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 March 31, 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 March 31, 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 -
March 31, 1995 and December 31, 1994 2
Consolidated Statement of
Income and Retained Earnings -
Three months ended
March 31, 1995 and 1994 3
Consolidated Statement of Cash Flows -
Three months ended March 31, 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)
March 31 December 31
ASSETS 1995 1994
(Unaudited)
Current Assets:
Cash and cash equivalents $ 51,052 $ 71,890
Short-term investments 75,204 61,156
Accounts receivable 90,631 88,606
Inventories 75,788 57,673
Other assets 16,434 21,677
Total Current Assets 309,109 301,002
Investment and Other Assets:
Marketable securities 205,200 174,027
Other assets 49,714 50,426
Total Investments and Other Assets 254,914 224,453
Property, Plant and Equipment, Net 1,039,595 1,026,875
Total Assets $1,603,618 $1,552,330
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 47,455 $ 44,804
Accrued liabilities 29,168 25,339
Income taxes payable 8,510 7,012
Long-term debt due within one year 24,340 19,672
Total Current Liabilities 109,473 96,827
Accrued Casualty Reserves and Other Liabilities 15,432 14,534
Long-Term Debt due After One Year 36,877 37,220
Deferred Income Taxes and Income Tax Credits 223,562 215,311
Minority Interest in Consolidated Subsidiaries 257,783 251,457
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 907,509 887,520
Net unrealized gains on debt and
marketable equity securities 44,268 40,747
Total Stockholders' Equity 960,491 936,981
Total Liabilities and Stockholders' Equity $1,603,618 $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
ended March 31
1995 1994
Net Sales $133,061 $116,828
Operating Revenues 50,975 50,540
Net Sales and Operating Revenues 184,036 167,368
Cost of Sales 98,818 98,043
Operating Expenses 36,586 36,483
Cost of Sales and Operating Expenses 135,404 134,526
Gross Profit 48,632 32,842
Selling, General and Administrative Expenses 15,538 13,822
Operating Profit 33,094 19,020
Other Income (Expense):
Dividends 565 534
Interest income 3,637 2,504
Interest expense (1,386) (963)
Gain on sales and other dispositions of
property, plant and equipment 815 384
Other, net 1,372 1,087
5,003 3,546
Income before Income Taxes and Minority Interest 38,097 22,566
Provision for Income Taxes 14,068 7,903
Income before Minority Interest 24,029 14,663
Income Applicable to Minority Interest in
Consolidated Subsidiaries 2,515 6,503
Net Income $ 21,514 $ 8,160
Retained Earnings at Beginning of Period 887,520 851,511
Dividends 1,525 1,525
Retained Earnings at End of Period $ 907,509 $ 858,146
Per Share Data:
Dividends $ 0.05 $ 0.05
Net Income $ 0.71 $ 0.27
Number of Common Shares Outstanding 30,498,650 30,498,650
See accompanying notes.
-3-
ST. JOE PAPER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands except per share amounts)
Three Months ended March 31
1995 1994
Cash Flows from Operating Activities:
Net Income $ 21,514 $ 8,160
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and depletion 15,791 15,533
Minority interest in income 2,515 6,503
Gain on sale of property (815) (384)
Increase in deferred income taxes 3,212 2,965
Changes in operating assets and liabilities:
Increase in accounts receivable (2,025) (7,173)
Increase in inventories (18,115) (5,784)
Decrease in other assets 6,880 5,517
Increase (decrease) in accounts payable,
accrued liabilities and casualty reserves 7,378 (1,536)
Increase in income taxes payable 1,498 3,536
Cash Provided by Operating Activities 37,833 27,337
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (32,602) (25,582)
Purchases of investments:
Available for sale (9,845) (721)
Held to maturity (61,575) (15,769)
Proceeds from dispositions of assets 4,907 1,771
Maturity and redemption of investments:
Available for sale 8,502 1,061
Held to maturity 29,552 20,087
Cash Used in Investing Activities (61,061) (19,153)
Cash Flows from Financing Activities:
Net change in short-term borrowings 8,861 6,398
Dividends paid to stockholders (1,525) (1,525)
Repayment of long-term debt (4,536) (326)
Dividends paid to minority interest (410) (430)
Cash Provided by Financing Activities 2,390 4,117
Net Increase in Cash and Cash Equivalents (20,838) 12,301
Cash and Cash Equivalents at Beginning of Period 71,890 48,304
Cash and Cash Equivalents at End of Period $ 51,052 $ 60,605
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for certain expense items is:
Interest $ 1,138 $ 838
Income taxes $ 5,803 $ 2,563
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 March 31, 1995 and December 31, 1994 and the results of operations
and cash flows for the three month period ended March 31, 1995 and 1994.
2. The results of operations for the three month period ended March 31, 1995
and 1994 are not necessarily indicative of the results that may be
expected for the full year.
3. Inventories at March 31, 1995 and December 31, 1994:
March 31 December 31
1995 1994
Manufactured paper products and
associated raw materials $ 31,810 $ 27,023
Materials and supplies 25,834 25,640
Sugar 18,144 5,010
$ 75,788 $ 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 March 31, 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
Net sales and operating revenues for the quarter ended March 31, 1995 were
$184.0 million, a $16.7 million increase over the same period in 1994. Cost of
sales and operating expenses were $135.4 million, up from $134.5 million.
These costs were 73.6% of net sales and operating revenues in 1995 compared
to 80.4% in 1994. Selling, general and administrative expenses rose from
$13.9 million in 1994 to $15.5 million in 1995. As a result of these changes,
operating profit during the first quarter of 1995 was $33.1 million compared
to $19.0 million in the first quarter of 1995. An analysis of operating
results by segment follows:
Forest Products
% Increase
1995 1994 (Decrease)
Net Sales 115,248 84,500 36.4
Cost of Sales 86,497 82,488 4.9
Selling, General and Administrative
Expenses 8,061 7,378 9.3
Operating Profit (Loss) 20,690 (5,366) 485.6
The containerboard market continues to be tight with additional price
increases effective January 1 and April 1, 1995. Average selling price for
the Company's linerboard rose from $360 in the first quarter of 1994 to $509
in 1995, a 41% increase. Net sales to outside customers by the Company's paper
mill increased 46% in the first quarter of 1995 compared to the same period
last year on a volume increase of 15%. The Company's container revenues were
33% higher in 1995 than the first quarter of 1994 on a volume decrease of 1.7%.
Timber sales to outside customers decreased 34% on a volume decline of 10% as
more of the Company's timber production was required by the mill.
Mill production per day rose by 6% and this increased productivity was a major
factor in a 1% reduction in cost per ton.
Transportation
% Increase
1995 1994 (Decrease)
Operating Revenue 43,176 43,136 0.1
Operating Expenses 31,666 31,782 (0.4)
Selling, General and Administrative
Expenses 4,325 3,825 13.1
Operating Profit 7,185 7,529 (4.6)
-7-
Operating results for the transportation segment were consistent with the
prior year. Revenues for the Florida East Coast Railway Company (FEC)
decreased by .9% compared to the first quarter of 1994 while Apalachicola
Northern Railroad Company (ANRR) revenues increased by 13.2%, primarily due
to an increase in coal shipments. Operating expenses at FEC declined .8% and
the ANRR increased 9.2%. Selling, general and administrative expenses rose
11.8% at FEC and 45.3% ($65,939) at ANRR.
Sugar
% Increase
1995 1994 (Decrease)
Net Sales 12,335 13,370 (7.7)
Cost of Sales 8,366 10,809 (22.6)
Selling, General and Administrative
Expenses 1,470 1,059 38.8
Operating Profit 2,499 1,502 66.4
The sugar segment experienced a 10.8% volume reduction in the first quarter of
1995 compared to 1994. The selling price rose 3.5%. Increased productivity
drove down the cost per ton of sugar by 11.3%. 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. The increase in selling, general
and administrative expenses is primarily due to the Everglades Agricultural
Privilege Tax which was enacted in the second quarter of 1994 and not reflected
in the first quarter of 1994.
Communications
% Increase
1995 1994 (Decrease)
Operating Revenue 7,799 7,404 5.3
Operating Expenses 4,920 4,701 4.7
Selling, General and Administrative
Expenses 1,148 1,051 9.2
Operating Profit 1,731 1,652 4.8
Operating revenues increased in the first quarter of 1995 compared to 1994
largely due to 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 for the first quarter.
-8-
Real Estate
% Increase
1995 1994 (Decrease)
Net Sales and Operating Revenue 6,011 19,482 (69.2)
Cost of Sales and Operating Revenue 4,459 5,242 (14.9)
Selling, General and Administrative
Expenses 564 538 4.8
Operating Profit 988 13,702 (92.8)
In the first quarter of 1994, realty property sales of $14.6 million ($13.7
million by Gran Central, Florida East Coast Industries, Inc. real estate
subsidiary, and $.9 million by the Company) occurred which were not repeated
in the first quarter of 1995. Rent and other income increased by $1.2 million
in 1995 compared to the same period in 1994. Gran Central's cost of sales
decreased by 9.4% and Southwood PropertiesO, the Company's real estate
division, decreased by 1.3%. Selling, general and administrative expenses
increased 9.0% at Gran Central and declined 6.7% at Southwood Properties.
Other Income increased $1.5 million in the first quarter of 1995 compared to
1994. Interest income increased by $1.1 million reflecting increased
investment and higher rates.
Net Income increased $13.4 million (163.7%) during the first quarter of 1995
from the same period in 1994. Earnings per share increased $0.44 to $0.71.
Financial Position
The Company's financial position remains strong. Current assets rose to
$309.1 million, an $8.1 million increase from year end. Increases in current
liabilities of $12.6 million caused the current ratio to drop from 3.1 at year
end to 2.8 at the end of the first quarter.
The Company increased its investment in marketable securities by $31.2 million
over year end. Net property, plant and equipment increased by $12.7 million,
largely in Florida East Coast Industries, Inc. Deferred income taxes grew by
$8.3 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 $31.49 per share, an increase of
$0.77 from December 31, 1994.
9
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
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)
E. C. Brownlie
Vice President
D. M. Groos
Comptroller
May 15, 1995
Date
-10-
5
1000
3-MOS
DEC-31-1995
MAR-31-1995
51,052
75,204
90,631
0
75,788
309,109
1,672,337
632,742
1,603,618
109,473
36,877
8,714
0
0
44,268
1,603,618
133,061
184,036
98,818
150,942
0
0
1,386
38,097
14,068
24,029
0
0
0
21,514
.71
.71
