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-
5
1,000
6-MOS
DEC-31-1995
JUN-30-1995
81970
69172
94687
0
79694
347848
1686727
640899
1623769
91163
36131
8714
0
0
49264
1623769
278018
385812
205993
314780
0
0
2714
84724
31218
53506
0
0
0
47850
1.57
1.57
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.
