-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GE9sMBQgUAWfwJjLLxoqouvxfCcYDPv5n54iW4xuDu6D7tvcXay4+Lr+SK5w2QvZ JVDD7rkGfelaXvUmU0xB6A== 0000034891-94-000002.txt : 19940517 0000034891-94-000002.hdr.sgml : 19940517 ACCESSION NUMBER: 0000034891-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940326 FILED AS OF DATE: 19940510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL PAPER BOARD CO INC CENTRAL INDEX KEY: 0000034891 STANDARD INDUSTRIAL CLASSIFICATION: 2631 IRS NUMBER: 220904830 STATE OF INCORPORATION: NY FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03838 FILM NUMBER: 94526773 BUSINESS ADDRESS: STREET 1: 75 CHESTNUT RIDGE RD CITY: MONTVALE STATE: NJ ZIP: 07645 BUSINESS PHONE: 2013911776 10-Q 1 FEDERAL PAPER BOARD COMPANY, INC. FORM 10-Q 3/94 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Twelve Weeks Ended March 26, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-3838 FEDERAL PAPER BOARD COMPANY, INC. (Exact name of Registrant as specified in its charter) NORTH CAROLINA 22-0904830 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 75 CHESTNUT RIDGE ROAD, MONTVALE, NEW JERSEY 07645 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (201) 391-1776 Indicate by check mark ("X") 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 twelve months and (2) has been subject to the filing requirements for at least the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AT APRIL 23, 1994 Common stock, par value $5 share 42,208,617 FEDERAL PAPER BOARD COMPANY, INC. INDEX PAGE PART I FINANCIAL INFORMATION Item 1.Financial Statements: Condensed Consolidated Balance Sheet 3 Condensed Consolidated Statement of Income 4 Condensed Consolidated Statement of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II OTHER INFORMATION * Item 4. Submissions of Matters to a Vote of Security Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 * Item numbers which are inapplicable or to which the answer is negative have been omitted. -2- FEDERAL PAPER BOARD COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) March 26, January 1, In thousands 1994 1994 ASSETS Cash $ 267 $ 271 Receivables - net 71,345 52,062 Inventories: Raw materials 65,045 58,720 Work in process 15,434 15,469 Finished goods 95,139 99,329 Supplies 51,265 51,701 Subtotal 226,883 225,219 Lifo Reserve (2,900) ( 2,819) Total inventories 223,983 222,400 Other current assets 33,400 34,960 Total Current Assets 328,995 309,693 Property, plant and equipment 2,694,924 2,666,423 Accumulated depreciation (799,418) (769,869) Property, plant and equipment - net 1,895,506 1,896,554 Timber and timberlands 188,655 189,674 Goodwill and other intangibles 117,045 118,418 Other assets 71,033 55,955 Total Assets $2,601,234 $2,570,294 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 91,143 $ 90,356 Current portion of long-term debt 54,529 56,148 Short-term bank debt 26,590 25,304 Accrued interest 30,862 18,688 Other current liabilities 92,689 87,055 Total Current Liabilities 295,813 277,551 Long-term debt 983,437 973,825 Other liabilities 72,478 63,086 Deferred tax liability 350,559 349,126 Capital stock 214,115 214,111 Other capital 250,373 249,800 Retained earnings 438,259 447,361 Treasury stock, at cost (3,800) (4,566) Total Shareholders' Equity 898,947 906,706 Total Liabilities and Shareholders' Equity $2,601,234 $2,570,294 See accompanying notes to condensed consolidated financial statements.
-3- FEDERAL PAPER BOARD COMPANY, INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) For The Twelve Weeks Ended March 26, March 27, In thousands, except per share amounts 1994 1993 Net sales $319,454 $319,844 Costs and expenses: Cost of products sold 246,523 235,674 Depreciation, amortization and cost of timber harvested 32,885 33,839 Selling and administrative expenses 14,999 15,232 Interest expense 19,860 19,794 Other - net 82 189 Total costs and expenses 314,349 304,728 Income before taxes 5,105 15,116 Provision for income taxes 2,005 6,016 Net income 3,100 9,100 Preferred dividend requirements 1,525 1,526 Net income available to common shares $ 1,575 $ 7,574 Average Common Shares Outstanding: Assuming no dilution 42,174 41,958 Assuming full dilution 42,948 42,527 Earnings Per Common Share: Assuming no dilution $.04 $.18 Assuming full dilution $.04 $.18 Dividends Declared Per Common Share $.25 $.25 See accompanying notes to condensed consolidated financial statements.
-4- FEDERAL PAPER BOARD COMPANY, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) For the Twelve Weeks Ended March 26, March 27, In thousands 1994 1993 CASH FLOWS FROM OPERATIONS: Net income $ 3,100 $ 9,100 Adjustments to reconcile net income to net cash provided by operations: Depreciation, amortization and cost of timber harvested 32,885 33,839 Deferred income tax provision 939 5,234 Other - net (7,020) 2,799 Net changes in current assets and liabilities 278 (4,753) NET CASH PROVIDED BY OPERATIONS 30,182 46,219 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (28,162) (22,201) Other (144) 112 NET CASH USED FOR INVESTING ACTIVITIES (28,306) (22,089) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (12,189) (12,141) Increase in long-term debt 10,267 125 Payments on long-term debt (2,313) (12,294) Issuance of equity capital 1,113 289 Change in short-term bank debt 1,242 (106) NET CASH USED FOR FINANCING ACTIVITIES (1,880) (24,127) INCREASE (DECREASE)IN CASH (4) 3 Cash: Beginning of year 271 280 End of period $ 267 $ 283 See accompanying notes to condensed consolidated financial statements.
-5- FEDERAL PAPER BOARD COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, of a normal and recurring nature, necessary to present fairly the results for the interim periods presented. 2. Net income used in the computation of earnings per common share assuming no dilution is reduced by preferred dividend requirements. Earnings per common share assuming full dilution for the first quarter of 1994 and 1993 excludes the conversion of the Company's $2.875 convertible preferred stock as the effect is antidilutive. 3. The Company manages certain portions of its exposure to foreign currency fluctuations through a variety of financial instruments with off-balance-sheet market risk including foreign currency option and foreign currency forward contracts. The risk of loss to the Company in the event of non-performance by any party under these agreements is not significant. The Company's market risk under these agreements is subject to currency rate differentials. At March 26, 1994, the Company had outstanding foreign currency call option contracts with notional amounts of 166.0 million U.S. dollars, 10.0 million British pounds and 8.5 million German marks; foreign currency put option contracts with a notional amount of 90.3 million U.S. dollars and forward foreign exchange contracts with a notional amount of 15.0 million U.S. dollars. 4. During the first quarter of 1994, the Company terminated $75 million of interest rate swap agreements. At March 26, 1994, the Company had interest rate swap agreements outstanding with a notional principal amount of $175 million. These swap agreements terminate on various dates through the year 1998. 5. Effective January 2, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits". SFAS No. 112 requires the Company to accrue for postemployment benefits provided to former or inactive employees, their beneficiaries and covered dependents after employment but before retirement. The impact of adopting this Statement was not material to the Company's financial position and results of operations for the interim period presented. -6- FEDERAL PAPER BOARD COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) For the Twelve Weeks Ended March 26, March 27, In thousands 1994 1993 NET SALES: Paper, Paperboard and Pulp $220,424 $221,066 Wood Products 58,835 56,110 Converting Operations 67,491 68,925 Intersegment Eliminations (27,296) (26,257) Total $319,454 $319,844 INCOME BEFORE TAXES: Paper, Paperboard and Pulp $ 10,606 $ 23,007 Wood Products 20,105 18,916 Converting Operations 1,236 (44) Intersegment Eliminations 13 (963) General Corporate Items - Net (6,995) (6,006) Interest Expense (19,860) (19,794) Total $ 5,105 $ 15,116
RESULTS OF OPERATIONS: Paper, Paperboard and Pulp Net sales of paper, paperboard and pulp remained virtually unchanged compared to the first quarter of the prior year. Market pulp sales increased 30% compared to the prior year due to increased volume. Uncoated free-sheet paper sales remained virtually unchanged compared to the prior year as increased volume was offset by decreased average selling prices. Bleached paperboard sales decreased 6% compared to the prior year primarily due to lower average selling prices while recycled paperboard sales increased 4% compared to the prior year as increased demand for this product offset decreased average selling prices. Operating profits for this segment declined 54% from the prior year. The decline in operating profits for this segment is primarily attributable to weather related factors, weaknesses in certain segments of the bleached paperboard market and operating problems which resulted in lost production and higher costs at the Company's major mills. During the quarter, operations at the Augusta and Riegelwood mills were adversely affected by unscheduled shutdowns. Operating results were also negatively impacted by higher wood and energy costs in the first quarter of 1994 resulting from the harsh winter weather. -7- Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) The bleached paperboard market showed continued weakness in certain segments. Average selling prices for this product were lower than in the first quarter of last year mainly due to an increase in lower priced commodity grade business. Despite this decline, demand has remained strong, with shipments of this product increasing slightly compared to the first quarter of the prior year. Slightly offsetting the decrease in bleached paperboard operating profits was improved results for market pulp. Operating results increased approximately 40% in the first quarter of 1994 as compared to the first quarter of 1993. Although this product line remained unprofitable in the first quarter, results improved significantly due to increasing demand. A December 1993 pulp price increase was fully implemented during the first quarter, an April price increase is now being implemented and another increase is scheduled to take effect in the second quarter. Operating profits for the Company's uncoated free-sheet paper operation improved from the comparable period of the prior year. Market conditions began to improve during the first quarter, allowing a price increase to be fully implemented with further increases in selling prices expected in the second quarter. Despite this price increase, average selling prices for this product remained below last year's level by approximately 6%. Demand has remained strong with adequate order backlogs and increased shipments of this product compared to the prior year. Profits were also positively impacted by slightly lower operating costs in the first quarter of 1994, resulting from capital improvements completed in 1993 which enhanced production efficiencies. Operating profits for recycled paperboard increased 40% compared to the same quarter of the prior year. The recycled paperboard market remained strong during the first quarter. The Company's mill in Sprague, CT operated efficiently with strong order backlogs and relatively stable pricing. Production and shipments of this product increased 4% and 10% respectively, compared to the first quarter of 1993, while average selling prices decreased 5% compared to the first quarter of the prior year. Improved operating efficiencies and increased demand for this product positively impacted operating profits compared to last year's first quarter. Wood Products The wood products segment recorded higher operating profits in the first quarter of 1994 compared to the prior year. Market conditions for lumber have continued to be favorable with average selling prices increasing approximately 17% compared to the first quarter of last year. However, shipments for lumber declined approximately 8% compared to the first quarter of 1993. The increase in selling price is primarily attributable to the reduced availability of timber from government-owned lands in the Pacific Northwest and from harsh weather conditions. The decline in shipments was primarily caused by poor weather conditions during the first quarter of 1994. Converting Operations Operating profits for this segment were improved while sales declined slightly compared to the first quarter of the prior year. The Company's cup operations experienced improved sales and operating profits compared to the prior year. A strengthening in demand and reduced costs, as a result of cost savings programs which were implemented at each location, are primarily responsible for the improvements. The Company's packaging operations experienced decreased sales and operating profits compared to the prior year. Interest Expense Interest expense for the first quarter of 1994 was virtually unchanged compared to the prior year. During the first quarter of 1994, capitalized interest increased while interest savings from the Company's interest rate swap agreements decreased compared to the prior year. The increase in capitalized interest is attributable to higher capital spending on projects qualifying for interest capitalization. Interest expense for the first quarters of 1994 and 1993 includes approximately $0.1 million and $1.9 million of savings, respectively, related to the Company's interest rate swap agreements. -8- Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) Accounting Matters Effective January 2, 1994, the Company adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits". The impact of adopting this Statement, for the first quarter of 1994, was not material to the Company's financial position and results of operations. CAPITAL RESOURCES AND LIQUIDITY: Cash provided by operations declined 35% compared to the comparable period of the prior year. The decline was primarily attributable to the lower level of earnings and changes in accounts receivable and inventories in the current year. The increase in receivable levels during the first quarter of 1994 is due to an increase in the average collection period along with a reduction in the amount of receivables sold under an existing agreement. Under this agreement, $83 million and $88 million were sold at March 26, 1994 and January 1, 1994, respectively. Improving market conditions for most of our product lines have caused inventory levels to remain relatively unchanged from the fourth quarter of 1993. However, inventory levels in the first quarter of 1993 increased significantly from the fourth quarter of 1992. Cash used for investing activities increased approximately 28% compared to the prior year. In both periods presented, the majority of cash used for investing activities was related to capital expenditures, predominantly related to a program to expand and modernize the No. 18 paperboard machine at the Riegelwood mill. This program is expected to be completed by mid-year 1994. Capital expenditures for the full year are expected to be consistent with last year's level. The Company believes it has adequate resources to finance its operations and future capital spending programs. The Company is a party to two revolving credit agreements with total commitments of $300 million. At April 23, 1994, $75 million was outstanding under these agreements. In addition, the Company has $75 million remaining under a previously filed shelf registration statement which can be used for future debt financings. Future Outlook: The outlook for the remainder of the year is for gradual improvement in market conditions for our major product lines. Demand is expected to improve in the second quarter and throughout the year, which should allow further pricing improvements. Operating problems which occurred in the first quarter are not anticipated to recur and therefore improved operating efficiencies are expected. -9- PAGE> PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual meeting of shareholders of the Company was held on April 19, 1994. The following four proposals were submitted to the shareholders for a vote: (a) The election of directors. There were 34,758,711 votes for the proposal, which was more than the majority of the shares represented at the meeting, entitled to vote and needed to elect directors and ratify the proposal under New York law. (b) The approval of the 1992 Key Employees Long Term Compensation Plan. There were 26,712,466 votes for the proposal, 6,005,417 votes against and 1,426,471 votes withheld. This was more than the majority of the shares represented at the meeting, entitled to vote and needed to approve and adopt the proposal under New York law. (c) The appointment of Deloitte & Touche as independent auditors. There were 35,263,470 votes for the proposal, 105,626 votes against and 108,470 votes withheld. This was more than the majority of the shares represented at the meeting, entitled to vote and needed to approve and adopt the proposal under New York law. (d) A shareholder proposal relating to the creation of an independent compensation committee for the Company. There were 9,241,856 votes for the proposal, 20,520,149 votes against and 1,872,691 votes withheld. This was more than the majority of the shares represented at the meeting, entitled to vote and needed to defeat the proposal under New York law. Item 5. Other Information Effective April 20, 1994, the Company officially changed its state of incorporation from New York to North Carolina. On November 16, 1993, at a special meeting of shareholders a proposal was approved to change the state of incorporation of the Company. The change in the state of incorporation did not result in any change of the Company's Board of Directors, management, operations or financial condition. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. A list of the exhibits required to be filed as part of this Report on Form 10-Q is set forth in the "Exhibit Index", which immediately precedes such exhibits, and is incorporated herein by reference. (b) There were no reports on Form 8-K filed for the twelve weeks ended March 26, 1994. -10- 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. FEDERAL PAPER BOARD COMPANY, INC. (Registrant) Date: /s/ THOMAS L. COX May 6, 1994 Thomas L. Cox, Vice President and Treasurer Date: /s/ ROGER L. SANDERS, II May 6, 1994 Roger L. Sanders, II, Controller (Principal Accounting Officer) -11- FEDERAL PAPER BOARD COMPANY, INC. EXHIBIT INDEX Exhibit No. Description Page No. 10 1992 Key Employees Long Term Compensation Plan 13-15 11 Computation of Earnings per Common Share 16-17 -12- EX-10 2 FEDERAL PAPER BOARD COMPANY, INC. EXHIBIT 10 3/94 EXHIBIT 10 FEDERAL PAPER BOARD COMPANY, INC. KEY EMPLOYEES LONG TERM COMPENSATION PLAN 1. DESCRIPTION OF THE PLAN: The Key Employees Long Term Compensation Plan (the "Plan"), provides for the granting of Contingent Incentive Awards consisting of a combination of an assumed issuance of Common Stock of the Company ("Phantom Stock") and cash units. The retention or payment of Contingent Incentive Awards will depend on the extent to which the Company has met the Performance Goals established for each Contingent Incentive Award over an Award Cycle consisting of three fiscal years of the Company. 2. PURPOSE OF THE PLAN: The purpose of the Plan is to provide incentive and reward to a limited group of key executive and managerial employees of the Company and its subsidiaries whose contributions, services and decisions have a long term impact on the operations of the Company. 3. TERM OF THE PLAN: The Plan shall become effective on January 1, 1992, and shall terminate on December 31, 2004, unless sooner terminated by the Board of Directors of the Company. The termination of the Plan shall not affect Contingent Incentive Awards granted pursuant to the Plan prior to such termination date, but no Contingent Incentive Award shall be granted under the Plan after such termination date. 4. ADMINISTRATION: The Board of Directors of the Company shall appoint a Committee (the "Committee") consisting of two or more members of the Board of Directors, who shall administer the Plan and serve at the pleasure of the Board of Directors. The members of the Committee shall not be eligible to participate in the Plan while serving on the Committee and shall be Independent Directors of the Company. The Committee shall have full power and authority, subject to the provisions of the Plan, to designate participants in the Plan, to determine the terms of such participation, to interpret the provisions of the Plan, to supervise the administration of the Plan, to promulgate rules and regulations, and to take all action in connection with or relating to the Plan as it deems necessary. Decisions and designations of the Committee shall be by a majority of its members and shall be final. Any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made at a meeting duly held. 5. ELIGIBILITY: Key employees, including officers of the Company and its subsidiaries (but excluding members of the Committee), who are from time to time responsible for the management, growth and protection of the business of the Company and its subsidiaries are eligible to be granted awards under the Plan. The employees who shall receive awards under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible. 6. DESCRIPTION OF CONTINGENT INCENTIVE AWARDS: Each Contingent Incentive Award granted to a participant under the Plan shall consist of (a) Phantom Stock having a fair market value on the date of the grant approximately equal to 50% of such participant's basic annual salary as of the beginning of the applicable Award Cycle and (b) cash units equal in amount to approximately 75% of such basic annual salary. The fair market value of such Phantom Stock shall be the average closing prices on the New York Stock Exchange for the 20 consecutive trading days immediately preceding the date of grant. In the event a participant is compensated in whole or in part on a commission basis, his basic annual salary shall be deemed to be his total salary and commissions for the year immediately preceding the applicable Award Cycle. The amount of cash units awarded to each participant under the Plan shall be credited to a memorandum account maintained by the Company for such participant and the participant shall have no rights thereto until and unless such units become payable under the terms of the Plan. -13- EXHIBIT 10 (Continued) FEDERAL PAPER BOARD COMPANY, INC. KEY EMPLOYEES LONG TERM COMPENSATION PLAN 7. TERMS AND CONDITIONS OF CONTINGENT INCENTIVE AWARDS: All Contingent Incentive Awards shall be subject to the following terms and conditions: a) At the time of each grant of Contingent Incentive Awards to participants under the Plan, the Committee shall establish Performance Goals to be met by the Company over the applicable Award Cycle for such grant. The applicable Award Cycle for the initial grant of Contingent Incentive Awards under the Plan shall be the Company's three fiscal years commencing with the 1992 fiscal year. The applicable Award Cycle for later grants of Contingent Incentive Awards under the Plan shall be the Company's three fiscal years commencing with the fiscal year in which or as to which the grant is made. The Performance Goals to be established by the Committee for each Award Cycle shall include Company objectives in attaining certain levels of return on shareholder's equity over the Award Cycle, Company objectives in achieving growth in earnings per share on the Common Stock of the Company over the Award Cycle, or such other financial objectives of the Company during or over the Award Cycle as the Committee may determine for each grant or any single such financial objective or any combination of same. The Performance Goals established by the Committee for each Award Cycle shall also specify graduated levels of attainment thereof which, after the designated minimums have been met, will result in graduated vesting of the Contingent Incentive Awards relating thereto. Failure of the Company to meet the designated minimum Performance Goals for any Award Cycle will result in the complete cancellation and forfeiture of all Contingent Incentive Awards relating thereto; whereas the attainment by the Company of the uppermost Performance Goals designated by the Committee will result in the full payment of the related Contingent Incentive Awards, except to the extent such Awards have been forfeited as hereinafter provided. b) At the expiration of each Award Cycle the Committee shall determine as soon as practicable thereafter the extent to which the Contingent Incentive Awards related to such Award Cycle have become vested and the extent to which such Contingent Incentive Awards have become forfeited. Forfeited Contingent Incentive Awards shall first reduce the cash unit portion of such awards and any forfeiture in excess of such cash unit portion shall then reduce the Phantom Stock portion of such Award. Holders of Contingent Incentive Awards which have become vested will thereupon receive from the Company the cash value of the Phantom Stock which has become vested. The Company shall also pay in cash to the holders of such Contingent Incentive Awards the amount of any cash units which have become vested and the balance, if any, which has not become vested shall be forfeited. The maximum Contingent Incentive Award payable to a participant shall in no event exceed 175% of such participant's basic annual salary as of the beginning of the applicable Award Cycle. c) Notwithstanding the foregoing, if a holder of any Contingent Incentive Award ceases to be an employee of the Company and its subsidiaries prior to the expiration of any Award Cycle to which such Award or Awards relate for any reason other than death, disability or retirement under the Company's Retirement Plan, then his interest in any such Contingent Incentive Award shall thereupon become forfeited. If a holder of any Contingent Incentive Award ceases to be an employee of the Company and its subsidiaries prior to the expiration of any Award Cycle to which such Award or Awards relate by reason of death, disability or retirement under the Company's Retirement Plan, then his interest in any such Contingent Incentive Award to the extent such becomes vested at the close of the Award Cycle shall be prorated based on the period of his employment during the applicable Award Cycle divided by three years. Death, disability and retirement under the Company's Retirement Plan after the expiration of an Award Cycle shall not cause any forfeiture of rights to Contingent Incentive Awards relating to such Award Cycle to the extent same become vested. Any amounts which become payable to a deceased participant shall be paid to the beneficiary designated by him in a writing filed with the Company, or if no such beneficiary is designated or survives the participant, to the legal representative of the participant's estate. 8. CHANGES IN CAPITALIZATION: In the event there is a change in, reclassification, subdivision or combination of, stock dividend on, or exchange of stock of the Company for the outstanding Common Stock of the Company, the number of shares of Phantom Stock subject to outstanding awards shall be appropriately adjusted by the Committee whose determination shall be conclusive. -14- EXHIBIT 10 (Continued) FEDERAL PAPER BOARD COMPANY, INC. KEY EMPLOYEES LONG TERM COMPENSATION PLAN 9. CONSOLIDATIONS OR MERGERS: If the Company shall be consolidated with or merged into another corporation, each employee who has a Contingent Incentive Award shall be entitled to become vested therein to the extent the Performance Goals have been achieved as of the date of such consolidation or merger but only in the ratio that the period of the applicable Award Cycle which has been completed as of such date bears to three years. 10. AMENDMENT OF THE PLAN AND TERMS AND CONDITIONS OF OPTIONS AND AWARDS: The Board of Directors may discontinue the Plan, provided that such discontinuance shall not adversely affect any employee with respect to awards then held by him. 11. PHANTOM STOCK: The cash value of each share of Phantom Stock which become payable under the Plan shall be the average of the closing prices for Common Stock of the Company on the New York Stock Exchange for the twenty (20) consecutive trading days immediately preceding the end of the Award Cycle. Participants credited with Phantom Stock shall receive cash dividend equivalents on such Stock as and when dividends are paid on Common Stock of the Company. -15- EX-11 3 FEDERAL PAPER BOARD COMPANY, INC. EXHIBIT 11 3/94 EXHIBIT 11 FEDERAL PAPER BOARD COMPANY, INC. COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited) For the Twelve Weeks Ended March 26, March 27, In thousands, except per share amounts 1994 1993 Assuming No Dilution: Net Income $ 3,100 $ 9,100 (Deduct) Dividends on Convertible Preferred Stock (1,525) (1,526) Net Income Available to Common Shares $ 1,575 $ 7,574 Actual Weighted Average Number of Common Shares Outstanding 42,174 41,958 Earnings Per Common Share Assuming No Dilution $ .04 $ .18 Assuming Full Dilution: Net Income $ 3,100 $ 9,100 (Deduct) Dividends on Convertible Preferred Stock (1,509) (1,509) Net Income Applicable to Common Shares, Common Equivalent Shares and Dilutive Securities $ 1,591 $ 7,591 Shares: Adjusted Weighted Average Number of Common Shares Outstanding 42,175 41,959 Dilutive Common Equivalent Shares Issuable Under Stock Option Plans 485 264 Common Shares Issuable Upon Conversion of $1.20 Convertible Preferred Stock 288 304 Common Shares Issuable Assuming Conversion Common Shares Issuable Assuming Conversion of $2.875 Convertible Preferred Stock (a) (a) Weighted Average Number of Common and Diluted Common Equivalent Shares and Dilutive Securities 42,948 42,527 Earnings Per Common Share Assuming Full Dilution, As Reported $ .04 $ .18 -16- EXHIBIT 11 (Continued) FEDERAL PAPER BOARD COMPANY, INC. COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited) For the Twelve Weeks Ended March 26, March 27, In thousands, except per share amounts 1994 1993 Primary Earnings Per Share (b): Shares: Weighted Average Number of Common Shares Outstanding 42,174 41,958 Dilutive Common Equivalent Shares Issuable Under Stock Option Plans 485 237 Weighted Average Number of Common and Dilutive Common Equivalent Shares 42,659 42,195 Primary Earnings Per Common Share Assuming No Dilution from Common Equivalent Shares $ .04 $ .18 (a) Antidilutive Issue. (b) The calculation of primary earnings per share is presented in accordance with Securities Exchange Act of 1934 Release No. 9083 although not required by footnote 3 paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%. Earnings applicable to common shares are the same as in the calculation assuming no dilution.
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