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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, 1994
[ ] 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, 1994 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, 1994 and December 31, 1993 3
Consolidated Statement of
Income and Retained Earnings -
Three Months and Six months ended
June 30, 1994 and 1993 4
Consolidated Statement of Cash Flows -
Six months ended June 30, 1994 and
1993 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Consolidated Financial Condition and
Results of Operations 8
PART II Other Information 14
ST. JOE PAPER COMPANY
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
June 30 December 31
ASSETS 1994 1993
(Unaudited)
Current Assets:
Cash and cash equivalents $ 45,177 $ 48,304
Short-term investments 66,745 66,307
Accounts receivable 80,185 74,127
Inventories 62,708 69,398
Other assets 27,967 25,720
Total Current Assets 282,782 283,856
Investment and Other Assets:
Marketable securities 179,271 159,523
Other assets 42,251 40,170
Total Investments and Other Assets 221,522 199,693
Property, Plant and Equipment, Net 1,020,364 1,007,722
Total Assets $ 1,524,668 $ 1,491,271
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 40,596 $ 41,515
Accrued liabilities 31,566 27,838
Income taxes payable 4,426 2,737
Long-term debt due within one year 23,828 21,309
Total Current Liabilities 100,416 93,399
Accrued Casualty Reserves and Other Liabilities 11,951 11,063
Long-Term Debt due After One Year 38,304 38,947
Deferred Income Taxes and Income Tax Credits 210,524 205,531
Minority Interest in Consolidated Subsidiaries 245,942 238,878
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 864,248 851,511
Net unrealized gains on debt and marketable
equity securities 44,569 43,228
Total Stockholders' Equity 917,531 903,453
Total Liabilities and Stockholders' Equity $ 1,524,668 $ 1,491,271
See accompanying notes.
- 3 -
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
1994 1993 1994 1993
Net Sales and Operating Revenues $ 165,886 $ 150,548 $ 333,254 $ 297,246
Cost of Sales and Operating Expenses 138,182 134,183 272,173 260,837
Gross Profit 27,704 16,365 61,081 36,409
Selling, General and Administrative
Expenses 13,731 14,126 28,088 29,032
Operating Profit 13,973 2,239 32,993 7,377
Other Income (Expense):
Dividends 531 826 1,065 1,055
Interest income 2,329 2,005 4,833 4,780
Interest expense (1,005) (2,419) (1,968) (3,398)
Gain on sales and other
dispositions of property,
plant and equipment 375 (86) 759 891
Other, net 704 1,148 1,791 2,469
2,934 1,474 6,480 5,797
Income before Income Taxes, Minority
Interest and Cumulative Effect of
Change in Accounting Principle 16,907 3,713 39,473 13,174
Provision for Income Taxes 6,913 925 14,816 4,561
Income before Minority Interest and
Cumulative Effect of Change in
Accounting Principle 9,994 2,788 24,657 8,613
Income Applicable to Minority
Interest in Consolidated
Subsidiaries 2,367 2,035 8,870 4,398
Income before Cumulative Effect of
Change in Accounting Principle 7,627 753 15,787 4,215
Cumulative Effect of Change in
Accounting Principle for
Income Taxes --- --- --- 20,518
Net Income $ 7,627 $ 753 $ 15,787 $ 24,733
Retained Earnings at
Beginning of Period 858,146 847,423 851,511 824,968
Dividends 1,525 1,525 3,050 3,050
Retained Earnings at End of Period $ 864,248 $ 846,651 $ 864,248 $ 846,651
Per Share Data:
Dividends $ 0.05 $ 0.05 $ 0.10 $ 0.10
Income before Cumulative
Effect of Change in
Accounting Principle $ 0.25 $ 0.02 $ 0.52 $ 0.13
Cumulative Effect of Change
in Accounting Principle --- --- --- 0.68
Net Income $ 0.25 $ 0.02 $ 0.52 $ 0.81
Number of Common
Shares Outstanding 30,498,650 30,498,650 30,498,650 30,498,650
See accompanying notes.
- 4 -
ST. JOE PAPER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands except per share amounts)
Six Months
ended June 30
1994 1993
Cash Flows from Operating Activities:
Net Income $ 15,787 $ 24,733
Adjustments to reconcile net income to cash
provided by operating activities:
Cumulative effect of a change in
accounting principle --- (20,518)
Depreciation and depletion 31,095 32,197
Minority interest in income 8,870 4,398
Gain on sale of property (759) (891)
Increase in deferred income taxes 4,993 6,257
Changes in operating assets and liabilities:
Accounts receivable (6,058) 9,537
Inventories 6,690 3,136
Other assets (4,328) (15,273)
Accounts payable, accrued liabilities
and casualty reserves 3,697 9,224
Increase in income taxes payable 1,689 ---
Cash Provided by Operating Activities 61,676 52,800
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (47,506) (45,857)
Purchases of investments (80,986) (23,821)
Proceeds from sales of property 4,529 4,950
Proceeds from sales of investments 61,194 18,775
Cash Used in Investing Activities (62,769) (45,953)
Cash Flows from Financing Activities:
Net change in short-term borrowings 2,514 896
Dividends paid to stockholders (3,050) (3,050)
Repayment of long-term debt (638) (983)
Dividends paid to minority interest (860) (846)
Cash Used in Financing Activities (2,034) (3,983)
Net Increase (Decrease) in Cash and Cash Equivalents (3,127) 2,864
Cash and Cash Equivalents at Beginning of Period 48,304 42,137
Cash and Cash Equivalents at End of Period $ 45,177 $ 45,001
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for certain
expense items is:
Interest $ 1,871 $ 1,827
Income taxes $ 10,927 $ 875
See accompanying notes
- 5 -
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, 1994 and December 31, 1993 and the results of operations and
cash flows for the three and six month periods ended June 30, 1994 and
1993.
2. The results of operations for the three and six month periods ended June
30, 1994 and 1993 are not necessarily indicative of the results that may
be expected for the full year.
3. Inventories at June 30, 1994 and December 31, 1993:
June 30 December 31
1994 1993
Manufactured paper products and
associated raw materials $ 27,367 $ 30,782
Materials and supplies 27,575 27,407
Sugar 7,766 11,209
$ 62,708 $ 69,398
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.
- 6 -
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, 1994 and December 31, 1993, 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.
- 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net Sales and Operating Revenues for the quarter ended June
30, 1994 increased $15.3 million (10.2%) compared to the same 1993
period. Net sales and operating revenues for the six months ended
June 30, 1994 increased $36.0 million (12.1%) compared to the same
1993 period.
Cost of Sales and Operating Expenses increased $4.0 million
(3.0%) for the quarter ended June 30, 1994 compared to the June 30,
1993 quarter which were 83.3% of net sales and operating revenue
for the 1994 quarter and 89.1% for the 1993 quarter. The cost of
sales and operating expenses for the six months ended June 30, 1994
were up $11.3 million (4.3%) compared to the same 1993 period and
were 81.7% of net sales and operating revenues in 1994 and 87.8% in
1993.
Selling, General and Administrative Expenses for the second
quarter of 1994 were down $0.4 million (2.8%) compared to the
corresponding 1993 quarter. These expenses for the year to date
were down $0.9 million (3.3%) compared to 1993.
Operating Profit for the quarter ended June 30, 1994 compared
to the same 1993 period for the Company was higher by $11.7 million
(524.1%) and for the six months period by $25.6 million (347.2%).
The operating results for the Company by industry segments for
the comparable three month and six month periods follows (in
millions of dollars).
FOREST PRODUCTS
Quarter Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 93.0 $ 77.9 19.4
Cost of Sales and Operating Expenses 85.4 80.3 6.3
Selling, General and Administrative
Expenses 7.3 7.3 0.3
Operating Profit (Loss) 0.4 (9.7) 103.7
-8-
Six Months Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $177.5 $157.0 13.1
Cost of Sales and Operating Expenses 167.8 157.0 6.9
Selling, General and Administrative
Expense 14.7 15.9 (7.5)
Operating Profit (Loss) (5.0) (15.9) 68.5
Net sales and operating revenue in the Company's paper mill
for the six month 1994 period were up 15.2% due to an increase in
tons sold to outside customers of 19.8%, while the average selling
price from the same 1993 period remained the same. Revenue from
sales of crest white were up 13.3% with revenue from crest white
sales amounting to 58% of total sales, which was up from 56% in
1993. Sales by the Company's container operations for the six
month period this year over 1993 were up 11.1% on an increase of
10.8% in tons sold and a small 0.2% increase in selling price per
ton. Timber revenue on sales to outside customers by our land
company was up 47.1% on an increase in tons sold of 41.4% and a
4.0% increase in per ton selling price.
The cost of sales and operating expenses at the mill for the
six months period ended June 30th decreased 3% on a per ton basis
compared to last year but due to the increased volume these costs
were up primarily in the area of repair materials, shipping
department, operations fees, water treatment and workmen's
compensation insurance.
Production at the mill was up 5.1% for the six month period of
1994 over like 1993 period as the average daily production was up
9.4% which overcame a four day reduction in days operated. The
revenue was helped this period by the increase in sales volume
particularity in the crest white tons sold and the $30 a ton
increase in linerboard prices in March 1994. There has been
another $40 per ton increase in linerboard prices in July 1994,
which will improve third quarter results. The backlog of orders in
our container operations have been at record highs the last several
weeks.
TRANSPORTATION
Quarter Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 44.8 $ 43.2 3.7
Cost of Sales and Operating Expenses 32.6 33.3 (2.1)
Selling, General and Administrative
Expenses 4.1 4.5 (9.9)
Operating Profit 8.1 5.3 51.7
-9-
Six Months Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 87.9 $ 86.5 1.7
Cost of Sales and Operating Expenses 64.4 66.2 (2.7)
Selling, General and Administrative
Expenses 8.4 8.3 1.2
Operating Profit 15.1 12.0 26.0
Net sales and operating revenue for the six month period
increased 1.8% at Florida East Coast Railway Company (FEC). This
increase reflects the continued general improvement in the economy.
Rail traffic volumes in rock and other types of carloads were up.
Rock carloads for the first six months of 1994 were up 10.9%, other
carloads up 1.7%, intermodel units and automotive carloads were
down from 1993. Apalachicola Northern Railroad Company (ANRR) net
revenue was flat for the six months 1994 period compared to 1993.
Cost of sales and operating expenses for the FEC decreased
3.3% for the six month period of 1994 and selling, general and
administrative expenses were up 1.6%. There were small expense
increases in employee wages, including fringe benefits,
depreciation and property taxes. ANRR operating expenses for this
six month period were up 4.9% and selling, general and
administrative expenses were down 9.2%. The main operating
expenses at ANRR that were up for this six month period are
maintenance on the track, material and labor and repair of freight
train cars.
SUGAR
Quarter Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 14.6 $ 12.8 14.1
Cost of Sales and Operating Expenses 11.6 11.8 (2.0)
Selling, General and Administrative
Expenses 0.8 0.8 (0.9)
Operating Profit 2.3 0.3 786.9
Six Months Ended June 30, 1994
Net Sales and Operating Revenue $ 28.0 $ 24.9 12.6
Cost of Sales and Operating Expenses 22.4 21.4 4.5
Selling, General and Administrative
Expenses 1.8 1.8 3.5
Operating Profit 3.8 1.7 124.3
-10-
Net sales and operating revenue in the Sugar segment were up
for the six month period due to an increase in tons sold of 10.2%
and a 2.2% increase in sales price per ton.
Cost of sales and operating expenses per ton were down 3.5%
caused by a decrease in dead season expenses this year and an
increase in sales of molasses. Molasses is a by-product of the
production of raw sugar and is accounted for as reduction in the
cost of sales and operating expense.
COMMUNICATIONS
Quarter Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 7.7 $ 7.7 0.1
Cost of Sales and Operating Expenses 4.6 5.1 (9.5)
Selling, General and Administrative
Expenses 1.1 1.0 8.3
Operating Profit 2.0 1.6 26.2
Six Months Ended June 30, 1994
Net Sales and Operating Revenue $15.1 $ 15.0 0.4
Cost of Sales and Operating Expenses 9.3 9.8 (4.9)
Selling, General and Administrative
Expenses 2.2 2.1 4.4
Operating Profit 3.6 3.2 14.3
Net sales and operating revenue for the Communications segment
were slightly higher for the six month period the result of access
line growth.
Cost of sales and operating expenses were lower due primarily
to the curtailment of an extensive outside plant maintenance
program initiated in mid 1992. Selling, general and administrative
expenses had a slight increase in the 1994 six months period from
the like 1993 period that was attributable to an ongoing billing
and customer service software conversion.
-11-
REAL ESTATE
Quarter Ended June 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 6.2 $ 9.6 (35.1)
Cost of Sales and Operating Expenses 4.5 4.2 5.2
Selling, General and Administrative
Expenses 0.5 0.5 (7.8)
Operating Profit 1.3 4.8 (73.6)
Six Months Ended June 30, 1994
Net Sales and Operating Revenue $ 25.7 $ 15.1 70.2
Cost of Sales and Operating Expenses 9.2 7.6 20.2
Selling, General and Administrative
Expenses 1.0 1.0 (0.8)
Operating Profit 15.5 6.4 141.0
In the Real Estate segment of the Company, Gran Central,
Florida East Coast Industries, Inc.'s real estate subsidiary, had
a 148.2% increase in net sales and operating revenue for the first
six month period of 1994. This increase was attributable to sales
of real estate being higher by $12.5 million and rental income
being up $1.5 million. Southwood Properties, the Company's real
estate division, had a decrease in net sales and operating revenue
of $3.4 million from less property and timber sales.
Expenses at Gran Central increased 29.6% in the six month
period of 1994 over 1993 and continue to be caused by increased
depreciation, property taxes and casualty insurance. Expenses at
Southwood were down $0.6 million as the cost of property sold was
less on the decrease in realty sales.
Other Income for the quarter ended June 30, 1994 was up $1.5
million (99.1%) as compared to the same 1993 period. For the six
months ended June 30, 1994, other income was up $0.7 million
(11.8%) compared to the same 1993 period. The increase in the six
months results occurred in dividend income and the net of interest
income less interest expense, being up 61.3%.
Taxes for the second quarter were up $6.0 million (647.4%)
and $10.3 million (224.8%) for the six month period. The effective
tax rate for the six month period is 37.5% for 1994 and 34.6% for
1993. This increase in tax expense is the direct result of
increased income.
-12-
Net Income Before Cumulative Effect Of Change In Accounting
Principle for the second quarter of 1994 of $7.6 million was $6.9
million more than the same 1993 period or up 912.9%. The six month
period ended June 30, 1994 shows an increase of $11.6 million or up
274.5%. The earnings per share for the six month period ended June
30, 1994 of $0.52 is $0.39 more than the like 1993 period.
Financial Position
The company continues to have a strong current asset position.
Current assets were $282.8 million, down $1.1 million or 0.4% from
December 31, 1993. The Company's working capital ratio at June 30,
1994 was 2.8 to 1, a decrease from December 31, 1993 when it was
3.0 to 1.
The Company had a net increase in property, plant and
equipment at June 30, 1994 of $12.6 million over the December 31,
1993 balance. The Company's net investment in marketable
securities has increased $19.7 million compared to December 31,
1993. This is primarily attributable to the investment of proceeds
received from Gran Central's sales of real estate in the first
quarter. The Company has a minimum amount of long-term debt. The
noncurrent long-term debt at June 30, 1994 of $38.3 million was
$0.6 million less than at December 31, 1993. There were no other
significant changes in the Balance Sheet at June 30, 1994 over
December 31, 1993.
Stockholder's equity at June 30, 1994 was $917.5 million or
$30.08 per share an increase of $14.1 million or $0.46 per share
over $903.5 million or $29.62 per share at December 31, 1993.
-13-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
No change from Form 10-K for the year ended
December 31, 1993
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders,
held on May 10, 1994 the following persons were
elected as Directors of the Company:
J. C. Belin R. E. Nedley
H. L. Brainin R. B. Newton, Jr.
E. C. Brownlie W. L. Revell
T. S. Coldewey R. E. Taylor
R. H. Dent W. T. Thompson, III
E. T. Ford W. L. Thornton
S.D. Fraser J. D. Uible
Item 5. Other Information
The Company is not aware of any other matters
of significance to be reported hereunder.
Item 6(a). Exhibits
NOTICE OF ANNUAL MEETING held on
May 10, 1994.
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. D. Fraser
Vice President and Director
D. M. Groos
Comptroller
August 8, 1994
Date
-14-
EXHIBIT
ST. JOE PAPER COMPANY
P. O. BOX 1380
JACKSONVILLE, FLORIDA 32201
MARCH 31, 1994
TO THE HOLDERS OF COMMON STOCK OF
ST. JOE PAPER COMPANY
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of St. Joe Paper Company
will be held on Tuesday, May 10, 1994, at 10:30 A.M. Eastern
Daylight Savings Time, at the Commerce-Dockside Room, Marina Hotel
and Convention Center at St. Johns Place, 1515 Prudential Drive,
Jacksonville, Florida. The meeting will be held to consider and
act upon the following matters, namely:
1. To elect a Board of fourteen (14) directors
for the ensuing year and until their
successors are duly elected and qualified.
2. To transact such other business as may
properly come before the Meeting or any
adjournment or adjournments thereof.
Shareholders of record at the close of business on March 31,
1994 are entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited and urged to attend the
meeting in person. The holders of a majority of the outstanding
shares entitled to vote at the Meeting, present in person or by
proxy, shall constitute a quorum.
This notice and the accompanying proxy material contains
important information regarding the Company and matters to be acted
on at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
RONALD A. ANDERSON
SECRETARY
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND
RETURN THE PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.