Products segment consists of the lumber, plywood and particleboard operations. The fundamentals in this business remain very positive. The segment had another record earnings year in 1994. Operating profit was $79 million, an increase of $9 million over 1993 and $52 million above 1992. Sales were $292 million in 1994, compared to $262 million and $207 million in 1993 and 1992, respectively. [Chart Omitted: Wood Products Operating Profit (millions of dollars) 1992 $27 1993 $70 1994 $79]. All product lines continued to benefit from a favorable supply/demand balance. Earnings for all operations increased, almost entirely the result of higher selling prices. The company's focus on industrial products markets has allowed it to avoid some of the price softness in the home construction markets. Prices in 1994 were up 12% for the lumber and plywood operations and 15% for particleboard. Higher wood costs offset some of these gains. Volumes were flat year-to-year. In 1993, lumber operations were particularly strong with volume up 2% and average prices 30% above 1992. Plywood and particleboard operations also had significant profit improvement over the prior year. Plywood prices increased 18% and particleboard volume was up 8%. Chemical Operating profit for this segment in 1994 was $67 million, well above the record $49 million in 1993 and more than double the operating profit in 1992. Net sales were $576 million in 1994, an increase of 11% over 1993 and 15% above 1992. [Chart Omitted: Chemical Operating Profit (millions of dollars) 1992 $29 1993 $49 1994 $67]. Bush Boake Allen Inc., a global leader in flavors, fragrances and aroma chemicals, is the largest operating unit in this segment with operations in thirty-seven countries. Earnings in this business increased 24% in 1994. Worldwide flavor and fragrance operations had strong growth in 1994 with all regions showing gains. In addition, the aroma chemical operations registered sharp earnings improvement with prices for many grades firming on stronger demand. Recent capital investments also provided greater efficiency and productivity. In 1993, revenues and operating profits increased driven by a recovery in the international aroma and terpene chemical markets and strong performance in the U.S. flavor and fragrance operations. During the second quarter of 1994, Bush Boake Allen completed an initial public offering of its common stock. The establishment of Bush Boake Allen as a public company gives further market recognition to the growth potential of this business and creates additional opportunity to fund future growth. Union Camp remains the majority owner of this global business with a 68% holding. The minority owners' share of pre-tax profits in 1994 was $6.5 million. The company's other chemical unit, the Chemical Products Division, upgrades papermaking by-products and other raw materials into a wide range of products. Operating results improved significantly over the prior year. Pricing initiatives in distilled and upgraded products kept ahead of escalating raw material prices. Improved product mix also benefited 1994 operations. Margins on castor-based products also increased from higher volume and prices. In 1993, the business achieved significant improvement in operating profit over 1992. Higher volume and lower raw material and fixed costs were the primary factors in the earnings increase. Summary Income from operations in 1994 was $275 million, an increase of $63 million over 1993 and $94 million above 1992. Significant selling price improvements in paper products fueled the earnings increase. Fourth quarter operating results soared as a strong overall economy combined with tightening supply to create a favorable market climate. These conditions have continued into 1995 and further price increases are expected. The Wood Products and Chemical segments' operating results in 1994 surpassed the prior year's record earnings levels. [Chart Omitted: Income From Operations (millions of dollars) 1992 $181 1993 $212 1994 $275]. Interest Expense Net interest expense was $109 million in 1994, a decrease of $16 million from 1993 and $27 million below 1992. The decrease in 1994 was almost entirely the result of a higher level of capitalized interest. The reduction in 1993 versus 1992 largely reflects the results of the company's program to refinance higher interest rate debt. 28 Other (Income) Expense-Net Other (income) expense in 1994 was expense of $5 million compared to income of $13 million and $21 million in 1993 and 1992, respectively. The decrease in 1994 from the prior year is primarily the result of an $11.7 million charge on the withdrawal from the retail paper bag business and a lower level of gains from the sale of land. Also in 1994, the company recorded a pre-tax gain of $34.7 million from the sale of a minority interest in Bush Boake Allen. This gain is presented as a separate line item, "Gain on Sale of Minority Interest" on the income statement. The decline in other income in 1993 compared to 1992 reflects a $4.7 million loss from the sale of the school supplies business, lower levels of interest income and other non-operating items which more than offset a higher level of gains from the sale of land. Income Taxes The effective rate for 1994 was 36.6% compared to 50% in 1993 and 34.8% in 1992. The increased rate in 1993 reflects a $16 million charge to adjust the deferred tax reserve for an increase in the federal income tax rate. Financial Position, Liquidity and Capital Resources Internally generated cash flow has been and will remain a primary source of capital to fund the company's growth. Over the last three years, operations have generated $1.1 billion of cash flow. In 1994, operations provided $369 million of cash flow compared to $418 million in 1993. Higher net earnings and non-cash charges in 1994 were offset by increases in working capital items primarily accounts receivable. The company's liquidity needs are driven primarily by its capital spending program and acquisition opportunities that may arise. While these needs will be met in a significant way by internally generated cash flow, the company has considerable additional debt capacity should supplemental financing be necessary. The ratio of long-term debt to total capital employed (the sum of long-term debt, deferred taxes and stockholders' equity) was 33.9% at year-end 1994 compared to 34.2% at the prior year-end. Stockholders' equity increased $20 million to $1.84 billion in 1994. Net working capital, the excess of current assets over current liabilities, was $67 million at year-end 1994, compared to $1 million at the end of 1993. [Chart Omitted: Cash Provided by Operations (millions of dollars) 1992 $268 1993 $418 1994 $369]. Cash provided by investment activities in 1994 includes $89 million received as a dividend from Bush Boake Allen (BBA) in connection with the sale to the public of approximately 6.1 million shares, 32%, of BBA stock. Capital Expenditures Capital spending totaled $325 million in 1994 compared with $310 million in 1993 and $220 million in 1992. [Chart Omitted: Capital Structure (millions of dollars) 1992 1993 1994 Stockholders' $1,882 $1,816 $1,836 Equity Deferred Income $ 553 $ 583 $ 606 Taxes Long-Term Debt $1,290 $1,245 $1,252]. Included in 1994 capital spending is paper mill spending of $202 million including $90 million at the Franklin mill to complete the 300 ton-per-day deinked pulp facility and enhance five of the mill's six paper machines. This enables the mill to produce deinked pulp, increase production and introduce recycled content grades along with other distinctive higher value grades of printing and writing papers. Included also in paper mill spending is $37 million to largely complete a low-odor, energy efficient recovery boiler at the Savannah mill. This boiler, one of the world's largest, will replace two of the mill's three units. Chemical sector spending, including Bush Boake Allen, totaled $25 million. Spending at domestic and international packaging plants was $29 million and investment at wood products facilities was $15 million.
($ in millions) 1994 1993 1992 Plant and Equipment (excludes acquisitions): Expansion & Cost Reduction $172 $119 $ 56 Replacement & Other 110 165 134 Capitalized Interest 22 8 13 Timberlands (acquisition & regeneration) 21 18 17 Total $325 $310 $220
29 At year-end 1994, purchase commitments related to capital expenditures were approximately $24 million, and the spending backlog under approved projects was approximately $190 million. Capital spending in 1995 is expected to decrease to about $260 million which reflects a reduced level of new project approvals during the past two years. [Chart Omitted: Capital Expenditures (millions of dollars) 1992 $220 1993 $310 1994 $325]. Acquisitions and Dispositions In March 1994, the company purchased Fleetwood Container & Display, Inc., a California-based graphic packaging and display company, at a cost of $6.5 million. In May 1994, the company's flavor and fragrance subsidiary, Bush Boake Allen Inc. sold a 32% minority interest to the public. The company recorded a $34.7 million pre-tax gain on the sale. In September 1994, the company acquired a 30% interest in Zucamor S.A., Argentina's largest independent corrugated container manufacturer at a cost of $22 million and sold its Shelbyville, Kentucky plastic retail bag operations for approximately $10 million. The company recognized a $3.7 million pre-tax loss on this sale. In January 1993, the company acquired a manufacturer of corrugated containers in Puerto Rico at a cost of $16 million and disposed of its School Supplies Division for approximately $32 million. Dividends Cash dividends paid in 1994 were $109.1 million. The annual dividend rate was $1.56 per share in 1994, 1993 and 1992. Stockholders' dividends were paid quarterly. Environmental Matters The company invested approximately $24.5 million in pollution control facilities in 1994. Over the past five years the investment was approximately $160 million or about 7% of the $2.3 billion of capital spending. This included environmental improvement elements of a large modernization and expansion program completed in 1991 as well as routine replacements of existing assets. During 1994, the company recorded expenses of $5 million for study, testing and remediation in compliance with environmental regulations. Regulations proposed by the Environmental Protection Agency in late 1993 and currently scheduled for promulgation in 1996 will require an estimated capital investment of $200-$300 million spread over several years in the late 1990's. At present, quantification of cost is quite speculative and subject to variation with respect to timing. Present indications are that the required investment can be managed so that annual spending levels will not materially detract from normal capital spending plans. The company also believes that since its situation, in relative terms, is similar to that of its competitors, compliance will not adversely affect its competitive position. Accounting Matters In the first quarter of 1994, the company adopted the provisions of SFAS No. 112, "Employers' Accounting for Postemployment Benefits". The implementation of this new statement results in a change in the company's method of accounting for certain disability, health care and life insurance benefits provided to former or inactive employees after employment but before retirement, from the "pay-as-you-go" to the accrual basis. The accumulated obligation as of January 1, 1994 was $6.0 million. This obligation, included within other long-term liabilities, was recorded in the first quarter of 1994 on a cumulative basis as a $3.7 million after-tax charge against income. In the third quarter of 1993, the company increased its deferred tax liability by $16 million to reflect the 1% rate increase as required under the provisions of SFAS No. 109, "Accounting for Income Taxes". The 1992 results included the effects of adopting two new accounting standards, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and "Accounting for Income Taxes". The new accounting standards resulted in a cumulative after-tax increase to income of $40.8 million. Income from operations in 1992 included a pre-tax charge of $57 million for estimated costs to enhance workplace safety. 30 Union Camp Corporation Quarterly Information
Net Income (Loss) Before ($ in thousands, except share and per share) Extraordinary Item and Accounting Changes Net Stock Price* Gross ------------------------ Net Income Dividends ---------------- Net Sales Profit Amount Per Share Income Per Share Per Share High Low 1994 Fourth Quarter $922,231 $265,801 $58,319 $0.83 $58,319 $0.83 $0.39 $50 $44 3/8 Third Quarter 856,271 194,961 21,733 0.31 21,733 0.31 0.39 50 7/8 45 Second Quarter 827,217 181,013 25,906 0.37 25,906 0.37 0.39 48 3/8 42 1/4 First Quarter 790,106 164,451 11,268 0.16 7,552 0.11 0.39 50 3/4 43 7/8 1993 Fourth Quarter $793,778 $181,121 $17,552 $0.25 $17,552 $0.25 $0.39 $48 1/2 $38 3/4 Third Quarter 778,708 171,674 4,881 0.07 4,881 0.07 0.39 46 3/8 41 1/8 Second Quarter 786,481 181,072 15,091 0.22 15,091 0.22 0.39 46 3/8 41 1/2 First Quarter 761,454 169,755 12,519 0.18 12,519 0.18 0.39 49 1/8 41 1/8 1992 Fourth Quarter $744,344 $166,561 $12,879 $0.19 $ 7,256 $0.11 $0.39 $48 1/4 $40 1/8 Third Quarter 780,274 183,150 21,146 0.30 20,814 0.30 0.39 48 5/8 41 1/4 Second Quarter 778,790 188,754 23,274 0.33 22,729 0.32 0.39 54 44 1/2 First Quarter 760,950 127,059 (14,644) (0.21) 25,434 0.37 0.39 55 1/8 49
Net income for 1994 includes a second quarter gain of $.30 per share on the sale of a minority interest in Bush Boake Allen. This gain was partially offset by a second quarter charge of $.16 per share to write down non-strategic assets, a third quarter charge of $.10 per share to reflect the withdrawal from the retail paper bag business and a first quarter charge of $.05 per share for the implementation of SFAS No. 112, "Employers' Accounting for Postemployment Benefits". Fourth quarter 1993 net income includes a gain of $.06 per share from the sale of land. The fourth quarter of 1992 included a charge of $.08 per share relating to the loss on the early retirement of higher interest rate debt. Partially offsetting fourth quarter charges in 1992 was income of $.03 per share resulting from LIFO inventory reserve adjustments. * The company's common stock is listed on the New York Stock Exchange and the Pacific Stock Exchange. The number of stockholders of record at December 31, 1994 was 9,343. 31 Report of Independent Accountants To the Stockholders and Board of Directors of Union Camp Corporation In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and of cash flows present fairly, in all material respects, the financial position of Union Camp Corporation and its subsidiaries at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes 1, 10 and 12, respectively, to the financial statements, the Company changed its methods of accounting for postemployment benefits in 1994 and for income taxes and postretirement benefits other than pensions in 1992. Price Waterhouse LLP Morristown, New Jersey February 7, 1995 32 Consolidated Income Union Camp Corporation
($ in thousands, except per share) For The Years Ended December 31, 1994 1993 1992 Net sales $ 3,395,825 $ 3,120,421 $ 3,064,358 Costs and other charges: Costs of products sold 2,524,844 2,360,298 2,290,717 Selling and administrative expenses 329,087 305,616 298,534 Depreciation and cost of company timber harvested 253,436 242,883 237,531 Other operating charges 13,958 -- 57,000 Income from operations 274,500 211,624 180,576 Interest expense 109,172 124,911 136,240 Gain on sale of minority interest (34,698) -- -- Other (income) expense-net 4,862 (13,425) (21,074) Income before income taxes, minority interest, extraordinary item and cumulative effect of accounting changes 195,164 100,138 65,410 Income taxes 71,420 50,095 22,755 Minority interest, net of tax 6,518 -- -- Net income before extraordinary item and cumulative effect of accounting changes 117,226 50,043 42,655 Extraordinary item: loss on early retirement of debt, net of tax -- -- (7,228) Cumulative effect of accounting changes, net of tax (3,716) -- 40,806 Net income $ 113,510 $ 50,043 $ 76,233 Earnings per share: Net income before extraordinary item and cumulative effect of accounting changes $ 1.67 $ 0.72 $ 0.61 Extraordinary item -- -- (0.10) Cumulative effect of accounting changes (0.05) -- 0.59 Net income per share $ 1.62 $ 0.72 $ 1.10
See the accompanying notes to consolidated financial statements. 33 Consolidated Balance Sheet Union Camp Corporation
($ in thousands) December 31, 1994 1993 Assets Current Assets Cash and cash equivalents $ 13,256 $ 38,287 Receivables-Net 469,584 389,549 Inventories 413,809 442,518 Other 54,484 40,364 951,133 910,718 Property Plant and equipment, at cost 6,175,539 5,938,975 Less: accumulated depreciation 2,745,017 2,540,253 3,430,522 3,398,722 Timberlands, less cost of company timber harvested 254,458 247,368 3,684,980 3,646,090 Other Assets 140,465 128,225 Total Assets $ 4,776,578 $ 4,685,033 Liabilities and Stockholders' Equity Current Liabilities Current installments of long-term debt $ 35,899 $ 45,869 Notes payable 373,384 426,229 Accounts payable 246,050 219,663 Other accrued liabilities 190,879 179,380 Income and other taxes 37,712 38,231 883,924 909,372 Long-Term Debt 1,252,249 1,244,907 Deferred Income Taxes 605,643 583,155 Other Liabilities and Minority Interest 198,441 131,751 Stockholders' Equity Common stock-par value $1.00 per share 70,012 69,833 Capital in excess of par value 87,897 81,491 Other equity adjustments (14,661) (24,176) Retained earnings 1,693,073 1,688,700 Shares outstanding, 1994-70,011,944; 1993-69,833,130 Stockholders' Equity-Net 1,836,321 1,815,848 Total Liabilities and Stockholders' Equity $ 4,776,578 $ 4,685,033
See the accompanying notes to consolidated financial statements. 34 Consolidated Statement of Cash Flows Union Camp Corporation
($ in thousands) For The Years Ended December 31, 1994 1993 1992 Cash (Used For) Provided By Operations: Net income $ 113,510 $ 50,043 $ 76,233 Adjustments to reconcile net income to cash provided by operations: Depreciation, amortization and cost of company timber harvested 270,850 261,518 253,087 Deferred income taxes 27,268 33,838 62,278 Gain on sale of minority interest (34,698) -- -- Asset write down and business disposal 25,676 -- -- Other 13,190 (6,744) 2,305 Changes in operational assets and liabilities: Receivables (80,593) 42,083 (84,879) Inventories 15,880 (3,382) (23,519) Other assets 5,175 7,264 (10,178) Accounts payable, taxes and other liabilities 12,244 33,800 (6,462) Cash Provided by Operations 368,502 418,420 268,865 Cash (Used For) Provided By Investment Activities: Capital expenditures (324,939) (310,113) (219,654) Payments for acquired businesses (25,006) (11,855) (11,862) Proceeds from sale of businesses-net 8,239 34,451 -- Proceeds from sale of assets 19,114 27,612 15,727 Proceeds from sale of minority interest 88,983 -- -- Other 10,311 17,818 5,942 (223,298) (242,087) (209,847) Cash (Used For) Provided By Financing Activities: Proceeds from issuance of long-term debt 61,725 21,278 294,630 Repayments of long-term debt (65,574) (117,588) (267,126) Change in short-term notes payable (57,596) 310 30,237 Dividends paid (109,137) (108,807) (108,592) (170,582) (204,807) (50,851) Effect of exchange rate changes on cash 347 (922) (1,414) Increase (decrease) in cash and cash equivalents (25,031) (29,396) 6,753 Balance at beginning of year 38,287 67,683 60,930 Balance at end of year $ 13,256 $ 38,287 $ 67,683
See the accompanying notes to consolidated financial statements. 35 Notes to Consolidated Financial Statements Union Camp Corporation ($ in thousands, except per share) 1. Significant Accounting Policies Principles of Consolidation The consolidated financial statements present the operating results and the financial position of the company and all of its subsidiaries. All significant intercompany transactions are eliminated. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investment instruments with an original maturity of three months or less. Inventories Inventories are stated at the lower of cost or market and include the cost of materials, labor and manufacturing overhead. Finished goods and raw materials of domestic operations are valued principally at last in, first out (LIFO) cost. Supplies and all inventories of foreign operations are valued at first in, first out (FIFO) or average cost. Property and Depreciation Plant and equipment is recorded at cost, less accumulated depreciation. Upon sale or retirement, the asset cost and related depreciation are removed from the balance sheet and the resulting gain or loss is included in income. Depreciation is principally calculated on a straight-line basis with lives for buildings from 15 to 33 years and for machinery and equipment from 10 to 20 years. For major expansion projects, the company uses the units-of-production depreciation method until design level production is reasonably sustained. Accelerated depreciation methods are used for tax purposes. The cost of company timber harvested is charged to income as timber is cut. The charge to income is the product of the volume of timber cut multiplied by annually developed unit cost rates which are based on the relationship of timber cost to estimated volume of recoverable timber. Goodwill The excess of the cost over the fair value of net assets of acquired businesses is recorded as goodwill and is amortized on a straight-line basis over a period not to exceed 20 years. The company reviews the goodwill recoverability period on a regular basis. Research and Development Costs Research and development costs are expensed as incurred. These expenditures totaled $49.2 million in 1994, $45.9 million in 1993 and $44.5 million in 1992. Capitalized Interest Interest is capitalized on major capital expenditures during the period of construction. Total interest costs incurred and amounts capitalized were:
1994 1993 1992 Total interest $ 130,800 $ 133,117 $ 149,620 Interest capitalized (21,628) (8,206) (13,380) Net interest expense $ 109,172 $ 124,911 $ 136,240
Pre-Start-Up Costs The company defers pre-start-up costs for major expansion projects until such projects become operational. Following the completion of start-up, the deferred costs are amortized on a straight-line basis over a five year period. Changes in Accounting Standards Effective January 1, 1994, the company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits", which requires companies to accrue for the cost of certain postemployment benefits including disability related, health care and life insurance benefits. In adopting this standard, the company recorded a one-time cumulative charge of $6.0 million ($3.7 million after-tax) in the first quarter of 1994. The net periodic expense for 1994 was $1.3 million. The company previously expensed the cost of such benefits on a pay-as-you-go basis. In 1992, the company adopted the provisions of SFAS Nos. 109 and 106. (Refer to Notes 10 and 12) Income Taxes Deferred income taxes are recorded using enacted tax rates in effect for the year the differences are expected to reverse. Federal and state income taxes are not accrued on the cumulative undistributed earnings of foreign subsidiaries because the earnings have been reinvested in the businesses of those companies. As of December 31, 1994, the total of all such undistributed earnings amounted to $116.7 million. (See also Note 10) Environmental Liabilities Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Liabilities are recorded when remedial efforts are probable and the costs can be reasonably estimated. The timing of these accruals generally coincides with the completion of a feasibility study or the company's commitment to a formal plan of action. Foreign Currency Translation The assets and liabilities of the company's foreign subsidiaries and affiliates are translated into U.S. dollars at year-end exchange rates, while income and expense accounts are translated at average annual rates. The primary factor used to determine the functional currencies of the company's foreign subsidiaries is the local currency cash flows resulting from manufacturing, sales and financing activities. Gains and losses resulting from foreign currency translation are reflected in a separate component of Stockholders' Equity entitled Other Equity Adjustments. The effect of these cumulative adjustments was to reduce equity by $14.3 million at December 31, 1994 and $23.5 million at December 31, 1993. Derivatives The company hedges foreign currency transactions by entering into forward foreign exchange contracts. 36 Gains and losses associated with currency rate changes on forward contracts hedging foreign currency transactions are recorded to other income/expense as incurred. Gains and losses on interest rate swap agreements are charged or credited to interest expense over the life of the agreement. (See also Note 7) Revenue Recognition The company recognizes revenues upon the passage of title, which is generally at the time of shipment. Income Per Share Net income per share of common stock is based on the weighted average number of shares outstanding during the period. Reclassifications Certain amounts have been reclassified for 1992 and 1993 to conform with the 1994 presentation. 2. Other Operating Charges In the second quarter of 1994, the company recorded a $14.0 million pre-tax charge to write down the carrying value of certain non-strategic assets. In the first quarter of 1992, the company recorded a $57 million pre-tax charge to operating income relating to the establishment of a reserve for the estimated cost of enhancing workplace safety. This was substantially completed in 1994. 3. Gain on Sale of Minority Interest In the second quarter of 1994, Union Camp's flavor and fragrance subsidiary, Bush Boake Allen Inc. (BBA) sold to the public approximately 6.1 million shares of BBA stock (approximately 32% of BBA's outstanding shares) at an offering price of $16.00 per share. Union Camp retains approximately 68% of the 19.215 million shares outstanding after the offering. As a result of this transaction, Union Camp recognized a $34.7 million pre-tax gain. 4. Other (Income) Expense-Net Other (income) expense for 1994 includes an $11.7 million charge to withdraw from the retail paper bag business. Partially offsetting this charge was a $9.1 million gain attributable to the sale of land. The years 1993 and 1992 included gains of $18.0 million and $10.6 million, respectively, attributable to the sale of land. 5. Supplemental Balance Sheet Information
December 31, 1994 1993 Receivables Trade $434,277 $365,504 Net refundable income taxes 3,218 7,035 Other 48,608 31,636 486,103 404,175 Less estimated doubtful accounts, discounts and allowances 16,519 14,626 Net $469,584 $389,549
December 31, 1994 1993 Inventories Finished goods $197,086 $228,863 Raw materials 98,884 91,685 Supplies 117,839 121,970 Total $413,809 $442,518
At December 31, 1994 and 1993, finished goods and raw materials totaling $196.8 million and $221.8 million, respectively, were valued at LIFO cost. The excess of current cost over LIFO value was $78.9 million and $76.0 million in 1994 and 1993, respectively.
December 31, 1994 1993 Other Current Assets Short-term timber leases $ 14,154 $ 20,305 Prepayments 19,414 15,905 Assets held for resale 20,916 4,154 Total $ 54,484 $ 40,364 Plant and Equipment, at cost Land $ 35,435 $ 36,831 Buildings and improvements 535,242 512,895 Machinery and equipment 5,380,959 5,158,902 Construction-in-progress 223,903 230,347 Total $6,175,539 $5,938,975
At December 31, 1994, property (principally machinery and equipment) having an original cost of approximately $383 million and a net book value of $182 million is pledged against lease obligations and notes payable to industrial development authorities (see Note 6) which have outstanding long-term balances totaling approximately $335 million.
December 31, 1994 1993 Other Assets Deferred pre-start-up $ 22,502 $ 29,108 Goodwill 21,796 22,223 Pension assets 26,807 24,713 Other intangibles 16,774 19,061 Investments in affiliates 24,465 1,554 Other 28,121 31,566 Total $140,465 $128,225
Short-Term Debt Included in Notes Payable at December 31, 1994 and 1993 were $340 million and $386 million, respectively, of commercial paper borrowings. The weighted average interest rates on these borrowings for the years 1994 and 1993 were 4.4% and 3.5%, respectively. The company has revolving credit facilities in numerous countries outside the United States which provide for aggregate availability of $86 million. At December 31, 1994 and 1993, approximately $42 million and $34 million, respectively, was outstanding and included in short-term borrowings. Commitment fees are either nominal or zero. Covenants, to the extent they exist, are presently being met and are expected to be met in the future. 37
December 31, 1994 1993 Other Accrued Liabilities Payrolls $ 61,557 $ 54,010 Interest 28,219 29,369 Special charge reserve 3,197 21,422 Other 97,906 74,579 Total $190,879 $179,380 Other Liabilities and Minority Interest Postretirement and postemployment benefits $111,845 $ 99,820 Minority interest 64,178 2,790 Minimum pension liability 7,511 10,063 Deferred revenue 4,132 4,808 Other 10,775 14,270 Total $198,441 $131,751
6. Long-Term Debt
December 31, 1994 1993 Sinking fund debentures: 8 5/8% due 1997 - 2016 $ 52,160 $ 100,000 10% due 2000 - 2019 100,000 100,000 9 1/4% due 2002 - 2021 125,000 125,000 Debentures 9 1/2% due 2002 100,000 100,000 Debentures 9 1/4% due 2011 125,000 125,000 Debentures 8 1/2% due 2022 100,000 100,000 Notes 7 3/8% due 1999 50,000 50,000 Medium-term notes due 1996-2001; 6.7% to 9.54%; weighted average rate 9.03% 206,000 230,000 Industrial Development Revenue Bonds; due 2001-2026; 5.2% to 8.0%; weighted average rate 5.95% 43,676 58,737 Pollution Control Revenue Bonds due 1996-2024; 4.3% to 7.45%; weighted average rate 6.52% 291,125 241,945 Other notes due 1996-2004 13,288 14,225 Commercial Paper 46,000 -- Total $1,252,249 $1,244,907
The current portion of long-term debt at December 31, 1994 amounted to $35.9 million. Amounts payable in the years 1996 through 1999 are $45.5 million, $112.9 million, $60.5 million and $85.0 million, respectively. At December 31, 1994, $46 million of commercial paper borrowings was classified as long-term debt, since the company has the ability and intent to renew these obligations through the year 2000. The effective interest rate on these borrowings was 8.07%, inclusive of the net effect of the interest rate swap. (See Note 7) The company has revolving credit/term loan agreements which provide for unsecured borrowings up to $400 million in the United States. Any borrowings under these agreements would incur interest at the prevailing prime rate or other market rates. Nominal commitment fees are paid on the unused portion. No borrowings were made in 1994 under these agreements. 7. Financial Instruments Fair Value of Financial Instruments The carrying amounts of certain financial instruments: cash, short-term investments, trade receivables and payables approximate their fair values. The fair value of the company's long-term debt varies with market conditions and is estimated based on quoted market prices for similar financial instruments by obtaining quotes from brokers. At December 31, 1994, the book value of long-term debt was $1.25 billion and the fair value was approximately $1.29 billion. The book value of all other financial instruments approximates their fair value. Derivative Financial Instruments The company uses derivative instruments exclusively to hedge the risk associated with underlying business transactions such as existing floating rate debt and existing foreign currency commitments. Derivatives are not used for trading or speculative purposes. The book value of these derivatives approximates their fair value. At December 31, 1994, the company had outstanding foreign exchange contracts valued at $70.2 million. The purpose of these contracts is to neutralize foreign currency transaction risk generated by the company's firm foreign currency business commitments. The change in value of the contracts resulting from changes in the respective foreign currency rates versus the U.S. dollar is accrued monthly and credited or charged to foreign exchange gain or loss. Foreign currency commitment exposures are evaluated on an ongoing basis and foreign currency contracts are adjusted as required to offset the risk associated with the underlying transactions. Cash settlements are executed whenever the contracts are adjusted which occurs at least monthly. Currency contracts are limited to currencies with established forward markets and to counterparties, which have Moody's credit ratings of A1 or better. At December 31, 1994, the company had an outstanding interest rate swap agreement the purpose of which is to convert $46 million of floating rate commercial paper to fixed rate debt. The swap agreement is based on a declining principal balance schedule which terminates in April, 2000. The differential between fixed and floating rate obligations is accrued as interest rates change and is charged or credited to interest expense over the life of the agreement. Cash settlements will be made quarterly commencing April 15, 1995. The counterparty has a Moody's credit rating of AA. 38 8. Stockholders' Equity
Capital In Other Common Excess of Retained Equity Stock Par Value Earnings Adjustments Balance, December 31, 1991 $ 69,461 $ 68,919 $ 1,779,823 $ 18,053 Net Income -- -- 76,233 -- Cash dividends ($1.56 per share) -- -- (108,592) -- Issuance of stock for options and award plans 203 6,989 -- 83 Foreign currency translation -- -- -- (29,294) Balance, December 31, 1992 69,664 75,908 1,747,464 (11,158) Net Income -- -- 50,043 -- Cash dividends ($1.56 per share) -- -- (108,807) -- Issuance of stock for options and award plans 169 5,583 -- 758 Foreign currency translation -- -- -- (13,776) Balance, December 31, 1993 69,833 81,491 1,688,700 (24,176) Net Income -- -- 113,510 -- Cash dividends ($1.56 per share) -- -- (109,137) -- Issuance of stock for options and award plans 179 6,406 -- 253 Foreign currency translation -- -- -- 9,262 Balance, December 31, 1994 $ 70,012 $ 87,897 $ 1,693,073 $ (14,661)
The authorized capital stock of the company at December 31, 1994, 1993 and 1992 consisted of 125,000,000 shares of common stock, $1.00 par value, and 1,000,000 shares of authorized but unissued preferred stock, $1.00 par value. Common stock repurchased is included in the authorized but unissued shares of the company. 9. Supplemental Cash Flow Information Cash paid for income taxes was $32.4 million in 1994, $26.1 million in 1993, (offset by a $64.7 million tax refund), and $26.0 million in 1992. Cash paid for interest, net of amounts capitalized, was $110.3 million in 1994, $129.3 million in 1993 and $135.5 million in 1992. The following table summarizes non-cash investing and financing activities related to the company's acquisitions in 1994, 1993 and 1992.
1994 1993 1992 Fair value of assets acquired $32,788 $21,399 $19,405 Less: cash paid 25,006 11,855 11,862 Liabilities incurred or assumed $ 7,782 $ 9,544 $ 7,543
10. Income Taxes The provision for income taxes is comprised of the following:
1994 1993 1992 Current: Federal $ 31,744 $ 14,180 $(37,213) State and local 3,652 (3,639) (7,953) Foreign 8,756 5,716 5,643 44,152 16,257 (39,523) Deferred: Federal $ 22,005 $ 27,317 $ 51,845 State 1,827 3,944 6,807 Foreign 3,436 2,577 3,626 27,268 33,838 62,278 Total $ 71,420 $ 50,095 $ 22,755
In 1992, the company adopted the provisions of SFAS No. 109. Under the standard, deferred taxes represent liabilities to be paid or assets to be received in the future and tax rate changes would immediately affect those liabilities or assets. The implementation of this standard reduced the deferred tax liability by $99.3 million at January 1, 1992. This resulted in an increase in net income. In 1993 the federal corporate income tax rate was increased from 34% to 35%. Consequently, the deferred tax provision and the liability for deferred taxes were in-creased by $15.0 million for prior years and $1.0 million for 1993 to reflect the full amount of the rate change. Under this method, the cumulative deferred tax liability at December 31, 1994 and 1993 was $605.6 million and $583.2 million, respectively. The significant components of these liabilities (assets) are as follows:
December 31, 1994 1993 Deferred federal taxes: Accelerated depreciation $ 657,732 $ 632,266 Alternative minimum tax (104,404) (94,253) Postretirement benefits (38,297) (36,414) Other 14,904 10,900 Total deferred federal taxes 529,935 512,499 Deferred state taxes 56,906 55,424 Deferred foreign taxes 18,802 15,232 Total deferred taxes $ 605,643 $ 583,155
A detailed analysis of the effective tax rate is as follows:
1994 1993 1992 Statutory federal tax rate. 35.0% 35.0% 34.0% State taxes (net of federal tax impact) 2.2 2.6 2.4 Foreign income taxes (0.8) (1.2) 1.3 Rate change -- 15.0 -- Other 0.2 (1.4) (2.9) Effective rate 36.6% 50.0% 34.8%
39 11. Employee Stock Option Plans Under the stock option plans adopted in 1982 and 1989 (as amended), a maximum of 2,175,000 shares and 3,595,000 shares, respectively, of the company's common stock were made available for the granting of options and stock appreciation rights to officers and other key employees of the company and its subsidiaries at prices not less than 100% of fair market value at the dates of grant. Such options and stock appreciation rights generally become exercisable two years after the date of grant and expire ten years from that date. No further options may be granted under the 1982 plan. At the end of 1994, 530,121 shares were available for future grants under the 1989 plan. The number of options exercisable under both plans at year-end 1994 was 2,027,577. Under the 1989 plan, 718,993 shares may be awarded as restricted stock to selected officers and other key employees of the company and its subsidiaries. Recipients of restricted stock are entitled to receive cash dividends and to vote their respective shares. Restrictions limit the sale or transfer of these shares during a specified period. At December 31, 1994, 101,942 common shares have been issued as restricted stock under this plan. Unearned compensation, equivalent to the market value of the restricted shares at date of grant, is included within Stockholders' Equity and is amortized to expense over the restriction period. The following table summarizes activity in the company's stock option plans during 1994, 1993 and 1992. The options outstanding at December 31, 1994 having related stock appreciation rights attached totaled 1,090,556.
1994 1993 1992 Options outstanding beginning of year 2,894,638 2,517,119 2,217,117 Granted-$44.38 to $52.38 per share 581,316 617,860 559,200 Exercised-$14.75 to $45.63 per share (176,550) (177,605) (190,071) Cancelled-$14.75 to $46.06 per share (86,151) (62,736) (69,127) Options outstanding end of year 3,213,253 2,894,638 2,517,119
12. Postretirement Benefits The company has a contributory postretirement health care plan covering primarily its U.S. salaried employees. Employees become eligible for these benefits when they meet minimum age and service requirements. The company funds its plan on a "pay-as-you-go" basis, in an amount equal to the retirees' medical claims paid. Effective January 1, 1992, the company adopted the provisions of SFAS No. 106. The implementation of this standard resulted in a change in the company's method of accounting for postretirement health care benefits from the "pay-as-you-go" to the accrual basis. In adopting this standard, the company recorded an accumulated postretirement benefit obligation (APBO) of $93.6 million as a cumulative charge against income. The components of the APBO as of December 31, 1994 and 1993 are as follows:
1994 1993 Retirees $ 63,202 $ 66,715 Fully eligible active plan participants 9,630 14,579 Other active plan participants 29,426 27,465 102,258 108,759 Unrecognized net gain (loss) 6,851 (4,584) Accrued postretirement benefit obligation $ 109,109 $ 104,175
The components of the postretirement benefit expense for the years 1994, 1993 and 1992 are as follows:
1994 1993 1992 Service cost-benefits earned during period $ 3,980 $ 3,344 $ 2,744 Interest cost on accumulated benefit obligation 7,818 7,369 7,278 Postretirement benefit expense $11,798 $10,713 $10,022
The discount rates used to determine the accumulated postretirement benefit obligation at December 31, 1994 and 1993 were 8.5% and 7.25%, respectively. The discount rates used to determine the annual postretirement benefit expense were 7.25% for 1994 and 8% for both 1993 and 1992. For measurement purposes, an 11% increase in the medical cost trend rate was assumed for 1994. This rate decreases incrementally to 5.5% after ten years and will remain at that level thereafter. It is estimated that a 1% increase in the medical cost trend rate would increase the accumulated postretirement benefit obligation as of December 31, 1994 by $12.0 million and the postretirement benefit expense for 1994 by $1.7 million. 40 13. Pension Plans The company and certain foreign subsidiaries have non-contributory defined benefit pension plans covering substantially all of their employees. Benefits are based on years of service and, for salaried employees, final average earnings. The company funds its plans annually based upon a consistently applied formula which amortizes the unfunded liability adjusted for actuarial gains or losses. Assets of the plans are primarily fixed income instruments and publicly traded stocks. Pension costs were $14.5 million, $14.6 million and $9.7 million for the years 1994, 1993 and 1992, respectively. The following tables set forth the funded status of all pension plans for 1994 and 1993 and the components of pension expense of all pension plans in 1994, 1993 and 1992:
December 31, 1994 1993 Domestic Plans Domestic Plans Assets in Accumulated Foreign Assets in Accumulated Foreign excess of benefits in Plans excess of benefits in Plans accumulated excess of accumulated excess of benefits assets benefits assets Actuarial present value of: Vested benefit obligation $ 371,028 $ 193,027 $ 84,482 $ 377,840 $ 214,944 $ 88,117 Accumulated benefit obligation 385,892 203,857 85,400 392,658 227,762 89,049 Projected benefit obligation 438,914 206,555 115,405 480,549 228,657 117,903 Plan assets at fair value 429,140 170,861 122,785 451,161 198,557 127,592 Projected benefit obligation in excess of (less than) plan assets 9,774 35,694 (7,380) 29,388 30,100 (9,689) Unrecognized net gain (loss) (11,872) 20,854 (15,193) (36,696) 18,914 (8,971) Unrecognized prior service cost 2,655 (20,462) (142) (112) (16,751) (21) Unrecognized transition asset (obligation) (302) (10,600) 3,382 (382) (13,121) 4,123 Adjustment to recognize minimum liability -- 7,511 -- -- 10,063 -- Pension liability (asset) recorded on Balance Sheet $ 255 $ 32,997 $ (19,333) $ (7,802) $ 29,205 $ (14,558)
At December 31, 1994 and 1993, the discount rates used to determine the pension benefit obligation were 8.5% and 7.25% for the U.S. plans and 9.0% and 7.5% for the foreign plans, respectively. The pension expense for these plans included the following components:
1994 1993 1992 Service cost-benefits earned during the period $ 24,869 $ 20,936 $ 20,510 Interest cost on projected benefit obligations 59,889 56,133 53,927 Actual return on assets 17,694 (120,589) (60,884) Net amortization and deferral (87,956) 58,075 (3,868) Total pension expense $ 14,496 $ 14,555 $ 9,685
The discount rates used to establish annual domestic pension expense were 7.25% for 1994 and 8.0% for the years 1993 and 1992. The salary progression rate for domestic plans was 5.5% for each year. The expected long-term rate of return on domestic plan assets was 9.5% for each year. For the foreign plans, the discount rates used to establish annual pension expense were 7.5%, 9.5%, and 10%, for 1994, 1993 and 1992, respectively. The salary progression rates were 5.5% for 1994, 7.5% for 1993 and 7% for 1992. The expected long-term rate of return on plan assets was 11.5% for each year. In 1994 the company withdrew from the retail bag business. As a result, the company recorded a plan curtailment charge of $1.0 million and special termination benefits of $1.8 million. 14. Commitments and Contingent Liabilities The company is involved in various legal proceedings and environmental actions. Based upon the company's evaluation of the information presently available, management believes that the ultimate resolution of any such proceedings and environmental actions will not have a material adverse effect on the company's financial position, liquidity or results of operations. The company has guaranteed repayment of a term loan up to $15 million (with a remaining term of four years) made by a financial institution to an unrelated entity. The guarantee is secured by the borrower's assets and stock. 41 15. Segment Information Operating results and other financial data are presented for the principal business segments of the company for the years ended December 31, 1994, 1993 and 1992. Total revenue and operating profit by business segment include both sales to customers, as reported in the company's consolidated income statement, and intersegment sales, which are accounted for at prices charged to customers and eliminated in consolidation. The amount of the elimination of intersegment profit on any product that remains in inventory at the end of the period is determined by changes in quantities of inventory and changes in the margins of profit. Operating profit by business segment is total revenue less operating expenses. In computing operating profit by business segment, none of the following items has been added or deducted: other income, portions of administrative expenses, interest expense, income taxes and unusual items. Identifiable assets by business segment are those assets used in company operations in each segment. Corporate assets are principally cash, intangible assets, deferred charges and assets held for resale. The company's real estate operations, Branigar, have been included within corporate items. Capital expenditures are reported exclusive of acquisitions. Total revenue and operating profit from the company's foreign subsidiaries were $417 million and $44 million in 1994, $372 million and $31 million in 1993, and $371 million and $26 million in 1992. No geographic area outside the United States was material relative to consolidated revenues, operating profits or identifiable assets. Export sales from the United States were $247 million in 1994, $209 million in 1993 and $249 million in 1992.
Paper and Packaging Wood Corporate Paperboard Products Products Chemical Items Consolidated 1994 Sales to Customers $1,123,530 $1,372,084 $ 292,254 $ 575,770 $ 32,187 $3,395,825 Intersegment Sales 697,959 7,367 135 153 (705,614)* -- Total Revenue 1,821,489 1,379,451 292,389 575,923 (673,427) 3,395,825 Operating Profit 182,234 9,335*** 78,520 67,182 (62,771)** 274,500 Identifiable Assets 3,385,220 669,039 105,743 437,740 178,836 4,776,578 Depreciation & Cost of Company Timber Harvested 185,855 35,541 10,997 17,130 3,913 253,436 Capital Expenditures 247,781 29,545 14,627 27,013 5,973 324,939 1993 Sales to Customers $1,057,100 $1,251,875 $ 261,569 $ 517,090 $ 32,787 $3,120,421 Intersegment Sales 594,126 6,513 24 1,647 (602,310)* -- Total Revenue 1,651,226 1,258,388 261,593 518,737 (569,523) 3,120,421 Operating Profit 101,482 29,483 69,080 48,931 (37,352)** 211,624 Identifiable Assets 3,320,737 668,069 97,492 389,208 209,527 4,685,033 Depreciation & Cost of Company Timber Harvested 175,470 35,514 10,708 16,535 4,656 242,883 Capital Expenditures 228,859 32,948 7,392 38,813 2,101 310,113 1992 Sales to Customers $1,097,316 $1,235,258 $ 206,826 $ 499,188 $ 25,770 $3,064,358 Intersegment Sales 617,547 5,392 80 709 (623,728)* -- Total Revenue 1,714,863 1,240,650 206,906 499,897 (597,958) 3,064,358 Operating Profit 192,816 37,078 26,330 29,446 (105,094)** 180,576 Identifiable Assets 3,311,033 663,457 95,364 349,091 326,252 4,745,197 Depreciation & Cost of Company Timber Harvested 166,718 35,220 10,953 21,778 2,862 237,531 Capital Expenditures 151,241 33,153 2,774 29,702 2,784 219,654
*Elimination of Intersegment Sales. **Includes intersegment eliminations and unallocated corporate, technology and engineering expenses of $50,725 in 1994, $48,071 in 1993, and $49,233 in 1992. 1992 also includes a $57.0 million charge for estimated costs to enhance workplace safety. ***Includes a charge of $13,958 relating to the write down of non-strategic assets. 42 Historical Data (1994-1984) Union Camp Corporation
1994 1993 1992 1991 ---- ---- ---- ---- Operating Results Net Sales ................................ $ 3,395,825 $ 3,120,421 $ 3,064,358 $ 2,967,138 Costs and Other Charges .................. 3,121,325 2,908,797 2,883,782 2,692,148 ----------- ------------ ------------ ------------ Income From Operations ........... 274,500 211,624 180,576 274,990 ----------- ------------ ------------ ------------ Interest Expense ......................... 109,172 124,911 136,240 81,750 Other (Income)-Net ....................... (29,836)* (13,425) (21,074) (11,748) ----------- ------------ ------------ ------------ Income Before Income Taxes, Minority Interest, Extraordinary Item, and Accounting Changes ....... 195,164 100,138 65,410 204,988 Income Taxes ............................. 71,420 50,095 22,755 76,978 Minority Interest, net of tax ............ (6,518) - - - Extraordinary Item, net of tax ........... - - (7,228) (3,220) Effect of Accounting Changes, net of tax . (3,716) - 40,806 - ----------- ------------ ------------ ------------ Net Income ....................... 113,510 50,043 76,233 124,790 ----------- ------------ ------------ ------------ Per Common Share Net Income ............................... 1.62 0.72 1.10 1.80 Dividends ................................ 1.56 1.56 1.56 1.56 Stockholders' Equity ..................... 26.23 26.00 27.01 27.88 ----------- ------------ ------------ ------------ Financial Position Current Assets ........................... 951,133 910,718 1,016,117 909,990 Current Liabilities ...................... 883,924 909,372 892,115 764,916 ----------- ------------ ------------ ------------ Working Capital .......................... 67,209 1,346 124,002 145,074 Total Assets ............................. 4,776,578 4,685,033 4,745,197 4,697,714 ----------- ------------ ------------ ------------ Long-Term Debt ........................... 1,252,249 1,244,907 1,289,706 1,348,157 Deferred Income Taxes .................... 605,643 583,155 553,871 627,120 Stockholders' Equity ..................... 1,836,321 1,815,848 1,881,878 1,936,256 ----------- ------------ ------------ ------------ Percent of Long-Term Debt to Total Capital 33.9% 34.2% 34.6% 34.5% ----------- ------------ ------------ ------------ Additional Data Cash Provided by Operations .............. 368,502 418,420 268,865 375,041 Capital Expenditures (excluding acquisitions) 324,939 310,113 219,654 482,638 Depreciation & Cost of Company Timber Harvested ......... 253,436 242,883 237,531 209,120 Tons Sold-Paper & Paperboard Products .... 3,452,604 3,291,255 3,242,511 3,004,980 Average Shares of Common Stock Outstanding 69,954,082 69,740,458 69,604,174 69,270,992 ----------- ------------ ------------ ------------
Note: Certain amounts have been reclassified to conform with the 1994 presentation. * Includes $34.7 million pre-tax gain on sale of minority interest in Bush Boake Allen. 44
($ in thousands, except per share) 1990 1989 1988 1987 1986 1985 1984 ---- ---- ---- ---- ---- ---- ---- $ 2,839,704 $ 2,761,337 $ 2,660,918 $ 2,361,684 $ 2,092,247 $ 1,865,871 $ 1,973,781 2,469,017 2,266,561 2,167,264 1,979,788 1,844,957 1,697,109 1,689,252 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 370,687 494,776 493,654 381,896 247,290 168,762 284,529 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 31,228 47,800 50,527 61,294 59,702 63,771 27,583 (26,559) (22,302) (24,882) (22,272) (18,756) (17,701) (18,355) ------------ ------------ ------------ ------------ ------------ ------------ ------------ 366,018 469,278 468,009 342,874 206,344 122,692 275,301 136,427 169,878 172,863 135,391 76,410 27,600 93,850 - - - - - - - - - - - - - - - - - - - - - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 229,591 299,400 295,146 207,483 129,934 95,092 181,451 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 3.35 4.35 4.25 2.83 1.77 1.30 2.48 1.54 1.42 1.22 1.14 1.09 1.09 1.09 27.60 25.47 22.66 20.24 18.62 17.92 17.63 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 859,532 721,195 769,323 753,683 626,481 514,534 493,128 642,776 366,962 326,079 295,618 275,665 344,996 295,757 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 216,756 354,233 443,244 458,065 350,816 169,538 197,371 4,403,354 3,413,862 3,094,414 2,919,115 2,776,602 2,660,609 2,566,880 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 1,221,597 690,149 627,928 632,706 651,539 592,464 608,180 589,477 581,835 581,080 538,774 478,829 408,057 371,562 1,910,643 1,754,524 1,559,327 1,452,017 1,370,569 1,315,092 1,291,381 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 32.8% 22.8% 22.7% 24.1% 26.1% 25.6% 26.8% ------------ ------------ ------------ ------------ ------------ ------------ ------------ 386,036 526,685 518,978 447,261 336,661 279,184 354,261 934,452 556,268 358,671 188,587 212,789 238,958 312,416 217,416 204,572 190,611 180,015 168,457 152,064 125,909 2,835,549 2,726,105 2,733,205 2,675,541 2,656,920 2,328,558 2,421,459 68,550,315 68,836,229 69,433,734 73,391,106 73,533,126 73,328,341 73,210,921 ------------ ------------ ------------ ------------ ------------ ------------ ------------
45 EX-21 5 EXHIBIT 21 EXHIBIT 21 SUBSIDIARIES OF UNION CAMP(1) JURISDICTION OF NAME OF SUBSIDIARY INCORPORATION ABC Container Corporation .............................. Delaware Cartonajes Union, S.A. .................................... Spain Escort City Enterprises Ltd. ............................ England Union Camp Chemicals Limited ........................ England Fleetwood Container & Display, Inc. .................. California Forest Land Investments, Inc. .......................... Delaware Puerto Rico Container Company, Inc. .................... Delaware Transtates Properties Incorporated ..................... Delaware The Branigar Organization, Inc. .................... Illinois Branigar Credit Corporation ...................... Illinois U.C. Realty Corporation ................................ Delaware Union Camp Patent Holding, Inc. ........................ Delaware Bush Boake Allen Inc. .............................. Virginia A. Boake Roberts & Company (Holding) Ltd. ......... England Bush Boake Allen Limited .......................... England Union Camp Foreign Sales Corporation ............. Virgin Islands Union Camp Holdings Chile S.A. ............................ Chile Union Camp Holdings Limited ................. Republic of Ireland Union Camp Ireland Limited .............. Republic of Ireland Union Camp International Sales Corporation ............. Delaware Union Camp Overseas Finance N.V. ........... Netherlands Antilles Union Camp Technology, Inc. ............................ Virginia ------------------ (1) The names of other subsidiaries have been omitted, since such unnamed subsidiaries in the aggregate would not constitute a significant subsidiary. EX-23 6 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 2-62214, 33-23952, 33-25455, 33-25454, 33-28396, 33-30599, 2-91519, 33-60428, 33-60426, 33-54335) of Union Camp Corporation of our report dated February 7, 1995 appearing on page 32 of the 1994 Annual Report to Stockholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 31 of this Form 10-K. PRICE WATERHOUSE LLP Morristown, New Jersey March 30, 1995 EX-27 7 EXHIBIT 27
5 1000 YEAR DEC-31-1994 DEC-31-1994 13,256 0 486,103 16,519 413,809 951,133 6,429,997 2,745,017 4,776,578 883,924 1,252,249 70,012 0 0 1,766,309 4,776,578 3,395,825 3,395,825 2,524,844 3,121,325 (29,836) 0 109,172 195,164 71,420 117,226 0 0 3,716 113,510 1.62 1.61 Includes $14 million pre-tax charge to reflect the write down of the carrying value of certain non-strategic assets. Includes $34.7 million pre-tax gain on sale of 32% minority interest in company's flavor and fragrance business. Reflects adjustment for minority interest (net of tax) of $6,518.