<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 ____ March 31, 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_________
69,925,347 shares of Registrant's Common Stock, Par Value $1 Per
Share, were outstanding as of the close of business on March 31,
1994.
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UNION CAMP CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Part I. FINANCIAL INFORMATION*
<S> <C> <C>
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 6
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 4. Submission of Matters to a 8
Vote of Security-Holders
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
____________
*A summary of the Registrant's significant accounting policies is
contained in the Registrant's Form 10-K for the year ended December
31, 1993 which has previously been filed with the Commission.
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
______________________________
1994 1993
---- ----
<S> <C> <C>
Net Sales $ 790,106 $ 761,454
Costs and other charges:
Cost of products sold 611,972 576,226
Selling and administrative expenses 74,294 77,161
Depreciation and cost of timber harvested 62,540 59,709
--------- ---------
Income from operations 41,300 48,358
--------- ---------
Gross interest expense 32,022 35,031
Less capitalized interest (4,530) (939)
Other (income) expense -net (3,264) (4,259)
--------- ---------
Income before income taxes and accounting change 17,072 18,525
--------- ---------
Income taxes:
Current (1,003) 726
Deferred 6,807 5,280
--------- ---------
Total income taxes 5,804 6,006
--------- ---------
Income before accounting change 11,268 12,519
Effect of change in accounting standard (net of tax) (3,716) -
--------- ---------
Net Income $ 7,552 $ 12,519
--------- ---------
--------- ---------
Earnings per share:
Before change in accounting standard $0.16 $0.18
After change in accounting standard $0.11 $0.18
Dividends per share $0.39 $0.39
</TABLE>
Earnings per share are computed on the basis of the average number of common
shares outstanding:
1994: 69,903,091 1993: 69,679,891
See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 5,451 $ 38,287
Receivables-net 409,524 389,549
Inventories at lower of cost or market:
Finished goods 223,500 228,863
Raw materials 91,009 91,685
Supplies 119,476 121,970
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Total inventories 433,985 442,518
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Assets held for resale 4,093 4,154
Other 36,814 36,210
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Total current assets 889,867 910,718
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Plant and equipment, at cost 5,993,520 5,938,975
Less: accumulated depreciation 2,598,902 2,540,253
------------ -----------
3,394,618 3,398,722
Timberlands, less cost of timber harvested 247,087 247,368
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Total property 3,641,705 3,646,090
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Other assets 125,713 128,225
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Total Assets $ 4,657,285 $ 4,685,033
------------ -----------
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 840,729 $ 909,372
Long-term debt 1,286,889 1,244,907
Deferred income taxes 587,326 583,155
Other long-term liabilities 142,240 131,751
Stockholders' equity (Shares outstanding
1994: 69,925,347; 1993: 69,833,130) 1,800,101 1,815,848
------------ -----------
Total Liabilities and Stockholders' Equity $ 4,657,285 $ 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)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1994 1993
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<S> <C> <C>
Cash Provided by Operations:
Net income $ 7,552 $ 12,519
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 66,814 64,758
Deferred income taxes 6,807 5,280
Other 2,710 1,165
Changes in operational assets and liabilities:
Receivables (17,101) (26,076)
Inventories 8,817 1,786
Other assets (213) (340)
Accounts payable, taxes and other liabilities (59,803) (26,628)
-------- -------
Cash (Used For) Provided By Operations 15,583 32,464
-------- -------
Cash (Used For) Provided By Investment Activities:
Capital expenditures (56,567) (41,579)
Payments for acquired businesses (1,000) (11,855)
Other (15,734) (1,981)
-------- -------
(73,301) (55,415)
-------- -------
Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable 44,783 70,787
Repayments of long-term debt (49,727) (56,895)
Proceeds from issuance of long-term debt 57,126 10,950
Dividends paid (27,267) (27,178)
-------- -------
24,915 (2,336)
-------- -------
Effect of exchange rate changes on cash (33) (716)
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Increase (decrease) in cash and cash equivalents (32,836) (26,003)
Balance at beginning of year 38,287 67,683
-------- -------
Balance at end of period $ 5,451 $ 41,680
-------- -------
-------- -------
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $33,979 $43,321
Income taxes $4,608 $1,314
</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
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 Note 2 recorded in the first quarter ended March 31, 1994.
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. Included in 'Current Liabilities' are $435 million and $384 million of
Commercial Paper (net of discount) at March 31, 1994 and year-end
1993, respectively.
Note 4. Included in 'Long-Term Debt' for March 31, 1994 is $49.9 million of
commercial paper intended to be refinanced on a long-term basis.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the first quarter of 1994 was $7.6 million or
$.11 per share, compared to $12.5 million or $.18 per share for
the comparable period of last year. The year over year decline
was due in large part to a charge in this year's first quarter,
of $.05 per share relating to the adoption of the new accounting
standard SFAS No. 112 'Employers' Accounting for Postemployment
Benefits'. Lower average selling prices for the company's paper
and packaging products was also a significant factor.
Overall demand for the company's paper products remains strong.
Net sales for the first quarter of 1994 were $790 million, 4%
above the previous year's comparable quarter. Paper products
shipments were approximately 850,000 tons, 6% above last year's
first quarter.
Operating income for the paper and paperboard segment was $9.2
million, down 53% from the first quarter of last year. Lower
average selling prices and higher direct manufacturing costs per
ton at the company's paper mills were the primary reasons for
this earnings decline. On a positive note, a $30 per ton price
increase in domestic linerboard was implemented in March, which
is a reflection of the improvement in the linerboard market
during the quarter. Average prices in the uncoated business
papers market for the first quarter were about level with last
year's first quarter. However, pricing pressure intensified as
the quarter progressed and by the end of March, prices were
below the depressed levels of the first quarter of last year.
First quarter 1994 operating income for the packaging segment
was $10.4 million, $1.4 million above last year's first quarter.
Corrugated container operations were the primary contributors to
this earnings improvement, with shipments up 7% over last year.
Earnings from the bag businesses, as well as overseas container
operations remained relatively level with the prior year's first
quarter.
The company's non-paper businesses reported excellent results
for the first quarter of 1994, with operating income up 23% over
last year's first quarter. The wood products segment was a major
contributor, with operating income of $20.6 million, compared to
$16.7 million for the first quarter of last year. Favorable
market conditions including record product price levels was a
primary factor for improved earnings. The chemical segment
continues to experience strong earnings, primarily attributable
to both the company's tall oil based chemicals business and its
BBA subsidiary.
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<PAGE>
Depreciation expense for the first quarter increased less than
5% over last year's comparable quarter. Net interest expense for
the first quarter decreased 19% from the first quarter of 1993.
The primary reason for this decrease is the reduction in gross
interest expense, due to lower debt levels, in addition to a
higher level of capitalized interest.
The increase in the deferred tax liability is primarily
attributable to accelerated tax depreciation offset in part by
the adoption of SFAS No.112, 'Employer's Accounting for
Postemployment Benefits'.
Net working capital was $49 million at March 31, 1994, compared
to $1 million at year-end 1993. Cash flow from operations for
the current year's first quarter was $16 million, compared to
$32 million for the same quarter a year ago. Changes in working
capital items, primarily accounts payable, were the major
contributors to this decline.
Capital expenditures for the first quarter of 1994 totalled $57
million, compared to $42 million for the same quarter a year
ago. Current quarter expenditures reflect spending of $29
million at the company's paper mills, primarily attributable to
$7 million for the Savannah mill recovery boiler and $11 million
for the deink facility and paper machine enhancements at the
Franklin mill. The ratio of long-term debt to total capital was
35.0% at March 31, 1994. In April 1994, the company completed
the issuance of $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 mill.
On May 12th of this year, Union Camp's flavor and fragrance
subsidiary, Bush Boake Allen Inc. (BBA), commenced a public
stock offering of 5.6 million shares (approximately 30% of BBA's
outstanding shares) at an offering price of $16.00 per share.
Union Camp will own the remainder (approximately 70%) of the
18.75 million shares outstanding after the offering.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In April 1994, the Company's facility in Savannah,
Georgia received a Notice of Violation and Opportunity to
Show Cause ('NOV') from the United States Environmental
Protection Agency ('EPA') alleging violations of the
EPA's rules governing the treatment of hazardous waste.
The allegations involve the applicability of these
regulations to the removal of granular impurities from
the pulping liquor recovery process at the Savannah
facility. While the EPA has not instituted any
enforcement action and has not sought penalties in
connection with the NOV, there can be no assurance that
it will not ultimately do so. The Company has arranged
to meet with EPA to support the Company's position that
the removal of the granular materials is not covered by
the EPA's rules governing the handling of hazardous
waste.
Item 4. Submission of Matters to a Vote of Security-Holders
The Company's annual meeting of its stockholders was held
on April 26, 1994.
At the annual meeting the Company's stockholders voted on
two proposals: (1) the election of four nominees to
serve as directors for three year terms; and (2) the
ratification of the appointment of Price Waterhouse as
independent accountants for the year 1994. The voting of
the Company's stockholders as to these matters was as
follows:
1. Election of Directors
<TABLE>
<CAPTION>
Votes
Nominees Votes For Withheld
-------- -------- --------
<S> <C> <C>
Sir Colin R. Corness 59,124,368 872,741
Robert D. Kennedy 59,139,437 857,672
W. Craig McClelland 59,152,328 844,781
James M. Reed 59,155,328 841,781
</TABLE>
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2. Ratification of Appointment of Accountants
<TABLE>
<CAPTION>
Votes
Votes For Against Abstentions
--------- ------- -----------
<S> <C> <C> <C>
59,859,419 59,446 78,244
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
<TABLE>
<CAPTION>
No. Description
-- -----------
<S> <C>
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 first 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)
Date: MAY 11, 1994 /s/ Dirk R. Soutendijk
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: MAY 11, 1994 /s/ Robert E. Moore
ROBERT E. MOORE
VICE PRESIDENT AND COMPTROLLER
(Chief Accounting Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
- -- ----------- ----
<S> <C> <C>
11 Statement re computation of per 12
share earnings.
</TABLE>
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1994 1993
---- ----
<S> <C> <C>
Net Income ($000) $7,552 $12,519
Weighted Average Common
Shares Outstanding 69,903,091 69,679,891
Earnings Per Share $0.11 $0.18
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 70,308,455 70,060,254
Primary Earnings Per Share $0.11 $0.18
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 70,308,455 70,060,254
Fully Diluted Earnings Per Share $0.11 $0.18
</TABLE>
