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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File No. 0-12001
S T. J O E P A P E R C O M P A N Y
(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)
Registrant's telephone number, including area code: (904) 396-6600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, No par value New York Stock Exchange
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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 [ ]
The aggregate market value of registrant's Common Stock held by non-affiliates
based on the closing price on March 15, 1995 was $560,474,346.
As of March 15, 1995 there were 30,498,650 shares of Common Stock No par value
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(Specific pages incorporated are identified under the applicable item herein.)
Portions of the Registrant's Annual Report to Stockholders for 1994 (the 1994
Annual Report to Stockholders) are incorporated by reference in Part I and
Part II of this Report.
Portions of the Registrant's definitive Proxy Statement dated March 31, 1995
(the "Proxy Statement") are incorporated by reference in Part III of this
Report. Other documents incorporated by reference in this Report are listed
in the Exhibit Index.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on February 28, 1995.
ST. JOE PAPER COMPANY
By:
D. Michael Groos
Comptroller
ST. JOE PAPER COMPANY
HISTORICAL SUMMARY
(Dollar amounts in thousands except per share amounts)
FINANCIAL CONDITION 1994 1993 1992 1991 1990
Total Assets $1,552,330 $1,491,271 $1,388,300 $1,372,961 $1,342,818
Current Assets $ 301,002 $ 283,856 $ 233,349 $ 265,581 $ 308,381
Less: Current
Liabilities 96,827 93,399 86,707 88,358 80,115
Working Capital 204,175 190,457 146,642 177,223 228,266
Current Ratio (to 1) 3.1 3.0 2.7 3.0 3.8
Investments and Other
Assets 224,453 199,693 171,527 180,200 148,790
Properties, at Cost 1,645,581 1,581,663 1,506,309 1,401,533 1,319,839
Less: Accumulated
Depreciation 618,706 573,941 522,885 474,353 434,192
Long-Term Debt 37,220 38,947 40,959 42,858 45,007
Reserves and Other
Liabilities 14,534 11,063 11,703 14,959 10,207
Deferred Income Taxes 215,311 205,531 185,300 182,021 183,789
Minority Interests 251,457 238,878 229,949 220,573 220,996
Net Assets Applicable to
Common Stock $ 936,981 $ 903,453 $ 833,682 $ 824,192 $ 802,704
FINANCIAL RESULTS
Net Sales and Operating
Revenues $ 685,762 $ 591,968 $ 591,912 $ 582,180 $ 610,200
Operating Profit 64,478 32,102 24,056 24,476 49,572
Other Income 27,395 12,473 17,458 37,201 35,307
Less: Taxes on Income 33,937 22,209 14,850 20,722 28,877
Income Applicable
to Minority
Interest 15,827 10,241 11,074 13,367 14,712
Cummulative Effect of
Change Accounting
Principle - 20,518 - - -
Net Income $ 42,109 $ 32,643 $ 15,590 $ 27,588 $ 41,290
Depreciation and
Depletion Expense $ 62,392 $ 62,872 $ 59,757 $ 55,241 $ 53,657
PER COMMON SHARE
Book Value -
End of Year $ 30.72 $ 29.62 $ 27.34 $ 27.02 $ 26.32
Income before Cumulative
Effect of Change in
Accounting Principle $ 1.38 $ 0.39 $ 0.51 $ 0.90 $ 1.35
Cumulative Effect of
Change in Accounting
Principle $ - $ .68 $ - $ - $ -
Net Income $ 1.38 $ 1.07 $ 0.51 $ 0.90 $ 1.35
Net Income as % of
Book Value 4.5 3.6 1.9 3.3 5.1
Dividends Paid $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.19
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDERS MATTERS
1994 1993
Quarter ended Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31
High 61 7/8 62 5/8 57 57 7/8 54 55 41 5/8 44 1/2
Low 54 1/4 49 1/4 49 1/8 50 1/4 45 3/4 39 1/4 38 1/2 37 1/2
Dividends .05 .05 .05 .05 .05 .05 .05 .05
a. Principal market on which St. Joe Paper Company common stock is
traded: New York Stock Exchange
b. The table above presents the high and low market prices and dividend
information for St. Joe Paper Company common shares.
c. The total number of holders of record of St. Joe Paper Company common
stock as of March 7, 1995 was 882.
(Total dividends per common share: 1994 = $0.20; 1993 = $0.20)
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
December 31
ASSETS 1994 1993
Current Assets:
Cash and cash equivalents $ 71,890 $ 48,304
Short-term investments 61,156 66,307
Accounts receivable 88,606 74,127
Inventories 57,673 69,398
Other assets 21,677 25,720
Total current assets 301,002 283,856
Investments and Other Assets:
Marketable securities 174,027 159,523
Other assets 50,426 40,170
Total investments and other assets 224,453 199,693
Property, Plant and Equipment, net 1,026,875 1,007,722
Total Assets $ 1,552,330 $ 1,491,271
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 44,804 $ 41,515
Accrued liabilities 25,339 27,838
Income taxes payable 7,012 2,737
Long-term debt due within one year 19,672 21,309
Total current liabilities 96,827 93,399
Accrued casualty reserves and other liabilities 14,534 11,063
Long-term debt due after one year 37,220 38,947
Deferred income taxes and income tax credits 215,311 205,531
Minority interest in consolidated subsidiaries 251,457 238,878
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 887,520 851,511
Net unrealized gain on debt and marketable
equity securities 40,747 43,228
Total stockholders' equity 936,981 903,453
Total Liabilities and Stockholders' Equity $ 1,552,330 $ 1,491,271
See notes to consolidated financial statements.
(12)
Management Discussion and Analysis of Balance Sheet
The Consolidated Balance Sheet gives the financial position or status of
accounts on the date shown and, taken as a whole, provides a picture of the
entire enterprise on that date. A series of balance sheets will show the
progress or movement of the enterprise from one period to the next. The
balance sheet should be viewed as a unit with the income statement to obtain
a sufficiently clear picture of the status and progress of a business.
In 1994, the Company continued to have a strong balance sheet. Management's
long standing policy of retaining funds to internally finance capital additions
was continued in 1994. Cash, short-term investments and marketable securities
totaled $307 million at December 31, 1994, a $32.9 million increase over the
1993 year end amount. The Forest Products segment generated $20.7 million of
this increase as a result of improved operating results. Florida East Coast
Industries, Inc. (FECI) received over $11 million from a condemnation sale of
realty properties to the State of Florida which was invested and will be used
to finance realty improvements in 1995. A reduction in unrealized gains on
debt and marketable equity securities decreased the carrying value of
investments by $4 million.
Accounts receivable increased $14.5 million in 1994 with $12.6 million being
in Forest Products. This increase reflects the strong pricing increases
experienced during the year. Inventories fell by $11.7 million. A shortage
of containerboard led to a $4.9 million decrease in Forest Products' inventory.
The Sugar segment's inventory decreased by $6.4 million due to harvesting
delays caused by rain. Other assets increased by $6.2 million, primarily
due to a $2.9 million increase in the Communications segment's equity
in four cellular partnerships and a $1.4 million increase in prepaid pension
plan costs.
Property, plant and equipment additions were $86.5 million in 1994.
Depreciation expense was $62.4 million. All segments showed a net increase
in fixed assets with the largest increase in FECI.
Stockholders' equity at December 31, 1994 was $30.72, an increase
of $1.10 or 4%. Over the last five years, stockholders' equity has increased
17%.
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.
The Company is subject to substantial 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.
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 financial position or liquidity of the Company, but could be
material to the results of operations of the Company in any one period. As of
December 31, 1994 and 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.
The Company's financial position continues to strengthen. Net working capital
(current assets less current liabilities) increased 7% at December 31, 1994
over 1993 to $204.2 million. The current ratio (current assets divided by
current liabilities) grew to 3.1 from 3.0 in 1993.
(13)
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
Years ended December 31,
1994 1993 1992
Net sales $ 479,050 $ 387,720 $ 395,074
Operating revenues 206,712 204,248 196,838
685,762 591,968 591,912
Cost of sales 412,577 360,679 366,342
Operating expenses 150,901 147,270 146,837
Selling, general and administrative expenses 57,806 51,917 54,677
621,284 559,866 567,856
Operating profit 64,478 32,102 24,056
Other income (expense):
Dividends 2,187 2,144 2,312
Interest income 11,085 9,575 13,581
Interest expense (4,080) (3,711) (3,884)
Gain on dispositions of
property, plant and equipment 14,450 1,085 2,511
Other, net 3,753 3,380 2,938
27,395 12,473 17,458
Income before income taxes, minority
interest, and cumulative effect of
change in accounting principle 91,873 44,575 41,514
Provision for income taxes:
Current 21,905 13,294 14,259
Deferred 12,032 8,915 591
Total provision for income taxes 33,937 22,209 14,850
Income before minority interest and
cumulative effect of change in
accounting principle 57,936 22,366 26,664
Less income applicable to minority
interest in consolidated subsidiaries 15,827 10,241 11,074
Income before cumulative effect of change
in accounting principle 42,109 12,125 15,590
Cumulative effect of change in accounting
principle for income taxes --- 20,518 ---
Net income $ 42,109 $ 32,643 $ 15,590
Per Share Data:
Income before cumulative effect of change
in accounting principle $ 1.38 $ 0.39 $ 0.51
Cumulative effect of change in accounting
principle for income taxes --- 0.68 ---
Net income per share $ 1.38 $ 1.07 $ 0.51
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands except per share amounts)
Years ended December 31,
1994 1993 1992
COMMON STOCK
Balance, at end of year (1994, 1993 and
1992 - 30,498,650 shares) $ 8,714 $ 8,714 $ 8,714
RETAINED EARNINGS
Balance, at beginning of year $ 851,511 $ 824,968 $ 815,478
Net income 42,109 32,643 15,590
Dividends: Cash ($0.20 per
share - 1994, 1993 and 1992) (6,100) (6,100) (6,100)
Balance, at end of year $ 887,520 $ 851,511 $ 824,968
NET UNREALIZED GAIN ON DEBT AND MARKETABLE EQUITY SECURITIES
Balance, at beginning of year $ 43,228 $ --- $ ---
Decrease in net unrealized gain,
net of tax effect (2,481) --- ---
Cumulative effect of change in accounting
principle for investments --- 43,228 ---
Balance, at end of year $ 40,747 $ 43,228 $ ---
See notes to consolidated financial statements.
(14)
Management Discussion and Analysis of Statement of Income
The Consolidated Statement of Income compares in summary form the results of
operations for the three year period 1992, 1993 and 1994. This discussion is
to provide help in understanding the significant events which caused the
changes between the years.
Net sales and operating revenues increased 16% in 1994 over 1993 due
principally to a $74.1 million increase in the Forest Products segment. All
segments reported increased revenues in 1994. In 1993, net sales and operating
revenues were flat with increases in the Transportation, Communications and
Real Estate segments and declines in Forest Products and Sugar.
Cost of sales in 1994 increased 14% over 1993 due mainly to a $46.9 million
increase in Forest Products. In 1993, cost of sales decreased 2% from 1992.
Operating expenses increased 3% in 1994 compared to 1993, which held steady
from 1992. Selling, general and administrative expenses were 11% ($5.9
million) higher in 1994 than 1993. The 1993 expenses were $2.8 million lower
than 1992.
Operating profit in 1994 was slightly more than double the 1993 amount which
was a third higher than 1992. Forest Products increased 109%, Real Estate
82%, Communications 32%, Sugar 25% and Transportation decreased 3% in 1994.
In 1993, Forest Products, Transportation and Real Estate had increased
operating profits while Sugar and Communications decreased.
Other income increased in 1994 by $14.9 million due primarily to land sales
of $3.5 million more by FECI and $8.7 million more by Forest Products. 1993
other income was down by $4.9 million from 1992 due to decreases in interest
income and sales of property.
The provision for income taxes increased $11.7 million in 1994 and $7.4
million in 1993. The 1994 increase is due to the higher income while 1993
also reflects the deferred tax effect of the change in the federal income
tax rate. The Company files a consolidated federal income tax return for the
parent and all 80% or greater owned subsidiaries. The effective income tax
rate was 36.9%, 49.8% and 35.8% for 1994, 1993, and 1992 respectively. In
1993, the Company adopted Statement of Financial Accounting Standards No. 109
which resulted in the recognition of $20.5 million in additional income in
the first quarter of 1993 for the cumulative effect of the change in
accounting for income taxes.
Net income before the cumulative effect of a change in accounting principle
for income taxes rose $30 million in 1994 after a decline of $3.5 million in
1993. Net income per share before the cumulative effect of change in
accounting principle for income taxes rose to $1.38 in 1994 compared to $0.39
in 1993 and $0.51 in 1992. Increased profitability in the Forest Products
segment, a condemnation sale to the State of Florida and the other land sales
mentioned above were the primary cause of the improvement in 1994. The
decline in 1993 was largely due to the effect of the enacted income tax
rate increase.
Forest Products
The operating results for the Forest products segment were dramatically
affected by the rapid tightening of the containerboard market during the
latter half of 1994. Domestic prices for kraft linerboard rose from $320 per
ton in January 1994 to $340 per ton in June to $430 per ton in December. The
average sales price of the Company's kraft linerboard rose by $40 per ton and
boxes by $49 per ton. Volumes also contributed to the $74.1 million increase
in Forest Products sales in 1994. Mill sales to outside customer increased 22%
and container sales increased by 10%. The mill also changed its product mix
as Crest White revenues rose to 60% of total mill sales compared to 55% in
1993. Sales by the forestry operation remained constant in 1994.
In 1994, Forest Products revenue was 56% of the Company's total compared with
53% in 1993 and 54% in 1992. In 1993, mill sales to outside customers and our
plants declined $14.1 million due to a decline in the average sales price. The
container operations sales in 1993 were lower than 1992 due to a decrease in
selling price and reduced volume while the forestry operation's revenues were
flat.
Cost of sales for the Forest Products segment rose 15% in 1994 over 1993.
The container plants accounted for most of the increase largely due to the
higher linerboard prices referenced above. The mill cost rose 10% on a volume
increase of 9%. The forestry operation had a slightly lower cost of sales in
1994 than in 1993.
In 1993, the mill and forestry units had increased cost of sales while
container costs were lower than 1992 due to lower linerboard prices. The mill
experienced higher natural gas and fuel oil costs in 1993 than in 1992 and
spent more on repair materials.
Selling, general and administrative expenses were 22% higher for the Forest
Products segment in 1994 than in 1993. The mill operation decreased its
expenses by 8%, forestry increased by 2% and the container plants increased
by 8%. In 1993, the mill's expenses were about the same as 1992 while
forestry increase 1% and containers decreased 2%.
(15)
Management Discussion and Analysis of Statement of Income
Transportation
In 1994, the Transportation segment accounted for 26% of the Company's total
revenue, compared to 30% in 1993 and 28% in 1992. The Florida East Coast
Railway Company (FEC) experienced an $0.8 million increase in revenue in
1994 over 1993. Adverse weather conditions in the fourth quarter slowed the
gain in rock shipments which increased 6% in 1994 after growing by 14% in
1993. Intermodal shipments were slightly down in both 1994 and 1993 for FEC
while automotive and other traffic increased by a small percentage in 1994
after a decline in 1993. In 1995, FEC is enlarging its scope of operations
to include Macon, Georgia where it will operate an intermodal facility. The
Apalachicola Northern Railroad Company's (ANRR) revenue increased by 2% in
1994 and 1993 principally due to increases in coal and pulpboard shipments.
Operating expenses for the Transportation segment increased by 2% in 1994
caused principally by increased property taxes at FEC. In 1993, operating
expenses dropped 2% at FEC (primarily due to decreased property taxes) and
increased 10% at ANRR (due to increased depreciation and locomotive repairs).
Sugar
Net sales for the sugar segment increased $5.8 million on a 12,233 ton
increase in volume and a slight price increase. The increased volume reduced
per ton costs and led to increased profitability. In 1993, sales decreased
10% due to a reduction in volume. Cost of sales decreased 9% in 1993, again
due principally to the lost volume. As a result of the Everglades Forever Act,
the Company was required to pay approximately $1.3 million new taxes in 1994
Communications
In 1994, Communication operating revenues grew 5% due mainly to increased
interstate long distance pooling settlements. Operating expenses in 1994 were
flat while selling, general and administrative expenses decreased 2% because
of outsourcing of certain customer billing functions.
1993 revenues were up by 6% due mainly to the reversal of excess earning
accruals made in 1992. Outside plant maintenance and increased depreciation
were the main factors in the 10% growth in operating expenses compared to
1992. Selling, general and administrative expenses remained stable form
1992 to 1993.
Real Estate
Real Estate segment revenues increased by $11.4 million in 1994. A
condemnation sale to the State of Florida in the amount of $11.3 million
offset declines in other property sales. Rental income continued to increase
and grew by $3.9 million in 1994. Cost of sales and operating expenses
increased by $2.6 million while selling, general and administrative expenses
were the same as 1993.
1993 revenues were 39% higher than 1992 due mainly to land sales. Cost of
sales and operating expenses increased by $3.6 million while selling, general
and administrative expenses were the same as 1992.
The Company continues to add rental buildings. .6 million square feet were
added in 1994 bringing the total available to 3.8 million square feet with an
additional .4 million square feet of leasable space under construction at
year end.
(16)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Years ended December 31,
1994 1993 1992
Cash flows from operating activities:
Net Income $ 42,109 $ 32,643 $ 15,590
Adjustments to reconcile net income
to cash provided by operating
activities:
Cumulative effect of a change
in accounting principle --- (20,518) ---
Depreciation and depletion 62,392 62,872 59,757
Minority interest in income 15,827 10,241 11,074
Gain on sale of property (14,450) (1,085) (2,511)
Increase in deferred income taxes 12,032 8,915 3,279
Changes in operating assets and
liabilities:
Accounts receivable (14,479) (2,772) 3,925
Inventories 11,725 (9,378) (1,255)
Other assets (6,213) (2,865) (7,569)
Accounts payable, accrued
liabilities and casualty
reserves 4,261 (362) (1,720)
Income taxes payable 4,275 2,737 (5,674)
Cash provided by operating activities 117,479 80,428 74,896
Cash flows from investing activities:
Purchases of property, plant and equipment (86,450) (93,045) (120,736)
Proceeds from sales of property 18,594 6,960 7,246
Purchases of investments --- (77,964) (162,031)
Available for sale (1) (18,851) --- ---
Held-to-maturity (1) (115,210) --- ---
Proceeds from maturities of investments --- 95,941 189,542
Available for sale (1) 12,779 --- ---
Held-to-maturity (1) 106,388 --- ---
Cash used in investing activities (82,750) (68,108) (85,979)
Cash flows from financing activities:
Net change in short-term borrowings (1,658) 3,400 (4,803)
Proceeds from long-term debt --- --- 7,633
Dividends paid to stockholders (6,100) (6,100) (6,100)
Repayment of long-term debt (1,706) (1,735) (2,242)
Dividends paid to minority interest (1,679) (1,718) (1,698)
Cash used in financing activities (11,143) (6,153) (7,210)
Net increase (decrease) in cash and
cash equivalents 23,586 6,167 (18,293)
Cash and cash equivalents at
beginning of period 48,304 42,137 60,430
Cash and cash equivalents at
end of period $ 71,890 $ 48,304 $ 42,137
Supplemental disclosure of cash flow
information:
Cash paid during the year for certain
expense items:
Interest $ 3,973 $ 3,340 $ 4,117
Income taxes $ 20,494 $ 12,476 $ 21,693
Mortgage assumed in purchase of property,
plant and equipment $ --- $ --- $ 2,200
(1) Disclosure is not applicable for the years ended December 31, 1993
and 1992. See note 2.
See notes to consolidated financial statements.
(17)
Management Discussion and Analysis of Statement of Cash Flows
The Statement of Cash Flows details information concerning the Company's
sources and uses of cash in its operating, investing and financing activities.
In 1994, the Company experienced a net increase in cash and cash equivalents
of $23.6 million compared to a $6.2 million increase in 1993 and a decrease of
$18.3 in 1992. The improvement in 1994 was due to the increase in cash
provided by operations while 1993 resulted from an increase in cash provided
by operations together with reductions in cash used by investing and financing
activities.
Cash flows from operations increased by $37.1 million in 1994 and $5.5 million
in 1993. The 1994 increase is due to the improved operations of the Forest
Products segment and the condemnation sale mentioned previously.
The Company purchased property, plant and equipment of $86.5 million in 1994,
down from $93 million in 1993 and $120.7 million in 1992. The Real Estate
segment spent $9.3 million less in 1994 than 1993 while Transportation spent
$2.3 million more and the other segments remained relatively constant. In
1993, Forest Products reduced expenditures by $22.5 million, Sugar by $4.5
and Communications by $2.4 while Real Estate remained constant and
Transportation increased by $1.5 million.
In 1992 and 1993, the Company used $27.5 million and $18 million respectively,
of its investments to fund its capital projects. The improved operating results
enabled the Company to fully fund its capital needs in 1994 and increase its
investments by $14.9 million.
Long term debt of $1.7 million was repaid in 1994, the same amount as 1993.
In addition, short term borrowing were reduced by $1.7 million as compared
with an increase of $3.4 million in 1993. No new long term debt was incurred
in 1994.
The Company maintained its policy of paying a $0.20 per share dividend to its
stockholders in 1994, as it had in 1993 and 1992. St. Joe Paper Company
continues to have adequate internally generated cash flow to meet its
foreseeable operating and capital needs.
(18)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
1. Majority Stockholder
The Alfred I. duPont Testamentary Trust (the "Trust") owns approximately 68%
of the common stock of St. Joe Paper Company, (the "Company"). The Company and
its subsidiaries had no significant transactions with the Trust during the
period.
2. Summary of Significant Accounting Policies
Principles of consolidation -- The consolidated financial statements include
the accounts of St. Joe Paper Company and all of its majority owned
subsidiaries. All significant intercompany transactions and balances have
been eliminated.
Cash and cash equivalents -- For purposes of the Consolidated Statement of
Cash Flows, cash and cash equivalents include cash on hand, bank demand
accounts, money market accounts, remarketed certificates of participation
and repurchase agreements having original maturities of three months or less.
Inventories -- Inventories are stated at the lower of cost or market. Cost
for manufactured paper products and associated raw materials are determined
under the last-in, first-out (LIFO) method. Costs for substantially all other
inventories are determined under the first in, first out (FIFO) or the
average cost method.
Property, plant and equipment -- Depreciation is computed using both
straight-line and accelerated methods over the useful lives of various
assets.
Depletion of timber is determined by the units of production method.
Railroad and communications properties are depreciated and amortized using
the straight-line method at rates established by regulatory agencies. Gains
and losses on normal retirements of these items are credited or charged to
accumulated depreciation.
Deferred cane crop costs -- Sugar cane plantings generally yield two annual
harvests, depending on weather conditions and soil quality, before replanting
is necessary. New planting costs are amortized on a straight-line basis over
two years.
Income tax credits -- The Company uses the flow-through method of accounting
for income tax credits except for credits relating to communications property
and equipment which are accounted for using the deferral method with
amortization over the service lives of the related assets as required by
regulatory agencies.
Reclassification -- The 1993 and 1992 consolidated financial statements have
been reclassified to the current year formats. These reclassifications were
not material to the consolidated financial statements.
Earnings per common share -- Earnings per common share are based on the
weighted average number of common shares outstanding during the year.
Fair value of financial instruments -- The carrying amount of the following
financial instruments approximated fair value because of their short maturity:
cash and cash equivalents, accounts receivable, accounts payable and other
accrued liabilities. The fair value of investments differs from the carrying
value as disclosed in Note 6. The fair value of long term debt, as determined
using current rates, approximates carrying value.
(19)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
2. Summary of Significant Accounting Policies (continued)
Income Taxes -- The Company follows the asset and liability method of
accounting for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes." Under
SFAS 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to affect taxable income. Under SFAS
109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
SFAS 109 also requires the recognition of a deferred tax liability on the
undistributed earnings of subsidiaries applied on a prospective basis.
Effective January 1, 1993, the Company adopted SFAS 109 and has reported the
cumulative effect of that change in the method of accounting for income taxes
in the 1993 consolidated statement of income.
Investments -- Investments consist principally of certificates of deposit,
remarketed certificates of participation, mortgage backed securities,
municipal bonds, common stocks, redeemable preferred stocks, and U.S.
Government obligations. The Company adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" at December
31, 1993. Under SFAS 115, the Company classifies its debt and marketable
equity securities in one of three categories: trading, available-for-sale, or
held-to-maturity. Trading securities are bought and held principally for the
purpose of selling them in the near term. Held-to-maturity securities are
those securities for which the Company has the ability and intent to hold the
security until maturity. All other securities not included in trading or
held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains
and losses on trading securities are included in earnings. Unrealized holding
gains and losses, net of the related income tax effect and minority interest
in consolidated subsidiaries, on available-for-sale securities are excluded
from earnings and are reported as a separate component of stockholders'
equity until realized.
A decline in the market of any available-for-sale or held-to-maturity security
below cost that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the security.
Realized gains and losses for securities classified as available-for-sale and
held-to-maturity are included in earnings and are derived using the specific
identification method for determining the cost of securities sold.
(20)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
3. Inventories
Inventories as of December 31 consist of:
1994 1993
Manufactured paper products and associated
raw materials $ 27,023 $ 30,782
Materials and supplies 25,640 27,407
Sugar 5,010 11,209
$ 57,673 $ 69,398
The replacement cost of manufactured paper products and associated raw
material inventories was in excess of LIFO stated cost by approximately
$21,101 as of December 31, 1994 ($12,781 in 1993).
4. Accrued Liabilities
Accrued liabilities as of December 31 consist of:
1994 1993
Payroll and benefits $ 4,234 $ 5,034
Payroll taxes 666 103
Property and other taxes 3,794 5,561
Accrued casualty reserves 22,136 22,911
Other accrued liabilities 9,043 5,292
39,873 38,901
Less: noncurrent accrued casualty reserves
and other liabilities 14,534 11,063
$ 25,339 $ 27,838
5. Property, Plant and Equipment
Property, plant and equipment, at cost, as of December 31 consist of:
Estimated
1994 1993 Useful Life
Land and timber $ 131,876 $ 125,675 ---
Land improvements 24,919 24,628 20
Buildings 47,255 47,174 45
Machinery and equipment 1,141,013 1,102,450 10 - 30
Office equipment 5,893 6,357 6 - 10
Autos and trucks 7,888 7,205 3 - 6
Construction in progress 12,409 18,161 ---
Investment property 274,328 250,013 various
1,645,581 1,581,663
Accumulated depreciation 618,706 573,941
$1,026,875 $1,007,722
Real estate properties having net book value of $142.2 million at December
31, 1994 are leased under non-cancelable operating leases with expected
aggregate rentals of $74.3 million of which $20.9, $18.6, $15.9, $11.4 and
$7.5 million is due in the years 1995 through 1999, respectively.
(21)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
6. Investments
Investments at December 31, 1994, consist of :
Amortized Carrying Fair Unrealized Unrealized
Cost Value Value Holding Holding
Gain Loss
Short term investments (maturing within one year)
Held to maturity:
U. S. Government securities $ 43,041 $ 43,463 $ 43,875 $ 482 $ 70
Tax exempt municipals 3,157 3,157 3,091 --- 66
Mortgage backed securities 2,990 3,009 2,985 --- 24
Other corporate debt
securities 3,473 3,499 3,499 --- ---
Remarketed certificates
of participation 4,986 5,061 5,061 --- ---
Certificates of deposit 2,963 2,967 2,967 --- ---
$ 60,610 $ 61,156 $ 61,478 $ 482 $ 160
Marketable securities
Available for sale:
U. S. Government securities
Maturing in one to
five years $ 3,003 $ 2,948 $ 2,948 $ --- $ 55
Tax exempt municipals
Maturing in one to
five years 4,457 4,236 4,236 --- 221
Maturing in five to
ten years 22,148 21,278 21,278 --- 870
Maturing in more than
ten years 3,364 3,272 3,272 --- 92
Equity securities 11,601 78,725 78,725 67,347 223
Mortgage backed securities
Maturing in more than
ten years 1,669 1,529 1,529 --- 140
Other corporate debt securities
Maturing in more than
ten years 2,250 2,176 2,176 --- 74
48,492 114,164 114,164 67,347 1,675
Held to maturity:
U. S. Government securities
Maturing within one
year 40,080 40,080 41,136 1,056 ---
Maturing in one to
five years 17,249 17,226 17,350 543 419
Tax exempt municipals
Maturing in one to
five years 1,416 443 1,288 845 ---
Other corporate debt securities
Maturing in five to
ten years 885 2,114 2,293 387 208
59,630 59,863 62,067 2,831 627
$108,122 $174,027 $176,231 $ 70,178 $ 2,302
(22)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
6. Investments (continued)
Investments at December 31, 1993, consist of :
Amortized Carrying Fair Unrealized Unrealized
Cost Value Value Holding Holding
Gain Loss
Short term investments (maturing within one year)
Held to maturity:
U. S. Government securities $ 27,658 $ 27,695 $ 28,214 $ 523 $ 4
Tax exempt municipals 2,401 2,401 2,376 --- 25
Remarketed certificates
of participation 5,000 5,028 5,028 --- ---
Certificates of deposit 31,063 31,183 31,183 --- ---
$ 66,122 $ 66,307 $ 66,801 $ 523 $ 29
Marketable securities
Available for sale:
U. S. Government securities
Maturing in one to
five years $ 393 $ 379 $ 379 $ --- $ 14
Tax exempt municipals
Maturing in five to
ten years 29,961 31,387 31,387 1,426 ---
Equity securities 12,059 79,746 79,746 67,687 ---
Mortgage backed securities
Maturing in more than
ten years 3,567 3,559 3,559 --- 8
Other corporate debt securities
Maturing in five to
ten years 1,684 1,699 1,699 15 ---
47,664 116,770 116,770 69,128 22
Held to maturity:
U. S. Government securities
Maturing within one
year 23,731 23,731 24,500 769 ---
Maturing in one to
five years 11,104 11,267 11,462 197 2
Tax exempt municipals
Maturing in one to
five years 1,612 1,645 2,601 956 ---
Mortgage backed securities
Maturing in one to
five years 2,990 3,003 3,007 4 ---
Maturing in five to
ten years 916 916 1,491 575 ---
Maturing in more than
ten years 91 91 103 12 ---
Other corporate debt securities
Maturing in five to
ten years 812 2,100 2,045 --- 55
41,256 42,753 45,209 2,513 57
$ 88,920 $159,523 $161,979 $ 71,641 $ 79
Marketable securities, including certain investments which mature within one
year, are held as a developmental fund created to accumulate capital expected
to be required for future improvement of the Company's real estate properties.
(23)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
7. Long-Term Debt
Long-term debt as of December 31 consists of:
1994 1993
Notes payable to banks under lines of
credit aggregating $70,000, due March
1995 through May 1996 with interest
rates of 5.94% to 7.9% $ 32,671 $ 35,038
Rural Telephone Bank (RTB) 6.50 % to 10.25%
mortgage notes with principal and interest
due quarterly through 2016 15,443 15,917
Industrial Revenue Bonds payable in
semiannual installments of $425 with
interest payable at 67% of the prime rate 2,046 2,896
Rural Electrification Administration (REA) 2%
mortgage notes with principal and interest
due quarterly through 2008 3,019 3,394
Federal Financing Bank (FFB) notes at varying
rates (weighted average: 1994 - 14.52%; 1993
- 14.50%) guaranteed by the REA 564 640
Mortgage loans payable to various institutions
and individuals with interest rates of 4.5%
to 9.75%, payable in variable installments 2,992 2,184
Other secured notes at variable interest rates
and maturities 157 187
56,892 60,256
Long-term debt due within one year 19,672 21,309
Long-term debt due after one year $ 37,220 $ 38,947
The REA and RTB notes, the Industrial Revenue Bonds and the notes and mortgage
loans payable are secured by company assets with a book value of approximately
$47,780, $7,419 and $44,931, respectively.
The aggregate amount of principal payments due in each of the years subsequent
to December 31, 1994 is:
Year ending
December 31 Amount
1995 $ 19,672
1996 18,797
1997 1,570
1998 1,273
1999 1,213
2000 and later 14,367
$ 56,892
(24)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
8. Income Taxes
Total income tax expense for the years ended December 31,
was allocated as follows:
1994 1993 1992
Income from continuing operations $ 33,937 $ 22,209 $ 14,850
Shareholders' equity, for recognition
of unrealized gain (loss) on debt
and marketable equity securities (2,377) 25,472 ---
$ 31,560 $ 47,681 $ 14,850
Income tax expense attributable to income from continuing operations differed
from the amount computed by applying the statutory federal income tax rate
to pre-tax income as a result of the following:
1994 1993 1992
Tax at the statutory federal rate $ 32,156 $ 15,601 $ 14,115
Dividends received deduction and
tax free interest (1,075) (937) (745)
State income taxes (net of federal benefit) 2,640 1,452 1,411
Adjustment to deferred tax assets and
liabilities for enacted changes in tax
laws and rates --- 4,324 ---
Undistributed earnings of FECI 1,245 775 ---
Other, net (1,029) 994 69
$ 33,937 $ 22,209 $ 14,850
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities as of December 31,
consist of:
1994 1993
Deferred tax assets:
Accrued casualty and other reserves $ 10,348 $ 10,616
Alternative minimum tax credit carryforward 14,315 12,219
State net operating loss carryforward 6,371 6,183
Other 3,304 1,914
Total gross deferred tax assets 34,338 30,932
Valuation allowance 6,371 6,183
Net deferred tax assets 27,967 24,749
(25)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
8. Income Taxes (continued)
1994 1993
Deferred tax liabilities:
Tax in excess of financial depreciation 159,531 154,817
Deferred gain on land sales 6,904 5,520
Deferred gain on subsidiary's defeased bonds 2,322 2,502
Unrealized gain on debt and marketable
equity securities 23,123 25,472
Deferred gain on involuntary conversion of land 29,227 24,937
Prepaid pension asset recognized for
financial reporting 7,804 7,285
Other 7,880 3,385
Total gross deferred tax liabilities 236,791 223,918
Net deferred tax liability $208,824 $199,169
Based on the timing of reversal of future taxable amounts and the Company's
history of reporting taxable income, the Company believes that the deferred
tax assets will be realized and a valuation allowance is not considered
necessary except for those resulting from the net operating loss carryforward
available for state income taxes. Because of the Company's history of
reporting tax losses in certain states, the Company believes that
substantially all carryforwards will not be realized and, accordingly, has
recorded a valuation allowance equal to the entire amount. This valuation
allowance was $6,371 and $6,183 at December 31, 1994 and 1993, respectively,
which increased $188 and $547 in 1994 and 1993, respectively. The current
deferred tax asset of $6,487 and $6,362 is recorded in other current assets
as of December 31, 1994 and 1993, respectively.
The Company has not recognized a deferred tax liability of approximately
$17,862 for the undistributed earnings of FECI that arose in 1992 and prior
years because the Company does not currently expect those unremitted earnings
to reverse and become taxable to the Company in the foreseeable future. A
deferred tax liability will be recognized when the Company expects that it will
recover those undistributed earnings in a taxable manner, such as through
receipt of dividends or sale of the investment. As of December 31, 1994, the
undistributed earnings of the subsidiary for which no deferred tax liability
was provided were approximately $48,454.
For the year ended December 31, 1992, deferred income tax expense of $591
resulted from differences in the recognition of income and expense for income
tax and financial reporting purposes. The sources and tax effects of those
differences are: accelerated depreciation for tax purposes of $4,366;
alternative minimum tax credit carryforward of ($3,025); prepaid pension cost
of $1,200; accrued casualty reserves of ($468); and, other, net of ($1,482).
9. Pension and Retirement Plans
The company sponsors defined benefit pension plans covering approximately 70%
of its employees. The benefits are based on the employees' years of service
or years of service and compensation during the last five or ten years of
employment. The Company's funding policy is to contribute annually the
maximum contribution required by ERISA.
A summary of the net periodic pension credit follows:
1994 1993
Service cost $ 3,486 $ 2,761
Interest cost 7,418 6,147
Actual return on assets 1,365 (13,460)
Net amortization and deferral (13,673) 1,272
Total pension income $ (1,404) $ (3,280)
(26)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
9. Pension and retirement plans (continued)
A summary of the plans' funded status as of December 31 was:
1994 1993
Accumulated benefit obligation, including vested benefits
of $86,807 and $73,780 in 1994 and 1993, respectively $ 94,485 $ 80,438
Projected benefit obligation for service rendered to date 116,101 96,177
Plan assets at fair value, primarily listed stocks
and U.S. bonds 141,090 144,713
Plan assets in excess of projected benefit obligation 24,989 48,536
Unrecognized net (gain) loss 2,615 (13,618)
Unrecognized prior service cost 11,545 5,393
Unrecognized transition asset (17,961) (20,527)
Prepaid pension cost $ 21,188 $ 19,784
The weighted-average discount rate for the plans was 7% in 1994 and 1993.
The rate of increase in future compensation levels used in determining the
actuarial present value of the projected benefit obligation for salaried
employees was 6% in 1994 and 1993. The expected long-term rates of return
on assets were 8% in 1994 and 7% in 1993.
The Company has an Employee Stock Ownership Plan (ESOP) for the purpose of
purchasing stock of the Company for the benefit of qualified employees.
Contributions to the ESOP are limited to .5% of compensation of employees
covered under the salaried pension plan. The Company also has other defined
contribution plans which, in conjunction with the salaried pension plan, cover
substantially all its salaried employees. Contributions are at the employees'
discretion and are matched by the Company up to certain limits. Expense for
these defined contribution plans was $1,213, $1,387, and $1,253 in 1994, 1993
and 1992, respectively.
10. Quarterly Financial Data (Unaudited)
Quarters Ended
1994 December 31 September 30 June 30 March 31
Net sales and operating
revenues 186,251 166,257 165,886 167,886
Operating profit 23,599 7,887 13,972 19,020
Net income 18,802 7,520 7,627 8,160
Net income per share .61 .25 .25 .27
1993 December 31 September 30 June 30 March 31
Net sales and operating
revenues 153,540 141,182 150,548 146,698
Operating profit 17,852 6,873 2,239 5,138
Net income 8,785 (875) 753 23,980
Net income per share .29 (.03) .02 .79
(27)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
11. Segment Information
The Company is engaged in five principal lines of business. These lines of
business are:
Forest Products - the integrated production of corrugated containers,
including the cultivation and harvesting of pulpwood and the manufacture of
linerboard;
Transportation - the operation of two railroads within the state of
Florida;
Sugar - the cultivation, harvesting and processing of sugar cane;
Communications - the provision of telephone services and telecommunications
equipment; and
Real Estate - the ownership, management and development of real estate.
Total net sales and operating revenues represent sales to unaffiliated
customers, as reported in the Company's consolidated income statement and
intersegment sales which occur principally between the Forest Products and
Transportation segments.
Operating profit is net sales and operating revenues less directly traceable
costs and expenses. In computing operating profit, the following items have
not been considered: other income (expense) and provision for income taxes.
Identifiable assets by lines of business are those assets that are used in the
Company's operations in each segment. Corporate assets are composed of cash,
marketable securities and miscellaneous nonsegment assets.
Information by lines of business segment follows:
1994 1993 1992
Net sales and operating revenues:
Forest Products $ 386,978 $ 312,875 $ 322,096
Transportation 176,074 175,095 169,439
Sugar 54,900 49,138 54,866
Communications 30,638 29,153 27,399
Real Estate 39,774 28,405 20,493
Intersegment (2,602) (2,698) (2,381)
Consolidated $ 685,762 $ 591,968 $ 591,912
Operating profit:
Forest Products $ 1,832 $ (19,684) $ (20,509)
Transportation 29,680 30,648 26,380
Sugar 6,329 5,058 6,313
Communications 6,753 5,130 5,240
Real Estate 19,884 10,950 6,632
Consolidated $ 64,478 $ 32,102 $ 24,056
(28)
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
(Dollars in thousands except per share amounts)
11. Segment information (continued)
1994 1993 1992
Assets:
Forest Products $ 371,353 $ 373,551 $ 378,461
Transportation 424,241 390,332 387,778
Sugar 93,685 96,925 90,724
Communications 70,658 65,674 63,594
Real Estate 229,449 230,343 198,236
Corporate 362,944 334,446 269,507
Consolidated $1,552,330 $1,491,271 $1,388,300
Capital expenditures:
Forest Products $ 24,270 $ 24,454 $ 46,950
Transportation 25,060 22,682 21,173
Sugar 3,381 2,944 7,441
Communications 5,385 5,271 7,612
Real Estate 28,354 37,694 37,560
Consolidated $ 86,450 $ 93,045 $ 120,736
Depreciation and depletion:
Forest Products $ 31,352 $ 33,015 $ 32,646
Transportation 18,706 18,147 17,112
Sugar 1,605 1,769 1,634
Communications 5,612 5,848 5,051
Real Estate 5,117 4,093 3,314
Consolidated $ 62,392 $ 62,872 $ 59,757
12. Contingencies
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 items 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.
The Company is subject to substantial 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.
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 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
December 31, 1994 and 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.
(29)
Management's Statement
The management of St. Joe Paper Company is responsible for the integrity and
objectivity of the financial statements presented in this Annual Report.
These statements have been prepared in conformity with generally accepted
accounting principles and fairly represent the transactions and financial
position of your company.
Your company maintains a system of internal management controls designed to
provide reasonable assurance that assets are safeguarded, transactions are
properly recorded and executed in accordance with management's authorization,
and that records are updated periodically to reflect assets actually on hand.
These controls are supplemented by internal audits of various units of your
company. Those audits are made on a random basis and are unannounced.
Independent Auditors' Report
The Board of Directors and Stockholders
St. Joe Paper Company:
We have audited the accompanying consolidated balance sheets of St. Joe Paper
Company and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentations. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of St. Joe
Paper Company and subsidiaries as of December 31, 1994, and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As disclosed in notes 2 and 6 to the consolidated financial statements, the
Company changed its method of accounting for investments to adopt the
provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" at December 31, 1993. As disclosed
in notes 2 and 8, the Company changed its method of accounting for income
taxes effective January 1, 1993 to adopt the provisions of the Financial
Accounting Standards Board's SFAS No. 109, "Accounting for Income Taxes".
KPMG PEAT MARWICK LLP
Certified Public Accountants
Jacksonville, Florida
February 28, 1995
(30)