<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 June 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)
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VIRGINIA 13-5652423
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
<TABLE>
<S> <C>
1600 VALLEY ROAD, WAYNE, NEW JERSEY 07470
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(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__________
69,943,154 shares of Registrant's Common Stock, Par Value $1 Per
Share, were outstanding as of the close of business on June 30,
1994.
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UNION CAMP CORPORATION
INDEX
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Page
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Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 7
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
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*A summary of the Registrant's significant accounting policies is
contained in the Registrant's Form 10-K for the year ended December
31, 1993 which has previously been filed with the Commission.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
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<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- -----------------------
1994 1993 1994 1993
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $827,217 $786,481 $1,617,323 $1,547,935
Costs and other charges:
Cost of products sold 635,131 592,354 1,247,103 1,168,580
Selling and administrative expenses 79,270 75,716 153,564 152,877
Depreciation and cost of timber harvested 62,006 61,425 124,546 121,134
Special Charge 13,958 -- 13,958 --
-------- -------- ---------- ----------
Income from operations 36,852 56,986 78,152 105,344
-------- -------- ---------- ----------
Gross interest expense 32,405 33,734 64,427 68,765
Less capitalized interest (5,207) (1,346) (9,737) (2,285)
Gain on sale of minority interest 34,698 - 34,698 -
Other (income) expense - net 2,426 937 (838) (3,322)
-------- -------- ---------- ----------
Income before income taxes and
accounting change 41,926 23,661 58,998 42,186
-------- -------- ---------- ----------
Income taxes:
Current (1,664) 4,174 (2,667) 4,900
Deferred 17,684 4,396 24,491 9,676
-------- -------- ---------- ----------
Total income taxes 16,020 8,570 21,824 14,576
-------- -------- ---------- ----------
Income before accounting change 25,906 15,091 37,174 27,610
Effect of change in accounting standard (net of tax) -- -- (3,716) --
-------- -------- ---------- ----------
Net Income $ 25,906 $ 15,091 $ 33,458 $ 27,610
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Earnings per share:
Before change in accounting standard $0.37 $0.22 $0.53 $0.40
After change in accounting standard $0.37 $0.22 $0.48 $0.40
Dividends per share $0.39 $0.39 $0.78 $0.78
</TABLE>
Earnings per share are computed on the basis of the average number of common
shares outstanding:
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1994 1993
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<S> <C> <C>
Quarter Ended June 30, 69,935,085 69,715,709
Six Months Ended June 30, 69,919,177 69,697,899
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See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
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<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
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ASSETS
Cash and cash equivalents $ 8,295 $ 38,287
Receivables-net 430,767 389,549
Inventories at lower of cost or market:
Finished goods 197,185 228,863
Raw materials 90,755 91,685
Supplies 117,259 121,970
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Total inventories 405,199 442,518
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Assets held for resale 13,897 4,154
Other 54,055 36,210
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Total current assets 912,213 910,718
---------- ----------
Plant and equipment, at cost 6,037,352 5,938,975
Less: accumulated depreciation 2,642,049 2,540,253
---------- ----------
3,395,303 3,398,722
Timberlands, less cost of timber harvested 249,042 247,368
---------- ----------
Total property 3,644,345 3,646,090
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Other assets 123,366 128,225
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Total Assets $4,679,924 $4,685,033
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 787,458 $ 909,372
Long-term debt 1,285,771 1,244,907
Deferred income taxes 603,256 583,155
Other liabilities and minority interest 196,630 131,751
Stockholders' equity (Shares outstanding
1994: 69,943,154; 1993: 69,833,130) 1,806,809 1,815,848
---------- ----------
Total Liabilities and Stockholders' Equity $4,679,924 $4,685,033
---------- ----------
---------- ----------
</TABLE>
See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
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<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1994 1993
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Cash Provided by Operations:
Net income $ 33,458 $ 27,610
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 133,159 130,801
Deferred income taxes 24,491 9,676
Asset write-down 13,958 --
Gain on sale of minority interest (34,698) --
Other 4,550 3,368
Changes in operational assets and liabilities:
Receivables (35,434) 36,313
Inventories 34,503 4,139
Other assets (17,071) 1,842
Accounts payable, taxes and other liabilities (57,455) (34,492)
--------- --------
Cash (Used For) Provided By Operations 99,461 179,257
--------- --------
Cash (Used For) Provided By Investment Activities:
Capital expenditures (132,299) (96,802)
Payments for acquired businesses (3,704) (11,855)
Proceeds from sale of businesses -- 34,451
Proceeds from sale of minority interest 88,983 --
Other (20,426) 1,179
--------- --------
(67,446) (73,027)
--------- --------
Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable (14,185) (32,038)
Repayments of long-term debt (51,271) (71,824)
Proceeds from issuance of long-term debt 57,126 10,950
Dividends paid (54,543) (54,368)
--------- --------
(62,873) (147,280)
--------- --------
Effect of exchange rate changes on cash 866 (1,042)
--------- --------
Increase (decrease) in cash and cash equivalents (29,992) (42,092)
Balance at beginning of year 38,287 67,683
--------- --------
Balance at end of period $ 8,295 $ 25,591
--------- --------
--------- --------
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $54,985 $68,919
Income taxes $12,112 $9,046
</TABLE>
See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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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. In the second quarter of 1994, the company recorded
a special 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 second quarter of
1993 included a $4.7 million non-recurring charge
related to the disposal of the company's School
Supplies business.
--continued--
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Note 6. Included in "Current Liabilities" are $376 million
and $384 million of Commercial Paper (net of
discount) at June 30, 1994 and year-end 1993,
respectively.
Note 7. Included in "Other Liabilities and Minority
Interest" for June 30, 1994 is $55.5 million
related to the minority interest in Union Camp's
investment in Bush Boake Allen.
Note 8. Prior periods have been reclassified to conform
with the 1994 presentation.
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the second quarter of 1994 was $25.9 million or
$.37 per share, compared to $15.1 million or $.22 per share for
last year's second quarter. In the second quarter, Union Camp
recorded a gain of $.30 per share from the sale of a minority
interest in its flavor and fragrance subsidiary, Bush Boake
Allen. This was offset in part by a charge of $.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 $.04 per share related to the disposal
of the company's School Supplies business.
Net income for the first half of this year was $33.5 million or
$.48 per share, compared to $27.6 million or $.40 per share for
the same period last year. Included in this year's results are
the items noted above plus a first quarter charge of $.05 per
share relating to the adoption of the new accounting standard
SFAS No.112 "Employers Accounting for Postemployment Benefits".
Overall demand for the company's paper and packaging products
continues to be strong, reflecting the improving economic
environment for our products both in the domestic and foreign
markets. Net sales for the second quarter were $827.2 million,
5% above the previous year's comparable quarter. Paper product
shipments were approximately 895,000 tons, 10% above last year's
second quarter and 5% above the first quarter of this year.
Operating income for the paper and paperboard segment was $18.7
million, an 18% decrease over the second quarter of last year.
The decline in earnings was primarily attributable to lower
average selling prices for uncoated business papers, which were
below the depressed levels of last year's second quarter and
more than offset the significant improvement in the company's
linerboard operations. Both the domestic and foreign linerboard
markets further improved during the quarter and average
linerboard prices were up 6% over last year's second quarter and
7% over the first quarter of this year. Also on a positive
note, shipments of uncoated business papers were 5% above the
second quarter of last year and prices began to trend upward.
-7-
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The packaging segment reported an $8.3 million loss for the
second quarter, compared to a $9.7 million profit for last
year's comparable quarter. The primary reason for the
significant decrease was a $14 million write down of the
carrying value of certain non-strategic assets. Operating
earnings in the flexible packaging portion of the segment were
affected by lower average selling prices and higher average
product costs. Earnings for the corrugated container operations
were down primarily due to higher raw material costs, despite an
improvement in average selling prices and shipments over last
year's second quarter. Second quarter earnings from the
company's overseas container operations remained relatively
level with last year's second quarter.
The company's non-paper businesses continue to report strong
results for the second quarter of this year, with operating
profits at $40.9 million, 34% above last year's comparable
period. The chemical segment was a major contributor with
operating income of $21.5 million compared to $14.0 million last
year. Both the tall-oil-based chemicals business and the
company's Bush Boake Allen subsidiary contributed to the
improved profitability. Wood products earnings increased 17%
over last year's second quarter. Improved prices for plywood and
particleboard more than offset a downturn in lumber prices which
rebounded by the end of the quarter.
Depreciation expense increased less than 1% in the second
quarter and 3% in the first half of 1994 from last year's
comparable periods. Net interest expense for the second quarter
and first half of 1994 decreased 16% and 18%, respectively from
the comparable periods of 1993. 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".
Net working capital was $125 million at June 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 second quarter of this
year.
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Cash flow from operations for the first half of 1994 was $99.5
million, as compared to $179.3 million for the same period last
year. Changes in working capital items were the major
contributors to this decrease.
Capital expenditures for the first half of 1994 totaled $132.3
million, compared to $96.8 million for the comparable period
last year. Year-to-date expenditures reflect spending of $77
million at the company's paper mills, primarily attributable to
$17 million for the Savannah, Ga mill recovery boiler and $33
million for the deink facility and paper machine enhancements at
the Franklin, Va mill. In April 1994, the company issued $49.9
million of 30 year tax exempt debt at an interest rate of 6.55%,
for the purpose of financing part of the deink project under
construction at the Franklin, Va mill. The ratio of long-term
debt to total capital employed was 34.8% at June 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.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
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No. Description
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10.1 Union Camp Corporation Supplemental
Retirement Income Plan for Executive
Officers as amended and restated
April 26, 1994.
10.2 Description of post-retirement
office arrangements between Union
Camp Corporation and Raymond E.
Cartledge.
11 Statement re computation of per
share earnings.
</TABLE>
b) Reports on Form 8-K.
No current Report on Form 8-K was filed by the Registrant
during the second quarter of 1994.
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<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)
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Date: AUGUST 5, 1994 /s/ Dirk R. Soutendijk
-------------------------------
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: AUGUST 5, 1994 /s/ Robert E. Moore
-------------------------------
ROBERT E. MOORE
VICE PRESIDENT AND COMPTROLLER
(Chief Accounting Officer)
</TABLE>
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<PAGE>
EXHIBIT INDEX
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SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
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10.1 Supplemental Retirement Income 14
Plan for Executive Officers
as amended and restated
April 26, 1994
10.2 Description of post-retirement 22
office arrangements between
Union Camp Corporation and
Raymond E. Cartledge
11 Statement re computation of per 23
share earnings.
</TABLE>
<PAGE>
EXHIBIT 10.1
UNION CAMP CORPORATION
SUPPLEMENTAL RETIREMENT INCOME PLAN
FOR EXECUTIVE OFFICERS
(AS AMENDED AND RESTATED APRIL 26, 1994)
PREAMBLE
The principal purpose of the Union Camp Corporation Supplemental
Retirement Income Plan for Executive Officers (the "Plan") is to ensure the
payment of a competitive level of retirement income to present members of the
policy committee of Union Camp Corporation (the "Company") in order to
attract, retain and motivate such members and to provide supplemental
retirement benefits to executive officers of the Company, identified by the
Personnel, Nominating and Compensation Committee of the Board of Directors of
the Company (the "Board"), who are then members of the policy committee or
who join or have joined the Company in mid-career and are responsible for a
significant segment of the Company's business and who otherwise would receive
retirement benefits from the Company which would not reflect their experience
prior to employment with the Company or would not be appropriate for the
position of responsibility which they hold with the Company.
1. DEFINITIONS
1.1 Benefit. Benefit is the benefit provided to an Executive
pursuant to Section 2 of the Plan.
1.2 Code. The Internal Revenue Code of 1986, as amended from time
to time.
1.3 Committee. The Committee is the Personnel, Nominating and
Compensation Committee of the Board or such other committee of the Board to
which similar responsibilities are delegated in the future.
1.4 Earnings. Earnings means the salary received by an Executive,
plus the amount of his annual target bonus, but excluding income attributable
to moving, group life insurance premiums, participation (except as provided
below) in any savings plan, stock options and appreciation rights. Earnings
shall exclude severance payments made pursuant to the Company's Severance
Policy for Key Employees or pursuant to a written severance agreement between
the Company and the Executive. In the case of an Executive on overseas
temporary assignment, Earnings shall include the Executive's salary and
annual target bonus but shall not include any special, extra or supplemental
payments of compensation pursuant to the Company's Compensation and
Relocation Guidelines for Overseas Assignments, other than the overseas
premium payable pursuant to such Guidelines, unless the Retirement Board in
its discretion provides otherwise pursuant to a nondiscriminatory rule of
uniform application. Earnings shall include amounts which are contributed on
behalf of an Executive to any plan by the Company pursuant to a salary
reduction agreement and which are not includible in the gross income of the
Executive under Sections 125, 402(e)(3) or 402(h)(1)(B) of the Code.
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Notwithstanding the above, the amount of the Executive's actual annual bonus
shall be substituted for his annual target bonus for any period prior to 1994
if doing so would result in the Executive's Earnings being higher.
1.5 Executive. The term Executive means the following members of
the Company's policy committee: Messrs. Ballengee, Boekenheide, Cartledge,
McClelland, Munford, Reed, Soutendijk and Trice; and such officers as the
Committee may from time to time designate as covered by the Plan if each such
officer is (i) a member of the Company's policy committee and/or (ii) an
executive officer of the Company who is responsible for a significant segment
of the Company's business and who when first employed by the Company already
had prior business or professional experience which was valuable to the
Company and relevant to the position for which he was employed. This term
shall also include the Executive's spouse in the event Benefit payments, as
described hereinafter, to such spouse have commenced under the Plan.
1.6 Final Average Earnings. Final Average Earnings means the
average annual Earnings received by an Executive during the 60 consecutive
calendar months of highest aggregate Earnings during the Executive's final
120 calendar months of Service immediately prior to his termination of
employment.
1.7 Primary Insurance Amount. The Primary Insurance Amount shall
be the Executive's primary insurance amount for Social Security purposes,
determined on the basis of the Executive's actual compensation with respect
to years of employment with the Company. With respect to years of
employment, if any, prior to employment with the Company, the Committee shall
estimate the Executive's income that is treated as wages for purposes of the
Social Security Act. If the Executive's employment with the Company is
terminated prior to age 65, for years following termination of employment, it
shall be assumed for purposes of calculating the Primary Insurance Amount
that the Executive earns compensation so as to accrue the maximum Social
Security benefits.
1.8 Retirement Board. The Retirement Board provided for in the
Retirement Plan.
1.9 Retirement Plan. Retirement Plan means the Retirement Plan
for Salaried Employees of Union Camp Corporation.
1.10 Service. Service is an Executive's "Service" as defined in
the Retirement Plan.
2. SUPPLEMENTAL RETIREMENT BENEFIT
2.1 Benefit. All supplemental retirement benefits under the Plan
shall be determined according to this Section 2. The base annual Benefit
payable to the Executive shall be equal to forty (40) percent of his Final
Average Earnings following ten years of Service, plus one and one-half (1 1/2)
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percent of such earnings for each year of additional Service up to a maximum
of fifty-five (55) percent of his Final Average Earnings following twenty
years of Service. This amount, payable at the age the Executive retires
under the Retirement Plan, shall be reduced by the sum of (i) the amount of
any benefits paid or payable to the Executive from any defined benefit
pension plans maintained by the Company, including the Retirement Plan and
the related Supplemental Retirement Plan of Union Camp Corporation (the
"Company's Plans"), and any benefits paid or payable from any retirement
plans of any other employer (whether tax-qualified or nonqualified), which
the Committee determines, in its sole discretion, are intended to provide
retirement benefits similar to the benefits provided under the Company's
Plans, determined, in all cases, by adjusting such benefits, using the tables
and actuarial assumptions under the Retirement Plan, to the same form as the
Executive's benefits are paid or payable from the Retirement Plan and
assuming the Executive's retirement age is the age that the Executive retires
under the Retirement Plan, and (ii) one-half (1/2) of his annual Primary
Insurance Amount payable at age 65. The benefit remaining after this
reduction shall constitute the Executive's net annual Benefit.
2.2(a) Form and Timing of Payment. Subject to Section 2.3, 3 and
4, the net annual Benefit shall be payable to the Executive in either: (i)
such form as benefits are payable to the Executive under the Retirement Plan
or (ii) in a single lump-sum payment as provided under Section 2.2(b).
Except as provided under Section 4.1 below, such Benefit shall commence upon
the day following the last day of the month in which the Executive's
employment with the Company terminates, or, in the case of a single lump-sum
payment, such Benefit shall be paid as soon as possible thereafter. However,
to the extent such lump-sum payment is not deductible in accordance with
Section 162(m) of the Code, it shall be paid, to the extent of deductibility,
in the next one or more taxable years until paid in full.
(b) Lump Sum Payment Election. Subject to the approval, in its
sole discretion, of the Retirement Board, an Executive may irrevocably elect
in writing to receive the net annual Benefit provided by the Plan in the form
of a single lump-sum payment. An Executive may elect a lump-sum payment at
any time up to, but no later than one year in advance of the earlier of his
actual retirement date or normal retirement date under the Retirement Plan,
provided, however, that an Executive who is age 64 or older as of April 26,
1994 may not make such an election later than June 25, 1994. The amount of
the lump-sum payment shall be determined by calculating the Executive's net
annual Benefit as a single life annuity and converting such annuity to a
present value. The rate that shall be used to calculate such present value
shall be determined on the first business day of each calendar quarter in
accordance with the following formula and shall apply to each lump-sum
payment made in such calendar quarter:
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The rate shall be the net after-tax rate derived by multiplying one
(1) minus the current U.S. income tax rate expected to be
applicable to the Company for financial reporting purposes by the
sum of (a) and (b), where:
(a) is the average of (i) the interest rate on 10 year
U.S. Treasuries and (ii) the interest rate on 30 year U.S.
Treasuries, and,
(b) is the average of the spread on 10 and 30 year
taxable debt of industrial companies with similar credit
rating to that of the Company over the 10 and 30 year
U.S. Treasuries, respectively.
If payment of any part of the lump-sum amount must be deferred due to its
non-deductibility pursuant to Section 162(m) of the Code, the amount of the
lump-sum payment to be deferred shall be converted back into a single life
annuity form of payment using the interest rate assumption used to calculate
the amount of the lump-sum payment. As soon as the payment of all or any
part of the deferred lump-sum payment can be deducted by the Company, such
single life annuity shall be converted to a present value, using the rate set
forth above as in effect for the calendar quarter in which the payment occurs
and using the Executive's age as of the date his benefit under the Retirement
Plan commenced.
(c) Death Benefits. If, at the Executive's death prior to his
actual retirement date he is entitled to a payment hereunder and is currently
married, subject to Section 4.3, his surviving spouse shall be entitled to
payments determined in accordance with Article VIII of the Retirement Plan
based upon the Executive's net annual Benefit, commencing upon the day
following the last day of the month in which the Executive dies and, if a
lump-sum payment election shall have been made by the Executive under Section
2.2(b), such election shall be void and of no effect.
2.3 Eligibility for Benefit. No Benefit shall be payable unless
the Executive shall have completed at least 10 years of Service on his date
of termination of employment.
2.4 Vesting. Subject to Sections 2.3, 3 and 4.4, the Benefit of
each Executive under the Plan shall at all times be 100% vested and
nonforfeitable.
2.5 Special Benefits. Notwithstanding anything herein to the
contrary, the minimum annual Benefit to be provided to W. Craig McClelland
shall be equal to the greater of (i) the Benefit determined under the other
provisions of the Plan, and (ii) the sum of $22,400 and any pension payable
to W. Craig McClelland under the Retirement Plan and the related Supplemental
Retirement Plan of Union Camp Corporation.
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3. COMPETITION WITH COMPANY; CAUSE. Subject to Section 5, but
notwithstanding any other provision of the Plan to the contrary, no Benefits
or no further Benefits, as the case may be, shall be paid to an Executive if
the Committee reasonably determines that such Executive has:
(i) To the detriment of the Company or any affiliate, directly or
indirectly acquired, without the prior written consent of the Committee,
an interest in any other company, firm, association, or organization
(other than an investment interest of less than 1% in a publicly-owned
company or organization), the business of which is in direct competition
with the business (present or future) of the Company or any of its
affiliates;
(ii) To the detriment of the Company or any affiliate, directly or
indirectly competed with the Company or any affiliate as an owner,
employee, partner, director or contractor of a business, in a field of
business activity in which the Executive has been primarily engaged on
behalf of the Company or any affiliate or in which he has considerable
knowledge as a result of his employment by the Company or any affiliate,
either for his own benefit or with any person other than the Company or
any affiliate, without the prior written consent of the Committee; or
(iii) Been discharged from employment with the Company or any
affiliate for "cause." "Cause" shall include the occurrence of any of
the following events or such other dishonest or disloyal act or omission
as the Committee reasonably determines in its sole discretion to be
"cause":
(a) The Executive has misappropriated any funds or property
of the Company or any affiliate;
(b) The Executive has, without the prior knowledge or written
consent of the Committee, obtained personal profit as a result of
any transaction by a third party with the Company or any affiliate;
or
(c) The Executive has sold or otherwise imparted to any
person, firm, or corporation the names of the customers of the
Company or any affiliate or any confidential records, data,
formulae, specifications and other trade secrets or other
information of value to the Company or any affiliate derived by his
association with the Company or any affiliate.
In any case described in this Section 3, the Executive shall be
given prior written notice that no Benefits or no further Benefits, as the
case may be, will be paid to such Executive. Such written notice shall
specify the particular acts(s), or failures to act, on the basis of which the
decision to terminate his Benefits has been made.
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<PAGE>
4. TERMINATION OF EMPLOYMENT PRIOR TO AGE 65. If the Executive terminates
employment prior to age 65 for any reason, his rights and Benefits under the
Plan will be determined in accordance with this Section 4.
4.1 Deferral. At the option of the Company, commencement of
Benefit payments under the Plan can be deferred until the Executive attains
age 65. If no such deferral is elected by the Company, the commencement date
of Benefit payments shall be the day following the last day of the month in
which the Executive terminates with the written consent of the Committee
employment with the Company or, in the case of a single lump-sum payment, as
soon as possible thereafter.
4.2 Benefit Adjustment. If the Executive terminates employment
prior to age 62 for reasons other than death or total and permanent
disability, as determined by the Company's physician, his Benefit shall be
reduced in accordance with the early retirement benefit provisions of the
Retirement Plan.
4.3 Death or Disability. If the employment of the Executive with
the Company terminates prior to age 65 but after completion of at least 10
years of Service with the Company, due to reasons of death or total and
permanent disability, as determined by the Company's physician, the Executive
or his surviving spouse will be eligible for Benefit payments pursuant to
Section 2.
4.4 Company Consent. Except for termination of employment under
Section 4.3 above, if the Executive terminates employment with the Company
prior to age 65 without the express, written consent of the Committee, all
rights of the Executive to Benefits hereunder shall thereupon terminate.
5. DISPUTES. If any dispute arises under the Plan between the Company and
an Executive as to the amount or timing of any Benefit payable under the Plan
or as to the persons entitled thereto, such dispute shall be resolved by
binding arbitration proceedings initiated by either party to the dispute in
accordance with the rules of the American Arbitration Association and the
results of such proceedings shall be conclusive on both parties and shall not
be subject to judicial review. If the disputed Benefits involve the Benefits
of an Executive who is no longer employed by the Company or any affiliate,
the Company shall pay or continue to pay the Benefit (except a Benefit
payable in a lump-sum pursuant to Section 2.2(b)) until the results of the
arbitration proceedings are determined unless such claim is patently without
merit; provided, however, that if the results of the arbitration proceedings
are adverse to the Executive, then in such event the recipient of the
Benefits shall be obligated to repay the excess benefits to the Company. The
Company shall pay any and all legal fees and expenses incurred by the
Executive in seeking to obtain or enforce any rights under the Plan, provided
that the Executive is successful in obtaining or enforcing such rights.
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<PAGE>
6. ADMINISTRATION. The Committee shall be responsible for the
administration of the Plan and may delegate to any management committee,
employee, director or agent its responsibility to perform any act hereunder,
including without limitation those matters involving the exercise of
discretion, provided that such delegation shall be subject to revocation at
any time at its discretion. The Committee shall have the authority to
interpret the provisions of the Plan and construe all of its terms, to adopt,
amend, and rescind rules and regulations for the administration of the Plan,
and generally to conduct and administer the Plan and to make all
determinations in connection with the Plan as may be necessary or advisable,
other than those determinations delegated to management employees or
independent third parties by the Board. All such actions of the Committee
shall be conclusive and binding upon all Executives.
7. AMENDMENT. The Plan may not be terminated, suspended or amended except
by action of the Committee, and may not be amended to terminate or reduce or
adversely affect Benefits to any Executive then participating in the Plan
without the approval of such Executive.
8. GOVERNING LAW; BINDING EFFECT. The Plan shall be governed and construed
and enforceable in accordance with the laws of the State of New Jersey. If
the Company is consolidated or merged with or into another corporation, or if
another entity purchases all, or substantially all of the Company's assets
the surviving or acquiring corporation shall succeed to the Company's rights
and obligations under the Plan. The Plan shall inure to the benefit of, and
is enforceable by, the Executive's personal or legal representatives,
executors, administrators, successors, heirs, devisees, and legatees. If the
Executive dies while married and any amounts are payable under the Plan, all
such amounts, unless otherwise provided, shall be paid in accordance with the
terms of the Plan to the Executive's surviving spouse.
9. NATURE OF OBLIGATIONS. The plan is unfunded, and the Company will make
Benefit payments solely on a current disbursement basis, provided, however,
that the Company reserves the right to purchase insurance contracts, which
may or may not be in the name of an Executive, or establish one or more
trusts to provide alternative sources of Benefit payments under this Plan.
10. NOTICE. Any notice or filing required or permitted to be given to the
Company shall be sufficient if in writing and hand delivered or when sent by
registered or certified mail to the principal office of the Company, directed
to the attention of the Secretary of the Company. Any notice to the
Executive must be in writing and is effective when delivered or when mailed
by registered or certified mail, return receipt requested, postage prepaid to
the Executive or his personal representatives at his last known address.
11. EMPLOYMENT. Nothing contained in the Plan nor any action taken
hereunder shall be construed as a contract guaranteeing the Executive
continued status as an employee.
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<PAGE>
12. VALIDITY. In the event any provision of this Plan is held invalid,
void, or unenforceable, the same shall not affect in any respect whatsoever
the validity of any other provision of this Plan.
13. ASSIGNMENT. An Executive may not assign, alienate, anticipate, or
otherwise encumber any rights, duties or amounts which he may be entitled to
receive under the Plan.
14. PROTECTIVE PROVISIONS. Each Executive shall cooperate in good faith
with the Company in furnishing any and all information reasonably requested
by the Company in order to determine and facilitate Benefit payments under
the Plan.
15. GENDER, SINGULAR AND PLURAL. All pronouns in any variations thereof
shall be deemed to refer to the masculine or feminine as the identity of the
person or persons may require. As the context may require, the singular may
be read as the plural and the plural as the singular.
16. CAPTIONS. The captions to the Sections of the Plan are for convenience
only and shall not control or affect the meaning or construction of any of
its provisions.
Revised 4/94
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<PAGE>
EXHIBIT 10.2
POST-RETIREMENT OFFICE
ARRANGEMENT WITH
RAYMOND E. CARTLEDGE
Commencing July 1, 1994 and continuing for up to seven years thereafter,
Union Camp Corporation will provide Raymond E. Cartledge, retired Chairman of
the Board and Chief Executive Officer of the Company, with office space,
secretarial services as required, office supplies and office furniture and
equipment, including telephone, personal computer, printer, fax, and
photocopier. At the conclusion of this arrangement, Mr. Cartledge shall have
the option of purchasing the above mentioned office furniture and equipment at
book value.
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Income ($000) $25,906 $15,091 $33,458 $27,610
Weighted Average Common
Shares Outstanding 69,935,085 69,715,709 69,919,177 69,697,899
Earnings Per Share $0.37 $0.22 $0.48 $0.40
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 70,236,072 70,066,450 70,263,026 70,058,442
Primary Earnings Per Share $0.37 $0.22 $0.48 $0.39
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 70,239,987 70,066,450 70,263,026 70,058,442
Fully Diluted Earnings Per Share $0.37 $0.22 $0.48 $0.39
</TABLE>
