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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[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, 1996
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. 1-10466
ST. JOE CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-0432511
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 400, 1650 Prudential Drive
Jacksonville, Florida 32207
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(Address of principal executive offices) Zip Code)
Registrant's telephone number, including area code: (904) 396-6600
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
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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 of 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 this 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 the registrant's Common Stock held by
non-affiliates based on the closing price on March 7, 1997 was $780,753,777.
As of March 7, 1997, there were 30,498,650 shares of Common Stock, No par value
outstanding.
DOCUMENT INCORPORATED BY REFERENCE
(Specific pages incorporated are identified under the applicable item herein.)
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders to be
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held on May 13, 1997(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.
This Form 10-K, including the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that are not historical facts. Such forward-looking
information may include, without limitation, statements that the Company does
not expect that lawsuits, environmental costs, commitments, contingent
liabilities, labor negotiations or other matters will have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity and other similar expressions concerning matters that are not
historical facts, and projections as to the Company's financial results. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those anticipated in the
forward-looking statements. Important factors that could cause such
differences include but are not limited to contractual relationships, industry
competition, regulatory developments, natural events such as weather
conditions, floods and earthquakes, forest fires, the effects of adverse
general economic conditions, changes in the real estate markets and interest
rates, fuel prices and the ultimate outcome of environmental investigations or
proceedings and other types of claims and litigation.
As a result of these and other factors, the Company may experience
material fluctuations in future operating results on a quarterly or annual
basis, which could materially and adversely affect its business, financial
condition, operating results, and stock price. An investment in the Company
involves various risks, including those mentioned above and elsewhere in this
report and those which are detailed from time-to-time in the Company's other
filings with the Securities and Exchange Commission.
Readers should not place undue reliance on forward-looking statements,
which reflect management's view only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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PART I
ITEM 1. BUSINESS
As used throughout this Form 10-K Annual Report, the terms "St. Joe", "Company"
and "Registrant" means St. Joe Corporation and its consolidated subsidiaries
unless the context indicates otherwise.
CONTINUING OPERATIONS
GENERAL. St. Joe, a Florida Corporation formed in 1936 is a diversified company
engaged primarily in the transportation, real estate, forestry and sugar
industries. Until the second quarter of 1996, the Company was also engaged in
communications and the manufacture and distribution of forest products.
During 1996 the Company disposed of its communications segment and linerboard
mill and container plants (see Discontinued Operations below for a discussion
of those sales). The Company has continuing operations in the following
industry segments: (i) Transportation - the transportation of goods by rail;
(ii) Real Estate - the development, construction and management, sale and
leasing of real estate;(iii) Forestry - the growing and harvesting of timber;
(iv) Sugar - the growing of sugarcane and processing of sugarcane into raw
sugar; and (v) Other - primarily corporate/parent general and administrative
expenses.
Financial information as to revenue, operating profits and identifiable assets
by industry segment is set forth in Note 12 to the Notes to Consolidated
Financial Statements of this report. Below is a description of each of the
Company's industry segments.
TRANSPORTATION. The Company owns 54% of Florida East Coast Industries, Inc.
(FECI) which in turn owns 100% of Florida East Coast Railway Company (FEC) and
80% of the stock of International Transit, Inc. (ITI). The Company also owns
and operates Apalachicola Northern Railroad Company (ANRR). The common stock,
par value $6.25 per share, of Florida East Coast Industries, Inc. is registered
pursuant to Section 12(b) of the Securities Exchange Act (Commission file
number 2-89530).
Both FEC and ANRR are subject to regulation by the Surface Transportation Board
of the U.S. Department of Transportation and, in some areas, the State of
Florida. These governmental agencies must approve, prior to implementation,
changes in areas served and certain other changes in operations of FEC and
ANRR.
The principal business of FEC is that of a common carrier of goods by rail along
the east coast of Florida. The mainline extends from Jacksonville in the north,
to Miami in the south, with a branch line extending west from Fort Pierce to
Lake Harbor. Principal commodities carried by FEC in its rail service include
automotive vehicles, crushed stone, cement, trailers-on-flatcars,
containers-on-flatcars and basic consumer goods such as food. FEC is the only
railroad serving the area between Jacksonville and West Palm Beach on the east
coast of Florida. Common motor carriers are competitors throughout the entire
transportation system and CSX Transportation, Inc. is a competitor over that
section of track extending southward from West Palm Beach to Miami for rail
traffic, excluding that of trailer-on-flatcar and container-on-flatcar traffic.
ITI is a common motor carrier providing truckload service throughout most of
the southeastern U.S. ITI was acquired by FECI at the beginning of the second
quarter of 1995, and competes with other common motor truckload carriers
throughout the Southeast.
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ANRR is a short line railroad that operates exclusively within the panhandle of
the state of Florida from Port St. Joe to Chattahoochee where it connects with
an unaffiliated carrier. Although it is a common carrier, most of ANRR
business consists of carrying coal and items related to wood. The other items
carried by ANRR are tall oil, chemicals, stone and clay products and recyclable
items. ANRR faces competition from motor carriers and barge lines. ANRR works
diligently with its rail connections to maintain lower prices than motor
carriers to offset the motor carriers' decided service advantage. On March 6,
1997 officials of the linerboard mill at Port St. Joe, Florida announced that
the mill will be shutdown beginning in April, 1997 for an indefinite period of
time. Shipment of wood and wood products is a significant portion of ANRR's
revenues. If the shutdown extends for a long period of time without ANRR being
able to replace this revenue source, ANRR's revenue, operating profit and net
income would be significantly impacted. ANRR is considering alternatives to
replace this potential loss of revenue and, or attempt to mitigate its financial
impact.
FEC is a party to various proceedings before state regulatory agencies relating
to environmental issues. In addition, FEC, along with many other companies,
has been named a potentially responsible party in proceedings under Federal
statutes for the clean up of designated Superfund sites at Hialeah, Florida;
Jacksonville, Florida; and Portsmouth, Virginia. See Item 3. "Legal
Proceedings."
REAL ESTATE. The real estate segment of the Company consists of two operations,
one a division of St. Joe known as Southwood Properties (Southwood), which is
primarily involved in resort and residential development, and Gran Central
Corporation (GCC), a wholly-owned subsidiary of FECI which is primarily involved
in commercial and industrial real estate development. Property included in this
segment is suited for development in a variety of areas including; commercial,
industrial, residential, resort and mixed use development.
The Company hired in the first quarter of 1997, a new Chairman and Chief
Executive Officer and a new General Counsel whose specialties include large
scale real estate planning, permitting and development. Under new management,
the Company intends to take a more active, aggressive and concentrated approach
to plan, attain approvals and develop its well situated properties as and when
the market permits. Those properties that the Company does not elect to develop
may be sold to third parties or utilized in joint ventures or exchanged. This
new expertise combined with the Company's more aggressive approach to its land
holdings may result in a more active land development segment than historical
levels.
The Company has historically not incurred debt in the development of its
various real estate projects. Development activities have been funded to date
from internally generated cash flows. As the Company moves forward under new
management, debt may be incurred in those situations where the use of financing
leverage is appropriate to maximize cash flow and enhance returns.
The growth of Florida's panhandle, where the Company owns significant acreage,
is expected to continue, although at a lesser rate than is generally expected
for the rest of the state. Florida's fastest population and employment growth
areas continue to be along both coasts (excluding the panhandle region) and
central Florida. Although Florida's growth is expected to continue to provide
significant real estate development opportunities, there is substantial concern
among state and local authorities about continued development's impact on the
environment, and provision of necessary public services and facilities. As a
result, land use and environmental regulations have become more complex and
burdensome. Development of real property in Florida entails an extensive
approval process which involves multiple regulatory agencies often with
overlapping jurisdictions. The process requires compliance with the Local
Government Comprehensive Planning and Land Development Regulation Act (the
"Growth Management Act"). In addition, development projects that exceed
certain specified regulatory thresholds require approval of a comprehensive
Development of Regional Impact (DRI) application. Compliance with the Growth
Management Act and the DRI process is usually lengthy and costly and can be
expected to materially affect the Company's real estate development activities.
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Southwood manages approximately 49,000 acres, that the Company owns in the
Florida panhandle and in St. Johns county. These wooded properties include
substantial gulf, lake and riverfront acreage and may be well suited to
residential and resort development, including development as large residential
and mixed-use planned communities. A portion of the Company's property along
the northwestern coast of Florida may also be suitable for commercial or
industrial development. Southwood faces competition from numerous developers,
real estate companies and other landowners in Florida that compete with the
Company in developing land and seeking buyers for improved properties.
Southwood's general strategy for developing its residential and mixed-use
properties is to develop a well conceived master plan, secure the necessary
governmental approvals, prepare and record protective covenants and
restrictions including architectural guidelines and controls, install the major
infrastructure improvements, such as sewers, utilities and roads, and sell lots
and or acreage to builders or individuals for construction in accordance
with that master development plan. The Company does not presently build
individual homes. Four lot developments however, are underway; three
subdivisions in Bay County, totaling 93 lots, and one, totaling 18 lots, in
Walton County. The Company is evaluating its other holdings to determine the
market's readiness for additional development.
GCC owns and manages approximately 19,100 acres within fourteen counties
including several high-growth areas along Florida's east coast, such as West
Palm Beach, Melbourne-Titusville, Daytona Beach, Jacksonville, Miami-Hialeah
and the Fort Pierce area. It also acquired in late 1995 a 78.6 acre tract of
land in Orlando, Florida capable of being developed into 1.2 million square
feet of commercial and industrial space. The primary focus of GCC's development
activities has been the Miami and Jacksonville area. These markets are highly
competitive with local, regional and national development companies competing
for land and tenants. GCC, because of its land holdings and cash position, has
been able to develop new projects as these markets have recovered from the over
building of the late eighties. The Company plans to continue to operate in
these markets, as well as the Orlando market, while at the same time evaluating
other Florida and southeastern markets to potentially provide geographic
diversity to its current portfolio. GCC at December 31, 1996, had 55 buildings
totaling 4.7 million rentable square feet of office and industrial space which
were 93% leased. This compares to 50 buildings totaling 4.1 million rentable
square feet in 1995 which were 95% leased. Seven new buildings are under
construction at December 31, 1996 which will add .9 million square feet of
rentable space when completed in 1997.
FORESTRY. The Company owns approximately 700,000 acres of plantable pine
timberland, of which approximately 665,000 acres are situated in northwestern
Florida and the remaining 35,000 acres are situated in southern Georgia.
Presently, approximately 638,000 acres have been planted as managed plantations
to facilitate harvesting and reforestation and to maximize timber yields.
During the current planting season, November, 1996 through the end of February,
1997, the Company planted approximately 14 million seedlings on 17,000 acres.
The Company owns, in total, approximately 1 million acres of land.
Six forestry units and a wood procurement unit manage the timberlands. The
timberlands are harvested by local independent contractors pursuant to
agreements which generally are renewed annually. The major customer for the
timber harvested from the Company's timberlands has been and continues to be
the Company's former linerboard mill which was sold on May 30, 1996. Wood is
supplied to the mill pursuant to the negotiated wood fiber supply agreement
executed at the time of sale. See Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations, "Forestry" for further
discussion of the wood fiber supply agreement.
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The Company has wood chipping facilities located at Lowry and Newport, Florida
and operates a nursery located in Capps, Florida, see "Research and
Development".
On March 6, 1997 officials of the linerboard mill at Port St. Joe announced
that the mill will be shutdown beginning in April, 1997 for an indefinite
period of time due to soft market conditions in the paper industry. The Company
is currently evaluating the impact of this shutdown on its sales related to the
wood fiber supply agreement and is considering its options and alternatives.
The financial impact to the Company's forestry operations is uncertain at this
time, however, a long term shut down would have significant impact on
operations of the forestry segment.
SUGAR. The Company owns Talisman Sugar Corporation (TSC), a grower of sugarcane
located in the fertile Belle Glade area in south central Florida. In addition
to growing sugarcane TSC harvests the cane and processes the cane into raw
sugar. The Company has and continues to explore the possible sale of its sugar
segment. See Item 7 Management's Discussion and Analysis and Results of
Operations "Overview" for further discussion of the possible sale.
The Company owns approximately 48,600 acres of agricultural land and leases
approximately 6,400 acres for use in its sugarcane growing operation.
Sugarcane production and processing is seasonal in nature. Sugarcane plantings
generally yield two harvests before replanting is necessary. The Company
harvests its sugarcane crop in one-year cycles, as do other Florida producers.
The Company generally plants sugarcane in the fall of each year. Harvesting of
a crop generally commences in October of each year and continues into the
following March. During the 1996-1997 crop year TSC grew sugarcane on
approximately 49,000 acres of land. The Company's sugar mill has a grinding
capacity of approximately 11,500 tons of sugarcane per day. The Company ground
approximately 1,202,000 tons of sugarcane in 1996, approximately 1,386,000 tons
in 1995 and approximately 1,184,000 tons of sugarcane in 1994 from Company
operated lands. Total raw sugar production for the Company was approximately
117,000 tons in 1996, 138,000 tons in 1995, and 114,000 tons in 1994.
The majority of the Florida sugarcane producers, including TSC, harvest
sugarcane using mechanical cane harvesters which reduce significantly the labor
requirements, resulting in substantial cost savings and more efficient and
timely grinding of the sugarcane. Mechanized harvesting, however, is less
precise than manual harvesting; results in greater amounts of chaff and trash
being mixed in with the harvested sugarcane; causes small amounts of sucrose to
be lost through leaching into the trash and chaff; damages cane fields more
than manual harvesting, and results in slightly lower cane yields in subsequent
crops. Yields of sucrose from such harvested sugarcane and its crop yields per
acre are generally slightly lower than those cut by hand. These negative
effects however, are far outweighed by cost savings and other efficiencies
which result from mechanized harvesting.
The sugar mill is virtually energy self-sufficient, with almost all of its
energy requirements supplied through the use of bagasse, a by-product of the
mill's cane grinding operations. The Company harvests and processes its
sugarcane into raw sugar and sells its entire production to Everglades Sugar
Refinery, Inc., a wholly-owned subsidiary of Savannah Foods & Industries, Inc.
see "Customers". Under the contract, the Company is paid for its sugar based on
market prices.
The sugar industry is highly competitive. The Company competes with foreign
and domestic sugarcane and sugar beet processors, as well as manufacturers of
corn sweeteners and artificial sweeteners such as aspartame and saccharin.
Sugar is a volatile commodity subject to wide price fluctuations in the
marketplace. Sugar prices have been supported by the United States Government.
Currently, such prices are supported by a combination of nonrecourse loans to
domestic sugar processors and restrictions on sugar imports. The nonrecourse
loan portion of the sugar price support system was extended in 1990 to cover
the 1991-95 crops of sugarcane through the Food, Agriculture, Conservation and
Trade Act of 1990 and was extended to cover the 1996-2002 sugar crops pursuant
to the Federal
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Agriculture Improvement and Reform Act of 1996. The restrictions on sugar
imports are implemented through a tariff-rate quota system determined under the
Uruguay Round Agreements Act.
In 1994 the State of Florida enacted the Everglades Forever Act which
significantly affects agriculture in the Everglades Agricultural Area (EAA).
The Act calls for the creation of six Stormwater Treatment Areas (STA) as
buffers between the Everglades Protection Area and the EAA. The Act imposes
substantial taxes on TSC (approximately $1.3 million was paid in 1996 and 1995,
respectively) and other agricultural interests to pay for construction of the
STAs. The Company also must maintain compliance with the Clean Air Act. See
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations "Environmental".
TSC had only minor expenditures for environmental problems in 1996. The only
continuing TSC environmental issue is the removal of water from its property.
TSC has installed equipment to monitor the quality and quantity of water being
pumped out of its pumping stations as required by the local Water Management
District.
DISCONTINUED OPERATIONS
On April 11, 1996, St. Joe Industries, Inc., a wholly owned subsidiary of the
Company, sold the stock of St. Joe Communications, Inc. (SJCI) to TPG
Communications, Inc. SJCI also sold its interests in three remaining cellular
limited partnerships. The Company had previously sold one cellular limited
partnership in 1995. These sales represented the Company's entire
Communications segment.
On May 30, 1996, the Company sold its linerboard mill and container plants. As
part of the sale, the Company accepted a $10 million senior subordinated note.
The Company remains contingently liable for up to $10 million relating to
On-Site Environmental Liabilities, as defined in the sales agreement. The
Company further agreed to reimburse up to $1 million for certain remediation
activities at the linerboard mill, if such activities were required under
environmental laws. See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations, "Discontinued Operations" and
"Environmental" for further discussion.
Approximately $359.3 million of proceeds thereon from these sales have been
held in special accounts during 1996. A formal plan of liquidation was adopted
on February 25,1997, and a distribution of net proceeds of the sales in partial
liquidation of $10 per share is payable on March 31,1997, for stockholders of
record on March 21, 1997. It is currently anticipated that remaining net
proceeds of approximately $1.00 per share will also be distributed later this
year after further costs and expenses of the sales have been accounted for.
Sale of these operations will materially lower the Company's revenues from
historical levels. Distribution of the net proceeds in partial liquidation will
also materially reduce cash. Accordingly, future net income, earnings per share
and cash flows may also be materially different than historical levels.
INVESTMENTS
The Company in addition to its operations has investments in U. S. Government
securities, government sponsored agency securities, tax exempt municipal bonds,
common and preferred stocks and other corporate debt securities. The Company's
marketable securities include common stock of E. I. duPont de Nemours and
Company, General Motors Corporation and General Motors Corporation Class-H
stock.
NEW PRODUCTS
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During 1996, no refinement of product or new product was introduced which would
require the investment of a material amount of St. Joe's assets or which
otherwise would be considered material.
SOURCES AND AVAILABILITY OF RAW MATERIALS
During 1996 and 1997 to date, all of the raw materials the Company uses were
available in adequate supply from multiple sources.
PATENTS, TRADEMARKS AND LICENSES
St. Joe did not obtain any new patents or licenses in 1996. The Company has no
pending applications for trademarks.
SEASONALITY
The sugarcane production and processing segment is seasonal with one sugarcane
crop being harvested each year. Little significant seasonality exists for
products or services in the other segments of the Company.
WORKING CAPITAL
In general, the working capital practices followed by the Company are typical
of industries in which it operates. During some periods the accumulation of
inventories in the sugar operations prior to expected shipments reflects the
seasonal nature of this industry and may require periodic short-term borrowing.
Additionally, the sugar segment will occasionally ship product in advance of
its contractual delivery date. The pre-shipment is then stored by the buyer and
collateralized by a letter of credit in favor of the Company.
CUSTOMERS
Major customers exist for each of the Company's industry segments. TSC has a
contract with Everglades Sugar Refinery, Inc. to purchase the entire raw sugar
production. This contract runs through the 1997/1998 crop year and is
automatically renewed each crop thereafter. Either party can decline to renew
by giving notice to the other party no later than October 1 of the fourth year
prior to the termination date.
Additionally, the linerboard mill, which was sold in 1996, remains the largest
major customer of the forestry segment pursuant to the wood fiber supply
agreement and as discussed in Part I Item I. "Forestry", has announced an
indefinite closing which could significantly impact that segment's operations.
No single customer, except for Everglades Sugar Refinery, Inc., accounts for
10% or more of the Company's consolidated revenues.
RESEARCH AND DEVELOPMENT
St. Joe maintains a nursery and research facility in Capps, Florida, which
grows seedlings for use in reforestation of its lands. The nursery conducts
research to produce faster-growing, more disease-resistant species of pine
trees, and produces seedlings for planting on Company-owned plantations. In
addition, the Company in cooperation with the University of Florida, is doing
experimental work in genetics on the development of superior pine seed. This
experimentation work is in genetics, plantation and fertilization. The amounts
spent during the last three fiscal years on Company-sponsored research and
development activities were not material.
EMPLOYEES
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The Company had approximately 2000 employees at December 31, 1996 as compared
to 5,000 at the same date in 1995. The 60% reduction in workforce is
substantially due to the sale of the previously discussed linerboard mill and
container operations. Approximately 48% of the Company's employees are covered
by collective bargaining agreements with different unions. These agreements
generally have terms of between one and four years and have varying expiration
dates. The Company considers its relations with its employees to be good.
ITEM 2. PROPERTIES
The principal manufacturing facilities and other materially important physical
properties of the Company at December 31, 1996 are listed below and grouped by
industry segment. All properties shown are owned in fee simple, except where
otherwise indicated.
CORPORATE FACILITIES
Jacksonville, Florida - Occupies approximately one floor of a four story
Company-owned building.
FORESTRY
Forestry Management Facilities
Albany, Georgia Port St. Joe, Florida
Hosford, Florida West Bay, Florida
Newport, Florida Wewahitchka, Florida
Chip Plants
Lowry Newport
Nursery and Genetics Research Facility
Capps, Florida
Pulpwood Procurement Offices
Port St. Joe, Florida
AGRICULTURAL LANDS
The Company owns slightly over one million acres of agricultural lands in
Florida and Georgia and leases an additional 6,400 acres.
TRANSPORTATION
FEC owns three four-story buildings in downtown St. Augustine which it uses for
its corporate headquarters. It also owns approximately 12,000 acres of land
along the east coast of Florida which is devoted to its railroad operation. Its
transportation facilities include 351 miles of main track, which is mostly 132#
rail on concrete crossties, 91 miles of branch line track, 157 miles of yard
switching track and 184 miles of other track. FEC owns 82 diesel electric
locomotives, approximately 2,635 freight cars, approximately 77 tractors, 1,359
trailer units for highway service, numerous pieces of work equipment and
automotive vehicles. All property and equipment owned is in good physical
condition.
ANRR owns one three-story building in Port St. Joe which it uses partially for
its corporate offices. Its transportation facilities include 96 miles of main
track, which is mainly 115# rail on concrete crossties, 13 miles of yard
switching track and 3 miles of other track. ANRR owns 14 diesel locomotives,
274 freight cars, numerous pieces of work equipment and automotive vehicles.
All property and equipment owned is in good physical condition.
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SUGAR OPERATIONS
Belle Glade, Florida. The Company owns approximately 48,600 acres of land and
leases approximately 6,400 acres. In addition, it owns a raw sugar mill and
various types of agricultural equipment.
REAL ESTATE
Southwood owns approximately 49,000 acres of investment land, the majority of
which is located in West Florida. The counties with the largest holdings at
December 31, 1996 are as follows:
Bay 25,933
Leon 9,556
Franklin 7,003
St. Johns 4,285
Walton 1,583
Wakulla 1,143
Southwood owns two office buildings in Panama City, Florida which contain a
total of 21,297 square feet.
GCC at December 31, 1996 owned and managed approximately 19,112 acres of land,
of this, 346 acres are developed with buildings, 1,158 acres are developed with
infrastructure ready for buildings and 16,511 acres are undeveloped, including
approximately 1,115 acres owned by FEC. The holdings by counties are as
follows:
COUNTY ACRES
Brevard 2,555
Broward 62
Dade 1,740
Duval 1,526
Flagler 3,464
Indian River 5
Martin 662
Manatee 897
Palm Beach 217
Putnam 87
Orange 79
St. Johns 3,385
St. Lucie 610
Volusia 3,823
GCC also owned at year-end 1996 fifty five buildings as detailed below;
NUMBER OF RENTABLE YEAR
LOCATION BUILDINGS TYPE SQUARE FEET BUILT
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duPont Center
Jacksonville, FL 2 Office 160,000 1987-88
Barnett Plaza
Jacksonville, FL 1 Office 67,000 1982
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Gran Park at
Interstate South
Jacksonville, FL 6 Office/Showroom/Warehouses 260,000 1987-89
Gran Park at 2 Office/Showroom/Warehouses 101,000 1992
the Avenues 3 Office 240,000 1992-95
Jacksonville, FL 2 Office/Warehouses 301,000 1994-96
Gran Park at
at Deerwood
Jacksonville, FL 2 Office 261,000 1995-96
Gran Park at
Melbourne
Melbourne, FL 1 Office/Showroom/Warehouse 28,000 1989
Gran Park at 1 Office/Showroom/Warehouse 62,000 1987
Riviera Beach, FL 2 Rail Warehouses 176,000 1982-87
Lewis Terminals 4 Cross Docks 74,000 1987-91
Gran Park - McCahill 2 Rail Warehouses 468,000 1992-94
Miami, FL 1 Front Load Warehouse 91,000 1996
Gran Park at Miami 5 Office/Showroom/Warehouses 369,000 1988-94
Miami, FL 5 Office/Warehouses 483,000 1990-96
4 Rail Warehouses 398,000 1989-94
7 Front Load Warehouses 790,000 1991-95
1 Double Front Load
Warehouse 239,000 1993
1 Office/Service Center 39,000 1994
Hialeah,Fl 1 Cross Dock 20,000 1987
1 Transit Warehouse 30,000 1975
Pompano, FL 1 Rail Warehouse 54,000 1987
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TOTAL 55 4,711,000
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GCC's holdings include lands adjacent to FEC tracks which are suitable for
development into office and industrial parks offering both rail and
non-rail-served parcels. Certain other holdings are in urban or suburban
locations offering opportunities for development of office building structures
or business parks offering both office building sites and sites for flexible
space structure such as office/showroom/warehouse buildings.
GENERAL
St. Joe considers that its facilities are suitable and adequate for the
operations involved.
ITEM 3. LEGAL PROCEEDINGS
The Company is named as a Potentially Responsible Party (PRP) for the
remediation of a designated Superfund site near Tampa, Florida. The United
States Environmental Protection Agency ("USEPA") has alleged that the Company
caused certain materials to be disposed at the site over a period of years in
the late 1970s or 1980s. The Company has provided USEPA with certain evidence
indicating the Company did not dispose of any material at the site. The Company
has declined an invitation to join a PRP group as a de minimis party. The
Company continues to deny liability and vigorously opposes any attempt to
impose any liability upon the Company for the remediation of the site.
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FEC, has been named as a PRP for the remediation of two designated Superfund
sites near Jacksonville, Florida. On the first site, the USEPA has alleged that
FEC caused certain materials to be disposed at the site over a period of years.
The USEPA has offered all named PRPs an opportunity to participate in the pilot
allocation program. This program is similar to binding arbitration. If FEC
participates in this program, its share of the liability for the remediation
will be fixed. The USEPA has also offered to negotiate a separate settlement
with certain parties, including FEC, whom we believe the USEPA considers to be
a de minimis party. FEC believes that, whichever alternative is chosen, its
liability for the remediation of the site will not be material. On the second
site, FEC was contacted by the USEPA during 1996, at which time FEC was asked
to provide certain information about the manner in which FEC disposes of steel
drums. The USEPA is attempting to determine whether or not FEC should be a PRP
at the steel drum site in Jacksonville, Florida. There is some evidence that
FEC may have sent a small number of steel drums to the site for disposal. FEC
believes its responsibility, if any, for the remediation of the site will not
be material.
FEC, has been named as a PRP for the remediation of a designated Superfund site
in Portsmouth, Virginia. The USEPA has alleged that FEC caused certain
materials to be sent to the site over a period of years. These materials were
utilized by the owner of the site in the course of its business which FEC
believes caused the site to become contaminated. The owner of the site has
filed suit in the United States District Court for the Eastern District of
Virginia, Norfolk Division seeking to impose liability upon the defendants,
including FEC, for remediation of the site. A settlement between the owner of
the site and FEC was achieved late in 1996. The settlement as to FEC, of
approximately $.2 million was approved by the Court and the USEPA. Unless
additional contamination is discovered at the site, or it becomes necessary to
remediate areas beyond the original clean-up, FEC will have no further
liability at the site.
FEC was contacted by the USEPA during 1996, seeking reimbursement of costs
associated with the remediation of a Superfund site in Hialeah, Florida. An
individual operated a business on this site for a number of years. The owner of
the business slightly encroached upon FEC's right of way. Upon discovering
this, FEC entered into a lease agreement with the business owner rather than
require the building be removed. The individual has ceased doing business.
The USEPA is seeking reimbursement of the approximate $2 million spent in
remediation from FEC on the grounds that FEC was an "owner" of the site.
Settlement negotiations are ongoing at this time and are not estimated to be
material.
The Company received notice of potential involvement in a Superfund Site in
Sharonville, Ohio, during the third quarter of 1996. The site was formerly
owned and operated by the Company as a container plant. It was sold in the
late 1970's. At this time the extent of the contamination and magnitude of the
cleanup is unknown. The Company does not believe from its preliminary
investigation of the Company's use of the property, that it is responsible for
the contamination and if found partially responsible, the Company does not
believe its liability would be material.
The Company, through its subsidiaries, is a party to various proceedings before
State regulatory agencies relating to environmental issues. The Company is not
aware of any monetary sanctions to be proposed, which, in the aggregate, are
likely to exceed $100,000, nor does it believe that corrections, if any, will
necessitate significant capital outlays or cause material changes in the
business.
During April 1996, a shareholder of FECI instituted a class action in Florida
state court against FECI, St. Joe Industries Inc., the Company and members of
the FECI Board of Directors (Messrs. Thornton, Belin, Nedley, Zellers,
Fairbanks, Foster, Harper, Mercer and Parrish). Certain of the individuals
named in the action also are officers or directors of the Company. The action,
which has been brought on behalf of all shareholders of FECI, other than the
defendants and their affiliates, is styled Kahn v. St. Joe Industries, Inc.,
St. Joe Paper Co., Thornton, Belin, Nedley, Zellers, Fairbanks, Foster, Harper,
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Mercer, Parrish and Florida East Coast Industries, Inc., Case No. 96-01874 CA
(Circuit Court, Fourth Judicial Circuit, Duval County, Florida, Division CV-G).
The complaint alleges that the defendants breached their fiduciary duties to
the minority shareholders of FECI in connection with the February 26, 1996
announcement by FECI that it was considering the sale of its real estate
subsidiary, GCC, to the Company and the sale of its railroad subsidiary, FEC to
a third party. According to the complaint, such transactions allegedly would
constitute unfair dealing and benefit the Company, as FECI's majority and
controlling shareholder, at the expense of FECI's minority shareholders. The
action seeks, among other things, to certify the litigation as a class action,
enjoin the sale of GCC to the Company and to require the defendant directors of
FECI to sell GCC by conducting an auction or accepting competitive bids from
third parties.
On May 29, 1996, the parties to the action entered into a stipulation whereby
(i) defendants agreed to appear in the litigation and waive any challenge to
sufficiency and service of process and (ii) plaintiff agreed that defendants'
time to respond to the complaint would be extended such that defendants are not
required to answer or respond to the complaint until plaintiff's counsel
provides written notice to defendants' counsel that a response is required (a
response is then required to be filed within 20 days). On February 6, 1997,
the Court entered an order approving the stipulation.
The Company, through its subsidiaries, is a party in various other pending
proceedings which are ordinary, routine litigation incidental to its business.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
none.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
STOCK AND RELATED STOCKHOLDER MATTERS
The company had 827 common stockholders of record as of March 7,1997. The
Company's common stock is quoted on the New York Stock Exchange ("NYSE")
Composite Transactions Tape under the symbol "SJP".
The range of high and low sales prices for the Common Stock as reported on the
NYSE Composite Transactions Tape for the periods indicated is set forth below.
FISCAL YEAR high low
- --------------------------------------------------------
1995 first quarter 67 3/4 53 3/4
second quarter 65 1/2 60 5/8
third quarter 64 1/2 60
fourth quarter 62 3/4 53 1/2
1996 first quarter 61 1/2 53 7/8
second quarter 65 1/4 58 7/8
third quarter 65 3/4 59 3/4
fourth quarter 68 7/8 64 1/8
DIVIDENDS
The Company paid a cash dividend of $.20 per share to holders of the Common
Stock in 1995 and 1996, respectively. A regular dividend of $.05 per share for
the first quarter of 1997 is payable on March 31, 1997 to holders of record on
March 21, 1997. In addition, the Company approved a distribution of net
proceeds in partial liquidation of $10.00 per share payable on March 31, 1997
to all holders of record on March 21, 1997. It is currently anticipated that
remaining net proceeds of approximately $1.00 per share will also be
distributed later this year after further costs and expenses of the sales have
been accounted for. Although the Company has historically paid quarterly cash
dividends of $.05 per share, there can be no assurance that such practice will
continue into the future.
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ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below for the five years
ended December 31, 1996 have been derived from the audited consolidated
financial statements of the Company. The statement of operations data with
respect to the years ended December 31, 1996, 1995, and 1994 and the balance
sheet data as of December 31, 1996, and 1995 have been derived from the audited
financial statements of the Company as included in this Annual Report on Form
10-K. The statement of operations data with respect to the years ended December
31, 1993 and 1992 and the balance sheet data as of December 31, 1994, 1993 and
1992 has been derived from audited financial statements of the Company
previously filed with the SEC but not incorporated by reference or included
elsewhere in this Annual Report on Form 10-K. The selected consolidated
financial data set forth below are qualified in their entirety by and should be
read in conjunction with the financial statements and the notes related thereto
included elsewhere in this Annual Report on Form 10-K. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations;
Consolidated Financial Statements."
(Dollar amounts in millions except per share amounts)
FINANCIAL CONDITION (1) 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Current assets $ 631 $ 497 $ 485 $ 486 $ 442
Current liabilities 57 44 68 69 56
Current ratio 11.1 11.3 7.0 6.9 7.9
Property, plant and equipment, net 834 805 757 722 684
Total assets 1,806 1,531 1,449 1,396 1,289
Long-term debt - - 17 16 16
Stockholders' equity (4) 1,197 1,016 937 902 836
RESULTS OF OPERATIONS (2)
Net sales and operating revenues $ 431 $ 335 $ 331 $ 312 $ 300
Cost of sales and operating expenses 252 256 244 235 190
Operating profit 148 47 60 55 43
Income from continuing operations 92 29 38 27 28
Income (loss) from discontinued operations (5)
(including gain on sale of discontinued operations) 84 45 4 (15) (12)
Cumulative effect of change in accounting principle(3) - - - 21 -
====== ====== ====== ====== ======
Net income $ 176 $ 74 $ 42 $ 33 $ 16
====== ====== ====== ====== ======
PER COMMON SHARE
Equity - end of year $39.25 $33.31 $30.72 $29.58 $27.35
Income from continuing operations $ 3.01 $ 0.96 $ 1.24 $ 0.87 $ 0.92
Income (loss) from discontinued operations (5)
(including gain on sale of discontinued operations) 2.76 1.46 0.14 (0.48) (0.40)
Cumulative effect of change in accounting principle(3) - - - 0.68 -
====== ====== ====== ====== ======
Net income $ 5.77 $ 2.42 $ 1.38 $ 1.07 $ 0.52
====== ====== ====== ====== ======
Return on equity 14.7 7.3 4.5 3.6 1.9
Dividends paid $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20
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(1) Approximately $359.3 million of proceeds thereon from these sales have been
held in special accounts during 1996. A formal plan of liquidation was adopted
on February 25,1997, and a distribution of net proceeds of the sales in partial
liquidation of $10 per share is payable on March 31,1997, for stockholders of
record on March 21, 1997. It is currently anticipated that remaining net
proceeds of approximately $1.00 per share will also be distributed later this
year after further costs and expenses of the sales have been accounted for.
(2) For various matters affecting 1996, 1995 and 1994 results of operations,
see Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
(3) Cumulative effect of adopting SFAS 109 " Accounting for Income Taxes ".
(4) The Company adopted the provisions of SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities" at December 31, 1993. This
adoption increased stockholders' equity by $41.5 million or $1.36 per share.
(5) As discussed in Note 3 to the Consolidated Financial Statements, net
operating results of the communications segment, linerboard mill and container
plants are shown separately as income (loss) from discontinued operations for
all years presented. Included in income (loss) from discontinued operations in
1996 are gains on these sales of $88.6 million, net of income taxes of $48.7
million.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Item 1. "Business" included elsewhere
herein which are incorporated herein by reference.
OVERVIEW
On April 11, 1996, St. Joe Industries, Inc., a wholly-owned subsidiary of the
Company, sold the stock of St. Joe Communications, Inc. (SJCI) to TPG
Communications, Inc. SJCI also sold its interests in three remaining cellular
limited partnerships in the first half of 1996. In 1995, the Company sold one
cellular limited partnership. These sales represented the Company's entire
Communications segment.
On May 30, 1996, the Company sold its linerboard mill and container plants.
The segmental analysis has been restated to reflect reclassification of general
and administrative expenses into a separate Other segment.
Consolidated net income rose to $176.0 million($5.77 per share) for the year
ended 1996 compared to $73.8 million ($2.42 per share) for 1995 and $42.1
million ($1.38 per share) in 1994. These results in 1996 include the income
from discontinued operations of $84.1 million, net of taxes (including gain on
sale of discontinued operations) and land sales to the State of Florida of
approximately $60.0 million, net of taxes. Discontinued operations in 1995 were
$44.5 million and $4.3 million in 1994.
Net sales and operating revenues rose to $431.2 million for the year ended
December 31, 1996, an increase of $96.3 million from the reported $334.9
million in 1995. Land sales to the State of Florida of $97.7 million in 1996
were the primary cause for the increase. Transportation segment operating
revenues increased by $1.1 million as a result of an increase in trucking
related revenues which were offset partially by a decline in rail revenues on
FEC and on ANRR. Sugar revenues declined in 1996 $3.0 million primarily because
of a drop in shipments of 3,095 tons combined with a $ 13.07 per ton price
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decline. Forestry revenues declined $3.4 million as a result of the sale of the
mill and conversion to operation under the wood fiber supply agreement. Real
estate revenues increased $101.6 million primarily, due to the above mentioned
sales to the State of Florida and increased rental and other income from its
operating properties of $4.1 million compared to 1995. In 1995, revenues
increased in transportation and sugar while the forestry and real estate
segments declined, compared to 1994, primarily as the result of non-recurring
land sales which occurred in 1994 but not 1995.
Operating profits increased by $100.9 million in 1996 from $47.3 million in
1995 and $60.0 million in 1994. The transportation segment experienced a $.9
million increase in operating profit. Transportation operating revenues
increases and operating expense decreases (.2%) were mostly offset by general
and administrative expenses increases (2.3%) compared to 1995. Land sales to
the State, referred to above, were the largest single factor in the $97.9
million increase in real estate operating profit. The forestry segment's
operating profit increase of $2.9 million was primarily the result of a
decrease in cost of sales from 98.5% of sales in 1995 to 92.5% in 1996. In the
sugar segment, higher cost of sales and selling general and administrative
costs combined with reduced net sales to result in a $5.0 million decrease in
that segment's operating profit. In 1995, sugar's operating profits
increased while transportation, real estate and forestry declined as compared
to the previous year.
Other income increased $22.1 million in 1996 compared to 1995, primarily as a
result of $9.8 million of interest income earned from investment of the
proceeds from the sales of the communications segment, and the linerboard mill
and container plants. Additionally, other income in 1996 includes $1.5 million
in capital gains on sales of securities and a gain totaling $1.6 million on the
sales of a fiber optic conduit contract. Other income declined in 1995 as
compared to 1994 primarily due to land sales of $3.5 million by the
transportation segment and $8.7 million by the forestry segment in 1994 which
were not repeated in 1995.
The provision for income taxes increased $58.6 million in 1996 compared to 1995.
The provision for income taxes decreased by $6.9 million in 1995 compared to
1994. These changes are, for the most part, due to the changes in taxable
income during the years. However, in 1996 a $15.1 million, 50% federal excise
tax provision was established against the possible reversion of the prepaid
pension asset. Discontinued operations includes $1.9 million of the excise tax
provision and $13.2 million of the excise tax is included in the tax provision
on income from continuing operations. Additionally, a deferred tax provision of
$37.5 million relating to the $97.7 million in land sales to the State of
Florida was established. Those condemnation proceeds can be reinvested over a
period up to three years and taxes thereon deferred into the basis of the new
properties acquired. 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 44.0%, 37.1%, and 36.9% in 1996, 1995,and 1994, respectively. The
1996 rate is unusually high due to the previously mentioned excise tax on
possible reversion of prepaid pension asset.
Income from continuing operations was $91.9 million compared to $29.4 million
in 1995. The increase is primarily attributable to the $97.7 million in land
sales to the State of Florida and $9.8 million in interest income earned from
investment of sales proceeds. Income from continuing operations in 1995
decreased $8.5 million from 1994 primarily as a result of land sales by the
transportation and forestry segments of approximately $12.2 million occurring
in 1994 which were not repeated in 1995.
Revenues, net income, earnings per share and cash flows may be materially
different than previous periods due to the sale of communications, and the
linerboard mill and container plants of the Company.
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In addition, as previously announced on February 28, 1995, the Company
continues to explore the sale of its sugar business. Should such a sale
materialize, the Company would also withdraw from the sugar segment of its
business. There can be no assurance when, if or on what terms such a sale may
be made. The Agriculture Act, which was signed into law by the President on
April 4, 1996, includes provisions for the restoration of the Everglade
ecosystem in South Florida. The Agriculture Act provides significant funding
levels for the acquisition of real property located in the Everglades where the
Company's sugar operations are located. It is currently unknown whether such
funds would be available or utilized if a sale of the sugar segment
materializes in the future.
As to transportation of goods by rail and real estate, FECI, in which the
Company beneficially owns 54% of the outstanding shares of common stock,
appointed a Special Committee of the Board of Directors (the "FECI Special
Committee") to consider whether its railroad transportation business now owned
by its wholly-owned subsidiary, FEC, should be disposed of in a merger or sale
transaction. The FECI Special Committee reached the conclusion that a
disposition should be pursued but only under certain conditions. The FECI
Special Committee advised the Company that the FECI Special Committee would not
pursue a disposition of the railroad unless the FECI Special Committee had
adequate assurance that the remaining business of FECI, the real estate
operations conducted by its wholly owned subsidiary, GCC, could also be
disposed of on acceptable terms. There can be no assurance when, if or on what
terms a disposition of FEC may be made.
The FECI Special Committee has recognized that it might be possible for FECI to
merge with another company with substantial railroad operations in a
transaction in which no gain or loss would be recognized to FECI or its
shareholders. FECI believes that the likelihood of such a merger is
significantly lessened as long as GCC remains a FECI subsidiary. The Company
has indicated to FECI that, if a merger of FECI with another
corporation, on terms acceptable to the Company, would be facilitated by an
exchange of GCC stock for the FECI stock held by the Company, the Company would
be willing to consider a tax free exchange of shares of FECI stock it owns for
all of the shares of GCC stock held by FECI.
The Company and FECI each hired an appraisal firm to assist in evaluating
the property of GCC, and the Company and FECI have conducted negotiations on the
possible terms of an exchange. The terms of an exchange have not been agreed
upon; and before proceeding with discussions concerning either the acquisition
of GCC or the disposition of FECI's railroad transportation business, the
Special Committee of the Company's Board of Directors is providing the Company's
new Chairman and Chief Executive Officer an opportunity to review the possible
transactions and report his views to the Special Committee. Accordingly, there
can be no assurance when, if and on what terms the Company may acquire GCC from
FECI or a disposition of FEC may be made.
President Clinton's Proposed Fiscal 1998 Budget (the "Proposed Budget") and
implementing legislation could have a substantial and adverse effect upon a
merger of FECI with another company subsequent to the acquisition of GCC common
stock by the Company in exchange for FECI common stock. The Proposed Budget
would amend current laws to provide that a merger of FECI with another company
within two years of the exchange of GCC common stock for FECI common stock,
pursuant to which the FECI shareholder would own less than fifty percent of the
voting power, and less than fifty percent of the value of the stock of the
surviving company, could cause FECI to recognize gain on the exchange of the
GCC common stock. The gain would be measured by the difference between the fair
market value of the GCC common stock and FECI's adjusted tax basis in such
stock. If enacted, the Proposed Budget would be effective for distributions
made after the date of first Congressional Committee action to amend the
current law. There can be no assurance that the Proposed Budget will be enacted
by Congress, and if enacted, the final form of the legislation.
Accordingly, there can be no assurance when, if, and on what terms a
transaction involving FECI and another corporation may be made or sale of FEC
or GCC, may be made. Also, there can be no assurance when, if and on what terms
the Company may acquire GCC from FECI.
If there is a sale of the sugar segment by the Company and sale of
18
19
the railroad by FECI and the acquisition of GCC by the Company, the Company's
operations would thereafter be primarily focused on real estate operations from
the point of view of the growing and harvesting of timber and the development
of commercial and residential real estate.
CONTINUING OPERATIONS
TRANSPORTATION
The transportation segment accounted for 43.0% of the consolidated revenues of
the Company in 1996 compared to 55% in 1995 and 53% in 1994. Revenues increased
by approximately $1.1 million in 1996 compared to 1995 and $10.7 million in
1995 compared to 1994.
The composition of the revenues and expenses of FEC changed significantly in
1995 and 1996 due to the purchase of its trucking subsidiary, ITI in April of
1995. The increases in revenues and expenses in 1996 (twelve months in 1996
versus nine in 1995) were related primarily to this acquisition, even though
the contribution to operating profit from this subsidiary was negligible. Also
contributing to the change was the implementation on April 1, 1995 of a haulage
agreement with a connecting rail carrier. Under this agreement, the connecting
rail carrier's intermodal shipments were handled wholesale to and from FEC's
south Florida intermodal terminals. Whereas, the purchase of the trucking
subsidiary increased revenues and expenses, the haulage agreement reduced
both revenues and expenses. FEC's revenues are derived from four major
classifications of traffic: shipments of rock, intermodal (container and
trailer), automotive and other.
Rock shipments increased slightly (1.4%) when compared to 1995 and were flat in
1995 compared to 1994. Continued growth and construction along Florida's east
coast and the greater Orlando area were key reasons for the increase in rock
shipments. Adverse weather conditions during the second and third quarters of
1995 were offset by strong fourth quarter shipments in 1995 to provide flat
growth in 1995.
Intermodal shipments decreased by 1.7% in 1996 compared to 1995 and 1.4% in
1995 compared to 1994. The market for intermodal shipments is very competitive
with the trucking industry. FEC is dependent on connecting carriers for
shipments destined to south Florida intermodal terminals. The number of
shipments interchanged from connecting carriers declined in 1995 and in the
first three quarters of 1996. However, fourth quarter 1996's shipments
increased 5% over the fourth quarter of 1995 and reduced the year's overall
decline to 1.7%.
Automotive shipments increased 9.3% compared to 1995 which had remained
relatively unchanged compared to 1994. The rental market for automobiles in
south Florida strengthened in 1996 as did the growth of new car sales compared
to 1995.
All other shipments in 1996 decreased by approximately 1.2% compared to 1995
which had increased 5% over 1994. Sizable gains in 1995's shipments of raw
sugar and a one time shipment of military equipment were not repeated in 1996.
Operating expenses for FEC increased in 1996 by $3.9 million or 2.4% and $13.5
million or 8.8% in 1995. These increases were primarily related to the
acquisition of ITI which added $24.7 million and $18.9 million, respectively to
1996 and 1995 operating expenses. Excluding ITI's impact, operating expenses
decreased $7.3 million or 4.7% in 1996 and $5.4 million or 3.5% in 1995.
These reductions were primarily due to outsourcing of services previously
performed by transportation subsidiaries combined with implementation of the
haulage agreement.
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20
The ANRR operating revenues decreased $0.7 million in 1996 compared to 1995
primarily due to reduced shipments of wood products and coal. Operating profits
in 1996 decreased $.7 million compared to 1995 as operating costs and selling,
general and administrative costs remained relatively flat. Operating profits in
1995 increased $.9 million over 1994 primarily due to the environmental clean
up expenses incurred in 1994 which were not repeated in 1995. Shipment of wood
and wood products is a significant portion of ANRR's revenues. If the
announced shutdown of the mill extends for a long period of time without ANRR
being able to replace this revenue source, ANRR's revenue, operating profit
net income, and cash flow would be significantly adversely impacted. ANRR is
considering alternatives to mitigate this loss.
REAL ESTATE
Real estate segment net sales increased $101.6 million compared to 1995. As
previously mentioned, the State of Florida condemned 852 acres, including 680
acres which were sold for $84 million at Topsail and 172 acres which were sold
for $13.7 million at Deer Lake, in early 1996. Lot sales from year to year have
remained relatively flat at $.6 million in 1996 and 1995. Real estate segment
net sales in 1995 declined by $9.4 million from 1994 to $30.4 million. The 1994
net sales included an $11.3 million dollar condemnation sale to the State of
Florida which was not repeated in 1995. Other land sales decreased by $1.1
million from 1995 and $2.0 million compared to 1994. Rental income increased by
$4.1 million in 1996 over 1995 and $4.3 million in 1995 over 1994.
Approximately $1.8 million of the increase in rental income in 1996 came from
existing 1995 properties while $2.3 million came as a result of new buildings
added in 1996. Operating profit for the real estate segment grew as a result of
the above by $97.9 million in 1996 from 1995. Operating profit fell to $11.6
million in 1995 compared to $22.3 million in 1994. The decrease was primarily
due to the condemnation sale referred to earlier. It should be noted that the
majority of the real estate segment's 1996 sales revenue and operating profit
came from condemnation sales which may not recur in 1997 or future years.
As of year end, Gran Central Corporation (GCC) owned 55 buildings versus 50
buildings in 1995 with approximately 4.7 million square feet of rentable space
as opposed to 4.1 million square feet of rentable space in 1995 and 3.8 million
square feet of rentable space in 1994. Approximately 93% of this space was
under lease at year end 1996 compared to 95% in 1995 and 90% in 1994. Under
construction at December 31, 1996 were 7 additional buildings which will add
0.9 million square feet of rentable space.
The Company's Southwood Properties (SWP) division finished construction on a
second 9,597 rentable square foot building in Southwood Center Office Park in
Panama City, Florida in 1996. The 11,700 square foot Building #1 is fully
leased. Building #2 is 80% leased at December 31, 1996. Site development for
the 70 lot first phase of the 250 lot Bay County Summerwood subdivision, which
began in 1995 was completed in 1996 with eighteen lots sold and closed in 1996.
Walton County issued the Development Order for the Camp Creek Point subdivision
in December 1995. The site development work on that 18 lot gulf front
subdivision is now complete and lots are for sale. Lot prices range from a low
of $200,000 to a high of approximately $900,000 for the premier gulf front
lots. The Retreat, a 97 lot subdivision in Walton County with 26 gulf front
lots is still awaiting final development approval which is expected in March
1997. Woods III a 44 lot Bay County subdivision has approximately 35 lots under
contract and should begin closings during the first or early second quarter of
1997. It is anticipated that during 1997, capital expenditures for residential
real estate will increase as compared to historical levels as the Company more
actively pursues land development of its SWP's properties.
FORESTRY
Net sales by the Forestry segment declined by $3.4 million in 1996 compared to
1995 and $0.1 million in 1995 compared with 1994. Operating profit in 1996,
however, increased $2.9
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million in 1996 from 1995 even though sales declined, primarily because cost
of sales declined $6.2 million. Cost of sales as a percentage of sales
decreased from 98.5% in 1995 to 92.5% in 1996. A combination of factors caused
the reduction in cost of sales : (1) reduced cut and haul costs as Company
timber was cut closer to its delivery point; (2)reduced cost of purchases as
the Company was better able to manage its supply needs pursuant to the wood
fiber supply agreement (executed at the time of sale of the linerboard mill and
container plants) and (3) timber inventory was adjusted in 1996 as a result of
the five year continuous forest inventory ("CFI") statistical analysis of the
Company's timber which was completed in November of 1995 and recorded in 1996.
This CFI analysis, which is performed every five years, resulted in a $.3
million reduction in 1996's depletion cost. Operating profit dropped from
income of $6.3 million in 1994 to a loss of $.6 million in 1995. The primary
factor in 1995's decline was the cost of wood, which increased by $5.9 million
despite volume remaining flat. Increased demand for pulpwood in the first half
of 1995 caused pulpwood prices to soar and as supplies tightened, the Company
was forced to bring in wood from further away increasing hauling cost.
The Company is currently evaluating the impact of the announced shutdown on its
sales related to the wood fiber supply agreement. Under that agreement, wood
fiber will be supplied to the linerboard mill at Port St. Joe, Florida for a
period of fifteen years, with two five year renewal periods. Tonnage to be
provided ,reduces from 1.6 million tons in year one to 1.4 ,1.2 ,.9 million
tons in years two, three and four respectively. Years four and thereafter
remain at .9 million tons. The amount of tonnage required from Company's land
is .9 million tons per year starting in the third year. At any time, the mill
can elect to reduce in increments on a permanent basis the amount of tonnage to
not less than 600,000 tons per year. Prices for the wood fiber were
established at the time of the negotiation of the agreement and were set based
on fixed prices from geographic zones for pulp wood and prices tied to
designated chipping facilities for wood chips. Under the wood fiber supply
agreement, prices are to be renegotiated every two years and are to be indexed
on a quarterly basis to certain published prices resulting in quarterly
adjustments that are not greater than five percent. As tonnage required to be
supplied under the agreement decreases, the Company intends to allow its
forests to grow for longer periods shifting the timber to higher margin
products. The performance of the Forestry Segment may decline in the near term
as that shift occurs. Sales to the mill accounted for 74% of the segment's
sales in 1996 compared to 77% in 1995. The financial impact of the announced
shut down to the forestry segment's operations would have a significant adverse
impact on the segment's revenues, operating profit, net income and cash flow if
the mill does not honor the annual tonnage requirement of the agreement.
Forestry is considering the alternatives available to it to mitigate this
potential loss.
SUGAR
Decreased sales volume of 3,095 tons (2.4%), combined with a $13.07 (2.9%) per
ton decrease in sales price to result in a $3.0 million decrease in net sales
in 1996 compared to 1995. Cost of sales as a percentage of sales increased from
67.1% in 1995 to 70.6% in 1996. Cost of sales includes the Everglades
Agricultural Privilege Tax paid by TSC of approximately $1.3 million in 1996
and 1995. Harvesting expenses increased approximately $5.00 per ton from 1995
to 1996 and cultivation expenses increased nearly $6.00 per ton from 1995 to
1996. Additionally, selling, general and administrative expenses increased
approximately $2.1 million as a result of advertising and public relations
costs related to the opposition and defeat of the proposed Florida sugar sales
tax referendum. Operating profit as a result decreased $5.0 million from 1995
to 1996. A slight increase in 1995's volume combined with a 4% price increase
to produce a $2.6 million increase in net sales for the sugar segment compared
to 1994. A $14 per ton decrease in harvesting cost and a 24% increase in
production, reduced the cost per ton of sugar resulting in a $4.4 million
decrease in the cost of sales. The increased revenue and decreased costs
contributed to a $7.0 million increase in operating profit from $6.3 million in
1994 to $13.3 in 1995.
21
22
OTHER
Other's operating profit for 1996 is $1.4 million of income, primarily
resulting from the increase in the prepaid pension asset totaling $5.5 million
which more than offset $4.1 million of general and administrative costs.
General and administrative expenses for 1995 and 1994 were $2.8 million and
$2.2 million respectively. Future general and administrative costs may be
higher than historical levels as new management increases staffing and
refocuses direction of the Company.
DISCONTINUED OPERATIONS
Income from discontinued operations, including gain on sale, net of taxes, was
$84.1 million in 1996, $44.5 million in 1995 and $4.3 million in 1994. The
increase in income from 1994 to 1995 primarily reflects the increase in
profitability of the linerboard mill and container plants as paper prices
increased substantially during the first half of 1995 before leveling off and
dropping near year end 1995.
On April 11, 1996, St. Joe Industries, Inc., a wholly owned subsidiary of the
Company, sold the stock of St. Joe Communications, Inc. (SJCI) to TPG
Communications, Inc. for $96.1 million. TPG Communications, Inc. assumed $18.0
million of SJCI interest bearing debt. SJCI sold its interest in three
remaining cellular partnerships for an aggregate of $25.1 million. The Company
recorded a $39.1 million gain on the sale, net of tax. SJCI's revenues through
the April 11, 1996 sale date were $9.3 million. Revenues in 1995 and 1994 were
$32.8 million and $30.6 million, respectively. During 1995, the Company had
previously sold a cellular partnership interest for $2.1 million. Earnings for
SJCI were $1.1 million, $6.8 million, and $5.0 million for 1996, 1995 and 1994
respectively.
On May 30, 1996, the Company sold its linerboard mill and container plants.
Proceeds from the sale include $323.8 million cash and a $10.0 million senior
subordinated note, (the Promissory Note). The Promissory Note bears interest at
a rate of 13.25% and interest is payable quarterly in arrears commencing
September 1, 1996, provided that any interest payable on its due date may, at
the borrowers' option, be added to the principal amount outstanding. To date
interest payments have been added to principal. All unpaid principal and
interest is due June 1, 2007. The Promissory Note may be prepaid without
penalty at any time. The gain on the sale was $49.5 million, net of tax.
Revenues for the linerboard mill and container plants through May 31, 1996 were
$156.3 million. Revenues in 1995 and 1994 were $438.4 million and $378.0
million, respectively. Earnings (loss) for the linerboard mill and container
plants were $(5.6) million, $37.7 million and $(.7) million for 1996, 1995 and
1994, respectively.
Included in cash and cash equivalents at December 31, 1996 is approximately
$359.3 million of proceeds from these sales which have been held in special
accounts during 1996. A formal plan of liquidation was adopted on February
25,1997, and a distribution of net proceeds of the sales in partial liquidation
of $10 per share is payable on March 31,1997, for stockholders of record on
March 21, 1997. It is currently anticipated that remaining net proceeds of
approximately $1.00 per share will also be distributed later this year after
further costs and expenses of the sales have been accounted for. Also included
in cash and cash equivalents at December 31, 1996 are $9.8 million of earnings
on the proceeds of sales.
Sale of these operations will materially lower the Company's revenues from
historical levels. Distribution of the net proceeds in partial liquidation will
also materially reduce cash. Accordingly, future net income, earnings per
share and cash flows may also be materially different than historical levels.
FINANCIAL POSITION
GENERAL
In 1996, the Company continued to have a strong balance sheet although the
composition of that balance sheet has changed dramatically since the sale of
the mill and container plants and the communications segment. Except for the
distribution in partial liquidation, management's long standing policy of
retaining funds to finance capital additions continued in 1996. Cash,
short-term investments and marketable securities totaled $819.9 million at
December 31, 1996 versus $304 million at December 31, 1995. The majority of
this increase is due to approximately $359.3 million of proceeds from the sales
which have been held in special accounts during 1996. A formal plan of
liquidation was adopted on February 25,1997, and a distribution of net proceeds
of the sales in partial liquidation
22
23
of $10 per share is payable on March 31,1997, for stockholders of record on
March 21, 1997. It is currently anticipated that remaining net proceeds of
approximately $1.00 per share will also be distributed later this year after
further costs and expenses of the sales have been accounted for. Unrealized
gains on marketable securities available for sale increased $20.7 million over
1995.
Net working capital (current assets less current liabilities) increased to
$573.7 million at December 31, 1996 a 26.7% increase over 1995's $452.7
million. Excluding the $359.3 million in special accounts, net working capital
would have been $214.4 million at December 31, 1996. Excluding the $296 million
of net assets of discontinued operations included in 1995's working capital,
net working capital would have been $156.7 million at December 31,1995. This
"adjusted" net working capital reflects an increase of 36.8% from 1995 to 1996.
The current ratio (current assets divided by current liabilities) fell to 11.1
in 1996 from 11.3 in 1995.
During 1995, the Company paid off its long-term debt and short term borrowings,
except for those related to the communications segment which were assumed as
part of that sale. Those payments amounted to $28.9 million.
Stockholders' equity at December 31, 1996 was $39.25 per share, compared to
$33.31 per share in December 31, 1995, an increase of $5.94 or 17.8% from 1995.
Over the last five years, stockholder equity has increased 43.2%. After the
$10.00 per share distribution of net proceeds referred to above, shareholders'
equity would be $29.25 per share.
CAPITAL RESOURCES
Property, plant and equipment additions were $64.3 million in 1996 compared to
$78.8 million in 1995 and $65.5 million in 1994. The majority of these
additions, $43.7 million, relate to real estate development and construction
which are funded out of FEC's operations.
Currently, GCC has seven buildings totaling approximately 856,000 square feet,
under construction which should be completed in 1997. These seven buildings
consist of one office building of 127,000 square feet, two office showroom
warehouses totaling 202,000 square feet, three office warehouses totaling
423,000 square feet and a rail warehouse of 104,000 square feet. Budgeted
costs to complete these projects approximates $22.3 million. See Note 12 to
Notes to Consolidated Financial Statements for additional capital expenditure
information by segment.
It is anticipated that during 1997 capital expenditures for residential real
estate will increase as compared to historical levels as the Company more
actively pursues land development of its Southwood properties consistent with
each market's ability to absorb such development. However, no current estimate
of that amount is available as new management is still evaluating the
properties and potential. The Company plans to fund such expenditures from
internally generated cash.
The Company has historically not incurred debt in the development of its
various real estate projects, funding instead from internally generated
cash flows. As the Company moves forward under new management, debt may be
incurred in those situations where the use of financing leverage is appropriate
to maximize cash flow and enhance returns.
ENVIRONMENTAL
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, including sites which have been previously sold. 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.
The Company is currently a party to, or involved in, legal proceedings directed
at the cleanup of six Superfund sites. The Company has accrued its total
estimated cleanup costs
23
24
for these six 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.
On May 30, 1996 the company sold its linerboard mill and container plants. As
part of the sale, the Company remains contingently liable for up to $10 million
relating to On-Site Environmental Liabilities, as defined in the sales
agreement, as long as they are discovered within three years of the closing
date of the sale and the Company has, except in limited circumstances, received
invoices for them within five years of the closing date. The Company has no
obligation for costs incurred by the buyer to comply with Title V of the Clean
Air Act or the Cluster Rules. On-Site Environmental Liabilities arising from
environmental conditions caused from activities both before and after the
closing date are to be allocated among the parties based on relative
contribution. The agreement provided the exclusive remedy for On-Site
Environmental Liabilities which relate to matters within the property lines of
real property conveyed under the agreement. The Company's obligation to pay
$10 million for On-Site Environmental Liabilities existing on the closing date
is subject to cost-sharing with the buyer according to the following schedule:
the first $2.5 million by buyer, the next $2.5 million by the Company; the next
$2.5 million by the buyer; the next $2.5 million by the Company; the next $2.5
million by the buyer and the next $5 million by the Company. The Company also
agreed to reimburse up to $1 million for certain remediation activities at the
linerboard mill, if such activities were required under environmental laws
under the following schedule: the first $.2 million by the Company, the next
$.3 million by the buyer, the next $.3 million by the Company, the next $.3
million by the buyer, the next $.5 million by the Company, the next $.5 million
by the buyer with any remaining amounts treated as On-Site Environmental
Liabilities. No known matters exist which, pursuant to this contingent
liability, would require funding or accrual in the Company's financial
statements.
EPA has proposed to amend federal air standards for particulate. If the
proposed rule is adopted, the new standard would be more stringent than the
current standard and could cause the company to incur substantial costs to
maintain compliance. However, there would be a lengthy regulatory process to
implement the new standard, so that installation of any new controls that might
ultimately be required would not be expected to occur for at least five years.
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, results of operations or liquidity of the Company.
Aggregate environmental-related accruals were $5.5 million and $6.2 million as
of December 31, 1996 and 1995, respectively.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements on page F-2 to F-17, inclusive and the Independent
Auditor's Report on page F-1 are filed as part of this Report and incorporated
herein by reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
24
25
Reference is made to the information to be set forth in the section entitled
"Election of Directors" in the definitive proxy statement involving the
election of directors in connection with the Annual Meeting of Stockholders of
St. Joe to be held on May 13, 1997 (the "Proxy Statement"), which section is
incorporated herein by reference. The Proxy Statement will be filed with the
Securities and Exchange Commission not later than 120 days after December 31,
1996, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended.
ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the information to be set forth in the section
entitled "Executive Compensation" in the Proxy Statement, which section is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Reference is made to the information to be set forth in the section
entitled "Common Stock Ownership of Certain Beneficial Owners" and "Common
Stock Ownership of Management" in the Proxy Statement, which sections are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
To the extent applicable, reference is made to the Proxy Statement, which
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT, SCHEDULES AND
REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The financial statements listed in the accompanying Index to
Financial Statements and Financial Statement Schedules and Independent
Auditors' Report are filed as part of this Report.
2. FINANCIAL STATEMENT SCHEDULES
The financial statement schedules and Independent Auditors'
Report listed in the accompanying Index to Financial Statements and
Financial Statement Schedules are filed as part of this report.
3. EXHIBITS
The exhibits listed on the accompanying Index to Exhibits are
filed as part of this Report.
(B) REPORTS ON FORM 8-K
None
25
26
ST. JOE PAPER COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) 1. and 2.)
PAGE NUMBER
Independent Auditors' Report F-1
Consolidated Balance Sheets at December 31, 1996 and 1995 F-2
Consolidated Statements of Income for each of the three
years in the period ended December 31, 1996 F-3
Consolidated Statements of Changes in Stockholders' Equity
for each of the three years in the period ended
December 31, 1996 F-4
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 1996 F-5
Notes to Consolidated Financial Statements F-6-F-17
Independent Auditors' Report - Financial Statement Schedules S-1
Schedule II - Valuation and Qualifying Accounts S-2
Schedule III - Real Estate and Accumulated Depreciation S-3-5
All other schedules have been omitted since the required information is
not present or not present in amounts sufficient to require submission of the
schedule or because the information required is included in the Consolidated
Financial Statements, and the Notes to the Consolidated Financial Statements.
26
27
ST. JOE CORPORATION
INDEX TO EXHIBITS
(ITEM 14(A) 3.)
S-K
ITEM 601 DOCUMENTS PAGE
- -------- --------- ----
(3) (a) Articles of Incorporation
(Previously filed as an Exhibit filed in connection with St. Joe Paper
Company Registration Statement on Form 10 as filed with the Securities
and Exchange Commission on April 30, 1984 (File No. 1-10466).
(3) (b) Amended By-Laws dated March 18, 1997 *
(3) (c) Articles of Amendment effective June 3, 1996 *
(10) (a) Agreement between Apalachicola Northern Railroad and
Seminole Electric Cooperative, Incorporated dated October 14, 1982
(Previously filed as an Exhibit filed in connection with St. Joe Paper
Company Registration Statement on Form 10 as filed with the Securities
and Exchange Commission on April 30, 1984 (File No. 1-10466).
(b) Agreement between Talisman Sugar Corporation and Everglades
Sugar Refinery dated February 11, 1986 (Incorporated herein by
reference to Exhibits filed with the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990).
(c) Stock Purchase Agreement dated as of September 1, 1995 between St. Joe
Industries, Inc. and TPG Communications, Inc. Incorporated herein by
reference to Exhibits filed with the Registrant's Quarterly Report on
Form 10-Q for the third quarter ended September 30, 1995).
(d) Asset Purchase Agreement dated as of November 1, 1995 by and among St.
Joe Forest Products Company, St. Joe Container Company and St. Joe
Paper Company, on the one hand, and Four M Corporation and Port St.
Joe Paper Company on the other hand (the "Asset Purchase Agreement").
(Incorporated herein by reference to Exhibits filed with the
Registrant's Quarterly Report on Form 10-Q for the third quarter ended
September 30, 1995).
(e) Amendments dated December 14, 1995; December 20, 1995; January 10,
1996; and January 12, 1996 to the Asset Purchase Agreement.
(Incorporated herein by reference to the Registrant's Proxy Statement
for Special Meeting of Stockholders on April 24, 1996).
(f) Promissory Note between Florida Coast Paper Company, L.L.C. and St.
Joe Forest Products, Company dated May 30, 1996 (previously filed as
Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1996).
(g) Wood Fiber Supply Agreement (previously filed as Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for the period Ended June 30,
1996),
(h) Amendment No. 4 to Asset Purchase Agreement *
(21) Subsidiaries of St. Joe *
27
28
(23) Accountants' Consent *
(24) Powers of Attorney *
(27) Financial Data Schedule (for SEC use only) *
* Filed herewith
28
29
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.
ST. JOE CORPORATION
By: /s/ J. Malcolm Jones, Jr.
------------------------------------
J. Malcolm Jones, Jr.
Chief Financial Officer
(Principal Financial Officer)
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 27, 1997.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Peter S. Rummell Chairman of the Board and March 27, 1997
- ----------------------------------------------------- Chief Executive Officer
Peter S. Rummell
/s/ Robert E. Nedley President, Chief Operating March 27, 1997
- ----------------------------------------------------- Officer and Director
Robert E. Nedley
/s/ J. Malcolm Jones, Jr. Vice President and Chief March 27, 1997
- ----------------------------------------------------- Financial Officer
J. Malcom Jones, Jr. (Principal Financial
Officer)
/s/ D. Michael Groos Controller (Principal March 27, 1997
- ----------------------------------------------------- Accounting Officer)
D. Michael Groos
/s/ Jacob C. Belin Director Narch 27, 1997
- -----------------------------------------------------
Jacob C. Belin
/s/ Robert M. Rhodes Senior Vice President and March 27, 1997
- ----------------------------------------------------- General Counsel
Robert M. Rhodes
/s/ Winfred L. Thornton Director March 27, 1997
- -----------------------------------------------------
Winfred L. Thornton
/s/ Russell B. Newton, Jr. Director March 27, 1997
- -----------------------------------------------------
Russell B. Newton, Jr.
/s/ John J. Quindlen Director March 27, 1997
- -----------------------------------------------------
John J. Quindlen
/s/ Walter L. Revell Director March 27, 1997
- -----------------------------------------------------
Walter L. Revell
/s/ Frank S. Shaw, Jr. Director March 27, 1997
- -----------------------------------------------------
Frank S. Shaw, Jr.
/s/ John D. Uible Director March 27, 1997
- -----------------------------------------------------
John D. Uible
/s/ Carl F. Zellers Director March 27, 1997
- -----------------------------------------------------
Carl F. Zellers
By: /s/ Robert M. Rhodes March 27, 1997
-------------------------------------------------
Robert M. Rhodes
Senior Vice President and
General Counsel
30
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
St. Joe Corporation:
We have audited the accompanying consolidated balance sheets of St. Joe
Corporation and subsidiaries as of December 31, 1996 and 1995,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, 1996.
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 presentation. 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 Corporation
and subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Jacksonville, Florida
March 7, 1997
F-1
31
ST. JOE CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
December 31,
---------------------
ASSETS 1996 1995
---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 449,013 $ 16,802
Short-term investments 88,011 96,923
Accounts receivable 57,517 44,390
Income taxes refundable - 4,314
Inventories 18,677 20,592
Other assets 17,455 18,162
Net assets of discontinued operations - 296,001
---------- ----------
Total current assets 630,673 497,184
INVESTMENTS AND OTHER ASSETS:
Marketable securities 282,827 189,865
Note receivable 10,000 -
Other assets 48,571 38,971
---------- ----------
Total investments and other assets 341,398 228,836
Property, plant and equipment, net 834,167 804,974
---------- ----------
Total assets $1,806,238 $1,530,994
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 28,480 $ 26,024
Accrued liabilities 21,615 18,445
Income taxes payable 6,864 -
---------- ----------
Total current liabilities 56,959 44,469
Accrued casualty reserves and other liabilities 18,361 11,681
Deferred income taxes 254,873 192,036
Minority interest in consolidated subsidiaries 279,104 266,741
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 1,125,161 955,239
Net unrealized gains on marketable securities
available for sale 63,066 52,114
---------- ----------
Total stockholders' equity 1,196,941 1,016,067
---------- ----------
Total liabilities and stockholders' equity $1,806,238 $1,530,994
========== ==========
See notes to consolidated financial statements.
F-2
32
ST. JOE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Years ended December 31,
----------------------------
1996 1995 1994
---- ---- ----
Net sales $245,704 $150,564 $155,122
Operating revenues 185,485 184,360 175,784
-------- -------- --------
Total revenues 431,189 334,924 330,906
Cost of sales 112,163 116,014 111,014
Operating expenses 139,640 139,875 133,091
Selling, general and administrative expenses 31,215 31,718 26,836
-------- -------- --------
Operating profit 148,171 47,317 59,965
Other income (expense):
Dividends 2,968 2,595 2,187
Interest income 29,914 12,666 9,678
Interest expense (600) (2,235) (1,982)
Gain on sales and other dispositions of
property, plant and equipment 3,423 2,674 13,895
Other, net 5,152 3,070 1,386
-------- -------- --------
Total other income (expense) 40,857 18,770 25,164
-------- -------- --------
Income from continuing operations before
income taxes and minority interest 189,028 66,087 85,129
Provision for income taxes
Current 30,288 5,778 24,692
Deferred 52,829 18,757 6,754
-------- -------- --------
Total provision for income taxes 83,117 24,535 31,446
-------- -------- --------
Income from continuing operations before
minority interest 105,911 41,552 53,683
Minority interest 14,002 12,194 15,827
-------- -------- --------
Income from continuing operations 91,909 29,358 37,856
Income from discontinued operations:
Earnings (loss) from discontinued operations,
net of income taxes of $ (2,785), $26,116
and $2,491, respectively (4,528) 44,461 4,253
Gain on the sale of discontinued operations,
net of income taxes of $48,705 88,641 - -
-------- -------- --------
Income from discontinued operations 84,113 44,461 4,253
-------- -------- --------
Net income $176,022 $73,819 $ 42,109
======== ======= ========
PER SHARE DATA:
Income from continuing operations $ 3.01 $ 0.96 $ 1.24
Earnings(loss) from discontinued operations (.15) 1.46 0.14
Gain on the sale of discontinued operations 2.91 - -
-------- ------- --------
Net income $ 5.77 $ 2.42 $ 1.38
======== ======= ========
See notes to consolidated financial statements.
F-3
33
ST. JOE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Years ended December 31,
----------------------------
1996 1995 1994
---- ---- ----
COMMON STOCK
Balance, at end of year (1996, 1995
and 1994 - 30,498,650 shares) $ 8,714 $ 8,714 $ 8,714
========== ======== ========
RETAINED EARNINGS
Balance, at beginning of year $ 955,239 $887,520 $851,511
Net income 176,022 73,819 42,109
Dividends:
Cash ($0.20 per share - 1996,
1995 and 1994) (6,100) (6,100) (6,100)
---------- -------- --------
Balance, at end of year $1,125,161 $955,239 $887,520
========== ======== ========
NET UNREALIZED GAIN ON MARKETABLE SECURITIES AVAILABLE
FOR SALE
Balance, at beginning of year $ 52,114 $ 40,747 $ 41,485
Increase (decrease) in net unrealized
gain, net of tax effect 10,952 11,367 (738)
---------- -------- --------
Balance, at end of year $ 63,066 $ 52,114 $ 40,747
========== ======== ========
See notes to consolidated financial statements.
F-4
34
ST. JOE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
Years ended December 31,
-------------------------------------
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
Net Income $176,022 $ 73,819 $ 42,109
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and depletion 28,758 28,551 27,612
Minority interest in income 14,002 12,194 15,827
Gain on sale of property (3,423) (2,674) (13,895)
Gain on sale of discontinued operations (88,641) - -
Deferred income tax provision 52,829 18,757 6,754
Changes in operating assets and liabilities:
Accounts receivable (13,127) (3,139) (1,375)
Inventories 1,915 (828) 6,545
Other assets (8,893) (4,790) (406)
Accounts payable, accrued liabilities
and casualty reserves 5,435 (4,279) 3,176
Income taxes payable 11,178 (7,012) 4,275
Discontinued operations - noncash
charges and working capital changes (58,710) 43,483 12,096
-------- -------- --------
Cash provided by operating activities 117,345 154,082 102,718
-------- -------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (64,271) (78,816) (65,450)
Investing activities of discontinued operations (4,327) (28,102) (19,513)
Proceeds from sales of property 9,743 5,119 18,135
Proceeds from sale of discontinued operations 445,055 - -
Purchases of investments:
Available for sale (21,928) (31,247) (18,851)
Held-to-maturity (180,797) (168,607) (105,091)
Maturity and redemption of investments:
Available for sale 18,291 29,058 12,779
Held-to-maturity 121,111 135,480 95,241
-------- -------- --------
Cash provided by (used in) investing activities 322,877 (137,115) (82,750)
-------- -------- --------
Cash flows from financing activities:
Net change in short-term borrowings - (11,989) (5,437)
Financing activities of discontinued operations (245) (9,917) 2,092
Dividends paid to stockholders (6,100) (6,100) (6,100)
Repayment of long-term debt - (16,893) (19)
Dividends paid to minority interest (1,666) (1,655) (1,679)
-------- -------- --------
Cash used in financing activities (8,011) (46,554) (11,143)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 432,211 (29,587) 8,825
Cash and cash equivalents at beginning
of period 16,802 46,389 37,564
-------- -------- --------
Cash and cash equivalents at end of period $449,013 $ 16,802 $ 46,389
========= ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for certain expense items is:
Interest $ 1,009 $ 4,541 $ 3,973
Income taxes $120,789 $ 45,283 $ 20,494
See notes to consolidated financial statements.
F-5
35
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1. NATURE OF OPERATIONS
St. Joe Corporation (the Company) is a diversified corporation engaged in
transportation, real estate, forestry and sugar operations. Forestry has
operations in both Florida and Georgia while the remaining businesses operate
principally within the state of Florida.
TRANSPORTATION - Transportation operations accounted for 43% of the Company's
net sales and operating revenues in 1996, and consist of both railway and
trucking operations. The two railroads, one serving the northwest Florida area
from Port St. Joe to Chattahoochee and the other serving the eastern seaboard
of Florida from Jacksonville to Miami, provide transportation services for the
common carriage of goods by rail between their terminating points. Since the
rail operations are within the state of Florida, more than one-half of its
transportation revenue is generated by shipments which originate and terminate
within Florida. Additionally, a significant portion of the traffic handled is
received from or transferred to other rail carriers. The principal commodities
carried by rail include crushed stone, cement, automobile vehicles and parts,
trailer-on-flatcar, container-on-flatcar, basic consumer goods such as
foodstuffs and building material, coal, pulpboard, pulpwood, woodchips, tall
oil chemicals, stone and clay products and recyclables. The trucking portion of
the Company's operation is an interstate, irregular route, common carrier with
terminals located throughout the eastern half of the United States.
REAL ESTATE -- Real estate accounted for 31% of the Company's net sales and
operating revenues in 1996, and consists of the development, construction and
management of real estate projects within the state of Florida, both for
long-term appreciation and for sale to third parties and the sale of both
developed and undeveloped land. Along Florida's east coast, the Company
concentrates in commercial property which it can manage, maintain and develop.
In west Florida, the Company has concentrated on developing parcels for
residential use. The Real Estate segment's competition is with other developers
and brokers throughout its operating area.
FORESTRY - Forestry accounted for 13% of the Company's net sales and operating
revenues in 1996, and consists of the growing and harvesting of timber on
approximately one million acres of timberlands in Florida and Georgia. The
majority of the wood harvested by the Company is sold under a long term wood
fiber supply agreement to one linerboard mill located in Port St. Joe, Florida.
The Company plans in the future to shift its remaining fiber production from
the Company's lands to higher margin timber products.
Wood is supplied to the mill pursuant to a negotiated wood fiber supply
agreement entered into at the time of the sale of the mill. See Note 3.
Discontinued Operations. Under that agreement, wood fiber will be supplied to
the linerboard mill for a period of fifteen years ,with two five year renewal
periods. Tonnage to be provided ,reduces from 1.6 million tons in year one to
1.4 ,1.2 ,.9 million tons in years two, three and four respectively. Years four
and thereafter remain at .9 million tons. The amount of tonnage required from
Company's land is .9 million tons per year starting in the third year. At
anytime, the mill can elect to reduce in increments on a permanent basis the
amount of tonnage to not less than 600,000 tons per year. Prices for the wood
fiber were negotiated at the time of the negotiation of the agreement and were
negotiated based on fixed prices from geographic zones for pulp wood and prices
tied to designated chipping facilities for wood chips. Under the wood fiber
supply agreement, prices are to be renegotiated every two years and are to be
indexed on a quarterly basis to certain published prices resulting in quarterly
adjustments that are not greater than five percent.
On March 6, 1997 officials of the linerboard mill at Port St. Joe announced that
the mill will be shutdown beginning in April, 1997 for an indefinite period of
time due to soft market
F-6
36
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
conditions in the paper industry. The Company is currently evaluating the
impact of this shutdown on its sales related to the wood fiber supply agreement
and its transportation revenues generated from shipments of wood to the mill.
The financial impact to transportation (ANRR) and forestry segments operations
would have a significant adverse impact on the segments' revenues, operating
profit, net income and cash flow if the mill does not honor the annual tonnage
requirement of the agreement. Forestry and transportation are considering the
alternatives available to it to mitigate this potential loss.
SUGAR -- Sugar accounted for 13% of the Company's net sales and operating
revenues in 1996, and consists of a sugarcane plantation and a sugar mill which
processes the sugarcane into raw sugar. The raw sugar from the mill is sold to
one customer. The sugarcane crop is subject to varying weather conditions
which can significantly reduce the harvest and crop yields.
2. MAJORITY STOCKHOLDERS
The Alfred I. duPont Testamentary Trust (the "Trust") and Nemours Foundation
(the "Foundation"), beneficiary of the Trust, collectively own approximately
69.8% of the common stock of the Company. The Company and its subsidiaries had
no significant transactions with the Trust or the Foundation during the period.
3. DISCONTINUED OPERATIONS
COMMUNICATIONS -- On April 11, 1996, St. Joe Industries, Inc., a wholly owned
subsidiary of the Company, sold the stock of St. Joe Communications, Inc.
(SJCI) to TPG Communications, Inc. for $96,098. TPG Communications, Inc.
assumed $17,963 of SJCI interest bearing debt. SJCI sold its interest in three
remaining cellular partnerships for an aggregate of $25,113. The Company
recorded a $39,154 gain on the sale net of tax. SJCI's revenues through the
April 11, 1996 sale date were $9,335. Revenues in 1995 and 1994 were $32,826
and $30,638, respectively. During 1995, the Company had previously sold a
cellular partnership interest for $2,104. Earnings for SJCI were $1,120, $6,767
and $4,993 for 1996, 1995 and 1994, respectively
FOREST PRODUCTS -- On May 30, 1996, the Company sold its linerboard mill and
container plants. Proceeds from the sale include $323,844 cash and a $10,000
senior subordinated note, (the Promissory Note). The Promissory Note bears
interest at a rate of 13.25% and interest is payable quarterly in arrears
commencing September 1, 1996, provided that any interest payable on its due
date may, at the borrowers' option, be added to the principal amount
outstanding. To date, interest payments have been added to the principal
amount. All unpaid principal and interest is due June 1, 2007. The
Promissory Note may be prepaid without penalty at any time. The gain on the
sale was $49,487, net of tax. Revenues for the linerboard mill and container
plants through May 30, 1996 were $156,305. Revenues in 1995 and 1994 were
$438,399 and $378,088, respectively. Earnings (loss) for the linerboard mill
and container plants were $(5,648), $37,694 and $(740) for 1996, 1995 and 1994,
respectively.
Included in cash and cash equivalents at December 31, 1996 is approximately
$359,267 of proceeds from these sales which have been held in special accounts
during 1996. A formal plan of liquidation was adopted on February 25,1997, and a
distribution of net proceeds of the sales in partial liquidation of $10 per
share is payable on March 31,1997, for stockholders of record on March 21, 1997.
It is currently anticipated that remaining net proceeds of approximately $1.00
per share will also be distributed later this year after further costs and
expenses of the sales have been accounted for. Also included in cash and cash
equivalents at December 31, 1996 is approximately $9,783 in earnings on the
proceeds of sales.
F-7
37
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the accounts of the Company and all of its majority owned subsidiaries. All
significant intercompany transactions and balances have been eliminated except
for sales of continuing operations of $18,988, $59,535 and $58,925 derived from
discontinued operations in the years ended December 31, 1996, 1995 and 1994,
respectively. The unrealized profit in ending inventories relating to these
sales has been eliminated.
REVENUE RECOGNITION -- Transportation revenues are substantially recognized
upon completion of transportation services at destination. Revenues from sales
of forestry products and sugar are recognized generally on delivery of the
product to the customer. Revenue from realty land sales is recognized upon
closing of sales contracts for sale of land or upon settlement of condemnation
proceedings. Rental revenues are recognized upon completion of rental and lease
contracts, using the straight-line basis for recording the revenues over the
life of the contract.
CASH AND CASH EQUIVALENTS -- For purposes of the Consolidated Statements of
Cash Flows, cash and cash equivalents include cash on hand, bank demand
accounts, money market accounts, and repurchase agreements having original
maturities at acquisition date of three months or less.
INVENTORIES -- Inventories are stated at the lower of cost or market. Costs for
substantially all 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. An
adjustment to depletion is recorded, if necessary, based on the continuous
forest inventory (CFI) analysis prepared every five years.
Railroad 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.
EARNINGS PER COMMON SHARE -- Earnings per common share are based on the
weighted average number of common shares outstanding during the year.
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
F-8
38
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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 be recovered or settled. 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.
INVESTMENTS -- Investments consist principally of corporate debt securities,
government sponsored agency securities, mortgage backed securities, municipal
bonds, common stocks, preferred stocks, and U.S. Government obligations.
Investments maturing in three months to one year are classified as short term.
Those having maturities in excess of one year are classified as marketable
securities.
The Company follows the provisions of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". 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.
LONG-LIVED ASSETS - In March 1995, the Financial Accounting Standards Board
issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the asset's carrying amount. SFAS 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company has
historically reserved for losses related to the impairment of long-term assets.
The adoption of SFAS No. 121 in 1996 had no material effect on the Company's
financial statements.
RECLASSIFICATIONS - Certain prior year amounts have been reclassified to
conform with the current year's presentation.
F-9
39
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
5. INVENTORIES
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995
---- ----
Inventories as of December 31 consist of: $13,530 $12,875
Materials and supplies 5,147 7,717
------- -------
Sugar $18,677 $20,592
======= =======
6. INVESTMENTS
Investments as of December 31, 1996, consist of :
Unrealized Unrealized
Amortized Carrying Fair Holding Holding
Cost Value Value Gain Loss
--------- -------- ------ ---------- ----------
Short term investments (maturing within one year)
Held to maturity
U. S. Government securities $ 87,007 $ 87,007 $ 87,226 $ 296 $ 77
Tax exempt municipals 1,004 1,004 1,005 1 -
-------- -------- -------- -------- ------
$ 88,011 $ 88,011 $ 88,231 $ 297 $ 77
======== ======== ======== ======== ======
Marketable securities
Available for sale
U. S. Government securities
Maturing in one to five years $ 1,226 $ 1,226 $ 1,226 $ 3 $ 3
Maturing in five to ten years 152 151 151 - 1
Tax exempt municipals
Maturing in one to five years 10,624 10,945 10,945 321 -
Maturing in five to ten years 19,726 20,336 20,336 610 -
Maturing in more than ten years 4,281 4,265 4,265 - 16
Equity securities 13,534 117,128 117,128 103,594 -
Mortgage backed securities
Maturing in one to five years 71 71 71 - -
Maturing in five to ten years 342 343 343 1 -
Maturing in more than ten years 3,210 3,255 3,255 45 -
Other corporate debt securities
Maturing in one to five years 920 931 931 11 -
Maturing in five to ten years 463 468 468 5 -
Maturing in more than ten years 95 105 105 10 -
-------- -------- -------- -------- ------
54,644 159,224 159,224 104,600 20
Held to maturity
U. S. Government securities
Maturing within one year $114,371 $114,371 $113,454 $ 333 $1,250
Tax exempt municipals
Maturing in one to five years 7,079 7,079 7,121 42 -
Maturing in more than ten years 56 56 725 669 -
Mortgage backed securities
Maturing in one to five years - - 400 400 -
Maturing in more than ten years 41 41 44 3 -
Other corporate debt securities
Maturing in one to five years 2,056 2,056 2,475 502 83
-------- -------- -------- ------- ------
123,603 123,603 124,219 1,949 1,333
-------- -------- -------- ------- ------
$178,247 $282,827 $283,443 $106,549 $1,353
======== ======== ======== ======== ======
F-10
40
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
6. INVESTMENTS (CONTINUED)
Investments as of December 31, 1995, consist of :
Unrealized Unrealized
Amortized Carrying Fair Holding Holding
Cost Value Value Gain Loss
--------- -------- -------- ---------- ----------
Short term investments (maturing within one year)
Held to maturity
U. S. Government securities $ 50,077 $ 50,818 $ 51,203 $ 385 $ -
Tax exempt municipals 39,135 39,179 39,150 - 29
Mortgage backed securities 5,641 5,911 5,909 - 2
Certificates of deposit 1,000 1,015 1,015 - -
-------- ------- ------- ---- -------
$ 95,853 $ 96,923 $ 97,277 $ 385 31
======== ======== ======== ======== =======
Marketable securities
Available for sale
U. S. Government securities
Maturing in one to five years $ 872 $ 887 $ 887 $ 15 -
Tax exempt municipals
Maturing in one to five years 6,968 7,181 7,181 213 -
Maturing in five to ten years 20,093 20,953 20,953 860 -
Maturing in more than ten years 5,610 5,820 5,820 210 -
Equity securities 11,633 94,027 94,027 82,394 -
Mortgage backed securities
Maturing in five to ten years 3,801 3,877 3,877 76 -
Other corporate debt securities
Maturing in five to ten years 1,842 1,897 1,897 55 -
-------- ------- ------- ---- -------
50,819 134,642 134,642 83,823 -
Held to maturity
U. S. Government securities
Maturing in one to five years 45,569 45,902 46,432 530 -
Tax exempt municipals
Maturing in one to five years 1,283 113 113 - -
Maturing in more than ten years 1,000 1,003 1,003 - -
Mortgage backed securities
Maturing in five to ten years 6,132 6,143 6,699 556 -
Other corporate debt securities
Maturing in five to ten years 794 2,062 2,454 451 59
-------- -------- -------- ------ -------
54,778 55,223 56,701 1,537 59
-------- -------- -------- ------- -------
$105,597 $189,865 $191,343 $85,360 $ 59
======== ======== ======== ======= =======
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.
F-11
41
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
7. ACCRUED LIABILITIES
Accrued liabilities as of December 31 consist of:
1996 1995
---- ----
Payroll and benefits $ 5,716 $ 1,433
Payroll taxes 403 246
Property and other taxes 4,248 3,418
Accrued casualty reserves 18,984 16,635
Other accrued liabilities 10,625 8,394
------- ------
39,976 30,126
Less: noncurrent accrued casualty reserves
and other liabilities 18,361 11,681
------ -------
$21,615 $18,445
======= =======
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, as of December 31 consist of:
Estimated
1996 1995 Useful Life
---- ---- ------------
Land and timber $ 134,811 $ 132,393
Land improvements 19,770 19,149 20
Buildings 3,702 3,686 45
Machinery and equipment 630,847 623,183 12-30
Office equipment 1,150 799 10
Autos and trucks 2,829 2,375 3-6
Construction in progress 3,844 5,689 ----
Investment property 359,689 318,181 various
---------- ----------
1,156,642 1,105,455
Accumulated depreciation 322,475 300,481
---------- ----------
$ 834,167 $ 804,974
========== ==========
Real estate properties having net book value of $196.7 million at December 31,
1996 are leased under non-cancelable operating leases with expected aggregate
rentals of $106.2 million of which $32.1, $26.5, $20.9, $15.8 and $10.9 million
is due in the years 1997 through 2001, respectively.
9. INCOME TAXES
Total income tax expense for the years ended December 31 was allocated as
follows:
1996 1995 1994
---- ---- ----
Income from continuing operations $ 83,117 $24,535 $31,446
Earnings (loss) from discontinued
operations (2,785) 26,116 2,491
Gain on the sale of discontinued
operations 48,705 -- --
Shareholders' equity, for recognition
of unrealized gain (loss) on debt and
marketable equity securities 9,428 8,778 (2,377)
-------- ------- -------
$138,465 $59,429 $31,560
======== ======= =======
F-12
42
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
9. INCOME TAXES (CONTINUED)
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:
1996 1995 1994
---- ---- ----
Tax at the statutory federal rate $66,159 $23,131 $29,795
Dividends received deduction and
tax free interest (4,311) (1,277) (1,075)
Excise tax on reversion of prepaid
pension asset 13,228 -- --
State income taxes (net of federal
benefit) 5,839 1,916 2,497
Undistributed earnings of FECI 1,262 916 1,245
Other, net 940 (151) (1,016)
------- ------- -------
$83,117 $24,535 $31,446
======= ======= =======
The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities as of December 31 are
presented below:
1996 1995
---- ----
Deferred tax assets:
Accrued casualty and other reserves $ 11,915 $ 7,451
Other 1,287 1,912
-------- --------
Total deferred tax assets 13,202 9,363
-------- --------
Deferred tax liabilities:
Tax in excess of financial depreciation 112,023 114,047
Deferred gain on land sales 7,224 6,893
Deferred gain on subsidiary's defeased bonds 1,929 2,139
Unrealized gain on debt and marketable
equity securities 40,330 30,902
Deferred gain on involuntary conversion of land 66,682 29,160
Prepaid pension asset recognized for
financial reporting 26,712 8,085
Other 8,042 5,620
-------- --------
Total gross deferred tax liabilities 262,942 196,846
-------- --------
Net deferred tax liability $249,740 $187,483
======== ========
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.
The current deferred tax asset of $5,133 and $4,553 is recorded in other
current assets as of December 31, 1996 and 1995, respectively.
The Company has not recognized a deferred tax liability of approximately
$17,842 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
F-13
43
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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, 1996, the undistributed earnings of the subsidiary for which no deferred
tax liability was provided were approximately $48,454.
10. PENSION AND RETIREMENT PLANS
The Company sponsors defined benefit pension plans which covered approximately
10% of its employees in 1996 and 70% of its employees in 1995. The reduction
in employees covered resulted from the previously discussed sales of the
communications segment and the linerboard mill and container plants. 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:
1996 1995
---- ----
Service cost $ 1,659 $ 3,450
Interest cost 7,923 7,986
Actual return on assets (26,606) (40,436)
Net amortization and deferral 11,555 28,221
------- -------
Total pension income $(5,469) $(779)
======= =====
10. PENSION AND RETIREMENT PLANS (CONTINUED)
A summary of the plans' funded status as of December 31 was:
1996 1995
---- ----
Accumulated benefit obligation, including vested benefits
of $105,627 and $92,354 in 1996 and 1995, respectively $106,368 $100,104
======== ========
Projected benefit obligation for service rendered to date 108,726 125,136
Plan assets at fair value, primarily listed stocks
and U.S. bonds 193,937 177,276
-------- --------
Plan assets in excess of projected benefit obligation 85,211 52,140
Unrecognized net (gain) loss (42,011) (27,734)
Unrecognized prior service cost 768 12,956
Unrecognized transition asset (12,829) (15,395)
Additional cost for special termination benefits (982) --
-------- --------
Prepaid pension cost $ 30,157 $ 21,967
======== ========
The weighted-average discount rates for the plans were 7% in 1996 and 1995.
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 1996 and 1995. The expected long-term rates of return on
assets was 8% in 1996 and 1995.
As discussed in note 3, several of the Company's operations were sold during
1996, which significantly reduced the number of employees covered under the
defined benefit plans. The defined benefit plans' assets were not a part of the
sales. In accordance with SFAS No. 88, "Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits", the Company recognized a curtailment gain of approximately $3.7
F-14
44
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
million ($.5 million net of tax). The Company's pension plans are in an
overfunded position and with the reduction in employees resulting from the
sales of several of the Company's operations, it is unlikely that the
overfunding will be realized other than by a plan termination and reversion of
excess assets. Accordingly, a 50% excise tax has been included in the tax
effects of the prepaid asset as well as the curtailment gain. The Company has
no immediate plans to terminate the pension plans and is in the process of
evaluating other alternatives.
The Company had an Employee Stock Ownership Plan (the ESOP) for the purpose of
purchasing stock of the Company for the benefit of qualified employees. On
November 21, 1996 the Pension committee of the Board of Directors of the
Company voted to terminate the ESOP effective December 31, 1996. Contributions
to the ESOP were limited to .5% of compensation of employees covered under the
ESOP. The Company also has other defined contribution plans which, in
conjunction with the ESOP, 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 $1,081,
$1,322, and $1,213 in 1996, 1995 and 1994, respectively.
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarters Ended
----------- ----------------------------------
1996 December 31 September 30 June 30 March 31
---------------------------- --------------------------
Net sales and operating revenues 95,481 84,556 80,190 170,962
Operating profit 22,125 9,595 23,053 93,398
Net income from continuing operations 14,991 11,449 5,790 59,679
Income (loss) from discontinued operations (7,003)* -- 82,227 8,889
Net Income 7,988 11,449 88,017 68,568
Net income per share 0.25 0.38 2.89 2.25
1995
Net sales and operating revenues 89,764 82,877 85,905 76,378
Operating profit 11,888 11,745 12,857 10,827
Net income from continuing operations 8,006 6,360 8,340 6,652
Income from discontinued operations 6,804 4,799 17,996 14,862
Net income 14,810 11,159 26,336 21,514
Net income per share 0.49 0.37 0.86 0.71
* The total gain on discontinued operations declined by approximately $7
million during the fourth quarter as a result of finalizing the postclosing
working capital adjustments, closing expenses and the pension curtailment gain,
previously estimated.
12. SEGMENT INFORMATION
Total net sales and operating revenues represent sales to unaffiliated
customers, as reported in the Company's consolidated income statements and
intercompany sales which occurred principally between the Forestry and
Transportation segments and discontinued operations. 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. Other assets are composed of cash,
marketable securities and miscellaneous nonsegment assets.
F-15
45
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Information by lines of business segment follows:
1996 1995 1994
---- ---- ----
Net sales and operating revenues
Transportation $ 185,484 $ 184,450 $ 173,707
Real Estate 134,530 32,870 42,141
Forestry 56,679 60,057 60,158
Sugar 54,496 57,547 54,900
---------- -------- ----------
Consolidated $ 431,189 $ 334,924 $ 330,906
========== ======== ==========
Operating profit:
Transportation $ 26,711 $ 25,763 $ 27,313
Real Estate 109,450 11,621 22,251
Forestry 2,337 (555) 6,293
Sugar 8,281 13,310 6,329
Other 1,392 (2,822) (2,221)
---------- -------- ----------
Consolidated $ 148,171 $ 47,317 $ 59,965
========== ========== ==========
Assets:
Transportation $ 413,100 $ 407,969 $ 424,241
Real Estate 373,799 290,013 229,449
Forestry 114,710 111,848 91,319
Sugar 77,824 72,647 93,685
Discontinued operations -- 296,001 299,347
Other 826,805 352,516 311,349
---------- ---------- ----------
Consolidated $1,806,238 $1,530,994 $1,449,390
========== ========== ==========
Capital expenditures:
Transportation $ 15,800 $ 28,204 $ 25,060
Real Estate 43,708 45,029 28,354
Forestry 4,672 5,413 8,655
Sugar 91 170 3,381
---------- ---------- ----------
Consolidated $ 64,271 $ 78,816 $ 65,450
========== ========== ==========
Depreciation and depletion:
Transportation $ 18,067 $ 18,840 $ 18,706
Real Estate 7,808 5,733 5,117
Forestry 1,148 2,307 2,184
Sugar 1,735 1,671 1,605
---------- ---------- ----------
Consolidated $ 28,758 $ 28,551 $ 27,612
========== ========== ==========
13. 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, 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 including sites which have been previously sold. It is the
Company's policy to accrue and charge against earnings environmental
cleanup costs when it is probable that a
F-16
46
ST. JOE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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.
On May 30, 1996 the company sold its linerboard mill and container plants. As
part of the sale, the Company remains contingently liable for up to $10 million
relating to On-Site Environmental Liabilities, as defined in the sales
agreement, as long as they are discovered within three years of the closing
date of the sale and the Company has, except in limited circumstances, received
invoices for them within five years of the closing date. The Company has no
obligation for costs incurred by the buyer to comply with Title V of the Clean
Air Act or the Cluster Rules. On-Site Environmental Liabilities arising from
environmental conditions caused from activities both before and after the
closing date are to be allocated among the parties based on relative
contribution. The agreement provided the exclusive remedy for On-Site
Environmental Liabilities which relate to matters within the property lines of
real property conveyed under the agreement. The Company's obligation to pay
$10 million for On-Site Environmental Liabilities existing on the closing date
is subject to cost-sharing with the buyer according to the following schedule:
the first $2.5 million by buyer, the next $2.5 million by the Company; the next
$2.5 million by the buyer; the next $2.5 million by the company; the next $2.5
million by the buyer and the next $5 million by the Company. The Company also
agreed to reimburse up to $1 million for certain remediation activities at the
linerboard mill, if such activities were required under environmental laws
under the following schedule: the first $.2 million by the Company, the next
$.3 million by the buyer, the next $.3 million by the Company, the next $.3
million by the buyer, the next $.5 million by the Company, the next $.5 million
by the buyer with any remaining amounts treated as On-Site Environmental
Liabilities. No known matters exist which, pursuant to this contingent
liability, would require funding or accrual in the Company's financial
statements.
The Company is currently a party to, or involved in, legal proceedings directed
at the cleanup of six Superfund sites. The Company has accrued an allocated
share of the total estimated cleanup costs for these 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, results of operations or liquidity of the Company.
Environmental liabilities are paid over an extended period and the timing of
such payments cannot be predicted with any confidence. Aggregate
environmental-related accruals were $5,500 and $6,200 as of December 31, 1996
and 1995, respectively.
F-17
47
INDEPENDENT AUDITORS' REPORT - FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Stockholders
St. Joe Corporation:
Under date of March 7, 1997, we reported on the consolidated balance sheets of
St. Joe Corporation and subsidiaries as of December 31, 1996 and 1995, 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,
1996, as contained in this annual report on Form 10-K for the year 1996. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedules as listed in the accompanying index. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Jacksonville, Florida
March 7, 1997
S-1
48
ST. JOE PAPER COMPANY
SCHEDULE II (CONSOLIDATED)
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
BALANCE AT ADDITIONS
BEGINNING CHARGED TO BALANCE AT
Reserves included in Liabilities OF YEAR EXPENSE PAYMENTS END OF YEAR
1996
Accrued casualty reserves 16,635 19,698 8,150 28,183 (a)(b)
1995
Accrued casualty reserves 21,019 4,742 9,126 16,635 (a)
1994
Accrued casualty reserves 16,587 9,305 4,873 21,019 (a)
(a) Includes $12,445, $7,322 and $9,976 in current liabilities at December 31,
1996, 1995 and 1994, respectively. The remainder is included in "Accrued
casualty reserves and other liabilities."
(b) 1996 additions include $6,871 related to discontinued operations and
charged to expense in prior years.
S-2
49
St. Joe Corporation
Schedule III (Consolidated) - Real Estate and Accumulated Depreciation
December 31, 1996, 1995, and 1994
(in thousands)
Initial Cost to Company
-----------------------
Costs
-----
Capitalized
-----------
Buildings & Subsequent to
----------- -------------
Description Encumbrances Land Improvements Acquisition
----------- ------------ ---- ------------ -----------
DUVAL COUNTY
- ------------
Office Buildings (8) 0 $ 1,153 $6,200 $55,732
Office/Showroom/Warehouses (8) 0 1,502 20,393
Office/Warehouse (2) 0 - 11,708
Land w/Infrastructure 0 6,593 8,201
Unimproved Land & Misc Assets 0 915 673
City & Residential Lots 0 362 5 77
ST. JOHNS COUNTY
- ----------------
Unimproved Land 0 2,631 406
Land with Infrastructure 0 10 - 622
FLAGLER COUNTY
- --------------
Unimproved Land 0 3,218 1,183
VOLUSIA COUNTY
- --------------
Unimproved Land 0 3,651 403
BREVARD COUNTY
- --------------
Office/Showroom/Warehouse (1) 0 73 2,198
Land w/ Infrastructure 0 3,633 -
Unimproved Land 0 4,846 190
INDIAN RIVER
- ------------
Unimproved Land 0 1 -
ST. LUCIE COUNTY
- ----------------
Unimproved Land 0 593 -
MARTIN COUNTY
- -------------
Land w/ Infrastructure 0 1,734 2,416
Unimproved Land 0 2,704 231
PUTNAM COUNTY
- -------------
Unimproved Land 0 - -
PALM BEACH COUNTY
- -----------------
Office/Showroom/Warehouse (1) 0 113 2,984
Rail Warehouses (2) 0 449 4,253
Cross Docks (4) 0 117 3,786
Land w/ Infrastructure 0 1,251 -
Unimproved Land 0 1,501 -
Carried at Close of Period Depreciable
------------------------------------------ -----------
Life used in
------------
Date Calculation in
---- --------------
Land & Land Buildings and Accumulated Capitalized Latest Income
----------- ------------- ----------- ----------- -------------
Description Improvements Improvements TOTAL Depreciation or Acquired Statement
----------- ------------ ------------ ----- ------------ ----------- ---------
DUVAL COUNTY
Office Buildings (8) $10,386 $52,699 $63,085 7,992 1985 3 to 40 years
Office/Showroom/Warehouses (8) 4,515 17,380 21,895 4,797 1987 3 to 40 Years
Office/Warehouse (2) 3,834 7,874 11,708 605 1994 3 to 40 Years
Land w/Infrastructure 14,794 - 14,794 355
Unimproved Land & Misc Assets 1,412 176 1,588 152
City & Residential Lots 362 82 444 65 - -
ST. JOHNS COUNTY
- ----------------
Unimproved Land 3,037 3,037 Various
Land with Infrastructure 10 622 632 -
FLAGLER COUNTY
- --------------
Unimproved Land 4,401 4,401 Various
VOLUSIA COUNTY
- --------------
Unimproved Land 4,054 4,054 Various
BREVARD COUNTY
- --------------
Office/Showroom/Warehouse (1) 438 1,833 2,271 509 1983 3 to 40 Years
Land w/ Infrastructure 3,633 3,633 Various
Unimproved Land 5,036 5,036 Various
INDIAN RIVER
- ------------
Unimproved Land 1 1 Various
ST. LUCIE COUNTY
- ----------------
Unimproved Land 593 593 Various
MARTIN COUNTY
- -------------
Land w/ Infrastructure 4,150 4,150 84 Various
Unimproved Land 2,935 2,935 Various
PUTNAM COUNTY
- -------------
Unimproved Land - -
PALM BEACH COUNTY
- -----------------
Office/Showroom/Warehouse (1) 599 2,498 3,097 865
Rail Warehouses (2) 557 4,145 4,702 1,257
Cross Docks (4) 1,261 2,642 3,903 1,034
Land w/ Infrastructure 1,251 1,251
Unimproved Land 1,501 1,501
S-3
50
BROWARD COUNTY
- --------------
Rail Warehouse (1) 0 85 1,708
Land w/ Infrastructure 0 999 122
Unimproved Land 0 1,193 68
MANATEE COUNTY
- --------------
Unimproved Land 0 14 87
DADE COUNTY
- -----------
Cross Dock (1) 0 137 1,018
Double Front Load Warehouse (1) 0 768 6,275
Rail Warehouses (6) 0 808 28,252
Office/Showroom/ Warehouses (5) 0 1,003 18,474
Office/Warehouses (4) 0 1,462 18,604
Front Load Warehouses (8) 0 1,943 28,751
Office/Service Center (1) 0 285 2,589
Transit Warehouse (1) 0 3 286
Land w/ Infrastructure 0 7,970 29,843
Unimproved Land & Misc Assets 0 10,326 5,496
ORANGE COUNTY
- -------------
Land w/ Infrastructure 0 - 7,626
GULF COUNTY
- -----------
Unimproved Land 0 358 - 176
BAY COUNTY
- ----------
Land w/ Infrastructure 0 1 - 45
Office Buildings (2) 0 2 - 2,052
Unimproved Land 0 516 - 1,105
LEON COUNTY
- -----------
Land w/ Infrastructure 0 603 - 30
WALTON COUNTY
- -------------
Land w/ Infrastructure 0 71 - 41
OTHER COUNTIES
- --------------
Unimproved Land 0 104 - 2,576
=========================================================
TOTALS $ - $65,702 $ 6,205 $270,680
=========================================================
BROWARD COUNTY
- --------------
Rail Warehouse (1) 405 1,388 1,793 621 1986 3 to 40 Years
Land w/ Infrastructure 1,121 1,121 Various
Unimproved Land 1,261 1,261 Various
MANATEE COUNTY
- --------------
Unimproved Land 101 101 Various
DADE COUNTY
- -----------
Cross Dock (1) 137 1,018 1,155 262 1987 3 to 40 Years
Double Front Load Warehouse (1) 1,985 5,058 7,043 977 1983 3 to 40 Years
Rail Warehouses (6) 8,119 20,941 29,060 3,614 1988 3 to 40 Years
Office/Showroom/ Warehouses (5) 5,765 13,712 19,477 3,465 1988 3 to 40 Years
Office/Warehouses (4) 5,410 14,656 20,066 2,884 1990 3 to 40 Years
Front Load Warehouses (8) 9,901 20,793 30,694 3,241 1991 3 to 40 Years
Office/Service Center (1) 757 2,117 2,874 228 1994 3 to 40 Years
Transit Warehouse (1) 3 286 289 54 Various 3 to 40 Years
Land w/ Infrastructure 37,813 37,813 455 Various 3 to 40 Years
Unimproved Land & Misc Assets 15,766 56 15,822 56 Various 3 to 40 Years
ORANGE COUNTY
- -------------
Land w/ Infrastructure 7,626 7,626 1,995
GULF COUNTY
- -----------
Unimproved Land 534 - 534 24
BAY COUNTY
Land w/ Infrastructure - 46 46 -
Office Buildings (2) 61 1,993 2,054 333
Unimproved Land 525 1,096 1,621 13
LEON COUNTY
- -----------
Land w/ Infrastructure 586 48 633 15
WALTON COUNTY
- -------------
Land w/ Infrastructure 71 41 112 -
OTHER COUNTIES
- --------------
Unimproved Land 2,680 - 2,679 41
===========================================================
TOTALS $169,387 $173,200 $342,586 33,998
===========================================================
S-4
51
Notes:
(A) The aggregate cost of real estate owned at December 31, 1996, for federal
income tax purposes is approximately $258,360,000.
(B) Reconciliation of real estate owned (in thousands of dollars):
1996 1995 1994
---- ---- ----
Balance at the Beginning of Year 274,526 249,180 222,498
Amounts Capitalized 68,705 26,499 28,350
Amounts Retired or Adjusted (645) (1,153) (1,668)
-------- -------- --------
Balance at the Close of Period 342,586 274,526 249,180
======== ======== ========
(C) Reconciliation of accumulated depreciation
(in thousands of dollars):
Balance at Beginning of Year 26,356 20,596 15,475
Depreciation Expense 7,710 5,760 5,145
Amounts Retired or Adjusted (68) -- (24)
-------- -------- --------
Balance at the Close of Period 33,998 26,356 20,596
======== ======== ========
S-5
1
EXHIBIT 3(b)
AMENDED BY-LAWS
OF
ST. JOE CORPORATION
ARTICLE I - STOCK
1. Certificate of Stock shall be issued in numerical order from the Stock
Certificate Book, and be signed by the President and by the Secretary and sealed
with the Corporate Seal. A record of each certificate issued shall be kept on
the stub thereof.
2. Transfer of Stock shall be made only on the books of the Company, in
person or by attorney upon surrender of the certificate evidencing the stock
sought to be transferred, properly endorsed; the certificate so surrendered
shall be canceled as and when the new certificate or certificates are issued.
ARTICLE II - STOCKHOLDERS
1. The Annual Meeting of the Stockholders of this Corporation shall be
held at 10:30 A.M. local time on the second Tuesday in May of each year
commencing with the year 1997 A.D. Each Annual Meeting shall be held at the
principal office of the Company in Jacksonville, Florida, unless some other
place in or out of the State of Florida is designated by the Board of Directors,
three weeks or more before the day of such Annual Meeting.
2. Special Meetings of the Stockholders may be called or held at any place
1
2
in or out of the State of Florida, at any time, by resolution of the Board
of Directors, and shall be called at any time upon written request of
Stockholders holding one-third of the outstanding stock.
3. Notice of Stockholders' Meetings of the Corporation shall be in
writing and signed by the Chairman the President or a Senior Vice President or a
Vice President or the Secretary or an Assistant Secretary of the Corporation.
Such notice shall state the purpose or purposes for which the meeting is called
and time when and the place where it is to be held. A copy of such notice shall
be served upon or mailed to each Stockholder of record entitled to vote at such
meeting not less than ten nor more than sixty days before such meeting. If
mailed, it shall be directed to the Stockholder at his home address as it
appears upon the records of the Corporation. Notice duly served upon or mailed
to a Stockholder in accordance with the provisions of this by-law shall be
deemed sufficient, and in the event of the transfer of his stock after such
service and prior to the holding of the meeting, it shall not be necessary to
serve notice of the meeting upon the transferee. Any meeting of Stockholders may
be held either within or without the State of Florida. Any Stockholder may waive
notice of any meeting either before, at or after the meeting. When the
Stockholders who hold four-fifths of the stock of the Corporation shall be
present at a meeting, however called, or notified, and shall sign a written
consent thereto on the record of the meeting, the acts of such meeting shall be
as valid as if legally called and notified.
4. A Quorum at any meeting of the Stockholders shall consist of a
majority of the stock of the Company represented in person or by proxy, and a
majority of such quorum shall decide any question that may come before the
meeting.
5. The Order of Business of the Annual Meetings, and as far as
possible, at all other meetings of the Stockholders, shall be:
2
3
1. Calling of roll.
2. Proof of due notice of meeting.
3. Reading and disposal of any unapproved minutes.
4. Annual reports of officers and committees.
5. Election of directors.
6. Unfinished business.
7. New business.
8. Adjournment.
ARTICLE III - DIRECTORS
1. The Business and Property of the Corporation shall be managed by a
Board of not less than nine nor more than fifteen Directors, the number to be
determined by the Stockholders of the Corporation, all of whom shall be of full
age and at least one of whom shall be a citizen of the United States and such
Board of Directors shall have full control over the affairs of the Corporation
and shall be authorized to exercise all of its Corporate powers unless otherwise
provided in these by-laws. The Directors shall be elected at the Annual Meeting
of the Stockholders by a plurality of the votes cast at such election, for the
term of one year, and shall serve until the election and acceptance of their
duly qualified successors. Vacancies in the Board of Directors shall be filled
by the Directors remaining in office.
2. A Chairman of the Board of Directors shall be selected, who shall be
considered an officer of the Corporation.
3. A Regular Meeting of the Board of Directors shall be held immediately
upon adjournment of the annual meeting of the stockholders each year at the
place where the annual meting of the stockholders is held that year.
4. Special Meetings of the Board of Directors may be held in or out of the
State of Florida, and can be called at any time or place by the Chairman of the
Board
3
4
of Directors or by any three members of the Board. Notice of the meeting,
stating a place, date, and hour, shall be given to each director by mail not
less than three days before the date of the meeting. Alternatively, notice may
be given personally to each director or by telephone, telegram, facsimile,
telecopy, fax, or similar means of communication not less than twenty four hours
before the date of the meeting. Emergency meetings may be convened on such
shorter notice as the Chairman or Board members calling the meeting deem
necessary and appropriate in the circumstances. A special meeting may be held at
any time or place without notice by unanimous written consent of all directors
or the presence of all directors at such meeting.
5. The Board of Directors, by resolution adopted by a majority of the full
Board, may establish from among its members one or more committees. As allowed
by general law and as provided in the resolution establishing the committee,
each committee shall have and may exercise all the powers and authority of the
Board of Directors in managing the business affairs of the corporation.
Each committee must have two or more members who will serve at the pleasure
of the Board of Directors. The Board, by resolution, may designate one or more
directors as alternate members of any committee.
The Board of Directors shall prescribe the manner in which committee
proceedings shall be conducted. Unless the Board otherwise provides, regular and
special meetings and other actions of any committee shall be governed by the
provisions of these by-laws applicable to meetings and actions of the Board of
Directors. Each committee shall keep minutes of meetings, copies of which shall
be furnished to all Directors. Each committee shall report all actions to the
Board of Directors.
4
5
6. A Quorum at any meeting shall consist of a majority of the Board. A
majority of such quorum shall decide any questions that may come before the
meeting. If at any meeting less than a quorum is present, the Directors present,
or a majority of them, may adjourn the meeting to another time and/or place.
7. Officers of the Company shall be elected by ballot of the Board of
Directors at its first meeting after the Annual Meeting of the Stockholders each
year. If any office becomes vacant during the year, the Board of Directors shall
fill the same for the unexpired term. The Board of Directors shall fix the
compensation of the officers and agents of the Company.
8. The Order of Business at any regular or special meeting of the Board of
Directors shall be:
1. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
9. Indemnification of Officers and Directors. The Corporation shall
indemnify each officer and director, whether or not then in office, (and his or
her executor, administrator and heirs), against all reasonable expenses actually
and necessarily incurred, including but not limited to, judgments, costs and
counsel fees in connection with the defense of any litigation, civil or
administrative action, suit or proceeding, to which he or she may have been made
a party because he or she is or was a director or officer of the Corporation. He
or she shall have no right to reimbursement, however, in relation to matters as
to which he or she had been adjudged liable to the Corporation for negligence or
misconduct in the performance
5
6
of his or her duties or was derelict in the performance of his or her duty as
director or officer by reason of willful misconduct, bad faith, gross negligence
or reckless disregard of the duties of his or her office or employment. The
right to indemnity for expenses shall also apply to expenses in connection with
suits that are compromised or settled if (1) the Court having jurisdiction of
the action shall approve such settlement, or (2) a majority of the Board of
Directors, excluding interested directors, votes to approve such settlement. As
used in this paragraph an "interested director or officer" is one against whom
the proceeding in question or another proceeding on the same or similar grounds
is then pending.
The foregoing right of indemnification shall be in addition to, and not
exclusive of, all other rights to which that director or officer may be
entitled.
10. Meetings of the Board of Directors or committees of the Board may be
held by means of a telephone conference call or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation by such means constitutes presence by such person at a
meeting.
ARTICLE IV - OFFICERS
1. The Officers of the Corporation shall be a Chairman of the Board of
Directors, a President, one or more Senior Vice Presidents and Vice Presidents,
a Secretary, a Treasurer, and a Comptroller, each of whom shall be elected
annually for the term of one year unless sooner removed by the Board of
Directors, and each of whom shall hold office until his successor shall be
elected and qualified. Any person may hold two or more offices except that the
Chairman of the Board of Directors shall not be also the Secretary or an
Assistant Secretary of the Corporation.
6
7
2. The Chairman of the Board of Directors shall be the Chief Executive
Officer of the corporation, and subject to the control of the Board of
Directors, shall supervise, control and manage all the business affairs of the
corporation. The Chairman shall preside at all meetings of the shareholders, the
Board of Directors, and all committees of the Board of Directors on which he or
she may serve. In addition, the Chairman shall possess and may exercise the
powers and authority, and perform the duties that are assigned to him by the
Board of Directors. The Chairman may delegate any of his or her powers to any
other officer of the Corporation, subject to the Chairman's overall supervision
and responsibility.
3. The President, shall report and be responsible to the Chairman of the
Board of Directors. The President shall have the powers and perform the duties
that are assigned or delegated to him or her by the Board of Directors or the
Chairman.
During the absence or disability of the Chairman, or at the request of the
Chairman, the President shall perform the duties and exercise the powers of the
Chairman. In the absence or disability of both the Chairman and the President,
the Senior Vice President or Vice President designated by the Chairman, or if no
one is designated by the Chairman, the Senior Vice President or Vice President
designated by the Board of Directors shall perform the duties and exercise the
powers of the Chairman.
4. Senior Vice Presidents and Vice Presidents shall have the powers and
perform the duties that are assigned or delegated to them by the Board of
Directors or the Chairman.
5. The Secretary shall keep the minutes of all meetings, shall have charge
of the seal and the corporate books, shall execute with the President, Senior
Vice President or Vice President such instruments as require such signatures,
and shall
7
8
make such reports and perform such other duties as are incident to his office,
or are properly required of him by the Board of Directors. The Board of
Directors may appoint one or more Assistant Secretaries, and in the absence,
disqualification or disability of the Secretary, any such Assistant Secretary
shall exercise the functions of the Secretary.
6. The Treasurer shall have the custody of all moneys and securities of the
Corporation and shall keep regular books of account under the direction of the
Board of Directors. He shall deposit all funds and moneys of the Corporation in
banks to be designated by the Board of Directors, and shall perform such other
duties as may be required of him by the Board of Directors. The Board of
Directors may appoint one or more Assistant Treasurers, and in the absence,
disqualification or disability of the Treasurer, or at his direction, any such
Assistant Treasurer shall exercise the functions of the Treasurer.
7. The Controller shall maintain adequate records of all assets,
liabilities, and transactions of the Corporation, shall see that adequate audits
thereof are currently and regularly made, and, in conjunction with other
officers and department heads, shall initiate and enforce measures and
procedures whereby the business of the Corporation shall be conducted with the
maximum safety, efficiency, and economy. He shall attend such meetings of the
Directors and Stockholders of the Corporation and shall make such reports to the
President and/or the Board of Directors as said Board of Directors may
prescribe, and shall perform such other duties as may be required of him by the
Board of Directors.
8. Removal of Officers. Any officer of the corporation may be removed from
his or her respective office or position at any time, with or without cause, by
the Board of Directors.
8
9
9. The Board of Directors may, from time to time, appoint such
additional officers as it deems necessary, prescribe their duties, and fix their
salaries, and may remove them at pleasure and may authorize any or all of the
officers of the Corporation to execute in the Corporation's name, notes,
purchases or sales of real estate, leases, bills of sale, mortgages, pledges,
exchanges, contracts, checks, bills of exchange and any and all other papers and
documents on behalf of the Corporation.
ARTICLE V - DIVIDENDS AND FINANCE
1. Dividends shall be declared only at such times and in such amounts
as the Board of Directors shall direct.
ARTICLE VI - SEAL
1. The Corporate Seal of the Company shall consist of two concentric
circles, between which is the following: "ST. JOE CORPORATION", and in the
center shall be inscribed "Seal - Incorporated 1936."
ARTICLE VII - AMENDMENTS
1. These By-Laws May be Amended, altered or repealed and new by-laws
adopted at any meeting of the Board of Directors by a majority vote. The fact
that the power to amend, alter or repeal the by-laws has been conferred upon
the Board of Directors shall not divest the shareholders of the same power.
Adopted by the Board of Directors this 18th day of March, 1997.
9
1
ARTICLES OF AMENDMENT
of
ST. JOE PAPER COMPANY
Pursuant to Section 607.1006, Florida Statutes, the Amended Articles of
Incorporation of the above-named Corporation are hereby further amended as
follows:
1. Article II is hereby amended to read as follows:
The name of the corporation is St. Joe Corporation
2. The foregoing amendment was adopted by the Board of Directors on
February 27, 1996 and the shareholders on May 14, 1996.
3. The number of votes cast for the amendment by the shareholders was
sufficient for approval.
4. This amendment shall be effective on June 3, 1996 at 12:01 a.m.
IN WITNESS WHEREOF, these Articles of Amendment have been executed this
22nd day of May, 1996.
[SEAL] ST. JOE PAPER COMPANY
CIRCUIT COURT
SUUM CUIQUE By: /s/ R.E. Nedley
GULF COUNTY, FLORIDA ----------------------------
R.E. Nedley, President
STATE OF FLORIDA
COUNTY OF DUVAL
The foregoing instrument was acknowledged before me this 22nd day of
May, 1996 by R.E. Nedley, as President of ST. JOE PAPER COMPANY, a Florida
corporation, on behalf of the corporation. He is personally known to me.
/s/ Patricia A. Pocock
--------------------------------
Notary Public
[SEAL]
NOTARY REPUBLIC
STATE OF FLORIDA
PATRICIA A. POCOCK
MY COMMISSION EXPIRES
FEB. 9, 1997
COMM. NO. CC 258161
FL 965861 B 567 P 341
CO: FRANKLIN ST: FL
FL 540125 B 1571 P 100
CO: WALTON ST:FL
FL 963327 B 194 P 573
CO: GULF ST: FL
RCD Sep 12 1996 02:25pm
HAROLD BAZZEL, CLERK
FL# 139619 B 292 P 528
REC NO. 17031011830
1
EXECUTION COPY
December 26, 1996
Mr. Dennis D. Mehiel, Chairman Mr. Roger W. Stone,
Box USA Chairman, President and
115 Stevens Avenue Chief Executive Officer
Valhalla, NY 10595 Stone Container Corporation
150 N. Michigan Avenue
Chicago, IL 60601-7568
Re: Amendment Number 4 to Asset Purchase Agreement dated as of November 1,
1995, by and between St. Joe Forest Products Company, St. Joe Container
Company and St. Joe Paper Company, on the one hand, and Four M
Corporation and Port St. Joe Paper Company, on the other hand, as
amended (the "Agreement").
Dear Messrs. Mehiel and Stone:
Pursuant to our negotiations on Friday, December 6, 1996, this
amendment Number 4 (the "Fourth Amendment") to the Agreement is entered into as
of December 6, 1996 (the "Amendment Date") by and among St. Joe Corporation, a
Florida corporation formerly known as St. Joe Paper Company ("SJC"), St. Joe
Forest Products Company, a Florida corporation ("SJFP"), and St. Joe Container
Company, a Florida corporation ("SJCC") and St. Joseph Land and Development
Company ("SJLD"), on the one hand, and Four M Corporation, a Maryland
corporation, and Box USA Group, Inc., a Maryland corporation (collectively with
Four M Corporation, "FMC") and Florida Coast Paper Company, L.L.C., a Delaware
limited liability company, ("JV"), on the other hand. All terms not otherwise
defined herein have those meanings set forth in the Agreement.
WHEREAS, pursuant to the Agreement, Buyer agreed to pay Seller a
purchase price of Three Hundred Ninety Million and 00/100 Dollars
($390,000,000), subject to the Purchase Price Adjustment;
WHEREAS, Seller calculated the Purchase Price Adjustment to be
Forty Five Million, Nine Hundred Seventy Four Thousand, Eight Hundred One and
00/100 Dollars ($45,974,801);
WHEREAS, Buyer delivered the Dispute Notice that claimed it is
owed an additional Seventeen Million, Ninety Six Thousand and 00/100 Dollars
($17,096,000), plus applicable interest, in Purchase Price Adjustment, including
Eleven Million, Eight Hundred Ninety Seven Thousand and 00/100 Dollars
($11,897,000) attributable to FMC and Five Million, One Hundred Ninety Nine
Thousand and 00/100 Dollars ($5,199,000)
2
Mr. Dennis D. Mehiel
Mr. Roger W. Stone
December 26, 1996
Page 2
attributable to JV;
WHEREAS, Seller has to date paid Buyer a Purchase Price Adjustment
of Forty Six Million, Eight Hundred Nineteen Thousand, Six Hundred Thirty Eight
and 00/100 Dollars ($46,819,638), of which Thirty Four Million, Five Hundred
Eighty Seven Thousand, Six Hundred Eighty Nine and 00/100 Dollars ($34,587,689)
were paid to FMC and of which Twelve Million, Two Hundred Thirty One Thousand,
Nine Hundred Forty Nine and 00/100 Dollars ($12,231,949) were paid to JV; and
WHEREAS, the parties have decided to fully and finally settle and
compromise their dispute as provided herein;
NOW, THEREFORE, the parties hereby agree that:
1. Subject to the proviso in Section 3, (a) the final Purchase
Price Adjustment is Fifty Five Million, Eight Hundred Nineteen Thousand, Six
Hundred Thirty Eight and 00/100 Dollars ($55,819,638), of which Nine Million and
00/100 Dollars ($9,000,000) plus interest will be paid as provided herein; and
(b) the final Purchase Price, as adjusted by the Purchase Price Adjustment, is
Three Hundred Thirty Four Million, One Hundred Eighty Thousand, Three Hundred
Sixty Two Dollars and 00/100 Dollars ($334,180,362).
2. The Purchase Price Adjustment shall not be submitted to a
Reviewing Accountant pursuant to Section 3.07 of the Agreement.
3. SJCC shall pay to FMC by wire transfer of immediately available
funds to an account of Box USA Group, Inc. designated by FMC Five Million, Four
Hundred Eleven Thousand, Two Hundred Twenty Seven and 65/100 Dollars
($5,411,227.65) consisting of Five Million, Two Hundred Fourteen Thousand and
00/100 Dollars ($5,214,000) of the Purchase Price Adjustment and One Hundred
Ninety Seven Thousand, Two Hundred Twenty Seven and 65/100 Dollars ($197,227.65)
interest pursuant to Section 3.05 of the Agreement as calculated in the interest
schedule attached hereto and made a part hereof; provided, however, in the event
FMC has not been paid One Hundred Eighty One Thousand, Five Hundred Thirty Nine
and 32/100 Dollars ($181,539.32) in respect of Accounts Receivable of Goodson
Farms, Inc. ("Goodson") by December 31, 1996, then SJCC shall pay to FMC by wire
transfer in immediately available funds any of the foregoing amount not paid by
such date and FMC shall assign Accounts Receivable of Goodson in such amount to
SJCC. For these purposes, if Goodson had accounts payable to both SJCC and FMC,
any amounts paid to FMC after May 30, 1996 shall first be deemed to have been
paid to FMC with respect to Accounts Receivable of SJCC.
4. SJFP shall pay to JV by wire transfer of immediately available
funds to an account designated by JV Three Million, Nine Hundred Twenty Four
Thousand, Six Hundred Twenty Nine and 84/100 ($3,924,629.84) consisting of Three
Million, Seven Hundred Eighty Six Thousand and 00/100 ($3,786,000) of the
Purchase Price Adjustment and One Hundred Thirty Eight Thousand, Six Hundred
Twenty Nine and 84/100 ($138,629.84) interest pursuant to Section 3.05 of the
Agreement as set forth in the
3
Mr. Dennis D. Mehiel
Mr. Roger W. Stone
December 26, 1996
Page 3
interest schedule attached hereto and made a part hereof.
5. JV and SJLD agree that Section 8 of the Wood Fiber Supply
Agreement dated as of May 30, 1996 between SJLD and JV is hereby amended to read
as follows:
Seller shall invoice Buyer on a weekly basis for
deliveries made during each week; and, for all deliveries made
during the first and second year of this Agreement, Buyer shall
pay Seller within 30 days from the date of such invoices, which
date shall not be earlier than the Friday of the week during which
the deliveries were made; for the next three years of the term of
this Agreement, Buyer shall pay Seller within 14 days from the
date of such invoices; and for the remainder of the term of this
Agreement, Buyer shall pay Seller within seven days from the date
of such invoices.
6. In consideration of the foregoing and of the mutual release set
forth in Section 7 hereof and of the representations and warranties and
covenants contained herein, each of SJC, SJFP and SJCC, for and on behalf of
itself, its predecessors, successors, parents, subsidiaries, affiliates, and
assigns, and each and all of its present and former directors, stockholders,
officers, employees, partners, attorneys, investment bankers, advisors,
auditors, accountants, principals and agents, and their respective heirs,
executors, personal representatives, trustees, estates, principals, agents,
partners, administrators, predecessors, successors, and assigns, DOES HEREBY
FULLY AND FOREVER REMISE, RELEASE, SETTLE, COMPROMISE, AND DISCHARGE each of FMC
and JV and its predecessors, successors, parents, subsidiaries, affiliates, and
assigns, and each and all of its present and former directors, stockholders,
officers, employees, partners, attorneys, investment bankers, advisors,
auditors, accountants, principals and agents, and their respective heirs,
executors, personal representatives, trustees, estates, principals, agents,
partners, administrators, predecessors, successors and assigns, of and from any
and all liabilities which in any way relate to the Purchase Price Adjustment or
the calculation thereof (or which have arisen or could have arisen therefrom, or
arise now or hereafter arise therefrom), including all claims, rights, demands,
liens, agreements, contracts, covenants, actions, suits, causes of action,
obligations, controversies, debts, costs, expenses, accounts, damages,
judgments, losses, matters and issues, of whatever kind or nature, in law,
equity or otherwise, whether known or unknown, whether or not concealed or
hidden, which against them, or any of them, each of SJC, SJFP or SJCC, or its
predecessors, successors, parents, subsidiaries, affiliates, or assigns, or any
of its present or former directors, stockholders, officers, employees, partners,
attorneys, investment bankers, advisors, auditors, accountants, principals or
agents, or their respective heirs, executors, personal representatives,
trustees, estates, principals, agents, partners, administrators, predecessors,
successors or assigns, or any of them, have had, may have had, or now have, or
hereafter can, shall or may have with respect thereto, including, without
limitation, any and all claims, which have been, could have been, or in the
future might have been asserted in any court or proceeding, save and excluding
from the provisions of the Fourth Amendment, only the obligations of FMC and JV
arising hereunder.
7. In consideration of the foregoing and of the mutual release set
forth in
4
Mr. Dennis D. Mehiel
Mr. Roger W. Stone
December 26, 1996
Page 4
Section 6 hereof and of the representations and warranties and covenants
contained herein, each of FMC and JV, for and on behalf of itself, its
predecessors, successors, parents, subsidiaries, affiliates, and assigns, and
each and all of its present and former directors, stockholders, officers,
employees, partners, attorneys, investment bankers, advisors, auditors,
accountants, principals and agents, and their respective heirs, executors,
personal representatives, trustees, estates, principals, agents, partners,
administrators, predecessors, successors, and assigns, DOES HEREBY FULLY AND
FOREVER REMISE, RELEASE, SETTLE, COMPROMISE, AND DISCHARGE each of SJC, SJFP and
SJCC, and its predecessors, successors, parents, subsidiaries, affiliates, and
assigns, and each and all of its present and former directors, stockholders,
officers, employees, partners, attorneys, investment bankers, advisors,
auditors, accountants, principals and agents, and their respective heirs,
executors, personal representatives, trustees, estates, principals, agents,
partners, administrators, predecessors, successors and assigns, of and from any
and all liabilities which in any way relate to the Purchase Price Adjustment or
the calculation thereof (or which have arisen or could have arisen therefrom, or
arise now or hereafter arise therefrom), including all claims, rights, demands,
liens, agreements, contracts, covenants, actions, suits, causes of action,
obligations, controversies, debts, costs, expenses, accounts, damages,
judgments, losses, matters and issues, of whatever kind or nature, in law,
equity or otherwise, whether known or unknown, whether or not concealed or
hidden, which against them, or any of them, each of FMC and JV, or its
predecessors, successors, parents, subsidiaries, affiliates, or assigns, or any
of its present or former directors, stockholders, officers, employees, partners,
attorneys, investment bankers, advisors, auditors, accountants, principals or
agents, or their respective heirs, executors, personal representatives,
trustees, estates, principals, agents, partners, administrators, predecessors,
successors or assigns, or any of them, have had, may have had, or now have, or
hereafter can, shall or may have with respect thereto, including, without
limitation, any and all claims, which have been, could have been, or in the
future might have been asserted in any court or proceeding, save and excluding
from the provisions of the Fourth Amendment, only the obligations of SJC, SJFP
and SJCC arising hereunder.
8. Article IV of the Agreement is hereby amended to add the
following provision:
4.16. Fourth Amendment. The execution, delivery and performance by
Seller and SJC of the Fourth Amendment and the mutual release
contained therein is within Seller's and SJC's powers and has been
duly authorized by all necessary actions on the part of Seller and
SJC. The Fourth Amendment constitutes a valid and binding
agreement of Seller and SJC enforceable against them in accordance
with its terms except that (a) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium (whether
general or specific) or other similar laws now or hereafter in
effect relating to creditor's rights generally and (b) the remedy
of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may
be brought. Neither Seller nor SJC has assigned, encumbered or in
any manner
5
Mr. Dennis D. Mehiel
Mr. Roger W. Stone
December 26, 1996
Page 5
transferred all or any portion of the claims covered by
the mutual release contained therein. No notice to or filing with,
and no permit, authorization, consent or approval of, any person
or Governmental Entity is necessary for the execution, delivery
and performance of the Fourth Amendment and the mutual release
contained therein. The execution, delivery and performance by each
of Seller and SJC of the Fourth Amendment and the mutual release
contained therein will not result in a violation or breach of any
agreement or obligation to which Seller or SJC is a party or by
which Seller or SJC or its respective assets may be bound. In
effecting and executing the Fourth Amendment and the mutual
release contained therein, each of Seller and SJC has received,
from its own legal counsel, advice as to its legal rights, and
that it understands the content and legal effect of the Fourth
Amendment and the mutual release contained therein without any of
which it would not have executed or delivered said Fourth
Amendment or release.
9. Article V of the Agreement is hereby amended to add the
following provision:
5.11. Fourth Amendment. The execution, delivery and performance by
FMC and JV of the Fourth Amendment and the mutual release
contained therein are within FMC's and JV's powers and has been
duly authorized by all necessary actions on the part of FMC and
JV. The Fourth Amendment constitutes a valid and binding agreement
where applicable of FMC and JV enforceable against each of them in
accordance with its terms except that (a) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium
(whether general or specific) or other similar laws now or
hereafter in effect relating to creditor's rights generally and
(b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding
therefor may be brought. Neither FMC nor JV has assigned,
encumbered or in any manner transferred all or any portion of the
claims covered by the mutual release contained therein. No notice
to or filing with, and no permit, authorization, consent or
approval of, any person or Governmental Entity is necessary for
the execution, delivery and performance of the Fourth Amendment
and the mutual release contained therein. The execution, delivery
and performance by FMC and JV of the Fourth Amendment and the
mutual release contained therein will not result in a violation or
breach of any agreement or obligation to which FMC or JV is a
party or by which FMC or JV or its respective assets may be bound.
In effecting and executing the Fourth Amendment and the mutual
release contained therein each of FMC and JV has received, from
its own legal counsel, advice as to its legal rights, and that it
understands the content and legal effect of the Fourth Amendment
and the mutual release contained therein without any of
6
Mr. Dennis D. Mehiel
Mr. Roger W. Stone
December 26, 1996
Page 6
which neither FMC nor JV would have executed or delivered said
Fourth Amendment or release.
10. All parties hereto acknowledge and agree that this is a
compromise settlement which is not in any respect, nor for any purpose, to be
deemed or construed to be any admission or concession of any liability
whatsoever on the part of any person, firm or corporation whatsoever.
11. Section 11.01 of the Agreement is hereby amended to add the
following at the end of Section 11.01 thereof:
Notwithstanding the foregoing, the representations and
warranties in Section 4.16 and 5.11 of the Agreement and
the releases set forth in Sections 6 and 7 of the Fourth
Amendment (which shall be deemed covenants within the
meaning of the Agreement) shall survive without
limitation, and the representation and warranty in Section
4.04 of the Agreement as to the financial statements
covered thereby and in Section 6.25 of the Agreement shall
terminate as of the Amendment Date and be of no further
force and effect as to any matters relating (i) to the
Purchase Price Adjustment, Net Working Capital, Closing
Sales Proceeds or Closing Capital Expenditures, or (ii) to
Receivables, Inventories or Payables as of any date.
12. Section 11.02 of the Agreement is hereby amended to add the
following at the end of Section 11.02(c) before the word "and":
or (iv) any action or proceeding brought at any time
against Seller Group by Sid Dunken (individually or
otherwise) or D&M Partnership with respect to the
Agreement or the transactions contemplated thereby,
13. No other provisions, terms or conditions of the Agreement,
including but not limited to, the representations and warranties and covenants,
are hereby amended and all other provisions, terms and conditions of the
Agreement, including but not limited to, the representations and warranties and
covenants, remain in full force and effect.
14. The Fourth Amendment and the mutual release contained herein
shall be construed in accordance with, and all disputes hereunder shall be
governed by, interpreted and enforced in accordance with the laws of the State
of Florida.
7
Mr. Dennis D. Mehiel
Mr. Roger W. Stone
December 26, 1996
Page 7
Please execute below to evidence your acknowledgement of and
agreement to the Fourth Amendment and the mutual release contained herein.
Very truly yours,
ST. JOE CORPORATION
(formerly St. Joe Paper Company)
ST. JOE FOREST PRODUCTS COMPANY
ST. JOE CONTAINER COMPANY
By: /s/ W.L. Thornton
---------------------------------
Name: W.L. Thornton
Title: Chairman
ST. JOSEPH LAND AND DEVELOPMENT
COMPANY (As to Section 5 only)
By: /s/ W.L. Thornton
--------------------------------------
Name: W.L. Thornton
Title: President
ACKNOWLEDGED AND AGREED:
FOUR M CORPORATION FLORIDA COAST PAPER COMPANY, L.L.C.
(successor in interest to Port
By: /s/ Harvey L. Friedman St. Joe Paper Company)
--------------------------------
Name: Harvey L. Friedman
Title: Secretary
BOX USA GROUP, INC. By: /s/ Leslie T. Lederer
------------------------------------
Name: Leslie T. Lederer
Title: Vice President
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
cc: Leslie T. Lederer, Esq.
Harvey L. Friedman, Esq.
Marilyn Mooney, Esq.
1
EXHIBIT 21
St. Joe Corporation
Subsidiaries at March 18, 1997
St. Joe Corporation
Florida East Coast Industries, Inc.
Gran Central Corporation
Dade County Land Holding Company, Inc.
Florida East Coast Railway Company
Florida East Coast Deliveries, Inc.
Florida East Coast Highway Dispatch Company
Florida East Coast Inspections, Inc.
Florida Express Carrier, Inc.
Operations Unlimited, Inc.
Railroad Concrete Crosstie Corporation
Railroad Track Construction Company
Jacksonville Properties, Inc.
St. Joseph Land and Development Company
Apalachicola Northern Railroad Company
St. Joe Terminal Company
Talisman Sugar Corporation
St. Joe Utilities Company
1
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
St. Joe Corporation:
We consent to the incorporation by reference in the registration statement (No.
333-23571) on Form S-8 of St. Joe Corporation of our reports dated March 7,
1997, relating to the consolidated balance sheets of St. Joe Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996, and related financial
statement schedules, which reports appear in the December 31, 1996, annual
report on Form 10-K of St. Joe Corporation.
KPMG Peat Marwick LLP
Jacksonville, Florida
March 27, 1997
1
EXHIBIT 24
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
OF ST. JOE CORPORATION
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director or
officer, or both, of St. Joe Corporation (the "Company") constitutes and
appoints J. Malcolm Jones, Jr. and Robert M. Rhodes, Esq., his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
and each of them with full power to act without the other for him and in his
name, place and stead, in any and all capacities, to execute and file, or cause
to be filed, with the Securities and Exchange Commission (the "Commission") an
Annual Report on Form 10-K for the Company's fiscal year ended December 31, 1996
and any and all amendments thereto, and all matters required by the Commission
in connection with such Annual Report on Form 10-K under the Securities Exchange
Act of 1934, as amended, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
the 27 day of March, 1997.
/s/ Peter S. Rummell
------------------------------
Peter S. Rummell
/s/ Robert E. Nedly
------------------------------
Robert E. Nedley
/s/ Jacob C. Belin
------------------------------
Jacob C. Belin
/s/ Winfred L. Thornton
------------------------------
Winfred L. Thornton
/s/ Russell B. Newton, Jr.
------------------------------
Russell B. Newton, Jr.
/s/ John J. Quindlen
------------------------------
John J. Quindlen
/s/ Walter L. Revell
------------------------------
Walter L. Revell
/s/ Frank S. Shaw, Jr.
------------------------------
Frank S. Shaw, Jr.
/s/ John D. Uible
------------------------------
John D. Uible
/s/ Carl F. Zellers
------------------------------
Carl F. Zellers
/s/ Robert E. Nedley
------------------------------
Robert E. Nedley
5
YEAR
DEC-31-1996
JAN-01-1996
DEC-31-1996
449,013
88,011
57,517
0
18,677
630,673
1,156,642
322,475
1,806,238
56,959
0
0
0
8,714
1,188,227
1,806,238
245,704
431,189
112,163
283,018
0
0
600
189,028
83,117
91,909
84,113
0
0
176,022
5.77
5.77
