-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NUzobDqbbtfqAZ8H09dT324h1pMfRYRHW5ycqxN1wp2oZcc2GJlODVITKQkItPah b4Uyh801/Q0cngoxpjIhTQ== 0000950117-97-001839.txt : 19971110 0000950117-97-001839.hdr.sgml : 19971110 ACCESSION NUMBER: 0000950117-97-001839 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION CAMP CORP CENTRAL INDEX KEY: 0000100783 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 135652423 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04001 FILM NUMBER: 97710472 BUSINESS ADDRESS: STREET 1: 1600 VALLEY RD CITY: WAYNE STATE: NJ ZIP: 07470 BUSINESS PHONE: 9736282000 MAIL ADDRESS: STREET 1: 1600 VALLEY ROAD CITY: WAYNE STATE: NJ ZIP: 07470 FORMER COMPANY: FORMER CONFORMED NAME: UNION BAG CAMP PAPER CORP DATE OF NAME CHANGE: 19660921 10-Q 1 UNION CAMP CORPORATION 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission File Number 1-4001 UNION CAMP CORPORATION VIRGINIA 13-5652423 - -------------------------------------------------------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 1600 Valley Road Wayne, New Jersey 07470 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Telephone: (973) 628-2000 - -------------------------------------------------------------------------------- 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, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 69,699,832 shares of Registrant's Common Stock, par value $1 Per Share, were outstanding as of the close of business on September 30, 1997. UNION CAMP CORPORATION INDEX Page ---- Part I. FINANCIAL INFORMATION* Item 1. Financial Statements. 2 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 6 Part II. OTHER INFORMATION Item 2. Changes in Securities 8 Item 6. Exhibits and Reports on Form 8-K. 8 ---------------------------------------------- * A summary of the Registrant's significant accounting policies is contained in the Registrant's Form 10-K for the year ended December 31, 1996 which has previously been filed with the Commission. PART I. FINANCIAL INFORMATION Item I. Financial Statements. UNION CAMP CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME ($ in thousands, except per share)
QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------- ---------------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net Sales $ 1,126,902 $ 1,017,310 $ 3,289,618 $ 2,929,613 Costs and other charges: Cost of products sold 849,318 779,415 2,505,991 2,149,085 Selling and administrative expenses 125,165 108,970 377,134 319,805 Depreciation, amortization, and cost of timber harvested 77,064 75,076 232,505 221,756 -------- -------- --------- --------- Income from operations 75,355 53,849 173,988 238,967 -------- -------- --------- --------- Gross interest expense 31,852 29,334 95,067 86,407 Less capitalized interest (2,922) (1,046) (7,114) (2,848) Other (income) expense - net (1,084) (979) (2,619) (2,638) -------- -------- --------- --------- Income before income taxes and minority interest 47,509 26,540 88,654 158,046 -------- -------- --------- --------- Income taxes: Current 12,620 6,591 20,480 38,797 Deferred 4,431 3,147 11,794 20,124 -------- -------- --------- --------- Total income taxes 17,051 9,738 32,274 58,921 -------- -------- --------- --------- Minority interest (net of tax) (2,899) (2,449) (8,592) (8,130) -------- -------- --------- --------- Net Income $ 27,559 $ 14,353 $ 47,788 $ 90,995 ============ ============ ============ =========== Earnings per share: $ 0.40 $ 0.21 $ 0.69 $ 1.32 Dividends per share $ 0.45 $ 0.45 $ 1.35 $ 1.35
Earnings per share are computed on the basis of the average number of common shares outstanding:
1997 1996 ---- ---- Quarter Ended September 30, 69,546,878 69,421,132 Nine Months Ended September 30, 69,359,639 69,164,387
See also the accompanying notes to consolidated financial statements. -2- UNION CAMP CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEET ($ in thousands)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ---- ---- ASSETS Cash and cash equivalents $ 40,698 $ 44,917 Receivables-net 578,095 544,320 Inventories at lower of cost or market: Finished goods 278,292 270,123 Raw materials 108,647 110,569 Supplies 111,421 115,741 ------- ------- Total inventories 498,360 496,433 ------- ------- Assets held for resale 10,933 6,650 Other 35,687 41,790 --------- --------- Total current assets 1,163,773 1,134,110 --------- --------- Plant and equipment, at cost 6,722,210 6,562,465 Less: accumulated depreciation 3,338,813 3,161,450 --------- --------- 3,383,397 3,401,015 Timberlands, less cost of timber harvested 359,839 351,334 --------- --------- Total property 3,743,236 3,752,349 --------- --------- Other assets 247,755 209,848 --------- --------- Total Assets $ 5,154,764 $ 5,096,307 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 847,395 $ 779,869 Long-term debt 1,231,366 1,252,475 Deferred income taxes 736,890 723,431 Other liabilities and minority interest 284,223 246,938 Stockholders' equity (Shares outstanding 1997: 69,699,832 ; 1996: 69,217,119) 2,054,890 2,093,594 --------- --------- Total Liabilities and Stockholders' Equity $ 5,154,764 $ 5,096,307 ============ ============
See also the accompanying notes to consolidated financial statements. -3- UNION CAMP CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ($ IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, 1997 1996 ---- ---- Cash Provided By (Used For) Operations: Net income $ 47,788 $ 90,995 Adjustments to reconcile net income to cash provided by operations: Depreciation, amortization, and cost of company timber harvested 232,505 221,756 Deferred income taxes 11,794 20,124 Other 21,572 11,041 Changes in operational assets and liabilities: Receivables (38,422) 25,461 Inventories (5,128) 36,119 Other assets 5,168 1,448 Accounts payable, taxes and other liabilities (2,301) (37,148) ------- ------- Cash Provided By Operations 272,976 369,796 ------- ------- Cash (Used For) Provided By Investment Activities: Capital expenditures: Plant and equipment (213,828) (191,632) Timberlands (25,645) (85,878) Payments for acquired businesses (13,890) (37,269) Other 19,253 4,460 ------- ------- (234,110) (310,319) ------- ------- Cash (Used For) Provided By Financing Activities: Change in short-term notes payable 57,482 21,003 Repayments of long-term debt (15,206) (48,052) Proceeds from the issuance of long-term debt 10,000 150,000 Repurchase of common stock -- (65,114) Dividends paid (93,681) (93,550) ------- ------- (41,405) (35,713) ------- ------- Effect of exchange rate changes on cash (1,680) 52 ------- ------- Increase (decrease) in cash and cash equivalents (4,219) 23,816 Balance at beginning of year 44,917 30,332 ------- ------- Balance at end of period $ 40,698 $ 54,148 ======= ======= Supplemental cash flow information: Cash paid during the period for: Interest (net of amount capitalized) $ 94,946 $ 88,639 Income taxes $ 22,304 $ 44,275
See also the accompanying notes to consolidated financial statements. -4- UNION CAMP CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. The information furnished in this report is unaudited but includes all adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods reported. The adjustments made were of a normal recurring nature. Note 2. Results for the third quarter and nine months of 1997 include sales of $183 million and $506 million, respectively, related to Alling & Cory, a paper distribution business acquired by the company in August 1996. Results for the third quarter and nine months of 1996 included sales of $112 million related to Alling & Cory. Note 3. Included in last year's "Income from Operations" for the nine months ended September 30, 1996 was a $2.9 million pre-tax charge for estimated severance costs related to the company's decision to outsource timber harvesting. Note 4. Included in "Other Income/Expense" for the nine months ended September 30, 1996 was a $4.2 million pre-tax gain on the sale of land by the company's Bush Boake Allen flavor and fragrance business. Note 5. Included in "Current Liabilities" are $140 million and $114 million of commercial paper borrowings at September 30, 1997 and year-end 1996, respectively. Note 6. Included in "Other Liabilities and Minority Interest" at September 30, 1997 and year-end 1996 are $87.2 million and $79.3 million, respectively, representing the minority interest in Union Camp's 68% owned subsidiary, Bush Boake Allen. Note 7. Certain amounts in the Consolidated Statement of Income have been reclassified for 1996 to conform with the 1997 presentation. -5- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net income for the third quarter of 1997 was $27.6 million or $.40 per share, compared with $14.4 million or $.21 per share for the third quarter of last year and $10.6 million or $.15 per share for the second quarter of this year. Income from operations for the quarter was $75.4 million, a 40% increase from last year's third quarter and this year's second quarter. Net income for the first nine months of 1997 was $47.8 million or $.69 per share, compared with $91.0 million or $1.32 per share for the same period last year. Operating income for the first nine months of 1997 was $174.0 million, a 27% decrease from the $239.0 million reported for the first nine months of 1996. Net sales for the third quarter were $1,127 million, 11% above the previous year's comparable quarter. The third quarter of 1997 included sales of $183 million attributable to The Alling & Cory Company, a paper distribution business acquired in August 1996. The third quarter of 1996 included sales of $112 million related to Alling & Cory. The impact of this business on third quarter operating results was not material. Total paper product shipments increased by 5% from last year's third quarter, to approximately 927,000 tons. Third Third Operating Profit by Segment ($000) Quarter 1997 Quarter 1996 - --------------------------------- ------------ ------------ Paper and Paperboard $ 45,674 $ 27,649 Packaging Products 6,424 9,577 Wood Products 18,776 16,056 Chemical 20,255 16,441 Corporate Items and Eliminations (15,774) (15,874) ---------- --------- Income from Operations $ 75,355 $ 53,849 ========== ========= Operating income for the Paper and Paperboard segment in the third quarter was $45.7 million, a 65% increase from the $27.6 million reported for the third quarter of last year. Higher operating profits from lower manufacturing costs and increased shipments of both domestic and export linerboard were partially offset by lower average selling prices. Linerboard shipments increased by 28%, and uncoated business papers volume increased modestly compared with last year's third quarter. Paper inventories dropped during the third quarter, primarily due to increased shipments outpacing high production levels and, to a lesser extent, approximately 32,000 tons of downtime taken. Third quarter average selling prices for linerboard decreased 4%, while average selling prices for uncoated business papers increased 2%, compared with last year. Upward movement in pricing occurred in both linerboard and uncoated business papers during the third quarter of 1997. Prices of linerboard and uncoated business papers in September increased by $22 and $55 per ton, respectively, above this year's second quarter average with additional upward price movement anticipated in the fourth quarter. Packaging segment operating income was $6.4 million for the third quarter of 1997, compared with $9.6 million for last year's comparable quarter. Earnings for the domestic corrugated container operations decreased by 47% compared with last year's comparable quarter, due to an 8% decline in average selling prices. Third quarter earnings from the company's overseas container businesses were well below last year primarily due to lower selling prices, which were partially offset by increased volume. Operating profit within the flexible packaging business increased modestly over the same quarter of last year, while operating profit within the folding carton business decreased substantially from last year. In October 1997, the company acquired Phoenix Display & Packaging Corp., a leading marketing, merchandising and point-of-purchase display company based in New Jersey, for approximately 188 thousand shares of company common stock. Also, in October 1997, the company sold its Denver container plant as an ongoing business. The company expects to record a gain from the sale of this facility. -6- The company's non-paper businesses reported an improvement in operating income, compared with last year's third quarter. The Wood Products segment reported third quarter earnings of $18.8 million, a 17% increase over last year's third quarter, due primarily to a 12% increase in the average selling price of lumber coupled with an 11% increase in volume. The Chemical segment reported operating income of $20.3 million, 23% above the third quarter of last year. The favorable results were attributable to increased earnings within both the company's Chemical Products Division, due to increased sales, and the company's Bush Boake Allen business which reported a 13% increase in operating profit compared to last year's third quarter. Depreciation expense for the third quarter increased 3% from last year's comparable quarter, and increased 4% for the first nine months of 1997 compared with last year. The increase is due to various capital projects becoming operational, and depreciation expense for Alling & Cory. Gross interest expense in the third quarter increased compared to the same quarter last year, reflecting the impact of an increase in outstanding debt, offset in part by an increase in the amount of interest capitalized. Cash flow from operations for the first nine months of 1997 was $273.0 million, compared with $369.8 million for last year's comparable period. The decrease was primarily due to the lower earnings for the first nine months of this year, and an increase in receivables. Capital expenditures for the first nine months of this year totaled $239.5 million, compared with $277.5 million last year, which included a large timberland acquisition. Total debt increased $52 million during the first nine months of 1997, primarily attributable to increased commercial paper borrowings and the issuance of $10 million of 6.1%, 30 year solid waste disposal facilities bonds. The ratio of total debt to total capital employed increased slightly to 36.2% at September 30, 1997, compared with 35.3% at year-end 1996. Net working capital decreased to $316.4 million at September 30, 1997, from $354.2 million at year-end 1996, primarily attributable to an increase in short-term borrowings. In the third quarter, all outstanding stock appreciation rights previously granted in tandem with nonqualified stock options under the company's management incentive program were terminated. This did not have a material impact on reported earnings. The related stock options were not affected by the decision and remain outstanding. In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per Share". The company is required to adopt this statement for periods ending after December 15, 1997. In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information". The company is required to adopt these statements for periods beginning after December 15, 1997. The statements will not have a material impact on reported net income. The company is currently in the process of evaluating its computer software and databases to ensure that any modifications required to be "Year 2000" compliant are made in a timely manner. Management does not expect the financial impact of such modifications to be material to the company's financial position or results of operations in any period. - ------------------------------------------------------------------------------- Statements in this report or in other company announcements that are not historical are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties with respect to the company include the effect of general economic conditions, fluctuations in supply and demand for the company's products including exports and potential imports, paper industry production capacity, operating rates and competitive pricing pressures. - ------------------------------------------------------------------------------- -7- Part II. OTHER INFORMATION Item 2. Changes in Securities. On October 23, 1997 the Company issued 188,471 shares of its Common Stock to Greater New York Box Co., Inc. in consideration of the acquisition by the Company of all of the outstanding capital stock of Phoenix Display & Packaging Corp. The value of the Union Camp Common Stock issued was approximately $11,845,000. The number of shares issued is subject to possible future adjustment in accordance with the terms of the acquisition agreement. The transaction in which the shares of Union Camp Common Stock were issued was a private placement exempt from registration under Section 4(2) of the Securities Act of 1933. Item 6. Exhibits and Reports on Form 8-K. a) Exhibits. No. Description 11 Statement re computation of per share earnings. 27 Financial data schedule. b) Reports on Form 8-K. No Current Report on Form 8-K was filed by the Registrant during the third quarter of 1997. -8- SIGNATURES Pursuant to the requirements 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. UNION CAMP CORPORATION --------------------------------------- (Registrant) Date: November 7, 1997 /S/ Dirk R. Soutendijk ---------------------------------------- DIRK R. SOUTENDIJK VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY Date: November 7, 1997 /S/ John F. Haren --------------------------------------- CONTROLLER -9- EX-11 2 EXHIBIT 11 EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
Quarter Ended Nine Months Ended September 30, September 30, -------------- -------------- 1997 1996 1997 1996 ---------- ----------- -------------- -------------- Net Income ($000) $ 27,559 $ 14,353 $ 47,788 $ 90,995 Weighted Average Common Shares Outstanding 69,546,878 69,421,132 69,359,639 69,164,387 Earnings Per Share $ 0.40 $ 0.21 $ 0.69 $ 1.32 Weighted Average Common Shares Outstanding Including Common Stock Equivalents - Primary Basis 70,321,568 69,784,214 69,795,368 69,568,382 Primary Earnings Per Share $ 0.39 $ 0.21 $ 0.68 $ 1.31 Weighted Average Common Shares Outstanding Including Common Stock Equivalents - Fully Diluted Basis 70,438,622 69,784,214 70,251,383 69,568,382 Fully Diluted Earnings Per Share $ 0.39 $ 0.21 $0.68 $1.31
EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND THE CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 SEP-30-1997 40,698 0 596,574 18,479 498,360 1,163,773 7,082,049 3,338,813 5,154,764 847,395 1,231,366 0 0 69,700 1,985,190 5,154,764 3,289,618 3,289,618 2,505,991 3,115,630 (2,619) 0 87,953 88,654 32,274 47,788 0 0 0 47,788 0.68 0.68 REFLECTS ADJUSTMENT FOR MINORITY INTEREST (NET OF TAX) OF $8,592
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