SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
-------------
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
------ ------
70,055,230 shares of Registrant's Common Stock, Par Value $1 Per
Share, were outstanding as of the close of business on March 31,
1995.
<PAGE>
UNION CAMP CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 6
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of 8
Security-Holders
Item 6. Exhibits and Reports on Form 8-K 8
</TABLE>
-------------------------------------
*A summary of the Registrant's significant accounting policies is
contained in the Registrant's Form 10-K for the year ended December
31, 1994 which has previously been filed with the Commission.
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1995 1994
---- ----
<S> <C> <C>
NET SALES $ 1,021,146 $ 790,106
Costs and other charges:
Cost of products sold 662,829 611,972
Selling and administrative expenses 90,634 74,294
Depreciation and cost of timber
harvested 66,364 62,540
--------- --------
Income from operations 201,319 41,300
--------- -------
Gross interest expense 32,935 32,022
Less capitalized interest (5,078) (4,530)
Other (income) expense -net 1,015 (3,777)
--------- --------
Income before income taxes,
minority interest and accounting
change 172,447 17,585
--------- --------
Income taxes:
Current 44,401 (1,003)
Deferred 20,340 6,807
--------- --------
Total income taxes 64,741 5,804
--------- --------
Minority interest (net of tax) (2,699) (513)
Effect of change in accounting standard
(net of tax) - (3,716)
--------- --------
NET INCOME $ 105,007 $ 7,552
--------- --------
--------- --------
Earnings per share:
Before change in accounting standard $1.50 $0.16
After change in accounting standard $1.50 $0.11
Dividends per share $0.39 $0.39
Earnings per share are computed on the basis of the average number of
common shares outstanding:
1995: 70,036,504 1994: 69,903,091
</TABLE>
See also the accompanying notes to consolidated financial statements.
-2-
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
------------- ----------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 36,547 $ 13,256
Receivables-net 539,800 469,584
Inventories at lower of cost or
market:
Finished goods 202,008 197,086
Raw materials 106,342 98,884
Supplies 117,278 117,839
----------- ------------
Total inventories 425,628 413,809
----------- ------------
Assets held for resale 20,582 20,916
Other 36,398 33,568
----------- ------------
Total current assets 1,058,955 951,133
----------- ------------
Plant and equipment, at cost 6,163,051 6,175,539
Less: accumulated depreciation 2,747,289 2,745,017
----------- ------------
3,415,762 3,430,522
Timberlands, less cost of timber
harvested 256,178 254,458
----------- ------------
Total property 3,671,940 3,684,980
----------- ------------
Other assets 138,396 140,465
----------- ------------
Total Assets $ 4,869,291 $ 4,776,578
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 881,461 $ 883,924
Long-term debt 1,240,063 1,252,249
Deferred income taxes 624,128 605,643
Other liabilities and minority
interest 203,950 198,441
Stockholders' equity (Shares
outstanding 1995: 70,055,230;
1994: 70,011,944) 1,919,689 1,836,321
----------- ------------
Total Liabilities and
Stockholders' Equity $ 4,869,291 $ 4,776,578
----------- ------------
----------- ------------
</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>
THREE MONTHS ENDED
MARCH 31,
-----------------
1995 1994
----- ----
<S> <C> <C>
Cash Provided by Operations:
Net income $105,007 $ 7,552
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and
cost of company timber harvested 70,443 66,814
Deferred income taxes 20,340 6,807
Other 2,725 2,710
Changes in operational assets and
liabilities:
Receivables (65,964) (17,101)
Inventories (12,709) 8,817
Other assets (1,380) (213)
Accounts payable, taxes and other
liabilities 11,594 (59,803)
-------- --------
Cash (Used For) Provided By
Operations 130,056 15,583
-------- --------
Cash (Used For) Provided By Investment
Activities:
Capital expenditures (61,690) (56,567)
Proceeds from sale of businesses 11,083 -
Other (9,786) (16,734)
-------- --------
(60,393) (73,301)
-------- --------
Cash (Used For) Provided By Financing
Activities:
Change in short-term notes payable (3,771) 44,783
Repayments of long-term debt (15,460) (49,727)
Proceeds from issuance of long-term
debt - 57,126
Dividends paid (27,320) (27,267)
-------- --------
(46,551) 24,915
-------- --------
Effect of exchange rate changes on cash 179 (33)
-------- --------
Increase (decrease) in cash and cash
equivalents 23,291 (32,836)
Balance at beginning of year 13,256 38,287
-------- --------
Balance at end of period $ 36,547 $ 5,451
-------- --------
-------- --------
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $34,666 $33,979
Income taxes $14,550 $4,608
</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 Note 2.
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. "Assets Held For Resale" remained relatively unchanged for the quarter.
The assets of the company's Asheville flexible packaging plant were
reclassified to "Assets Held For Resale" at March 31, 1995. Offsetting
this increase was the sale of certain assets previously classified in
"Assets Held For Resale".
Note 4. Included in "Current Liabilities" are $332 million and $340 million of
commercial paper borrowings at March 31, 1995 and year-end 1994,
respectively.
Note 5. Included in "Other Liabilities and Minority Interest" for March 31,
1995 and year-end 1994 are $61.9 million and $59.7 million,
respectively, representing the minority interest in Union Camp's 68%
owned subsidiary, Bush Boake Allen.
Note 6. Prior periods have been reclassified to conform with the 1995
presentation.
-5-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net income for the first quarter of 1995 was $105.0 million or $1.50 per share,
compared to $7.6 million or $.11 per share for the comparable period of last
year. Significant price recovery in both the domestic and export paper product
markets coupled with increased volume were primarily responsible for the first
quarter's record earnings level. Last year's first quarter included a charge of
$.05 per share relating to the adoption of the new accounting standard (SFAS No.
112).
Overall demand for the company's paper products was very strong in both domestic
and export markets during the first quarter. Net sales for the quarter were $1.0
billion, 29% above last year's first quarter. Total paper product shipments for
the first quarter were 910,000 tons, a 7% gain over last year's comparable
quarter.
Operating income for the paper and paperboard segment was $165.8 million,
compared to $9.2 million for the first quarter of last year. The primary factor
for the significant earnings improvement was higher selling prices for the
company's major paper products. For the quarter, prices for average linerboard
and uncoated business papers were up 66% and 50%, respectively. Improvement
occurred equally in both the domestic and export paper product markets. In
addition, capacity improvements at the Savannah mill were a primary factor in a
27% gain in linerboard shipments over last year's first quarter. First quarter
shipments of uncoated business papers were up 6% over last year.
First quarter 1995 operating income for the packaging segment was $21.0 million,
more than double the $10.4 million reported for last year's comparable quarter.
Corrugated container operations were the primary contributors to this earnings
improvement, with average selling prices increasing 31% and customer shipments
up 8% over the first quarter of last year. First quarter earnings from the
company's overseas container operations improved 31% over last year's comparable
quarter. These improvements reflect more favorable market conditions for the
company's domestic and export corrugated container products. Earnings from the
company's flexible packaging operations improved 46% over last year's first
quarter, primarily the result of overall cost reductions realized from the
closures of its retail bag operations in 1994.
-6-
<PAGE>
The company's non-paper businesses continue to report excellent results.
Chemical segment earnings increased 9% over last year's first quarter,
reflecting strong results in both the Bush Boake Allen flavor and fragrance
operations and the tall-oil-based chemical business. Operating income for the
wood products segment was $15.5 million, a 25% decrease from last year's first
quarter. Despite a strong demand for the company's lumber, plywood and
particleboard products, profit margins slipped due to higher raw material costs.
Depreciation expense for the first quarter was $64.9 million, a 6% increase over
last year's comparable quarter. This reflects the start-up of a deinking (fiber
recycling) plant at the Franklin mill in late 1994.
The increase in the deferred tax liability is primarily attributable to a
utilization of the `alternative minimum tax' credit and accelerated tax
depreciation.
Net working capital was $177.5 million at March 31, 1995, compared to $67.2
million at year-end 1994. The increase in working capital was primarily
attributable to a higher level of trade receivables at the end of the first
quarter.
Cash flow from operations for the first quarter of 1995 was $130.1 million,
compared to $15.6 million for last year's first quarter, due primarily to
increased earnings. Capital expenditures totaled $61.7 million, compared to
$56.6 million last year. Total debt was reduced $19 million during the quarter,
compared to an increase of $52 million in last year's first quarter. The ratio
of long-term debt to total capital was 32.8% at March 31, 1995, compared to 35%
at March 31, 1994.
The company's Board of Directors recently approved a 5% increase in the
quarterly dividend rate to $.41 per share, effective with the second quarter of
this year.
-7-
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company's annual meeting of its stockholders was held on April 25,
1995.
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 1995. 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>
Jerry H. Ballengee 61,137,980 904,466
Ann D. McLaughlin 60,954,680 1,087,766
George J. Sella, Jr. 61,088,162 954,284
Ted D. Simmons 61,127,431 915,015
</TABLE>
2. Ratification of Appointment of Accountants
Votes
Votes For Withheld Abstentions
---------- -------- -----------
61,828,020 69,226 145,200
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.
No Current Report on Form 8-K was filed by the Registrant during the
first quarter of 1995.
-8-
<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 12, 1995 /s/ Dirk R. Soutendijk
------------ -------------------------------
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: MAY 12, 1995 /s/ Robert E. Moore
------------ ------------------------------
ROBERT E. MOORE
VICE PRESIDENT AND COMPTROLLER
(Chief Accounting Officer)
-9-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
<S> <C> <C>
11 Statement re computation of per 12
share earnings
27 Financial data schedule 13
</TABLE>
-10-
<PAGE> EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1995 1994
---- ----
<S> <C> <C>
Net Income ($000) $105,007 $7,552
Weighted Average Common
Shares Outstanding 70,036,504 69,903,091
Earnings Per Share $1.50 $0.11
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 70,577,131 70,308,455
Primary Earnings Per Share $1.49 $0.11
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 70,696,067 70,308,455
Fully Diluted Earnings Per Share $1.49 $0.11
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 36547
<SECURITIES> 0
<RECEIVABLES> 557426
<ALLOWANCES> 17626
<INVENTORY> 425628
<CURRENT-ASSETS> 1058955
<PP&E> 6419229
<DEPRECIATION> 2747289
<TOTAL-ASSETS> 4869291
<CURRENT-LIABILITIES> 881461
<BONDS> 1240063
<COMMON> 70055
0
0
<OTHER-SE> 1849634
<TOTAL-LIABILITY-AND-EQUITY> 4869291
<SALES> 1021146
<TOTAL-REVENUES> 1021146
<CGS> 662829
<TOTAL-COSTS> 819827
<OTHER-EXPENSES> 1015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27857
<INCOME-PRETAX> 172447
<INCOME-TAX> 64741
<INCOME-CONTINUING> 105007<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 105007
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.49
<FN>
<F1>Reflects adjustment for minority interest (net of tax) of $2,699.
</FN>
</TABLE>
