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 September 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 September 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 -
September 30, 1994 and December 31, 1993 3
Consolidated Statement of
Income and Retained Earnings -
Three Months and Nine Months ended
September 30, 1994 and 1993 4
Consolidated Statement of Cash Flows -
Nine months ended September 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)
September 30 December 31
ASSETS 1994 1993
(Unaudited)
Current Assets:
Cash and cash equivalents $ 40,921 $ 48,304
Short-term investments 81,117 66,307
Accounts receivable 80,240 74,127
Inventories 49,731 69,398
Other assets 31,672 25,720
Total Current Assets 283,681 283,856
Investment and Other Assets:
Marketable securities 179,410 159,523
Other assets 45,829 40,170
Total Investments and Other Assets 225,239 199,693
Property, Plant and Equipment, Net 1,020,715 1,007,722
Total Assets $ 1,529,635 $ 1,491,271
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 39,754 $ 41,515
Accrued liabilities 37,546 27,838
Income taxes payable 4,767 2,737
Long-term debt due within one year 15,865 21,309
Total Current Liabilities 97,932 93,399
Accrued Casualty Reserves and Other Liabilities 12,808 11,063
Long-Term Debt due After One Year 37,971 38,947
Deferred Income Taxes and Income Tax Credits 210,451 205,531
Minority Interest in Consolidated Subsidiaries 247,963 238,878
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 870,243 851,511
Net unrealized gains on debt and
marketable equity securities 43,553 43,228
Total Stockholders' Equity 922,510 903,453
Total Liabilities and Stockholders' Equity $ 1,529,635 $ 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 Nine Months
ended September 30 ended September 30
1994 1993 1994 1993
Net Sales $ 122,546 $ 98,065 $ 367,918 $ 308,862
Operating Revenues 43,711 43,117 131,592 129,566
Net Sales and Operating revenues 166,257 141,182 499,510 438,428
Cost of Sales 109,748 92,126 317,541 286,858
Operating Expenses 33,796 28,815 98,176 94,920
Cost of Sales and Operating
Expenses 143,544 120,941 415,717 381,778
Gross Profit 22,713 20,241 83,793 56,650
Selling, General and
Administrative Expenses 14,826 13,368 42,915 42,400
Operating Profit 7,887 6,873 40,878 14,250
Other Income (Expense):
Dividends 555 535 1,620 1,590
Interest income 3,159 2,472 7,993 7,252
Interest expense (1,035) (82) (3,002) (3,480)
Gain on sales and other
dispositions of property,
plant and equipment 4,295 63 5,054 954
Other, net 1,087 726 2,877 3,195
8,061 3,714 14,542 9,511
Income before Income Taxes, Minority
Interest and Cumulative Effect of
Change in Accounting Principle 15,948 10,587 55,420 23,761
Provision for Income Taxes 5,372 9,413 20,187 13,974
Income before Minority Interest and
Cumulative Effect of Change in
Accounting Principle 10,576 1,174 35,233 9,787
Income Applicable to Minority
Interest in Consolidated
Subsidiaries 3,056 2,049 11,926 6,447
Income before Cumulative Effect of
Change in Accounting Principle 7,520 (875) 23,307 3,340
Cumulative Effect of Change in
Accounting Principle for
Income Taxes --- --- --- 20,518
Net Income $ 7,520 $ (875) $ 23,307 $ 23,858
Retained Earnings at Beginning
of Period 864,248 846,651 851,511 824,968
Dividends 1,525 1,525 4,575 4,575
Retained Earnings at
End of Period $ 870,243 $ 844,251 $ 870,243 $ 844,251
Per Share Data:
Dividends $ 0.05 $ 0.05 $ 0.15 $ 0.15
Income before Cumulative Effect
of Change in Accounting
Principle $ 0.25 $ (0.03) $ 0.76 $ 0.10
Cumulative Effect of Change in
Accounting Principle --- --- --- 0.68
Net Income $ 0.25 $ (0.03) $ 0.76 $ 0.78
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)
Nine Months
ended September 30
1994 1993
Cash Flows from Operating Activities:
Net Income $ 23,307 $ 23,858
Adjustments to reconcile net income to
cash provided by operating activities:
Cumulative effect of a change in accounting
principle $ --- $ (20,518)
Depreciation and depletion 46,707 48,899
Minority interest in income 11,926 6,447
Gain on sale of property (5,054) (954)
Increase in deferred income taxes 4,920 15,513
Changes in operating assets and liabilities:
Accounts receivable (6,113) 8,529
Inventories 19,667 10,169
Other assets (11,611) (19,823)
Accounts payable, accrued liabilities and
casualty reserves 9,692 9,216
Increase in income taxes payable 2,030 1,207
Cash Provided by Operating Activities 95,471 82,543
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (64,015) (75,759)
Purchases of investments (111,465) (88,461)
Proceeds from sales of property 9,369 11,033
Proceeds from sales of investments 75,521 75,928
Cash Used in Investing Activities (90,590) (77,259)
Cash Flows from Financing Activities:
Net change in short-term borrowings (5,437) (5,100)
Dividends paid to stockholders (4,575) (4,575)
Repayment of long-term debt (983) (1,313)
Dividends paid to minority interest (1,269) (1,267)
Cash Used in Financing Activities (12,264) (12,255)
Net (Decrease in Cash and Cash Equivalents (7,383) (6,971)
Cash and Cash Equivalents at Beginning of Period 48,304 42,137
Cash and Cash Equivalents at End of Period $ 40,921 $ 35,166
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for certain expense items is:
Interest $ 2,815 $ 2,704
Income taxes $ 23,661 $ 1,573
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
September 30, 1994 and December 31, 1993 and the results of operations and
cash flows for the three and nine month periods ended September 30, 1994 and
1993.
2. The results of operations for the three and nine month periods ended
September 30, 1994 and 1993 are not necessarily indicative of the results that
may be expected for the full year.
3. Inventories at September 30, 1994 and December 31, 1993:
September 30 December 31
1994 1993
Manufactured paper products and
associated raw materials $ 26,402 $ 30,782
Materials and supplies 22,836 27,407
Sugar 493 11,209
$ 50,772 $ 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. Certain self-insurance risks with respect to losses for third
party liability, property damage and group health insurance provided to
employees have been retained by the Company. In the opinion of management,
none of these are expected to have a material adverse effect on the Company's
consolidated financial position or results of operations.
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.
- 6 -
ST. JOE PAPER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands )
The Company is subject to substantial costs arising out of environmental
laws and regulations, including obligations to remove or limit the effects on
the environment of the disposal or release of certain 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.
It is not possible to quantify future environmental costs because many
issues relate to actions by third parties or changes in environmental
regulation. Based on information presently available, management believes that
the ultimate disposition of currently known matters will not have a material
effect on the consolidated financial position or liquidity of the Company, but
could be material to the results of operations in any one period. The
aggregate accruals relating to environmental costs were $6.7 million as of
September 30, 1994 and December 31, 1993. Environmental liabilities are paid
over an extended period and the timing of such payments cannot be predicted
with any confidence.
- 7 -
MANAGEMENTS DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net Sales and Operating Revenues for the quarter ended
September 30, 1994 increased $25.1 million (17.8%) compared to the
same 1993 period. Net sales and operating revenues for the nine
months ended September 30, 1994 increased $61.1 million (13.9%)
compared to the same 1993 period.
Cost of Sales and Operating Expenses increased $22.6 million
(18.7%) for the quarter ended September 30, 1994 compared to the
September 30, 1993 quarter which were 86.3% of net sales and
operating revenue for the 1994 quarter and 85.7% for the 1993
quarter. The cost of sales and operating expenses for the nine
months ended September 30, 1994 were up $33.9 million (8.9%)
compared to the same 1993 period and were 83.2% of net sales and
operating revenues in 1994 and 87.1% in 1993.
Selling, General and Administrative Expenses for the third
quarter of 1994 were up $1.5 million (10.9%) compared to the
corresponding 1993 quarter. These expenses for the year to date
were up $0.5 million (1.2%) compared to 1993.
Operating Profit for the quarter ended September 30, 1994
compared to the same 1993 period for the Company was higher by
$1.0 million (14.7%) and for the nine month period by
$26.6 million (186.9%).
The operating results for the Company by industry segments for
the comparable three month and nine month periods follows (in
millions of dollars).
FOREST PRODUCTS
Quarter Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $101.4 $ 75.9 33.6
Cost of Sales and Operating Expenses 94.6 78.0 21.3
Selling, General and Administrative
Expenses 8.9 7.3 22.4
Operating Profit (Loss) (2.2) (9.4) 77.1
-8-
Nine Months Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $278.9 $232.9 19.8
Cost of Sales and Operating Expenses 262.4 235.0 11.7
Selling, General and Administrative
Expense 23.6 23.2 1.9
Operating Profit (Loss) ( 7.2) (25.3) 71.7
Net sales and operating revenue on sales to outside customers
in the Company's paper mill for the quarter ended September 30,
1994 and nine month period 1994 compared to the same 1993 periods,
were up 39.7% and up 23.1% respectively, reflecting an increase in
tons sold of 32.2% for the quarter and 23.9% year to date and an
increase in selling price of 26.1%, for the quarter and year to
date of 8.2%. Revenue from sales of crest white for the quarter and
nine month period was up 46.7% and up 24.0% respectively, while
kraft liner sales for the same periods were up 3.6% and 3.4%,
respectively. Revenue by the Company's container operations were
up 16.2% this nine month period with tons sold up 12.5% and selling
price per ton up 3.3%. Timber revenue on sales to outside
customers for the nine month period, by our land company was up
8.5% in 1994 over 1993 on increased tons sold of 9.9% but offset in
part by a decrease of 1.3% in the per ton selling price.
The cost of sales and operating expenses for the nine month
period at the mill increased 7.8% and consisted of the higher cost
for water and energy costs, baled waste and chemicals, workman's
compensation insurance and repair material expenses.
In October, the selling price of kraft linerboard was
increased $40 per ton by virtually all companies in the industry,
including this Company. This is the fourth increase in the last
thirteen months and will have a positive affect on the operating
results of this segment of the Company for the fourth quarter of
1994.
TRANSPORTATION
Quarter Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 43.7 $ 43.1 1.4
Cost of Sales and Operating Expenses 33.8 28.8 17.2
Selling, General and Administrative
Expenses 3.7 3.8 (2.7)
Operating Profit 6.2 10.5 (40.9)
-9-
Nine Months Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $131.7 $129.6 1.6
Cost of Sales and Operating Expenses 98.2 95.0 3.4
Selling, General and Administrative
Expenses 12.2 12.2 ---
Operating Profit 21.3 22.4 (5.2)
Operating revenue for the third quarter, 1994 and nine month
period compared to like 1993 periods increased 1.7% and 1.8%,
respectively, at Florida East Coast Railway Company (FEC). This
revenue increase for the nine month period of 1994 over 1993 is in
the rail traffic volumes of carload rock being up 8.9%, and other
carloads up 2.0%. The rail traffic volumes of intermodel units and
carload automobiles had a slight decrease of 1.3% and 1.2%
respectively. Apalachicola Northern Railroad Company (ANRR) net
revenue for the year to date period increased 1.0% mainly on
increase in woodchips, pulpwood and recyclable cars handled.
Operating expenses for the FEC increased 3.2% for the nine
month period and selling, general and administrative expenses
increased 1.1%. These expense increases were in the area of
depreciation, property taxes, casualty and personal injury
insurance. ANRR operating expenses for the 1994 nine months period
over 1993 were up 5.9% and selling, general and administrative
expenses were down 24.0%. The primary areas of increase in
operating expenses were costs connected with train derailment,
track laying and locomotive maintenance.
SUGAR
Quarter Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 8.7 $ 9.2 ( 5.3)
Cost of Sales and Operating Expenses 6.9 5.4 28.8
Selling, General and Administrative
Expenses 0.8 0.7 1.5
Operating Profit 1.0 3.1 (67.1)
-10-
Nine Months Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 36.7 $34.1 7.7
Cost of Sales and Operating Expenses 29.3 26.8 9.3
Selling, General and Administrative
Expenses 2.6 2.5 2.9
Operating Profit 4.8 4.8 1.3
Net sales and operating revenue in the Sugar segment were up
for the nine month period due to an increase in tons sold of 6.9%
and a 0.9% increase in sales price.
Cost of sales and operating expenses were up for the nine
months period due to increase in dead season expenses, that caused
these expenses to increase by 3.7% per ton. In addition, sales of
molasses were up 54.3% per ton of sugar. Selling, general and
administration expenses increased mainly in the area of pollution
control.
COMMUNICATIONS
Quarter Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 7.6 $ 7.0 7.5
Cost of Sales and Operating Expenses 4.6 5.1 (9.4)
Selling, General and Administrative
Expenses 1.0 1.0 (4.7)
Operating Profit 2.0 0.9 115.7
Nine Months Ended September 30, 1994
Net Sales and Operating Revenue $22.6 $22.0 2.7
Cost of Sales and Operating Expenses 13.9 14.9 (6.4)
Selling, General and Administrative
Expenses 3.1 3.1 1.4
Operating Profit 5.6 4.1 37.0
Net sales and operating revenue for the Communications segment
were up for the nine month period. The major item included in this
increase was reduced payments to other telephone companies for call
termination services but also there was a general increase in all
services including local service, long distance and access charges.
Cost of sales and operating expenses were lower for the 1994
nine month period on the reduction in the extensive outside plant
maintenance program at one of the operating companies. The small
increase in selling, general and administrative expenses for the
nine month period was attributable to general inflationary
influences.
-11-
REAL ESTATE
Quarter Ended September 30, 1994
%Increase
1994 1993 (Decrease)
Net Sales and Operating Revenue $ 5.6 $ 6.6 (16.1)
Cost of Sales and Operating Expenses 4.3 4.3 ( 1.5)
Selling, General and Administrative
Expenses 0.4 0.5 ( 7.4)
Operating Profit 0.9 1.9 (52.3)
Nine Months Ended September 30, 1994
Net Sales and Operating Revenue $ 31.3 $ 21.7 43.8
Cost of Sales and Operating Expenses 13.4 11.9 12.3
Selling, General and Administrative
Expenses 1.5 1.5 ( 2.9)
Operating Profit 16.4 8.3 97.7
In the Real Estate segment of the Company, Gran Central,
Florida East Coast Industries, Inc.'s real estate subsidiary,
had a 111.4% increase ($15.1 million) in net sales and operating
revenue for the nine month period in 1994 over the same 1993
period. Of this increase, sales of real estate were up 739.9% and
rental and other income was up 24.2% Southwood Properties, the
Company's real estate division, had a decrease in net sales and
operating revenue of 68.9%. This decrease was primarily caused by
property sales being down by 72.2% and timber sales being down by
52.4%.
Expenses at Gran Central increased 25.7% for the nine month
period of 1994 over 1993 and are attributable mainly to increased
depreciation, property tax, commissions, utilities, insurance,
uncollectible revenue and maintenance expense. Southwood's
expenses were down 45.4% on lower salaries, depreciation and for
the cost of property sold which is attributable to the decrease in
realty sales for the first nine months of 1994 over 1993.
OTHER INCOME for the quarter ended September 30, 1994 was up
$4.3 million (117.1%) as compared to the same 1993 period. For the
nine months ended September 30, 1994, other income was up $5.0
million (52.9%) compared to the same 1993 period. The major reason
for this increase for the nine months 1994 period over the like
1993 period was in net interest income (interest income less
interest expense) being up $1.2 million (32.3%) and gain on sale
and other dispositions of property, plant and equipment having
increased $4.1 million (429.8%).
-12-
TAXES for the third quarter were down $4.0 million (42.9%)
and up $6.2 million (44.5%) for the nine month period. The
effective tax rate for the third quarter 1994 was 33.7% compared to
88.9% for the third quarter 1993. The effective tax rate for the
nine month period is 36.4% for 1994 and 58.8% for 1993. The high
effective tax rate for both the quarter and nine month period in
1993 reflected the retroactive increase in the corporate federal
income tax rate from 34% to 35%, effective January 1, 1993 which
resulted in additional income tax expense for the 1993 third
quarter. This amount in 1993 was further increased by an increase
in deferred income taxes resulting from the federal income tax rate
increase as required by Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes."
NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE for the third quarter of 1994 of $7.5 million
was $8.4 million more than the same 1993 period or up 959.4%. The
nine month period ended September 30, 1994 shows an increase of
$20.0 million or up 597.8%. The earnings per share for the nine
month period ended September 30th of $0.76 is $0.66 more than the
like 1993 period.
FINANCIAL POSITION
The Company continues to have a strong current asset position.
Current assets were $283.7 million, down $0.2 million or 0.1% from
December 31, 1993. The Company's working capital ratio at
September 30, 1994 was 2.9 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 September 30, 1994 of $13.0 million over the December
31, 1993 balance. The Company's net investment in marketable
securities has increased $19.9 million compared to December 31,
1993. This was primarily attributable to the investment of
proceeds received from Gran Central's sales of real estate as
reported in prior reports. The Company has a minimum amount of
long-term debt. The non-current long-term debt at September 30,
1994 of $38.0 million was $1.0 million less than at December 31,
1993. There were no other significant changes in the Balance Sheet
at September 30, 1994 over December 31, 1993.
Stockholder's equity at September 30, 1994 was $922.5 million
or $30.25 per share, an increase of $19.1 million or $0.63 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 5. Other Information
The Company is not aware of any other matters of
significance to be reported hereunder.
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
November 11, 1994
Date
-14-
5
1000
QTR-3
DEC-31-1994
SEP-30-1994
40921
81117
80240
0
49731
283681
1630297
609582
1529635
97932
37971
8714
0
0
870243
1529635
367918
499510
317541
415717
0
0
3002
55420
20187
23307
0
0
0
23307
.76
.76
