<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, 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
70,217,147 shares of Registrant's Common Stock, Par Value $1 Per Share, were
outstanding as of the close of business on September 30, 1995.
<PAGE>
UNION CAMP CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 6
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
</TABLE>
_______________________________________
*A summary of the Registrant's significant accounting policies is contained in
the Registrant's Form 10-K for the year ended December 31, 1994 which has
previously been filed with the Commission.
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 1,073,494 $ 856,271 $ 3,203,935 $ 2,473,594
Costs and other charges:
Cost of products sold 674,033 634,444 2,029,991 1,881,547
Selling and administrative expenses 96,140 82,751 285,408 236,315
Depreciation and cost of timber harvested 68,732 63,934 203,583 188,480
Other operating charge - - - 13,958
----------- ----------- ----------- -----------
Income from operations 234,589 75,142 684,953 153,294
Gross interest expense 29,892 33,075 94,732 97,502
Less capitalized interest (851) (5,501) (8,082) (15,238)
Gain on sale of minority interest - - - (34,698)
Other (income) expense - net (4,126) 8,513 (597) 5,428
----------- ----------- ----------- -----------
Income before income taxes,
minority interest and accounting change 209,674 39,055 598,900 100,300
----------- ----------- ----------- -----------
Income taxes:
Current 51,915 15,314 149,320 12,647
Deferred 25,167 (208) 73,028 24,283
----------- ----------- ----------- -----------
Total income taxes 77,082 15,106 222,348 36,930
----------- ----------- ----------- -----------
Minority interest (net of tax) (2,846) (2,216) (8,648) (4,463)
Effect of change in accounting standard (net of tax) - - - (3,716)
----------- ----------- ----------- -----------
Net Income $ 129,746 $ 21,733 $ 367,904 $ 55,191
=========== =========== =========== ===========
Earnings per share:
Before change in accounting standard $1.85 $0.31 $5.25 $0.84
After change in accounting standard $1.85 $0.31 $5.25 $0.79
Dividends per share $0.41 $0.39 $1.21 $1.17
</TABLE>
Earnings per share are computed on the basis of the average number of common
shares outstanding:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Quarter Ended September 30, 70,199,410 69,966,470
Nine Months Ended September 30, 70,104,025 69,935,114
</TABLE>
See also the accompanying notes to consolidated financial statements.
-2-
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------ -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 43,297 $ 13,256
Receivables-net 536,376 469,584
Inventories at lower of cost or market:
Finished goods 238,303 197,086
Raw materials 109,271 98,884
Supplies 115,888 117,839
---------- -----------
Total inventories 463,462 413,809
---------- -----------
Assets held for resale 1,089 20,916
Other 40,057 33,568
---------- -----------
Total current assets 1,084,281 951,133
---------- -----------
Plant and equipment, at cost 6,247,877 6,175,539
Less: accumulated depreciation 2,869,038 2,745,017
---------- -----------
3,378,839 3,430,522
Timberlands, less cost of timber harvested 263,979 254,458
---------- -----------
Total property 3,642,818 3,684,980
---------- -----------
Other assets 123,495 140,465
---------- -----------
Total Assets $ 4,850,594 $ 4,776,578
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 622,351 $ 883,924
Long-term debt 1,203,095 1,252,249
Deferred income taxes 677,967 605,643
Other liabilities and minority interest 214,890 198,441
Stockholders' equity (Shares outstanding
1995: 70,217,147; 1994: 70,011,944) 2,132,291 1,836,321
----------- -----------
Total Liabilities and Stockholders'
Equity $ 4,850,594 $ 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>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1995 1994
---- ----
<S> <C> <C>
Cash Provided By (Used For) Operations:
Net income $ 367,904 $ 55,191
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 215,690 201,568
Deferred income taxes 73,028 24,283
Asset write down - 13,958
Gain on sale of minority interest - (34,698)
Withdrawal from retail paper bag business - 11,000
Other 8,544 8,935
Changes in operational assets and liabilities:
Receivables (68,867) (49,428)
Inventories (50,328) 40,627
Other assets (4,591) (4,008)
Accounts payable, taxes and other liabilities 6,817 (31,856)
--------- --------
Cash Provided By Operations 548,197 235,572
--------- --------
Cash (Used For) Provided By Investment Activities:
Capital expenditures (177,675) (220,068)
Proceeds from sale of businesses 36,133 6,739
Proceeds from sale of minority interest - 88,983
Other 7,485 (28,835)
--------- --------
(134,057) (153,181)
--------- --------
Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable (275,792) (36,879)
Repayments of long-term debt (46,216) (59,353)
Proceeds from issuance of long-term debt 22,625 61,725
Dividends paid (84,835) (81,834)
--------- --------
(384,218) (116,341)
--------- --------
Effect of exchange rate changes on cash 119 527
--------- --------
Increase (decrease) in cash and cash equivalents 30,041 (33,423)
Balance at beginning of year 13,256 38,287
--------- --------
Balance at end of period $ 43,297 $ 4,864
--------- --------
--------- --------
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 93,257 $ 88,597
Income taxes $ 128,559 $ 16,018
</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 and 4.
Note 2. Included in 'Income from Operations' for the second quarter of
1995 is a net pre-tax gain of $6.4 million relating to the sale
of a flexible packaging operation. In the second quarter of
1994, 'Income from Operations' included an operating charge of
$14.0 million ($8.8 million after tax) to write down the
carrying value of assets related to this business.
Note 3. Second quarter 1994 results included 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
retains a 68% interest in its Bush Boake Allen subsidiary.
Note 4. 'Other (Income) Expense' for the third quarter of 1994 includes
an $11 million pre-tax charge to reflect the company's decision
to withdraw from the retail paper bag business.
Note 5. 'Assets Held For Resale' decreased by $19.8 million from
year-end 1994, which was primarily attributable to the sale of
certain assets of the retail paper bag business previously
classified as 'Assets Held For Resale'.
Note 6. Included in 'Current Liabilities' are $64 million and $340
million of commercial paper borrowings at September 30, 1995 and
year-end 1994, respectively.
Note 7. Included in 'Other Liabilities and Minority Interest' for
September 30, 1995 and year-end 1994 are $67.2 million and $59.7
million, respectively, representing the minority interest in
Union Camp's 68% owned subsidiary, Bush Boake Allen.
- 5 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net income for the third quarter of 1995 was $129.7 million or $1.85 per share,
compared to $21.7 million or $.31 per share for the third quarter of last year.
The significant earnings improvement reflects the continued favorable pricing
climate in both the domestic and export paper products markets, together with
production gains in the company's mill operations. Last year's third quarter
included a non-recurring charge of $.10 per share to reflect the company's
decision to withdraw from the retail paper bag business. Third quarter operating
income was $234.6 million, a significant increase from the $75.1 million
reported for last year's third quarter.
Net income for the first nine months of this year was $367.9 million or $5.25
per share, compared to $55.2 million or $.79 per share for the same period last
year. Last year's results included a net loss of $.01 per share from
non-recurring items as follows; a third quarter charge of $.10 per share to
reflect the company's decision to withdraw from the retail paper bag business, a
second quarter gain of $.30 per share from the sale of a minority interest in
the company's Bush Boake Allen flavor and fragrance subsidiary, a second quarter
charge of $.16 per share relating to the write down of the carrying value of
certain non-strategic assets and a first quarter charge of $.05 per share
relating to the adoption of the new accounting standard (SFAS No.112). Operating
income for the first nine months of 1995 was $685 million, compared to $153.3
million for the same period last year.
Net sales for the third quarter were $1.1 billion, 25% above the previous year's
comparable quarter. Higher selling prices, in addition to a healthy overall
demand for the company's paper and packaging products in both the domestic and
export markets were the primary contributors to this increase. Total paper
product shipments for the third quarter were at 855,000 tons, about a 1% gain
over last year's comparable quarter. However, a slowness in economic growth
during the quarter, as well as higher inventory levels were the primary factors
for an 8% decrease in shipments from the second quarter of this year.
Operating income for the paper and paperboard segment was $215.2 million, a
substantial increase over the $53.5 million reported for the third quarter of
last year. Higher average selling prices for the company's major paper products
and production gains at the company's paper mill operations contributed to the
strong earnings. For the quarter, average prices for the company's linerboard
and uncoated business papers were up 62% and 69%, respectively, compared to last
year's third quarter. The strong economic growth experienced in the first half
of this year began to slow down in the third quarter, which had a negative
effect on inventory levels and shipments for the company. As a result of the
slowness in the market, the company took approximately 30,000 tons of
market-related linerboard downtime during the third quarter and is continuing
with additional downtime in the fourth quarter.
-6-
<PAGE>
Packaging segment operating income was $10.9 million for the third quarter of
1995, compared to $.8 million for last year's third quarter. The company's
corrugated container operations were the primary contributors to the overall
profitability of the segment, with average selling prices increasing 35% over
the third quarter of last year. Third quarter earnings from the company's
overseas container operations increased substantially over last year's
comparable quarter. Earnings for the flexible packaging operations improved 48%
over the third quarter of last year, primarily attributable to overall cost
reductions realized from the closures of its retail bag operations in 1994, in
addition to higher selling prices and increased shipments for the quarter.
The company's chemical segment reported strong third quarter results. Operating
income for the quarter was $22.4 million, an increase of 32% over last year's
third quarter, reflecting continued strong results in the Bush Boake Allen
flavor and fragrance operations, as well as the company's tall-oil-based
chemical business. Earnings for the wood products operations were at $5.1
million, a 75% decrease from the third quarter of last year, reflecting a
downward trend in selling prices, in addition to higher wood costs for the
quarter.
Depreciation expense increased 8% in both the third quarter and first nine
months of 1995 from last year's comparable periods. This primarily reflects the
start-up of a deinking (fiber recycling) plant at the Franklin mill in late
1994, in addition to the start-up of the recovery boiler at the Savannah mill at
the end of the first quarter.
The deferred tax liability increased as a result of utilizing a portion of the
Alternative Minimum Tax credit carryforward established in prior years as a
deferred tax asset, in addition to temporary differences arising from
accelerated tax depreciation methods.
Cash flow from operations for the first nine months of 1995 was $548.2 million,
compared to $235.6 million for last year's comparable period, primarily due to
increased earnings. Capital expenditures for the first nine months of this year
totaled $177.7 million, compared to $220.1 million last year. Total debt was
reduced $299 million during the first nine months of 1995. The ratio of
long-term debt to total capital was 30% at September 30, 1995, compared to 33.9%
at year-end 1994.
Net working capital was $461.9 million at September 30, 1995, compared to $67.2
million at year-end 1994. The increase in working capital was primarily
attributable to a significant reduction in short-term commercial paper
borrowings and a higher level of trade receivables at the end of the third
quarter.
Effective with the fourth quarter of 1995, the company increased its quarterly
dividend rate by 10% to $.45 per share, the second dividend increase this year.
The company also began to repurchase some of its outstanding common stock under
a previously announced program authorizing the repurchase of up to 5 million
shares of the company's common stock.
-7-
<PAGE>
PART II. OTHER INFORMATION
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.
27 Financial data schedule.
</TABLE>
b) Reports on Form 8-K.
No Current Report on Form 8-K was filed by the Registrant during the third
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: NOVEMBER 10, 1995 /S/ Dirk R. Soutendijk
----------------- -------------------------------------
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: NOVEMBER 10, 1995 /S/ Robert E. Moore
----------------- -------------------
ROBERT E. MOORE
VICE PRESIDENT AND COMPTROLLER
(Chief Accounting Officer)
-9-
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
11 Statement re computation of per 12
share earnings
27 Financial data schedule 13
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income ($000) $129,746 $21,733 $367,904 $55,191
Weighted Average Common
Shares Outstanding 70,199,410 69,966,470 70,104,025 69,935,114
Earnings Per Share $1.85 $0.31 $5.25 $0.79
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary
Basis 70,968,515 70,392,353 70,702,533 70,287,937
Primary Earnings Per Share $1.83 $0.31 $5.20 $0.79
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 70,985,037 70,416,339 70,889,652 70,384,983
Fully Diluted Earnings
Per Share $1.83 $0.31 $5.19 $0.78
</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, 1995 AND THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995 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-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 43297
<SECURITIES> 0
<RECEIVABLES> 553918
<ALLOWANCES> 17542
<INVENTORY> 463462
<CURRENT-ASSETS> 1084281
<PP&E> 6511856
<DEPRECIATION> 2869038
<TOTAL-ASSETS> 4850594
<CURRENT-LIABILITIES> 622351
<BONDS> 1203095
<COMMON> 70217
0
0
<OTHER-SE> 2062074
<TOTAL-LIABILITY-AND-EQUITY> 4850594
<SALES> 3203935
<TOTAL-REVENUES> 3203935
<CGS> 2029991
<TOTAL-COSTS> 2518982
<OTHER-EXPENSES> (597)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86650
<INCOME-PRETAX> 598900
<INCOME-TAX> 222348
<INCOME-CONTINUING> 367904<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 367904
<EPS-PRIMARY> 5.25
<EPS-DILUTED> 5.19
<FN>
<F1>Reflects adjustment for minority interest (net of tax) of $8,648.
</FN>
</TABLE>
