-----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, U9S/EtrkfUDqNzjUFs9nrU1notfdGqG9TVlGDAHJBVTuUcnlOsPBggOGZ9As/gC1 plZKCQmlTYZRThTnJF+SeQ== 0000745308-96-000001.txt : 19960517 0000745308-96-000001.hdr.sgml : 19960517 ACCESSION NUMBER: 0000745308-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96566803 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 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 Commission file number: 1-10466 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 March 31, 1996 there were 30,498,650 shares of common stock, no par value, outstanding. ST. JOE PAPER COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 31 December 31 1996 1995 ---------- ----------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 108,157 $ 16,802 Short-term investments 87,046 96,923 Accounts receivable 52,050 44,390 Income taxes refundable 0 4,314 Inventories 24,832 20,592 Other assets 14,450 18,162 Net assets of discontinued operations 275,906 296,001 -------- ---------- Total Current Assets $ 562,441 $ 497,184 Investment and Other Assets: Marketable securities 241,821 189,865 Other assets 30,587 38,971 -------- ---------- Total Investments and Other Assets $ 272,408 $ 228,836 Property, Plant, and Equipment, Net 816,020 804,974 -------- ---------- Total Assets $1,650,869 $1,530,994 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 24,450 $ 26,024 Accrued liabilities 19,538 18,445 Income taxes payable 11,744 0 ---------- ---------- Total Current Liabilities 55,732 44,469 Accrued casualty reserves and other liabilities 11,598 11,681 Deferred income taxes and income tax credits 225,865 192,036 Minority interest in consolidated subsidiaries 269,627 266,741 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 1,022,282 955,239 Net unrealized gains on debt and marketable equity securities 57,052 52,114 ---------- ---------- Total Stockholders' Equity 1,088,048 1,016,067 ---------- ---------- Total Liabilities and Stockholders' Equity $1,650,869 $1,530,994 ========== ========== (See accompanying notes) ST. JOE PAPER COMPANY CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Dollars in thousands except per share amounts) (Unaudited) Three Months Ended March 31 1996 1995 ---------- ---------- Net sales $ 125,519 $ 33,202 Operating revenues 45,443 43,176 ---------- ---------- Net sales and operating revenues 170,962 76,378 Cost of sales 34,276 26,337 Operating expenses 34,652 31,666 Selling, general and administrative expenses 8,636 7,547 ---------- ---------- Operating profit 93,398 10,828 Other income (expense): Dividends 706 565 Interest income 4,060 3,015 Interest expense (67) (807) Gain on sales and other dispositions of property 2,811 815 Other, net 1,397 443 ---------- ---------- 8,907 4,031 ---------- ---------- Income before income taxes and minority interest 102,305 14,859 Provision for income taxes 39,197 5,692 ---------- ---------- Income before minority interest 65,108 9,167 Income applicable to minority interest in consolidated subsidiaries 3,429 2,515 ---------- ---------- Income from continuing operations 59,679 6,652 Earnings from discontinued operations (net of income taxes of $4,975 and $8,376, respectively) 8,889 14,862 ---------- ---------- Net Income $ 68,568 $ 21,514 Retained earnings at beginning of period 955,239 887,520 Dividends 1,525 1,525 ---------- ---------- Retained earnings at end of period $1,022,282 $ 907,509 ========== ========== Per share data: Dividends $ 0.05 $ 0.05 ========== ========== Income from continuing operations $ 1.96 $ 0.22 Earnings of discontinued operations 0.29 0.49 ---------- ---------- Net Income $ 2.25 $ 0.71 ========== ========== (See accompanying notes) ST. JOE PAPER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands except per share amounts) (Unaudited) Three Months Ended March 31 1996 1995 ---------------------------- Cash flows from operating activities: Net Income $ 68,568 $ 21,514 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and depletion 6,826 6,691 Minority interest in income 3,429 2,515 Gain on sale of property (2,811) (815) Increase in deferred income taxes 29,893 2,361 Changes in operating assets and liabilities: Accounts receivable (7,660) 270 Inventories (4,240) (10,729) Other assets 12,096 6,161 Accounts payable, accrued liabilities, and casualty reserves (564) 5,879 Income taxes payable 16,058 (2,635) Discontinued operations - non-cash charges and working capital changes 22,543 (630) ---------------------------- Cash provided by operating activities 144,138 30,582 ---------------------------- Cash flows from investing activities: Purchases of property, plant, and equipment (19,902) (28,146) Investing activities of discontinued operations (2,448) (5,375) Purchases of investments: Available-for-sale (106,682) (8,873) Held-to-maturity 0 (61,575) Proceeds from dispositions of assets 4,841 4,854 Maturity and redemption of investments: Available-for-sale 63,149 8,502 Held-to-maturity 10,200 29,552 ---------------------------- Cash used in investing activities (50,842) (61,061) ---------------------------- Cash flows from financing activities: Net change in short-term borrowings 0 4,661 Dividends paid to stockholders (1,525) (1,525) Dividends paid to minority interest (416) (410) ---------- ---------- Cash used in financing activities (1,941) (2,726) ---------- ---------- Net decrease in cash and cash equivalents 91,355 (27,753) Cash and cash equivalents at beginning of period 16,802 46,389 ---------- ---------- Cash and cash equivalents at end of period $ 108,157 $ 18,636 ========== ========== Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 476 $ 572 Income taxes $ 0 $ 5,803 (See accompanying notes) 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 March 31, 1996, and December 31, 1995, and the results of operations and cash flows for the three-month periods ended March 31, 1996, and 1995. The 1995 statements have been restated to reflect the reclassification of the Communications segment and linerboard mill and container plants as discontinued operations. 2. The results of operations for the three-month periods ended March 31, 1996, and 1995 are not necessarily indicative of the results that may be expected for the full year. 3. On September 1, 1995, St. Joe Industries, Inc., a wholly-owned subsidiary of the Company, agreed to sell the stock of St. Joe Communications, Inc. (SJCI) to TPG Communications, Inc., for approximately $115 million subject to purchase price adjustments. The sale is subject to customary conditions, including regulatory approvals. SJCI has sold its interest in three cellular partnerships and has a contract to sell the remaining one for an aggregate of approximately $27 million. These sales represent the Company's entire Communications segment and are all expected to close in the second quarter of 1996. On November 2, 1995, the Company announced that it had entered into an agreement to sell its linerboard mill and container plants for approximately $390 million subject to purchase price adjustments and contingent on, among other things, the buyer's receipt of financing. The Company retains its timberlands and will continue to operate in this segment. This sale is expected to close in the second quarter of 1996. Operating revenues for the three-month periods ended March 31, 1996, and 1995 for the Communications segment were $8,435 and $7,799, respectively, and net sales for the linerboard mill and container plants were $93,306 and $103,807, respectively. These amounts are not included in operating revenues in the accompanying statements of income and retained earnings. Net operating results of the Communications segment and for the linerboard mill and container plants for the three-month periods ended March 31, 1996, and 1995 are shown separately as earnings from discontinued operations in the accompanying statements of income and retained earnings. Net assets to be disposed of have been separately classified in the accompanying balance sheets at March 31, 1996, and December 31, 1995. Assets and liabilities of the Communications segment and linerboard mill and container plants consisted of: March 31 December 31 1996 1995 ------------------------- Cash and cash equivalents $ 12,916 $ 11,357 Accounts receivable 44,771 43,419 Inventories 44,546 49,414 Other assets 4,338 19,748 Marketable securities 2,607 2,582 Property, plant, and equipment 254,782 261,674 -------------------------- Total assets 363,960 388,194 Accounts payable 9,605 14,460 Accrued liabilities 8,699 7,671 Long-term debt 17,849 18,093 Accrued casualty reserves and other liabilities 4,332 4,332 Deferred income taxes 47,569 47,637 -------------------------- Net assets of discontinued operations $275,906 $296,001 ========================== 4. Inventories at March 31, 1996, and December 31, 1995: March 31 December 31 1996 1995 -------------------------- Materials and supplies $ 13,550 $ 12,875 Sugar 11,282 7,717 -------------------------- $ 24,832 $ 20,592 ========================== 5. 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. The Company is currently a party to, or involved in, legal proceedings directed at the cleanup of three Superfund sites. The Company has accrued its allocated share of the total estimated cleanup costs for these three 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 results of operations of the Company. As of March 31, 1996, and December 31, 1995, the aggregate environmentally related accruals were $6.2 million. Environmental liabilities are paid over an extended period and the timing of such payments cannot be predicted with any confidence. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW On September 1, 1995, St. Joe Industries, Inc., a wholly-owned subsidiary of the Company, agreed to sell the stock of St. Joe Communications, Inc. (SJCI) to TPG Communications, Inc., for approximately $115 million subject to purchase price adjustments. The sale closed on April 11, 1996. The Company has sold its interest in three cellular partnerships due in 1995 and two in the first quarter of 1996 and has a contract to sell the remaining one for an aggregate of approximately $27 million. The final sale is expected to close in the second quarter of 1996. These sales represent the Company's entire Communications segment. Operating revenues for the three-month periods ended March 31, 1996, and 1995 for the Communications segment were $8.4 million and $7.8 million, respectively. These amounts are not included in operating revenues in the accompanying statements of income and retained earnings. Net earnings of the Communications segment for the three-month periods ended March 31, 1996, and 1995 were $6.7 million and $1.6 million, respectively, and are shown separately as earnings from discontinued operations in the accompanying statements of income and retained earnings. On November 2, 1995, the Company announced that it had entered into an agreement to sell its linerboard mill and container plants for approximately $390 million subject to purchase price adjustments and contingent on, among other things, the buyer's receipt of financing. The sale is expected to close in the second quarter of 1996. The Company will retain its timberlands and will enter into a fifteen-year fiber supply agreement with the buyer with two five-year extensions. Annual wood fiber tonnage to be supplied from the Company's lands will not exceed that currently provided and will be at negotiated market prices adjusted on a quarterly basis. The Company plans in the future to shift its remaining fiber production from the Company's lands to higher margin timber products. Net sales for the linerboard mill and container plants were $93.3 million and $103.8 million for the three months ended March 31, 1996, and 1995, respectively. Net earnings for the three months ended March 31, 1996, and 1995 were $2.2 million and $13.3 million, respectively, and are shown separately as earnings from discontinued operations in the accompanying statements of income and retained earnings. Upon the completion of these sales, revenues of the Company will be materially lower than historical levels. Net income, earnings per share, and cash flows may also be materially different from previous periods. Quarter ended March 31, 1996 Net sales and operating revenues for the quarter were $171.0 million, a $94.5 million increase over the same period in 1995 and $81.2 million over the fourth quarter of 1995. A land sale to the State of Florida for $84 million accounted for the increase. Cost of sales and operating expenses were $68.9 million, up from $58.0 million in 1995 and $68.8 million in the fourth quarter of 1995. These costs were 40.3% of net sales and operating revenues in 1996 compared to 75.9% in 1995 and 76.6% in the fourth quarter 1995. Selling, general and administrative expenses were $8.6 million in the first quarter of 1996 compared to $7.5 million in the first quarter of 1995 and $9.1 million in the fourth quarter 1995. As a result of these changes, operating profit was $93.4 million compared to $10.8 million in the same quarter of 1995 and $11.9 million in the fourth quarter of 1995. An analysis of operating results by segment follows: Forestry Quarter ended March 31, 1996 % Increase 1996 1995 (Decrease) -------------------------------- Net Sales 14.1 14.9 (5.4) Cost of Sales 14.2 13.5 5.0 Selling, General & Administrative Expenses 1.3 1.2 11.9 -------------------------------- Operating Profit (Loss) (1.4) 0.2 (808.8) Reduced production at the Company's linerboard mill resulted in sales to the mill decreasing 68,000 tons. An increase of $2.95 per ton in the delivered price offset some of the volume decrease. Outside sales increased by 3,580 tons but the product mix caused the price per ton to drop $5.71. A $6.22 per ton increase in the cost of wood purchased for resale was the largest factor in the overall cost increase. Transportation Quarter Ended March 31, 1996 % Increase 1996 1995 (Decrease) -------------------------------- Operating Revenue 45.4 43.2 5.1 Operating Expenses 34.7 31.7 9.5 Selling, General & Administrative Expenses 5.2 4.3 21.0 -------------------------------- Operating Profit 5.6 7.2 (22.2) Operating revenues, operating expenses, and selling, general and administrative expenses all increased due to the inclusion in 1996 of an FECI subsidiary acquired in the second quarter 1995. The lower operating profit is primarily attributable to a decline in rail traffic of 7.2% on FEC and 8.1% on ANRR combined with the FEC haulage agreement. Sugar Quarter Ended March 31, 1996 % Increase 1996 1995 (Decrease) -------------------------------- Net Sales 18.7 12.3 52.0 Cost of Sales 13.1 8.3 57.8 Selling, General & Administrative Expenses 1.1 1.5 (26.7) -------------------------------- Operating Profit 4.5 2.5 80.0 The sugar segment experienced a 52% volume increase in the first quarter of 1996 compared to 1995. The selling price fell slightly. Production fell 23%, but costs per ton rose only 1%. Selling, general and administrative expenses fell due mainly to lower worker's compensation payments in 1996. Real Estate Quarter Ended March 31, 1996 % Increase 1996 1995 (Decrease) -------------------------------- Net Sales 92.7 6.0 1,445.0 Cost of Sales 7.0 4.5 55.7 Selling, General & Administrative Expenses 0.9 0.6 50.0 -------------------------------- Operating Profit 84.8 0.9 9,322.3 In 1996, a single realty property sale of $84.0 million was made to the State of Florida which did not occur in 1995. Rent and other income increased by $2 million in the first quarter of 1996 compared to the same period in 1995. Cost of sales increased due to cost associated with the sale of the property to the State of Florida. Selling, general and administrative expenses increased by $0.3 million. Other Income increased $4.9 million in the first quarter of 1996 compared to 1995. Interest income increased by $1.4 million reflecting increased investment and higher rates. Gain on sales and other dispositions of property, plant, and equipment increased $2.0 million primarily due to the first of three installments involving the sale of fiber optic conduit for a total of $8.7 million. Other income, net, rose by $0.9 million primarily due to increased earnings on FECI's investment portfolio held for realty development. Income from Continuing Operations increased $53.0 million (797%) during the first quarter of 1996 from the same period in 1995. Earnings from discontinued operations (net of income taxes) representing the Company's former Communications segment and linerboard mill and container plants, were $6.0 million less than the first quarter of 1995. Net income for the quarter was 219% above the same period in 1995. Net income per share increased $1.54 to $2.25. Income from continuing operations was $1.96 per share. Financial Position The Company's financial position remains strong. Current assets rose to $562.4 million, a $65.2 million increase from year-end. Current liabilities increased by $11.3 million causing the current ratio to drop from 11.2 to 1 at year-end to 10.1 to 1 at the end of the first quarter. The Company increased its investment in marketable securities by $42.1 million over year-end. Net property, plant, and equipment increased by $11.0 million, largely in FECI. Deferred income taxes grew by $33.8 million, due primarily to deferred taxes on the proceeds of the condemnation sale to the State of Florida. Stockholders' equity at March 31, 1996, was $35.68 per share, an increase of $2.36 from December 31, 1995. Recent Events As reported in the 1995 Annual Report to Shareholders, the Company has indicated a willingness to consider exchanging shares of FECI stock it owns for all of the shares of Gran Central Corporation (GCC) held by FECI and, in that regard, has proposed acquiring all the issued and outstanding shares of GCC in a tax-free exchange of its shares in FECI in return for 100% ownership of GCC stock. The Company and FECI have each hired appraisal firms to assit in evaluating the property of GCC and the Company and FECI intend to see if they can negotiate terms of an exchange that will be acceptable to both parties. To date, no purchase price discussions have been held nor will any discussions be held until the completion of the appraisals. Accordingly, there can be no assurance when, if, or on what terms the Company might acquire GCC from FECI. PART II - OTHER INFORMATION Item 1. Legal Proceedings On April 19, 1996, Florida East Coast Industries, Inc. (FECI), a wholly-owned subsidiary of the Company, was served with a complaint filed by Alan Russell Kahn. The complaint is filed in the Circuit Court of Duval County, Florida. Mr. Kahn alleges that he is a shareholder of FECI. In addition to FECI, the following entities and persons are named as defendants: the Company, St. Joe Industries, and the Board of Directors of FECI, as individuals. In his prayer for relief, Mr. Kahn requests the following: (1) an order certifying the action as a class action; (2) an injunction preventing the sale of Gran Central to the Company; (3) an order requiring the Directors of FECI to place Gran Central for sale by means of an auction or to accept competitive bids from third paries in some other fashion; (4) an order requiring the Company to account to Mr. Kahn and the class for any profits; and (5) an order granting Mr. Kahn attorney's fees and costs. Item 5. Other Information On March 1, 1996, the United States Securities and Exchange Commission (SEC) sent letters to FECI and the Company notifying them that the SEC was conducting an informal inquiry into the trading of the securities of FECI. The letters requested certain information regarding the circumstances and events surrounding the proposed acquisition of Gran Central Corporation by the Company. The requested information was timely provided to the SEC. 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) /s/ J.M. Jones, Jr. Vice President and CFO /s/ D.M. Groos Comptroller May 15, 1996 (Date) EX-27 2
5 3-MOS YEAR DEC-31-1996 DEC-31-1995 MAR-31-1996 DEC-31-1995 108,156,879 16,802,144 87,046,579 96,923,514 52,050,043 44,389,879 0 0 24,831,487 20,591,717 562,440,465 497,184,935 1,121,883,213 1,105,455,333 305,863,139 300,480,854 1,650,868,804 1,530,995,011 55,732,424 44,469,522 0 0 8,713,900 8,713,900 0 0 0 0 1,079,333,927 1,007,352,932 1,650,868,804 1,530,995,011 125,518,878 148,072,825 170,962,134 334,924,340 34,275,586 116,014,000 77,563,643 287,606,464 0 0 0 0 67,399 2,234,854 102,304,844 66,087,305 39,197,000 24,535,000 59,678,680 29,358,040 13,864,530 70,576,624 0 0 0 0 68,568,109 73,818,564 2.25 2.42 2.25 2.42
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