0000745308-95-000004.txt : 19950815 0000745308-95-000004.hdr.sgml : 19950815 ACCESSION NUMBER: 0000745308-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST JOE PAPER CO CENTRAL INDEX KEY: 0000745308 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD MILLS [2631] IRS NUMBER: 590432511 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10466 FILM NUMBER: 95562694 BUSINESS ADDRESS: STREET 1: 1650 PRUDENTIAL DR STE 400 CITY: JACKSONVILLE STATE: FL ZIP: 32207 BUSINESS PHONE: 9043966600 MAIL ADDRESS: STREET 2: P O BOX 1380 CITY: JACKSONVILLE STATE: FL ZIP: 32201 10-Q 1 UNITED STATES 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 June 30, 1995 [ ] 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 0-12001 St. Joe Paper Company (Exact name of registrant as specified in its charter) Florida 59-0432511 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite 400, 1650 Prudential Drive, Jacksonville, Florida 32207 (Address of principal executive offices) (Zip Code) (904) 396-6600 (Registrant's telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) 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 APPLICABLE ONLY TO CORPORATE ISSUERS: As of June 30, 1995 there were 30,498,650 shares of common stock, no par value, outstanding. ST. JOE PAPER COMPANY INDEX Page No. PART I Financial Information: Consolidated Balance Sheet - June 30, 1995 and December 31, 1994 2 Consolidated Statement of Income and Retained Earnings - Six months ended June 30, 1995 and 1994 3 Consolidated Statement of Cash Flows - Six months ended June 30, 1995 and 1994 4 Notes to Consolidated Financial Statements 5 Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations 7 PART II Other Information 10 ST. JOE PAPER COMPANY CONSOLIDATED BALANCE SHEET (Dollars in thousands) June 30 December 31 ASSETS 1995 1994 (Unaudited) Current Assets: Cash and cash equivalents $ 81,970 $ 71,890 Short-term investments 69,172 61,156 Accounts receivable 94,687 88,606 Inventories 79,694 57,673 Other assets 22,325 21,677 Total Current Assets 347,848 301,002 Investment and Other Assets: Marketable securities 181,405 174,027 Other assets 48,688 50,426 Total Investments and Other Assets 230,093 224,453 Property, Plant and Equipment, Net 1,045,828 1,026,875 Total Assets $1,623,769 $1,552,330 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 43,586 $ 44,804 Accrued liabilities 34,442 25,339 Income taxes payable - 7,012 Long-term debt due within one year 13,135 19,672 Total Current Liabilities 91,163 96,827 Accrued Casualty Reserves and Other Liabilities 16,271 14,534 Long-Term Debt due After One Year 36,131 37,220 Deferred Income Taxes and Income Tax Credits 229,328 215,311 Minority Interest in Consolidated Subsidiaries 260,578 251,457 Stockholders' Equity: Common stock, no par value; 60,000,000 shares authorized; 30,498,650 shares issued and outstanding 8,714 8,714 Retained earnings 932,320 887,520 Net unrealized gains on debt and marketable equity securities 49,264 40,747 Total Stockholders' Equity 990,298 936,981 Total Liabilities and Stockholders' Equity $1,623,769 $1,552,330 See accompanying notes. -2- ST. JOE PAPER COMPANY CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (Unaudited) (Dollars in thousands except per share amounts) Three Months Six Months ended June 30 ended June 30 1995 1994 1995 1994 Net Sales $144,957 $113,415 $278,018 $230,243 Operating Revenues 56,819 52,471 107,794 103,011 Net Sales and Operating Revenues 201,776 165,886 385,812 333,254 Cost of Sales 107,175 100,395 205,993 198,438 Operating Expenses 41,860 37,252 78,446 73,735 Cost of Sales and Operating Expenses 149,035 137,647 284,439 272,173 Gross Profit 52,741 28,239 101,373 61,081 Selling, General and Administrative Expenses 14,803 14,266 30,341 28,088 Operating Profit 37,938 13,973 71,032 32,993 Other Income (Expense): Dividends 768 531 1,333 1,065 Interest income 3,890 2,329 7,527 4,833 Interest expense (1,328) (1,005) (2,714) (1,968) Gain on sales and other dispositions of property, plant and equipment 3,186 375 4,001 759 Other, net 2,173 704 3,545 1,791 8,689 2,934 13,692 6,480 Income before Income Taxes and Minority Interest 46,627 16,907 84,724 39,473 Provision for Income Taxes 17,150 6,913 31,218 14,816 Income before Minority Interest 29,477 9,994 53,506 24,657 Income Applicable to Minority Interest in Consolidated Subsidiaries 3,141 2,367 5,656 8,870 Net Income $ 26,336 $ 7,627 $ 47,850 $ 15,787 Retained Earnings at Beginning of Period 907,509 858,146 887,520 851,511 Dividends 1,525 1,525 3,050 3,050 Retained Earnings at End of Period $932,320 $864,248 $932,320 $864,248 Per Share Data: Dividends $0.05 $0.05 $0.10 $0.10 Net Income $0.86 $0.25 $1.57 $0.52 See accompanying notes. -3- ST. JOE PAPER COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands except per share amounts) Six Months ended June 30 Cash Flows from Operating Activities: 1995 1994 Net Income $47,850 $15,787 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and depletion 31,765 31,095 Minority interest in income 5,656 8,870 Gain on sale of property (4,001) (759) Increase in deferred income taxes 7,472 4,993 Changes in operating assets and liabilities: Accounts receivable (6,081) (6,058) Inventories (22,021) 6,690 Other assets 1,090 (4,328) Accounts payable, accrued liabilities and casualty reserves 9,622 3,697 Income taxes payable (7,012) 1,689 Cash Provided by Operating Activities 64,340 61,676 Cash Flows from Investing Activities: Purchases of property, plant and equipment (61,328) (47,506) Purchases of investments: Available for sale (16,401) (721) Held to maturity (77,695) (80,265) Proceeds from dispositions of assets 14,611 4,529 Maturity and redemption of investments: Available for sale 18,193 1,061 Held to maturity 79,861 60,133 Cash Used in Investing Activities (42,759) (62,769) Cash Flows from Financing Activities: Net change in short-term borrowings (2,339) 2,514 Dividends paid to stockholders (3,050) (3,050) Repayment of long-term debt (5,287) (638) Dividends paid to minority interest (825) (860) Cash Used in Financing Activities (11,501) (2,034) Net increase (decrease) in cash and cash equivalents 10,080 (3,127) Cash and Cash Equivalents at Beginning of Period 71,890 48,304 Cash and Cash Equivalents at End of Period $81,970 $45,177 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $ 2,524 $ 1,871 Income taxes $26,572 $10,927 See accompanying notes -4- ST. JOE PAPER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands) 1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 1995 and December 31, 1994 and the results of operations and cash flows for the three and six month periods ended June 30, 1995 and 1994. 2. The results of operations for the three and six month periods ended June 30, 1995 and 1994 are not necessarily indicative of the results that may be expected for the full year. 3. Inventories at June 30, 1995 and December 31, 1994: June 30 December 31 1995 1994 Manufactured paper products and associated raw materials $ 43,039 $ 27,023 Materials and supplies 26,008 25,640 Sugar 10,647 5,010 $ 79,694 $ 57,673 4. The Company and its subsidiaries are involved in litigation on a number of matters and are subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect on the Company's consolidated financial position or results of operations. The Company has retained certain self-insurance risks with respect to losses for third party liability, property damage and group health insurance provided to employees. The Company is subject to costs arising out of environmental laws and regulations, which include obligations to remove or limit the effects on the environment of the disposal or release of certain wastes or substances at various sites. It is the Company's policy to accrue and charge against earnings environmental cleanup costs when it is probable that a liability has been incurred and an amount is reasonably estimable. As assessments and cleanups proceed, these accruals are reviewed and adjusted, if necessary, as additional information becomes available. -5- ST. JOE PAPER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands) The Company is currently a party to, or involved in, legal proceedings directed at the cleanup of two Superfund sites. The Company has accrued its allocated share of the total estimated cleanup costs for these two sites. Based upon management's evaluation of the other potentially responsible parties, the Company does not expect to incur additional amounts even though the Company has joint and several liability. Other proceedings involving environmental matters such as alleged discharge of oil or waste material into water or soil are pending against the Company. It is not possible to quantify future environmental costs because many issues relate to actions by third parties or changes in environmental regulation. However, based on information presently available, management believes that the ultimate disposition of currently known matters will not have a material effect on the financial position or liquidity of the Company , but could be material to the results of operation of the Company in any one period. As of June 30, 1995 and December 31, 1994, the aggregate environmental related accruals were $6.7 million. Environmental liabilities are paid over an extended period and the timing of such payments cannot be predicted with any confidence. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Quarter ended June 30, 1995 Net sales and operating revenues for the quarter were $201.8 million, a $35.9 million increase over the same period in 1994 and a $17.8 million increase over the first quarter of 1995. Cost of sales and operating expenses were $149.0 million, up from $137.6 million in 1994 and 135.4 million in the first quarter of 1995. These costs were 73.9% of net sales and operating revenues in 1995 compared to 83.0% in 1994 and 73.6% in the first quarter 1995. Selling, general and administrative expenses rose from $14.3 million in the second quarter of 1994 to $14.8 million in 1995, a decrease from the $15.5 million recorded in the first quarter 1995. As a result of these changes, operating profit during the second quarter of 1995 was $37.9 million compared to $14.0 million in the same quarter of 1994 and $33.1 million in the first quarter of 1995. Six Months ended June 30, 1995 Net sales and operating revenues for the six months ended June 30, 1995 were $385.8 million, a $52.5 million increase over the same period in 1994. Cost of sales and operating expenses were $284.4 million, up from $272.2 million. These costs were 73.7% of net sales and operating revenues in 1995 compared to 81.7% in 1994. Selling, general and administrative expenses rose to $30.3 million in 1995 from $28.1 million in 1994. Operating profit during the first six months of 1995 was $71.0 million compared to $33.0 million 1994. An analysis of operating results by segment follows: Forest Products Quarter ended June 30, 1995 1995 1994 % Increase Net Sales 125,092 93,033 34.5 Cost of Sales 94,768 85,352 11.0 Selling, General and Administrative Expenses 7,609 7,319 4.0 Operating Profit 22,715 362 6174.9 -7- Six Months ended June 30, 1995 1995 1994 % Increase Net Sales 240,340 177,533 35.4 Cost of Sales 181,265 167,840 8.0 Selling, General and Administrative Expenses 15,670 14,697 6.6 Operating Profit (Loss) 43,405 (5,004) 967.4 The containerboard market began to demonstrate some softness following the price increase April 1, 1995. Average selling price for the Company's linerboard rose from $374 per ton in the second quarter of 1994 to $565 per ton in 1995, a 51% increase. Net sales to outside customers by the Company's paper mill increased 49% in the second quarter of 1995 compared to the same period last year on a volume increase of 2%. The Company's container revenues were 25% higher in 1995 than the second quarter of 1994 on a volume decrease of 8.3%. Timber sales to outside customers decreased 24% on a volume decline of 22% as more of the Company's timber production was required by the mill. The Company increased its timber purchases from outside suppliers to meet the mill requirements which, together with the decreased timber sales, resulted in a $1.4 million decrease in operating profit from the timber operations. Mill production of mottle white linerboard rose by 51% and this was a major factor in a 15% increase in production cost per ton. Transportation Quarter ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 48,759 44,792 8.9 Cost of Sales 36,757 32,638 12.6 Selling, General and Administrative Expenses 4,967 4,082 21.7 Operating Profit 7,035 8,072 (12.9) Six Months ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 91,936 87,928 4.6 Cost of Sales 68,424 64,420 6.2 Selling, General and Administrative Expenses 9,291 8,442 10.1 Operating Profit 14,221 15,066 (5.6) -8- The composition of revenues and expenses in the Transportation segment changed significantly in the second quarter of 1995. Florida East Coast Industries (FECI) acquired an 80% interest in International Transit, Inc. (ITI), a common motor carrier with 1994 annual operating revenues in excess of $21 million and, on April 1, 1995, the Florida East Coast Railway Company (FEC) commenced haulage agreements with a connecting rail carrier regarding the connecting carrier's intermodal traffic to and from FEC's south Florida intermodal terminals and enabling FEC to move intermodal freight to and from a terminal established by FEC at Macon, Georgia. Operating results for the transportation segment for the second quarter included ITI's revenues and expenses which accounted for most of the increases in operating revenues, operating expenses and selling, general and administrative expenses. Sugar Quarter ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 11,531 14,647 (21.3) Cost of Sales 7,925 11,565 (31.5) Selling, General and Administrative Expenses 537 776 (30.8) Operating Profit 3,069 2,306 33.1 Six Months ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 23,866 28,017 (14.8) Cost of Sales 16,291 22,374 (27.2) Selling, General and Administrative Expenses 2,007 1,835 9.4 Operating Profit 5,568 3,808 46.2 The sugar segment experienced a 27.8% volume reduction in the second quarter of 1995 compared to 1994. The selling price rose 8.9%. Increased productivity drove down the cost per ton of sugar by 13.2%. The segment produced 28.3% more sugar in 1995 than 1994 with an 18.4% increase in the amount of cane ground and an 8.5% increase in the yield. Selling, general and administrative expenses were up by $ 0.2 million. -9- Communications Quarter ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 8,060 7,679 5.0 Cost of Sales 5,103 4,614 10.6 Selling, General and Administrative Expenses 1,079 1,102 (2.1) Operating Profit 1,878 1,963 (4.3) Six Months ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 15,859 15,083 5.1 Cost of Sales 10,023 9,315 7.6 Selling, General and Administrative Expenses 2,227 2,153 3.4 Operating Profit 3,609 3,615 (0.2) Operating revenues increased in 1995 compared to 1994 largely due to mandated adjustments in the interstate access charge pooling process. All three local exchange companies began their cable maintenance earlier in 1995 than 1994 resulting in increased operating expenses. Real Estate Quarter ended June 30, 1995 1995 1994 % Increase Net Sales 8,559 6,216 37.7 Cost of Sales 4,679 4,464 4.8 Selling, General and Administrative Expenses 640 482 32.8 Operating Profit 3,240 1,270 155.1 Six Months ended June 30, 1995 % Increase 1995 1994 (Decrease) Net Sales 14,570 25,698 (43.3) Cost of Sales 9,137 9,170 (0.4) Selling, General and Administrative Expenses 1,204 1,020 18.0 Operating Profit 4,229 15,508 (72.7) -10- In 1994, a single realty property sale of $11.3 million was made by Gran Central, Florida East Coast Industries, Inc. real estate subsidiary, to the State of Florida which was not repeated in 1995. Rent and other income increased by $1.2 million in the second quarter of 1995 compared to the same period in 1994. Cost of sales increased 4.8% in the second quarter compared to the same period in 1994. Selling, general and administrative expenses increased by $0.2 million. Other Income increased $5.8 million in the second quarter of 1995 compared to 1994. Interest income increased by $1.5 million reflecting increased investment and higher rates. Gain on sales and other dispositions of property, plant and equipment increased $2.8 million due to the sale of an unused facility in Wilmington, Delaware. Other income,net rose by $1.4 million primarily due to the sale of material from the Company's linerboard mill. Net Income increased $18.7 million (245.3%) during the second quarter of 1995 from the same period in 1994. Earnings per share increased $0.61 to $0.86. Financial Position The Company's financial position remains strong. Current assets rose to $347.8 million, an $46.8 million increase from year end. Current liabilities dropped by $5.6 million causing the current ratio to rise from 3.1 to 1at year end to 3.8 to 1 at the end of the second quarter. The Company increased its investment in marketable securities by $7.4 million over year end. Net property, plant and equipment increased by $18.9 million, largely in FECI. Deferred income taxes grew by $14.0 million, due to the tax effect of an increase in the unrealized gains on debt and marketable equity securities and a decrease in alternative minimum tax credits. Stockholders' equity at March 31, 1995 was $32.47 per share, an increase of $1.75 from December 31, 1994. -11- PART II - OTHER INFORMATION Item 1. Legal Proceedings No change from Form 10-K for the year ended December 31, 1994 Item 5. Other Information On May 9, 1995, the Board of Directors passed the resolution amending the Company's bylaws shown in exhibit 3(ii) regarding indemnification of officers and directors 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. St. Joe Paper Company (Registrant) J. M. Jones, Jr. Vice President and CFO D. M. Groos Comptroller August 14, 1995 Date -12- EX-27 2
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EX-3 3 RESOLUTIONS OF THE BOARD OF DIRECTORS ST. JOE PAPER COMPANY WHEREAS, pursuant to Article XI of the Articles of Incorporation of the corporation, the directors of the corporation, subject to the By-laws adopted by stockholders, if any, may amend the By-laws of the corporation. WHEREAS, the board of directors believes it in the best interests of the corporation to clarify the rights to indemnification of officers and directors, as well as make advancement of legal expenses to such person mandatory, subject to conditions imposed by law, NOW THEREFORE, BE IT RESOLVED, that the By-laws of the corporation be, and they hereby are, amended by deleting paragraph 9 of Article III thereof in its entirety and substituting the following new paragraph 9 of Article III: The corporation shall indemnify every person (and his executors, administrators or heirs) who was or is a party or is or was threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the corporation, or who, while being such a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against expenses (including counsel fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, to the full extent permitted by applicable law, including Section 607.0850 of the Florida Business Corporation Act. Such indemnification shall include advances of expenses in advance of final disposition of such action, suit or proceeding, subject to compliance with the provisions of Section 607.0850(6) of the Florida Business Corporation Act requiring the director or officer to provide an undertaking to repay any advance as provided therein. FURTHER RESOLVED, that the secretary of this corporation is hereby directed to insert a copy of such amendment to the By-laws in the minute book of this corporation.