<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file Number 1-4001
UNION CAMP CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
VIRGINIA 13-5652423
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1600 VALLEY ROAD, WAYNE, NEW JERSEY 07470
(Address of Principal Executive Offices) (Zip Code)
(201) 628-2000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
YES X NO
70,003,026 shares of Registrant's Common Stock, Par Value $1 Per
Share, were outstanding as of the close of business on September
30, 1994.
<PAGE>
UNION CAMP CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 7
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
*A summary of the Registrant's significant accounting policies is
contained in the Registrant's Form 10-K for the year ended December
31, 1993 which has previously been filed with the Commission.
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $856,271 $778,708 $ 2,473,594 $ 2,326,643
Costs and other charges:
Cost of products sold 634,444 591,865 1,881,547 1,760,445
Selling and administrative expenses 82,751 72,580 236,315 225,457
Depreciation and cost of timber harvested 63,934 60,441 188,480 181,575
Other operating charges - - 13,958 -
------- ------- ---------- ---------
Income from operations 75,142 53,822 153,294 159,166
Gross interest expense 33,075 32,761 97,502 101,526
Less capitalized interest (5,501) (2,172) (15,238) (4,457)
Gain on sale of minority interest - - (34,698) -
Other (income) expense - net 8,513 (7,795) 5,428 (11,117)
------- ------- ---------- ----------
Income before income taxes,
minority interest and accounting change 39,055 31,028 100,300 73,214
------- ------- ---------- ---------
Income taxes:
Current 15,314 8,774 12,647 13,674
Deferred (208) 1,373 24,283 11,049
Effective tax rate adjustment - 16,000 - 16,000
Total income taxes 15,106 26,147 36,930 40,723
------- ------- ---------- ---------
Minority interest (2,216) - (4,463) -
Effect of change in accounting standard (net of tax) - - (3,716) -
Net Income $ 21,733 $ 4,881 $ 55,191 $ 32,491
------- ------- ---------- ---------
------- ------- ---------- ---------
Earnings per share:
Before change in accounting standard $0.31 $0.07 $0.84 $0.47
After change in accounting standard $0.31 $0.07 $0.79 $0.47
Dividends per share $0.39 $0.39 $1.17 $1.17
Earnings per share are computed on the basis of the average number of common shares outstanding:
1994 1993
Quarter Ended September 30, 69,966,470 69,759,696
Nine Months Ended September 30, 69,935,114 69,718,724
See also the accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 4,864 $ 38,287
Receivables-net 438,623 389,549
Inventories at lower of cost or market:
Finished goods 179,277 228,863
Raw materials 92,795 91,685
Supplies 116,088 121,970
-------- --------
Total inventories 388,160 442,518
-------- --------
Assets held for resale 30,925 4,154
Other 41,453 36,210
---------- ----------
Total current assets 904,025 910,718
---------- ----------
Plant and equipment, at cost 6,099,539 5,938,975
Less: accumulated depreciation 2,693,591 2,540,253
---------- ----------
3,405,948 3,398,722
Timberlands, less cost of timber harvested 253,095 247,368
---------- ----------
Total property 3,659,043 3,646,090
---------- ----------
Other assets 142,239 128,225
---------- ----------
Total Assets $ 4,705,307 $ 4,685,033
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 819,023 $ 909,372
Long-term debt 1,277,757 1,244,907
Deferred income taxes 604,066 583,155
Other liabilities and minority interest 196,394 131,751
Stockholders' equity (Shares outstanding
1994: 70,003,026; 1993: 69,833,130) 1,808,067 1,815,848
---------- ----------
Total Liabilities and Stockholders' Equity $ 4,705,307 $ 4,685,033
---------- ----------
---------- ----------
</TABLE>
See also the accompanying notes to consolidated financial statements.
3
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
_____________________________
1994 1993
____________ ____________
<S> <C> <C>
Cash Provided by Operations:
Net income $ 55,191 $ 32,491
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 201,568 195,762
Deferred income taxes 24,283 27,249
Gain on sale of minority interest (34,698) -
Asset write down 13,958 -
Withdrawal from retail paper bag business 11,000 -
Other 8,935 (1,602)
Changes in operational assets and liabilities:
Receivables (49,428) 49,851
Inventories 40,627 6,379
Other assets (4,008) 8,002
Accounts payable, taxes and other liabilities (31,856) (5,879)
____________ ____________
Cash (Used For) Provided By Operations 235,572 312,253
____________ ____________
Cash (Used For) Provided By Investment Activities:
Capital expenditures (220,068) (184,304)
Payments for acquired businesses (21,089) (11,855)
Proceeds from sale of businesses 6,739 38,639
Proceeds from sale of minority interest 88,983 -
Other (7,746) 8,938
____________ ____________
(153,181) (148,582)
____________ ____________
Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable (36,879) (30,584)
Repayments of long-term debt (59,353) (83,103)
Proceeds from issuance of long-term debt 61,725 10,950
Dividends paid (81,834) (81,579)
____________ ____________
(116,341) (184,316)
____________ ____________
Effect of exchange rate changes on cash 527 (925)
____________ ____________
Increase (decrease) in cash and cash equivalents (33,423) (21,570)
Balance at beginning of year 38,287 67,683
____________ ____________
Balance at end of period $ 4,864 $ 46,113
____________ ____________
____________ ____________
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $88,597 $106,792
Income taxes $16,018 $16,545
</TABLE>
See also the accompanying notes to consolidated financial statements.
4
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The information furnished in this report is
unaudited but includes all adjustments which, in
the opinion of management, are necessary for a fair
presentation of results for the interim periods
reported. The adjustments made were of a normal
recurring nature, except as described in Notes 2,
3, 4 and 5.
Note 2. Effective January 1, 1994, the company adopted the
provisions of SFAS No. 112, 'Employers' Accounting
for Postemployment Benefits'. The implementation
of this new statement results in a change in the
company's method of accounting for certain
disability, health care and life insurance benefits
provided to former or inactive employees after
employment but before retirement, from the 'pay-as-
you-go' to the accrual basis.
The accumulated obligation as of January 1, 1994
was $6.0 million. This obligation, included within
'Other Long-Term Liabilities', was recorded in the
first quarter of 1994 on a cumulative basis as a
$6.0 million pre-tax charge against income ($3.7
million after-tax).
Note 3. Second quarter 1994 results include an 'Other
Operating Charge' of $14.0 million ($8.8 million
after tax) to reflect the write down of the
carrying value of certain non-strategic assets.
Note 4. Second quarter 1994 results include a $34.7 million
pre-tax gain on the sale of a 32% minority interest
in the company's Bush Boake Allen flavor and
fragrance business. Union Camp still maintains a
68% interest in its Bush Boake Allen subsidiary.
Note 5. 'Other (Income) Expense' for the third quarter of
1994 includes an $11 million charge to reflect the
company's decision to withdraw from the retail
paper bag business, effective December 31, 1994.
The second quarter of 1993 included a $4.7 million
non-recurring charge related to the disposal of the
company's School Supplies business.
-continued-
5
<PAGE>
Note 6. Effective with this year's third quarter, minority
interest is being presented as a separate line
item, below pre-tax income, on the face of the
income statement. The company feels that this
change is a more meaningful representation of its
operating results. The current year-to-date
results have been restated to reflect this change.
Prior year results have not been restated due to
immateriality.
Note 7. The increase in 'Assets Held for Resale' as of
September 30, 1994 is primarily due to the
reclassification of $26 million of assets related
to the company's decision to withdraw from the
retail paper bag business.
Note 8. Included in 'Current Liabilities' are $367 million
and $384 million of commercial paper (net of
discount) at September 30, 1994 and year-end 1993,
respectively.
Note 9. Included in 'Other Liabilities and Minority
Interest' for September 30, 1994 is $57.8 million
related to the minority interest in Union Camp's
investment in Bush Boake Allen.
Note 10. Prior periods have been reclassified to conform
with the 1994 presentation.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the third quarter of 1994 was $21.7 million or
$0.31 per share, compared to $4.9 million or $0.07 per share for
last year's third quarter. This year's third quarter included a
charge of $0.10 per share to reflect the company's decision to
withdraw from the retail paper bag business. Last year's third
quarter included an income tax charge of $0.23 per share to
reflect an increase in the corporate federal income tax rate.
Year-to-date net income for 1994 was $55.2 million or $0.79 per
share, compared to $32.5 million or $0.47 per share last year.
In addition to the items noted above, this year's results
include a first quarter charge of $0.05 per share relating to
the adoption of the new accounting standard (SFAS No.112), a
second quarter gain of $0.30 per share from the sale of a
minority interest in the company's flavor and fragrance
business, offset in part by a charge of $0.16 per share relating
to the write down of the carrying value of certain non-strategic
assets. Last year's second quarter included a non-recurring
charge of $0.04 per share related to the disposal of the
company's School Supplies business.
Demand for the company's primary paper and packaging products
was strong both in the domestic and foreign markets during the
third quarter. Net sales for the third quarter were $856.3
million, a 10% increase over last year's comparable period.
Total paper product shipments for the third quarter were
849,000 tons, 4% over last year's third quarter.
Operating income for the paper and paperboard segment was $53.5
million, as compared to $31.2 million for the third quarter of
last year. The significant improvement in earnings was primarily
attributable to a 27% increase in average linerboard prices for
the quarter, reflecting price recovery in both the domestic and
export linerboard markets. During the quarter, a linerboard
machine at the company's Savannah, Ga. mill was extensively
damaged due to a dryer section failure. The company has
insurance that covers both property damage and business
interruption. The impact on third quarter income was not
material. The machine is expected to be fully operational
before the end of the year. Third quarter shipments of uncoated
business papers were up 9% over last year's third quarter,
however this increase was more than offset by a 3% decrease in
average prices for the quarter, in addition to higher average
product costs as compared to last year. As the quarter
progressed however, more favorable trends developed in the
uncoated business papers market, with the result that industry
order backlogs climbed and prices of uncoated business papers
improved.
7
<PAGE>
Packaging segment operating income for the third quarter was
$819 thousand, well below the $4.2 million reported for last
year's third quarter. The primary reason for this earnings
decline was higher product costs in the company's domestic
corrugated container operations, which more than offset an
improvement in average selling prices and shipments over last
year's third quarter. Third quarter earnings from the company's
overseas container operations improved slightly over last year's
comparable period, reflecting improving conditions in these
foreign markets. Earnings for the flexible packaging operations
improved 20% over the third quarter of last year, reflecting
higher selling prices and increased shipments for the quarter.
The company has announced its decision to withdraw from the
retail paper bag business, effective December 31, 1994. As a
result, the company will close its Savannah, Ga. bag plant and
either close or sell its Richmond, Va. bag operation. The
retail paper bag business had net sales of $80 million for 1993.
As a result of this decision, the company recorded an $11
million pre-tax charge against non-operating income in the third
quarter. In addition, $26 million of assets related to this
withdrawal were reclassified to 'Assets Held For Resale' on the
company's consolidated balance sheet.
The company's non-paper businesses reported excellent third
quarter results, with operating income at $37.7 million, 27%
above last year's comparable quarter. The wood products segment
was a major contributor with operating income of $20.7 million,
compared to $16.4 million for last year's third quarter. Despite
a downward trend for wood and panel product prices for the
quarter, prices were still well above last year's comparable
period. Chemical segment earnings increased 27% over last year's
third quarter, reflecting strong results in both the Bush Boake
Allen flavor and fragrance operations and the tall-oil-based
chemicals business.
Depreciation expense increased 5% in the third quarter and 4% in
the first nine months of 1994 from last year's comparable
periods. Net interest expense for the third quarter and first
nine months of 1994 decreased 10% and 15%, respectively. The
primary reason for this decrease was a higher level of
capitalized interest.
The increase in the deferred tax liability is primarily
attributable to accelerated tax depreciation and the gain on the
sale of a minority interest in Bush Boake Allen, offset in part
by the adoption of SFAS No.112, 'Employers Accounting For
Postemployment Benefits'.
8
<PAGE>
Net working capital was $85 million at September 30, 1994,
compared to $1 million at year-end 1993. The increase in working
capital was primarily attributable to a lower level of payables
and accrued liabilities at the end of the third quarter of this
year.
Cash flow from operations for the first nine months of 1994 was
$235.6 million, compared to $312.3 million for last year's third
quarter. Changes in working capital items were the major
contributors to this decrease. Cash used for financing
activities was $116.3 million for the year-to-date period,
compared to $184.3 million for the same period last year. The
year-to-year reduction was primarily due to the issuance of
$49.9 million of 6.55%, 30 year tax exempt bonds in April 1994.
Capital expenditures for the nine month period ended September
30, 1994 totaled $220.1 million, compared to $184.3 million for
the same period last year. Year-to-date expenditures reflect
spending of $131 million at the company's paper mills, primarily
attributable to $23 million for the Savannah, Ga. mill recovery
boiler and $63 million for the deink facility and paper machine
enhancements at the Franklin, Va. mill.
In October 1994, the company filed a $150 million 'Shelf'
registration, covering debt securities, with the SEC. Net
proceeds from the sale of these debt securities will be used to
repurchase outstanding debt obligations, to provide funds for
working capital and for general corporate purposes. The ratio of
long-term debt to total capital was 34.6% at September 30, 1994.
In the second quarter of this year, Union Camp's flavor and
fragrance subsidiary, Bush Boake Allen Inc. (BBA), sold to the
public approximately 6.1 million shares of BBA stock
(approximately 32% of BBA's outstanding shares) at an offering
price of $16.00 per share. Union Camp retains approximately 68%
of the 19.215 million shares outstanding after the offering. As
a result of this transaction, Union Camp recognized a $34.7
million pre-tax gain.
9
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
No. Description
11 Statement re computation of per
share earnings.
27 Financial data schedule.
b) Reports on Form 8-K.
During the third quarter of 1994, the Registrant filed a
Current Report on Form 8-K dated August 17, 1994 in which
it reported under Item 5 - 'Other Events'.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
UNION CAMP CORPORATION
-------------------------------
(Registrant)
Date: NOVEMBER 9, 1994 /s/ Dirk R. Soutendijk
-------------------------------
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: NOVEMBER 9, 1994 /s/ Robert E. Moore
-------------------------------
ROBERT E. MOORE
VICE PRESIDENT AND COMPTROLLER
(Chief Accounting Officer)
11
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
11 Statement re computation of per 14
share earnings
27 Financial data schedule 15
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income ($000) $21,733 $4,881 $55,191 $32,491
Weighted Average Common
Shares Outstanding 69,966,470 69,759,696 69,935,114 69,718,724
Earnings Per Share $0.31 $0.07 $0.79 $0.47
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 70,392,353 70,074,727 70,287,937 70,047,107
Primary Earnings Per Share $0.31 $0.07 $0.79 $0.46
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 70,416,339 70,074,727 70,384,983 70,047,107
Fully Diluted Earnings Per Share $0.31 $0.07 $0.78 $0.46
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 4864
<SECURITIES> 0
<RECEIVABLES> 454829
<ALLOWANCES> 16206
<INVENTORY> 388160
<CURRENT-ASSETS> 904025
<PP&E> 6352634
<DEPRECIATION> 2693591
<TOTAL-ASSETS> 4705307
<CURRENT-LIABILITIES> 819023
<BONDS> 1277757
<COMMON> 70003
0
0
<OTHER-SE> 1738064
<TOTAL-LIABILITY-AND-EQUITY> 4705307
<SALES> 2473594
<TOTAL-REVENUES> 2473594
<CGS> 1881547
<TOTAL-COSTS> 2320300<F1>
<OTHER-EXPENSES> (29270)<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82264
<INCOME-PRETAX> 100300
<INCOME-TAX> 36930
<INCOME-CONTINUING> 58907<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 3716
<NET-INCOME> 55191
<EPS-PRIMARY> .79
<EPS-DILUTED> .78
<FN>
<F1>Includes $14 million charge to reflect the write-down of the
carrying value of certain non-strategic assets.
<F2>Includes $34.7 million gain on sale of 32% minority interest in company's
flavor and fragrance business.
<F3>Reflects adjustment for minority interest (net of tax) of $4,463.
</TABLE>
